A Financial Education Event
 
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March 2, 2019

Car Buying Do’s and Don’ts

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elliek

Financial Readiness equals Military Readiness and whether you are a civilian or a service member, one of the top financial mistakes most Americans make has to do with how they buy their vehicles. But if you’re smart, you can avoid this mistake and eventually drive your cars for free.

Our Heroes at Home Financial Event just completed a tour where we gave 27 presentations at 17 bases in 4 countries. In fact, you can contact us about whether we are coming to YOUR base later this year.

McConnell AFB Heroes at Home Financial Event. One of the main topics that is: What is the smart way to buy a vehicle?

Let me start by asking you the question we ask our audiences: How do you lose around $8000 in 8 seconds?

Did you get the answer yet?

The answer is: you drive your brand new car off the lot.

Yes, the average new vehicle will depreciate $8000 in the first year. Since most folks finance that new vehicle, it’s more like losing $10,000 in 8 seconds!

So WHY oh WHY do you continue to buy NEW?

Some folks answer, “for the warranty.” But if you bought the vehicle a year old, you could do two things to make up for that 12 months of warranty you lose over buying new:

  • Warranty Purchase – you could purchase an extended warranty, which (depending on the car you drive) is only $800 to $1500 per year. This is WAY LESS than the 8K–10K you are losing by buying new. Plus warranties are negotiable. When I had to renew the warranty on my Mercedes 280SLK, the dealership gave me their best price. Then I called USAA, telling them the best quote I got and they beat the price by $800. Plus, instead of the $200 deductible I had with the other quote, the USAA deductible was $0! I used that warranty at my local Mercedes dealership (world’s best service department) and paid $0 deducible and got the same excellent service that I normally get.
  • CPO or Certified Previously Owned – If you get a vehicle with a CPO on it, then part of the deal is that the dealership extends the warranty a year and this is a full manufacturer’s warranty. Plus, there are more stringent inspection standards and additional roadside assistance. Once, I had a shady salesperson who told me the car was CPO, “All our cars are CPO” she said, but she never presented me with CPO paperwork to sign at the deal’s closing. You guessed it, the vehicle was NOT CPO and she lied. Be sure you get CPO paperwork if you are told it is a genuine CPO. It costs the dealership anywhere from $800 to $2500 to CPO your vehicle, depending on the year, make and model. You HAVE TO sign CPO paperwork that is dated from BEFORE the date you buy the car or it’s not valid. Remember that asking a dealer to make a vehicle CPO is part of the negotiating process and this will increase the value of the deal anywhere from $1000 to $2500.

A couple years ago, I was on my way to Disneyland to meet another author friend and a careless driver made an unprotected left hand turn right into my vehicle (about 5 feet off the bumper). I had NO TIME to react or even take my foot off the brake. The fact that Mercedes are so well built and the fact God sent his angels to protect me are the only reasons I walked away from this terrible crash with only a few cuts and bruises.

This accident put me back in the market for a vehicle. So this time I decided to try USAA’s car buying service. Since we had an extra car at home, I could take my time to find the best deal. The car buying service told me the price, the discount, gave me free access to a CarFax report, showed me a chart of similar cars purchased in my area to indicate an average, good, or great deal, and more. I compared the prices I saw on the site to Kelley Blue Book and did all my research. Then I followed the same three steps we teach in our Heroes at Home Financial Events.

Step One: Negotiate Price First

Negotiate the price of the car at a dealership apart from the value of the trade-in. Tell the salesperson you want to determine the price of the car without the trade-in. The reason you want to do this is because salespeople will often give you far more for your trade than you expected—thus hooking you on the deal. However, this higher-value-for-the-trade-in shtick can be part of the technique they use to get you to purchase the car. If a higher value is given to the trade, then they will give a lower discount on the price of the vehicle, because all the discounting went into the value of the trade.

Step Two: Negotiate the Value of the Trade-In

Now that you’ve determined the price of the car, ask what the dealer will give you for your trade-in. Most likely, you will get more for your car if you sell it yourself. A little elbow grease and some top-notch detailing can net you hundreds of dollars more than a dealer can give you, if you can find a buyer. Some people (like military families) don’t always have the time to sell their car because of moving schedules and so forth. So if you are going to try to trade in your car, look up the value of your existing car at Kelley Blue Book or Edmunds, then print the page (or screen shot it), and bring it with you to the car lot to negotiate the price. Bottom line: try your best to gather enough facts beforehand so that you make a wise decision.

Step Three: Secure Your Own Financing

The F&I (finance and insurance office) is where the lion’s share of a dealership’s profit is made. In this office, you will have to navigate interest rates, payments, terms, additional services, and warranties. Unless you put miles on your car for business or you are purchasing a car that will cost a lot to repair (and you intend to keep it longer than the warranty lasts), extended warranties are usually not a good value. When it comes to vehicle financing, you can generally do better on interest by selecting your own creditor unless the manufacturer is offering a lower APR. Keep in mind that the .99% APR offers only go to the top 10% of those who are the FICO score elite, chances are good that you will not qualify. The credit life insurance that dealers offer is more expensive than raising your regular insurance premium by twenty thousand dollars to cover this expense. And don’t forget to research the price of insurance on your new car so you can afford both the payment and the insurance.

