Money Management

Laddering CDs can help your money remain accessible to you when you need it. But is this strategy needed for long-term CDs? Read on to find out. [[{“value”:”

There are benefits and drawbacks to opening a CD. On the plus side, CD rates tend to be more generous than savings account rates. Plus, CDs guarantee you a specific interest rate on your money for a preset period of time. When you put money into a savings account, you might start out with a certain interest rate, only to see it drop as market conditions change.

The downside of putting money into a CD, though, is having to commit to its term. Whether you open a 6-month CD, a 1-year CD, or a 5-year CD, you’re pledging to keep your money where it is for the duration of that period. And if you cash out your CD before it matures, you risk being penalized for that.

The extent of that penalty will depend on your bank. At Capital One, for instance, the penalty for cashing out a CD early with a term of 12 months or less is three months of interest. For a CD term of over 12 months, it’s six months of interest.

You might open a CD with every intention of keeping your money in place until that CD comes due. But sometimes, unforeseen circumstances or expenses can arise that might force you to tap a CD early and take a penalty. That’s why laddering your CDs is a strategy worth employing. But is it always worth employing?

The upside of a CD ladder

With a CD ladder, you have money coming due at various intervals instead of having all of your cash tied up for the same time period. What you might do to build a CD ladder is open a 3-month CD, a 6-month CD, a 9-month CD, and a 1-year CD at the same time rather than put all of your available cash into a single 1-year CD. That way, you have money freeing up every three months over the course of that year.

Another option for building a CD ladder is to open a 1-year CD in January, a second in April, a third in July, and a fourth in October. This effectively achieves the same goal of having some of your money free up every few months during the year so that if a need for cash arises, you have access to some of yours.

Laddering your CDs could help you avoid a costly penalty. So it’s worth doing that for shorter-term CDs. With longer-term CDs, it may not be as necessary.

When you’re tying up your money for the long haul

CDs come in different terms, and you may decide to open a 4- or 5-year CD in an effort to save for a longer-term goal. In that case, laddering your CDs isn’t a bad idea. But instead, you may just want to keep a nice pile of cash on hand in savings for emergencies, and then commit to your CD and write off access to that money until it comes due.

This isn’t to say that you couldn’t open, say, a 1-year CD, 2-year CD, 3-year CD, and 4-year CD instead of a single 4-year CD. But once you start looking at long-term CDs, you’re making a much bigger commitment than with a shorter-term CD. And you need to make absolutely certain you’re covered for emergencies before diving in.

From there, a CD ladder may not offer you so much value. If you lose your job and have to wait two months to access funds from a CD, that might help in a case where your CD ladder has funds freeing up every three months. You may be able to tide yourself over in that situation.

But if you lose your job and your next CD isn’t coming due for another 11 months, you’re going to have to come up with another plan for accessing money — either that, or resign yourself to a penalty. But at that point, it may not matter whether you have money next coming due in 11 months or 47 months from now.

All told, CD laddering is a smart strategy to employ. It may not offer quite as much benefit in the context of long-term CDs, though. So if you’ll be building one of those, make absolutely sure you’re able to part with your money for as long as you think you can.

These savings accounts are FDIC insured and could earn you 11x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts could earn you 11x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.

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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

“}]] Read More 

It’s a good time to clean up your finances as well as your garage. Here’s how to get started. [[{“value”:”

Spring is in the air! Well, almost, anyway.

For some people, that means itchy, watery eyes and allergies galore. For others, it means a celebration of milder weather and the chance to spend more time outdoors.

For you, it might mean getting into serious cleaning mode. But in that regard, you don’t just want to focus on your basement, shed, and garage. Now’s a really good time to spring clean your personal finances as well. Here’s how to get started.

1. Assess your emergency fund

Do you have enough money in your savings account to cover three months of essential living expenses? If you don’t, you’re in good company.

Recent data from SecureSave found that 63% of Americans do not have the cash reserves to cover a $500 expense that arises out of the blue. But if your emergency fund is lacking, it means you’re running the risk of landing in serious debt the next time an unexpected bill lands in your lap, like a home or car repair. Or, it could mean having to live off of credit cards in the event of a layoff.

