Money Management

Owning a home comes with benefits you just won’t get with renting. Find out some perks of being a homeowner that could convince you to buy. [[{“value”:”

Buying a house is a huge financial responsibility. But despite the fact that purchasing meant committing to a big mortgage payment every month for 30 years, I bought my own home as soon as I was financially able to do so. I have been a homeowner ever since.

There are a few key reasons why I absolutely prefer being an owner to a renter. Check out why I love owning my own house to see if any of my reasons could apply to you and convince you it’s better to buy.

1. I’m building equity with every payment

One of the single biggest reasons that I prefer owning my house to renting is because every payment I make grows my net worth — and that wouldn’t be the case if I rented a property.

See, when I pay my mortgage lender every month, my principal balance goes down. I build home equity, which is the percentage of the home I own beyond the bank’s interest in it. And I will eventually own a valuable asset free and clear, which should ideally have gone up in value.

Now, it’s true you can become rich without owning a house. But it can be harder because you’ll need to be 100% sure you’re investing regularly to grow your net worth. While you still have to do that as a homeowner, paying into your house is a type of forced savings that essentially requires you to acquire an asset worth hundreds of thousands or even millions of dollars.

The fact that homeownership means you end up with a house in the end is one big reason why homeowners have 40 times the net worth of renters. (The other reason is that you have to be financially stable to buy, and that financial stability contributes to your higher net worth, too.)

2. My mortgage interest is tax deductible

There’s another big benefit to home ownership that I love: The government is subsidizing my housing costs. That’s because I itemize on my taxes, so I’m eligible to deduct mortgage interest on loans up to $750,000.

Deductible interest means that my taxable income is reduced by the amount of interest paid. Say, for example, I was in the 22% tax bracket. For each $1,000 in mortgage interest I pay over the course of the year, I could save up to $220 because I wouldn’t pay taxes on that $1,000. The $1,000 in interest costs would only cost me $780.

You do have to itemize to deduct mortgage interest, and many people don’t because they claim the standard deduction. Still, if you have a lot of other deductible expenses and itemizing could end up making sense for you, this is a huge benefit of owning your own house. So consider this factor when deciding if buying a home is right for you.

3. I get to customize my house

The last benefit isn’t a financial one, but a personal one. Because I own my house, I get to make it my own. I can paint it whatever color I want, remodel to my needs, and make it my own. If I was a renter, it wouldn’t make sense to do that. Since I work from home and spend a lot of time there, this is a huge benefit to me.

If you’re fussy about your space, being able to design it exactly the way you want it is a great reason to buy — as long as you’re in a financial position to afford the home and the changes you want to make.

Owning a home isn’t for everyone. But if you want forced savings, a tax break, and the ability to deep-dive into interior design, it could be a great choice for you. Just don’t buy before you’re ready to stay put for at least a few years, have a down payment saved, and can keep your total costs of homeownership to 30% of your budget or less. That way, you’ll make a smart financial choice, as well as the right personal decision for your lifestyle.

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You don’t need to buy in bulk to save at Costco. Check out four single purchase items with a lower price at Costco. [[{“value”:”

In theory, shopping at Costco could help you save money on groceries, especially if you consume a lot of one product. When broken down by the unit, Costco’s prices are hard to beat, which makes buying items in bulk cheaper than buying them in smaller quantities at other grocery stores.

But even if you don’t go through 30 rolls of toilet paper in a few weeks (hey, they won’t go bad!), Costco might still offer you some savings opportunities for your personal finances. While the store is mostly known for its bulk items, here are some single purchases you could save on at Costco.

1. Gift cards

It’s no secret — gift cards are my favorite Costco product.

In case you haven’t noticed, Costco sells bundles of gift cards for as much as 25% off the pack’s face value. For example, you can buy a Southwest Airlines gift card with a total value of $500 for $449.99. I’ve even seen the same gift card priced at $429.99 — a savings of $70 just by purchasing the gift card through Costco.

If you frequently shop or dine out at places Costco sells gift cards for, you could easily save more than what your membership costs. Just keep in mind there’s typically a limit on how many gift cards you can buy per membership. And some gift cards, like Lyft and Airbnb, come in limited quantities that sell out fast.

2. Travel

If you hate planning and booking your own travel, Costco Travel might be right for you. With all-inclusive packages to resorts located around the world, plus cruises and trips designed for families, Costco Travel can help you book hotels, flights, rental cars, and activities without having to do the research yourself.

Plus, its prices are hard to beat. Take, for example, its “hot buy” Hawaii vacation package, which includes a four-night stay at the Mauna Lani, Auberge Resort on the Hawaii Island, round trip tickets (leaving from Portland, Oregon), transportation, a $250 Shop Card, and daily breakfast. For two people, this package costs about $5,500 on Costco. That might seem high, until you realize a four-night stay at Mauna Lani, Auberge Resort for the same dates would cost you $4,927 alone.

Of course, I don’t think Costco Travel will suit everyone. Many of the packages are luxurious, and they might be too pricey for those traveling on a shoestring budget. It could prove economical if you’re traveling somewhere popular — like Disney World — but do your own research if you’re fine bunking in a hostel and eating bread and cheese.

3. Gas

Costco’s gas prices are frequently lower than other gas stations. While you might have to wait in line — especially if you live in New Jersey where self-service pumping is illegal — the savings are well worth the time spent. Costco also sells TOP TIER™ gasoline, which, according to AAA research, is supposedly cleaner and more efficient.

4. Car insurance

Costco doesn’t sell car insurance, but it can hook its members up with a significant discount through its partner CONNECT, which is backed by American Family Auto.

