Should  I RENT OR BUY?????

Should I RENT OR BUY?????

 

Let me start by saying the cheesiest thing- the choice comes down to what do you need and what can you afford?

My husband and I get asked a lot if we have bought a house and the answer- which also applies to many frequented questions is NO. Although we have been married five years and we have been officially out of school for a while, we have not yet bought a home. Several factors influence our decision-making process. Hopefully, this post will help you if you are debating similar issues.

One of the things people say a lot is that renting is wasting money. It is not – you get a place to live in. You can waste money in either situation; if you rent or buy a home that is way beyond your means or bigger than you need (McMansion ALERT). Having a place to stay that is within your budget and financial goals is not wasting money-it is a blessing.

Some questions to ponder before you make a decision

  1. How much can I afford to pay for my living situation? If you can only afford to spend $500 a month for the roof over your head, then you may not be ready to purchase a home.
  2. Do I have consumer and or student debt? If you have a lot of debt, you may not want to buy a house and add a mortgage to your debt bill –
  3. Do I have a solid emergency fund? The experts suggest 4-6 month’s worth of living expenses saved in an easy to access high yield savings account before making major investments. Fellow millennials and baby cousins in Generation Z- please trust me when I say emergencies happen. You need an emergency FUND.
  4. If I were to buy a home, could I afford a decent down payment to avoid paying PMI and other protections? You can probably take advantage of many first-time buyer deals and put just 5% down, but some financial experts say it is always better to have at least 10-20% down payment saved. If you don’t use it all for the downpayment you may need it for closing costs and moving expenses.
  5. Do I have money set aside for home ownership related expenses that can occur as soon as I move in? These can include flooding basement, failing AC or heating system, leaking roof, etc. Things happen. Unless you are getting a brand new home chances are that it will have some issues.
  6. Could I comfortably pay my mortgage if I lost my job? This is important.
  7. Do I plan to live in this home for at least five years? If you are still moving jobs buying a home may be risky – if you are unable to find a renter, you may find yourself paying a mortgage for an empty house. If you find a terrible renter, you may still pay your mortgage plus rent at your new place.
  8. The cost of buying a home is more than the cost of a mortgage and down payment. You will need to pay taxes, homeowners insurance, fix things, mow your lawn, keep up with neighbors and their gardens – heating a home is also kinda expensive.
  9. Owning a home is also fantastic – you can paint the house fun colors, and you do not need permission to drill the walls.
  10. A home purchase can be a worthwhile long-term investment, especially if it is in an area where home values appreciate.

At the end of the day, do not feel pressured to rent or own a house. Your bank account will tell you what you can afford. The heart might lead you astray.

 

P.S. I am not a certified financial advisor this is just my fun blog

 

 

DO NOT ASK YOUR ENTREPRENEUR OR SMALL BUSINESS OWNER FRIENDS/FAMILY FOR DISCOUNTS

DO NOT ASK YOUR ENTREPRENEUR OR SMALL BUSINESS OWNER FRIENDS/FAMILY FOR DISCOUNTS

DO NOT ASK YOUR ENTREPRENEUR OR SMALL BUSINESS OWNER FRIENDS/FAMILY FOR DISCOUNTS

 

There are a lot of friends and family money-related discussions going on –they all matter. I wanted to point another angle we don’t often think about-FRIEND DISCOUNTS.

A lot of us millennials are dabbling in entrepreneurship to supplement our income or because we prefer to create employment. Entrepreneurship and or owning a business sounds sexy, but the reality is not that cool- there is a lot of work and debt involved in building an enterprise. Many small business owners operate in the red for the first few years of owning a business.

I am the queen of discounts and coupons. I pride myself in getting good deals. I  will happily spend hours on the phone with our service providers because research has shown that we can cut our utility bills by about 20% if we are committed. My husband is not, and he dreads going shopping with me, haha but I know he loves that whenever we go to the apple store, I can save him at least 10%. This disclaimer is important because I do not want you to feel judged for seeking out ways to save money. Use retailmenotto get discounts to bath and body – the company can afford your discount.

 

However, I want to emphasize that seeking savings on the hard work of our friends or family is not cool. My parents were small business owners and worked informally, so I know how important it is for entrepreneurs to maximize their income. Asking our friends for a discount might signal that we do not respect their hustle, or we do not care about their work. If you can pay full price for a friend’s yoga class, please do it because contrary to popular belief yoga teachers, photographers and website builders do not make a lot of money. When your friend’s business takes off, and they become a multimillion-dollar conglomerate, they will not forget the support that you gave them.