By following my own advice, I talked to my sales representative and I was able to:

  • Negotiate the best price on the vehicle.
  • Get the USAA discount added to the deal.
  • Get a car that had less than 3K miles on it.
  • Get CPO added to my vehicle.
  • Drive a vehicle that is now under warranty until 2022.
  • Get a like-new car that had only been in service officially for a mere three months.
  • Save $9K off the brand-new-plus-CPO price.
  • Pay cash for my car (stay tuned for next week’s blog on how to pay cash for cars).
  • Get the year, make, model and color of the car I wanted.
  • Walk away feeling good about the deal and the value I got.

When are you in the market to get a vehicle, which of these tips will you follow to get the best deal?

Ellie Kay

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September 4, 2018

Receive Extra $$ Rewards & Grants as a Hero When You Buy, Sell, or Refinance

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elliek

This week, to kick off our new podcast season on The Money Millhouse, we have a special interview with Joseph Kelly from Heroes Come First that share how heroes of all kinds can enjoy rewards and grants from a program that benefits Heroes at Home.

Enjoy this great information and be sure to share the following blog from our guest writer, Joseph Kelly, with a hero that you know.

Ellie Kay, Founder and CEO

 

You may or may not feel like it, but as a military veteran, active duty or reserve you are designated an American Hero, and that means you qualify for significant rewards you probably are not aware of when you take out a mortgage or buy or sell a house.

Most are aware that they have VA Benefits that include mortgage benefits.  And that program has some wonderful advantages.  But few are aware that there are additional benefits available that can give you an extra $2,000 to the $7,000 or more without any cost or added paperwork!

A national program called Heroes Come First defines heroes as people who serve their community. This includes active duty military personnel, veterans as well as  all current and former medical professionals (nurses, doctors, dentists, EMS, etc.), police officers, firefighters, first responders, teachers, and clergy.

Before I tell you how this reward program works please allow me to offer two key pieces of advice if you are considering buying a home in the next year that will save you from added stress and confusion.

1st Key– BEFORE you find of call a realtor and start looking at homes GET PRE-APPROVED from a trusted, reputable, recommended lender. (if you desire we offer this in all 50 states). Get your questions answered on your qualifications, credit, savings, options, etc. BEFORE starting to look at properties.  This will allow you to make adjustments if needed and be prepared to speak to real estate professionals who will have confidence in working with you.

2nd Key– Using sites like Zillow, Realtor.com, etc. are great tools to see what properties are out there however I encourage you to be VERY CAREFUL before entering your contact information on these sites.  Read the “fine print” at the bottom of the website.  These companies will sell your information to multiple lenders and realtors who then will call you and email you for months!  While some of these companies be ones you wish to consider it can be overwhelming and confusing as lenders buy your information as a “lead.” (FYI the program we are about to discuss does NOT sell or provide any information to other companies)

How the rewards work …

Buying a Home

There are several ways that the Heroes Come First program saves you time and money when you purchase a primary or second home or an investment property and get a mortgage to finance the purchase.

If you, or another hero you know, is thinking of buying in the next 12 months the most important first step is speaking to a pro-hero lender and getting “pre-approved” for your financing. The Heroes Come First team can introduce you to a participating lender who focus on heroes with both financial and added service rewards to get you on the right track for your purchase.

Benefits include:

  • You get a Lender Hero Reward of a minimum of $500 – $1000 toward closing costs.
  • Work with a pro-hero realtorand receive a portion of the realtor’s commission. For example receive $700 for every $100,000 in the sales price, which is a rebate of a quarter of the realtor’s commission. So if you were to buy a home worth $300,000, you would get a check for $2,100; if the home you buy costs $600,000, you receive $4,200.
  • You can earn a discount over usual title fees, averaging about $350, from the title companies that participate in the program.
  • You may qualify for a Purchase Grantof up to $10,000, to be used toward the down payment on a home or closing costs. This grant does not have to be repaid. 

Selling Your Home

When you sell your home, you get a break on all of the real estate fees that are usually part of the closing. The average reduction is $2,000, but it could be more for a high-priced home. The participating realtor that handles your listing rebates one quarter of their commission to you at the closing, which could amount to several thousand dollars more, depending on the price of the home.

Refinancing Your Mortgage

When you refinance your existing mortgage to get a lower rate and payment, you qualify for a Lender Hero Reward between $500 and $1,000, which is applied toward your closing costs. The lenders who participate in this program offer competitive interest rates in all 50 states, so you don’t have to compromise on settling for a higher mortgage rate to get these discounts. The participating title companies also offer discounts of up to $350 for title searches that are needed when you refinance your mortgage.

