Money Management

Owing too much on your credit cards could make it harder to get a mortgage. Read on to learn more. [[{“value”:”

Owing money on credit cards can be stressful. It can also be costly, since the more you owe, the more interest you might accrue.

If you’re able to make your minimum credit card payments on time every month, you won’t be considered delinquent on that debt. And that’s a good thing from a credit score perspective.

But even so, owing a lot of money on your credit cards could make it harder for you to get a mortgage. Here’s why.

1. Your credit score could still take a hit

The minimum credit score to qualify for a conventional mortgage is 620. Certain loan programs, like FHA loans, make it possible to get approved with a lower score than that. But ultimately, the better shape your credit score is in, the more likely you are to qualify for a mortgage.

The problem with owing too much money on your credit cards, though, is that a large balance could damage your credit score. If your credit utilization, or the amount of revolving credit you’re using relative to your total limit, is high, your score might take a dive, dropping it below the 620 mark (which is a problem if you want a conventional loan).

Also, just because 620 is the minimum credit score for a conventional loan doesn’t mean that every lender will accept applicants with that score. You may find a lender that insists on a minimum score of 640. So if your large credit card balance drags your score down below that point, it could compromise your ability to borrow for a home.

2. Your debt-to-income ratio could rise

Your debt-to-income ratio measures how much debt you have relative to your income. And as you might imagine, if that ratio is high, a lender might hesitate to write you a giant loan for fear that you won’t be in a position to pay it back.

Meanwhile, the more money you owe on your credit cards, the higher your minimum payments are apt to be. And those, combined with other debts you might have, like car payments, could lead to a debt-to-income ratio that mortgage lenders aren’t comfortable with.

For the most part, lenders like to see a debt-to-income ratio of 36% or less. But many will accept a debt-to-income ratio of 43% or less. Once you go beyond that point — meaning, your total debts eat up more than 43% of your income — you risk being denied a mortgage.

It’s good to pay off debt before applying for a mortgage

As you can see, a large credit card balance has the potential to hurt your chances of mortgage approval. It’s a good idea to try to pay off your credit cards before applying for a mortgage.

One thing you may want to do is pick up a temporary side hustle. The extra money could be instrumental in chipping away at your balance.

Remember, too, that once you put a mortgage in place, you’re going to have another large expense to pay every month. So let’s say you’re currently paying $600 a month toward your credit cards. Wouldn’t it be better to knock your minimum monthly payments down to $200, or, better yet, $0, before taking on another large bill?

All told, you might manage to qualify for a mortgage with a large credit card balance. But a better bet is to do what you can to pay off your credit cards before submitting that home loan application.

Alert: our top-rated cash back card now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee! Click here to read our full review for free and apply in just 2 minutes.

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.

“}]] Read More 

Living in another country can prove complicated tax-wise. Find out how to manage your tax bill if you’re living and working internationally. [[{“value”:”

In over 10 years of living abroad, two topics of conversation come up time again: Visas and taxes. Visa issues are usually very visible — you may not be able to enter or stay in the country without one. Taxes, on the other hand, are easier to ignore. But doing so can be a silent budget killer.

Don’t forget about your taxes as a digital nomad

There are many perks to life as a digital nomad. Not least that you can explore new cultures without giving up your career. As long as you have access to wifi, you can set up shop against a backdrop of idyllic beaches, misty mountains, or bustling metropolises.

If you visit places with lower living costs, there are often financial benefits too. I have one friend who swapped a shared New York apartment for a huge loft rental and still halved her housing costs. Plus, your nomadic lifestyle often won’t include costs like car insurance and utility bills. Put simply, it can be a great way to save money without sacrificing quality of life.

That said, you’ll still need to make a financial plan and find good ways to keep track of your money on the go. A budgeting app might help, particularly as the costs of flights, accommodation, and adventuring can quickly add up. Importantly, don’t forget to factor in taxes. U.S. citizens have to file with the IRS, no matter where they live.

In addition to U.S. taxes, you may have local obligations as well. In many cases, if you spend more than half the year in the same country, you’ll be a tax resident, regardless of your visa status. That means you may also have to file taxes in the country you’re living in, depending on where you are and how long you spend there.

