Money Management

If you’re healthy and still working, is it a smart idea to buy long-term care insurance now? Keep reading to find out. [[{“value”:”

Long-term care insurance is designed to prevent the financial strain that comes with unexpected nursing home stays and other types of long-term care you might need later in life. With nursing home stays exceeding six-figure sums in many cases, this can be valuable protection for retirees.

While you’re unlikely to need long-term care anytime soon if you’re a healthy 50-something who hasn’t retired yet, you can certainly purchase a long-term care policy if you choose to do so. In this article, we’ll discuss the basics of how long-term care insurance works, why you might want to consider it as part of your retirement planning, and why it could be a smart idea to buy it while you’re still relatively young.

What is long-term care insurance?

In a nutshell, long-term care insurance, or LTC insurance, is designed to protect you financially in the event that you require extended care. It is a completely different concept than life insurance or health insurance. Depending on the circumstances, LTC insurance can pay for the cost of nursing home stays, assisted living facilities, or in-home caregivers, just to name some of the most common.

Long-term care insurance policies differ significantly from one another, but the general idea is:

LTC insurance kicks in after some required waiting period, such as 90 days.Most policies have a maximum per-day benefit.Most LTC policies provide coverage for one to five years of qualifying long-term care services, although there are policies that cover even longer potential stays.

Do you need it?

It’s easy to see why long-term care insurance could be desirable. For the most part, nursing home stays and other long-term care expenses aren’t covered by Medicare. And about 50% of people over the age of 65 will require long-term care at some point in their lives.

The average cost of a private room in a nursing home is more than $100,000 per year. It can be significantly higher in some of the more expensive areas of the United States.

The bottom line is that long-term care insurance ensures that the retirement and savings account balances you’ve worked so hard to build won’t be consumed by unexpected costs like these.

Why would you buy LTC insurance in your 50s?

To be sure, you are most likely to need long-term care services later in life. So, it might seem wasteful to spend money on an LTC policy when you’re still in your 50s, especially if you’re rather healthy.

However, one extremely important concept to know is the sooner you buy LTC insurance, the lower the premiums will be.

Consider this example. As of 2022, the average annual cost of a LTC insurance policy for a 55-year-old man with $165,000 in level benefits was $950, and for a 55-year-old woman, the average premium was $1,500. (Note: The difference is mainly due to the fact that women tend to live longer than men, and therefore have a higher likelihood of needing long-term care at some point.)

The cost of waiting for 10 more years to purchase a policy would result in premiums that are 50% higher, on average. Waiting 20 more years (until you’re 75) would increase the cost of LTC insurance by a staggering 188%.

The bottom line on buying LTC insurance

Of course, there are other factors that determine LTC insurance premiums. Your current health status, desired coverage amount, and where you live are a few examples. Keep in mind when choosing your coverage amount that it doesn’t necessarily need to cover the entire cost of long-term care — it just needs to bridge the gap between what your Social Security and other reliable retirement income will pay and the anticipated cost of long-term care.

However, the age at which you purchase the policy can make a massive difference, and in many cases, can be the difference between an affordable LTC premium and coverage being impractical to buy.

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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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Mortgages are expensive to sign right now. Read on to see why they might remain expensive a bit longer. [[{“value”:”

If you’ve been trying to buy a home, you may be at a point where you’re ready to give up. Not only are home prices elevated, but it’s been expensive to sign a mortgage for a really long time.

The good news is that the Federal Reserve is expected to start cutting interest rates at some point this year. Once that happens, mortgage rates may follow suit. But in light of new inflation data from March, the Fed may have no choice but to postpone its rate cuts, leaving homeowners in a serious lurch.

The Fed may not be ready to take action

The Federal Reserve spent a good part of 2022 and 2023 raising interest rates to cool inflation. While the central bank didn’t go out and directly cause mortgage rates to rise, its actions indirectly drove up the cost of financing a home.

The Fed has noted that interest rate cuts are likely in store for 2024. But that’ll largely depend on how inflation trends. And March’s inflation data is a step in the wrong direction.

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

Meanwhile, the Fed’s target annual inflation rate is 2%. It’s this rate, the Fed feels, that’s most conducive to long-term economic stability.

Because annual inflation was measured at a higher level in March compared to February (3.5% versus 3.2%), the Fed may decide to hold off on rate cuts till the third quarter of 2024, or possibly even the fourth quarter. That could leave would-be home buyers in a tough spot if today’s mortgage rates are making it impossible to afford a home.

How to score a more competitive mortgage rate

As of this writing, the average 30-year mortgage rate is 6.82%, says Freddie Mac. For a $200,000 mortgage, that results in a monthly payment of $1,306 for principal and interest.

Mortgage rates could start to creep closer to the 6% mark once the Fed’s rate cuts begin. But unfortunately, those might now take longer to happen.

Still, all isn’t lost. There are steps you can take to lock in a more competitive mortgage rate.

For one thing, try boosting your credit score. You can do so by paying bills on time, slashing your credit card debt, and checking your credit report for errors.

