Redfin Estimate: Now More Accurate and Available for 11 Million More Properties – Redfin Blog

December 19, 2019 October 5, 2020 by Alina Ptaszynski

Updated on October 5th, 2020

Big news! Redfin is excited to announce today that we’ve improved the accuracy of the Redfin Estimate and expanded coverage to five new metro areas and several additional property types, including land and multi-family properties. The Redfin Estimate is a calculation of a home’s worth, built on our propriety machine learning algorithm that uses billions of data points about properties across the country. Our engineers and data scientists improved the accuracy of the estimate for off-market homes by 70 basis points, as the median error improved from 6.3% to 5.6%. An error rate of 5.6% means that half of all Redfin Estimates fall within 5.6% of the home’s eventual sale price. For a typical $300,000 home, the updated Redfin Estimate is now $2,100 closer to the market value and will be within $16,800 of the final sale price half of the time. 

Among Redfin’s most popular features, the Redfin Estimate gives homeowners, buyers, sellers and real estate agents insight into the value of more than 85 million properties. Claim your home on Redfin to track its Redfin Estimate over time and edit facts about your property to further improve the accuracy. When it’s time to sell, the Redfin Estimate is often the starting point in a conversation with your Redfin agent. 

“Everyone wants to know what their home is worth, which is why the Redfin Estimate drives so many homeowners to visit our site and start a conversation with a Redfin agent,” said Redfin CTO Bridget Frey. “In real estate, every tenth of a percentage point matters and can represent hundreds or thousands of dollars in a home’s value. Agents know that a smart, data-driven pricing strategy is often the difference between a home that sells quickly with multiple offers and one that sits on the market. The accuracy of the Redfin Estimate speaks to Redfin’s data advantage as a brokerage that employs thousands of real estate agents across the country who work hand-in-hand with our engineers, providing uniquely human insights as we train our machine learning algorithms. With the best data, top tech talent and deep agent expertise, Redfin has the necessary ingredients to transform the real estate industry through AI and machine learning.”

A highly accurate estimate is also critical for RedfinNow, our instant-offer business. RedfinNow buys homes directly from homeowners for cash, fixes them up, if needed, and then quickly resells them. 

“The new release not only improves the accuracy of the estimate, it includes back-office tools for RedfinNow that show the confidence of the estimate and project the future sales price, so we can better assess the risk and opportunity of buying a particular home,” said Quinn Hawkins, head of RedfinNow. “With continued advancements in AI and machine learning, we can envision a future where the Redfin Estimate becomes a live offer for a subset of properties.”  

More Accurate

Redfin has improved the accuracy of the Redfin Estimate for both off-market and on-market properties. For homes actively listed for sale, the Redfin Estimate error rate improved by 5 basis points, improving from 1.62% to 1.57%. These accuracy gains for both on- and off-market properties were measured by comparing the performance of the previous algorithm to the updated algorithm between February and August 2019. The Redfin Estimate error rate is dynamic and updates daily for on-market homes and weekly for off-market homes. The most current national and local error rates are listed on the Redfin Estimate page

Redfin’s engineers and data scientists improved the Redfin Estimate’s accuracy by conducting hundreds of experiments, testing and retesting new models and incorporating new data. Because Redfin is a brokerage, the company has complete access to the Multiple Listing Services (MLS) used by real estate agents to describe properties in extensive detail, with each MLS tracking different attributes of a home that Redfin can use to calculate a more accurate estimate, such as whether a home is located on the water, has a view or faces a busy street.

Expanded Coverage

Redfin also expanded the Redfin Estimate to five new markets: Connecticut, Boise, Des Moines, Spokane and Chattanooga. Previously available for three property types: single family homes, condos/coops and townhouses; Redfin can now provide estimates for several new types of properties including land, mobile homes and multi-family buildings. 

Check your home’s Redfin Estimate on redfindevelop.wpengine.com/redfin-estimate.

Source: redfin.com

Harry Gesner’s famed Flying Wing house aims for $8 million

Harry Gesner’s name will always be linked to his iconic Wave House, a curvy coastal home that hovers above the ocean in Malibu and served as the inspiration for the Sydney Opera House.

Another of the architect’s most notable works, however, just surfaced for sale across the city in the Hollywood Hills, where the Flying Wing house is up for grabs at $8 million.

Based on the form of a bird, the architectural gem was built by Gesner in the 1970s for Mike Hynes, a lumber mill owner who reportedly wanted the home to showcase his company’s wood. Gesner fulfilled Hynes’ vision, as the hilltop perch employs a structural system of wood poles and features living spaces loaded with lumber.

“It looks like a flying eagle about to take off from the mountains,” said listing agent Jason Oppenheim of Oppenheim Group and Netflix’s “Selling Sunset.”

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Forty-five years later, the stunning abode still maintains its original flair thanks to a 2014 remodel by modern architect Dean Larkin. His renovation focused on letting the space take full advantage of the scenic setting, and he added a bevy of windows for better views, including a primary bathroom with pocketing walls of glass so the tub overlooks the city.

In addition, he installed an LED-lighted staircase, an updated entry with a water feature and — because the property lacked a yard — a green space created through a series of retaining walls.

