In today’s world, availability of credit is one of the leading factors for increase in spending. While credit cards have powered the purchase of multiple essentials, it might seem almost impossible to purchase a house with a credit card. It’s not.
If you’ve got ample credit to cover the total expense, you can buy the house outright, although this might not be the wisest option to cling to. It’s time consuming and could balloon your total debts.
Handing over your card to the seller will not close the real estate deal. The first step is to ensure you get a cash advance and use the funds to buy a cashier’s check, which can be used to buy your home.
However, this comes at a cost. Availing a cash advance from your credit card can be an expensive affair. The fees tagged to these advances can sometimes touch 5%.
If you withdraw $20k using your credit card, the borrowing fees would come to $1k. While this
amount solely accounts for the fees you pay for availing the cash advance facility, interest rates on the cash advance can attract higher payments than a regular mortgage.
If the home seller would need to see the funds parked in your account before accepting your contract, you would need to borrow the funds much earlier and pay a significant interest to simply park the funds in your account.
With a mortgage, the interest rates will be much lower. What’s more, the monthly payments for a credit card can be almost three times the payment you would make on a regular mortgage to a lender.
Another hiccup that shouldn’t be missed is the credit card’s cash advance limit. The cash advance limit is much lower than the credit limit.
For example, a credit card limit of $40k might give you the facility to withdraw a cash advance of $10k. Tapping into a traditional fixed-rate mortgage is a better way to finance your micro home.
A mortgage perk you can bank on is the option to make a down payment of 20% on your loan, which could help you avoid mortgage insurance for that amount.
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How To Invest Your Way To Your First $1M (In 8 Steps)
While being a millionaire most certainly offers a sense of privilege and extravagance, it also provides comfort.
Despite the idea that many of life’s luxuries can cost you your bank (plus a large chunk of your future earnings), achieving comfortable wealth is possible—if you’ve got a solid investment plan you’ll follow religiously.
Here are eight investment strategies to work your way to your first million dollars.
1. Say No To Fees (Of Any Sort!)
Investing comes packed with hidden and some obvious fees – broker fees, distributor fees, exit and entry fees, maintenance fees, and a string of other service-based fees. If you can manage your own investments and money, you can save hundreds of thousands in fees over the lifetime of your investment.
2. Don’t Try To Time The Market
This can be one of the biggest blunders one can make—simply because it’s impossible, speculative and you’re gambling with your savings. While there are indicators that show market trends, this does not promise that your investment will most certainly move up or down.
#BQPortfolio | Don't try to time the market, Sunil Pandey learns as he plans his retirement.
— BloombergQuint (@BloombergQuint) July 10, 2018
3. Think Long Term And Diversify
If you put all your investments into one asset class, your investment will tank the minute the asset class goes into free fall. How do you beat this? Plan and diversify your investment – it could be debt, treasury bills, equity, real estate, startups, business ideas – anything, as long as you think long-term. This can pay off in the long run.
4. Think Like An Owner
When you buy your stocks or make your investments, think and act like it’s yours – you’ll be doubly careful to make the right checks and invest smart. When you invest in solid, robust companies with this in mind, the returns would also be equally strong. Good companies can pay you high dividends that can up your total income.
5. Invest In Yourself First
Be it education or investing for your retirement, put yourself first and then try to budget for the other frills in life.
6. Borrow If You Can, Don’t Buy
With a growing shared economy, you now have plenty to choose from – co-working spaces, ride-hailing and ride-sharing services, shared rentals and accommodation, and the list goes on. Here’s where you can really cut costs – be it while running your business or as a regular looking to channel the savings elsewhere.
7. Set Goals (And Stick To Them)
Make sure you start saving as early as possible and invest it – even a dollar can compound over time. As time goes, set bigger goals and get excited about them! Once bonuses and income increases come your way, bump up your investments – it can soon touch a quarter of a million.
8. Max Out Early
Your 401K can be one of your biggest retirement funds and maxing out your annual contribution by the end of June can be a great way to boost your retirement savings. How does this help? It gives your money an additional six months to compound.
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