Also, shopping around is helpful. You may find that one lender is willing to offer you a lower rate than a competing lender in your area. Make some calls and put in applications with multiple lenders. But do so quickly — ideally, within two weeks — to minimize the likelihood of those hard inquiries damaging your credit score. (When you shop for the same type of loan, like a mortgage, in a short period, your various hard inquiries will often be counted as just one, which is a good thing for your score).

March’s inflation report could be a setback on the road to interest rate cuts. But that doesn’t mean rate cuts are off the table. It just means that consumers may need to sit tight a bit longer until they happen. Thankfully, though, you can take steps to save on your mortgage rate even if the Fed doesn’t step in to help.

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How you manage money can make or break your small business startup. Read about the most common financial mistakes so you can make sure to avoid them. [[{“value”:”

If you have your own small business, you’re probably already pretty busy. There’s a lot to manage, including developing products or services, keeping customers happy, and hiring the help you need. And on top of all that, you also need to manage your company’s finances.

The financial side is arguably the most important part of operating a successful business. There are several mistakes many entrepreneurs make here. By knowing what they are, you can make sure financial mismanagement doesn’t sink your small business.

Mixing personal and business expenses

When you’re paying for business expenses out of your own pocket, you might be tempted to just put them on your personal credit cards. Or maybe you’re shopping for office supplies, but then you also decide to grab a new keyboard for your personal computer while you’re there, and you pay for them all in one transaction.

These are examples of mixing personal and business expenses, also known as commingling. While it may seem harmless, it can cause serious issues for your business later. Here are some of the potential consequences:

It’ll be harder to file taxes for your business. When you have business credit cards and bank accounts, they help keep all your business expenses organized. If you use the same card to pay for personal and business expenses, it takes more time to sort through transactions and find tax deductions.You could have trouble calculating profitability. Without separation between business and personal expenses, it’s harder to keep track of your business’s financial health.It may impact your ability to get financing for your business. If you decide to apply for a business loan or seek outside investors, you’ll likely need to provide financial records. It won’t reflect well on you if you’ve been commingling expenses.

Make sure to open a business credit card and business bank account. It doesn’t take long, and it will save you a lot of time and trouble later.

Cash flow mismanagement

Cash flow is the money coming into your business versus the money going out. It’s a common cause of businesses going under — a U.S. Bank study found that 82% of small business failures are because of cash flow problems.

The biggest cash flow problem is spending more than your business makes. Now, this is normal in the early stages. You’ll incur expenses to get your business off the ground, and it will take time to build your business’s income.

But you should have a business plan with an estimate of when you’ll be cash-flow positive (when your business earns more than it spends). This varies by business, but three to four years is common.

Another way entrepreneurs mismanage cash flow is by not keeping track of income in relation to payment due dates. Then, they may have bills due before the income needed to pay those bills has hit the account. You could end up incurring late fees, overdraft fees, or both.

Not planning for taxes

Taxes get much more complicated when you’re a small business owner compared to when you’re an employee. You’ll need to pay self-employment taxes, since these aren’t being withheld from your paycheck anymore. You may also need to file a tax return for your business, depending on the business structure you choose.

If you used to wait until April every year to handle your taxes, that’s not a good idea anymore. It’s better to keep track of tax deductions throughout the year. This is easier than going back and looking for them later, and you’re less likely to forget about deductions.

In addition, you’re required to make estimated tax payments every quarter. If you don’t, the IRS can charge you an underpayment penalty and interest on the amount you owe.

Consider hiring an accountant who has experience with small business taxes. While you could handle your taxes on your own, it’s often worth the money to hire a professional. It will save you time and make it more likely that your return is done correctly. Plus, an accountant could find tax savings that you might’ve missed.

Running a successful small business

Every entrepreneur wants to give their small business the best chance of success. Keeping personal and business expenses separate, managing cash flow well, and tax planning are all a must, so your business will be in good financial shape.

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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.Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends U.S. Bancorp. The Motley Fool has a disclosure policy.

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There’s one potentially easy way to give your credit score a lift. But you’re taking a risk. Read on to learn more. [[{“value”:”

The higher your credit score is, the easier it becomes to borrow money when you need to, whether in loan or credit card form. And having a higher credit score could spell the difference between snagging a favorable interest rate on a loan or getting stuck with a higher one.

As such, you may be eager to boost your credit score. You may have heard that paying off some existing credit card debt is a good way to do so.

Five different factors go into calculating a credit score based on the FICO model (the most popular scoring model in the U.S.):

Payment historyCredit utilizationLength of credit historyNew accountCredit mix

These factors carry different amounts of weight. But your credit utilization ratio, which measures the amount of available credit you’re using at once, accounts for 30% of your credit score.

The lower your credit utilization, the more your credit score might improve. So if you owe $3,500 on your credit cards and your total spending limit on them is $10,000, you’re at 35% utilization, which isn’t great. If you whittle your balance down to $2,000, you’ll be at just 20% utilization, which is far more favorable from a credit score perspective.

Of course, paying off credit card debt is easier said than done. So you may want to take another approach to boosting your credit score.