It’s currently owned by the estate of Erick Morillo, a DJ who died earlier this year who produced music under the moniker Reel 2 Real. Morillo, whose hits included “I Like to Move It,” bought the home for $7.6 million in 2014.

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The property got another face-lift over the last few months when Oppenheim oversaw some renovations through his concierge service, in which he fronts money needed for updates and is paid back at no interest when the property sells.

Oppenheim said he put more than $100,000 into the property, which saw him treat and stain the exterior wood, replace the lighting, update the audio-visual system, replace grass with turf and add landscaping and an herb garden.

“It’s a win-win because I want to list the property in perfect condition and don’t want any money left on the table,” said Oppenheim, who sold the house to Morillo back in 2014 and said that it remains his favorite house among all the properties he’s sold in his career.

Today, it holds four bedrooms and three bathrooms in about 4,500 square feet. It’s perched on its own promontory lot of about an acre with 300-degree views, parking for six cars and a variety of outdoor spaces. Lawns stretch along the side of the estate, and out back, there’s a spacious patio, dining area, outdoor kitchen and an infinity-edge swimming pool and spa with a recording studio tucked underneath.

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The living spaces are sunny concoctions of wood and glass with a few splashes of brick. Highlights include a living room with a wet bar, an indoor-outdoor dining area and a sprawling second-story entertaining deck. An elevator navigates the two-story floor plan.

Source: latimes.com

How We Reached Financial Independence in 3 Years Using Airbnb & Real Estate

Hello! Today, I have a great guest post from Boris and Susan. They purchased their first real estate property in 2017, and became Airbnb hosts. This was a 4-bedroom home that ended up generating them $120,000 in revenue in the first 12 months. They now host close to 10,000 guests per year across all of their properties and do all of this remotely. Below is their story, enjoy!

A foreword given the current state of the world

We wrote this post back in February to describe and share our experience using real estate and Airbnb over the past 3 years to build additional sources of (semi-passive) income. As everyone else, we had no idea that the world would change so dramatically in less than a month after that.

However, although it certainly did change – especially given that the travel and hospitality industry came to a grinding halt and caused a few heartburn-filled weeks – the fundamentals remained valid. 

As we’ll discuss towards the end of the article, we’ve been able to make adjustments and pivot in a way that kept our properties occupied, covering costs, and still generating a profit (albeit a smaller one than usually).

The truth is that if we’re looking at a 3-9 months horizon, things will remain challenging and uncertain. However, this was never a short-term strategy for us, as we try to plan for the next 3-10 years and make decisions based on that sort of a timeline. But first, let’s start in the beginning.

_______________________

Here’s how it all got started as Airbnb hosts.

For many years, real estate was not really on my radar.

I was happily renting, enjoying the flexibility that it offered, and generally thought of real estate in the context of owning your own home – mainly that it limited your options and didn’t really bring too many positives, other than the hassle of maintenance and doing your own lawn every Saturday.

When I met my wife, Susan, on the other hand, she grew up with a completely different mindset.

When she was growing up in China, the common wisdom was that you should always strive to own your own place as soon as you can afford it.

When she moved to the U.S., she maintained the same viewpoint that owning real estate is a key to becoming financially secure.

We’ve met in late 2013 and started dating shortly thereafter. At that time, I was renting while she already had a condo that she was living in and the topic of real estate and financial independence would start to come up with occasional frequency.

In late 2015, we decided to go to Seattle for Susan’s birthday and, as a surprise, I rented a little houseboat on a lake for the weekend on Airbnb. If only we knew what this would have led to!

We enjoyed the weekend on the houseboat so much that when we came back home, we started to throw around the idea of buying a houseboat of our own to rent out to others on Airbnb and occasionally using it ourselves.

Although we went back to our daily routine, we continued to toy around with that idea – although we weren’t quite sure how to proceed.

Then, as it often happens, the situation changed, as Susan decided to move out of her place and we were thinking of moving in together, so we started thinking about the options. During one late evening, I found myself on Craigslist and typed in “liveaboard boat” into the search.

Pretty much the first result was a beautiful, 36′ foot, twin-engine power boat with a description that started with “perfect for a liveaboard”. Complete with 2 (tiny) bedrooms, 2 (tiny) bathrooms, a living room, kitchen and 2 open-air decks, it seemed to offer everything you’d need to be comfortable. 

Best of all, it was half the price of anything else we looked at before at $28,000. Since it was about 30 years old, it was already fully depreciated, so we figured that we’d be able to buy it, use it and then eventually resell it and recoup most of our costs if we took good care of it. 

I went to sleep that evening thinking that this idea, like so many other late-night thoughts that “seem like a good idea at the time”, would go away by morning, but surprisingly it didn’t. Even more surprisingly, when I suggested the idea to Susan of getting that boat and actually living on it, she was intrigued!

Within about two months, we gave up the apartments that we both had, bought the boat, found a marina near downtown that had a slip available, and made it our new home. This began the new phase of our life together.

Related content:

Our Foray Into Semi-Passive Income

Living on a boat was a life-changing experience for us. It certainly wasn’t always easy, but it was incredibly special and beautiful.

We had the best of both worlds. The marina was near downtown, so we got to benefit from convenient access to work and all of the amenities of city-living.

However, our living costs were cut in half, as we no longer had rent to pay (there was still a sizable marina fee, utilities, and many, many maintenance expenses – but it still ended up lower than renting).

