Money Management

Autopaying bills comes with some attractive perks, including avoiding late fees. Learn why one writer is just saying no, despite the convenience. [[{“value”:”

Gone are the days when “paying the bills” meant sitting down with an honest-to-goodness checkbook, envelopes, and stamps. These days, you can pay all your bills over the internet — and you can even set them up to be drafted out of your bank account automatically, with no monthly intervention from you. Who wouldn’t want that? Me. Here’s why I don’t utilize autopay — even though it’s the right move for many people (and maybe even you).

1. Fear of overdraft

I lived paycheck to paycheck for the entirety of my adult life, until very recently. This was due to a few factors, including paying off my education and having a career that was more emotionally than financially satisfying. In those days, the prospect of money leaving my checking account at any point without my direct involvement in setting up the payment was scary indeed. When you pay your bills and are left with very little in your account, having a surprise charge hit can ruin your day.

Will that extra expense result in a checking account overdraft (and a fee) — or will it just make you sweat and worry until you get paid again? I wanted no part of this exercise, and to this day, autopay makes me nervous, even despite being able to leave more cushion in my checking account to guard against surprise bills.

2. Desire to feel in control of my finances

Here’s my dirty little personal finance secret: I actually enjoy paying bills. OK, I don’t necessarily love that so much of my hard-earned cash goes toward housing, utilities, and especially health insurance (the biggest downside of being a freelancer: no more employer-subsidized insurance). But I do love signing into my bank accounts on payday and sending the money where it needs to go.

I have a few techniques to keep the process as stress free as possible, and crossing paid bills off my calendar is very satisfying. And it’s even better to see what cash I have left over and can move to my high-yield savings account, where it can grow and eventually pay my taxes, cover vacation costs, or go towards the purchase of my new house.

What about you?

Everyone’s financial circumstances are unique, and what works for me may not work for you (or vice versa). So to that end, is it a good idea to set up autopay for your bills? Here’s why you might want to consider it:

Autopay can save you money on late fees: If you pay a bill late, you’re generally assessed a late fee. It’s usually only a nominal amount (such as a flat fee or a percentage of what you owe — my electric/gas utility charges a late fee of 1.5% of the amount due). But why pay any extra if you don’t have to?Autopay saves you time: I might enjoy the process of paying the bills, but it does take time every week. If you’re short on time, you’ll probably appreciate saving some by setting up autopay.

I advise caution with autopay in two scenarios. If you live paycheck to paycheck and setting it up puts you at risk of overdrafting your checking account, you might want to pass on it for now, like I have for so many years. And think long and hard about putting your credit card bills on autopay. Ideally, you’re paying off credit cards every month so you can avoid interest charges. But it’s likely that your credit card bills fluctuate, so you may not pay the same amount every month.

You can likely set up your account so you autopay the minimum balance, pay the card off in full, or pay another set amount every month. It might be a better idea to make that payment manually, though. That way, you’ll know how much you’re spending (and whether you need to cut back) and there won’t be any surprises if you’re set to pay the balance off in full and it comes in higher than expected.

Personal finance is just that: personal. If the prospect of saving time and reducing the impact late fees can have on your bottom line sounds appealing, you might want to set up autopay for your bills. But if you live paycheck to paycheck or just like having a steadier finger on the pulse of your cash flow, doing it manually might be right for you.

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The window to find a tax preparer is dwindling. Read on for some tips if you still haven’t lined up tax help. [[{“value”:”

Now that we’re well into the month of March, it’s time to get serious about filing your taxes. Tax returns for 2023 are due on April 15. And if you don’t submit your taxes on time, there can be costly penalties for filing late when you owe the IRS money.

When you don’t owe any money, there’s technically no penalty for a late filing. But you’ll delay your refund from hitting your bank account, which is bad news in its own right.

Now, if your tax situation is straightforward, you may be able to file your taxes on your own. But if you’re self-employed, work and live in different states, or have a business you run, then it generally pays to hire a tax professional.