According to Costco’s own data, most members save about $595.86 in the first year they switched to CONNECT. That comes out to about $50 per month. These savings can be combined with other insurance discounts, like safe driving and bundled policies, to help you shave even more off your auto policy’s rate.

All things considered, you don’t have to buy in bulk to save money at Costco. In fact, there are a slew of big ticket items that are often cheaper at Costco, like sheds, greenhouses, appliances, sports tickets, and even solar panels, just to name a few. And if you end up with a Costco membership that isn’t saving you money, guess what — you can get a full refund at any time just for being dissatisfied.

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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 positions in and recommends Costco Wholesale. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.

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Before you become dependent on your partner, there are some tasks you need to take care of to protect your financial future. Find out about them here. [[{“value”:”

Becoming a stay-at-home parent isn’t financially feasible or personally desirable for everyone. But for men or women who want to be home with their kids, it can provide some amazing benefits for a family and help children establish a firm foundation in life.

Unfortunately, it also makes the stay-at-home spouse financially vulnerable. Before you put your career on hold and jump into caregiving, there are a few things you should do to make certain you are protecting your personal finances as much as possible. Here’s what they are.

Get life insurance on the working spouse

Life insurance is crucial if one person is going to be the sole breadwinner for a family. When the stay-at-home spouse steps away from their career, they limit their future earning potential. In most cases, it would be difficult and disruptive to the family if they were suddenly forced back to work in the event of a tragedy.

Life insurance can provide funds necessary for the at-home spouse and their children to maintain as close as possible to their standard of living even upon the death of the primary earner. A policy must be put in place to make sure that can happen. In fact, since the services a stay-at-home mom or dad provides are also valuable and difficult to replace, it’s a good idea to get insurance for that parent as well.

Establish credit in your name

The sad reality is that somewhere around 50% of marriages end in divorce. If you don’t have credit in your own name and you want to leave your spouse (or your spouse divorces you), you are going to be in serious trouble.

You typically need a good credit score to get an apartment, set up utilities without a large deposit, or even get a cellphone. You’ll also need credit to borrow for things you might need in the future, like a vehicle.

You should be sure joint loans, like a shared mortgage, have your name on them so they show up on your credit report and help you build credit (and you should pay attention to your finances to ensure your spouse is paying all these bills so your credit isn’t damaged). You should also have a credit card in your name, in case you need it and to help you build your own personal credit score.

Make sure your name is on shared accounts

Just because your spouse is bringing home the paycheck doesn’t mean you aren’t entitled to a share of it. You should insist upon your name being on joint bank accounts and shared marital assets such as the deed to a family home and the title to your vehicle. If your spouse starts a business and you help provide support to them while doing it, you may even want to ensure you have an ownership stake in that company as well.

All of this can help ensure that if something goes wrong, you have money and financial security to start your new life. Since you’re giving up your earning potential and making it harder to support yourself in the future, you must take care of yourself in the present.

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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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Failing to report income could have serious consequences. Read on to learn more. [[{“value”:”

There are very few types of income the IRS does not get a piece of. Roth IRA withdrawals fall into that category, as do withdrawals taken from a Roth 401(k).

But otherwise, when you earn income, whether it’s interest payments in a savings account or dividend payments in a brokerage account, you’re required to report that income so the IRS can take its share. Similarly, when you earn freelance income, you have to report that income on your taxes and pay the IRS a portion. And failing to do so could have serious consequences.

Don’t assume the IRS won’t find out

When you’re paid as a salaried employee, you have taxes withheld from your paychecks on an ongoing basis. When you’re paid on a freelance or self-employed basis, you get your full wage, and it’s on you to allocate some of that money for tax purposes.

If you’re paid $600 or more from a given company or entity, it’s obligated to issue you a 1099 form — specifically, a 1099-NEC (non-employee compensation). And every time you’re issued a 1099 form, the IRS gets a copy as well. So it’s a really big mistake to not claim income on your tax return that’s documented on a 1099 form, since the IRS is apt to get wind of it.

Furthermore, even if you were paid less than $600 by a given company and therefore won’t get a 1099 form, you still have to report that income and pay taxes on it. And while you might wonder how the IRS would find out about income not documented on a 1099, the answer is, you might get away with hiding it, or maybe you won’t. But do you really want to take the chance?

Not reporting freelance income could have serious consequences. At the very least, you should expect to pay penalties on unreported income. If you’re accused of tax evasion, that could have serious criminal consequences. So it’s just plain not a practice you want to engage in.

Another thing you should know is that as of now, third-party payment platforms like Venmo are only required to issue 1099 forms to those who receive over $20,000 in payments from over 200 transactions for the 2023 tax year. That rule is set to change in the future so that payments of $600 or more trigger a 1099 form from third-party platforms.

But again, the reporting rules on your part are the same. If a freelance client paid you $2,000 through Venmo and you didn’t get a 1099 form from Venmo for 2023, it doesn’t mean you don’t have to report that income.

How to avoid a tax headache as a freelancer

When you earn freelance income, you’re required to make estimated quarterly tax payments on your earnings so you’re paying the IRS during the year. It’s a good idea to work with an accountant or tax professional to come up with those numbers. That way, you’re less likely to owe a whopping sum when you go to file your tax return.

Another thing it pays to do is set money aside on top of those estimated quarterly payments in case they end up being a bit off and you wind up owing the IRS during tax season. But don’t not claim freelance income due to an inability to pay a tax debt. The IRS is very good at recouping funds it’s owed, and it’s known to work with filers by letting them pay their debts off over time. So you’re better off being honest about your income and figuring out a way to pay if need be.

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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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