We continued to work full-time while living aboard. During that time, we slowly came to a realization that we want to have a bit more freedom and flexibility in our lives. Although we both enjoyed work, we wanted to have the flexibility to do other things later on and not have to rely on a corporate job. Of course, this would all depend on having enough income to pay for it.

Our thought process started to come back to real estate – but this time, it was also complemented by an idea that we thought that we could generate a decent income passively through hosting via Airbnb. 

We’ve used the service numerous times on our own and have even considered renting out the boat when we were away, but we’ve always hesitated making the first jump in it (the marina also did not permit it). 

While we were still considering it, an acquaintance passed me a lead on a property that just came on the market and everything aligned such that we decided to move forward with it and purchase it.

Our start as an Airbnb host

As we acquired the property, we decided to learn everything we possibly could come across about being a successful Airbnb host. As we’re both tech, marketing and spreadsheet-obsessed, we wanted to approach this in a very structured, strategic way.

We wanted to figure out how we can best optimize our occupancy and rates, how we can automate the mundane and repetitive tasks, and how we can deliver an 5-star experience to every guest every time – without necessarily creating a second full-time job for ourselves. 

We learned everything from scratch, from how to best decorate and furnish the rooms to how to hire a reliable housekeeper and streamline those processes. There were a million little things involved but before we knew it, our property was up and running.

To our great surprise, we’ve ended up generating over $7,000 in monthly revenue from it during the first full month.

This blew us away – this was literally my monthly paycheck and yet here, we were able to generate this all on a side. I think at the end of that first month, we already knew that this would be a game-changer.

Michelle’s side note: You can click here to sign up as an Airbnb host.

Taking it to the next level

The experience with the first property was quite insightful. As we continued to run and optimize our first property, we were already thinking about repeating this with another one.

We’ve decided to take what we learned and do it again elsewhere. After some consideration, we determined that we should look in other cities. This was in part driven by the fact that real estate prices were much more affordable elsewhere, as well as the idea that we actually wanted to spread our risk a bit better.

We figured that if we’re going to approach this with a goal of automation and scale, it wouldn’t make a difference if it was a 2-hour drive or a 2-hour flight from us.

Within the next three years, we proceeded to acquire another 5 properties in cities around the U.S. that we now run as short-term rentals. 

Between them all, we’re now on track to host 10,000 guests per year, while doing it entirely remotely – living hundreds and sometimes thousands of miles away from our cities. 

For us, doing short-term rentals became one of the key components of our investment strategy. And we’d love to share a bit of our approach, so it could hopefully be helpful to you as well.

Our hosting strategy before the pandemic:

Each time we considered a new city, we started with thinking about the hosting strategy itself. Every market is a bit different and the property should cater to the types of visitors that come there. We generally like cities and urban areas – especially those that have large universities, hospitals, or large companies based there. 

This typically means that there are a large number of people coming and going there all the time – not just on weekends.

Other people will find success in more traditional vacation markets or in their own backyard.The truth is that there is demand for short-term accommodations nearly everywhere, so it’s a bit of your personal decision what you want to focus on.

As far as our strategy goes,  at least before the pandemic happened, we prefer to rent out the properties that we have by the bedroom. Contrary to expectations, it actually tends to be less work than doing full-house rentals because people tend to leave less of a mess and be more respectful of the space if they are sharing it with others.

We also generally find that at the right price point, people don’t mind the fact that the common areas and bathrooms are shared. After all, they are paying a fraction of what they’d pay at a hotel.

At the same time, we also find that there is a premium on a larger space on the weekends when groups travel. For groups, renting a 3-4 bedroom house is much more convenient than renting multiple hotel rooms – so they are willing to pay a premium for that.

As such, we rent out the full house as a single listing on the weekends and then rent out the bedrooms – individually – during the week.

From the revenue perspective, this will help keep occupancy high and will ensure that the property is not sitting empty during the week. We generally see occupancy rates of 90%+ across all of our properties when we follow this approach.

Our first step was to really nail down our processes. If you simply launch and proceed to handle everything manually, it can quickly become overwhelming to manage it – especially if you’re running multiple properties. You’d essentially create a full-time, 24/7 job for yourself.

Fundamentally, there are several key areas of running a short-term rental business: 

  • Guest communication, 
  • Check ins and check outs,
  • Housekeeping, and 
  • Price optimization. 

Fortunately, we can now benefit from a plethora of 3rd party tools that exist on the market that can automate 95% of our work in a really simple way. Here’s how we approached it:

  • Guest Communication – typically the most time consuming process is guest communication and sending instructions. This includes details on how to check-in, how to use everything inside the house, how to check-out, and so on. Fortunately, we can solve this by using a tool like Smartbnb.io. This nifty service allows us to automate all of the check-in and check-out communication for your guests, as well as automatically send out responses to the most common questions.
  • Automated Check In and Check Out – we utilize keyless, digital locks that enable us to create a code for every guest when they check in. These locks can expire the code when the guests check out and generate new ones for every guest, if desired. This makes it very easy the coming and going of the guests.
  • Housekeeping – we typically invest quite a bit of time in finding, vetting and training a local housekeeper. That individual is quite important to the overall success, as they have a large impact on guest satisfaction (it has to be clean and neat every single time), as well as our ability to manage multiple properties remotely (they have to show up on time, every time).
  • Price Management – There’s a reason why hotels, airlines, and other industries adjust their pricing regularly depending on the demand, time of year, and a myriad of other factors. This is where technology comes in again. There are a couple of tools available on the market, such as PriceLabs, BeyondPricing, and UseWheelhouse that help Airbnb hosts with price management. They monitor the demand, competition, and occupancy of your listings and those of your competitors and automatically adjusts pricing for every single one of your listings every single day. You can set a strategy that you prefer and it will make the adjustments that help you get there.

