Good Life Advice from Grandma

 

From a syndicated personal finance columnist:

The best advice I received was from my Grandmother. 

When I was 14 and got my first job as a tutor, she told me to save something from that paycheck--and every time I got paid.

So, all my working life, I have saved part of my payday. Every. Single. Paycheck. She made me a lifelong saver in good times and bad.

My husband and I put our children through college with no debt, largely because of our saving habits.

Lots of people look for a quick way to get rich. 

But my Grandma was right: Save a little something from every paycheck and patiently grow your wealth.

The Magic number to set your AC Temp

 

78 degrees Fahrenheit - the magic number

According to Energy Star, a program of the US Environmental Protection Agency and the US Department of Energy, 78 degrees Fahrenheit is the ideal temperature for air conditioners in the summer.

This setting helps you stay cool while simultaneously saving money because it strikes the perfect mix between comfort and energy economy. 

How is the Local Market doing?

 This Data is for Lansing, South Holland, Lynwood and Thornton in Illinois and NW Indiana:

• Still Hot describes the real estate market. Selling Prices are still Really Good. The last 4 homes we Sold, had multiple offers. 

   

• Low Listing Inventory is keeping prices up. You will get top dollar, if now is the time to sell.

• When interest rates fall, you can talk to your Lender about refinancing. Mortgage refinances can help homeowners save money by lowering their monthly housing cost, or by reducing their interest rates and improving the terms of their loan. 

• It may make sense to consider refinancing if your financial circumstances have improved since you took out your original mortgage or your current interest rate is at least 1% higher than what the current rate is.

• How much does a 1% decrease in interest rate lower a mortgage payment?

         If you have a $300,000 mortgage, a 1% decrease in interest rate, saves you $175 per month more on your mortgage.

   

 

Real Estate Market Update

 The Real estate Market in Illinois AND Indiana is still good, due to a shortage of Listings.

There are still buyers out there, despite interest rates being around 6.6%.

Another measure we use to determine market activity is called Absorption rate.

AB rates: less than 5 (months) indicate a Sellers market.

AB rates 5-7, indicate a balanced market.

AB rates greater than 7, indicate a buyers market.

NW Indiana, including Cedar Lake, Munster, Dyer, Highland, Schererville, St. John and Crown Point, is currently at 1.8.

If you are a seller, this is still great news. Listing inventory is low.

If you are a buyer, this is still good, because there are fewer buyers and less competition. Fewer multiple contracts.

In the Southern Cook county Illinois suburbs of Lansing, Thornton, South Holland and Lynwood, the AB rate is 2.6.  Yes, a Sellers market with the same reasons as Indiana.

Do you have to pay capital gain on the profit from your home?

 You can sell your primary residence and be exempt from capital gains on the first $250,000 if you are single and $500,000 if married filing jointly. All you have to do is live in the house at least 2 of the last 5 years. Exemption is only available once every 2 years.

Plus, you can add your cost basis and costs of any improvements that you made to the home to the $250,000/$500.000 amounts.

Example: A married couple, purchased a home for $500,000 in 2015. The neighborhood experienced tremendous growth, and home values increased significantly. Seeing an opportunity to reap the rewards of this surge in home prices, they sold their home in 2022 for $1.2 million. The capital gains from the sale were $700,000. As a married couple filing jointly, they were able to exclude $500,000 of the capital gains, leaving $200,000 subject to capital gains tax. If they had sold for $1.0 million, there would be no capital gains tax. $1.0 million sales price - $500,000 original purchase price = $500,000, which would be exempt from taxes.

Always consult a tax professional, as a double check and because of the mention of cost basis and improvements mentioned earlier.

This is an excellent incentive to invest in real estate, as up to a $500,000 gain is not taxable.

And as Mark Twain once said: 

“A person doesn't know how much he has to be thankful for until he has to pay taxes on it."

Except in selling your home!

Another Indicator that the local Real Estate Market is Still Pretty Good