Money Management

A class action lawsuit settlement from real estate firms could give you extra cash. Keep reading to see how this could affect your bottom line. [[{“value”:”

A major class action lawsuit against real estate agencies could be bringing massive changes to how homes are bought and sold. And if you sold a home in the past few years, you could get money from it. This lawsuit is called Burnett et al. v. National Association of Realtors, et. al., and it made news headlines in November 2023 when a federal jury handed down a verdict for $1.8 billion of damages against the National Association of Realtors and two real estate brokerage firms.

Why did these real estate organizations get sued? The plaintiffs (lawyers representing a large group or “class” of home sellers) argued that real estate agencies and the National Association of Realtors have been using illegal, anticompetitive business practices. The jury agreed.

Let’s look at what the real estate commission class action lawsuit means for you — and how you can get money from it.

What is the real estate agent commissions lawsuit about?

Class action lawsuits are often incredibly complicated. This one focuses on a simple question: How much should real estate agents get paid for the sale of a home, and who should pay them?

Here’s how real estate sales usually work: the home seller and home buyer both have their own real estate agents (for buyer and seller) who split a combined commission that is typically 6% of the sale price. So if a home sells for $400,000, the real estate commission amounts to 6% of that, or $24,000. The seller’s agent gets $12,000 (3% of the sale price) and the buyer’s agent gets $12,000 (3%).

The plaintiffs in the Burnett class action lawsuit basically argued that sellers shouldn’t have to pay the commission for the buyer’s agent, and that real estate commissions shouldn’t have to be 6%. In a truly competitive market for real estate sales, 6% would not be a standard, fixed commission for every home sale. Instead of splitting commissions with each other, real estate agents might have incentives to get more business by offering lower commissions, or negotiating more aggressively for home buyers to drive down the price.

High sales commissions have already disappeared in many other areas of life. Most online brokerages no longer charge commissions for buying stocks, and online travel sites help customers get lower-cost airline tickets and hotels without a travel agency commission. In the same way, lower real estate commissions could drive down costs for home buyers and sellers.

But because real estate agencies tend to have so much control over the process of selling homes, and real estate agencies own the multiple listing services (MLS) to show homes that are available for sale, the federal jury found that the current way of doing business in real estate is anticompetitive and unfair to customers. The lawsuit claims that, by keeping real estate sales commissions unfairly high, real estate brokers and agents have been violating antitrust law.

Why home sellers could get money from this lawsuit

Instead of helping home buyers and sellers get the best deal on each real estate transaction, the lawsuit claims that these unfair business practices have allowed real estate agents to keep too much money for themselves — and home sellers want some of that cash back.

There are already a lot of extra costs of homeownership, like homeowners insurance and property taxes. If the cost of selling a home has been pushed too high by unfair business practices in the real estate industry, home sellers deserve to be compensated.

The jury agreed with the Burnett class action plaintiffs. The $1.8-billion verdict found that real estate agents and brokers have effectively been overcharging for their services in selling homes, in a way that goes against the rules of America’s free market. Some real estate agencies and brokerages have agreed to settle the lawsuit, instead of continuing to appeal and fight the case in court — these companies have not admitted to any wrongdoing, but have agreed to pay about $208 million of settlements.

Who gets money from the real estate commission settlement

If you sold a home during a certain timeframe within the past few years, you could be eligible to get some money from the $208-million settlement of this class action lawsuit.

Here’s the three-part test to see if you can get money:

You sold a home during the eligible date range (exact dates depend on the home’s location, but could include the years 2014-2024)The home you sold was listed on a multiple listing service (MLS) in the U.S.You paid a commission to any real estate brokerage in connection to the sale of the home

Learn more at RealEstateCommissionLitigation.com. If you want money from this lawsuit settlement, you must go to the website and submit a claim form by May 9, 2025. The site will ask you to provide details about the sale of your home and any real estate commissions you paid as part of the sale.

Bottom line

If you recently sold a home, check out RealEstateCommissionLitigation.com to see if you are eligible for a payment from the class action lawsuit settlement. This lawsuit could mean the end of the 6% real estate commission. Lower commissions on real estate sales are likely bad news for real estate agents, but potentially good news for anyone buying or selling a home.