Hosting strategy adjustments during and after the pandemic:

The reality is that the crisis had an effect on all types of real estate investors – both with long-term and short-term rentals. 

Arguably, for investors with long-term rentals, the situation was also quite difficult. If the tenants are unable or unwilling to pay rent, the tools you have at your disposal are limited. 

Short-term rentals are a bit different. Firstly, it’s worth highlighting that for short-term rentals, the impact was quick and significant – but not evenly spread. 

As properties in urban areas saw their occupancy decline overnight, there was actually an increase in demand for more remote, drive-to accommodations as people looked to book them for several weeks or months at a time to isolate themselves.

If you owned property like that, you have likely seen a small dip in demand when the country initially shut down followed by an increase in longer-term bookings. So traditional vacation rentals actually fared OK – and will likely continue to do well as people likely switch to more domestic travel for the foreseeable future. 

However many others, including ourselves, have properties in urban areas who don’t necessarily cater to the leisure traveler. As such, our demand dried up and did not necessarily recover on its own right away.

As the pandemic situation began to unfold in March 2020, most hosts had to figure out how to deal with the new reality. The objective for most was simple — in the short-term, cover all of your holding costs  (mortgage, interest, insurance, property taxes) and hold on until the situation begins to improve.

Taking Action

As the situation continued, we took a number of immediate steps:

  • Increased the maximum duration that guests can stay from 5 nights (our regular limit) to 90 nights to encourage longer-term stays while also giving us flexibility to go back to regular short-term rentals when things begin to improve.
  • Tweaked the pricing to offer discounts for multi-week or monthly stays.
  • Begun to explore additional channels outside of Airbnb, such as FurnishedFinder.com – which is a popular site for connecting with travelling nurses who are looking for temporary accommodations during their assignments.
  • Implemented and highlighted more intensive cleaning and sanitizing procedures throughout all of the properties.

What happened as a result is that we’ve quickly begun to fill up our listings with people who were looking for accommodations for 2 to 4 weeks or a bit longer. 

Some guests are medical professionals. Others are students who have been kicked out of their dorms. A number were airline employees who were caught in limbo between cities. 

Although the tourist and business travel market dried up, there were no shortage of people that have been displaced suddenly that needed a place to stay that was furnished, flexible and reasonably priced. 

And then there are quite a few people who were local who looked to isolate themselves for one reason or another and just needed a safe, affordable place to stay for a couple of weeks.

Although the RevPAR (Revenue Per Available Room) went down quite a bit with these reservations, it was still a bit higher than with traditional long-term rentals and allowed us fill in our listings quickly.

As a result, our occupancy across all of the properties remained at above 90% through March and April and is on track to do the same in May. Between all of the properties, we’re able to stay above break even point even during the worst of it.

Support Your Team

We’ve provided our housekeepers in different cities with additional directions on how to sanitize the property daily and highlighted this in the listings to let the prospective guests know what’s being done.

We’ve also communicated to our housekeepers that we’ll continue to support them through this and instituted a floor pay. Whereas before, their pay was typically dependent on the number of turnovers or days worked, we’ve let them know that even as we have more longer term stays that reduce the need for daily turnovers, they’ll continue to get a fixed pay throughout this entire crises that’s about 80% of the regular amount.

This was key because these relationships are vital to the long-term success and the people on the other end are the most vulnerable to the crisis.

So while it may be tempting to cut their work as booking revenue comes down, I think it’s wise to provide everyone with stability until things begin to return to normal — if you expect to continue to operate in the short-term rental space.

What’s next?

It is our opinion that the consequences of this crisis will be felt for some time to come. Regardless of whether the government “lifts the lockdowns”, people will be hesitant to travel until the vaccine is widely available and adopted.

I think that under the best of circumstances, we’re looking at a year or so until this is more under control.

In the meantime, we’re likely to see economic pain continue to depress the hospitality industry and the real estate market.

That said, for folks investing in real estate, it represents an opportunity not seen since the financial crisis over a decade ago:

  • For one, real estate prices have been unsustainably high to the point where in many markets, it is nearly impossible to buy and cashflow a small multi-family property. Yes, short-term rentals made it possible to be profitable, but ideally, any multi-family property should also be underwritten to work as a long-term rental so you have a backup plan. For better or for worse, I think we’re going to see a significant impact on the real estate market in the coming months as the sellers begin to be more anxious to get cash out of the market and the buyers are more hesitant with using their depleted cash reserves.
  • We’ll likely see a significant number of short-term rental properties shut down or be converted to long-term options. Many existing hosts who were not able to adjust may decide that they don’t want to deal with it anymore and simply convert their listings to long-term rentals.

