Consumer, Finance, Home, House

Ask Chuck: Is Low Price Better Than High Quality?

By: Chuck Bentley, Crown Financial Ministries

Dear Chuck,

I like nice, quality things. My husband prefers lower prices. My perspective is that buying quality is better in the long run. Is there a right or wrong way to look at it? We are stuck on which refrigerator to buy to replace the old one we have now.

Needing A Compromise

Dear Compromise,

Let’s reframe the choices you have from just two to three. You could get a quality refrigerator, you could get a low priced refrigerator, or you could get the best value refrigerator. The final choice is the best one but getting to the compromise will be the challenge.

My wife and I both like nice things…at a good price. But it can take months to find a deal! My wife, Ann, will research an item to death, whereas I’m ready to buy when I know an item is right for us. The key is learning to work together by honoring each other’s personality and opinions. Both of you can be equally right, and wise decisions can be made through prayer and honest, respectful communication.

There is a time to spend more for quality and longevity. There’s also a time where the extra expense doesn’t matter. However, some people do not understand the difference. Rather than using common sense and trusting the Lord, some people are caught up in the need for luxury.

In The Psychology Behind Why People Buy Luxury Goods, Vanessa Page writes:

People buy luxury goods for a variety of reasons, all of which are related to the strong emotions that we attach to expensive material goods. Whether we are financially comfortable or not, we will often purchase luxury items to show off to or gain acceptance from others and to reward ourselves for an accomplishment.

A good steward has his/her identity in Christ and does not ‘need’ luxury. Quality is different. Here are a few basic things to remember when shopping for the best value: a quality product at a great price. 

Consider the length of ownership to determine what should be quality and what is non-essential. A refrigerator lasts a long time so quality is important. You need to know for certain that it will protect the food you buy for your family. A cat bed, however, is disposable and does not need to be the best on the market.

When to Spend More for Quality

  • Energy efficiency
  • Longer life of the product
  • Dependability
  • Maintenance free

When to Be Frugal

  • Disposable items
  • No difference in quality
  • Functionality is equal
  • Less expensive won’t affect safety or health

Tips on Getting the Best Value

Know what you need to best serve your family. It’s easy to get overwhelmed and talked into spending more money than is necessary because there are so many bells and whistles on appliances today that have little meaningful purpose.

If you shop Craigslist and Facebook Marketplace, remember, not all sellers can be trusted. In addition to having no warranty or guarantee that the product will work, you may have to move it yourself. And, when replacing appliances, that means moving out the old ones as well.

Check out sales over holiday weekends and check for online sales. Avoid new models and take advantage of the old stock that retailers want to clear out. The end of the month is a great time to negotiate a purchase because employees working on commission are eager to make more sales. Always ask to see any ‘scratch and dent’ items. They are often significantly discounted for appearances only. 

Ask if there are delivery and installation charges and any fees with hauling away the old appliance. I ignore extended warranties and always research reviews and consumer reports.

Steward Time, Money, and Relationships

The time you put into researching the purchase of a higher costing item can be saved over the life of a product. Do your work upfront. Time is money. Read reviews. Talk to salesmen, people you know, anyone willing and trustworthy to educate you on the purchase.

Pray for discernment and for leading to the right item. Needs and wants should be vetted. God often grants us the desires of our heart when he knows our desire is to use His money wisely. Let your husband know that you are willing to work to find the best value refrigerator and ask for his support.

Seek harmony and peace in your marriage. Respect your spouse’s opinion. Be quick to listen and slow to speak. In humility, present your case with proven research while honoring your husband. If he believes his way is best, then submit in love. Sometimes we have to sacrifice our desires for the good of the marriage. Your relationship is more important than an appliance.

