How To Get A Money Order: Easy Steps To Follow

February 8, 2019 by  
Filed under Finance

There are times when the best form of payment is a money order. Money orders can be obtained from several locations. However, there are only certain instances where a money order might actually be necessary. If you're moving into a new apartment and need to provide a security deposit, the landlord might require a money order instead of a check. Whatever the reason behind it, you will need to know the steps of getting a money order.

What Is a Money Order? 

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A money order is similar to a check. It is a paper form of payment. However, unlike a check, it does not come directly from your checking account. When a money order is required as a form of payment, it is typically because the recipient wants to make sure there is money in the account. A cash payment is difficult to handle as it can be lost, misplaced or miscounted. The recipient of the money may not want a personal check the very first time a payment comes in, because they want to be sure that money is available. Following the first payment, the recipient might then be willing to accept a personal check. For these reasons and more, it is important to know exactly the steps of getting a money order.

The money order looks like an oversized check. It shows the amount the money the order is for, who it is from, and the third party that created the money order. Sending money orders used to be a common form of payment, especially before the expanded use of credit. Lines of credit now are easy to determine if the money is there. As this is not the case with a personal check, the money order offers guaranteed funds to the recipient.

How Do Money Orders Work? 

If you are looking into getting a money order, it is a good idea to know how the entire money order process works. It begins with someone either in need of a guaranteed payment from you (such as a new apartment), or a time when you need to make a payment but don't have a checking account. You will go to a service provider that offers money orders. Once you are there, you will pay for the money order. The recipient will take your money and print out a money order, which is also sometimes known as a cashier's check. (Note: it is a certified check if it comes from your bank.)

THE STEPS INVOLVED

The money order/cashier's check is given to you to give to the recipient of the payment. The creator of the money order keeps the money for the money order. The printed amount on the money order is how much the order is worth.

When the recipient of the money order receives the payment, they can then cash it, similar to the process with a check. When the money order is cashed, the bank will then contact the issuer of the money order (the financial lender that created the money order in the first place) for the actual transfer of the funds.

This isn't all that different from writing out a personal check. However, the recipient of the personal check will not know if there is money in the account until after the check has been processed. By the time the recipient of the personal check discovers that there is no money in the account, it might be a day or two later. The money order/cashier's check offers the guarantee of money existing, which is why certain locations require this form of payment.

Steps of Getting a Money Order

Obtaining a money order isn't difficult and there are several locations you can go to get a money order. Whatever the reason might be, as long as you follow these instructions of getting a money order, you shouldn't have any issue obtaining this form of payment.

GO TO A MONEY ORDER LOCATION

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There are several locations you can go to to obtain a money order. First, you can try your personal bank or credit union. This is likely the easiest location to try, as your bank can take money directly out of one of your accounts for the money order.

If you don't have a bank or choose not to go to a bank, there are several other options available to you. Walmart, for example, can create money orders for you in the service department. Western Union can help you with this as well. There are likely other lenders in your area that create money orders too. Certain pharmacies also have this service.

Before you go about paying for a money order, it is important to look at the fee you'll be charged by the service provider. Each provider is a little different. While you can receive a money order from your personal bank, you may find your bank charges a higher fee for the creation of such an order than Walmart or other location providers. If you are part of a credit union, you'll likely have better luck here as credit unions typically have lower fees; either way, you'll be better off looking for the best rate. This is especially true if you need to create multiple money orders or will use the service often instead of writing personal checks.

PAY FOR THE MONEY ORDER

western union sample money order form

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When you arrive at the money order location and request a money order, you'll need to pay the value of the money order, plus whatever fee is charged. There are a few ways you can go about paying for this. If you're creating a money order/cashier's check from your personal bank, you can have the funds directly drawn out of your account. This is easier than the other options as you won't have to deal with any additional paperwork. The payment will come right out of your account and you will have records in the form of a withdrawal.

If you go to another location other than your bank, you can still pay with a debit card. Some locations might take personal checks, but most will not. Those that take personal checks like cap off the money order amount to a smaller value (such as $50).

You can pay for a money order with a credit card; although you not only will be charged the service fee for the creation of the money order, but also whatever interest rate is associated with your credit card. Due to these added fees, if you can avoid using a credit card you will be better off.

