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How To Decorate Your Home Frugally

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Most of us have watched a new home buyer show or two and seen how a family buys a house and then spends tens of thousands of dollars renovating it so the house is just their style. 

While that’s fun to watch, for many of us living on a tight budget, buying the house is enough of a financial strain. There is little money leftover for changing the house’s décor or even buying new furnishings. 

If you’d like to make some changes to your new home, there are strategies to decorate your home frugally.

frugal home decorating tips

First, Be Cautious And Grateful

First, before you do anything, evaluate your budget. 

Buying a new home is an enormous financial obligation. The last thing you want to do at this point is buy new furnishings and redesign the house and put yourself thousands of dollars in debt. 

When you own a home, being in a strong financial position is essential because you never know when a large repair might be necessary. 

Be cautious with the money you’d like to spend.  You can always wait until you’re in a better financial position.

We bought our home 5.5 years ago. The first thing I wanted to do was repaint the ugly living room walls that were done in a 90’s sponge paint fashion. 

Ugh. 

But guess what, that still hasn’t been done. We don’t have time for such a large project, and thanks to numerous expensive home repairs (replacing a water heater and an AC unit, for starters) and medical bills, we just haven’t had the money. And I’m okay with it. 

I know we’ll be in this house for years, and eventually there will be money (and time) to repaint the living room and redo the floors.

How To  Decorate Your Home Frugally

However, if you do want to make some changes and buy new items, try these low-cost techniques:

Join Your Local Buy Nothing Group On Facebook

Join your local buy nothing group on Facebook. There you will find people giving away all manner of items. 

Furnishing your home this way takes patience and flexibility, but it costs nothing. 

Many people have fun seeing how many items they need that they can get for free.

Use A Habitat For Humanity Store

Another option is to visit a Habitat for Humanity store in your area. 

In these stores, you will find new and gently used appliances, building materials, and used furniture. You’ll likely save up to 50 to 90% off retail prices. 

Again, the trick with these types of places is that you can’t have your heart set on one particular item. You must be willing to work with what you find at the store, and if you can’t find what you’re looking for now, you must be willing to wait until you can.

Visit Hobby Lobby

If you have a local Hobby Lobby, consider looking for your décor there. 

A friend of mine decorated much of her house with items she found at Hobby Lobby, several of them on clearance. 

Most Hobby Lobby stores are huge, offering you a wide range of items to choose from that change seasonally.

Decorating A New House Can Be Fun & Frugal

Congratulations on buying a new house. While it’s exciting to immediately go in and spend thousands of dollars to make your house uniquely yours, recognize that doing so makes for good television, but may not be possible for all new home owners. 

Take your time decorating and furnishing your new home, and use some of these strategies to make doing so as easy on the wallet as possible.  You’ll be glad you did, even if you need to exercise patience.

Dave Ramsey’s 7 Baby Steps: Step 6 – Pay Off The Home Early

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In Baby Step 5 Ramsey talked about your options for saving for your children's college education.

While I think it's a good idea to get your kids involved in helping to pay for their own education, I'm not against giving them some help as well.

I think  you need to do your best to go to school and graduate debt free if you can – or with minimal debt.

Dave Ramsey's Baby Step 6

Baby Step 6: Paying Off Your Home Early

In step 6 Dave suggests that you pay extra on your mortgage, and payoff your mortgage faster.

When we talk about mortgages Dave talks about how he thinks you should have no more than a 15 year fixed rate mortgage, and that your payments should be no larger than 25% of your monthly income.  For many people that doesn't seem doable because of the  housing markets they live in, or because of the standards they've set for the home they want to live in.  Sometimes people just aim too high!  In any event, in most cases it is something that most people can do – take on a 15 year loan for less than 25% of their income.

I will be the first to admit that we've taken on a 30 year mortgage at our house because when we bought the house we weren't as serious about our finances, and we were over the 25% of our income as well.  At the same time we have no other debts to speak of, and since we bought the home our income has gone up – to the point where it is no longer over that 25% number.  In any event, we're also paying extra on the mortgage now to help pay it off early.

So what do you get by paying off the mortgage early?  You'll be giving yourself peace of mind in a tough economic climate knowing that your house is paid off.   If the worst happens and you lose a job or have a medical emergency, you’ll be able to get by on a whole lot less.   After all, the house is paid for!

Why You Should Pay Off The House Early

If you read personal finance blogs, there are a lot of arguments in favor and against paying off your home early.  Which is the better for people financially? To pay off their mortgage early, or to save and invest the money for the long term?