Example of Heroes Come First Savings

Real Estate Transactions:

  • Sell your home for $300,000
  • Purchase a new home for $450,000
  • Take out a $360,000 mortgage on the new home

Costs and Discounts:

Realtor’s rebate of selling commission:                                         $2,250

(25% of standard 3% commission)
Pro-Hero Realtor reward on purchase of new home:                  $3,150

(up to$700 per $100,000)

Lender discount on $360,000 mortgage:                                      $1.000

Title company discount for title settlement costs:                           $350

Total Savings: $6,750

  

Find out more

It really is simple to get started with the Heroes Come First program when you are in the market to buy or sell your home or refinance your mortgage. There are no restrictions, paperwork, fees, or fine print to read in order to qualify. Start the process by registering at www.HeroesComeFirst.com or call them at 800.272.5626 and they will refer you to a participating lender, title insurance companies, and realtors who serve where you live.

Know other heroes? Help them too!

The Heroes Come First program can help not only you but also other heroes you know. And if you tell other heroes in your life—like your children’s teachers, your local firefighters and police officers, or any veterans or active duty military you can be a hero to them by saving them a significant amount of money on their home transactions.

Since 1989 Joseph Kelly has brought a unique blend of technical, marketing, sales and leadership experience to the mortgage industry. As a graduate of the University of Virginia with a degree in Aerospace Engineering (yes….a rocket scientist), he realized that the mortgage industry was lacking a critical component – consumer education and programs to help increase savings and reduce debt through mortgage management.

Joseph Kelly is very proud of having three sons who are veterans.  Two Army and one Navy.  Their service inspired the development of a national financial program to help all military (active, reserve and veterans) receive mortgage financing advice focused on their long term benefit, not a one time “sale” for a mortgage company.

Heroes Come First was launched to include all of our nations heroes; Military (active, reserve and veterans), current & former Firefighters, Law Enforcement, Medical & Educational professionals and is dedicated to saying “Thank You”  in a practical & financial way when they Buy, Sell or Refinance a Home. 

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May 1, 2018

Financial First Aid Kit – Military Appreciation Month

elliek

In honor of military appreciation month, I’d like to highlight our Army son, Joshua. When he was born we started saying, “If he had been our first, he would have been our last.” That little boy had more energy and could get into more scrapes than all our other children combined. When he was eighteen months old, he stripped down to his diaper, took a plastic sword and chased his four older siblings around the house, thus earning the nickname “Conan, the baby barbarian.” By that age, he had also jumped off the top bunkbed (three stitches) and “flown” off our travel trailer (four stitches). Joshua was the reason we purchased a serious first aid kit. He’s now an Army Lt jumping out of airplanes at Fort Benning.

Just as every family needs a good first aid kit for those unexpected accidents, they also need a financial first aid kit, or practical ways to help safeguard their financial future.

  1. An Emergency Savings Account – This account is not an investment account, it doesn’t include IRAs, retirement accounts or CDs. Its purpose is not growth, but safety. These are funds that are accessed in the event of spouse unemployment, emergency home repairs, or unexpected auto repair bills. The best way to build this account is to establish a family budget. Go to your base’s Family Readiness Center to develop a budget for your current season of life. I recommend automatically transferring funds from a paycheck or checking account into a savings account every week. A good guideline is to save three months of living expenses for dual income households or six months for a single income family.
  2. Life & Health Insurance – For life insurance, you will need enough money so that your dependents could invest the money and live modestly on the proceeds. For military members, the best buy is still SGLI, or Servicemember’s Group Life Insurance. Members are automatically insured for the maximum amount of $400,000 unless an election is filed reducing the insurance by $50,000 increments or canceling it entirely.  Family Servicemembers’ Group Life Insurance (FSGLI) is a program extended to the spouses and dependent children of members insured under the SGLI program. FSGLI provides up to a maximum of $100,000 of insurance coverage for spouses, not to exceed the amount of SGLI the insured member has in force, and $10,000 for dependent children. The rates are inexpensive. If your situation requires additional life insurance or you are transitioning out of the military, look at USAA for the best rates for military members and their families. For health insurance, there’s healthcare.gov where you can find out about open enrollment season and how to get insurance plans changed or updated. Another good place to research a variety of plans is found at eHealthInsurance where you can compare plans. There’s also
  1. A Will –Here’s another easy one, that’s as easy as making an appointment with the JAG or taking advantage of mobile services that are sometimes offered at military conferences such as Yellow Ribbon. The main section of this critical document will assign a guardian for your children. In many states, the surviving spouse may only get one-third to one-half of the assets that were in your sole name. Your children get the rest and if they are minors, a court administrator could handle their money until they become adults. Make sure that the beneficiary designations on any 401(k) plans, IRAs, life insurance and bank accounts are also up to date. Another option is legal zoom, which can prepare a quick will at a low cost.
  2. A Retirement Account –A surprising number of military spouses, or reservists do not take advantage of the terrific tax-deferred accounts offered by their employer, which include 401(k) plans. The Thrift Savings Plan (TSP) is a Federal Government-sponsored retirement savings and investment plan and has great rates with low fees for administering the account It’s part of the new Blended Retirement System that is currently in place. This plan offers the similar tax benefits that many private corporations offer their employees under 401(k) plans and they are full portable upon leaving the military. Be sure your current TSP funds are not in the “G” fund for maximum benefit.
  3. A Good Credit Rating – The best way to rebuild good FICO, or credit score, is found in three steps: pay more than your minimum payment (even if it’s only $5/month more), pay a day early rather than a day late (set up automatic transfers from your checking account to your credit card company for minimum payments) and never let your available credit fall to less than 30% of the total credit available (for example, $2000 on a $6000 credit line.)  Each year, get a free copy of your credit report by going to Annual Credit Report or go into the base’s Family Support Center where they can also run a free copy of your report and check your score.
  4. A College Fund for Those Babies!–Select a college savings account that has low fees, a good selection of investments, plus a tax break. One of the many options is a Qualified State Tuition Plan, also known as 529 Plans. Be sure to research your state of record and their plans. These contributions will be tax-deferred and could even be tax-deductible from your state income tax if you are a resident of that state (check with your tax specialist). When the money is withdrawn for college, it is only taxed at the student’s income tax rate. If the child does not go to college, the money can be designated for another beneficiary or removed at a 10% penalty.