But what if you haven’t managed to find the right person for the job? Maybe you met with an accountant you found through an online search, and their fees were too high, or you just didn’t get a good feeling about them.

At this point, the clock’s ticking down to find tax help. Here are some key steps to take.

1. Ask friends and colleagues for recommendations

Getting tax help recommendations from people you know is beneficial for a couple of reasons. First, you can go into those initial meetings with more confidence knowing that someone you know has had a good experience with the professional in question.

But also, many tax preparers are pretty booked for the season at this point. So if you call one cold, they may not be able (or willing) to fit you in. But if you name-drop a client who’s been with them for 15 years, they may be willing to throw you a bone and squeeze you in this late in the season.

2. Use the IRS’s directory to find a qualified professional

The problem with simply doing an online search for a tax professional is that you’re not guaranteed to find someone with the right credentials. The good thing about using the IRS’s directory is that you can vet different professionals’ credentials from the start.

At this point in the tax season, you can’t afford to waste time talking to tax preparers who aren’t really qualified to help you. So if you use the aforementioned directory as a starting point, you minimize that risk.

3. Consider an enrolled agent if you can’t find a CPA

Some people have it in their heads that only a CPA is qualified to offer tax help. But if you can’t find a CPA with availability, it pays to consider working with an enrolled agent instead.

Enrolled agents are professionals who have extensive knowledge of IRS laws. In fact, enrolled agent status is the highest credential the IRS awards. Professionals who manage to attain this status must not only adhere to ethical standards, but also complete 72 hours of continuing education courses every three years to make sure they’re up to date on the latest rules.

If you haven’t yet found a tax professional you’re comfortable with, don’t panic. You still have some time to line up the help you need. But it pays to use these tips to expedite the process so you don’t end up with a late filing on your hands.

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Finding out you owe the IRS can be really stressful, but you have options. Here’s what you need to know to get your tax bill paid. [[{“value”:”

Doing your taxes is unpleasant enough, but it can turn into a nightmare if you wind up with an unexpected bill. If you’re lucky, you can cover what you owe out of your bank account and mail in a check along with your return. But this isn’t an option for everyone.

Don’t panic, though. There are ways to get the IRS off your back that don’t require a large, upfront payment. Here are some of your best options — and one you definitely want to avoid.

Do nothing

Doing nothing is the worst thing you can do in the face of a tax bill. The IRS will charge you a failure-to-pay penalty that’s worth 0.5% of the tax owed every month it remains unpaid. This maxes out at 25% of your unpaid taxes. You could also face a failure-to-file penalty worth 5% of your unpaid taxes, up to a maximum of 25% of taxes owed, if you don’t file your return when you should have.

The IRS could also come after you for tax evasion, which could result in hefty fines and even prison time. So you definitely don’t want to just ignore your tax situation. File your tax return, even if you can’t afford the bill right now. Then, reach out to the IRS to work out a payment agreement.

How to pay the IRS when you don’t have the money right now

If you don’t have the cash on hand to cover your tax bill, you have a few options, including the following.

Short-term repayment plans

Short-term repayment plans give you up to 180 days to pay your tax bill in full. There’s no fee to set one of these up, but your balance will continue to accrue failure to pay penalties and interest during this time.

To qualify for one of these plans, you must owe less than $100,000 in combined taxes, penalties, and interest. You can apply using the IRS’s online payment agreement form.

Long-term payment plans

Long-term payment plans give you more than 180 days to pay back what you owe, but they require you to pay in monthly installments. You can do this via:

Direct debit from your bank accountPayroll deductionDebit cardCredit cardCheckCash

There is a fee for this unless you qualify for a low-income exemption. And again, your balance will still accrue penalties. But it’s a solid option to consider if you’ve filed your return and owe less than $50,000. You can choose your payment due date and how much you can afford to pay each month. Those interested can apply using the same online form linked above.

