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Turning Frugal: Save Money by Spending Wisely

You can feel it in the air. Everyone is turning frugal. After decades of engaging in shameless consumerist attitude, people are suddenly becoming wiser with their money. The catastrophe that forced them into the situation might not be welcome, but the shift in consumer attitude will do a lot of good to society as a whole for the long-term.

There are still bills to pay and debts to get rid of though. In the meantime, it is important to save as much money as you can. It is inevitable that you still need to spend on certain things. Here, we compiled some blog posts that can help you spend less on your needs and wants:

April @ Get Rich Slowly uploaded an article titled “The Art of Improvising: Alternatives to Buying New”. Despite what the headline implies, this posts digs deeper into saving. Other than telling you to stop buying new stuff, the author also provided practical tips on how and where you can save. For example, she tells you to repair whenever possible, delaying spending, trading, or renting. Borrowing is also a good idea in some instances.

DeputyHeadmistress @ Frugal Hacks wrote an interesting post “When It Pays to Buy New”. Now, she is not specifically encouraging you spend money on new things; the point of the article is that it sometimes pays to buy something new. This is especially true if the product you’re interested in meets two factors: it frequently needs to be replaced and the company you’re buying from offers money-back replacement guarantee. If it doesn’t meet the latter condition, you should think twice.

The third blog we will feature for this week focuses on buying cheap books. Fiscal Geek has a post titled “24 Ways to Help You Buy Cheap Used Books”. It provides various links to websites that sells books at bargain prices. Even non-booklovers will find the post useful because it gives them an idea about how much, or how little, they should pay when buying stuff.

Home Buyer Credit: Is It Going to Last?

First time home buyers is inevitably anxious right now, especially if they’re not sure they will be able to find their dream home next month. On November 30, the credit is to be finished although the Obama administration is looking into extending it past the due date in order to make it available to more home buyers.

The situation about the $8,000 first-time home buyer credit is very fluid right now. According to Housing Secretary Shaun Donovan and Treasury Secretary Tim Geithner, the government may extend it for a “limited period”. However, several proposals are being considered. There are very generous and least generous proposals that are being looked into.

Jaret Seiberg from the Concept Capital’s Research Group said that, “there is bipartisan compromise to extend the credit through spring and expand it to existing homeowners who are stepping up to a different home”. Because of this, policymakers are considering giving up to $6,500 in credit for homeowners who want to trade up their homes, as long as they live in their current residence for at least five years.

Not everyone can take advantage of the first-time home buyer credit though. This is because in order to get the full amount, the applicant should have less than $125,000 in adjusted gross income ($225,000 for married couples). Aside from this, the provision is only applicable for homes that are sold for $800,000 or less. The contract should be signed by April 30, 2010 and must be closed by June 30 of the same year to qualify for the home buyer credit.

The home buyer credit has attracted supporters and critics alike. Supporters say that it has helped boost home sales at a time when it is needed most. Extending it will further improve sales and help stabilize prices. However, critics say that while it has helped in some ways, it is ill-targeted and therefore not cost-effective. They say that only 10 to 20 percent of 2 million qualified home buyers bought homes with the credit in mind.  In other words, 80 to 90 percent would have bought anyway even without the credit.

Home Prices are About to Get Much Worse – Fiserv

People hoped that the worst is over. But recent research reveals that it is just about to get worse. Home prices are about to plunge into new lows next year. According to a forecast on real estate price, home values will drop in 342 out of the 381 markets. Fiserv, a financial analysis firm, forecasts that median home prices will lower by 11.3 percent by June 30, 2010 nationwide. By 2011, the organization sees some stabilization in the market with prices rising by 3.6 percent.

Previously, Fiserv has projected the decline in home-sale prices even while overvalued houses are being taken up by enthusiastic buyers. However, even the firm has underestimated the scope of the crisis. Moody’s Economy.com chief economist Mark Zandi agrees with the Fiserv’s findings. “I think more price declines are coming because the foreclosure crisis is not over.”

It is expected that areas with high levels of foreclosures will have the steepest declines. For instance, Miami is expected to be the biggest loser with prices projected to plunge by 29.9 percent by the June of next year. Home prices there have already fallen by a massive 48 percent in the last three years. If this projection is correct, the median home prices in the area will fall to $142,000 by June 2011.

Another big loser because of the crisis is Orlando, Florida. It is the second to the worst performer and Fiserv projects that prices will decline by 27 percent by June 2010. Then there will be a less severe price drop in 2011. Meanwhile, in Hanford in California, prices are expected to drop by 26.9 percent and this will continue to fall through the following year. Naples, Florida expects a fall of 26.8 percent but it will flatten out during in the following year.

Not all research firms think that prices will drop further though. Filserv’s findings are at odds with the report from S&P/Case-Shiller Home Price Index. It said house prices have already stabilized.

Budgeting: It Affects Your Lifestyle

Though most people do not realize it, budgeting is part of their everyday life. Whether it is grocery shopping, buying an expensive pair of shoes, or paying for the mortgage, everyone tries to allocate their money properly to pay for their needs and wants. However, in there instances when the amount of available money does not tie up with the expenses. That’s when debt occurs.

For this reason, it is critical for everyone to know how to budget their money in order to avoid debt. Budgeting is not as hard as it sounds. Below is a list of blogs that can help you in this endeavor:

Bem @ Digirati Life wrote a helpful post “Personal Budgeting Made Easy with the 60% Solution”. The goal of this article is to make budgeting simpler and easier. It was inspired by the article “A Simpler Way to Save: The 60% Solution by Richard Jenkins from MSN. Basically, all you need to do is keep track of all your basic expenses including food, clothing, household expenses, insurance premiums, bills, and taxes. By having a strict budget on those areas, the battle is already more than half won.

The You Need a Budget Blog has an interesting article for this week titled “Controlling Your Financial Destiny: Seeing Things as They Really Are.” It cannot be denied that a significant number of people base their financial decisions on “fiction”. Basically, because of the availability of the credit card and other forms of credit, people have come to believe that they have more money than they actually do. The importance of budget is emphasized in this blog post.

Mary Ann @ Families provided practical tips in preparing for the holiday meal in the post “Budgeting for the Holiday Meal.” Although the article might seem a bit trivial to some, it actually shows how a budget affects the lifestyle of families at home. It provides a look into what families can prepare when money is tight.

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