As starter homes become 'a fairy tale,' first-time buyers find creative alternatives |
Younger Americans looking for affordable property are finding the search increasingly difficult. U.S. median home prices have surged 33% since January 2020, from $329,000 to $436,800, putting monthly mortgage payments out of reach for people who make an average income. What's more, modestly priced two-bedroom homes with fewer amenities — such as less storage space or no backyard — are harder to find. "The idea of a 'starter home' has become more of a fairy tale," says Denis Smykalov, a Florida-based real estate broker at Wolsen Real Estate. Those looking to become first-time homeowners, then, are forced to save longer or consider alternative options. One creative solution that's becoming more common: buying with friends. In 2020, when Amanda Schneider was forced out of a rental in Nashville, Tennessee, she pitched the idea of going in on a home together to her two roommates. After a few weeks of searching, the women found a detached brick home on 1.25 acres of land in Gallatin, Tennessee, for $315,000. They made a 10% down payment and split the mortgage payments evenly. "With three incomes, it broadens the possibility of what we could get, and we genuinely enjoy living together as a unit of roommates," Schneider says. |
Money Tip of the Week: Understand how 401(k) vesting works Looking to stash money away for retirement? Conventional wisdom suggests starting by investing enough in your workplace retirement account to receive any matching contribution your employer offers. "It truly is free money," says Kevin Brady, a certified financial planner and vice president at Wealthspire Advisors in New York City. But depending on how long you've been at your company, the money may not be yours. Not yet, anyway. That's because your employer's contributions to your account come with a vesting schedule. That means if you leave the firm before working a certain number of years, you may not be able to take some or all of the matching money with you. Under the Internal Revenue Code, companies can generally offer one of two vesting models. 1. Three-year cliff. You receive 100% of the company match once you've worked for three years. Leave before that and you get 0% of what your company contributed. 2. Six-year graded. With this plan, you don't get 100% of your match until six years of service. Under a common model, you get 0% after one year, 20% after two, 40% after three and so on. Companies can be more generous if they choose. Your plan may vest instantly. Or maybe there's a one- or two-year cliff. To find out, go to your 401(k) website and read the plan document or summary plan description. |
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Next Gen Investing: ChatGPT probably won't help you beat the market, but it could make you a better investor |
Around 50% of Gen Zers and millennials have used ChatGPT, OpenAI's viral chatbot, for investing advice, according to a recent survey from The Motley Fool. Depending on what you're prompting the artificial intelligence to do, that may not be the best idea, financial pros say. For one thing, OpenAI warns ChatGPT users that the bot sometimes "writes plausible sounding but incorrect or nonsensical answers," and that the tool was not intended to give advice. If you're asking it to pick investments, "it is by no means going to provide you with a way to beat the market," says Douglas Boneparth, a certified financial planner and founder and president of Bone Fide Wealth. Though the AI's potential for analyzing vast quantities of data would make it seemingly useful in choosing investments, the technology just isn't there yet, he says. But chatbots can be useful as a tool in the research process. The technology can be helpful for looking up unfamiliar financial terms or helping you research a company whose stock you're interested in, Boneparth says. While a human financial advisor will be more adept at helping you navigate financial decisions which involve feelings and behaviors, he adds, chatbots can help if your task is more in the vein of "analytical number crunching." |
Worth the Money: $159 weekender bag |
When all of the people you love live at least a bus, train or plane ride away, you need a good duffel bag. Enter: the Patagonia Black Hole bag. This duffel can contract or expand into any shape you need it to: It can fit a week's worth of clothes (and shoes) for a long road trip, and still be rolled into a small ball that can be tucked away into a corner of my closet. Did I mention it's waterproof and comes with clip-on backpack straps? Dare I say it is the perfect summer travel bag? —Morgan Smith, Work Reporter |
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