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Saving for retirement may seem impossible if you have a limited income, but if you start early, you can end up with much more than you might think. Here’s how. [[{“value”:”

If you make a limited income in the United States, the idea that you could ever retire may seem like nothing more than a fantasy. But the reality is, you could actually end up with quite a lot of money in a brokerage account. In fact, even if you are among the country’s lowest earners, it’s possible you could become a millionaire.

The key, though, is to get started saving very early. Here’s what happens if you make very little money, but you start investing at a young age.

Early savings could lead to retirement wealth even for low-income workers

Saving and investing for retirement doesn’t take a whole lot of money if you have the power of time on your side. That’s because once you get your money into the stock market and it begins earning returns, you don’t have to use your limited dollars as your sole source of wealth building. The money you have already invested can earn returns and grow your account for you — this is called compound growth.

The more time you allow for this to happen, the wealthier you can become — even if you contribute very little of your own cash.

Say, for example, that you want to end up with $1 million by age 65 — a pretty lofty goal if you aren’t making a lot of money. But if you start saving at 25 years old and have 40 years to hit your target, you would only have to save and invest $188.28 every month to end up a millionaire assuming you earned a 10% average annual return.

U.S. Census data shows that the lowest-earning quintile of workers had an income of $30,000 or less, while households in the second-lowest quintile had incomes of $30,001 to $58,020. So someone who earned $30,000 would be classified as a low-income individual. Even for that salary, a contribution of $188.28 a month would be just around 7.5% of their income at most — which is a lot, but not impossible.

Tax breaks and matching contributions can make saving even easier

The good news is, low-income workers may not even have to actually find $188.28 of their own money each month to save enough to become a millionaire. That’s because there are systems in place to help.

For those who have access to a workplace 401(k), many companies provide employer matching contributions. These contributions might be a 100% match on up to 4% of your salary or a 50% match on up to 6%, or some other combination. If you made $30,000 and your employer provided a 50% match on up to 6% of your salary, it would contribute up to $1,800 for you if you invested at least $3,600.

Even if you couldn’t do that and invested just $1,000 a year, you’d still get a matching contribution of $500. And a $1,500 annual investment over 40 years would still turn into $663,934.09 in retirement savings by age 65.

Of course, not all workers get a 401(k) match. Many low-income workers don’t have access to a 401(k) at all, much less to matching contributions. But that’s OK. You can still open an individual retirement arrangement (IRA) on your own pretty easily. Just check out the best brokerage firms for IRAs. IRAs allow you to make tax-deductible contributions up to an annual limit. And these tax breaks help make saving easier.

Say, for example, you made your $188.28 per month contributions to your IRA:

You’d be investing $2,259.36 per year and could deduct that much from your taxes.The amount you could save would depend on your tax bracket. If you were in the 10% tax bracket (where you’d likely be after claiming deductions when you have a $30,000 annual income), deducting your IRA contributions could save you $225.94Your $2,259.36 contribution would only cost you $2,033.42.

Lower-income folks would likely also qualify for the Saver’s Credit if they contribute to a retirement plan. This gives you a tax credit equal to either 10%, 20%, or 50% of your eligible contribution back as a tax credit (depending on your income). You can claim this credit for up to $2,000 in contributions. The amount you’re eligible for is based on your adjusted gross income (AGI), which is income minus eligible deductions, such as IRA contributions.

If you were able to claim a 20% credit on $2,259.36, you’d get another $451.87 off your tax bill (credits, unlike deductions, reduce your income on a dollar-for-dollar basis).

So, the table below shows what this could look like:

And this is assuming you don’t have a 401(k) match, or qualify for the 50% Saver’s Deduction credit and you might, depending on AGI. So for around $1,500 a year or less, low-income workers could become millionaires if they start saving for retirement early.

It’s absolutely worth trying to save that much to set yourself up for your future security. So, get started ASAP and make your money work for you.

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When people file for bankruptcy, they may believe their finances will always be a mess. Here’s why nothing could be further from the truth. [[{“value”:”

If you’ve recently filed for personal bankruptcy protection, you’re not alone. According to U.S. Courts, 416,607 filings nationwide were made in 2023, up 12% from the previous year.

Bankruptcy can be a tough time in anyone’s life, leaving them worried that they may never get their finances back on track. Nothing can be further from the truth. Millions of people rebound from bankruptcy. Here’s how you can, too.