Offer in compromise

An offer in compromise is where you tell the IRS what you can afford to pay toward your tax bill, even if it’s not the entire amount. The IRS will consider your offer and, if it agrees, you make your payment, either as a lump sum or monthly installments, and the IRA forgives the remainder of your tax debt. However, it doesn’t accept all offers. It will consider your income, assets, expenses, and ability to pay.

To qualify, you must have filed all required tax returns and made all estimated tax payments if self-employed. You also cannot be in an open bankruptcy proceeding. The Form 656-B booklet can guide you through how to make an offer in compromise and what to do if yours isn’t approved.

When in doubt, it’s best to contact the IRS or speak with a tax professional to determine what your best option is. Don’t wait. The longer you do, the more likely it is you’ll encounter costly penalties.

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Whenever my husband and I buy a house, we want to make sure we can afford it on either one of our incomes. Here’s why. [[{“value”:”

My husband and I have purchased several houses over the course of the 12-year period that we have been married. Each time we buy a house, there’s one very basic rule that we follow. Here’s what that rule is, some details on why we’ve chosen to enforce it, and whether it’s a rule that others might want to look into as well.

Our home needs to be affordable on a single salary or we won’t buy it

The rule that my husband and I always follow is that our mortgage payment must be affordable on either one of our incomes independently. We will not buy a house that we could not afford if either one of us was forced to stop working or took a big cut to our income.

We have this rule in place for a few key reasons:

We’re both self-employed and we can’t count on a steady income. Since neither of us have an employer promising us a paycheck, our income is a little bit more uncertain than most people’s. We don’t want to commit to a payment we couldn’t make if one of us had a bad month at our jobs.We want more flexibility. We don’t want to both be pressured to make a large amount of money just to be able to afford a mortgage payment. If one of us wants to take time off to spend with our kids or, worse, if something happens and one of us is forced to take time off due to health or family issues, we want the flexibility to be able to do that.We want to accomplish other financial goals. By making sure that we’re only devoting around 30% of each of our individual incomes to housing costs, we have plenty of money left over as a household to do other things. Since we have lots of important goals, like saving for early retirement, it’s essential we don’t overcommit.We know a mortgage is a long commitment. It’s one thing to take on a large loan for a few years — but the mortgage requires three decades of payments. So there’s more chance of something going wrong financially or of a job change becoming necessary during that time.

Keeping our mortgage costs affordable enough that either one of us could make the payments if we had to gives us a lot of peace of mind. We know that the chances of us being unable to make our mortgage payments is slim. Something would have to happen to stop both of our incomes from coming in for that to occur.

Should you follow a similar rule?

This rule works for us because we both make a pretty good living and have been able to afford to borrow from mortgage lenders to buy houses in the areas where we want to live even while following it. We also have a similar level of earnings.

If you have a big salary disparity between you and your spouse, or if you couldn’t afford to buy a house at all if you followed this rule, then it probably doesn’t make sense to do so. But if you want a lot more peace of mind and plenty of money for other goals, then it may be a good option for you if it’s possible.

The most important thing is to keep your total housing costs below 30% of your household income to avoid being house poor. If all your income is going toward your mortgage and other housing costs, you won’t be able to meet other goals (such as saving for retirement). If this is a less restrictive rule than forcing yourself to ensure the house is affordable on each spouse’s salary, then you’re still most likely going to be OK with your purchase.

But if you want to make the most financially conservative choice and you don’t mind scaling down the home you can buy to follow this rule, you may just appreciate the extra peace of mind it gives you.

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Want to buy a car in 2024? Getting EV tax credits on new or used electric vehicles could be easier than you think. Here’s how. [[{“value”:”

If you are in the market for a car in 2024, you might want to consider buying an electric vehicle (EV). The federal government is offering EV tax credits of up to $7,500 for qualifying new EVs, or up to $4,000 for used EVs. At a time when car insurance costs are skyrocketing, getting a discount on your EV purchase could help a lot.