Instead of asking for a discount help your friend or family member, you can support their work by advertising their business and encouraging your circle of friends to use their services. I love seeing the way payments for services offered by friends can empower them. If I can afford it, I always pay full price or a little extra for my friend’s services.

 

Both of my businesses can now  AFFORD to give friend discounts because our friends and family supported us 100% when we were still starting up.

 

Please use code: welcome10 for your next order from www.zimtuckshop.com if you are in Harare and want to buy a special treat from Trendy inbox our facebook page or WhatsApp +263772951139 for a discount.

Vacation without breaking the bank

Vacation without breaking the bank

It’s SUMMERTIME SO!!!!

Nothing sucks like coming back home to an empty bank account – because YOLO- when in fact you have bills to pay.

A newish survey from Bankrate found that about 60% of people living in the US will not be able to take a vacation because funds are tight. Holidays are not a need, but it is fun to let loose and travel. On social media, I have had enjoyed following conversations on vacations but not listening to my friends pinning for trips they feel they can’t take. Can we agree that many of us would love to travel? It doesn’t matter if you are going a couple of hours from home or a few thousand miles – you will have more fun if you budget for your trip.

Vacation is expensive. Are you planning a trip? Think about how much you think you will spend – now double or triple that number. I am a planner, and I was shocked by how much we spent on our recent trip to Paris. I am glad I had budgeted, but we certainly underestimated the small costs associated with international travel.

STEPS TOWARDS A $$ STRESS-FREE VACATION

  1. Three to Six months out– Set a realistic savings goal
    1. Get realistic about the cost of flights to your destination. Use google flights and cross check that number with a few airlines. You can fly to Capetown for just under $1,500 if you book today – Just saying JWrite down the number $$$
    2. Get a realistic cost for housing – I suggest Airbnb or some other house share for a trip longer than three days & hotels for a shorter trip. Airbnb is probably better if you are going as a group. Write down the number $$$

Some airbnb’s and hotels can be trash too so do your research

  1. Get a realistic cost of local transportation – if you plan on renting a car then use your favorite car rental website to compare deals

STOP HERE – If there is no way you can manage steps 1.1 to 1.3 without dipping into your credit card and incurring debt, then you are not ready for this trip. Instead of going to Capetown consider something close to home

  1. Set a realistic goal for dining: When we went to Paris, I completely underestimated how expensive Europe is. Use yelp to get a sense of what people are spending per night – how much you pay depends on your taste and how much work you do. This confession will not make me look good, but in the spirit of transparency (truth is overrated), we once spent $150 for a simple dinner at a Jamaican restaurant in New York City because we had no idea where to go for reasonably priced -or regular black person- Jamaican meal in NYC. Strangely enough, I never spend a lot on meals in London because the drinks are cheap, hahaha. In Harare, Capetown, Nairobi, Lagos, etc. you can eat for cheap or spend a lot – the point is to get a sense of the average cost of meals, multiply that by 3 to get a daily rate and by the total number of days to get an estimated bill.

You will likely spend between $50 and $100 per person per day in most places around the world.

  1. Set a realistic goal for local transportation – in Europe use public transit. For five days, you are looking at about $60/week. Most major African cities have uber, but the rates are quite high so that local taxes might be a good option. Seek local advice and stay safe.
  2. Set a realistic budget for all your sight-seeing adventures: I assume you are going on vacation to have some fun
    1. Pre-purchase any tickets for museums or anything that has an entry fee. Do not use third-party websites if you can avoid them- pre-purchasing will not only keep you within budget, but you avoid exchange rate dilemmas
    2. Research the other things you won’t get to up to- swimming with dolphins will cost between $50 and USD 100 in Zanzibar, entering the Vic Falls is between $2 and $45 depending on your citizenship (You do not want to die without ever having visited the Falls)…

You can watch the video of him bungee jumping – it was awesome. I have also done a few crazy things in Vics like walking with lions – I know – why are you judging me

  • Remember, most things are free- visiting the Eiffel Tower is free you only pay if you want to go to the top (est. $30).