Take control of your credit report

Ordering a free credit report from AnnualCreditReport.com allows you to receive a copy of your report from each of the big three credit reporting agencies — Equifax, Experian, and TransUnion. Go over each report, line by line (they won’t be identical). Ensure all the eligible debt included in your bankruptcy filing is noted on the report rather than showing up as unpaid debt. If you find any errors, dispute them with the credit reporting agency in question.

Beware of scam artists

Subprime lenders like payday lenders, title loan companies, and even pawn shops may come out of the woodwork offering you a loan. What they don’t tell you is that you’ll probably pay more than 400% interest on any money you borrow. Avoid them at all costs.

While you’re at it, ignore any credit repair company that claims it can remove negative credit history from your report (if a negative remark is accurate, no one can legitimately remove it). They may even tell you that they can create a new identity for you. It’s a giant scam. What these companies are trying to do is to make you hopeful enough to give them money. They can do nothing to help.

File the bankruptcy paperwork someplace safe

You won’t want to curl up on the sofa and read the documents over and over, but you don’t want to lose them, either. You may need them to prove to a collection agency that the debt was discharged in your bankruptcy case or use them when you apply for credit in the near future.

Don’t be discouraged

In terms of personal finances, bankruptcy may feel like a failure, but it doesn’t have to. It’s probably better to think of it as a “reset,” an opportunity to start over and do things differently. Starting over doesn’t begin months after you’ve filed for bankruptcy. It begins on the way home.

Properly handled, your situation can turn around relatively fast. A 2020 LendingTree study found that among people who filed for bankruptcy, 56% already had a credit score of 640 or higher one year later. According to HGTV, if you maintain a good credit history after filing for bankruptcy, some lenders will extend credit for an auto or mortgage loan 18 to 24 months after the bankruptcy is discharged.

Begin to rebuild your credit

Now is the time to take active steps to rebuild your credit. As long as you’re consistent, it’s not complicated.

Pay your bills on time: How well you pay your bills makes up 35% of your FICO® Score. Prioritize paying bills when they’re due.Create a budget: Living without a monthly budget is like taking a trip without a map. It’s there to remind you whether you’re on the right track.Build a savings account: Life happens, and you may need an emergency savings account to dip into. Even if you can’t earmark more than $10 or $20 weekly for savings, every little bit helps.Apply for a credit card: Credit card companies know that you can’t file another bankruptcy case right away, so they may be willing to give you a card. If so, keep the balance low and pay it off in full every month. Each time you make a payment, it’s reported to the credit reporting agencies, and your score is enhanced. If you don’t qualify for a traditional credit card, a secured credit card can also help you rebuild credit.Keep your credit utilization ratio low: Credit utilization counts for 30% of your FICO® Score. It works like this: You qualify for credit but then use only a small percentage of it. As a rule, personal finance experts recommend keeping your credit usage under 30% of your credit limit. For example, if you have $10,000 in credit, you don’t want to use more than $3,000 at any time. Once you pay off the $3,000, you can use up to another $3,000.Mix up the types of credit accounts when you can — but slowly: Once you’re sure your monthly budget is under control, slowly apply for new credit. When you do, though, try to mix it up. For example, if the only credit you have is an auto loan, consider applying for a credit card or personal loan. As you begin to apply for credit, make sure you do it slowly. Applying for too much credit in too short a time will damage your credit score.

Filing for bankruptcy is not for the weak of heart and can present a host of challenges. However, with time and a solid plan in place, you can rebuild your finances.

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There’s a lot to keep track of when doing a home remodel, but you can’t forget to protect your investment. Learn one key thing all remodelers should do. [[{“value”:”

Remodeling your home is a great way to make your space feel more modern and inviting while also adding to your home’s value. It can be time-consuming and expensive, though, which is why you probably only want to do it once.

Having a clear plan of action is important, but so is taking steps to protect your newly remodeled space financially. Here’s one step you don’t want to forget.

Remodels increase more than your home’s value

One of the main reasons people remodel their homes is so they can get more money for them when they eventually sell. But increasing the value of the home also leads to higher repair costs if the home is damaged in a fire or natural disaster.