 

If you’re a family with a “Conan,” then make sure you have a First Aid Kit on hand. But don’t forget the fact that your family need a Financial First Aid kit as well.

I wanted to issue a special thank you to all our military families who serve, we appreciate you!

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April 10, 2018

Financial Education Month – How to Resolve a Credit Dispute

elliek


In our Heroes at Home Financial Event tour, we work with military members to make sure their credit history keeps them flying high! Even pilots can get grounded if they can’t hold a Top Secret security clearance and they can’t hold a clearance if their credit is awry. There are some pilots with one million dollars in training assets invested in them. It would be terrible for them to have to fly their last sortie because of this important issue. But security clearances are something that every military member has to protect. That could be an expensive mistake. Thankfully, some of these issues are able to be resolved with the help of Airman and Family Readiness, but it still had an impact on military readiness.

You may not have a million dollars in national security assets invested in you, but you’re still a valuable person to your family, friends and community. Whether you are a military aviator or a mom who works from home–it’s important to regularly check your credit report from all three providers (Experian, TransUnion and Equifax). You can get a free copy at Annual Credit Report where federal law allows you to get a free copy of your credit report from each of these reporting bureau once every twelve months. The law also allows you to ensure that all the information on your credit reports are accurate and up to date.

One of our financial education speakers is the ever knowledgeable presenter, Rod Griffin, from Experian. We recently discovered something new going on

at Experian regarding  enhancements to its dispute center that make it easier and faster to file a dispute.  Many people do not understand how to correct mistakes on their credit reports – so financial literacy month is a good time to help educate them on the process and take away the fear that it’s a daunting or complicated task.

Here are some of the highlights of the dispute center where consumers can:

  • Use their smart devices as it’s mobile-optimized
  • Upload photos of supporting materials directly from their smartphone
  • Get a free Experian credit report
  • Follow contextual links designed to help them better understand and access various sections of their report
  • Receive timely alerts updating them on the current status of their active disputes
  • Sort and view the accounts listed on their credit report by alphabetical order, date opened or status, and filter by categories such as collections or installment loans.

Be sure you share this with anyone you know who may have a credit report dispute and be sure that you check the credit reports on everyone in your family. Hopefully, you won’t find a credit history on your four year old daughter or 1 year old son, but identity theft is knows no age!

Knowing your options will help you with your credit report spring cleaning–especially if you find anything out of place! Once your work is done, sit back, make yourself a cup of coffee and don’t forget to join me and my co-host, Bethany Bayless in The Money Millhouse podcast for our interview with Rod Griffin, Gerri Detweiller and other credit financial experts.

 

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March 20, 2018

Millennial Moneybags

elliek

As a seven-year-old, I launched a business where I made $10 in two weeks through extensive marketing and key product placement to my second-grade class. In 2018 dollars, that’s equal to $712—not bad for a kid entrepreneur! When my dad heard how much I’d made, he pulled my braid and said, “Good job, little moneybags!” That sparked a passion in me to earn more, save more and share more.

Fast forward a lotta years and I’m teaching my five millennials the basic skills to master in their 20s to become financially savvy and stable.

Spend Plan

It’s important to develop a budget and stick to it. Make sure it is realistic and accounts for all your spending—including entertainment, gifts and other splurges. If there’s more than one person doing the spending on the same plan, then mint has a good app you can use to track where those dollars are going. The three main parts of a good spend plan include the ability to: save diligently, share generously and spend wisely.

Squash Debt

It’s pretty basic: saving=good and debt=bad. Don’t add to debt buying things you don’t need with money you don’t have to impress people you don’t like. Instead, put all “bonus” money toward debt such as income tax returns, bonuses from work and even a happy birthday check from your Grandma. This can also help you whittle down that average student loan debt of 35K+ and the average credit card debt of 8K. By paying off this debt early in your life, you’ll avoid thousands of dollars in interest and create margin in your life. In our 20’s my husband and I made the move to one car to get ahead on debt repayment and we don’t regret doing without for a little while to be debt free forever!

Spend Not and Want Not

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Most millennials live paycheck to paycheck with a lot of financial stress hanging over their heads. You can break this cycle, even if you came by it honestly (from your parents’ example.) Readjust your mind set to look at extra money left over at the end of the month as either savings or debt repayment—not fun money to spend. As you are trying to spend less to get on track financially, you may get an extra roommate to reduce your rent payments or carpool to save on commuting. Go to happy hour for free food and be the designated driver, drinking water. Use Retail Me Not every time you buy anything (online or in a store) to get codes and other savings. Be creative in the ways you can spend less than you make each month.

