Voices 4 Climate

American Ease

Credit cards can provide a gateway to happiness, or so it would seem. With rent stacking up before our paychecks come through and awesome deals at every window, the power to purchase instantly is in high demand. After all, when we need things right away, what could be better? We live in a culture where we need it and we need it yesterday. Not only is sliding a card much easier than handing over a wad of cash, it requires much less thought. But as with anything, there must be some sort of catch, right?

Snapback

As easy as it is to charge enough groceries to last the month or a down payment on a new laptop, in the end you still end up with that nasty little thing called a bill. As the bill starts to add up and the paychecks aren’t getting any larger, credit cards can quickly become the enemy. That little piece of plastic that was once the gateway to American freedom has suddenly become a slavedriver and you find yourself behind the iron bars of debt.

Now what?

Looking at it this way, it would seem that there’s no other way but to chop up all your credit cards and move to cash only. However, there must be some way to still enjoy the plastic gateway. As unattractive as it may sound at first, a budget can be that balance. Say you need to put out a hundred dollars before your paycheck comes in because of an emergency. Instead of pushing yourself back into the hands of collectors in a couple months, take that money out of next month’s budget and only spend as much as you can pay back. A simple budget can turn the deadly sting of credit card debt into that extra push you needed to get through the end of the month.

The Balance

So there you have it. Credit cards can be a wonderful and thrilling thing, as long as you use them responsibility. You wouldn’t start out on a road trip in the middle of a desert without a full tank of gas, would you? Then don’t spend more than you can pay back! It’s a simple principle that can allow you to enjoy the joys of credit cards, and you can avoid the annoyance of collectors as well as the weight of debt. As long as you keep an eye on your financial gas tank, making your way through the desert should become as easy as cruising down the highway.

When buying a new home, you generally have two different options in terms of your mortgage and how you are able to pay the mortgage back. This comes in the form of the interest rate. While there are different formulas for determining the actual interest rate, you have the option of selecting a fixed mortgage rate or an adjustable rate. There are different elements that come into play for changing the adjustable rate, but all in all, it is very important to, whenever possible, accept the fixed rate, so you know what you are to pay every single month.

Fix and Adjustable Rates

locks When looking at the two initial rates, chances are the adjustable rate is going to have a lower interest payment. This is going to make it rather attractive when signing a new agreement for a long term mortgage. When you have to pay off a house over a 30 year time span, you are going to find that the adjustable rate is less, so if you calculate the total payment in your head, you probably are going to find that the overall cost is going to be thousands of dollars less. Of course those sounds good, as anyone who can save thousands, if not tens of thousands of dollars, should go ahead and do it. However, this is not exactly how an adjustable rate works.

Adjustable Rates Increase With Time

Over time, the adjustable rate is going to vary in its amount, which means you are not going to pay the same amount of money on a month to month basis. In fact, adjustable rates typically become larger when the different variations, ranging from inflation to the payment trends come in. The different variables that deterring the interest rate for an adjustable rate are ultimately going to increase the rate over time. This means, while the adjustable rate might appear more attractive up front, in the matter of a few years, it could possibly be several percentage points higher. This means, by the end of your 30 year mortgage, you are more likely going to be maying several thousand, if not tens of thousands of dollars more for your mortgage, all because you went with the adjustable mortgage rate.

Make the Right Decision

If you are looking to decrease your interest rate, you need to look for the fixed rate mortgage and the different elements that you can use to lower the monthly payment and the interest rate. Providing the 20 percent down payment is very important, as this is going to help lower the monthly interest rate. You also need to try and fix your credit score before you go about buying a house. By taking the year prior to buying a house to work on your credit, you can substantially increase your chances of receiving an improved interest rate. By following through with a few different changes in how you apply for the fixed rate mortgage, you are able to purchase the house and save money, all at the same time, without worrying about what your mortgage rate might be in the coming months.