That’s why it’s crucial to update homeowners insurance coverage when remodeling. Without additional coverage, homeowners could find themselves without enough insurance to rebuild after a total loss. They might have to borrow money to pay for what their insurance policy doesn’t or they may have to settle for a smaller, cheaper rebuild.

Purchasing more homeowners insurance could help homeowners avoid this. It’s pretty straightforward. Homeowners can contact their existing insurer and notify them of the planned updates. Then, they can work with the insurer to figure out how to adjust their policy limits. Or homeowners can shop for a new policy altogether.

In some cases, an insurance agent may need to inspect the home before it will sell or update a policy. If so, the company should notify the homeowner and schedule a visit when it’s convenient for both parties.

How to find a great deal on homeowners insurance

It’s not a bad idea to get quotes from several homeowners insurance companies before deciding which to work with, unless the homeowner has a specific reason for staying with their current provider. Rates can vary considerably because each company has its own risk algorithm.

The average annual homeowners insurance premium was $1,787 in 2023, but a lot depends on the home in question, including its location, size, and the quality of its finishes. Comparing rates from at least four to five insurers is the best way to find a great rate.

Homeowners insurance discounts can also help, although there usually aren’t as many opportunities to save as there are with auto insurance. Still, things like bundling home and auto, having a new home, or replacing the home’s roof can all translate to savings. Those who think they may qualify may want to seek out insurers who reward these things.

Finally, homeowners may consider raising their deductibles if they wish to lower their monthly premiums. However, doing this also increases out-of-pocket costs if they need to file a claim. It’s helpful to save for the deductible in an emergency fund so it’s close at hand if a disaster occurs.

Getting homeowners insurance quotes can take longer than getting auto insurance quotes because it’s often not possible to purchase a policy online. So it’s best to begin as soon as possible — even before the remodel is complete — to ensure the home is fully protected.

Our picks for best homeowners insurance companies

There are many homeowners insurance companies to choose from. We’ve researched dozens of options and short-listed our favorites here. Looking for a green build discount or easy bundle policies? Want an easy-to-use interface? Read our free expert review and get a quote today.

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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Saving for retirement is one of the most important money moves you can make. Learn about the best strategy to maximize your retirement savings. [[{“value”:”

Everybody needs to save for retirement. Whether you’re doing this already or are about to start, you probably want to build your retirement savings as efficiently as possible. There’s a smart strategy you can follow to help with this, but nearly half of Americans haven’t tried it.

The best way to save for retirement is through retirement accounts. Even though these accounts are specifically designed for retirement savings, only 51% of Americans have them, according to an investing study by The Motley Fool. If you aren’t using them yet, that’s a change you should make in 2024.

Use retirement accounts to invest and save on taxes

Retirement accounts are the most effective strategy to save for retirement because they offer tax advantages. When you invest through a standard brokerage account, you don’t get any tax benefits. You’ve already paid income taxes on the money you deposit to your account and invest. When you sell profitable investments, you’ll owe capital gains taxes.

With a retirement account, you get to avoid some of this tax burden. The tradeoff is that they normally require that you don’t start making withdrawals until age 59 1/2 or later. If you need to make a withdrawal before then, there’s an early withdrawal penalty.

There are many types of retirement accounts, but here are the most common options:

Individual retirement accounts (IRAs)Roth IRAs401(k)sRoth 401(k)s

You can open an IRA and a Roth IRA yourself through a stock broker. A 401(k) is an employer-sponsored plan, so you can only open a 401(k) or a Roth 401(k) if your employer offers one. If you’re self-employed, you also have the option of opening a solo 401(k) for yourself.

Here’s how these retirement accounts help you save on taxes.

Traditional IRAs and 401(ks)

Traditional retirement accounts let you make tax-deferred investments. Contributions made to your IRA or 401(k) are tax deductible, and withdrawals are taxed as ordinary income.

IRAs and 401(k)s have annual contribution limits. Here are their limits for 2024:

IRAs: $7,000 ($8,000 if you’re 50 or older)401(k)s: $23,000 ($30,500 if you’re 50 or older)

If you’re under 50, you can contribute up to $30,000 to an IRA and 401(k) this year. You could then deduct that $30,000 from your taxable income. If that portion of your income would’ve been taxed at 24%, you’d save $7,200 this way.

Roth IRAs and 401(k)s

Roth accounts offer tax-free growth and withdrawals. Your contributions aren’t tax deductible, but you don’t need to pay any taxes when you withdraw money.