    I took this loopy looking pic

  1. Start saving for the trip
    1. Divide the totals from step 1 by the total number of paychecks before your trip. That is how much you should be setting aside each month.
    2. Set up direct deposit into your savings account for your trip – DO THIS
  2. Pay for most expenses before you leave home
    1. Purchase your ticket on your credit card and pay it off
    2. Book your hotel (set aside the money and be ready to pay it off when you check in.)
    3. Buy your museums passes etc. and pay off the balance
  3. Get travel insurance: protect all your purchases because things happen
  4. Set aside an emergency or over budget fund – about 20% of your expenses (excluding fixed things like flight and hotel)
  5. STICK TO YOUR BUDGET AND HAVE FUN

How to set financial goals without losing your soul

Financial Goals

I realized that in my blog and almost every other financial blog, everyone is telling us to make goals, stick to our goals, evaluate our goals, but how do we make goals?

In this post, I attempt to breakdown the process of thinking about financial goals.

Practical tips:

  1. Create a monthly even annual budget
  2. Live within your means
  3. Pay off any debt
  4. Set up an emergency fund
  5. Contribute to your retirement funds/ start a retirement plan (even if you are in Zimbabwe!)
  6. Visualize the life you want
  7. Do work that keeps you happy (when possible – sometimes we just have to do what have to do)
  8. Spend on what you like
  9. Cut out any expenses that  waste your money and do not bring you joy
  10. Make charitable giving an integral part of your financial goals

I think about money as a vehicle for living the life that we want. A wholesome, happy life of giving, traveling, and doing the things that bring us (me) joy.

Before we get down to business, I would suggest doing a visualization exercise. Close your eyes and think about the life you want, where you want to be, and what makes you happy. Maybe when you close your eyes, you see a beautiful house, your parents with a car, a million dollars in your retirements account. It doesn’t matter as long as you are honest. I daydream a lot- my therapist says this is healthy. So there you go- I just saved you $150.

Step one:

Build your budget – we now write down our budget, so do this. This is worth repeating at every turn.

Step two:

Think about what you want – what are your five-year goals? Where do you see yourself in ten years? Thinking through these questions is how you come up with short and long term goals.

Your fixed goals should include living within your budget,  paying off debt, setting up an emergency fund, contributing to retirement and saving at least 20-30% of your income. After that, the goals you make are entirely dependent on the kind of life you want to live.

  1. If you are a student, you need to regularly set aside a small nest for after graduation to cover trips to visit friends, to support the family and additional health expenses (we have to talk about the cost of dental care -yikes) that might come up.
  2. If you have just started working you may need to furnish your home, get a car and or  you may be thinking about settling down, etc

Our financial goals change; this is perfectly normal. Do not stress when you find yourself needing to adjust some plans. Life changes, things happen, pause, assess the change, breath, and embrace the change.

Step three:

Do I need big purchases? What brings me the most joy? How well do you know yourself?

My husband and I are in our early 30s, so everyone we know is continually asking us if and when we are planning to buy a house. We also get asked a lot if we are planning on getting a new car. And about kids! I am not a minimalist or even planning to retire early, but I value financial independence.

  1. What is keeping you up at night? The things that keep us up at night should be at the top of our financial goals. For a while, debt was keeping me up at night – so I  came up with a strategy to pay it off and exclusively focused on that. Then organizing things for my mom was stressing me for a while, so I researched what I needed to do and dealt with that. Owning a house and or a bigger car has never kept me up at night, so it is not part of our immediate goals. What do I need to be happy? What kind of living situation would make me happy?

We would love to buy a house in the future (Because Boston- seriously who can afford a house here?).  We have learned that I hate commuting – I loathe it, BUT my husband prefers distance between home and work. As a result,  as we are thinking about home purchases, I might have to give up my dreams of a big yard for a home walking distance to work. Houses closer colleges tend to cost more money. We also have to be realistic about the timeline. It is a lot better to save at least 20% for a down payment. We also have to think about the various hidden costs associated with homeownership. Once you have considered multiple things, you can be honest with yourself about how much house you can afford and how long it will take you to raise those funds. There is no competition, so do what fits your budget and your goals.

We are all different: I love traveling. You love gadgets. She loves yoga. He loves driving a nice car. They love buying a lot of books.

I believe that money should enhance our lives. Access to cash should allow us to do the things that we love. Look at your budget – if you tend to spend $500 on books a month then think about how you can cut out the things that do not bring you joy and think long term about the things you love.