First, here are some points in favor of paying off the mortgage early:

  • Save Money On Interest: If you pay off your mortgage off early, you'll be saving thousands of dollars in interest.  Think about this:  If you have a $200,000 dollar mortgage for 30 years, with an interest rate of 6%, at the end you'll have paid $250,000 in interest.  Change that to a 15 year mortgage and only $115,000 in interest will be paid.   If you can pay down the mortgage even faster than 15 years, you'll be saving even more because you'll be paying less interest.
  • Mitigate Your Risk:  One of the most attractive things about paying off the mortgage early to me is the fact that it helps to minimize the amount of risk that you have in your life.  With a paid off house you don't have to worry about mortgage payments.  If you can scrape enough together to pay for food, transportation, clothing and utilities, you should be able to get by. Without a mortgage that number is significantly lower.   Trying to invest the money and come out ahead may work for some, but because investing is inherently risky (we've seen that in the last year or two), it could mean adding risk to your life as well.
  • Financial And Emotional Peace + Less Stress: With no mortgage I know that we would be much closer to true financial and emotional peace just because we wouldn't have the debt weighing on our shoulders – and the risk of losing our home to a job loss or medical issue are greatly reduced.  So less  debts and obligations mean less stress in our household.  Add to that the fact that you’ll have less stress when having to deal with a job change, or wanting to become a one income family so one spouse can stay home with the children.   When you have a paid for house you’ll only need to cover the minimum of life's essentials – and you'll have walkaway power – power to walk away from any job you don’t love or enjoy because you only have minimal expenses!
  • With A Paid Off Mortgage You Get A Huge Raise!:  When your monthly debt obligation drops so significantly because you've paid off your house, it means that your income will go up significantly. Can you imagine how much money you could save, invest and give if you didn't have a mortgage?

Being debt free brings freedom, and sometimes that’s better than a few extra dollars made through investments.

Pay Mortgage Early

Arguments For Investing Instead Of Paying Extra On House

There are some pretty good arguments that others have made against making extra payments on a house.  Here are the few that made the most sense to me:

  • Keeping Your Holdings Liquid = Flexibility:  When you have your money in investments as opposed to prepaying on a house, the money is going to be more accessible if you absolutely need to access it.  When your money is being invested in a house, you can't exactly just cash it out – you still need a place to live.   So many would suggest that investing your money will give you more flexibility in the case you need to access your money in an emergency.
  • Returns On Investing Will Be Higher:  If the money you expect to make in the stock market is more than the amount you'll save by pre-paying your mortgage, than it may be a better bet to invest your money.
  • Inflation Is Your Friend?: Inflation goes up by a rate of 3-4% every year, so by not prepaying your mortgage you are in essence paying less money for a house that is increasing in value every year.  The amount you pay in 2040 to live in your house is the same as you're paying in 2010.   You'll be getting more for your money!
  • No Asset Diversification:  By only investing in your house, some argue that you're not properly diversifying your holdings – you're only investing in one asset type and class.  Better to invest and diversify your holdings.

The arguments for investing vs. paying off your mortgage early really do make a good case, although I will admit some of them hold less merit for me than others.

What We're Doing

We've considered both sides of the argument at our house, and in the end the thought of having a paid off house  – and no mortgage debt – just appealed to us more.  We love the idea of having the freedom and the walkaway power that goes along with having a paid off mortgage.

At the same time, we still want to invest.  So what we're doing at our house is a little of both. We're both investing for our future, and we're pre-paying our mortgage to the tune of several payments per year.  We may not pay off the house as fast this way, but we'll still be paying it off years early.

What do you think about paying off the house early?  Do you think it’s a good idea or a bad idea? Which path are you choosing if you’re at that point? Tell us in the comments!

Buying A Home: When Is The Right Time?

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Humanity has come a long way since the time we lived in caves.

Back then, we simply had to find a cave that didn't have a bear inside of it, and we owned a home.

Now, it's a bit different.

There's a whole process and lots of different people involved in the home purchase event. There are also a lot of questions that will need to be answered, such as what are my homeowner's insurance costs going to be, how much do solar panels cost or where should I go to get my loan.

In this article, we will discuss what it takes to purchase a home.

Buying a Home: When Is The Right Time?

Buying A Home

How do you know when it's the right time to settle down and purchase a home? Is it when your bank account has the zeroes needed to put a hefty down payment, or when your kids have begun to drive you crazy inside of your two-bedroom apartment?

