Top 4 Things I Love About Dave Ramsey Baby Steps (And 4 Things I’d Change)

Dave Ramsey has helped thousands of people around the world through the 7 Baby Steps for financial peace and freedom.

The process works.

His book titled the Total Money Makeover has had some impressive sales numbers. The book has sold over 5 million copies and has been on the Wall Street Journal Best-Selling list for over 500 weeks. (That data is from August 2017, over 4 years ago, so it’s sold more by now.)

So, we know that the 7 Baby Steps work. There’s a lot to love above the process, and we will address 4 of those attributes here. We will also cover 4 things that we think could be updated this year (as it has been almost 30 years since the Baby Steps were created).

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7 Baby Steps really do work. There are three great reasons why the plan actual works:

a. The Baby Steps Force You To Get Gazelle Intense When It Comes To Paying Off Debt

I’ll mention this later, but I really appreciate that Dave Ramsey keeps the emergency fund smaller to force you to be gazelle intense. Having such a small emergency fund of $1000 really does force you to get out of debt faster because having too much money in the bank can cause you to stagnate. 

b. Dave Strongly Encourages Your Behavior Modification

Too many financial gurus don’t give it to you straight. They may tell you that you need to invest in real estate or cryptocurrency.  It often feels like a lie that you can achieve financial freedom without putting in a lot of work.

Dave Ramsey comes off as blunt many times, but he forces people to confront that the debt is often our fault (with some exceptions). His bluntness, along with the Baby Steps, forces you to self-reflect.

c. The Plan Is Simple And Shows How You Need To Focus On One Step At A Time

I’ll mention this more below, but it’s evident that his focused intensity on the Baby Steps plan helps you stay focused on the task. You complete the first 3 steps consecutively and the following 4 steps concurrently in a prioritized order. 

You don’t have to multitask. Also, you don’t need to think about another step. You just need to focus on the step at hand.

2) Dave Ramsey Is Right That You Need A Plan

Dave Ramsey has many helpful quotes. One of my favorite of Dave Ramsey’s quotes is, “You must plan your work and then work your plan”. 

Too often we go through life without a plan, but we expect that everything is going to work out just fine. I remember the first time I budgeted.  I thought that I spent a certain amount of money on eating out each month, only to realize that number was much higher.

We need plans. It could be a debt payoff plan to stay on top of your debt. It could also be a budget to understand your income and expenses. Or it could be a plan to pay off your home early as per Baby Step 6.

Dave Ramsey understood that which is why the Baby Steps plan is so useful. You stick to the plan and you get out of debt. Voila.

3) The Baby Steps Get Progressively More Challenging

One thing I noticed early was that the Baby Steps seems to get progressively more challenging. This helps build momentum. It is much easier to save $1000 than to pay off your house early. By starting and taking baby steps, the baby steps themselves actually don’t feel very babyish. 

Paying off your home early per Baby Step 6 feels much more like a big kid step, but it’s still just a Baby Step like the others. It’s impressive how Dave structured these baby steps.

4) The Community Around Dave Ramsey Baby Steps Is Incredible

You don’t have to look far to realize that the community around Dave Ramsey is incredible. You can take a Financial Peace University class at your local church. These classes are excellent to encourage you and help keep you accountable while you eliminate debt. You’ll learn the baby steps inside and out with others in your community. 

You can also be a part of a vibrant Dave Ramsey Facebook Community. Personally, I am a part of many of these communities where I receive a ton of encouragement when sharing wins and losses in the process of debt elimination.

There’s a lot to love about the Dave Ramsey Baby Step method.

Now, let’s cover a few things that could use a refresh.

1) Can Creating A Budget Be Baby Step #1?

I am a budget fanatic. I would love to see a Baby Step dedicated to budgeting. Why? Because budgeting helps you understand where every dollar goes. I used “every dollar” like that on purpose because Dave Ramsey himself created a budget app called EveryDollar for that very purpose.

What better way to understand how much money you have to put towards your emergency fund than starting with a budget.

I am not sure why Dave doesn’t start with a budget, but I would be keen to start the Baby Steps with creating one.

2) Dave Ramsey’s Emergency Fund May Need A Refresh

Dave Ramsey’s emergency fund calls you to save $1,000 in Baby Step 1. Is $1,000 enough? It really depends. 

First, adjusted for inflation, $1,000 in 1990 is now worth $2,043.26 per the US Inflation Calculator.

Dave Ramsey's emergency fund needs to be larger due to inflation

There’s a plethora of questions you can ask yourself when considering whether the emergency fund is big enough, such as:

  1. How much debt do you have to pay off?
  2. Do you own a home?
  3. How old is your car?
  4. How many kids do you have?
  5. Do you have insurance?

Another question I like to ask is, “where do you live?”. Personally, my family and I live in the Bay Area, California where the cost of living tends to be quite high. $1,000 wouldn’t get us very far.

3) Is The Snowball Method The Best Way To Pay Off Debt?

As a refresh, the debt snowball method means that you line up your debts from smallest to largest and pay your monthly extra to your smallest debt first then snowball into higher debts. The debt avalanche method is where you line up your debts from the highest interest rate and use your monthly extra to pay off the highest interest first. The savvy debt method is where you pay off 1-2 of your smallest balances first via snowball before reverting to the avalanche method to save the most in interest.

Dave Ramsey loves the debt snowball method. It has worked for many people, so why wouldn’t he? He feels the opposite for the debt avalanche where he mentions that it doesn’t work.

The challenge is that you could lose thousands in interest if your smallest debts also have the smallest interest rates. This can be possible because higher debt amounts carry a higher risk to the lenders, meaning potentially higher interest rates.

You can see how much the snowball method loses in comparison through this debt payoff calculator which compares interest paid from snowball to savvy methods. For reference, we are comparing 4 debts: $23,000 at 22%, $18,000 at 19%, $12,000 at 9% and $8,000 at 7% interest rate. The monthly payment is $1,825.00

debt snowball versus other debt payoff methods

In this example, you would lose over $3,500 in interest by choosing the snowball method.

Does that mean that the snowball method is always worse? Absolutely not. The snowball method may provide the psychological benefit that you need to exterminate your debt.

You choose the debt payoff app and debt payoff method that is best for you.

4) Should You Follow Dave Ramsey’s Advice And Pay Off Your House Early Or Invest?

Dave Ramsey loves mutual funds and paying off your home early. My question is what if your mutual funds are making so much more in interest than paying off your home would save you?

Wouldn’t the prudent thing be to continue to pay off your home and then get the higher interest from investing in mutual funds?  It’s not a one size fits all solution, but it is something to consider.

There are also often benefits of not paying off your home early such as interest paid being tax-deductible. That said, you would really need to determine whether you would make more money from mutual funds than saving from interest payments to determine what’s best for you.

What Do You Think About The Baby Steps?

The Dave Ramsey Baby Steps have helped thousands around the globe. What do you like about the Baby Steps? Do you agree or disagree with what we would change in 2021?

4 things I love about Dave Ramsey's baby steps and 4 things I'd change

Top 4 Things I Love About Dave Ramsey Baby Steps (And 4 Things I'd Change)

Source: biblemoneymatters.com

6 of the Worst Things to Buy at Aldi

ALDI food market branch in St. Louis.
ZirePhotos / Shutterstock.com

Aldi is quietly becoming one of the most respected grocery chains in America.

In its latest ranking of grocery stores, Consumer Reports awarded Aldi 84 of 100 possible points for overall satisfaction. That puts it just behind some of the nation’s most beloved grocers. Trader Joe’s, for comparison, earned an 87 and Costco received an 86.

Every retailer has strengths and weaknesses. Don’t buy a laptop at Walmart if price matters, for example, and Trader Joe’s is not the best for low-priced meat and seafood.

The “no frills” Aldi — which currently serves the Eastern seaboard, Midwest, Arizona and California — earns a perfect CR score of 5 out of 5 for competitive prices. CR also points to the chain’s store cleanliness, for which Aldi earned a 4 out of 5.

Aldi falls down, however, in the following areas, based on Consumer Reports’ findings or our own.

1. Store-prepared fresh foods

Woman shopping for groceries at Aldi
defotoberg / Shutterstock.com

Aldi earns a rock-bottom low grade from Consumer Reports — only 1 of 5 possible points — for its store-prepared fresh foods.

That can include, for instance, freshly made salads, deli sandwiches and whole roast chickens prepared in stores. The chain says it has increased its fresh food offerings since 2018, but Consumer Reports, in its 2019 assessment, wasn’t impressed.

For better bets, check out “My 7 Favorite Things to Buy at Aldi.”