Save for a Rainy Day and Beyond

Any smart millennial will have a few months savings in a rainy-day account to pay for that unexpected bill or an emergency. A super smart saver will also start tucking away money for retirement and take advantage of the miracle of compounding interest. In our Heroes at Home show, we share this slide that shows you how to invest in yourself.

 

Super Skilled Cooking Star


My twentysomething year olds love the food network and Pinterest. They especially like watching a client of mine, Amy Pottinger, a military spouse, compete on that network. But what’s the use of watching cooking shows if you never cook? According to the USDA Cost of Food at Home, you can save thousands of dollars each year by making your own food instead of eating out. In fact, by using apps to save money in the grocery store and getting coupons and tips from sites like The Coupon Mom, you can save even more. I added up all the money I saved over 20 years with sales, coupons, and eating in (instead of eating out) and the amazing total was $161,000, that’s enough to help put some millennials through college debt free!

Strategic Splurges

 

Sometimes, there’s a misconception that becoming financially fit means you deprive yourself of everything fun and there’s no room for a splurge. Not true. You are just careful about what you will splurge on. That $20 glass of wine in a restaurant can go four times as far at Trader Joe’s when you splurge on a $20 bottle of wine (instead of the two buck Chuck.) Buying clothes that fall apart after one or two washes isn’t as smart as buying quality (on sale) that will last longer. An energy efficient appliance that saves you money in the long run is a better option than the cheaper version with a higher utility bill. Read up on products before you waste your money and realize that a strategic splurge here and there can save you significant change in the long run.

 

So, So, Happy

 

One of the reasons our family could go from being 40k in consumer debt to where we could pay cash for everything (including cars and college) is because we chose to be content. The more you choose to be happy where you are (knowing that’s not where you will always be), the better off you will be financially. You don’t have to drive a new car, live in the coolest place or take a mega trip once a month. I always said, “you can have it all—but not all at once.”  It’s a choice, you can drive a better car and have more roommates. You can splurge on clothes and drive an old clunker. It’s all about choices and the biggest and best choice of all is to simply choose to be content where you are right now.

 

How many of these habits do you currently practice?

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March 6, 2018

Rent-To-Own: Is It Ever A Good Idea?

elliek

I

You’ve moved into a new place, started a new job and you’re beginning another phase of your life. The only problem is that you don’t have enough furniture for the new place and you realize you’ll also need a washer/dryer.  Then, miraculously, an ad pops up on social media for a place where you can go get name brand appliances and choose from dozens of options on exactly the kind of furniture you need—all for only $21.99 a month! YEA!!!  You’re saved! After all, you have a good job, the monthly payments aren’t going to break you and you deserve to make your new place comfortable, right?

Wait a minute, not so fast.

Is rent-to-own the best option? The answer is:  it depends.

How Does Rent-to-Own Work?

Usually, you’re renting from a well known store, but, in most cases, you’ll have to sign a third party contract. I remember one time when we bought a refrigerator and my husband thought, “Let’s use someone else’s money at 0% interest.”  The only problem was the third party contract indicated that those 0% payments were only for a fixed introductory period, then there were three options. We could buy the item, continue making payments (at 200% APR interest) or return the item to end our lease. We bought it out early, so that we were in the clear and vowed to never buy into this kind of a contract without understanding the fine print first.

 

Rent-to-own also means that if you fall behind on the payments, the leasing company can repossess your leased item and you don’t get any money back. There may be cheaper ways to pay because even if you have bad credit the options of  layaway, sub-prime credit cards or  bad-credit personal loans, which run 36% APR are better than the 200% APR of many rent-to-own programs.

 

When Is Rent-to-Own A Good Idea?

 

Despite the typical APR rates north of 200% for this kind of contract, there may be some anomalies when this option is not a bad thing for your bottom line. In fact, there are some instances, when using a rent-to-own option make sense:

 

  • If the interest rate stays relatively low (less than 3%) during the entire leasing term, and the term is 24 months or less, then you aren’t losing much. But read the fine print.
  • If you believe you’ll have the money to buy the item outright at the end of the low, fixed rate introductory period, then it could be a good way to keep some money in a rainy day account while you save up for the buy out.
  • If you need to diversify your loans to improve your credit score, and you qualify for low interest, then this kind of financial contract could help your credit score. But since diversification of loans only represents 10% of your credit score, it’s not worth paying higher interest rates to diversify.
  • If you are only in a location for a short amount of time (our sons have military training at bases for anywhere from 3 months to 10 months), and your interest rate is low, you could rent and turn the item back in when you move. But make sure the contract allows you to do so. If you must move yourself and your company doesn’t pay for a move, then renting a truck and moving that furniture cross country could cost more than it’s worth.
  • If you have the good credit score amongst your roommates and you all need to get furniture for the main living areas, then you could work a deal where they use your credit (your contribution) and they pay their part of the monthly payments (their contribution). But make sure the interest rates are low for the entire contract and that you trust your roommates enough to make the payments to you (on time) so that you can make the payment. At the end of the lease, you keep the furniture. This option may be more of a hassle than it’s worth. But if you are cash strapped, it might be just what you need.

