Determining Money Values
Your values play a big role in determining the way you spend money. If you don’t understand how your values and emotions influence your money decisions, you’ll never be able to gain control and make better money decisions. Take the money personality assessment to understand your money values.
Steps for Decision Making
Making financial decisions is a huge process. Decisions to buy big tickets items such as homes or cars should not be taken lightly. Here are a few questions to ask yourself or discuss with your family:
- What is the money issue or decision you need to make?
- What are the possible options or choices for making the decision?
- What are the possible results (pros and cons) for each option or choice?
- What is your decision? When will you look at the decision again?
- Additionally, using a decision satellite map may be helpful.
Can You Afford a Home?
When buying a house, it’s important to stick to a price range that meets your needs and will be affordable with your current income. Keeping this price range in mind, you can have confidence during the application process. Consider the following:
- Overall Cost: If you have good credit, a steady income and a reasonable amount of preexisting debt, it may be safe to estimate that you can afford—and will qualify for a mortgage on—a home that costs 2.5 -3 times your gross annual income (the amount of your paycheck before deductions). You’ll also want to factor in steady income from other sources, such as retirement, disability, child support, social security or alimony. For all income, you must be able to show a history of at least two years, and a likelihood that the income source will continue.
- Mortgage Payments: Before approving your mortgage loan, a lender will examine two different ratios:
- Housing ratio = the maximum percentage of a borrower’s gross monthly income that can be used to make the monthly mortgage payment, including principal, interest, taxes and insurance (or PITI). This percentage will be pre-set based on the type of loan that you are applying for, and is typically between 28 and 33 percent.
- Debt-to-income ratio = the maximum percentage of a borrower’s gross monthly income that can be used for the house payment, plus all other debts. These debts can be from credit cards, vehicles, student loans, etc. The debt-to-income ratio is predetermined based on loan type and ranges from 36 to 41 percent. It’s important to know how much outstanding debt you have before applying for a mortgage. If you find you have a lot of debt, you might need to pay some of it off before applying for a mortgage.
Communicating About Money
Are you a good listener? The I-Message is a helpful tool for couples and families because it helps you express your feelings in a calm way. For example, if you were discussing paying bills with your spouse, you may say, “I feel nervous when I notice that the phone bill is not paid because I worry about bad information on our credit report.” Additionally, these steps may help you communicate better about money:
- Find the real problem
- Talk only about the problem itself
- Face the problem
- Brainstorm and talk about options
- Agree on a plan
- Support the plan
- And keep talking!
Setting S.M.A.R.T. Goals
Do you have financial goals that you wish to reach, but it seem like you never do? Maybe you’re not being detailed enough or writing your financial goals down. It’s time to get SMART about your financial goals! SMART is an acronym that stands for Specific, Measurable, Attainable, Realistic and Timely.
Michigan State University Extension Educator Wanda Roberts explains SMART goals in the video above. Use our SMART goals worksheet and work toward your SMART goals today!
Events
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Oct 4
Homeownership Education Webinar (MSHDA) - October 4, 2023
October 4, 2023 9:00AM – 1:00PM Virtual via Zoom
This homeownership seminar from MSU Extension will provide you with valuable information about the home buying process.
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Oct 5
Protecting Your Identity - Oct 5, 2023
October 5, 2023 12:00PM – 1:00PM Zoom Webinar
This one-hour webinar will discuss how to protect yourself from identity theft & what to do if someone has stolen your identity.
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Oct 9
Make a Spending Plan Work for You! (Webinar) - October 9, 2023
October 9, 2023 12:00PM – 1:00PM Zoom
Trying to stretch your money? Learn how to create and manage a spending plan.
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Oct 10
Cash Crunch - Navigating Money Challenges October-2023
October 10, 2023 4:00PM – 5:00PM Zoom
Dealing with sudden income loss is very stressful. Learn tools to help you manage your finances and debts.
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Oct 17
Student Loan Repayment Webinar - October 17, 2023
October 17, 2023 4:00PM – 5:00PM Virtual
This one-hour webinar will provide you with tips and tools to successfully navigate repaying your student loans including repayment options and how to avoid default. We will review the new rules and programs regarding your student loans.
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Oct 17
Student Loan Repayment Webinar - October 17, 2023
October 17, 2023 4:00PM – 5:00PM Virtual
This one-hour webinar will provide you with tips and tools to successfully navigate repaying your student loans including repayment options and how to avoid default. We will review the new rules and programs regarding your student loans.
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Oct 18
Homeownership Education webinar (MSHDA) October 18, 2023
October 18, 2023 9:00AM – 1:00PM Zoom Webinar
This homeownership seminar from MSU Extension will provide you with valuable information about the home buying process.
News
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The newest pick-up line: What’s your credit score?
Published on June 15, 2023
Research has been found that examines the linkage between relationship status and personal credit scores. -
5 facts to know about mortgage insurance
Published on June 15, 2023
Add mortgage insurance to costs if your down payment is below 20 percent when buying a home. -
Do I have to move out of my home before the sheriff sale?
Published on June 15, 2023
Homeowners can stay in their homes after the sheriff sale, usually 6 months. -
Is a low credit score keeping you from buying a home
Published on June 15, 2023
Bankruptcy and foreclosure can be overcome when trying to purchase a home.