This answer varies depending on the individual or family's situation, but there are some guidelines to follow before even thinking about purchasing a home. Below is a list of these guidelines, and what they entail:

  • Credit: In order to get a good mortgage (unless you're buying in cash) you must have good credit. There is no way to even be considered for a home loan without having good credit. Lenders want to know that they will be repaid, and a history of late payments, collections, and other events that appear negative, can have a huge impact on your loan and you may even get denied for a home loan. A rule of thumb is to have a credit score above 700 which is considered “good” credit. Anything above 750 will put you in a very good spot in the lender's eyes.
  • Job Security: Another thing that mortgage companies want to make sure is stability in your job. They don't want to know that you've had six jobs in the last six months. This shows irresponsibility, and a lack of commitment. If you're going to keep paying a mortgage for fifteen to thirty years, they want to know you're a stable person and can keep a job for more than two years.
  • Down Payment: Before applying for a mortgage, you need to make sure that you can put down at least 25% of the price of the home. This will ensure you get a better rate, and that your monthly payment is as low as it can be. The less you put down, the higher your monthly mortgage payment will be, and the higher your interest rate will be.
  • Savings: Remember we were talking about job security. If you've had a few jobs in the past two or three years, you can give some security to the lender by letting them know that you have a large savings account. If you don't, you may have to wait a few more years to accumulate it.
  • Proper Knowledge: Buying a home is much more than just “buying a home.” It may be a month's income for the realtor, it may meet a mortgage broker's quota for the year, and it can be a great investment as well. For these reasons, you need to have the proper knowledge about escrow companies, title companies, realtors, contracts, negotiation, and the fine print of your mortgage contract. The aforementioned professionals can all help you with this, but it is always smart to triangulate with other professionals to make the best decision possible.
  • Market Trends: In the previous passage we mentioned how a home can be an investment for some. Market trends can cause this investment to increase and create a good return if you were ever to sell, or it can put people underwater just like it did in 2008. You must project your home's value into the future because you do not want to be stuck with a mortgage that is more than what the home is going to be worth in five to ten years.

There are many important items to think about before purchasing a home. These include knowing as much as possible about the home buying process to prevent problems, projecting future values and trends inside of your market, having a stable income, and good to great credit.

When everything is in place, you can begin to build the home of your dreams.

Are You Ready Financially And Emotionally To Buy A Home?

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One of the big financial and life milestones that our society still values is the purchase of a home. We assume that a home is going to be a solid investment, even if it's more of an emotional investment than a financial investment.

But are you really ready to buy a home? Casey Fleming is the founder of LoanGuide.com, and he has decades of experience in the mortgage industry. He sees plenty of people buy homes when they aren't ready for the financial and emotional commitments that come with home ownership.

house

Financial Preparation to Buy a Home

Before you buy a home, review your finances. Are you truly ready for the cost? “You need to have the savings, credit, and income to support the purchase,” says Fleming.

It's not just about saving up for a down payment. Fleming points out that there are ongoing maintenance and repair costs associated with being a homeowner. “Your landlord will no longer come when the dishwasher breaks,” he says. That's something that you are in charge of. From yard care to repairs, you are in charge of caring for your home.

Not only that, but you also need to consider the costs of insurance and property taxes. These are expenses that will impact your finances in the long run, and you need to be prepared. Also, be on guard against being house poor. The cost of paying for your home and maintaining it can mean that you don't have the money to do other things.

Emotional Preparation to Buy a Home

Don't forget that a big purchase like a home means emotional involvement as well. You need to be ready for the changes that home ownership brings into your life and the way you live it.

If you have a lot of debt, buying a home and adding to that debt will only strain you further. Additionally, both you and your partner need to be on board with the purchase. Otherwise, you'll end up unhappy over the home.

Another reality is that your lifestyle might change. “When you buy a home, your life changes,” says Fleming. “No more exotic vacations, and you usually can't pick up and go rock climbing for the weekend.”

Instead, you have duties and expenses that mean you need to consider the impact of long absences. On top of that, you have less flexibility in living arrangements. You can't just break your lease and leave when you own a home. You need to be sure that you are emotionally ready to put down roots in one place before you buy, and realize that your home ownership ties you to a specific location and lifestyle.

Before you buy a home, make sure that you are truly ready for the responsibility. This goes beyond just the financial aspects. You also need to make sure that you are ready to handle the emotional realities of home ownership. “If you don't really want to take on the lifestyle of a homeowner,” warns Fleming, “it will probably be a terrible investment.”

Why I’d Rather Pay $10,000 to Unload My House Than Become a Landlord

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There are people out there who are made to be landlords. They like the idea of having someone else pay the mortgage on a home or apartment building and enjoying the ability to build equity on the property without using their own money. Once the property is paid off, the monthly rent is income (offset by the cost of taxes, insurance, and keeping the property up).

