Money Management

Backing out of a home sale could be a costly decision. Read on to learn more. [[{“value”:”

The decision to sell a home is a big one. After all, you’re uprooting your life and leaving the property you may have lived in for years. And it’s not always easy to let go of a home you’re attached to emotionally.

There can also be financial consequences to moving. It’s important to make sure you’re really ready to sell your home before you hire a real estate agent and start the process of creating a listing.

But what happens if you put your home up for sale, get an offer, accept that offer, and then change your mind? Can you back out without consequences? Or will you be setting yourself up for financial losses?

It’s all about your contract

Whether you can change your mind about a home sale without penalty will hinge on your reason for doing so and how your real estate contract is worded. Let’s say you simply get cold feet about moving. That may not be a valid reason for backing out as spelled out in the real estate contract you signed with your home buyer.

However, it is pretty common for real estate contracts to include a contingency that protects you in the event that you’re unable to find a replacement home. And that may be a particular problem today.

RELATED: Today’s Mortgage Rates

As of late February, there was only a 2.9-month supply of available homes on a national level, according to the National Association of Realtors. For context, it can easily take a six-month supply of available homes for there to be enough properties to meet buyer demand in full.

So let’s say you accept an offer on your home and your contract contains a contingency giving you 60 days to find a new one to live in. If you can’t find one — say, because you can’t afford the mortgage on a potential replacement — and you back out of the contract, you should be protected.

It’s important to have a good real estate agent — and attorney

Sometimes, plans change and feelings shift. But in the context of selling a home, changing your mind after you’ve accepted an offer as well as a deposit from a buyer could lead to a world of problems if you’re not adequately protected. That’s why it’s so important to hire not just a great real estate agent, but also a savvy real estate attorney who can prepare a home sale contract that comes with built-in safeguards for you.

If you’re not sure how to find a good attorney, ask your real estate agent. It’s common for agents who help people sell homes to know of skilled local attorneys who can handle the legalese of the agreements that need to be signed.

Before you sign a real estate contract outlining the terms of the sale of your home, read it carefully so you know what you’re getting into. This way, you won’t face unpleasant surprises if you decide to stay in your home after accepting a buyer’s offer on it.

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The amount you can borrow when you get a personal loan depends on your income and which lender you use. Learn more here about maximum loan limits. [[{“value”:”

If you’re taking out a personal loan and you need it to be a big one, you might be wondering what the maximum amount you can borrow is. Unfortunately, there’s not one simple answer to that question because it depends on a few things, including your personal finances and the lender you pick.

Here’s how to know how much you can borrow when you take out a personal loan.

Which lender are you using?

Some personal loan lenders allow you to borrow up to $100,000. For others, limits are lower — sometimes around $50,000 or even less. So, if you need to borrow a lot, you’ll need to look for a lender willing to give out the amount you require.

Most lenders publish minimum and maximum loan limits online, so you can see if any particular lender can offer you the full amount of funding you need or if you should look elsewhere.

What does your personal financial situation look like?

Just because a lender may have a maximum loan limit of $50,000 or $100,000 doesn’t mean it will allow you to borrow that much.

Loan providers aren’t in the business of giving money to people they aren’t confident will repay them, so they’ll look at your financial credentials when deciding what amount to allow you to borrow.

Specifically, lenders are going to look at your income relative to your debt. As a general rule of thumb, it’s smart to keep debt payments to below 36% of your income. If your debt-to-income ratio (DTI) is much above that, it will be harder to get a large loan from most lenders.

A good credit score can also make it more likely that a lender will offer you a larger loan. After all, it faces less risk loaning large sums to someone who has a solid track record of paying their bills.

If your financial situation doesn’t qualify you for the loan amount you need, it may be worth thinking about whether anyone can cosign for you. A cosigner is someone with more solid finances (like more income or better credit) who agrees to take responsibility for your debt if you don’t pay.

Cosigners can help you borrow more and often at a better rate, but be aware your debt will show up on their credit report and become their responsibility if you stop paying, so don’t ask someone to do this if you aren’t sure you can pay back your loan.

What can you afford?

Finally, you’ll want to think about what is affordable for you in terms of a monthly payment. Even if a lender is willing to give you a large loan because it thinks you can afford it, that doesn’t necessarily mean paying it back will be easy.

Carefully consider how large of a loan payment can fit in your budget. If you can’t afford to pay what a lender is offering you, then you shouldn’t borrow that much money. Doing so could ruin your credit and leave you facing unpleasant legal action.

To make sure your loan is affordable, try “practicing” payments by figuring out how much your loan will cost each month and paying that amount to yourself into your savings while living on what’s left over. If that’s not a hardship, then your loan is probably affordable.