2. Avocado oil

Avocado oil
Lecic / Shutterstock.com

The reputation of the avocado as a healthy food might make you crave avocado oil, a relatively new grocery product. It’s full of minerals, vitamins and healthy fats.

But in a recent review of seven brands by ConsumerLab.com, Aldi’s Simply Nature 100% Pure Avocado Oil was the only one that didn’t earn ConsumerLab.com’s approval. The company, which independently tests the quality of health and nutrition products, said of Aldi’s brand:

“[I]ts fatty acid profile did not fully match that of avocado oil, suggesting adulteration with another oil.”

3. Sandwich bags

bagged lunch
Hannamariah / Shutterstock.com

We’ve done the math on Aldi’s sandwich bags so you don’t have to.

“Every time I have done the per-unit math, Walmart’s Great Value sandwich bags have been cheaper than Aldi’s Boulder sandwich bags,” says Money Talks News managing editor Karla Bowsher.

Walmart’s bags are cheaper even than the ones Costco sells, she reported in “7 Things I Never Buy at Costco.”

4. Name brands

Kellogg's name brand breakfast cereals
Steve Cukrov / Shutterstock.com

Store brands typically offer more for your money, and more than 90% of Aldi’s products are house (or “private-label”) brands.

“One reason [Aldi’s] prices are so low is that a majority of the groceries it carries are private-label,” affirms Business Insider.

However, shop beyond these private-label products and you might end up digging more deeply into your purse or wallet.

At Aldi, “not only are these [name brands] usually over-priced, you can’t use coupons on them to save more money,” says blogger MoneySavingMom.

5. Disposable shopping bags

Aldi shopping bag
monticello / Shutterstock.com

Unlike many stores, Aldi doesn’t give shoppers free bags at checkout. You bring your own or buy disposable or reusable shopping bags.

Aldi’s FAQ explains that “we not only save our customers money — by avoiding adding the cost of the bag to our prices — but also precious resources.”

Don’t get stuck paying for a disposable grocery bag, though. Plan ahead and bring your own for free. Or, if you don’t own reusable shopping bags, buy some reusable bags at Aldi rather than paying for disposable bags that aren’t made to last.

6. Locally produced products

Aldi produce department
Ilze_Lucero / Shutterstock.com

Shopping for locally grown and crafted goods? Try local food cooperatives, farm stands and farmers markets. A sore point for Aldi in Consumer Reports’ ranking was its score — just 1 of 5 possible points — for its selection of locally produced products.

Aldi shines, however — earning 4 of 5 possible points — for its prices on organic products.

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

Source: moneytalksnews.com

How is a credit score calculated? A survey of America’s credit knowledge

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

In the U.S., a credit score determines whether Americans can purchase a home, rent an apartment or even qualify for certain jobs. Despite the significance of credit scores, many consumers are unaware of how they are calculated and what factors can positively or negatively impact them.

According to a survey conducted by LendingTree, more than a third of respondents reported having no idea how their credit score was determined.

Given the significance that credit scores have, how much do American consumers know about their credit scores and the system responsible for them?

We surveyed 3,000 Americans to find out more about how much they know about the credit industry and accessing their information.

Key findings:

  • Nearly half of respondents said they had never checked a copy of their credit report.
  • A third of respondents disagreed with the statement “I know what information of mine the credit bureaus have access to.”

Half of Americans have never checked their credit reports

When asked to agree or disagree with the statement “I have checked a copy of my credit report,” 52 percent responded “no.”

Women were slightly more likely than men to have checked a copy of their credit report, with 54 percent of women reporting “yes” compared to 50 percent of men.

Credit reports are a record of a consumer’s financial history that inform how a credit score is calculated, with different scoring methods weighting various events, or items, differently (which is why a person’s FICO score will typically be slightly different from their VantageScore).

In many cases, a lender will not only look up an applicant’s credit score but will also request a copy of the applicant’s credit report, leading to someone being denied despite having an excellent score.

Additionally, just as there is more than one kind of credit score, each consumer has three separate credit reports maintained by the three credit reporting bureaus: Equifax, Experian and TransUnion. A debt does not have to be reported by a lender or creditor to all three bureaus, which can lead to discrepancies between the three reports.

Normally, consumers can view one free credit report per bureau per year. However, since the advent of the COVID-19 pandemic last year, consumers have been able to request a free copy of their credit report once a week from each of the three credit bureaus. (This benefit will be ending soon.)

If only half of respondents had ever reviewed a copy of their credit report, how many were knowledgeable about what information the credit bureaus had access to?

What do the credit bureaus know? A third of Americans are unsure

About 33 percent of respondents disagreed with the statement “I know what information of mine the credit bureaus have access to.”

Consumer confusion around credit reporting is well known: according to the same LendingTree survey mentioned above, most consumers knew that paying bills on time and credit utilization factored into the determination of their score, but fewer were aware that the length of credit history or applying for credit could affect scores as well.

Lack of awareness around the credit bureaus featured more prominently in younger respondents, with 50 percent of respondents between the ages of 18 to 24 indicating that they “strongly disagreed” with the statement.

Impact of credit knowledge

Having knowledge about the credit industry and how it functions, what information a lender can access regarding your financial history and how this information is reported has a direct bearing on the financial health of consumers.

Based on findings in an annual survey conducted by the CFA and VantageScore Solutions, LLC, low-income households were less aware of the credit industry than high-income households, and were more likely to lack the knowledge needed to raise and monitor their credit scores.

Your credit standing is determined by more than a single score, and it is possible to proactively monitor and improve your credit by tracking your credit reports and ensuring their accuracy.

Being knowledgeable about what can negatively or positively affect your credit, monitoring your credit reports regularly and disputing errors can help you prevent mistakes that may have long-term effects on your credit. If you’re wondering where to start, we can help with that.

Methodology

This study was conducted for Lexington Law using Google Consumer Surveys and interpreted by Progrexion Marketing. The sample consisted of no less than 1,000 completed responses per question. Post-stratification weighting has been applied to ensure an accurate and reliable representation of the total population. This survey was conducted in February 2021.


Reviewed by Alexis Peacock, Supervising Attorney at Lexington Law Firm. Written by Lexington Law.

Alexis Peacock was born in Santa Cruz, California and raised in Scottsdale, Arizona. In 2013, she earned her Bachelor of Science in Criminal Justice and Criminology, graduating cum laude from Arizona State University. Ms. Peacock received her Juris Doctor from Arizona Summit Law School and graduated in 2016. Prior to joining Lexington Law Firm, Ms. Peacock worked in Criminal Defense as both a paralegal and practicing attorney. Ms. Peacock represented clients in criminal matters varying from minor traffic infractions to serious felony cases. Alexis is licensed to practice law in Arizona. She is located in the Phoenix office.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

What happens if you don’t pay a collection agency?

Woman on the phone.

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

While it may be tempting to simply ignore debt collectors, that is generally a poor long-term strategy. Several potential consequences of not paying a collection agency include further impacts to your credit score, continuing interest charges and even lawsuits. Even if you can’t pay the debt in full, it’s often best to work with the collection agency to establish a payment plan. 

The stress of having a debt sent to collections can be tremendous, especially with the worries that come from a decreased credit score and a wave of phone calls from debt collectors. You may have considered waiting out the collection agency and hoping the problem goes away on its own. 

Unfortunately, collection agencies are unlikely to give up on your debt, especially if you owe a substantial amount of money. Also, you can face continued negative effects from your debt if you try to ignore the debt collector. 

However, you can make a plan to deal with debt collectors, often by establishing a payment plan or settling the debt for a lower amount. While this may be difficult at first, it will ultimately help you establish solid credit habits and get you on track toward improving your credit score. 

Read on to learn more about four possible consequences of not paying your debt—and at the end of the article, we’ll offer some strategies for dealing with debt collectors. 

1. Interest charges

Even after your debt goes to collections, interest charges can continue to accrue. According to the Fair Debt Collection Practices Act (FDCPA), any fees or interest rates outlined in your original contract—like the interest rate of a loan, for instance—can be charged by the collection agency as well. 

The collection agency cannot raise your interest rate or add new fees, but it may choose to continue generating interest or charge late fees if they were part of the original agreement. That means ignoring the debt collector doesn’t just fail to make your debt go away—in fact, the amount you owe may continue to grow. 

2. Credit effects

Having an account sent to collections will lead to a negative item on your credit report. Unfortunately, the mark is likely to stay on your credit report for up to seven years even if you pay off your debt with the collection agency. It’s also possible that paying off your collection account may not raise your credit score. 