I totally get why some people love the idea of getting into real estate and renting out property. I even get why many people who, upon moving, decide that they would rather rent out the old home than sell it.

I am not one of those people. I am getting ready to move across the country, and my husband and I have no desire to try to rent out the house. In fact, in the worst case scenario put forth by our real estate agent, we will have to pay $10,000 to unload our house.

But I'd rather do that than become a landlord. Here's why:

pay to sell house

I Don't Want to Worry About Damage to the Property

We've taken good care of the house. When we were tenants, we took good care of the rentals we lived in. I expect, now that we are moving into a rental again, we will once again take good care of our living space. However, not everyone is as conscientious as we are. We have one (well-behaved) child and no pets. I've seen what others have done to rentals in the past. We wouldn't want to allow pets, and, while we could technically say no to someone with lots of rowdy kids, we'd feel bad.

The other issue is that of tenants who might not pay rent on time, or who might have a history of damaging apartments. It's true we can vet our tenants with credit checks, background checks, and reference checks. However, these things take time and money. And I don't want to mess with it. Properly vetting a tenant is more work than I want to do, and even then you still run the risk of having problems with the tenant.

Managing Long Distance Is Too Much Work

Another issue is that of management. I don't want to manage a property in Utah from Pennsylvania. From maintenance needs and repair issues to checking up on the tenants, doing so from 2,000 miles away just doesn't appeal to me. Yes, I could hire someone to manage the rental for me, but that requires that I go through a vetting process to find a suitable candidate, and I am not interested in doing so.

Plus, it's one thing to hire a manager or management company for an apartment building, or to help you with multiple properties. It's quite another to hire someone to manage a single home. None of it seems worth it.

Hopefully we'll be able to break even on our home sale, but even if we're not, it's worth it to me to avoid the hassle and inconvenience of being a landlord. It's just not my thing.

What about you? Would you consider becoming a landlord? If you are a landlord, what do you like about it?

Has Your Home Offered You A Solid Return So Far?

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One of the cool tools offered by CNN Money right now is a calculator that lets you see whether or not your home has been a good investment. You enter information on when you bought your home, as well as how much it cost. Then you enter how much it is worth right now. The results display your total return and your annual return. You can also see how your home's value has fared in comparison to investments like stocks and bonds.

I entered my information in the field, and found that my annual return is 1.0% on my home. This isn't surprising, since the appraisal associated with the refinance I completed indicates that our home has increased in value a little bit since we bought in 2007. CNN Money's calculator indicates that the average U.S. home has seen an annual loss of 4.7% in the same period of time.

But how does my home's value compare with the performances of stocks and bonds since September 2007?

Home value solid investment returnWell, to tell the truth, I wasn't surprised to see that stocks have returned 3.1% annualized since then. With the recent gains in the market completely erasing the disappointing years just following the financial crisis, it's not hard to understand why stocks have seen better returns than residential real estate. Bond have done even better, offering a 5.6% annualized return, according to the CNN Money calculator.

What the Calculator Doesn't Account For

Of course, the calculator is quite simple, and doesn't account for some of the costs associated with home ownership. Your home is one of those assets that has potential, but can really cost you over the long term. That 1.0% annualized return calculated by CNN Money doesn't take into account the amount of interest I've paid on the home in the last 5 1/2 years. Even after I account for the tax deduction associated with the taxes, that 1.0% annualized return is basically erased. And that doesn't include the cost of property taxes (even with offsetting tax deductions), utilities, landscaping, and maintenance.

Once all of those things are added into the equation, I've been losing money on the house.

The calculator also doesn't take into account the reality of trying to sell a home. Even though the appraisal says one thing, I know that we won't get that much back for it. To sell a home in my neighborhood, where there are for-sale signs everywhere and others are lopping $15,000 to $20,000 off their original buying prices to sell quickly, we're going to be stuck paying to discharge our mortgage when all is said and done (assuming we end up moving in the next 12 months).

Of course, the return on investment on a home isn't all financial. Some of it is emotional. My family has enjoyed living in this house. We have been able to landscape it how we want, and we have been able to arrange matters as we prefer. Additionally, there's something nice about a home that we can't be kicked out of when the lease is up (happened to us once when the owner decided she wanted the house for her grandkids). Being able to call someplace “home” and give our son a secure place to return to has its charms.

So, even though the home hasn't been a solid financial investment, it's been worth it to us in other ways.

What do you think makes a home a good investment?