Paradoxically, this may actually lower the pricing on long-term rentals, as more inventory will come online. On the flip side, the lowered supply of short-term rentals may actually increase the average daily rates for the short-term rentals that remain on the market.

Personally, since the beginning, we’ve loved the idea of using real estate as a means towards getting to financial security. This hasn’t changed today.

What has changed is how we underwrite any new purchase, what sort of a discount we’d be looking for to offset the uncertainty, and the ability of a property to be able to function both as a short-term, mid-term and long-term rentals and remain profitable even if the revenue is depressed.

We’re also not in a rush – there’s no reason to be. While we may see some opportunities come up in the next few weeks, we will likely wait towards the second half of the year before beginning any additional acquisitions.

Then, we’ll likely expand beyond just urban markets to also focus more on traditional vacation markets. Especially over the next few years, we expect that people will remain hesitant about traveling abroad for their leisure and instead will seek out places they can go to domestically with their families for vacations.

We remain bullish on short-term rentals as a long-term investment strategy and will be spending the next few months on research, analysis and forming the strategy, so we can get everything in order for when we are ready to act.

To sum it up, once everything settles down, for those that are prepared, there will undoubtedly be significant opportunities to explore and act on.

Are you interested in buying real estate to rent out? What about becoming an Airbnb host?

About Boris & Susan

Boris & Susan are experienced Airbnb hosts and real estate investors hosting close to 10,000 guests per year around the country and managing their properties remotely while working full-time.

They write more about their experience, as well as help other people acquire, launch and automate their short-term rental properties at www.BuildYourBnb.com. Drop by to say hello or email them at [email protected] with any questions you may have!

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Source: makingsenseofcents.com

478: Leverage LinkedIn for More Listings, Buyer Clients and Real Estate Profits with LinkedIn Expert Italina

Most real estate agents are missing a huge opportunity by failing to leverage LinkedIn to grow their real estate business. Today’s podcast features real estate LinkedIn expert Italina who offers us a ton of specific, actionable steps and strategies you can use right now to sell more listings, get more buyer clients and build a valuable referral network on LinkedIn. If you want to find out what real estate agents should and shouldn’t be doing online with LinkedIn real estate marketing to make more real estate profits, then this is the podcast for you. Listen now as Pat Hiban interviews rockstar LinkedIn expert Italina!

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How to Pay for College: 5 Strategies and Tips

How to Pay for College: Strategies & Tips – SmartAsset

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Figuring out how to pay for college can be one of your biggest financial challenges, whether you’re a student or a parent who’s preparing to send one of your kids to school. According to CollegeBoard, the average cost of tuition and fees for in-state students attending public four-year universities and colleges was $10,440 for the 2019-20 academic year. The cost for out-of-state students climbed to $26,820, while students attending private colleges paid $36,880 per year on average. With the costs of higher education continuing to climb, researching all the options for covering college expenses can help to ease the financial pressure. Contacting a financial advisor who understands the ins and outs of paying for college can also ease such financial pressure as well as saving time.

How to Pay for College: Start With the FAFSA

The Free Application for Federal Student Aid (FAFSA) is what’s used to determine financial aid eligibility for students. Completing this form is a good idea even if you don’t think you (or your student) will qualify for financial aid, which could include:

  • Federal student loan
  • Work-study aid
  • Grants
  • School-based aid
  • State-based aid

You can complete the FAFSA online and the deadline for doing so is the end of June each year. The earlier you get your FAFSA in, the better, since some schools award financial aid packages on a first-come, first-served basis.

When completing the FAFSA as a student, you’ll need to include information about your income, your parents’ income, your assets and their assets. Student assets are weighted more heavily than parent assets so not having bank accounts or other assets in your name could work in your favor when attempting to qualify for more aid.

If you’re approved for a financial aid package but it’s less than what you’ll need to cover your costs of attendance, don’t panic. Instead, consider appealing your financial aid award. You’ll need to write an appeal letter explaining why you believe more aid is merited or needed and send it to your school’s financial aid office.

Research Scholarships and Grants 

Scholarships and grants can be one of the best options for how to pay for college since these funds typically don’t need to be repaid.

There are numerous places to find scholarships and grants, including:

  • Your school
  • Nonprofit organizations
  • Public and private companies
  • Fraternal organizations
  • Government programs

Some of these programs may require you to submit a FAFSA to qualify, so you’ll need to do that if you haven’t yet. And keep in mind that some scholarships may be merit-based while others are need-based.

Merit-based programs are awarded based on academic achievement and potential while need-based awards are tied to your financial need. When researching scholarships and grants, pay attention to what requirements are needed to maintain your award.

For example, some government-sponsored awards such as the National Health Service Corps Scholarship, require you to agree to a work commitment after graduation. If you accept a scholarship or grant that has a required work commitment and don’t follow through on it, you may be expected to pay back some or all of the money you received.

Apply for Work-Study

When you complete the FAFSA, you’ll have the option to apply for work-study. A work-study program is the equivalent of a full- or part-time job you take on while in school to help pay for college costs. This is a need-based funding program.

Work-study positions can be on-campus jobs or off-campus. These positions are usually limited, which is another good reason to get your FAFSA in as early as possible. If you’re approved for a work-study job, make sure you check the pay and the hours you’ll need to work to maintain your participation.

