Stretching Your Retirement Buck--The Reverse Mortgage

As my mom spins into retirement she is on a never ending quest to increase her retirement income and make her life more enjoyable. At some point I suggested that she check out reverse mortgages and see if that would work out for her. She loved the idea and applied for the loan. She loves her home and it's in a good safe neighborhood so, she has no interest in selling her house and moving to use the equity. The reverse mortgage increased her income by over four hundred dollars a month and she has been delighted with the extra money.

Many people aren't aware of reverse mortgages. If you own your own home and have equity built up in it, you should consider a reverse mortgage to help generate extra income as you retire and make your life more comfortable.

You need to be 62 or older to obtain a reverse mortgage and how it works is that You obtain a loan based a percentage of the equity in your home. The lender will pay you monthly payments depending on the terms of the agreement usually until the day you die or until you move out of your home. In the end your home is sold to repay the loan--usually after you die, (grim huh?) If you decide to try out a reverse mortgage read the terms of the agreement carefully and ask any questions of the lender that you might have. It's something to think about anyway.

Take Control of Your Financial Life! Create a Budget.

The single best way to take control of your financial life is to create a budget.

1. Creating a budget helps you to see exactly where your sources of income are coming from and where your money is being spent.


2. With a budget you will be able to see where expenses can be reduced to help you save money.


3. With a good budget you will be able to plan and make decisions about future expenditures and achieve financial goals.

To create a budget, gather data on your income and expenses. Three months of data is a good place to start. You can get the data from your checkbook register or online bank statements.

1. Start with a list of monthly income using the data collected for three months. You can then project your income for the rest of the year. Your income should be about the same for the upcoming months--adjust it if there are any changes.
2. list income from salary and wages, interest, dividends, self-empoyment income, and any other fixed income such as alimony.
3. Calculate a monthly total for all income.

After you have computed your total monthly income you can calculate your monthly expenses:

1. List your fixed expenses that must be paid every month first like house payment or rent, taxes, insurance, car payment, credit card and debt payments.


2. List your variable expenses like groceries, utilities, clothing, entertainment, any upcoming vacations, and savings.


3. Project your expenses by adding up the first three months of say--groceries and divide by the number of months (3) to get an average.


4. Use this average as your projected grocery amount for the upcoming months.


5. Do this with all of your variable expenses.


6. Include any upcoming major expenses that you know of like vacations and insurance payments.


7. Calculate a monthly total for all of your expenses.Subtract your total monthly expenses from your total monthly income to get your net income.


8. Try to keep your budget simple.


9. Round off dollar amounts to a whole number.


10. Look at your variable expenses to see if there are some expenses that you can cut back on and put into savings.

I have created an example budget for you to look at--just click on the link below.

http://spreadsheets.google.com/ccc?key=pw8uKsSvPJgdeEv3ebaTlLA&hl=en&pli=1