 

Before You Sign

Let’s say that you’ve decided that Rent-to-own is the route that will work best for your budget and lifestyle. Here is your checklist before you ink that contract, if any of these are not clear are it’s revealed that they are not to your advantage, then think twice about this option. Here’s the list:

  • What are the monthly payments (including all fees)?
  • When are the payments due?
  • What is the total cost to own this item (all payments, interest and fees)?
  • Who insures damaged or theft?
  • If you miss a payment, will it be automatically repossessed?
  • Is the item new or used?

After You Sign

 

Let’s say you already signed a contract before you read this blog. Or, you’ve followed all the advice shared and decide that the contract will be a good option for you. Take these steps to protect yourself:

 

  • Follow the money. Make sure you are keeping your payment records because some rental companies have had problems with giving their customers credit for payments made.
  • Pay on time. Since 35% of your credit score is your credit history, it’s crucial that you make your payments on time or even before they are due. If possible, set up the payments to transfer from your bank account so that you never miss a payment.
  • There’s a chance your debt might be sold to a debt collector Know your rights in this situation as the Fair Debt Collection Practices Act requires debt collectors from harassing customers, calling them excessively and using abusive or deceptive practices to collect on the debt. 

In the Kay family, we like to live a debt free life and will usually save up to buy furniture or appliances before we would go into debt. This isn’t always possible for American consumers, in which case it’s good to know the nuances of Rent-to-Own for you or those you care about.

What has been YOUR experience with Rent-to-Own?

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February 20, 2018

Car Buying Do’s and Don’ts

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elliek

Financial Readiness equals Military Readiness and whether you are a civilian or a service member, the number one financial mistake has to do with how you buy your vehicles. But if you’re smart, you can avoid this mistake and eventually drive your cars for free.

Our Heroes at Home Financial Event is in the midst of a tour where we are giving 25 presentations at 17 bases in 4 countries. In fact, you can contact us about whether we are coming to YOUR base later this year.

McConnell AFB Heroes at Home Financial Event. One of the main topics that is: What is the smart way to buy a vehicle?

Let me start by asking you the question we ask our audiences: How do you lose around $8000 in 8 seconds?

Did you get the answer yet?

The answer is: you drive your brand new car off the lot.

Yes, the average new vehicle will depreciate $8000 in the first year. Since most folks finance that new vehicle, it’s more like losing $10,000 in 8 seconds!

So WHY oh WHY do you continue to buy NEW?

Some folks answer, “for the warranty.” But if you bought the vehicle a year old, you could do two things to make up for that 12 months of warranty you lose over buying new:

  • Warranty Purchase – you could purchase an extended warranty, which (depending on the car you drive) is only $800 to $1500 per year. This is WAY LESS than the 8K–10K you are losing by buying new. Plus warranties are negotiable. When I had to renew the warranty on my Mercedes 280SLK, the dealership gave me their best price. Then I called USAA, telling them the best quote I got and they beat the price by $800. Plus, instead of the $200 deductible I had with the other quote, the USAA deductible was $0! I used that warranty at my local Mercedes dealership (world’s best service department) and paid $0 deducible and got the same excellent service that I normally get.
  • CPO or Certified Previously Owned – If you get a vehicle with a CPO on it, then part of the deal is that the dealership extends the warranty a year and this is a full manufacturer’s warranty. Plus, there are more stringent inspection standards and additional roadside assistance. Once, I had a BAD salesperson who told me the car was CPO, “All our cars are CPO” she said, but she never presented me with CPO paperwork to sign at the deal’s closing. You guessed it, the vehicle was NOT CPO and she lied. Be sure you get CPO paperwork if you are told it is a genuine CPO. It costs the dealership anywhere from $800 to $2500 to CPO your vehicle, depending on the year, make and model. You HAVE TO sign CPO paperwork that is dated from BEFORE the date you buy the car or it’s not valid. Remember that asking a dealer to make a vehicle CPO is part of the negotiating process and this will increase the value of the deal anywhere from $1000 to $2500.

A couple years ago, I was on my way to Disneyland to meet another author friend and a careless driver made an unprotected left hand turn right into my vehicle (about 5 feet off the bumper). I had NO TIME to react or even take my foot off the brake. The fact that Mercedes are so well built and the fact God sent his angels to protect me are the only reasons I walked away from this terrible crash with only a few cuts and bruises.

This accident put me back in the market for a vehicle. So this time I decided to try USAA’s car buying service. Since we had an extra car at home, I could take my time to find the best deal. The car buying service told me the price, the discount, gave me free access to a CarFax report, showed me a chart of similar cars purchased in my area to indicate an average, good, or great deal, and more. I compared the prices I saw on the site to Kelley Blue Book and did all my research. Then I followed the same three steps we teach in our Heroes at Home Financial Events.