Open a College Savings Account

College savings accounts can help you save money for college on a tax-advantaged basis. There are two main options for how to pay for college with savings: a 529 plan or a Coverdell Education Savings Account.

With a 529 college savings plan, the money you save can grow-tax deferred until you or your student is ready to go to college. Once you begin withdrawing the money, those withdrawals are tax-free as long as they’re used for qualified education expenses.

You can contribute to any state’s 529 plan, regardless of whether you live in that state or attend school in that state. The lifetime contribution limits for some of these plans can be in the hundreds of thousands of dollars, giving you plenty of leeway to save for college.

Coverdell ESA has a $2,000 annual contribution limit. You can make contributions to one of these plans for a student under 18. Like a 529 plan, withdrawals for qualified education expenses are tax-free. But you have to use up all the money by the time the beneficiary student turns 30; otherwise, you’ll face a hefty tax penalty.

Speaking of taxes, there also are three back-to-school tax breaks parents of college students should be sure not to miss.

Be Strategic With Student Loans

Taking out student loans may not be ideal if you want to avoid debt while paying for college but it may be a necessity. If you’re considering student loans to pay for college, it helps to start with federal student loans first.

You can apply for these loans by completing the FAFSA. Federal student loans can offer low interest rates and you typically don’t have to make payments toward them if you’re enrolled in school at least half-time.

There are limits to how much you can borrow with federal loans each year, however. If you need more money to pay for college you could also research private student loans as an option.

Private student loans can offer higher borrowing limits but  do require a credit check to qualify. If you’re applying as a student and you don’t have credit established yet you may need a cosigner to get approved. The upside is that having a cosigner with good credit could help you secure lower interest rates on private student loans.

When applying for private student loans, pay attention to the interest rates and repayment terms. Also, keep in mind that private student loans aren’t required to offer the same benefits and protections as federal loans. Those include grace periods, deferments and temporary forbearance periods.

The Bottom Line

Deciding how to pay for college is no easy task but fortunately, there are multiple ways to approach it. Besides these ideas, other options for paying for college include getting a part-time job or starting a side hustle if you’re a student. If you’re a parent, you might consider taking out federal PLUS loans in your name or withdrawing money from your retirement accounts. Before pursuing any one way to pay for college, however, consider both the pros and cons first.

Tips for Investing

  • Consider talking to your financial advisor about the best ways to pay for college and how to work that into your financial plan. If you don’t have a financial advisor yet, finding one doesn’t have to be complicated. SmartAsset’s financial advisor matching tool can help you connect with professional advisors in your local area. It takes just a few minutes to get your personalized recommendations online. If you’re ready, get started now.
  • Step One in any plan to cover college costs should be calculating what it will cost. If it turns out that a loan makes sense then be sure to use a free student loan calculator to make sure you’re applying for the right amount.

Photo credit: ©iStock.com/sshepard, ©iStock.com/Morsa Images, ©iStock.com/nirat

Rebecca Lake Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
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Source: smartasset.com

How My Wife and I Lived on $2,000 Per Month for 3 Years During a Financial Hardship

Hello! Today, I have a guest post from Dave at The Dollar Blogger. Dave lost his job, and then 2 weeks later his wife was laid off. This is their story of how they got by, their sacrifices, strategies, and more.

I’ll be honest – I’m not one for excessive frugality. I wouldn’t consider myself frivolous, at least, not anymore, but my wife Mary and I were hit with a solid dose of reality when we lost all of our income over the course of two weeks in 2012. One wrong turn and a layoff two weeks later took Mary and me from making over $100,000 in a year to zero income.

In this post, I’m going to share with you this scary financial hardship that rocked our world, and how the two of us got through it successfully and back on our feet.

We also learned some life-changing lessons about money, which is excellent for anyone who suffers a sudden and total income loss.

In the end, we lived on $2,000 a month, for just over three years.

Related content:

From $100,000 to Zero in Two Weeks

In 2012, I was working as a software engineer making $75,000 a year, and Mary was making $12/hr as an intern at a local business, with a potential raise to $15/hr once hired.

This put us at roughly $100,000 a year, and boy, we were excited.

We had been scraping by for the past couple of years after moving to a new state where we hoped to start life anew.

We were so sure that life could only go up that we were meeting up for lunch daily, spending up to $100/week during the week on lunch alone. We would then spend an additional $100-$200 per weekend eating out, sometimes twice a day.

With a fully-owned townhouse, our only major expenses were HOA fees, taxes, utilities, food, and basic necessities.

But, my job was causing me undue amounts of stress, and I left it voluntarily, under the assumption that a web design business I started as a side hustle would take off. I also assumed my wife’s internship would turn into a full-time job. Both accounts didn’t happen.

Once we both lost our jobs, our income fell to zero. Mary had another year of grad school, and we didn’t want her to withdraw.

Before we could even think about creating a budget, we had to address one of the top reasons that can lead to divorce – financial problems.

The Initial Toll on Our Marriage

Now, I’m no counselor, but I have learned over the years that financial issues are one of the leading causes of divorce. In fact, according to Insider, over one-third of all people polled stated that financial problems led to their divorce.

Mary and I had and still have a strong marriage, but this financial hardship tested us. Here’s what we did before we even examined the budget.