Despite all of that, there are several reasons that paying off a collection account could help your credit situation:

  • The account will be shown as “paid in full” or “settled.” When future creditors look at your report, a collection account that was paid in full sends a more positive signal than an unpaid debt. 
  • Updated FICO® models may regard paid collection accounts differently. Changes to the way that FICO® credit scores are calculated may mean that collection accounts paid in full won’t hurt your score. 
  • Sticking to a payment plan could help establish good credit habits. As you work to pay off your debts, you’ll be establishing positive credit behaviors that will benefit you as you improve your credit history.

While you may not see an immediate boost to your credit score after paying off a collection account, it’s an excellent first step toward creating a more positive credit history for yourself. Over time, the impact of a collection account on your score starts to decrease, which means that your new credit habits—paying on time each month and keeping utilization low, for instance—will start to have a strong effect.

3. Collector communications

Collection agencies will continue to try to reach out to you unless you pay your debt, particularly if you owe a significant amount of money. Collectors are allowed to contact you by phone, mail, fax or email from 8 a.m. to 9 p.m. Additionally, they are allowed to contact your friends and family members to try to locate you—so simply avoiding their phone calls is not a viable strategy.

Also, it’s important to know that collection agencies can continue to reach out to you even after your debt falls off your credit report as long as it is still within the statute of limitations. The statute of limitations, or how long your debt is considered valid, varies based on the type of debt and your state. That said, since the longest statute of limitations can be upwards of 10 years, some collectors could be calling you even after the seven years the collection account is on your credit report. 

According to federal law, you do have the right to request in writing that debt collectors stop contacting you. If they don’t stop contacting you, you can file a complaint with the Consumer Financial Protection Bureau. 

However, requesting a collection agency to stop contacting you doesn’t mean the debt goes away. If you continue to ignore the debt, the collection agency may file a lawsuit. 

4. Lawsuits

If a collection agency is intent on getting paid for your debt, it may decide to initiate a lawsuit against you. After the collection agency files the lawsuit with the state, you’ll receive a copy as well as a summons to appear in court. 

You’ll want to consult with an attorney immediately, as failing to appear in court will mean that you lose by default. In that case, the judge could award the collection agency the ability to do any of the following:

  • Place a lien on your property, which can be a mark on your public record
  • Garnish your wages, which means that your employer may give part of your paycheck to the collection agency before you receive it
  • Freeze some or all of the funds in your bank accounts

If you do receive a court summons, work with a qualified lawyer to help build a case, which will hopefully lead to a settlement with the collection agency. 

That said, the best approach is to avoid lawsuits in the first place, which means making a plan to deal with debt collectors rather than ignoring them. 

Make a plan to deal with debt collectors

Although it can be overwhelming to receive communication from a debt collector, you can formulate a plan to deal with debt collectors to get yourself out of debt. With the right approach, you’ll be able to slowly fix your credit and get back on track.

Use the following approach to begin dealing with the collection agency:

  • Set up a payment plan with the debt collector, or see if you can reach an agreement to settle the debt for a smaller amount of money.
  • Start practicing good financial habits by keeping your credit utilization low, making payments every month and only spending what you can afford.
  • If the debt is not yours or has already been paid, work with an attorney to start a dispute and get the collections mark removed from your credit report.

Over time, you’ll be able to rebuild your credit and pay your debts. If the debt is illegitimate or misreported, however, you should immediately challenge it. To help with that process, consider working with the credit repair consultants at Lexington Law Firm, who can assist with credit repair and potentially get negative items removed from your credit report.


Reviewed by Vince R. Mayr, Supervising Attorney of Bankruptcies at Lexington Law Firm. Written by Lexington Law.

Vince has considerable expertise in the field of bankruptcy law. He has represented clients in more than 3,000 bankruptcy matters under chapters 7, 11, 12, and 13 of the U.S. Bankruptcy Code. Vince earned his Bachelor of Science Degree in Government from the University of Maryland. His Masters of Public Administration degree was earned from Golden Gate University School of Public Administration. His Juris Doctor was earned at Golden Gate University School of Law, San Francisco, California. Vince is licensed to practice law in Arizona, Nevada, and Colorado. He is located in the Phoenix office.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

All You Need to Know About Moving to California

The Mama’s & the Papa’s nailed it with their hit song, “California Dreamin’”! Over 39 million people call the Sunshine State home, and it’s easy to see why. From sandy beaches to the Hollywood Hills, California’s many facets include hi-tech industries, lush redwood forests, Napa wineries, miles of coastline, and idyllic sunshine. No wonder it’s the most populous state.

Newport Beach CaliforniaNewport Beach California

The Time is Right to Move to California

Considering a move to California in the near future? Forbes describes the housing markets as booming, though affordable housing is at record lows. Nonetheless, they say the time is right to invest in California real estate. You should, however, gear up for:

  • A sizable down payment
  • Bidding wars – about 54% of homes sold above the asking price
  • To act fast — homes stay on the market around 19 days

Hmmm, What About Rentals in CA?

California’s rents are some of the most expensive in the nation, but there may be more inventory of available rentals than a supply of homes. In some locations, generally, you could expect rising rents and competition for available units.

10 Major Cities in California for Your Move

Before you settle down with your coffee and the real estate section, you will want to unpack your needs, because California is huge. Are you looking for a family-friendly burb or bustling cosmopolitan area? What is your max patience for commute time? How much space do you need?

There are 58 counties and 482 municipalities to choose from all with unique features and property values. Here is a brief low-down on 10 major cities in CA:

1. San Diego

California’s most southern stretch of sun-drenched Pacific coastline, San Diego is popular with young families, college students, beachgoers, hipsters, millennials and about 1.3 million people. With forecasts in the 70’s most days, this is also a prime spot to hike, explore the beaches of La Jolla, play a round of golf, and take the kids to the famous San Diego Zoo. Or, appreciate the big city amenities like a thriving foodie scene and local culture. There’s a commuter train from the North County to downtown – Niche gives high marks to Torrey Hills, Del Mar Mesa, Villa de la Valle.

  • Average Home Price: $529,000
  • Rent Instead: 1000 sq.ft. = $2150 monthly

2. Los Angeles

LA is the biggest city in CA and where you can cheer on the Lakers, Dodgers, Kings, Clippers. It’s also the entertainment capital (Hollywood!) and may appeal to singles, the fashionable cool, millennials and urbanites to-the-core. There are hundreds of neighborhoods to match with your personality. Some more modern (South Park), others more laid back (San Fernando Valley).

  • Average Home Price: $939,500
  • Rent Instead: 332 sq.ft. = $1478-$3028 monthly

3. San Francisco

SF is located on the bay and identified by the iconic Golden Gate Bridge and Alcatraz. There are tons to see despite the fog, and it’s great for keeping in shape (oh, those hills). The suburb of Emeryville is ranked by Niche the #1 best suburb in CA for millennials and there are newly built homes and condos to check out. There’s also Showplace Square, South Beach, Rincon Hill and many more. Expect an overall housing crunch in San Francisco – you may need to look at metro area communities like Oakland and Brisbane. But, SF is a vibrant, happening area – ranked #20 for best places to live in the states by U.S. World News and Report.

  • Average Home Price: $1.6 million
  • Rent Instead: 223 sq.ft. = $2100 monthly
Golden Gate BridgeGolden Gate Bridge

4. Berkeley

Just across the bay from SF, Berkeley has a small-town and energetic college vibe compared to LA and is also diverse and friendly to small businesses and cyclists alike. Home to scenic parks, the Bay Trail, artist studios, cafes, UC Berkeley, and gourmet food, Berkeley is also on the map for its many unique festivals and tons of bookstores. Expect some smart conversations and an eco-conscious group of residents. Fun to know – 57 percent rent vs. own and #1 healthiest city in the US.

  • Average Home Price: $1.1 million
  • Rent Instead: 750 sq.ft. = $2075-$2099 monthly

5. Sacramento

Sacramento may be the perfect choice for those who are being priced out of the coastal areas and want a lower cost of living. As the state’s capital, Sacramento has a hip downtown core that appeals to young working professionals who want to live in a walkable area. Some of the more suburban areas are noteworthy for their lush tree-lined streets and great schools (e.g. Folsom). You can also have some great outdoor adventures in Lake Tahoe which is close enough for a road trip.

  • Average Home Price: $300,000
  • Rent Instead: 783 sq.ft. = $1195-$1495 monthly

6. Santa Barbara

Dubbed the ‘American Riviera,’ Santa Barbara is a gem. Located between the Pacific Ocean and Santy Ynez mountains, the weather is gorgeous and the views – picturesque. Here you’ll find adobe rooftops and Spanish style architecture, palm trees, surfing, hiking and bike lanes. There are also three cities to look into: Montecito, Santa Barbara, and Goleta. There’s also plenty in the way of wineries, fashion, food, and nightlife though in a smaller scale than LA.

