6 Things You Think Add Value To Your Home – But Really Don’t

Every homeowner must pay for routine home maintenance, such as replacing worn-out plumbing components or staining the deck, but some choose to make improvements with the intention of increasing the home’s value. Certain projects, such as adding a well thought-out family room – or other functional space – can be a wise investment, as they do add to the value of the home. Other projects, however, allow little opportunity to recover the costs when it’s time to sell.

Even though the current homeowner may greatly appreciate the improvement, a buyer could be unimpressed and unwilling to factor the upgrade into the purchase price. Homeowners, therefore, need to be careful with how they choose to spend their money if they are expecting the investment to pay off. Here are six things you think add value to your home, but really don’t.

1. Swimming Pools

Swimming pools are one of those things that may be nice to enjoy at your friend’s or neighbor’s house, but that can be a hassle to have at your own home. Many potential homebuyers view swimming pools as dangerous, expensive to maintain and a lawsuit waiting to happen. Families with young children in particular may turn down an otherwise perfect house because of the pool (and the fear of a child going in the pool unsupervised). In fact, a would-be buyer’s offer may be contingent on the home seller dismantling an above-ground pool or filling in an in-ground pool.

An in-ground pool costs anywhere from $10,000 to more than $100,000, and additional yearly maintenance expenses need to be considered. That’s a significant amount of money that might never be recouped if and when the house is sold.

2. Extensive Landscaping

Homebuyers may appreciate well-maintained or mature landscaping, but don’t expect the home’s value to increase because of it. A beautiful yard may encourage potential buyers to take a closer look at the property, but will probably not add to the selling price. If a buyer is unable or unwilling to put in the effort to maintain a garden, it will quickly become an eyesore, or the new homeowner might need to pay a qualified gardener to take charge. Either way, many buyers view elaborate landscaping as a burden (even though it might be attractive) and, as a result, are not likely to consider it when placing value on the home.

3. High-End Upgrades

Putting stainless steel appliances in your kitchen or imported tiles in your entryway may do little to increase the value of your home if the bathrooms are still vinyl-floored and the shag carpeting in the bedrooms is leftover from the ’60s. Upgrades should be consistent to maintain a similar style and quality throughout the home. A home that has a beautifully remodeled and modern kitchen can be viewed as a work in project if the bathrooms remain functionally obsolete. The remodel, therefore, might not fetch as high a return as if the rest of the home were brought up to the same level. High-quality upgrades generally increase the value of high-end homes, but not necessarily mid-range houses where the upgrade may be inconsistent with the rest of the home.

In addition, specific high-end features such as media rooms with specialized audio, visual or gaming equipment may be appealing to a few prospective buyers, but many potential homebuyers would not consider paying more for the home simply because of this additional feature. Chances are that the room would be re-tasked to a more generic living space.

The Bottom Line

It is difficult to imagine spending thousands of dollars on a home-improvement project that will not be reflected in the home’s value when it comes time to sell. There is no simple equation for determining which projects will garner the highest return, or the most bang for your buck. Some of this depends on the local market and even the age and style of the house. Homeowners frequently must choose between an improvement that they would really love to have (the in-ground swimming pool) and one that would prove to be a better investment. A bit of research, or the advice of a qualified real estate professional, can help homeowners avoid costly projects that don’t really add value to a home.

This article was originally posted at forbes.com on May 19, 2013. To read the entire list, click here.

4 Easy Steps to Raising Money-Smart Kids

Human beings may be destined to do everything the hard way. Consider teaching kids about money. Parents can do this quite simply, following a few guidelines. Yet few make any real effort, and we ask schoolteachers to fill the gap.

Parents are hands-down the most influential force in any child’s life, and studies show that this extends to money management. Yet the money talk still doesn’t happen in about half of all households.

Meanwhile, we have a global movement to bring financial education into the classroom. This effort has been clumsy at times though sorely needed. Too many kids go to college or get their first job without a basic understanding of budgets, debt, and saving. We ask the schools to address this need before the kids turn into bankrupt adults whose financial assistance boomerangs back on society.

If only more parents took control, the lessons learned at school would resonate with what they hear at home and sink in to a greater extent.