Now you know that the maximum loan size is $100,000 from some lenders, but you won’t necessarily be able to borrow that much. Get online quotes from the lender of your choosing to see your personal loan limits and make the best borrowing choice.

Our picks for the best personal loans

Our team of independent experts pored over the fine print to find the select personal loans that offer competitive rates and low fees. Get started by reviewing our picks for the best personal loans.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Not paying your taxes could have serious consequences. But will it also damage your credit? Read on to find out. [[{“value”:”

As of March 29, the average tax refund given out by the IRS during the 2024 filing season was $3,050. But what if you’re not in line for a refund this year? What if you owe the IRS money, and you have no idea how on earth you’re going to pay?

It’s not such an unusual situation, and it can certainly be a stressful one. But one thing you don’t want to do is ignore your tax debt, as that could have truly negative consequences. But will one of those consequences be credit score damage?

When you don’t pay the IRS

The higher your credit score is, the more likely you are to get approved for a loan or credit card when you apply. Also, when you’re taking on debt, a higher credit score could lead to a more favorable interest rate on the sum you’re borrowing, resulting in lower monthly payments. So all told, it’s in your best interest to get your credit score into good shape and prevent it from falling.

Now, the good news is that if you owe money on your taxes, it won’t directly hurt or impact your credit score. The IRS doesn’t report tax payment information to the credit bureaus. However, not paying a tax bill could still have negative consequences, and ones that ultimately result in credit score damage.

At a minimum, when you don’t pay your taxes, the IRS assesses interest and penalties on the sum you owe. However, if you reach out to the IRS and get onto a payment plan, you can pay off your tax debt in installments. You’ll still face interest charges and penalties, but the IRS will consider you current if you stick to your payment agreement.

On the other hand, if you don’t pay your tax bill and make no effort to get onto a payment plan, the IRS will send you a warning letter that it may seek to garnish your wages. If you ignore it and continue not to pay, the IRS will have the right to seize a portion of your paycheck to recoup the taxes you owe. And that has the potential to indirectly affect your credit score.

If the IRS is taking away a portion of your earnings, you might fall behind on credit card or loan payments. That negative activity will then get reported to the credit bureaus, resulting in a credit score drop. And from there, you might struggle to borrow, or borrow affordably, when you need to.

A problem you shouldn’t ignore

It can be stressful to owe the IRS money when you normally get a tax refund, or to owe a much larger amount than you were expecting. But the IRS is surprisingly understanding in situations like these, and there are different payment plan options you can look into. It’s in your best interest to do so to avoid not just wage garnishment, but the potential to see your credit score take a dive.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Opting out of parenthood means saving a lot of money on raising children. Read on to learn why this doesn’t mean non-parents are automatically wealthier. [[{“value”:”

I decided more than three decades ago that I wasn’t going to become a parent, and in the ensuing years, I’ve heard all the myths, stereotypes, and outright lies about people like me. One of the biggest is that people without kids are rich — this one is frequently repeated, even in comic strip form.

Let me clear that up for you right now. I’ve been in this community for long enough to know that childfree finances are as varied as childfree people ourselves. Sure, we’re not paying the significant costs to raise children. Research from The Motley Fool Ascent found that it costs about $310,000 to raise a child to age 17 — that doesn’t even include any money you might spend on higher education.

But missing out on those bills doesn’t automatically translate to having tons of disposable cash. Here’s why you shouldn’t assume your friends without kids are rich. And if you are childfree, read to the end for a few ways to improve your financial standing.

Childfree people aren’t exempt from financial problems

Not having kids doesn’t automatically equal more money in a budget. Just like anyone else, childfree people usually work, and while we may have more flexibility for scheduling and in the types of jobs we can take than parents do, we’re still bound by the economic realities of life in America. We are impacted by higher inflation in the wake of COVID-19, and we are also among the 63% of American workers who couldn’t cover a $500 unplanned expense out of savings.

I know people who are struggling to keep their heads above water financially (and this was me for most of my adult life). Others are in school, or they run small businesses — I even have a friend who does educational demonstrations to teach the lay public about reptiles! And some may not pay the bills that come with raising their own children, but they care for elderly or disabled family members and contribute money toward that effort.

How can childfree people build financial security?

I rebuilt my finances from the ground up over the last few years. I started with a career change in 2021 after spending more than a decade in a career that was emotionally and mentally rewarding, but also financially unsustainable. I was tired of having to move for jobs, and my sector (arts and culture, specifically museums) was badly impacted by COVID-19.