  • Average Home Price: $464,392
  • Rent Instead: 1026 sq. ft. = $3500 monthly

7. Fresno

At the base of Yosemite, Kings Canyon, and Sequoia national parks, a move to Fresno puts you in the heart of the San Joaquin Valley. Residents here enjoy tons of outdoors fun – you can golf, hike, snowboard, ski, white water raft, boat, rock climb, and much more. Apart from the leisure scene, Fresno has performing arts, music, theatre and a unified school district. Thirteen of its high schools are recognized by U.S. News & World Report’s best. It’s also surrounded by farms so if you like to eat healthy, here you’ll find a strong agricultural economy – California peaches, tomatoes, almonds, pistachios and more.

  • Average Home Price: $270,000
  • Rent Instead: 602 sq.ft. = $1064-$1369 monthly

8. Santa Clara

Listed by Niche as one of the best cities for millennials, Santa Clara has lots in the way of local bars, restaurants, nightlife, diversity, weather, and location. As one of the main cities in Silicon Valley, Santa Clara has recently attracted more than hi-tech, with the relocation of the 49ers to their new home at Levi’s Stadium. Other draws include free Wi-Fi throughout the city, high marks for quality of education (Cupertino) and a community that values reclaimed water and conservation.

  • Average Home Price: $1,080,000
  • Rent Instead: 853 sq. ft. = $2270-$2736 monthly

9. Irvine

Regarded as one of the more affluent suburbs in California’s Orange County, Irvine has a lot going for it. In fact, WalletHub recently listed Irvine in the top 25 ‘happiest’ cities in the states. Here, you’ll get your joie de vivre on from the beautiful weather alone. Lots of parks, nearby organic farms where you can pick California strawberries and trails make this mid-size city a good coastal location for families and outdoors enthusiasts. Irvine also gets great family-friendly marks from NerdWallet and has strongly supported schools. While not inexpensive, it’s a city with a fairly low unemployment rate and a strong economy.

  • Average Home Price: $987,000
  • Rent instead: 1050 sq.ft. = $1750-$2671 monthly

10. Fremont

Tesla calls it home. Located in Alameda County, Fremont is another one of the cities in America with the happiest residents, especially with young families looking to nest. WalletHub recently ranked Fremont the 5th (out of 105 U.S. cities) for best city to raise a family. It scored really well for family fun, health and safety, so expect great walkability, bike paths, and recreational facilities.

  • Average Home Price: $1,082,9000
  • Rent Instead: 640 sq.ft. = $2298-$2920 monthly

Other Useful Resources

Before you sign on the dotted line, make sure to thoroughly research your neighborhood. Here are a few useful resources to keep on hand as you plan your move to California.


Rana Waxman parlays years of work experience in several fields into web content creation aligned with client needs. Rana’s versatile voice is supported by a zest for research, a passion for photography, and desire to provide clients with a purposeful presence online. In her non-writing hours, Rana is a happy yogini, constant walker, avid reader, and sometimes swimmer.

Source: homes.com

Where the Most (and Fewest) Homes Sell Below Asking Price

Family Home Sold
Andrey_Popov / Shutterstock.com

Editor’s Note: This story originally appeared on Stessa.

It is no secret at this point that one of the economic effects of the COVID-19 pandemic has been a red-hot housing market. With more people at home, consumer spending in 2020 was down and savings rates were up, while the government pumped money into the economy with low interest rates and direct stimulus to American households. These conditions gave more people the means to save up for a home and brought a stampede of new would-be buyers into the housing market. But with many sellers staying out of the market, prices are at record highs and inventories at record lows.

While the pandemic has created conditions for dramatically accelerated demand for homes over the last year, the reality is that these trends have been ongoing for several years. One key factor is demographics: the millennial generation is now in their late 20s and 30s, and as they settle into their careers and family life, more have been entering the housing market. According to the National Association of Realtors, millennials represented 38% of homebuyers last year, and a large share of those were first-time buyers.

The increased demand has translated to rapidly increasing rates of homeownership and decreasing rates of homeowner vacancy. Just five years ago, in 2016, homeownership rates were at 63.4% — their lowest level since the 1990s, according to U.S. Census Bureau data. In 2020 that figure was 66.6%, which was a 2 percentage point increase just over the previous year. Vacancy rates, meanwhile, have taken the opposite trajectory. After spiking to nearly 3% when the housing bubble burst in the mid-2000s, vacancy rates have declined sharply and dipped to a low of 1% in 2020.

With higher demand and lower inventory, prices inevitably start to rise. The trend of price increases extends to homes of all sizes. Based on Zillow data dating back to 1996, prices for one, two, three, four and five (or more) bedroom homes have all been creeping steadily upwards since around 2012, when the recovery from the last recession began to pick up steam. Within the last year, the trend lines in each category have moved more steeply upward, an indication that record low inventory is pushing up prices for all home types.

Large metros with the most homes selling below asking price

mangostock / Shutterstock.com

While home pricing is usually cyclical — with higher prices and fewer cuts during spring and summer months — 2020 and 2021 have proven to be aberrations. The share of listings with price cuts stayed relatively flat throughout 2020, between 11% and 13%, before turning sharply downward at the end of the year. In February 2021, the share of listings with a price cut was at 8.2%, a decrease of more than half from a recent peak of 17.8% in September 2019.

This is not the reality in every market, however. Some cities where housing is plentiful and easy to build—like Houston—or where demand is lower—Rust Belt metros like Pittsburgh and Dayton—are still seeing substantial price cuts after homes come on the market. In contrast, cuts are almost nonexistent in some other areas where the inverse is true.

To find these locations, our team of researchers used data from Zillow to identify the share of listings with a price cut, the median price cut as a percentage of list price, the median price cut in dollars, and the median home value in all metro areas with available data. These figures all come from data collected from September 2020 through February 2021 to reflect the latest market trends.

Here are the metropolitan areas with the most and fewest homes selling below asking price.

1. Chicago, IL

Homes in Chicago, Illinois
Mark Baldwin / Shutterstock.com
  • Share of listings with a price cut: 17.9%
  • Median price cut as a percentage of list price: 2.4%
  • Median price cut in dollars: $7,350
  • Median home value: $257,400

2. Louisville-Jefferson County, KY

Louisville Kentucky homes
EQRoy / Shutterstock.com
  • Share of listings with a price cut: 16.9%
  • Median price cut as a percentage of list price: 2.7%
  • Median price cut in dollars: $5,322
  • Median home value: $195,880

3. Indianapolis, IN

winter scene homes in Indianapolis, Indiana
Ted Alexander Somerville / Shutterstock.com
  • Share of listings with a price cut: 16.8%
  • Median price cut as a percentage of list price: 2.5%
  • Median price cut in dollars: $5,475
  • Median home value: $199,721

4. Pittsburgh, PA

Steve Heap / Shutterstock.com
  • Share of listings with a price cut: 16.4%
  • Median price cut as a percentage of list price: 3.3%
  • Median price cut in dollars: $6,344
  • Median home value: $175,315

5. Houston, TX

Houston homes neighborhood
Stephanie A Sellers / Shutterstock.com
  • Share of listings with a price cut: 16.3%
  • Median price cut as a percentage of list price: 2.3%
  • Median price cut in dollars: $7,810
  • Median home value: $229,957

6. Dayton, OH

Dayton Ohio
Alex Balanov / Shutterstock.com
  • Share of listings with a price cut: 16.1%
  • Median price cut as a percentage of list price: 2.9%
  • Median price cut in dollars: $5,006
  • Median home value: $149,572

7. Oklahoma City, OK

Oklahoma City
Henryk Sadura / Shutterstock.com
  • Share of listings with a price cut: 15.5%
  • Median price cut as a percentage of list price: 2.0%
  • Median price cut in dollars: $5,000
  • Median home value: $168,394

8. Charleston, SC

Houses in Charleston, South Carolina
Sean Pavone / Shutterstock.com
  • Share of listings with a price cut: 15.3%
  • Median price cut as a percentage of list price: 1.9%
  • Median price cut in dollars: $6,733
  • Median home value: $292,942

9. Albuquerque, NM

Albuquerque, New Mexico
BrigitteT / Shutterstock.com
  • Share of listings with a price cut: 15.3%
  • Median price cut as a percentage of list price: 2.2%
  • Median price cut in dollars: $6,083
  • Median home value: $234,844

10. Columbus, OH

Historic homes in Columbus, Ohio
Karen and Scott Wightwick / Shutterstock.com
  • Share of listings with a price cut: 15.3%
  • Median price cut as a percentage of list price: 2.4%
  • Median price cut in dollars: $5,625
  • Median home value: $230,663

Large metros with the fewest homes selling below asking price

decision indecision undecided home buying buy house
By maroke / Shutterstock.com

Meanwhile, the chances of finding a home selling below its asking price are less likely in these markets.