If you are not passionate about cars like me, then you can buy yourself something functional that you pay less for. My car is a 2000 Toyota. I have kept it well, and it gets me from point a to b. Since I live walking distance to work, I hardly drive. Everything I need yoga, church, groceries is within walking distance or a two-mile radius. If I bought a pricier car, I would end up spending a lot on insurance for no reason.

I have a friend who loves gadgets. They spend almost nothing on clothes and save for the newest iPad or headphones (I have tried out fancy headphones – and let me tell ya,  if I weren’t cheap I would get me some beats- also dear husband if you are reading this my birthday is today). On the other hand, I have had the same phone since 2014, and before that, I had last bought a phone in 2009. If it works, why change it. I like reliable brands that I can keep for a long time.

Do not spend money on things you do not value – that bring you no joy. I have stopped going to Marshalls because I would end up buying a lot of things that I hardly wear. I now buy clothes on a need to basis from brands that I like to wear.

I love traveling and going on vacations. I save for that and find ways to get to beautiful places within our budget. When we travel, I like to do touristy things – my husband would be fine sitting on a balcony with a cold beer, but he is a good husband so follows along with my plan.

Resources

Here are some of the top savings account options for your emergency fund.

I loved reading Dave Ramsey’s snowball method for paying off debt

Brainstorming life insurance

 

Diaspora, are you to blame for your financial misery?

Diaspora, are you to blame for your financial misery?

Some people have lived in the diaspora for years or what feels likes decades, and yet they look around and feel like they have nothing to show for all those years of hard work. Some people feel disappointed that they have been working all these years and maybe sending money “home,” but there is nothing to show for this either. Do you sometimes feel like this? I know I used to.

The truth is sometimes we are caught in a web of comparing ourselves to false standards that do not represent our truth. Before I dive into the hard stuff, I want you to hug yourself and say –

I am wonderful. I am not a failure. I have done my best, and I will continue to do my best.

Seriously, do this.

Ok- so the other truth is that maybe we find ourselves a little frustrated by our financial situation because we have not done a few things right. If you have been sending money back home for two decades and the receivers are still in the same situation or expecting you to keep remitting, then maybe your financial strategies need to change.

Over the weekend, I had some intense conversations on remittances. To be expected. My research and that of others studying remitting behavior across Africa, in Mexico, various Caribbean countries shows that on average, you diasporians are sending more than the average monthly income in your home countries. That’s right. You are sending between $200 and $500 on regular months. Then you send more for emergencies and other random events. You may be sending/remitting between 3 and 10%  of your income. Your money is making western union rich – Just kidding.

The reason that you are upset or feel some type of way is because it sometimes looks like you will never stop sending. A friend of mine said sending money home sometimes feels like flushing money down the toilet – ouch.

People will never stop asking for money so you, my friend,  have to decide how much you are willing to send, for what reasons and for how long you will fund that expense.

Those of you supporting parents probably have to accept that since many of our developing countries have an awful welfare system, you the children will need to be the buffer. That said there are things that we can do to not only improve the lives of our parents but also manage the financial bill.

So here are some ten things to think about

  1. Do your parents have a permanent home? In the village or the city- paying rent long term will cripple your finances. If you do not like where your parents are living, consider a long term investment in the type of upgrades that will make a happy place.

A year ago or so I spent some time at a cousin’s house in rural Masvingo and woow. Just woow – the house was better than most homes in the city, and everything was about 90% solar powered. They had a borehole and a water tank drawing water into the house. I had the best shower of my life.

I have seen friends who choose to rent when they visit home because their parent’s house is not up to standard for their diaspora kids. I have also had some friends extend and improve their parent’s houses in high-density areas. You know your situation best, so plan accordingly.

  1. Do you have a plan for access to food? I was having the food conversation with my inlaws a while back when mom in law jumped in and said you don’t have to worry about us for food. Also- just to say my mom in law is incredible, she raised five wonderful men. Three are still single by the way JMy mother in law, and many of the women in her area are farming on a small plot of shared land. She grows enough maize/corn to last them the year, sweet potato (which she exchanges for labor), and they have a yearlong supply for vegetables. Instead of buying them food we invest in agriculture inputs, and each year the actual bill has reduced as she is modifying her seeds. We have also come up with a long-term plan to subsidize her labor costs.