Step One: Negotiate Price First

Negotiate the price of the car at a dealership apart from the value of the trade-in. Tell the salesperson you want to determine the price of the car without the trade-in. The reason you want to do this is because salespeople will often give you far more for your trade than you expected—thus hooking you on the deal. However, this higher-value-for-the-trade-in shtick can be part of the technique they use to get you to purchase the car. If a higher value is given to the trade, then they will give a lower discount on the price of the vehicle, because all the discounting went into the value of the trade.

Step Two: Negotiate the Value of the Trade-In

Now that you’ve determined the price of the car, ask what the dealer will give you for your trade-in. Most likely, you will get more for your car if you sell it yourself. A little elbow grease and some top-notch detailing can net you hundreds of dollars more than a dealer can give you, if you can find a buyer. Some people (like military families) don’t always have the time to sell their car because of moving schedules and so forth. So if you are going to try to trade in your car, look up the value of your existing car at Kelley Blue Book or Edmunds, then print the page (or screen shot it), and bring it with you to the car lot to negotiate the price. Bottom line: try your best to gather enough facts beforehand so that you make a wise decision.

Step Three: Secure Your Own Financing

The F&I (finance and insurance office) is where the lion’s share of a dealership’s profit is made. In this office, you will have to navigate interest rates, payments, terms, additional services, and warranties. Unless you put miles on your car for business or you are purchasing a car that will cost a lot to repair (and you intend to keep it longer than the warranty lasts), extended warranties are usually not a good value. When it comes to vehicle financing, you can generally do better on interest by selecting your own creditor unless the manufacturer is offering a lower APR. Keep in mind that the .99% APR offers only go to the top 10% of those who are the FICO score elite, chances are good that you will not qualify. The credit life insurance that dealers offer is more expensive than raising your regular insurance premium by twenty thousand dollars to cover this expense. And don’t forget to research the price of insurance on your new car so you can afford both the payment and the insurance.

By following my own advice, I talked to my sales representative and I was able to:

  • Negotiate the best price on the vehicle.
  • Get the USAA discount added to the deal.
  • Get a car that had less than 3K miles on it.
  • Get CPO added to my vehicle.
  • Drive a vehicle that is now under warranty until 2022.
  • Get a like-new car that had only been in service officially for a mere three months.
  • Save $9K off the brand-new-plus-CPO price.
  • Pay cash for my car (stay tuned for next week’s blog on how to pay cash for cars).
  • Get the year, make, model and color of the car I wanted.
  • Walk away feeling good about the deal and the value I got.

When are you in the market to get a vehicle, which of these tips will you follow to get the best deal?

Ellie Kay

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January 16, 2018

Smart Money Habits for Millennials (and Their Mamas)

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elliek

The Kay Family had five babies in seven years. That roughly adds up to 3 kids in diapers at once, 10 years of not sleeping through the night, 4 teenage drivers at the same time, 3 kids in college at once and today, we have 5 millennials in their 20’s simultaneously.

Fun .

But the good news is that they eventually slept, pottied, drove, graduated and even mastered money habits in the journey. Here are the habits we helped teach our millennials to make sure they didn’t have to move home, they could remain financially independent, have a great start for their families, and still buy their mama nice birthday gifts.

Habit #1 – Create and Live By a Spending Plan

Many millennials have heard of the value of creating a budget and even have apps that help. But it’s of little use if they don’t know how to stick to it. Here are my favorite apps to help:

  • Mint Budgeting App – I met the founder of Mint, Aaron Patzer, in a green room, years ago, when we were both going to be on ABC News in NYC. At the time, he was building his success with Mint. I just remember him being (as he says in the video) “full of myself.” Ha! But his budgeting app is probably the best out there because it makes it easy to create a budget. You connect the Mint app to your bank and the app uses your details to help create a personalized budget.
  • PocketGuard Budget App – This app also connects to your bank accounts and shows you what you currently have in your pocket. It tracks your money to show what you are spending and automates where you’re going off budget and where you need to cut back.
  • You Need a Budget – This app’s claim to fame is that it creates a budget you can stick to based on the info provided in your bank accounts and spending habits. It even teaches you what to do if you overspend and how to live on last month’s income. This is the only app that cost money in my list and it’s $50 for the year, but there are hoards of devotees that say this app helped them to finally live on a budget.
  • GoodBudget – Back when dinosaurs roamed the financial space, there was an “envelope system” where you put the money you needed in each envelope labeled with expenses such as gas, food and entertainment. It helped Bob and I get out of 40K in consumer debt in only 2.5 years when we were first married. This app is the digital version of that system, making sure that everyone knows how much is left in the “envelope.”

You might need a money buddy to stay on track, too. Tiffany Aliche, The Budgetnista, talks about her journey on our fun podcast The Money Millhouse and how she went from broke to anything-but-broke through techniques that kept her on track.

Habit #2 – Cook Creatively and Consistently

Money evaporates when you order out for lunch or dinner more than one or two meals a week. Bob took leftover dinners (the

re’s a microwave and fridge at work) for our entire marriage and we calculate that he’s saved $20,000 by doing this! Make Pintrist your pal or watch The Food Network to learn easy ways to create nutritious and tasty meals. Ask for an Instant Pot for your next birthday and make more than you need for dinner so you’ll have leftovers for either lunch or dinner later in the week. Or freeze the leftovers. My daughter lived with roommates for a few years and they would assign different nights for each of them to cook to simplify the work. Cook more and your wallet and your waistline will thank you.