1. El Paso, TX

El Paso Texas neighborhood
IflyAerialPhotography / Shutterstock.com
  • Share of listings with a price cut: 6.0%
  • Median price cut as a percentage of list price: 2.3%
  • Median price cut in dollars: $5,006
  • Median home value: $147,524

2. Stockton, CA

Stockton California
Terrance Emerson / Shutterstock.com
  • Share of listings with a price cut: 7.2%
  • Median price cut as a percentage of list price: 2.4%
  • Median price cut in dollars: $10,072
  • Median home value: $423,916

3. Urban Honolulu, HI

Honolulu City neighborhood
Real Window Creative / Shutterstock.com
  • Share of listings with a price cut: 7.4%
  • Median price cut as a percentage of list price: 3.0%
  • Median price cut in dollars: $14,186
  • Median home value: $739,690

4. Boise City, ID

Boise, Idaho neighborhood
CSNafzger / Shutterstock.com
  • Share of listings with a price cut: 7.5%
  • Median price cut as a percentage of list price: 2.1%
  • Median price cut in dollars: $8,908
  • Median home value: $381,759

5. Ogden, UT

Paul W Thompson / Shutterstock.com
  • Share of listings with a price cut: 7.9%
  • Median price cut as a percentage of list price: 2.3%
  • Median price cut in dollars: $9,994
  • Median home value: $371,978

6. Providence, RI

Providence, Rhode Island houses homes
Joy Brown / Shutterstock.com
  • Share of listings with a price cut: 8.2%
  • Median price cut as a percentage of list price: 3.1%
  • Median price cut in dollars: $10,000
  • Median home value: $350,548

7. Madison, WI

Houses in Madison, Wisconsin
MarynaG / Shutterstock.com
  • Share of listings with a price cut: 8.2%
  • Median price cut as a percentage of list price: 2.8%
  • Median price cut in dollars: $10,000
  • Median home value: $305,550

8. Colorado Springs, CO

Colorado Springs Neighborhood
Nirmal Bhagat / Shutterstock.com
  • Share of listings with a price cut: 8.6%
  • Median price cut as a percentage of list price: 2.3%
  • Median price cut in dollars: $10,567
  • Median home value: $359,246

9. Riverside, CA

Riverside California neighborhood
Matt Gush / Shutterstock.com
  • Share of listings with a price cut: 8.6%
  • Median price cut as a percentage of list price: 2.5%
  • Median price cut in dollars: $10,228
  • Median home value: $425,713

10. Virginia Beach, VA

Virginia Beach, Virginia
JoMo333 / Shutterstock.com
  • Share of listings with a price cut: 8.7%
  • Median price cut as a percentage of list price: 2.1%
  • Median price cut in dollars: $5,211
  • Median home value: $261,139

Detailed findings & methodology

Realtor in front of large brick home.
SpeedKingz / Shutterstock.com

The data used in this analysis is from Zillow. Researchers calculated the share of listings with a price cut, the median price cut as a percentage of list price, the median price cut in dollars, and the median home value. All were obtained using data from September 2020 through February 2021. The analysis includes all homes, including single-family, condominium, and co-operative homes with a county record. Metropolitan areas were ranked based on the share of listings with a price cut. In the event of a tie, the location with the higher median price cut percentage was ranked higher. Only the largest metropolitan areas in the U.S. with available data from Zillow were included.

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

Source: moneytalksnews.com

8 Foods You Should Never Buy at Costco

Costco bakery
Trong Nguyen / Shutterstock.com

No question, I’m a Costco fan. I’ve written about the things I always buy at the massive warehouse store, and I’m a fan of their food court’s $1.50 hot dog and drink combo too. But just as with my beloved Target, I admit that not every store should sell everything.

I’ve been a Costco shopper for decades now, and I’ve learned through my mistakes that some items are better bought elsewhere. It can be hard to look at those cheap Costco prices and giant sizes and walk on by, but a deal’s not a deal if it’s a massive daycare-size jar of jelly and you have a family of three.

Here’s a look at some foods I never buy at Costco.

1. Milk

Milk at Costco
TonelsonProductions / Shutterstock.com

Our family is slowly shifting to dairy alternatives, like oat milk, but even before that, I was no fan of buying regular milk at Costco. The price is acceptable — my store sells 2 gallons for less than $5. But the 2 gallons are yoked together, making it a lumpy, uncomfortable item to heave into my cart and trunk.

And have you ever tried to pour milk out of a Costco gallon? The plastic container is shaped oddly — probably for better stacking in the store — but I spill it every time I pour. Not to cry over spilled milk, but the awkward container makes any savings not worth it.

2. Extra virgin olive oil

Extra virgin olive oil at Costco
TonelsonProductions / Shutterstock.com

To ensure you consume this healthy fat at its freshest, the Olive Center at the University of California, Davis, advises consumers to not buy a container of olive oil they can’t use up in about six weeks. But unless you’re feeding a big family and using olive oil at every single meal, you’re unlikely to go through a Costco-size bottle that quickly.

3. Croissants

Croissants at Costco
TonelsonProductions / Shutterstock.com

I’m a fan of Costco birthday cakes, and there’s usually some container of other baked sweets at the warehouse club that I can buy for my book club. But I’ll always pass on the store’s croissants.

The price is right: My local store sells a dozen for less than $5. But the croissants are huge — like New York-style pizza-slice huge — so I find about half of each croissant ends up uneaten. And while they’re acceptable for a mass-produced baked good, I’ve been spoiled by my local French bakeries, which turn out flaky, fresh croissants that remind me of Paris. Costco’s croissants just aren’t for me.

4. Salsa

Salsa and tortilla chips
losinstantes / Shutterstock.com

Costco sells whopping jugs of salsa in many varieties, and who doesn’t love the accent that salsa gives to a good Mexican meal? But I’ve tried multiple flavors there and miss the freshness of salsas from delis or specialty brands. One of our local grocery stores churns out its own small-batch salsa and its own tortillas, and I just can’t go back to the ho-hum salsa Costco sells. Plus, I’ll never get through a giant jar before it starts to grow mold.

5. Coffee

Starbucks coffee at Costco
Pictures_n_Photos / Shutterstock.com

Even though I live in coffee-centric Seattle, I’m not a java snob — I can drink almost anything. But I don’t even slow down in the Costco coffee aisle. Those 3-pound cans and bags of whole beans or ground coffee are probably perfect for when Pam on “The Office” has to stock the Dunder Mifflin break room, but for our small family, they’re too much and not worth the storage space.

6. Avocados

Avocados at Costco
TonelsonProductions / Shutterstock.com

I adore avocados — whether sliced on a sandwich or smashed into guacamole. But Costco sells them by the bagful, and they’re all usually hard as rocks when sold. That makes sense — shoppers don’t have to eat them up the very next day. But avocados have such a brief window of perfect softness, going from boulder-hard to brown and squishy in a blink, that I waste more than I use. It’s a pain to stand at my local grocery store and hand-select an individual avocado or two based on softness, but it saves on food waste.

7. Applesauce

Apple sauce
Moving Moment / Shutterstock.com

Applesauce from Costco seems like a fine purchase for daycare centers. But four giant jars shrink-wrapped together, as is sold at my store, would be a lifetime supply for my family’s home. I was actually happy to discover that regular grocery stores now sell four-packs of individual cups of applesauce since one small cup makes a good lunchbox addition or a decent serving to accompany pork chops. (My Costco sells the individual cups too, but the smallest container I saw has 36 cups.)

8. Spices

Spices at Costco
Cassiohabib / Shutterstock.com

Costco’s spice section is a restaurant owner’s dream. Turmeric, chopped dried onion, crushed red pepper, chili powder, cumin, taco seasoning — the solid staples of a spice rack are all there. But spices lose their potency if you keep them for a long time, and it would take me years to use up 12 ounces of ground turmeric. Plus, my kitchen has a nifty pull-out spice rack that is made for individual 2-ounce jars, and I don’t need six times as much.

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

Source: moneytalksnews.com

Buying an Old House? – Common Problems, Hidden Costs & Benefits

America has lots of old houses. According to Eye on Housing, the average owner-occupied structure was about 37 years old in 2016, the most recent year for which data is available. For reference, that’s nearly the U.S. median age of 38.2.

In some parts of the country, the housing stock is far older. On average, owner-occupied housing in New York, Massachusetts, and Pennsylvania is more than 50 years old. Though there are exceptions to the rule, homes tend to be older throughout the Northeast and Midwest and in urban cores across the country.