To avoid that scenario, sit down and figure out what your essential monthly bills look like. Then, multiply that total by three and see how far away you are from that target. From there, you can make a plan to boost your savings, whether it’s picking up a side job or cutting back on some of the things you currently spend on.

2. Set bills to autopay to avoid being late

Paying bills late could have different consequences. In some cases, it could mean getting hit with fees. In other cases, it could mean credit score damage.

It pays to see which bills of yours are eligible for autopay. That basically takes human error out of the equation, and it also might free up a lot of time in your schedule so you can focus on other important matters.

Some of the bills you can think about automating may include your:

MortgageCar paymentsCellphoneCableUtility bills (you can work with your providers to get onto a payment plan that works for you)Estimated quarterly tax payments, which you have to pay if you’re self-employed or earn freelance income during the year

3. Come up with a filing system that works year-round

If you’ve been spending the past few weeks digging up documents for your taxes, then you may have found yourself bemoaning your lack of organization. But the reality is that it’s important to keep good financial records year-round, and to have a system for filing documents you might need in the near term as well as the long term.

During your spring cleaning, come up with a filing system that’s sustainable for you. That could mean scanning documents and storing them electronically, or buying cabinets to house physical files. And before you start moaning about how time-consuming this task might be, recognize that making the effort now could save you a lot of time down the road.

The start of spring can be a mixed bag, depending on whether you’re a fan of the season or not. But one thing’s for sure — it’s important to get your financial house in order, and now’s as good a time to do that as any.

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 

Taxes are due in about a month. While an extension will buy you more time to file them, it won’t give you extra time to pay. Learn more here. [[{“value”:”

At this point, there’s still a decent amount of time to file your taxes ahead of this year’s April 15 deadline. But what if you’re really behind, you haven’t yet lined up any tax help, and you just don’t see a way to get your return completed by mid-April?

One thing you should know is that if you don’t owe the IRS money, but rather are due a refund, you won’t face a penalty for being late with your tax return. In that situation, being late with your return will delay your refund from hitting your bank account. Since that doesn’t hurt the IRS ( if anything, it benefits it), there’s no added penalty imposed.

However, if you owe the IRS money from 2023 and are late submitting your return, then you could face a steep penalty for submitting your taxes late. The failure-to-file penalty amounts to 5% of your unpaid tax bill for each month or partial month your return is late, up to a total of 25%. That could amount to a lot of money.

That’s why it’s important to request a tax extension if you’re behind on your taxes and don’t expect to be done by April 15. But it’s also important to understand how tax extensions work.

You get more time to file — not more time to pay

If you request a tax extension by April 15, the IRS will give you six more months to submit your return. And don’t worry — you don’t need to come up with an excuse along the lines of “My dog ate my tax return.”

When you request an extension, you don’t have to give a reason for needing more time. You just have to ask for more time.

That said, a tax extension won’t give you extra time to pay your tax bill. It’ll get you out of the failure-to-file penalty, but it won’t exempt you from the late payment penalty the IRS imposes for tax bills that are submitted after April 15.

The late payment penalty is equal to 0.5% of your unpaid taxes for each month or partial month your payment is late. Clearly, it’s considerably smaller than the failure-to-file penalty, but the late payment penalty also maxes out at 25% of the sum you owe. So all told, it’s not a good thing to let an IRS tax debt drag out.

Try to pay on time either way

If you’re going to ask for a tax extension, one thing it definitely pays to do is try to estimate what you owe the IRS and pay that sum by April 15. Tax software can help with this. Let’s say you estimate your tax debt at $2,000 and pay that sum when, in reality, you discover once you actually complete your tax return that you owe $2,500. In that case, you’ll only face a late payment penalty on the $500 you didn’t submit, thereby minimizing the damage.

All told, you may end up needing more time to finish your taxes this year, and that’s not necessarily something to panic over. But make sure you understand how tax extensions work. And make sure to request that extra time on or before April 15. Beyond that, you can get flagged and penalized for being late.

