What do YOU want to do?...
Buying a house or car can be both exciting and nerve wracking, and likely one of the larger purchases you’ll ever make. If a new car or dream house is on your horizon, here’s how to seal the deal.
Check your credit report for errors
If it's been more than a year since you've checked your credit report, access your free copy via www.annualcreditreport.com to make sure it is accurate and mistake-free. If you find errors that might hurt your credit score, it's important to take the steps to fix them before you apply for credit.
Figure out how much you can afford
Before you start shopping, make sure your monthly payment will fit into your budget. Remember that the amount the bank approves you may be more than you can comfortably afford, or need.
Find out your credit score
Once you know your credit report is accurate, you need to know your score. The interest rate you pay on credit often depends on your credit score. In general, a score of 740 or higher will garner you the best rates, while scores in the 500's may make it tough to obtain credit.
Throughout the course of this year...
Do your research regarding prices, taxes and timing
The monthly payment you can afford will tell you how big of a loan you can take out. If you want to make a purchase that is more than that, you'll need to save the balance for a down payment.
Establish a savings plan
Select the date by which you want to reach your minimum goal for your nest egg. Then, calculate how much you'll need to save each month to get there. Adjust the amount or date according to whether the amount is realistic with your current budget.
Set up automatic savings transfers
Don't wait to see if there is money “left over” each month, treat saving as another bill to make sure it happens.
Throughout the years...
Maintain your investment
Regular maintenance and check-ups are important for extending the life and value of both your car and home. This will also help you avoid costly repairs further down the road.
Once you've made your purchase, or paid off your loan, keep saving that amount
You'll need it for maintenance and other incremental costs that come with ownership. This will also set you up for your next purchase, or allow you to supercharge your long-term savings.
Save six months of living expenses
It's important to have an emergency fund to cover your monthly bills in case an unexpected change to your financial situation should occur, like a job loss, extended illness or natural disaster.