This is a guest post by Jack Anderton.

Purchasing your first home is an incredibly important financial decision. It is an exciting time because you are picking the place that you will live for at least the next few years. However, before making a home purchase you want to be sure that you do not overextend yourself financially. Lots of people overspend on their home and find themselves unable to keep up with the payments. You can keep yourself out of this predicament by using these two useful ratios to keep you from breaking your budget.

Debt to income ratio

One of the mistakes that people made over the past decade was buying more home than they could afford. This is at the core of causes that led to the subprime crisis in United States. The incomes that they earned were not enough to comfortably make the payments on their loan. You can avoid making this mistake by evaluating the debt to income ratio. The debt to income ratio measures the amount of money that you earn on a monthly basis and divides it by the amount of money that you owe monthly.

If your mortgage payment is $2,500 a month and your monthly income is $5,000 then your debt to income ratio would be 50%.

A 50% debt to income ratio is too high. A borrower would have trouble trying to make the monthly mortgage payments or trying to refinance the loan. As an approximate rule of thumb, a single person should have a debt to income ratio no greater than 30%. A married couple should have a debt to income ratio below 35%.

Loan to value ratio

Another useful metric to use when doing home loan comparison is the loan to value ratio, also known as LVR. The loan to value ratio will keep you from paying too much for your home. Loan to value measures the risk of a loan by looking at the mortgage amount of a property and divides it by the appraised value of the home.

If you own a home and your mortgaged owed is $100,000 and the appraised value of the home is $200,000 then your loan to value ratio would be 50%.

A 50% loan to value ratio is outstanding. A loan to value ratio that is at 75% or below makes you a good risk for a lender to give a home loan to. This ratio is very useful to borrowers that are seeking to refinance a home. In certain countries such as Australia, you will be required to take on Lenders’ Mortgage Insurance if your LVR is higher than 80% because you are deemed to carry greater risk than a borrower who has an LVR of lower than 80%. This is an insurance that protects the lenders in the event of borrower default.

Calculating these two ratios when loan shopping will keep you from buying a home that is too expensive for your bank account.

This is a guest post by Jack Anderton.

This is a guest post by Jessica Wagner.

Everybody knows the home air conditioner chews away at the summer budget. However, your main budget enemies during the summer months are actually your A/C-running gas guzzler, entertaining the kids home from school, and not doing enough to reduce home energy use in simple effective ways. The following are tips to shave a few dollars off the summertime budget that are so easy you’ll have a hard time not giving them a try.

RECIRCULATE CAR AIR EFFICIENTLY

Virtually every automobile with an air conditioner includes a recirculation button. Nobody needs to be explained what this does, but most people are unsure as to how to use it properly. The common instinct is to get the A/C and recirculation going at the same time. However, the air inside a sitting car will probably be hotter than the air outside. Wait about ten minutes before starting recirculation. In return, save some extra at the pump.

FILL THAT FRIDGE

One-sixth of your home energy use derives solely from your refrigerator. Making sure your kitchen stays relatively cool can lower this usage, but by keeping the inside fully stocked you can reduce the number of times the refrigerator re-cools itself. More cold material within the fridge means when the door is opened and closed again the air inside can be cooled much more quickly. Even if you don’t have the budget or the number of mouths necessary to pack your refrigerator, just fill it with pitchers of water.

SCOUR THE WEB FOR COUPONS, PROMOTIONS, AND DEALS

Sure this is just a high tech version of telling you to cut your coupons out of the Sunday paper, but the Internet offers a far wider variety of ways to save. Promo code collections abound online, and with just a simple web search you can find these continually-updated coupon libraries. Paid surveys, while by no means a method to retire early with, take minutes to complete and can earn you points towards websites like Amazon and iTunes, through whom you can buy just about anything that’s useful for the home or for keeping kids happy.

DISREGARD THE DRYER

In this record heat, there’s no reason why anybody should be using a machine to dry their washed clothing. Stringing a clothesline up is a possibility in virtually any living situation. Not using the dryer cuts out a large chunk of your energy bill. Plus a clothesline makes any home look a little more welcoming.

It’s scorching out there, but that doesn’t mean you have to get steamed over the burden of summertime expenses. There are ways around the surging demand for energy and smart methods to slice off a little of the cost of running the home and entertaining the kids. You just have to be a little proactive – nothing a talented mom isn’t used to.

This is a guest post by Jessica Wagner.