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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

“}]] Read More 

It’s hard to save money if you’re spending every nickel on rent — but in these 10 metro areas, moving in with someone can be a game-changer. Learn more here. [[{“value”:”

It’s finally almost spring — the birds are chirping, the plants are budding, and every living thing, in one way or another, is thinking about shacking up. Maybe this year, you should consider it, too, since it can save you a bundle in rent to split with someone else.

If you’ve been trying to save for a house of your own, living together can help you meet that down payment goal faster, and you’ll get a good idea of whether or not you can stand the sound of your beloved slurping soup long before you buy real estate together.

Why split a rental?

There are plenty of social reasons to split a rental unit. Maybe you’re just the kind of person who likes having other people around, or maybe love is in the air this spring and you’re ready to take it to another level. If you and your partner are ready to share spaces, doing it in a rental versus an owned home makes a lot of sense. After all, if you get tired of one another, you simply have to finish out the lease, and poof, your responsibility to one another is resolved.

If you do successfully rent together, you may also start to think about wanting to buy a home together, just like 22% of renters surveyed by Realtor.com. Of those surveyed, 44% are saving $500 or less per month toward their purchase. At that rate, it could take many years to amass a reasonable down payment. A whopping 45.2% of those surveyed have been saving for at least two years already.

Splitting a rental with the person you also want to split your life with makes a lot of sense if you’re considering buying a house together. It’ll free up some of your collective money, and allow you to potentially put even more into your savings account for that future home purchase.

Top ten metros where sharing a home will save you big bucks

No matter where you live, halving the cost of your rental unit is going to save you lots of money, but there are some metro areas in which the impact is massive. Predictably, these are high rent and high cost of living areas, but even the least expensive metro area included in the Realtor.com rental report will help you save almost $500 per month by going halfsies.

Your top 10 metros for savings, at a glance:

But, if you live in a less pricey city, don’t let that stop you. As it turns out, splitting the rent in even the least expensive metro areas can still make a huge impact on your personal finances, by allowing you to save $5,928 per year.

Best ways to grow your down payment savings together

Something you may not be aware of while you’re trying to grow your down payment savings is that you actually need to keep it somewhere. This isn’t just so raccoon bandits don’t break in your window at night and rob your jar of down payment dollars, it’s also to provide documentation of your growing savings.

Seasoned funds, as they’re known, are required by banks so they can verify the source of your closing funds. In part, it’s so the underwriters know that it’s a reliable source of funds that can be counted on all the way to closing, and in part, it’s to cut down on money laundering. It goes both ways, no matter what you’ve heard.

Growing your down payment in a high-yield savings account, a certificate of deposit, or a money market account kills two birds with one stone. It both allows your money to season in a place where the source of your funds can be verified, and it allows your money to grow by as much as 5.00% per year at today’s APYs. Kind of a great deal all around.

No matter where you live, you can take that $494 to $1,609 straight to the bank every month by moving in with someone you already adore this spring. Building your nest egg together is a great step on the way to finally buying your own nest.

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 

Costco members get a list of deals in the mail each month, but there’s a flaw in the system. Read on to learn more. [[{“value”:”

Costco is known for its fabulous prices on bulk grocery and household items. And joining Costco can be a smart personal finance move because the fee you shell out for a membership can more than make up for itself in the form of savings during the year.

But sometimes, Costco manages to outdo itself price-wise by discounting certain items. Usually, Costco puts different products on sale every three to four weeks. And it informs its members of those sales via a monthly mailer — a deal book of sorts.

I happen to find that mailer less than helpful, though. Here’s why.

When you don’t get the full picture

There are certain items I buy at Costco all the time regardless of price. For example, I’ve found that Costco has the best prices on milk and egg in town. So if we need to stock up on those items, I’m buying them even if they aren’t on sale.

But then there are those items I’ll try to only buy at a low price because I’m not sure how much I’ll like them. The problem with Costco’s deal book, though, is that it only shows you how much money off you’re getting for a given item; it doesn’t tell you the final cost of that item. As such, it’s hard to use the deal book to create a grocery budget for the week.

Of course, there’s a reason for this. Costco’s in-store prices vary from one market to another. So it’s easier for Costco to blast out a deal book to all of its members, regardless of location, highlighting the discounts it’s offering. It would be more cumbersome and costly for Costco to send customized mailers to members based on their geographic location.