While this doesn’t save you money on your taxes right now, it’s a huge advantage once you retire and start taking withdrawals. If you end up with $500,000 spread across Roth accounts, that’s $500,000 you can use tax free.

The same contribution limits apply to Roth accounts, and these are combined limits. For example, if you open a traditional IRA and a Roth IRA, you can contribute up to $7,000 total in 2024. You could divide that down the middle and contribute $3,500 to each one, or any other split that doesn’t total more than $7,000.

Note that Roth IRAs have income limits, so they’re not an option for high earners. In 2024, if you’re a single filer with a modified adjusted gross income (MAGI) of more than $146,000, the contribution limit is reduced. If your MAGI is over $161,000, you can’t contribute to a Roth IRA at all.

How to set up your retirement accounts

To start using retirement accounts, first see which options you have available. If you work for an employer, check if it offers a 401(k) plan. If so, talk to the HR department to open one and start having contributions taken directly out of your paychecks.

An IRA is almost always an option — anyone who has earned income can open this type of account. You can also open a Roth IRA, if you’re under the income limits. And if you’re self-employed, you’re likely able to open a SEP IRA or solo 401(k).

If you’re interested in an IRA, Roth IRA, or a self-employed retirement account, you can open those through an online stock broker. Here are some excellent IRA options:

Best IRAsBest Roth IRAs

After you open a retirement account, you also need to choose your investments. The options vary depending on the type of account.

With IRAs, you can invest in anything that the stock broker offers. With 401(k)s, the options depend on the plan administrator. Most retirement accounts include target date funds, which are built around a specific retirement year. These are a good “set-it-and-forget-it” option. If you want to retire in 2050, you could choose a 2050 target date fund and invest in that going forward.

Retirement accounts are a powerful tool. Make sure to use them so you can lower your tax burden now, when you retire, or both of the above.

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Great credit could help you borrow affordably when you need to. Read on to see why you may be hurting your credit without even realizing it. [[{“value”:”

The higher your credit score is, the easier and more affordable it becomes to borrow money when you need to. It’s in your best interest to keep your credit score as high as possible.

Experian reports that the average FICO credit score was 715 in 2023. But whether your score is higher or lower than that, it’s important to try to preserve it. These moves, however, might drag your score down without you being any the wiser.

1. Only making your minimum credit card payments

Your payment history carries more weight than any other factor when calculating your credit score. As such, you’d think that by making credit card payments on time, you’d be helping your score. But while making your minimum payments on your credit cards can help from a payment history perspective, letting the bulk of your balances linger and build could drive your credit utilization into unfavorable territory.

Your credit utilization ratio measures how much of your available revolving credit you’re using at once. As that ratio rises, your credit score has the potential to dip. So you’re better off trying to make payments on your credit cards beyond the minimum amounts required. Doing so could also limit the amount of interest you end up accumulating.

2. Paying off installment loans

There may come a point when you’re done paying off your mortgage, or you’re finally able to shed the car loan you’ve been paying for years. You’d think that paying off a large loan would, if anything, help your credit score. But unfortunately, the opposite might hold true.

When you pay off a long-standing loan, it reduces the average length of your open accounts. That could cause your score to take a hit. Plus, if you pay off an installment loan and are left with only credit cards as your open accounts, it could lead to a less favorable credit mix — which is another reason your score might go down.

This isn’t to say that you shouldn’t pay off an installment loan as you’re supposed to. Rather, the point is to be mindful of the impact it might have on your credit score so you’re not thrown for a loop.

3. Applying for too many new credit cards in short order

Each time you apply for credit, a hard inquiry is done on your credit report. A single hard inquiry shouldn’t cause much damage to your credit score, as it may only reduce it by a handful of points. It’s when you apply for too many new credit cards in short order that more damage can occur, since in that case, you may be looking at multiple hits to your credit score in a row.

A better bet is to space out credit card applications by 90 to 180 days. That might also make it so you’re better able to take advantage of the sign-up bonuses your new cards have to offer.

Great credit could do a lot of awesome things for your finances. Be mindful of the factors that could cause your credit score to take a dive unexpectedly and try to avoid them when possible. In some cases, such as paying off a loan, things may be out of your hands. But at least now you know what to expect.

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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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