And there is one fairly easy way to give your credit score a boost. But it’s an approach that can also be risky.

When you raise your credit limit

Your credit utilization ratio is measured based on your outstanding balance and total credit limit. If you can’t lower your balance, you might still manage to lower that ratio by raising your credit limit.

Credit card issuers will often give you more buying power on your cards if you call and ask. It helps if you’re an account holder in good standing. You can also request a credit limit increase following a pay raise. The logic is that if you’re earning more, you can afford to spend more (no one ever said that was good logic).

So let’s say you owe $3,500 and have a $10,000 credit limit. If you get that limit raised to $15,000, your credit utilization ratio will shrink from 35% to about 23%. That could help your credit score improve in rather short order.

However, this only works if you don’t add to your balance. If you take advantage of your higher credit limit and start spending more, you’re not going to do your credit score any favors.

In fact, what might happen then is that you not only add to your debt, thereby setting yourself up to pay more interest, but you start to fall behind on your minimum payments. That could really hurt your credit score, since your payment history carries more weight than any other factor in calculating that number. In fact, it accounts for 35% of your credit score — more than your credit utilization ratio.

And of course, adding to your total credit card balance could also cause your credit utilization ratio to hold steady at a higher level or even increase. That, too, isn’t great for your score.

Paying off debt is your best bet

Getting a credit limit increase might seem like the easiest solution for bumping up your credit score. But you’ll be doing your finances a world of good by taking the hard way out and working to chip away at your credit card balance.

Even if your outstanding balance leaves you with a reasonably low credit utilization ratio, the longer you carry that balance, the more money you stand to lose to interest. So the sooner you can get that balance paid off, the better.

One thing that could help you pay down existing debt sooner is to do a balance transfer to a new card with a 0% introductory APR. Let’s say you manage to get a 0% introductory rate for 15 months. Let’s also imagine you cut your spending and perhaps take on a side hustle to drum up extra money. It’s conceivable that you could be debt-free in 15 months, and not racking up extra interest on your balance could be your ticket to whittling it down to $0.

Once your balance is down to $0, if you choose to ask for a credit limit increase, so be it. At that point, you’ve proven your ability to get out of debt and exercise self-control. But until you’re in a better place debt-wise, you should really proceed with caution when considering a credit limit increase.

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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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Getting a dog? Read on for ways to save on common expenses. [[{“value”:”

Owning a dog can be a very rewarding experience. But it can also be an expensive one. The annual costs of caring for a dog can range from $1,000 to $5,225 a year, says Rover. But you may have the ability to lower some of your dog-related expenses. Here are a few strategies to save.

1. Food

Rover says that the cost of dog food can range from $560 to $4,115 per year. Now, a lot of that will depend on the size and breed of your dog and whether they have special medical or dietary needs. But one thing it could pay to do is sign up for a dog food subscription where it’s delivered to your door every month, or at a regular interval that works for you.

Chewy is known for its competitive prices on dog food, so that’s one option to look at. But don’t discount Amazon as an option. You may find that your go-to brand is cheaper with the Subscribe & Save program than what Chewy has to offer.

2. Poop bags

As a dog owner, it’s your responsibility to pick up after your pup. But at a cost of $65 to $85 a year for poop bags, that’s a lot of money to be spending in this particular category.

Before you spring for those scented poop bags that may or may not mask the smell of your dog’s droppings, visit your local grocery store and ask to purchase a large roll of plastic bags — the kind you’ll see in the produce aisle. You may find that you’re able to spend $5 or less for a roll of hundreds of bags. Or, if you get a nice manager, they may even give you one for free.

3. Toys

Rover puts the average cost of toys at $5 to $125 a year. But depending on your dog, this is one expense you may be able to skip out on entirely.

It’s true that it’s a good thing to keep your dog active and engaged. But instead of dipping into your savings account to buy toys, try heading into your own backyard, finding a stick, and enjoying a good old game of fetch.

Furthermore, you need to know your dog in the context of buying toys. If they’re the type to destroy something within minutes, why waste your money? And don’t believe those so-called indestructible stuffies — they’re just as likely to get ripped to shreds as their much less expensive counterparts if your dog is the destroyer type.

That said, if your dog is one who might allow a toy to last, read reviews before buying yours so you’re more likely to end up with quality items with staying power.

4. Emergency vet visits

Unlike food and poop bags, which are given budgetary expenses when you own a dog, you’ll hopefully manage to avoid emergency vet visits for the most part. But should you need one, Rover warns that the cost could be up to $2,985 on average. That’s where pet insurance could come in handy.

The cost of putting that insurance in place will vary based on factors such as your dog’s age and breed. But you might pay a few hundred dollars a year for pet insurance only to have that policy save you thousands when an emergency arises. So it’s a good idea to shop around with different pet insurers to compare their premium costs and the level of coverage you might get.

There’s no question about it — it takes money to own a dog. But if you play your cards right, you might manage to lower some of your costs considerably.

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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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Maurie Backman has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Fetch. The Motley Fool has a disclosure policy.

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