By Stephanie Taylor Christensen, Personal Finance Writer and Founder of Wellness On Less
Thanks to the expired payroll tax cut, it’s estimated that earners making between $75,000 and $100,000 annually will lose about $1,200 of their paycheck this year. On top of that decreased cash flow, prices on three of life’s biggest expenses are rising in 2013. Here’s how to make your big ticket purchases more affordable.
1. Rising auto prices. New Federal fuel efficiency standards require automakers to double vehicle fuel economy by 2025, and auto manufacturers aren’t wasting time passing costs associated with the mandate to consumers. Toyota Camry ticket prices have gone up about $175 this year, while Lexus CT model prices jumped about $3,000. Even used cars are expected to cost about $1,000 more, thanks to Hurricane Sandy. To counteract the rise, it pays to be strategic about your financing options. If you’re buying new, many manufacturers like Buick, GMC, Ford, and Toyota are offering 0% financing in early 2013. Take advantage of the free loan until the interest rate expires, and buy the vehicle outright before you pay a dime of interest. Short on cash? Pawning the valuables that are collecting dust in your closet can fund your down payment, at a low, short-term interest rate. If you’re leasing or refinancing, the same strategy can provide the cash for a down payment that will ultimately lower monthly payments, and boost your eligibility for low interest rate loans.
2. Higher tuition, less help. The average 2011 college graduate has more than $26,000 in debt—an increase of 5% from the previous year. Budget cuts and reduced subsidies at the state level will make funding college even more painful in 2013. According to the College Board Trends Report, average in-state tuition and fees in public four-year colleges increased 4.8% in 2012; costs at two year public state colleges increased 5.8%. Worse still, Federal grant aid for students, which can help absorb rising costs, remain flat. Instead of adding to student loan debts, avoid the borrowing trap. A student who cuts expenses by just $7 a day for about six months could save about $1,260 to fund tuition. He or she could make up any shortfall by pawning an item of value, and repaying the loan over the course of the semester.
3. Prime your finances to score low mortgage interest rates. Housing experts agree that home prices will increase in 2013, at least by 1%, and possibly, as high as 5%. At the same time, mortgage loan and refinance interest rates remain low, presenting a prime opportunity to buy a new home, or refinance an existing loan. The catch? Those advertised low interest rates have criterion: To qualify, potential refinancers must have equity in their homes, and new home buyers must have a down payment. Excellent credit scores are required in either case. Because UltraPawn doesn’t reflect on your credit report, using your valuables as collateral can free up the cash you need to pay down debt balances, and in turn, boost your credit score. Additionally, it can fund a down payment, or even reduce your mortgage loan balance to achieve the home equity required for a lower interest refinance opportunity.