READ MORE: Best cash back apps

How to file your taxes from abroad

If you’re filing your taxes from abroad, the first thing to know is that it doesn’t mean you’ll have to pay tax twice. The U.S. has agreements in place with many countries to avoid double taxation, as well as specific tax credits for people based outside the country.

You can file your Form 1040 online or mail in the physical return. If your earnings are in another currency, you’ll need to convert to U.S. dollars for the dates of each transaction. You may also have to declare any bank accounts you hold internationally.

Deadline-wise, U.S. citizens abroad may qualify for an automatic two-month filing extension, which can ease the time pressure slightly. That said, you’ll have to pay interest on any tax you owe, so it’s better to file on time if you can.

Here are some practical steps to take.

Plan for state taxes

Each state has different rules about digital nomad taxes. Some, such as California and Virginia, will chase you for taxes even after you’ve left. Some digital nomads move to other states before they leave the country to avoid this problem. Be sure to understand the rules so you don’t accidentally miss a payment.

Understand tax breaks

Common tax breaks for digital nomads include the Foreign Earned Income Exclusion and Foreign Tax Credit. The former lets you exclude a certain amount of international earnings from your declaration. The latter means you can reduce your tax bill by the amount you’ve paid in another country. You may also be able to deduct housing and other expenses.

Keep track of your travels

If you’re digital nomading within the U.S., you may need to record how long you’ve spent in different states as well as what you earned while you were there. If you’re based internationally, keep a detailed log of the time you spend and what you earn (and spend) while you are in other countries.

Learn about taxes in the country you’re visiting

Find out how taxes, medical payments, and other contributions work in your host country (or countries). Don’t assume taxes in, say, Romania will work the same as those in Mexico. Pay particular attention to how many days constitute tax residency, filing deadlines, and any double taxation agreements.

Don’t forget Social Security

In addition to federal and state taxes, you may also have to make Social Security and Medicare contributions. Again, this may overlap with payments you make internationally. Find out whether the U.S. has an agreement with your adopted home, so you don’t have to pay double.

Consider getting professional advice

Living abroad can really complicate your tax situation. If you’re not sure what to do or are worried about navigating the tax systems of more than one country, it may be worth consulting a tax professional. Some of the best tax software has help that’s specifically designed for expats and digital nomads, too.

Bottom line

When you’re working abroad, it’s tempting to try to escape red tape. Or you may simply forget about certain financial obligations. But if you haven’t budgeted for tax costs, they can completely derail your budget. And that’s before we consider any fines or penalties you may incur. Ultimately, ignoring your taxes can weigh you down more than an overweight suitcase.

Alert: our top-rated cash back card now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee! Click here to read our full review for free and apply in just 2 minutes.

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.

“}]] Read More 

You may need to dip into your savings to bring home a dog. Read on to learn more. [[{“value”:”

One of the best decisions you might make in your lifetime is the decision to adopt a dog. Not only might a dog provide you with the companionship you crave, but there’s something so rewarding about knowing you’ve rescued a dog who otherwise wouldn’t have had a home.

But even if you’re adopting a dog and aren’t buying one from a pet store or breeder, you might spend a fair amount of money when bringing them home. That’s something you’ll need to prepare for financially.

Don’t forget about pet adoption fees

Animal shelters and rescues that take in stray or unwanted animals have many costs to bear. It’s common for these groups to spend money tending to animals’ medical needs before they’re adopted out. And the costs there can be exorbitant.

It’s pretty common for shelters and rescues to charge an adoption fee to those looking to bring home a pet. This isn’t a means of these groups profiting from your decision so much as a way of recouping costs and being able to stay afloat. So frankly, it should be a fee that you’re willing to pay.

But you should also know that Rover puts the average cost of a dog adoption fee at $0 to $600. Clearly, that’s a pretty big range.

If you’re using a rescue, not a shelter, you may be looking at the higher end of that range, though that’s not always the case. The type of dog you adopt might also determine what adoption fee you pay.

Some dogs are designated as benefactor dogs by rescues. These dogs tend to be more desirable breeds, and they often come with a higher adoption fee to help these groups adopt out less-desirable breeds at a lower cost. But either way, expect to spend something to bring your dog home.