By contrast, newer homes and bona fide new construction homes are more common in Southern and Western cities in general, and in suburban and exurban communities across the country. For example, the median age of owner-occupied homes in Nevada is barely 20 years old.

What Counts As an Older Home?

As a general rule of thumb, homes built after 1990 are considered newer, and homes built before 1920 are considered old or antique. But housing age is a subjective condition that turns on numerous factors, including construction style and quality, local climate and geology, and work done over the life of the home.

The most important factors include:

  • Construction Style and Quality. Prefabricated and mobile homes are generally constructed to lower quality standards than solidly built Tudors, Craftsmans, or Colonials. Mass-produced houses, which tend to be newer, can have quality issues as well. However, custom-built new homes may be constructed even more solidly and durably than older homes. Ultimately, construction quality comes down to the quality of the materials used and the skill and diligence of the builders.
  • Climate and Geology. Climate — particularly humidity, temperature extremes, and storms — accelerate the aging process. Homes in the eastern half of the U.S. are more likely to experience problems attributable to these issues, such as roof damage and basement or foundation moisture, than homes in coastal California cities like San Francisco and Oakland. Geological factors that can accelerate the aging process include seismic activity, sinkholes and limestone geology, and high water tables.
  • Renovations. In some cases, antique homes are updated so dramatically that it’s difficult to define their age any longer. For instance, my wife’s parents owned a farmhouse built in the 1880s. But successive owners thoroughly updated, modernized, and expanded the house over the years. In fact, the only original components are an old cinder block foundation and basement (now completely encased by a newer, expanded foundation and basement) and a few structural supports rising above the original footprint. Most other components date from the 1970s or later. So is it really fair to say the house is an original 1880s farmhouse?

Common Older Home Problems & Potential Solutions

Even well-maintained older homes can present problems that owners of newer homes simply don’t need to deal with. These include health hazards such as asbestos and mold, serious pest problems that can lead to structural issues, and issues with utility systems like wiring and plumbing.

1. Lead and Asbestos

Lead and asbestos are two hazardous materials that were used in residential applications until relatively recently.

Lead is a neurotoxic metal that’s particularly harmful to children. It’s commonly found in exterior and interior paint made before 1978. It’s also found in substantial quantities in pre-World War II plumbing systems and in smaller quantities in water pipes installed before the mid-1980s.

Asbestos is a naturally occurring fibrous material that causes a serious form of lung cancer and other respiratory problems. It was a ubiquitous insulation and fireproofing material until the mid-1970s. Successive EPA actions banned most asbestos applications by the late 1980s, but the agency never required building owners to remove existing asbestos products. Accordingly, many older crawlspaces, walls, and pipes still contain asbestos insulation.

If you determine that you need professional help to deal with either of these environmental issues, use a resource like HomeAdvisor to find reputable, pre-vetted contractors in your area.

Possible Solutions: Lead

When you buy a home built before 1978, you’re usually required to affirm your understanding that the home may contain lead paint. If you’re uncomfortable with the idea of coexisting with lead paint, invest in professional lead paint removal services. According to HouseLogic, professional removal costs $8 to $15 per square foot. The medical literature isn’t conclusive on the matter, but removal is recommended for homeowners with small children.

If your home’s plumbing system is very old, it could still contain measurable quantities of lead. The most cost-effective way to deal with this is a water filtration system, either for the entire house ($1,000 to $3,000, depending on house size and system quality) or the kitchen tap ($200 to $1,000, depending on brand and quality). Replacing the home’s entire piping system is the only way to ensure totally lead-free water, but doing so can cost upward of $5,000.

Possible Solutions: Asbestos

Though direct, prolonged exposure to asbestos is a serious health hazard, insulation tucked away in inaccessible walls is not likely to pose a direct risk. However, removal is recommended if you plan on knocking down walls, expanding your home’s footprint, or attempting other expansive projects likely to uncover asbestos-laden material.

Asbestos removal costs vary greatly by project size. A single pipe or wall runs in the high three- or low four-figure range, while a whole-house project costs $20,000 to $30,000.


2. Termite Damage

Over time, termites can devastate homes’ wooden and wood-like components, including floors, structural supports, and drywall. The problem is particularly acute in the southern half of the country, where termites are active for most or all of the year. Older homes are more likely to have active termite infestations or preexisting termite damage due to compromised foundations or drywall.

Depending on the length and severity of the infestation, termite damage repairs can range from cosmetic fixes (such as replacing damaged floorboards) that cost a few hundred dollars to structural remediation projects that can cost $10,000 or more.

Signs of termite damage include:

  • Sagging or buckling floors
  • Pinpoint holes in drywall
  • Hollow-sounding wood supports or floorboards
  • Bubbling or peeling paint

Possible Solutions

Prevention is the cheapest and least invasive termite solution. Remove all loose wood vectors — including shrubbery, mulch, building materials, and stacked firewood — from contact with the lowermost portion of your house. Prevent water from pooling near or against your home’s foundation by filling in low ground or installing a surface drainage system. Use treated lumber (toxic to termites) for decks and other wooden structures attached to your house. Remove dead stumps and root systems from areas near the house. And seal visible foundation cracks, which provide ready entry for termites.

For infestations in progress, hire a pest control professional to shrink or eliminate the colony. Exterminators typically charge $3 to $16 per linear foot (as measured around the home’s perimeter), according to HomeAdvisor. The average home’s perimeter ranges from 150 to 200 feet, so expect comprehensive treatment to cost anywhere from $450 to $3,200. But bear in mind that your actual all-in cost will depend on the foundation type and the infestation’s severity.

If you catch the problem before you buy, perhaps during a professional home inspection ($200 to $500), get a repair estimate from a general contractor. Then negotiate with the seller to cover part or all of the repair costs, as well as the cost of professional pest control services if the infestation is in progress


3. Mold and Mildew Damage

Over time, homes exposed to excessive moisture often develop mold and mildew problems. Though particularly common in basements and bathrooms of wet-climate homes, moisture-related microorganism growth can occur anywhere. The problem is more likely to occur in old homes because moisture more readily seeps through cracked foundations and leaky pipes. However, since infestations can start inside walls, it’s possible to walk through a mold-infested older home for sale without realizing there’s a problem.

While small amounts of indoor mold growth are permissible and even expected, uncontrolled growth can exacerbate allergies and existing respiratory problems (such as asthma) in healthy children and adults. More serious infections can develop in the very young, the very old, and those with compromised immune systems.

Also, mold eats away at its host surfaces, particularly wood, drywall, grout, and other porous or semiporous substances. Unchecked mold infestations can cause structural problems and render a home temporarily or permanently uninhabitable.

Possible Solutions

Your mold and mildew solution will depend on the severity of the problem:

  • Prevention: As with termite infestations, the best solution to mold and mildew is prevention. Buying a dehumidifier (anywhere from $100 to $500 new, plus $30 to $100 in annual electricity costs) for your basement can work wonders. Ensuring proper ventilation through a combination of floor or ceiling fans and open windows during dry, mild weather can help on higher floors.
  • Minor Infestations: You can treat small mold infestations, such as on an isolated area of a basement or bathroom wall, with store-bought mold spray, abrasive sponges or brushes, kitchen gloves, and lots of elbow grease.
  • Major Infestations.: For larger infestations, the spray-and-scrub approach is impractical. According to HGTV, whole-home mold remediation can cost as much as $5,000 and possibly more if the infestation affects hard-to-reach areas like the attic, basement crawl spaces, or inside the walls. To reduce remediation costs, make sure your homeowners insurance policy covers mold cleanup before you buy an older home, and consider switching policies (using a comparison engine like PolicyGenius to save time) if your policy doesn’t.

4. Plumbing Problems

The biggest danger of an old or substandard plumbing system is the possibility of a pipe failure that floods the home or causes major water damage in the walls and floors. A serious failure can temporarily render the home uninhabitable and cost tens of thousands of dollars to clean up, though the damage is often covered by homeowners insurance. It can also cause longer-term problems, such as mold infestations.

Before purchasing an older home, ask the seller how old the plumbing system is and about the material used in supply and drain pipes. Whereas brass and copper pipes typically last 50 years or more, steel pipes can wear out after as little as 20, according to HouseLogic. Pipes made from PEX, an increasingly common plastic material, typically last 40 or 50 years.

Special care is warranted if the pipes are made of polybutylene, a grayish, flexible plastic material used from the 1970s to the 1990s. Chlorine, which is found in bleach and other household cleaners, corrodes polybutylene pipes over time and can lead to spontaneous failure.

Root damage is another old home plumbing issue that’s particularly common in heavily vegetated neighborhoods. Over time, tree roots work their way into older drainage pipes under or outside the home’s foundation, busting through pipe joints and tapping the year-round supply of nutrient-rich water flowing within.