You are also able to pay for the money order with cash, and some locations will even allow you to pay for a money order with an employment check. This is an option if you don't have a bank account. It is recommended to obtain a bank account rather than rely on money orders for all your service payments (such as for a mobile phone or utilities). Paying the service fee every time you need a written check adds up quickly.

RECEIVE MONEY ORDER AND GIVE TO RECIPIENT

western union sample money order form

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The final step of getting a money order is to receive the actual money order. When you make the payment, you'll likely be given the money order on the spot. Some locations that accept personal checks may require a day or two to process before the money order is ready. When considering the different ways of getting a money order, if you need the money order right away you should avoid paying with a check because of this.

When you receive the money order, it will include your name as the payer and the recipient as the payee. It also includes what the money order is for. Ask for a receipt from the creator of the money order. Now, take the money order to the individual or business you need to pay. Make sure to not lose this and to treat it like cash; if you misplace it, there is not much you can do about it.

Upon giving the recipient the money order, make sure to ask them for a receipt. This way, should they attempt to say you did not make the payment, you will have the receipt that says otherwise. With money orders, it is all about saving a paper trail. Keep this receipt safe, just in case an issue should ever arise.

Conclusion

There are going to be times when you are required to make a payment in the form of a money order, certified check or a cashier's check. Whatever term is used, the process is all the same. It is about ensuring the recipient of the check receives the money owed. Sometimes the first payment needs to be a money order and then, from there, you can provide a personal check. Other times, you might not have a checking account and need to have a financial location write you out a check. Now that you know of getting a money order, you'll be able to obtain a money order whenever necessary.

How Much Rent Can I Afford? Living Within Your Means

February 1, 2019 by  
Filed under Finance

Americans might not realize that the struggle to figure out, "How much rent can I afford?", is one experienced around the world. But, finding housing you can afford developed in unique ways in the United States. Prior to World War II, like much of the developed world, most Americans lived in urban situations, in cramped apartments and flats. In the aftermath of World War II, America saw a massive growth in the availability of housing.

The new concept of suburban living exploded onto the scene, helped by special mortgage opportunities for veterans of the war. Veteran's Affairs-backed mortgages had new requirements for how much land a house had to exist on to be approved. There were even requirements for spacing between the house and its neighbors. Townhouses were not an option for these early home-seeking veterans.

The prevalence of these requirements helped pave the way for what we know today as "the American dream," a single-family home with a white picket fence and enough yard for kids and a dog. Developers shifted towards meeting this demand and moved away from building the more economical apartment, condo, and townhouse living that dominated in the past. The accompanying economic boom of the post-war years effectively killed the market for affordable living solutions that didn't meet this new paradigm. It's helpful to understand this history of housing in the United States when you try to determine, "How much rent can I afford?".

What Is Affordable Housing?

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Anyone asking themselves, "How much rent can I afford?" inevitably runs across the term 'affordable housing'. More generally, this term refers to housing whose costs fall well under the average wages of people living in the area. More specifically, affordable housing might refer to living arrangements that meet the needs of specific socioeconomic groups, like those on a government-funded housing voucher system like Section 8. It could also refer to housing that falls within the standard 30% of income, based on the average income of those living in the area.

Housing is one of, if not the most, expensive recurring financial responsibilities for adults today. And, the costs of housing keeps rising. Because individuals have many financial responsibilities, including food and groceries, the cost of housing should be under a certain percentage of income. This ensures that there is enough income left over to meet other needs, like paying off debts, affording medicine, and paying car payments and insurance. Ideally, housing costs should fall under 30% of your income, including costs for renters insurance and utilities. The reality is that many people spend far more than this, though they may not have taken the time to ask themselves, "How much rent can I afford?".

Affordable housing usually consists of apartments, townhouses or older homes. Newer homes tend not to be available as cost-effective rentals. Single-family homes are not as economical as apartments and townhouses. It takes more resources to build these homes. When developers build single-family homes they need more pipes, more wires, more foundation materials, more insulation, and more roofing materials. Apartments and townhomes economize the distribution of these resources and effectively cut costs. Significantly older homes can be made into affordable rentals because the costs of these resources have already been recuperated. If the property taxes in the area are not high, renters might be able to enjoy an affordable rent in a single-family home. But, this is often a rare find.

Is Affordable Housing Available?