Habit #3 – Care About Your Retirement

When we take our Heroes At Home Financial Event on the road, we teach young service members the miracle of compounding interest with the mantra: start early, start small and stay committed. Be sure to start with funding a Roth IRA and take advantage of your company’s matching portion of your 401(k). Lacey Langford, an Accredited Financial Counselor gave some great tips on a segment called “I Aint Afraid of No Money.”  She discussed retirement planning from her experience in working with the military (but many tips apply to civilians as well.) If you’re military, be sure to go into your Family Readiness Center to discuss the Blended Retirement System and what your options are for your situation. It’s free and a benefit you can use early and often.

Habit #4 – Count the Cost of Debt

The average millennial college grad owes 37K in student loan debt and the average household owes $8500 in credit card debt. Work on minimizing the debt you accrue and pay off the debt you have so that you’ll have the flexibility to move or wait on the right job. One of my sons worked for JC Penney, and they eliminated his entire department. Most employees were freaking out because they had student loan debt, consumer debt and car debt—but not our son. He made a practice of living on less so he wouldn’t accrue debt and he was able to have less worry in the process of finding a new job.

Be sure you also pay attention to your credit score. Rod Griffin, from Experian, came over for a discussion on coffee and credit. He works with us on our tours and he teaches that if you have bad credit, you’ll pay an average of 360K more (over your lifetime) for the use of basic credit, than the person who has a good score. Improve your score by paying on time, paying more than the minimum balance due and make sure you never use more than 30% of your available credit.

Habit #5 – Choose Contentment

This is a tricky habit because it’s a mindset that you choose. There will always be something to spend money on to make you go off budget or get into financial trouble. There’s the new phone, tablet, car, vacay, boyfriend/girlfriend, baby, or a plethora of other reasons to want to spend more and have more. This is where your friends, family and even faith come into play. Coveting what others have or do is a lesson in futility and discontentment. Your friends either contribute to this mindset or they keep you focused on what matters most. If keeping up with their lifestyle is an important platform in your friendship, then you may want to find new friends. Remember that this financial journey is a marathon not a sprint. I’ve always said, “you can have it all—just not at the same time.”

What is one habit you are good at? What is one habit you want to improve upon? Share it with us, a friend or even a money buddy, so that you can be fiscally healthy in 2018 and for a lifetime.

 

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December 5, 2017

The Money Millhouse – Podcast Extraordinaire

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elliek

Live, from Ellie’s kitchen table… it’s The Money Millhouse!

WELCOME TO THE FINANCIAL SHOW ANYONE CAN LISTEN TO!

The conversation gets lively and somewhat ridiculous when Ellie and Bethany share a cup of coffee (or four) over Ellie’s kitchen table. They not only have fun at The Money Millhouse, their conversations about saving money, couples communication, spend plans, super heroes and more make you feel like you are drinking coffee right along with them. Coffee, friends, money, sometimes random singing… what could be better?

Each week on this little-over-20-minute podcast, a special guest joins Ellie and Bethany at the table to discuss relevant money-related issues. From saving for retirement and credit chats, to home-based business tips and maybe a thing or two about what Star Wars has to do with coffee, there is always something to talk about.

The Money Millhouse will teach you while entertaining you with offbeat humor, geek-speak and money tips you never knew existed. If you can put up with Ellie’s annoying dogs announcing the next guest to come to Ellie’s door for a cup of Joe and a light hearted but important conversation, then you’ll get the maximum return on your time investment.

Come on in to The Money Millhouse, where we brew up money saving tips and tricks for anyone’s lifestyle. You might even learn a few secrets in the Millhouse closet.

The Money Millhouse is a production of Heroes at Home, a non-profit organization that gives financial education to military families around the world. To find out more about Heroes at Home, visit heroesathome.org.

The Money Millhouse Crew:

Ellie Kay is the wife of the “World’s Greatest Fighter Pilot”, mother of 5 children, 3 fur-babies, and best-selling author of fifteen books and a popular media guest on Fox and ABC News, among others. Ellie is the founder of the non-profit “Heroes at Home” and has taken this financial literacy tour around the country and the world for the last decade. Ellie loves roller coasters, ziplining and all kinds of adventure and once took a ride in an F-15 E Strike Eagle, which she said it was less scary than walking into her youngest son’s dorm room. Find Ellie’s personal blog at EllieKay.com.

Bethany Bayless is the wife of Travis, mother of London (goldendoodle puppy), and Director of Communications for Heroes at Home. She holds a Bachelor of Arts in Communications from Moody Bible Institute, Chicago, IL, and has been a social media coordinator for several organizations including two international groups. She is a self-professed geek, aspiring home-cook, and globe-trotter (not the basketball kind). In her spare time, Bethany draws and handletters, throws tennis balls for her puppy, London, and quotes movie lines with her family near and far. Find her blog at wanderlust4less.com.

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