But for example, right now, Costco has Girl Scouts Thin Mints Bites available at a discount. If you look at the mailer, which is also accessible online, you’ll see that they’re $3.60 off.

Based on my love of the original Thin Mint cookie, I can’t imagine this being a product I won’t enjoy. But without knowing the final price, I’m not sure I’ll plan to add it to my shopping cart. Since it’s an item I’m not familiar with, for all I know, even with the $3.60 discount, I could be looking at paying $9, or $12, or $17.

I’d probably be willing to take a chance on a new snack at the lower end of that range. But I’m not sure I’d pay much more than $12 in case the flavor isn’t to my liking.

How to get a better sense of what Costco products will cost in stores

The easiest way to figure out what Costco is charging for various items is to walk into the store and look at price tags. But if you’re someone (like me) who tends to fall victim to impulse buys, you may prefer to bring just enough cash with you to do your food shopping to avoid that temptation, rather than using your credit card. And it’s hard to do that when Costco doesn’t publish in-store prices in its monthly deal books.

One option is to call your local store and ask for a price ahead of your visit. Another thing you could do is check out the online price for the item you’re interested in. Usually, in-store prices are cheaper, so you can see what the online cost is and subtract 10% to 20% in your head, which is probably in the range of the difference you’ll be looking at.

That only works when Costco sells the item you want online, though. In the case of those Thin Mints Bites, apparently they’re in-store only, so my only option for figuring out the price ahead of time is to call my local store.

And to be honest, because I know how busy it tends to be, I’m not going to do that. I can wait until I hit the store to check out the price for myself.

All told, Costco’s deal book can be useful in that it can alert you to when items you buy regularly are going on sale. It’s just less helpful when you’re interested in new items but want to know their cost.

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.Maurie Backman 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 

When you’re having a hard time making payments, your lender is the first person you should tell. Find out why. [[{“value”:”

A growing number of Americans are having a hard time making their mortgage payments, with troubling data from TransUnion showing a 16% increase in mortgage-holders who were at least 60 days past due in the fourth quarter of last year.

If you’re having trouble finding the money in your bank account to pay your home loan, you are definitely not alone. Rising mortgage interest rates, surging inflation, and high housing prices all created a perfect storm that has made homeownership seem less affordable than ever.

It’s a big deal to fall behind on your mortgage, though, as there is a serious risk of foreclosure if you miss several months of payments. If you want to avoid financial disaster when you’re having trouble, there’s one thing you absolutely do not want to do, as it could only serve to make your situation a whole lot worse.

Don’t do this if you are having a hard time with your mortgage

If you are struggling to pay your home loan costs, the absolute worst thing that you can do is to try to hide the problem from your lender. It’s a bad idea to ignore the problem and not let your lender know right away about the difficulties you’re facing.

Instead of just letting things go or continuing to struggle until you can’t any more, the best thing you can do is to reach out to your mortgage lender immediately — as soon as you know that making a payment on time might not happen.

That’s because many mortgage lenders have programs in place that are designed to help homeowners to stay in their homes. For example, lenders may be willing to allow you to put your loan into forbearance and temporarily pause payments during periods of financial hardship. Or they may be able to assist you in working out a payment plan that lowers the monthly costs you’re facing.

The specific options that are available to you will vary depending on what programs your lender offers and whether the financial hardship you’re dealing with is likely to be resolved quickly or to persist for a long period of time. But you won’t know about the options if you just ignore the problem.

If you don’t tell your lender about your troubles right away, your life is likely to only get harder as you absorb late fees and penalties. Plus, your lender could possibly start the foreclosure process, which could mean you need a lawyer and a huge lump sum payment in order to keep your home.

Take action right away when you’re facing hardship

If you can’t make your mortgage payments, the lender is going to figure it out very quickly when the money stops coming.

Rather than waiting until you get into these dire straits, call your lender as soon as you realize there’s a problem. You may find yourself pleasantly surprised by the options available to keep your home. You have nothing to lose and everything to potentially gain by seeing what your lender will do for you.

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