The answer to the question of whether affordable housing is available depends completely on how much money you make. The startling truth is that no state in the USA offers affordable housing for an adult earning minimum wage and working 40-hours a week. At $7.25 an hour, a minimum wage worker averages $1,256 each month. That means he or she would have to find rent for only $300 a month and then spend no more than an additional $77 for renter's insurance and utilities.

AFFORDABLE STATES AND TERRITORIES

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Puerto Rico is the only location that is able to come close to this, but workers there still need to earn at least $10.53 an hour working full time to afford rent. States in the South and Midwest are the next best for affordability, requiring workers to earn between $13 and $15 per hour to afford the average one-bedroom apartment. Arkansas, South Dakota, Iowa, and Idaho offer the cheapest average rent costs out of all the states. The thing to take into account, however, is the average wages in these regions. Typically, regardless of how low rent costs are, the costs of housing still stand higher than the 30% of average income for the area.

SECTION 8 HOUSING VOUCHERS

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The situation has become even more dire for those asking, "How much rent can I afford?" as struggling state governments tighten the purse strings and municipalities freeze Section 8 wait lists. Section 8 provides housing vouchers for lower-income individuals and families to offset the costs for housing and prevent homelessness. As of writing this in November 2018, thirteen states had only one or no waiting lists open in the entire state. Washington D.C., which requires a $28 hourly wage for the average one-bedroom apartment, offers no waiting list.

OTHER OPPORTUNITIES FOR AFFORDABLE RENT

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Adults over the age of 55 have more options, however. Legislation developed rent controls for adults reaching their senior years, and many older adults can find attractive, affordable housing well-within their income range. Younger adults are developing their own solutions outside of legislation. Many single and childless adults are choosing to rent, or even purchase, housing with friends or roommates to overcome rising housing prices. Other community-oriented adults and families are creating co-operative housing options to not only beat rising housing costs but also to share the household burdens of homeownership.

How Much Rent Can I Afford?

Calculating Your Ideal Monthly Rent

There are a number of calculators available online to help determine the answer to the question, "How much rent can I afford?". The most basic calculation would take your annual after-tax income, multiply it by 0.3 (to figure out 30%), and then divide by 12 (for average monthly rent).

The calculation would look this way:

  • (After-tax annual income) * (0.3) = Annual rent you can afford
  • (Annual affordable rent) / (12) = Monthly rent you can afford

The median income in the United States is currently around $45,000 a year. Assuming the individual files as a single taxpayer, we can estimate that the after-tax/net income is around $36,000 per year. So, $36,000 * 0.3 = $10,800, and then divided by 12, you get a $900 limit for monthly rent.

ACCOUNTING FOR ALL HOUSING COSTS

A more accurate calculation would also figure in associated housing costs. Renter's insurance is a necessary expenditure, and thankfully a rather cheap one. Most renters can find renter's insurance for under $20 a month. Some apartments and homes have extremely high utility costs, especially in older homes with outdated electric wiring or oil heaters in cold-climates. If the apartment or home you are renting covers all utilities in the cost of rent, your job is much easier. However, if the landlord expects renters to cover all utilities, including heating, electric, garbage, and water, you will want to ask how much these costs usually are and factor them into your calculations as you determine "How much rent can I afford."

KEEPING COSTS DOWN

When determining how much rent you can afford, you will want to try to get as close as possible to the 30% income threshold. You want to make sure that you can make your monthly rent payments so that you can keep your credit healthy. There are a few tactics you can use to get to this level, not least of which is finding roommates to share the costs with you.

WHAT IF I CAN'T KEEP UNDER THE 30% THRESHOLD?

If you earn less than your locality requires to find a decent apartment, it will be important to find an apartment that is as close to the 30% of income as possible. When your rent exceeds 1/3rd of your income, you will want to spend the time figuring out your monthly budget. Use an automated budget app or software to do this or develop a spreadsheet for tracking monthly income and expenses. You want to make sure to budget enough for your housing costs if they make up close to half of your income.

Conclusion

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Considering how much money goes into putting a roof over your head, it's vital that new renters and those making big moves across state lines or to new jobs ask themselves, "How much rent can I afford?". Since the compulsion toward the "American dream" has not yet died, and developers realize they can make more money from single-family homes, the development of more affordable apartment buildings and townhouses have fallen behind the demand for these. The increase of single-family home rentals has outpaced the increase of available apartment rentals. This will continue pushing rent prices up as the property taxes and values of these housing units far exceed what renters face in more economical apartments and flats.