And above all these put on love, which binds everything together in perfect harmony. And let the peace of Christ rule in your hearts, to which indeed you were called in one body. And be thankful. (Colossians 3:14-15 ESV)

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Budgeting, Christian Credit Counselors, College Debt, Consumer, Coupons, Credit, Credit Cards, Credit Counseling, Credit Score, Debit & Your Credit Score, Debt, Debt Consolidation, Debt Settlement, Goals, House, Kids & Money, Money Management, Personal Goals, Saving, Student Loans, Uncategorized

Use the Start of the School Year to Set the Stage for Your Child’s Financial Success

By: Brittany Frost

Where did the summer go? As the school year rapidly approaches, children are preparing for the academic and social journey of the next grade level while parents are bracing their financial situation for the costs of continuing education. Parents can take this golden opportunity to go above and beyond just shopping for school supplies at Wal-Mart and, instead, show their children how to budget, save, and spend their money in order to teach them how to financially prepare for school (which will undoubtedly come in handy for college).

Alarmingly, a study released in July by the FINRA Foundation estimated that almost two-thirds of Americans couldn’t pass a basic financial literacy test, including calculating interest payments correctly (See Ref. 1). When you pair that with the fact that public, in-state college tuition, room, and board has risen 1300% since 1971 (See Ref. 2) and a recent survey showing that 75% of U.S. workers have student loan debt so high that they contribute less to their retirement (See Ref. 3), it is easy to see why parents must take every opportunity to educate themselves and their children so they do not end up in pools of unmanageable student loan debt. It is never too early to avoid the debt cycle and teach your children to financially prepare for school. Think about it: Did you or do you still struggle with enormous student loan debt? Did you avoid college altogether because you couldn’t afford it? Or did you have the financial means or knowledge to keep your student loan debt to a minimum? Either way, think of your financial mistakes, trials, and triumphs and use the start of this school year to teach your children everything you’ve learned about financially preparing for school. Use your experiences along with the following resources and ideas as motivation to set the stage for your child’s financial success or, perhaps, to change your own path.

So how can you do this? Include your child in the financial process of preparing for school. Sit down and discuss with them. Educate them on the difference between a “want” and “need” so they can decide what they need for school. Ask for their opinion and listen. Use free online budgeting tools available on www.christiancreditcounselors.com to set a budget together. Discuss and research ways to stick to that budget by using free resources such as Passionate Penny Pincher’s Free Back-to-School Cheat Sheet for a complete list of back-to-school deals. Record and track your spending. Make back-to-school shopping a learning experience through mathematical games. In “7 Smart Ways to Save on Back-to-School Clothing,” Deacon Hayes also suggests tips like assessing your child’s current school inventory, visiting thrift stores first, and adding in a fun but frugal activity such as stopping for an inexpensive lunch or treat to make back-to-school shopping a happy experience (See Ref. 4). Above all, just enjoy spending time and working toward your financial goals together as a family. By doing this, you will not just be buying more pencils and notebooks, but you will be setting the stage for the financial success of your children AND yourself. Here’s to a successful school year!

References

1.       Farber, Madeline. Fortune. Nearly Two-Thirds of Americans Can’t Pass a Basic Test of Financial Literacy. 12 Jul. 2016. http://fortune.com/2016/07/12/financial-literacy/

2.       Jacoby, Jeff. The Boston Globe. Making college ‘free’ will only make it worse. 13 Jul. 2016. 18-20. http://c.ymcdn.com/sites/www.ncher.us/resource/collection/6E4F0103-05C8-4F48-844E-BEEAC285C10B/db0714_2016.pdf

3.       O’Connell, Brian. The Street. 75% of U.S. Workers Say High Student Loan Debt is Crippling Their Retirement. 12 Jul. 2016. https://www.thestreet.com/story/13627148/2/75-of-u-s-workers-say-high-student-loan-debt-is-crippling-their-retirement-savings.html

4.       Hayes, Deacon. U.S. News Money. 7 Smart Ways to Save on Back-to-School Clothing. 15 Jul. 2016. http://money.usnews.com/money/blogs/my-money/articles/2016-07-15/7-smart-ways-to-save-on-back-to-school-clothing

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Christian Credit Counseling
Christian Credit Counselors, Credit Counseling, Debit & Your Credit Score, Debt Consolidation, Home, House, Uncategorized

Debt Counseling Before a Short Sale

Living through The Great Recession

Sometimes even the best efforts to be a good steward of the resources we are given can seem to come up short. In 2008 an economic downturn began that has become known as “the great recession”.