Make sure you can handle the expense of a dog

One of the biggest mistakes some well-intentioned pet owners make is adopting an animal only to realize after the fact that they couldn’t afford their care. As a general rule, if you can’t afford your pet’s adoption fee, it means you probably can’t afford your pet, period.

On the other hand, if you can’t afford a pet at present but really want one, save up. Boost your cash reserves over time so you have enough money to cover not only adoption fees, but other upfront costs you might bear.

If you’ve never owned a dog before, for example, you might spend a few hundred dollars on a leash, food bowls, and other supplies just to get started. You don’t want that to end up being a credit card charge you pay off over time and accrue interest on.

Finally, whether you’re adopting a dog or another animal, plan to put pet insurance in place very early on. That could spare you from having to raid your savings to cover unplanned healthcare emergencies.

Remember, when you adopt a dog (or any other pet), you may not get their full medical history because the group you adopt from may not have those details themselves. So you’re taking a risk in that regard. You can help minimize the financial aspect of that risk by buying pet insurance so your pet’s medical care is largely covered.

Also, having pet insurance in place might give you more peace of mind. And that could help you focus on bonding with your new pet rather than stressing about the bills you might soon face.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

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.

“}]] Read More 

When friends don’t have Costco memberships, you could be tempted to share your own. Here’s why you should think twice. [[{“value”:”

When you like something, it’s natural to want to share it with others. However, if that “something” is your Costco membership card, you should definitely think twice before sharing.

Costco membership is non-transferrable. This means only you can use your membership card. Each membership comes with two cards, so you can add one member of your household. Otherwise, you’re allowed up to two guests while you shop — but a member must pay at checkout.

Some folks may try to skirt this policy by lending a friend or family member (or, worse, a stranger) their membership card. Unfortunately, this is a risky choice that is likely to backfire.

They’ll probably get stopped at checkout

As most regular Costco shoppers already know, you need to show your membership card often. Often, you need it just to get through the door (other than guests).

More importantly, you definitely need it to check out. Even if you use self-checkout, you’re going to have to scan a membership card. Plus, an employee may also check your card — and the picture of you on it — before you even start checking out.

If the person doesn’t match the picture on the card, they won’t be able to check out. You may also be subject to some questions about how they came to be in possession of your card.

Misbehavior will come back on you

Should the stars align and someone gets through checkout using your membership card, you’re not necessarily off the hook. That purchase is now forever tied to your membership account. If anything hinky occurs, it’s easily traced back to you.

For example, say you scan your membership card for a stranger and it turns out they used a stolen credit card. Guess whose name and address is on file for that transaction? Hint: It’s not them.

While it’s unlikely you’d wind up in legal trouble if you can show you weren’t the perpetrator, you’ll still need to admit that you broke the terms and conditions of your membership. Which leads to…

Your Costco membership could be revoked

If there’s an honest mistake — perhaps you didn’t realize your teenager couldn’t check out with your membership card — then you’ll likely get a warning. Folks with a history of misuse, however, will typically have their membership revoked.

Fun fact: Costco (and pretty much any other business or organization) can revoke your membership at any time, for any reason (not prohibited by law).

Sharing your membership card is specifically against the rules of said membership. Costco is well within its rights to revoke that membership if you break the rules. And the company will happily do so. Costco has 130 million cardholders — it isn’t worried about losing one or two.

Gift them a Costco Cash Card instead

If you really want to share the Costco experience, there are a few ways your friends and/or family can check out Costco with you:

You can bring them as a guest. You get up to two guests per visit. Keep in mind that only members can make purchases, so you’ll need to put anything they want to buy on your own credit card and have them pay you back later. (On the plus side, more credit card rewards for you!)You can add them as your second cardholder. If you’re the Primary Member, you can add someone else from your household to your account. They’ll get their own card and have all the same shopping privileges you do.Gift them a Costco Shop Card. Only members can buy Costco Shop Cards, but non-members can use them to pay for Costco purchases. Note that Costco’s usually generous return policy may not apply to returns made by non-members.

It’s always fun to share what we love with the people we love. But there’s a right way to do it — and a wrong way. Make sure you’re choosing the right way to share your Costco love so you don’t wind up on the wrong side of the rules.

Alert: our top-rated cash back card now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee! Click here to read our full review for free and apply in just 2 minutes.

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.Brittney Myers has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

“}]] Read More