  • Assess what to do: We sat down and talked about how we would live off zero income and how we could recover while keeping her in school. We went on a spending freeze for as many days of each month as we could. Mary and I discussed who could work where and for how much.
  • Disability Claim: I have Asperger’s Syndrome (an Autism Spectrum Disorder), however in my adult life, it hadn’t really gotten in my way as far as work. Some people with this disorder gradually get worse over time. I decided to get evaluated for such to see if I could claim a disability.
  • Could Family Help? Mary’s family offered to send us cash every month while we got back on our feet. While only so much was available, it did help us make a budget.

In the end, Mary got a temporary job at a local gas station/minimart, and I helped Mary’s father work on his business. Combined with getting a little extra money from Mary’s family, we ended up with $2,000 per month in income after living with no income for several months.

The key take-away that I got from this exercise was that in a financial hardship, it’s crucial to be on the same page with your spouse.

Had we resorted to fighting and finger-pointing, everything would only get worse.

The Tightest Budget We Ever Made

It’s always been my job in the relationship to draft updates to our household budget and finances. Mary certainly has her say and must agree to everything, but I do all the initial drafting.

I had $2,000 to closely allocate to all of our expenses, including around $8,000 in credit card debt that had wracked up before the loss and in the several months that we had zero income.

After mulling over the numbers for some time, our budget looked something like this:

Let’s break this budget down, shall we?

First of all, notice there is no line item for credit card debt.

When I wrote this budget, I was so desperate to fit everything in that I left out a key item. What ended up happening was, I used our Buffer / Margin of Error, combined with what was leftover each month from our Semi Variable Costs, to pay as much of the credit card debt as possible.

In hindsight, I would have lowered our Electric / Gas / Water bills through more strict usage. The financial hardship started in winter, and we could have cut back on electric heat by wearing several layers of clothing. With a near $250 electric bill in the winter, mostly from heat, I imagine we could have saved $50-$100 simply by wearing heavy sweaters or jackets while inside the house. This was an oversight and something one can consider if they are on an incredibly tight budget.

Mary and I have clean driving records, and at the time, she had no accidents, and I had one fender bender in the past eight years. If we had shopped around more, we could have lowered our auto insurance further, saving us more money while living on $2,000 per month. In a situation where money is incredibly tight, always contact all providers and negotiate your bills.

Negotiating Bills and Cutting Back

Here are some of the bills we negotiated from the above list:

Car insurance: We called our provider and stated our financial situation and asked if we would qualify for a lower rate after being a loyal customer for so many years. They worked with us, and we saved $25 per month. As I mentioned above, we likely could have saved more switching to another provider, which we did a few years later.

Homeowner’s Insurance: Our homeowner’s insurance wasn’t bundled with our car insurance. We moved our homeowner’s insurance to the same company that had our car insurance, which allowed us to pay only $15 per month for our policy. Also note that we lived in a townhouse, where policies are less because the HOA has a master policy that covers the outside of the home. Our original policy cost us $35 per month, so a savings of $20 a month total.

Internet/Landline: Most people don’t realize this, but you can generally talk your internet/cable/phone bill down significantly by politely telling your cable company that you are planning to take your business elsewhere if they won’t lower your rate. We used both the financial hardship and data found online that said we were paying well over the average national rate for internet to haggle with our provider. In the end, we agreed to a 24 month extended contract at the introductory rate, which was $40 per month less than what we were currently paying. I’m not one for contracts, but there were no other decent internet providers where we lived at the time, so I took it. That’s $480 per year saved for two years.

Additionally, we cut back on the following:

Utilities (Electric / Water / Gas): I mentioned above that our financial hardship started in the winter. We budgeted $300 per month for utilities, $250 of which we estimated for electricity due to electric heat. It gets incredibly cold up here in New Hampshire during the winter, and heating bills go through the roof. We were fortunate enough not to go over our limit by wearing heavier clothes. I’m sure we could have lowered our heating bill further had we worn jackets, long johns, and doubled-up our socks on the coldest of days.

Groceries: During the financial hardship, we had two cats. We include their food and litter in our grocery bill, and as you can imagine, feline family members can cost a bit to feed and keep healthy. We tackled groceries by shopping for generic brands and using coupons. We only bought what we needed to eat, versus snacks and other fun foods. This cut our estimated grocery costs from $400 to $300 per month, saving us $100 monthly.

We couldn’t save much on medical due to my disability and requiring health insurance plus doctor visits and treatment. This has always been a tough situation that is certainly not unique for those who suffer from any form of physical and/or mental illness that requires temporary or permanent treatment.

A Curve Ball Set Us Back Again – But We Didn’t Give Up

Mary had a semester left to go when we started to stabilize. We had gotten used to our $2,000 per month lifestyle, but we were still in a lot of debt, and we weren’t happy.

When she graduated with a Masters in Marketing a term later, she looked for work.

Unfortunately, we lived in an area where there weren’t many marketing jobs. This, on top with what we were already going through, was gut-wrenching.

Did we just make another mistake?

What do you do when your plans go south again and again?

You don’t give up.

Since my disability claim was for SSDI (Social Security Disability Insurance), I was legally allowed to work at a very limited capacity. I picked up a few more hours per week for my father-in-law and gained an additional couple hundred dollars per month. Mary left the gas station that was 15 miles away and started working at a private grocery store that just opened 2 miles down the road. The pay and hours were better, and by being right near us, she saved on gasoline and other car maintenance.