Through no fault of their own, but only due to buying their home at the high point of home prices before the recession hit, many homeowners have found themselves “underwater”.This means the current market value of their homes is less than their original purchase price and less than the outstanding balance of their mortgage loan. If they do a conventional sale, they will be without their home and still owe the portion of their mortgage loan balance that is not covered by proceeds from the sale.

Understanding Short Sales

In these circumstances, with the approval of the lender, it may be possible to sell a home for less than the balance of the home loan and have the entire debt excused. This is known as a short sale. As stated by a Bank of America official quoted on the federal website, makinghomeaffordable.gov, “In many cases, [a short sale] is a dignified exit strategy where the borrower can sell the home and avoid the negative impact of foreclosure on their credit report and return to a better financial position.” While it is true that a short sale may be a viable solution for many, it is wise when considering a short sale to also seek debt counseling.

Debt Consolidation Programs

A debt counselor can help you explore a variety of programs available through the federal government, including the Home Affordable Foreclosure Alternatives (HAFA) program and the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (HHF). But most importantly, a debt counselor will assist you in determining if a short sale is really the right solution for you.

Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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    Home, Home & Mortgage, House, Loans, Mortgage

    Mortgage Loan Types – Home Buying

    Home Buyers and First Loans

    Buying your first home? You may be thinking the hardest decision you have to make is picking a house.  However, the hardest decision you will be making in this process is what mortgage loan to sign for.  The main types of loans are: fixed rate, adjustable rate, interest only and reverse.

    Federal Housing Administration (FHA) Loans

    For first time home buyers, Federal Housing Administration (FHA) Loans may be the best option.  This program offers competitive interest rates, allows smaller down payments and has easier qualifications.  The typical down payment required with this program is 3.5 percent of the purchase price of the home.  FHA mortgage loans also require insurance, but they do offer a refund on it.

    Fixed Rate Mortgage

    A fixed rate mortgage is also referred to as PITI, Principal Interest Tax Insurance.  With this mortgage everything is included: principal, tax, interest and insurance.  For example, if you have a fixed mortgage, you don’t have to worry about forking over extra cash during tax season because you already paid this tax along with your mortgage. Usually a fixed mortgage is for 30 years, but you can also get a 15 year mortgage, depending on your finances.  If you do qualify for a 15-year mortgage you can expect a lower interest rate, but higher monthly payments.

    Adjustable Mortgage

    An adjustable mortgage has lower payments at the beginning of the loan.  You can get this mortgage for 15 or 30 years.  During this time, payments can be adjusted upward; as the market changes so do your payments.  This type of loan comes with more risk because your payments change regardless of whether your income increases.

    Interest Only Loan

    An interest only loan usually takes 5 or 10 years to pay off, during this time your entire payment is going to pay off the interest.  It’s a waste because although you are making monthly payments, you are not paying off your home.  The only positive aspect about this loan is that it allows customers who expect to increase their income in the future to take out a bigger loan than they can currently afford.  This type of loan comes with a high risk.

    Reverse Mortgage

    Reverse mortgage is especially made for those over the age of 62 and it was created through the government program HUD.  These citizens get a portion of their equity and receive a payment every month.  To become a part of this program there is no income or credit requirement.  However, the cost to enroll in this program can be more than $8,000.  Also, once the borrower dies, the bank settles the debt with the heirs.

    A Debt Free American Dream

    Achieving the American Dream without getting further into debt is possible.  Regardless of which mortgage you sign for make sure you know the details.  The key to avoiding traps is knowledge.  Be realistic and buy a house within your means.

    Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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