Maintenance & Repair

When making a big purchase, such as a car, a home, or even a high-end electronic gadget, many people focus solely on the upfront cost, but often overlook the costs associated with maintaining or fixing these items in the long run. While it may seem tempting to ignore these potential expenses, they are crucial to consider to determine if you can afford to keep it in good working condition.

Here are a few practical steps to help you assess the situation: Research and estimate ongoing maintenance costs: Before purchasing, take the time to research the typical maintenance costs associated with the item you're considering buying. This could include regular servicing, repairs, or part replacements.

Unused Funds

Congratulations on meeting your savings goal to fund a child's college education! However, there may be situations where you have leftover money in your college savings account. This could be due to your child pursuing a different career path, receiving scholarships, enlisting in the armed forces, or completing college early.

But don't worry, you don't have to forfeit that money! As the account owner, you have several options:

(1)  Use the money for tax-favored expenses: It's always wise to use as much of the money as possible to pay for qualified expenses. These include not only tuition but also student fees, books, supplies, required equipment, a computer, software, and certain room and board expenses.

Debt-to-Income Ratio

Someday, you’re probably going to need a loan to purchase a car or a home. Even if that day feels far away right now, you can still learn how lenders—like credit unions and banks—determine how much they’re willing to lend you, and then take steps to put yourself in the strongest borrowing position for that “someday.”

When applying for a loan, your credit score is a large factor in determining what size loan and interest rate you’re approved for. Your score is based on multiple elements, like length of credit history, on-time payment history, and amount owed. Once your credit “worthiness” has been established (meaning you have a high enough credit score to meet the lender’s standards), the lender then looks at what size loan and loan payments you can reasonably afford. Affordability is largely determined by your debt-to-income ratio, or your DTI.

Your DTI is based on a simple formula: monthly gross debt divided by monthly gross income. For example, if your monthly gross income is $3,000, and you pay $1,500 in monthly bills, your debt-to-income ratio is .50, or 50 percent ($1,500/$3,000).