I know others who are engaged in small scale chicken projects etc. The goal is to keep things manageable and support something that people have already started. If the idea comes from the diaspora, it will likely fail. Organic projects have a long shelf life.

 

  1. A significant expense for diaspora folks is school fees for siblings, nieces, etc. In most cases where the parents are late, you may need to keep this budget item until the child has completed their studies. However, if the parents are living, you will want to try and engage them. This type of conversation is hard, but this is something I have been actively working towards. I no longer accept “the father is useless” as an excuse. If he is living and breathing, I will find him and ask him to take care of his responsibility even if this means going to court or engaging in DNA tests. I am tired of our cultures, giving a free pass to absent fathers. I  wish I had healthily engaged my relatives whose kids I supported  to see if we could come up with a plan for me to help them help themselves. It is too late for me, but I hope this is not the case for you.

 

You will also need to have a post-graduation plan. Will the kids continue to University, find jobs, or start their own business? It should be made clear early on that not earning an income is not an option. Budget an extra year of school fees to use as start-up funds for their next stage of life. It is also vital to foster the spirit of giving back while they are young.

  1. Stop with the building projects. If you have been sending money for the last decade to build a house that is still at window level, it might be time to stop. I used to think building scams were a uniquely Zimbabwean problem but alas from Capetown to Cairo around to Jamaica and the Philippines it is a universal problem. You may be better off investing in a home in your host country/new home country or honestly just saving your money.
  2. Budget your money – my favorite sermon on giving was when our pastor told us that God does not like disorganized giving. If you are not planning your giving, then end up in debt -what you have done? Listen to me on this. Been there done that and never again!  If you do not have – you do not have. Avoid financial emergencies by investing in small monthly payments for health care and funeral policies for key members of your family. Have an emergency fund but please stop creating crises for yourself.
  3. Do not borrow money to go home. Every year around Christmas, social media is awash with stories of folks taking out $5,000 loans to visit the home country. Look, unless you are going for a family emergency plan long term for the trip and wait until you have the money. Borrowing money with no way/ or resources to pay it back will make you miserable.
  4. Do not be a show-off. Stop using the money you do not have to buy gifts people do not want. Why are you clocking $3,000 on your credit card for t-shirts and sneakers? Does your 5-year-old cousin need jordans to know that you love them? Do you need to rent the flashiest car when you go home? BE SERIOUS –

This is also a message for me. I was the worst at this. I would spend and spend and spend unbudgeted money for gifts. People will be excited for 5 minutes before they start asking why you did not buy them this other thing.

Who are you trying to impress?

  1. Stop living a life you can’t afford. You are going home so now you want to spend $5,000 on new clothes? Look, I love treating myself but only if I have saved and can afford the new thing. In January, I did splurge a little on a new purse because I was feeling sad and wanted to cheer myself up. In my sadness, I still paid cash for it. I understand that sometimes we need a pick me up but not if that will make you miserable later. If you must- by yourself one special item and maybe don’t take it home. At our house beautiful things belong to everyone lol

Your family will not love you any less because you do not have the latest X item.

  1. Have you invested in your future? Do you have a retirement plan? Do you have a plan for if you get injured and have to stop working? What about if you get laid off? The western world is getting more and more expensive, and things do happen. We are human, not machines. When I interviewed nannies for a work project, job security was always a top concern. Many of our diaspora jobs do not provide a long-term cushion, so this is something we need to do for ourselves. Dear friend, please get yourself
    1. Life insurance – that covers death/repatriation and will live your loved ones, some cushion. Some even over disability cover
    2. A high yield savings account which can give you at least 2% interest
    3. Savings for at least five years after you stop working
    4. Invest in some technical training, an associate degree, or even returning to school full time. You are worth the investment
  2. Are you enjoying life?

The first time I went to England, my heart was broken as I saw the life of deep sacrifice that my mom was living to afford sending money home. I was hurt- deeply. I sent my mom $50 when I got my first paycheck- she laughed and said Pipo I am fine. I encouraged my mom to move into a nicer place and to start living a wholesome life. To take time off on weekends to attend church. To do one thing- just one thing that she loves. The people she was sending money to were living their best lives while her best life was being wasted in awful jobs and sacrificing joy. I speak to you as I would my mom – take care of yourself. Honestly, live in a decent place with heating. Buy healthy food, and you deserve that yoga class if that is your thing.

 

Diaspora do not be miserable