We were now 24 months into our three years of living at $2,000 per month.

We got savvier with our money.

We contacted our credit card company and told them we were going to start paying down our balance more aggressively. We requested an APR decrease and cited that otherwise, we would have to consider getting a balance transfer card at a different bank.

The representative transferred us to their supervisor, and the supervisor lowered our APR by 3% after we shared our situation and discussed that we had never missed or had a late payment in the over six years that we had an account with them.

A quick math note: A 3% APR change on a $5,000 credit card balance, when you’re only paying the minimum payments, can save you over $400 in interest payments over the course of paying down the card. It can save you over $1,000 in interest payments if you also pay an additional $100 per month on top of the minimum payments.

When in doubt, always contact your creditors and work with them.

We also started using apps to save money on shopping. Ibotta, for example, is an app where you can save around 8% on many grocery and retail store purchases. We took advantage of this to put as much money back in our pocket as possible.

I also started doing Swagbucks, which earned me around $3/hour, 1-2 hours per day. This didn’t add up to much, but when money is tight, and you have a credit card to pay, every dollar counts.

The Letter That Changed Everything

This next part is something that won’t happen to most people. But to contrast it with typical results, this was the resolution to the financial hardship. Every situation has a resolution – some take longer, some results are better than others, and all vary widely.

In my case, the social security administration approved my claim and back-dated payments for 2 years.

We received a lump sum for 24 months of disability payments, which left us feeling more ecstatic than I can possibly convey here, as you may imagine.

We were now approaching the 36-month mark, and my SSDI payment amount raised our income a fair share. But we weren’t out of hot water yet. We had a financial lifestyle problem to address. How could we avoid this from ever happening again?

Mary and I sat down for another meeting.

Our Next Steps and What We Learned From This Financial Hardship

We paid off our debt with the lump sum and banked the rest. But, our living expenses compared to our income was still tight.

We needed to enact serious financial change.

Here’s what we did:

We flipped our house and downsized: Our house was valued at just over twice what we paid for it, and we didn’t need all of the space. We sold our house and used the cash to buy a comfy mobile home a few towns over, replenish our emergency fund, pay off all debt, and take a budget vacation to an old favorite place that we hadn’t visited in the three-year hardship. I had considered selling the house when the hardship originally happened, but I’m glad we waited because the value increased so much as the housing market boomed over those three years.

Over the years and going forward, we track our finances monthly: From the end of the hardship in 2016 to the present, we track our finances monthly with Personal Capital, an easy-to-use app where we plugin our bank, credit card, and investment accounts. It also lets you track any other assets and liabilities as well as individual transactions on each account.

We now live greatly within our means: We learned that anything can happen with the drop of a hat. Instead of living just below our means, we live as much below our means as possible. While we aren’t extremely frugal, we are nowhere near the spend-thrifts that we used to be. We check with each other any time one of us wants to spend money. We allocate “fun” money each month and don’t exceed it unless saving across multiple month’s fun money to buy a bigger purchase.

We learned that there is so much we don’t actually need: Everywhere you go, you are told “YOU NEED THIS” – the reality is, you don’t need much of anything. You want many things, but when it comes to needs, you need food, shelter, clothing, and transportation, among other small necessities. You don’t need a fancy car. You don’t need extravagant vacations. And, you certainly don’t need to eat out all the time.

Fast forward to 2020, our income has had its ups and downs, but we have not had an issue with it. By using apps such as Personal Capital, and keeping track of our money with a budget Excel spreadsheet, we seem prepared for anything that comes our way. If you’re not good with spreadsheets, I’ve also used YNAB – You Need A Budget – which is the perfect site for tracking your money.

Wrapping It Up

It doesn’t matter if you’ve never had a financial education or if you write about money every day – financial hardships will happen. When they happen, remain calm, stay focused, and find opportunities to work your way out of them. If you’re married, get on the same page, and be an amazing team, rather than panic and turn on one another.

We got through this hardship over the course of 3-4 years. We still live on just over $2,000 per month, minus the two months each year where we travel.

Tough times happen, but staying strong, coming up with a plan, and then executing on it is your surest way to recovery.

Author Bio:Dave Bochichio is the Owner and Writer for The Dollar Blogger. When he’s not writing about personal finance, Dave enjoys spending time with his wife and two cats, and eating exotic and international foods. Dave also writes fiction, with one book published and two more on the way.

What is your monthly budget? What have you done to cut expenses?

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Source: makingsenseofcents.com

United’s Mile Play promo is back: Earn up to 20,000 bonus miles

Targeted: Earn bonus miles through United’s latest Mile Play promo – The Points Guy


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Source: thepointsguy.com

9 Deep Discounts Available on Amazon This Friday

Woman reading mail
Photo by Branislav Nenin / Shutterstock.com

Planning to shop at Amazon today? Make sure you first check the “Today’s Deals” section. This is the retailer’s hub for deep discounts — but these offers change frequently.

To save you some time, we’ve handpicked several of the best deals available today. They are all at least 30% off and get a four-star rating or better from reviewers.

We recommend you compare prices around the web before you buy, though. Also, note that although prices you see here will almost always be accurate, they do sometimes differ slightly from what you’ll see at Amazon.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com