Without proper maintenance, this leads to clogs and backups that can interrupt washing routines and cause water damage in low-lying parts of the house. Remember that tree roots can travel a long way underground. There may be no obvious culprit near your main drain outlet, but that mature tree across the street or around the side of your house could be responsible.

Possible Solutions: Pipes

If you’re eying a home with polybutylene pipes, ask the seller to install (and pay for) new pipes. If not, consider whether you can put up with the inconvenience and cost of replacing the pipes yourself, which you should do as soon as your budget allows to minimize failure risk.

For other common pipe materials, you simply need to ascertain the system’s age and target a date several years before the end of its life expectancy. If you plan on still owning the house when that date arrives, begin saving for a full system replacement now, keeping in mind the effects of inflation.

In a 1,500 square-foot house, whole-house pipe replacement costs range from $2,000 to $6,000, depending on the pipe material, size and floor count of the house, and number of water fixtures, according to HouseLogic.

Possible Solutions: Root Damage

Root damage fixes can be even costlier. Replacing a root-infested main drain pipe typically requires excavation, a notorious cost multiplier. Expect to pay up to $25,000, depending on the length of the pipe and required depth of excavation, per HomeAdvisor.

Root-and-line jobs, which remove existing roots and install impermeable liners that prevent further intrusion, are nearly as expensive: $5,000 to $15,000, on average.

Periodic root removals, which need to be repeated every couple years, are much easier on the wallet: anywhere from a couple hundred bucks to around $1,000, depending on the severity of the problem.


5. Foundation or Structural Problems

Over time, nature catches up with even the most solidly built homes. Older homes are prone to a variety of foundation and structural problems, such as:

  • Major cracks or unevenness in the slab or perimeter foundation wall
  • Corrosion, dry rot, or moisture damage in pilings or concrete foundation supports
  • Damaged piers (support footings)
  • Dry rot or moisture damage in above-ground studs

These issues are particularly common, and tend to occur sooner, in regions with abundant soil moisture, unstable bedrock, seismic activity, and other perils. Though alert homeowners generally catch structural problems before they render homes uninhabitable, remediation is costly and inconvenient.

Signs of foundation or structural problems include:

  • Doors that jam or fail to latch
  • Visible wall cracks that grow over time
  • Cracked tile or concrete floors
  • Persistently stuck windows
  • Floors that are clearly off-level

Possible Solutions

Any apparent foundation or structural issue requires an expert opinion from a structural engineer ($500, on average). Addressing a modest foundation issue, such as a crack in the perimeter wall, can cost a few hundred dollars. More serious problems, such as uneven soil that requires support piers underneath the foundation, can cost $10,000 or more. And in seismically active areas, foundation anchor bolts are required or recommended — at a cost of at least $1,500 apiece. Many homeowners insurance policies don’t cover these costs.

If the foundation requires extensive repair or wholesale replacement, costs can quickly escalate. Expect to pay a minimum of $20,000 to raise your home and replace the foundation, per HomeAdvisor. Again, homeowners insurance often doesn’t cover these costs. If you’re seriously thinking about buying an older home with obvious foundation damage, factor repair costs into your offer price or ask the seller to address the problems before closing.

Also, note that the cost of repairing secondary issues related to foundation damage (such as damaged upper-level flooring, walls, and doors) varies greatly and can add substantial expense to your project.


6. Radon

Radon is a radioactive gas that occurs naturally in certain types of bedrock. The Environmental Protection Agency says that radon tends to persist at higher concentrations in the Northeast, Midwest, and Intermountain West, but it can occur anywhere.

Radon enters homes through cracks in the foundation perimeter and basement walls, which are more common in older homes. The gas then circulates throughout poorly ventilated houses over time. Though it’s not toxic when encountered intermittently and in small doses, radon is the leading cause of lung cancer for nonsmokers, and exposure over the generally accepted safe concentration is not recommended for long periods.

Possible Solutions

Radon mitigation typically involves capturing gas in the soil or rock surrounding the foundation and piping it up to a rooftop vent, then sealing foundation cracks to prevent further leakage. It can also involve installing multiple depressurization vents outside the house (venting radon before it reaches the foundation), as well as negative-pressure fans that essentially blow radon from the basement or lowest level back into the soil.

According to Kansas State University, the average cost of a radon mitigation system is about $1,200. But the actual cost can vary between a few hundred dollars to more than $3,000, depending on the home’s size, foundation type, and the problem’s severity.

Amazon sells radon testing kits for less than $15. This can be an inexpensive way to see if you need to call in the professionals.


7. Roof Problems

Older homes tend to have older, possibly deteriorating roofs. This presents numerous problems, including pest infestations, interior water damage, and less-effective insulation. Problems stemming from a compromised roof, particularly once interior leaks begin occurring regularly, can cost tens of thousands of dollars to fix and may not be covered by homeowners insurance.

Warning signs of potential roof issues include:

  • Missing or damaged shingles
  • Crumbling roof cement
  • Bowed or sagging gutters
  • Persistent moisture in the attic
  • Evidence of water damage in the upper floors
  • Critters in the attic or upper crawlspaces

Possible Solutions

Before you buy an older home, assess the roof’s age and condition to the best of your ability. Unless the seller put the roof on, they might not be aware of when it was installed, so consider hiring a roof inspector ($100 to $600) if there are obvious signs of wear.

Next, consider the likely lifespan of your current roof and its potential replacement:

  • Shingles. On sloping roofs, asphalt shingles typically remain in good shape for 15 to 20 years. Treated wood shingles last 20 to 30 years.
  • Metal. Metal roofs are typically warranted for 20 to 40 years, though they often last longer and require little maintenance.
  • Tile and Stone. Tile and stone roofs can last up to 100 years with proper installation and maintenance.

Within these categories, construction matters. For example, on sloping shingle roofs, a rubber or thermoplastic coating layer can mean the difference between a roof that goes bust at 15 years and one that keeps on chugging well beyond that. Of course, no matter the material, a roof’s actual lifespan depends on installation quality, prior maintenance record, roof slope, and local climate.

Replacement costs vary greatly by material, but you can expect to spend anywhere from $5,000 to more than $10,000 to replace an entire asphalt shingle roof. Slate (stone) roofs cost $11,000 to $24,000 to replace, on average.

If the roof’s problems are confined to a small area and the roof isn’t near the end of its predicted lifespan, you can save money by replacing or repairing only the damaged section. If the roof is older or widely damaged, it makes long-term financial sense to replace the entire thing, or at least one whole side.


8. Inefficient Windows

Old homes are more likely to have older, inefficient windows. The primary downside of inefficient windows is higher electricity bills because the home’s climate control system has to work harder to compensate for leaks. According to the Federal Government’s ENERGY STAR program, installing the most efficient class of windows in your entire home can reduce your annual electric bill by as much as $600, depending on the size of your home and where you live.

Possible Solutions

Address inefficient windows temporarily with passive heating and cooling methods, such as shutting windows and blinds on hot days and opening them at night, and by using plastic film ($10 to $20, on average) to seal leaks during the winter. Sealing cracks around your windows and reinforcing your home’s insulation, a more permanent solution, can cost upward of $1,000.

The ultimate leaky-windows solution is simply to replace old windows with more efficient ones. While judicious window replacement is often cited as one of the top home improvement projects to reduce long-term homeownership costs, bear in mind that super-efficient windows are costly. Installing them in your entire house could set you back $10,000 or more, meaning you might never earn back your investment.


9. Inadequate or Unsafe Electrical Systems

Electrical problems fall into two categories: convenience and safety.

First, convenience: Unless their electrical systems have been updated, older homes lack sufficient numbers of electrical outlets to address our collective addiction to electronic devices.

Second, and more importantly, safety: The lifespan of electrical wiring itself is limited by the lifespan of the wire’s insulation. Wiring installed before 1960 lasts roughly 70 years, while newer wiring is estimated to last at least 100 years. Once the insulation deteriorates to the point that the actual wire is exposed, the risk of electrical fire, shocks, short circuits, and localized (single- or multiroom) power failures increases dramatically.

Electrical service panels and circuit breakers are also prone to deterioration. Service panels last 60 or 70 years, while breakers last 30 or 40. Failing panels and breakers can cause shock, power failure, fire, and other dangers.

Note that water damage, fire, pest infestation, and other unusual events can harm some or all of an electrical system’s components, necessitating repair or replacement long before they reach their life expectancy.

Possible Solutions

Electrical work is dangerous and confusing for novices, so avoid taking the DIY route with your electrical project. Instead, hire a licensed electrician.

