Do You Put Your Ideals Ahead of Your Pocketbook?

There are times when adhering to your ideals is cost-efficient. For example, many of the things you do to live in a more eco-friendly manner are also things that happen to save you money. You can live more sustainably and come out ahead at the end of the month.

Not everything is like that, however. There are times when your ideals can cost you money. Sometimes, you pay for something because you believe in it — not because it’s cost efficient.

Giving to Causes

One of the biggest examples is giving to charity. If you believe in a cause enough to give money to it, you aren’t likely to derive any benefit out of it. You can get your money back if you buy energy-efficient light bulbs or invest in a smart thermometer.

Giving to a cause you believe in that doesn’t provide that kind of monetary return. The money is gone, and you can only hope that the people that run the charity will use the money well. (This is one of the reasons that I’m such a big fan of local charity, as well as sometimes donating to larger organizations with good ratings on sites like Charity Navigator.)

Socially Responsible Investing

Another way that you might end up losing a little more — or at least seeing smaller returns than you would have otherwise — is through socially responsible investing. Many people like the idea of only investing in companies and funds that reflect their ideals. However, in some cases, these investments don’t pan out. You might end up losing money because you invested in a clean energy company that isn’t off the ground yet, instead of in an oil company.

In some cases, you might see gains, but they might not be as big as otherwise. Some mutual funds that focus on socially-responsible companies charge higher expense ratios and other fees. You might end up with a lower ROI just through fees. If it’s important to you to invest where your ideals are, this isn’t the end of the world — as long as you can afford it.

Buying More Expensive Items

Unlike more expensive thermostats that eventually pay for themselves, there are some things that are just more expensive. What happens when you buy more expensive foods because it’s “whole” or for some other reason? What about buying products that are eco-friendly or produced in an eco-friendly manner, but that cost less? There are lots of examples of these kinds of purchases, and you might not get a corresponding increase in true quality.

The argument can be made that when you buy organic food, you are going to be healthier, and that is a benefit that can save you money down the road, but the reality is that there aren’t conclusive studies that say buying organic makes a significant difference in your health. You might also run into similar issues when you buy products that are made according to ideals. They might just be more expensive, without providing you with any other benefit beyond the warm fuzzies.

If you can afford these things, and you would rather see your money go toward things that are in line with your values, it’s not really a problem. However, if you are getting in debt as a result of the choices, it might time to re-think your decisions.

How Can Your Parents Help You Finance Your First Home

Many people are relying on their parents to help them buy their first home or house as it becomes harder to access loans from banks to place that deposit. Most banks do not give 100 percent loans of the value of the home which was common before 2008. Help from parents financially means that you are able to make huge savings because a larger deposit means that you are eligible for lower interest rates. There are a number of products that are designed for parents that will help their children finance the first home.

One of these products is a private home loan also known as an intra family mortgage or a private mortgage. With this loan you sign a contract and a payback schedule which states the amount of money that you will pay every month and it includes the interest that you have agreed upon. The contract also has the provision that allows your parents to foreclose on the property in case you default on the loan. This protects them in the event that another lender forecloses on the property. Another kind of loan hat parents can advance is one where your parents still have ownership of the money that they advance you so that their name also appears as part owner of the house.

The way this kind of loan works is that you and your parents put your money in a joint savings account which will be the deposit to the house. A charge may be placed over the money in that account. This helps to reduce the interest rate that you will pay on the house. For many parents this is ideal if they are contributing to a home that their child is purchasing with a partner. In case they split, the partner cannot take that money as the parents still have ownership of their money. You will also not be able to access the money until the mortgage on the house is worth some percentage of the property which in most cases is 75 percent.

There are various benefits to this kind of arrangement such as you will pay a lower interest rate then you are able to place a larger deposit so that you make some savings. Your parents are more likely to give you a lower interest rate if you are repaying back the money with interest which is cheaper than what your bank would give you. You may also be able to have a more flexible repayment contract as compared to what you would have with a financial institution which may be less financially strenuous to you.

For your parents some of the benefits that this kind of arrangement has is that they may get a steady income from the payments that you make to them instead of the money just sitting in the bank. The regular payments are also welcome as they become a steady income for them. It is important that u\you make the payments as scheduled as a sign of good faith.