I switched to digital content writing and editing because it’s a role that can be done from anywhere, and I also became a full-time freelancer for even greater flexibility. Thanks to increasing my income, I was able to pay off debt and build up real savings for the first time in my life. My current preoccupation is getting a mortgage and buying a home for myself because I want a stable living situation and the ability to build equity in a property.

No two childfree people are alike, but I believe many can take the same path I did. We might not necessarily be rich in money, but we are often rich in time and flexibility. Here’s what to focus on to put yourself on a steadier financial path.

Save an emergency fund

Living without an emergency fund means dangling over a financial cliff and going into debt (or deeper into debt) every time an unplanned expense pops up (and they always do). The most effective way I’ve found to build savings is to increase your income. Consider fighting for a raise at work, increasing your hours (or taking on a side hustle, if you can), or even changing careers to earn more. And don’t worry if you can’t immediately put aside the recommended three to six months’ worth of income right away– any amount saved can help you avoid taking on debt.

Invest in yourself

Here it is — the most underrated financial benefit of being childfree. Focusing on growing your job skills and certifications can help you avoid layoffs, increase your income, and even grow as a person. There are loads of free or low-cost educational resources out there, and it won’t cost you a lot to meet with a career counselor. I paid about $150 to do so in 2021 when I was trying to change careers.

Meet with a financial advisor

If you need help seeing the personal finance forest for the trees, a financial advisor or planner can help. Savvy ones have realized that childfree people are an untapped demographic, and if you meet with an advisor who is at a loss to help you, there are others out there who can. Ask friends and family for recommendations, and you can plug names into FINRA’s BrokerCheck database to check their bona fides.

If you thought people without kids were all up to our necks in disposable income, I hope I’ve relieved you of that belief. And if you don’t have kids but do have financial worries, consider focusing on the above moves — they really can help.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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CD rates are attractive right now but are expected to fall in line with rate cuts. But read on to see why that may not happen for quite some time. [[{“value”:”

The Federal Reserve spent much of 2022 and 2023 raising interest rates to slow the pace of inflation. While that was problematic for borrowers, as it led to higher interest rates across a range of loan products, it was a great thing for people with money in the bank.

These days, CD rates are sitting at some of the most competitive levels we’ve seen in years. But once the Fed starts cutting interest rates, CD rates are apt to follow suit.

The Fed has signaled that it’s looking to cut rates at some point in 2024 but has yet to commit to a specific time frame. But recent inflation data might prompt the Fed to keep rates steady a bit longer.

Inflation rose in March

In March, the Consumer Price Index, which measures changes in the cost of consumer goods and services, rose 0.4% from the previous month. It also rose 3.5% on an annual basis.

Numbers like these are unlikely to get the Fed to reverse course and start implementing interest rate hikes again. But they may not be conducive to near-term rate cuts, either.

See, the Fed has long maintained that its ideal annual inflation target is 2% over the long run. It’s this level, the central bank feels, that’s most conducive to economic stability.

While 3.5% isn’t too far away from 2%, it’s a higher level than what was recorded in February, when annual inflation was measured at just 3.2%. Because of this, the Fed may not cut interest rates at its next meeting, which is scheduled for April 30-May 1. Rather, the central bank might postpone those rate cuts to the third quarter of the year, possibly even the fourth quarter.

That’s bad news for borrowers who have been waiting for interest rates to drop to sign loans. But it’s good news for people with extra money who now have a bit more time to open a CD.

What CD term is right for you?

The CD rate you’re able to lock in will depend on your bank and your CD’s term. Right now, you’re likely to snag a higher rate on a shorter-term CD than a longer-term one, since banks want to minimize their long-term risk knowing that rate cuts are in store.

Before you commit to a CD term, think about your goals with the money you’re looking to lock away. If you’re saving to buy a house and know you’re at least two years away, you may decide to open an 18- or 24-month CD. If your plans for your money are less certain, you may want to stick to a term of 12 months or less.

Another important thing to look at is laddering your CDs. This way, you have portions of your money freeing up at varying times so that if your financial situation changes, you may not need to cash out a CD early and face a potentially costly penalty as a result.

Of course, before you open a CD, it’s also important to ask yourself whether you can afford to lock your money away in the bank at all. If your car has been giving you trouble and you’re anticipating a near-term repair that could cost thousands of dollars, that’s reason alone to wait on a CD and put your money into a regular savings account. Similarly, if you don’t have enough money in savings to cover at least three full months of living expenses, you should complete your emergency fund before putting money into a CD.

Either way, you may have a little more time this year to research CD options and come up with a plan. But you also don’t want to wait too long.

We don’t know what April’s inflation report will look like. But if inflation creeps closer to the 2% mark, there could be a rate cut to follow. That’s something you’ll want to get ahead of to lock in the best rate on a CD possible.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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