A qualified electrician typically takes 30 to 60 minutes to install a single outlet, at a cost of anywhere from about $100 to about $400. If a new circuit is required, the cost will be higher, though not excessively so.

A new service panel starts at about $500, but a higher-amp option (which may be required for high-power appliances) costs closer to $1,500


10. Failing or Inefficient Mechanicals and Appliances

Old homes are more likely to have old mechanical equipment, such as water heaters, furnaces, and air conditioning units, as well as older household appliances. Mechanical and appliance lifespan varies by item, brand, and workload. On average, expect major mechanical equipment and appliances to age as follows:

  • Water Heater: 10 to 15 years
  • Furnace: 15 to 30 years
  • Central Air Conditioning System: 15 to 25 years
  • Refrigerator: 15 to 20 years
  • Washers and Dryer: 10 to 15 years

Equipment near the end of its useful life is more prone to failure, raising the possibility of an inconvenient or dangerous situation — such as the heat going out in the dead of winter or an electrical fire — that needs to be addressed immediately. Moreover, older equipment is usually less energy-efficient, resulting in ballooning utility costs.

Possible Solutions

Older homes with recently updated mechanical equipment and appliances typically fetch a premium. If you’re fine with buying older mechanicals and appliances, research each unit and determine about how much longer it can be expected to last. Draw up a replacement schedule commensurate with your time horizon and begin saving for the most pressing projects. If your furnace has 15 years left and you plan on selling in five, replacement isn’t necessary.

Mechanical and appliance replacement costs vary by item and brand. For instance, natural gas furnaces, ideal for colder climates, cost about $2,000 to $4,000, on average. Heat pumps, sufficient in warmer climes, cost less. Efficient tankless water heaters can cost as much as $6,000, though the average installation cost (per Fixr) is closer to $2,000. Traditional tank heaters cost even less, in the $1,000 to $2,000 range.

If you plan ahead to replace your old water heater or laundry machine, finding room in your household budget won’t be an impossible task. Set up an interest-bearing, FDIC-insured savings or money market account earmarked specifically for the project.

An unexpected replacement can really set you back, particularly if there’s damage involved. A family friend recently had to replace his old dryer after a massive electrical fire was sparked by faulty wiring and exacerbated by a clogged dryer vent. Including cleanup, the bill came to more than $20,000, though his homeowners insurance policy covered most of the cost.


11. Unhelpful, Unfinished, or Outdated Updates

Older homes typically have more than one previous resident, and sometimes a lot more. All those past homeowners had license to do what they wished with the property.

While many older homes retain the charm and function of their original construction, others have a host of unhelpful or anachronistic updates that detract from the homeowner’s experience and potentially add to the cost of ownership. Particularly costly updates that may need to be rectified shortly after moving in include:

  • Poorly designed, inadequate, or simply tasteless kitchens
  • Illegal basement bedrooms (lacking egress windows, for instance)
  • Incomplete projects, such as a partially finished basement or partially laid patio

Before we bought our current house, my wife and I went to an open house at a 100-year-old home with a half-finished basement , half-finished screen porch, and a literally transparent exterior paint job. The home had been purchased just a few months earlier for far less than the current asking price, suggesting the current owner had attempted to flip the house and had become overwhelmed. Our real estate agent remarked, “It looks like this guy ran out of money and bailed.”

Possible Solutions

As long as they’re not unsafe, you can live with unhelpful or outdated features until you have room in your budget to fix them. The cost of said fixes varies widely. A full kitchen update typically runs into five-figure territory, while replacing outdated moldings or rectifying a hideous interior paint job might cost only a few hundred.

Half-finished add-ons, such as the porch at the abandoned flip mentioned above, are another matter. They can be unsafe, particularly for small children, and may provide access points for insects and rodents. Think twice about buying an older home with too many wonky updates or haphazard design touches, as they often disguise bigger problems.

For instance, we found out later that the abandoned flip had serious foundation problems that would cost tens of thousands of dollars to fix. The scale of the foundation issue likely compelled the flipper to walk away from the property before completing the job.


12. Substandard or Unsafe Features

Older homes sometimes have too much charm. Depending on the style, location, and history of a particular house, some original features may be obsolete, not up to current building codes, or actually unsafe. Examples include:

  • Old laundry chutes
  • Servants’ staircases
  • Staircases leading nowhere (commonplace in houses that were once divided into multiple dwelling units)
  • Steep staircases
  • Low ceilings
  • Blocked-off chimneys
  • Nonworking fireplaces.

Our current home is by far the nicest place we’ve ever lived, but it nevertheless has a steep, winding staircase we’d feel uncomfortable allowing a toddler to traverse, as well as an obsolete chimney that’s showing early signs of deterioration.

Possible Solutions

Many jurisdictions are lenient about substandard or against-code features in owner-occupied residences, relative to rental or commercial properties. Accordingly, you likely won’t be required to fix such issues (unless they threaten other properties) after taking possession of your older home. However, fixing these issues can preserve or increase your home’s value, not to mention enhance the safety and comfort of its occupants.

Some problems have straightforward, affordable solutions. For example, childproofing our steep staircase simply involves installing a latching door or child gate at the entrance. Others, such as a crumbling chimney, require regular upkeep (repairing flashing and any damaged roof materials) that can cost a few hundred dollars per year.


Potential Benefits of Owning an Older Home

You wouldn’t guess it from the litany of potential problems owners of old houses can face, but old-home ownership has its benefits too. Older homes are often conveniently located in established, amenity-rich neighborhoods; inside, they offer abundant charm and equity-building opportunities.

1. Convenient Location

Because most cities grow outward over time, older homes tend to be located closer to employer- and amenity-rich downtown cores. A convenient location offers many time-saving and healthful benefits, such as shorter commutes (and the opportunity to use public transit or commute by bike) and easier shopping trips.

By contrast, newer owner-occupied homes tend to be built where land is cheapest, often on the edges of existing towns and cities. Such places aren’t always convenient.

However, these rules aren’t universal. Big cities have plenty of newly built condos downtown or close by, and many rural homes are quite old.

2. Hard-to-Duplicate Original Features

Though some older homes lack character, many showcase charming, period-specific features that are pleasing to the eye and may increase resale value. For instance, the built-in storage and display cabinets in our older home’s dining room definitely influenced our purchasing decision because it was both aesthetically pleasing and practical. In our region, the only new homes that contain such built-in furnishings were well out of our price range and preferred neighborhood.

3. More Established Neighborhood

In towns and cities, older homes are often located in established neighborhoods with long-term homeowners who care about the area and community, mature landscaping and tree cover, and a general sense of community. Such areas are also more likely to be connected to municipal infrastructure, such as sewer and water systems.

By contrast, less-established neighborhoods tend to have less community engagement, particularly if the homes are very new and most residents are busy professionals without the time to engage their neighbors. Plus, newer subdivisions look bleak until newly planted trees and shrubs fill out.

4. Potential for Better Construction Quality

Depending on the building style and location, an older home may be constructed more solidly and durably than newer homes. This is particularly true for budget-friendly new homes in recent subdivisions, which are typically built by big companies with the ability to cheaply mass-produce the structures.

Then again, some of America’s original suburbs were mass-produced housing tracts built shortly after World War II. When considering any home built to standardized specifications, learn as much as possible about the materials, methods, and labor used by the construction company.

5. More Opportunities to Build Equity

Creative, enterprising, diligent homeowners see opportunity in older homes’ shortcomings. Every poorly designed kitchen, unfinished basement, or non-landscaped yard is a project in waiting. A well-chosen, well-executed renovation or update can boost a home’s appraised value, and its eventual resale value, by more than the project’s cost.

Your budget is likely to limit the scope of your vision, particularly right after you move in. But equity-building projects become more manageable when they’re planned and budgeted for well ahead of time. My wife and I are already kicking around ideas (and saving) for a finished basement and brand-new detached garage, even though we won’t start on either project anytime soon.


Final Word

Even a charming, beautifully staged older home in a convenient, tight-knit neighborhood is likely to have some of the drawbacks mentioned above. If you choose to fix most or all issues as they arise, you’ll likely end up spending tens of thousands of dollars during your time in the home.

Alternatively, if you choose to ignore serious issues or do only the bare minimum to fix them, you’ll likely have to accept a lower sales price or cover the cost of major repairs just before selling. Either way, you could limit or negate the overall return on your real estate investment by purchasing an older home.

That’s not to say that newer homes don’t require major repair and upkeep investments over time. And new homes often come with additional expenses that owners of older homes aren’t likely to face, such as homeowners association fees. Ultimately, it’s more important to choose the home that feels right to you and your family than to obsess over what could go wrong with your new abode.

Source: moneycrashers.com