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!
Make a Spending Plan Work for You! (Webinar) - April 3, 2023
April 3, 2023 12:00PM – 1:00PM Zoom Webinar
Trying to stretch your money? Learn how to create and manage a spending plan.
Mortgage Foreclosure Basics
April 5, 2023 12:00PM – 1:00PM Virtual
This webinar will describe the options to keep, sell or let foreclosure happen.
Helping Youth Master Money- Webinar for Adults April 6 at noon
April 6, 2023 12:00PM – 1:00PM
This webinar will help adults/ teachers and other youth professionals discover fun ways for youth to learn about budgeting, credit, saving and more.
Homeownership Education Webinar (MSHDA) - April 11, 2023
April 11, 2023 9:00AM – 1:00PM Zoom Webinar
This homeownership seminar from MSU Extension will provide you with valuable information about the home buying process.
Financial Preparedness for Disasters ~ Webinar April 13, 2023
April 13, 2023 12:00PM – 1:00PM Zoom
Prepare for disasters with these steps that might affect your finances. Save time, money and stress if and when a disaster strikes.
How Much Home Can You Afford?
April 18, 2023 12:00PM – 1:00PM Virtual
Looking to buy a home? Learn how to calculate how much home you can afford based on your current income during this 1-hour event.
Savvy Tips for Starting a Small Business - April 18, 2023 (Webinar)
April 18, 2023 4:00PM – 5:00PM Zoom Webinar
The class provides financial tools to entrepreneurs and potential small business owners who are considering starting a new business.
4-H Smart Money Contests for youth pay off
Published on February 23, 2023
Youth can win prizes and gain financial awareness with these Smart Money Contests.
Where does money comes from?
Published on December 19, 2022
Learn about a resource that can help answer where money comes from, and other questions related to youth money management.
It’s almost FAFSA time – are you ready?
Published on September 9, 2022
If you need help paying for college, technical or career school, check out the options you may be eligible for from the federal government.
Education pays in lower unemployment rates and higher wages
Published on July 27, 2022
With additional educational attainment comes higher wages and lower unemployment; however, some fields of training are more lucrative than others, and research should be done to ensure that a prospective field can offer the lifestyle one desires.