Jonathan Clements is one of the few parents I know that has made a big effort at raising financially literate children. A former personal finance columnist at the Wall Street Journal, Clements is now the director of financial education at Citi Personal Wealth Management. He started family money lessons at age 5 with his children, who are now twentysomethings with, he tells me, enviable money management skills.

Clements believes there are four simple guidelines to raising money-smart kids:

1. Make them feel like the money they spend is theirs.

One way to do this is pay an allowance, explain what the money is for and never give in when they ask for more. “The first rule of parenting,” Clements jokes, “is to never negotiate with terrorists.” With young children, play the soda game. When you eat out offer $1 if they drink water instead of a soft drink. It’s shocking how often they take the $1. Pay allowance to a bank account so that they must make a withdrawal before they can spend.

2. Tell family stories that illustrate money values

Clements’ own grandfather inherited and squandered a small fortune. He says he grew up hearing the story over and over from his parents; it ingrained in him and his siblings the lesson that money spent is not easily replaced. Share stories about your humble roots or how you struggled when starting your career. That way your kids will understand they must work to earn their lifestyle. “We all had cockroaches in our apartment at one point,” Clements says. “Don’t be afraid to dress up your story a little bit for emphasis.”

3. Lead by example

Even if you are not a financial whiz (and who is?), you can set a good example by paying your bills on time and staying out of debt troubles. “If your kids know you’re up to your eyeballs in credit-card debt, they aren’t going to pay much attention to any wise words you might have about managing money,” Clements says. “Your kids are more likely to do as you do, not as you say.”

4. Manage expectations

In their teens, Clements’ kids clearly heard what Dad would and would not pay for as the kids reached adulthood—how much he would pay toward college, what kind of support they could expect after college and how much he would pay towards a wedding. This gave them a realistic sense of what was coming and “no bruised feelings” later.

And there you have it. The hardest part may be consistency with your message and, for some, staying out of money trouble themselves. That’s all the more reason to commit to a plan like this, which will benefit you too.

This article was written by Dan Kadlec and originally published on May 03, 2013 at time.com.

Member Appreciation Open House

WESTconsin Credit Union and WESTconsin Realty are hosting a Member Appreciation Open House and Cookout on Thursday, May 23 from 3 – 6 p.m. Enjoy visiting with our office team and real estate professionals about financial matters and the local real estate market.

The event is taking place at the WESTconsin Credit Union – Prescott Office located at 1400 North Acres Road. The public is invited to attend, and food and refreshments will be served. Please call (715) 262-4600 for more information.

5 Habits You Didn’t Know Were Costing You

Everyone has bad habits. Maybe you obsessively check Facebook while at dinner with friends, arrive late to meetings or interrupt people when they’re talking. Chances are you’re at least sometimes aware of these bad acts. But you might not realize how other habits are costing you actual money. And we’re not talking about a daily Starbucks fix. If you get pleasure out of those lattes, by all means enjoy them.

But some other under-the-radar tendencies can end up sabotaging your financial health, and you may not even realize it.

1. You shop with friends

Shopaholics are typically portrayed by women in popular culture. But at least in one respect, men can out-shop women. A 2011 study, “The Influence of Friends on Consumer Spending,” found that men spend more when they’re accompanied by a friend than when they’re alone, and the effect wasn’t the same for women.

The results of four experiments showed that men shopping with a buddy spent 54% more than men shopping solo, while women spent about the same whether they shopped by themselves or not. The authors posit that the reason for the discrepancy comes from a key difference between men and women – albeit a gender stereotype. Men focus on status and “engage in self-promotion through increased spending while shopping with friends” – in other words, they tend to show off – whereas women are “communion-oriented,” meaning they aim for cooperation and harmony, “leading them to keep their spending under control in the presence of a friend.”

2. You’ve got a credit mindset

Studies going back to 2001 have shown that consumers spend more when using credit cards compared to buying with cash. Two MIT professors set out to determine if research participants would be willing to pay more for an item simply because they were paying for it with a credit card instead of cash. They set up an auction where participants could bid on tickets to a basketball game. The participants who were told they could pay with plastic submitted significantly higher bids – nearly twice as high as the average cash bid.

A 2008 study published in the Journal of Experimental Psychology found that the “more transparent the payment outflow, the greater the aversion to spending, or higher the ‘pain of paying.’” Basically, paying $600 for an iPad in cash hurts more than handing over your Visa. Cash is viewed as the most transparent form of payment; less-transparent payment modes, such as credit cards and gift cards, are more easily spent or treated as play or “monopoly money,” the researchers said.

3. You have multiple bank accounts

Conventional wisdom suggests people should spread their earnings across different accounts to maximize savings. But a recent study found that having more accounts has the opposite effect.

Researchers at the University of Utah and University of Kansas conducted studies that presented 566 participants with the opportunity to earn money across tasks and spend it on different products. The authors found a higher rate of saving among individuals who maintained one account compared with those who had multiple accounts.

The reason? People look for an excuse to spend, and “vague” information makes it easy to justify that spending. Having multiple accounts makes it seem like you’ve got more funds available than you actually do. Having a single account – and one number reflecting your total wealth – makes it harder for individuals to come up with creative justifications to spend.

This article was written by Lisa Scherzer and originally published at The Exchange, a Yahoo! Finance Blog, on May 9, 2013. To read the entire list of costly habits, click here.

7 “Smart” Credit Tips That Aren’t

There’s a lot of advice floating around out there about how to manage your credit cards and other debts to maximize your credit score. The trouble is, not all this wisdom is created equal, and some tips intended to help your credit can actually have the opposite effect. Here are seven supposedly “smart” tips we’ve heard recently that generally ought to be ignored.

1. Asking for a lower credit limit

If you can’t control your spending, asking for a lower credit limit may indeed keep you out of trouble by simply capping how much you can borrow. But there’s also a risk to this approach. As MyFICO.com explains, 30% of your credit score is based on how much you owe. The formula looks at how much you owe as a percentage of how much available credit you have, otherwise known as your credit utilization ratio. So if you’re unable to pay off your debts, lowering your credit limit will increase your ratio — and damage your score. The impulse to impose external limits on your spending is understandable, and in some cases wise, but you’re better off focusing your energy on internal restraint.

2. Opening a bunch of cards at once

Since your utilization ratio is so important, a lot of people think that getting as much available credit as possible — immediately — will do the trick. But it doesn’t work like this, unfortunately. You can’t magically improve your utilization ratio by applying for a slew of cards in rapid succession because numerous inquiries and multiple brand-new cards both can lower your score, says Barry Paperno, credit expert at Credit.com. If you want more credit to improve your score, space out the process and be realistic about your situation; don’t take the hit to your score by applying for a card you know you probably won’t qualify for. (Banks and third-party websites that aggregate credit card deals both generally spell out what kind of credit score you need to obtain a particular card.)

3. Using prepaid debit cards to rebuild your credit

John Ulzheimer, president of consumer education at SmartCredit.com, says a lot of borrowers have the misconception that prepaid debit cards and credit cards are equally good credit-building tools. They’re not. Prepaid cards “don’t do anything to help build or rebuild your credit and are not a viable long-term plastic solution,” he says. Although some prepaid card issuers say they help build credit, none currently report to the three major credit bureaus.

Instead, Paperno suggests a secured credit card, which requires you to put up a cash deposit equal to the amount you can spend. The effect on your cash flow is the same as with a prepaid card, but you’ll be building a credit history. That said, there two caveats to keep in mind. First, although most secured card issuers do report your activity to credit bureaus, check the fine print or call and ask to make sure it reports to at least one of the big three (TransUnion, Equifax or Experian). Second, watch out for fees; in a March ruling that disappointed consumer advocates, the Consumer Financial Protection Bureau reversed a regulation that limited some fees on these cards.

4. Never using your credit cards

Some people approach credit like a poker game, with the mentality that you can’t lose money if you don’t play your cards. Although it’s always advisable to pay off your bill in full every month to avoid interest charges, not using credit cards at all can actually backfire when it comes to your credit score. If an issuer looks at your account and sees that there hasn’t been any activity for a while (how long varies, but more than a year is a good rule of thumb), they might close it. Losing that credit line hurts your utilization ratio, which can hurt your credit score. Lohrenz suggests charging a small amount regularly — maybe a recurring bill like a gym membership or Netflix subscription — and paying it off every month. Some issuers will let you set up automatic payments from your checking account, so you won’t forget to make those payments.

This article was written by Martha C. White and originally published on May 06, 2013 at time.com. To read the entire list of “tips”, click here.