There are a lot of misconceptions about EV tax credits. Let’s look at a few of the big ones.

Myth No. 1: No new electric vehicles can get EV tax credits anymore

Reality: EV tax credits for purchase of a new electric vehicle can be as much as $7,500 — but not every EV qualifies for that full amount. In fact, many EVs do not. The EV tax credits have gotten a bit confusing and limited for new cars in 2024.

The electric vehicle tax credits, also called “clean vehicle credits,” were created as part of the Inflation Reduction Act (IRA), a new federal law passed in 2022. Along with encouraging more people to buy electric vehicles, the law had another goal: to create more American jobs making electric vehicles.

For that reason, the EV tax credits for new cars are limited to vehicles that were “made in the USA” — having their “final assembly” done in North America. There are also limitations based on which country each EV battery was sourced from. So if you want the full amount of $7,500 of EV tax credits for a new EV in 2024, try to buy an electric vehicle that is entirely “made in the USA” — and has battery materials from the right foreign countries.

According to FuelEconomy.gov, as of Feb. 23, 2024, here is the complete list of new fully electric EVs that can get the full $7,500 of new EV tax credits in 2024:

Myth No. 2: EV tax credits make you fill out a bunch of paperwork and wait for tax season

Reality: If you buy an eligible EV in 2024, it’s easier than ever to get your EV tax credit. That’s because car dealerships are required to tell you, at the point of sale, whether your vehicle qualifies for the tax credit — and the dealership handles the paperwork to register the sale with the IRS.

With EV tax credits in 2024, you get an immediate discount on the purchase of your EV, right there at the dealership. You don’t have to wait to file your tax return — just ask your dealer for a copy of the “time-of-sale” report to keep for your records. But be aware of the income limits to receive EV tax credits:

New EV tax credit: modified AGI of $150,000 or less (single filers)Used EV tax credit: modified AGI of $75,000 or less (single filers)

Myth No. 3: Used EVs don’t qualify for good EV tax credits

Reality: EV tax credits for pre-owned vehicles might be an even better deal than for new vehicles. You can get an EV tax credit of 30% of the sale price (up to $4,000) on the purchase of a qualifying used EV. Prices of used EVs have come down significantly in the past year or so. Many recent model year EVs might still have low mileage, plenty of warranty left on the battery, and be a good value for your car-buying dollars.

And when you buy a used EV, you can get the tax credit even if the car wasn’t assembled in North America, and no matter where the EV battery parts came from. This gives you a wider range of car manufacturers and models to choose from.

Here are a few examples from FuelEconomy.gov of used EVs that qualify for the EV tax credit, as of Feb. 23, 2024:

Bottom line

There’s still a decent selection of EVs on car dealership lots that will get the full $7,500 EV tax credit for new cars, or up to $4,000 for used cars, in 2024. Some car dealerships might also offer discounts on other new EVs that don’t get the $7,500 tax credit. Buying an EV in 2024 could be more cost-effective than you think. Just be sure to get price quotes for car insurance before you choose your EV.

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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 Tesla. The Motley Fool has a disclosure policy.

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Amazon Prime offers free shipping and lots of other valuable benefits. Find out about the rarely mentioned drawbacks before you get a membership. [[{“value”:”

If you like to shop on Amazon, you’re probably either already a Prime member or considering it. Joining can certainly be a smart personal finance move. For $14.99 per month, or $139 per year, you get free one- and two-day shipping. Some orders even qualify for free same-day delivery.

Getting Amazon orders fast and for free is always nice. Amazon Prime also includes plenty of other benefits, including its Prime Video streaming service, Amazon Music for free songs, and Prime Gaming for free games.

The biggest downside of Amazon Prime is that it’s on the expensive side, so you should only get it if you’re going to use it regularly. But there are also drawbacks that don’t get talked about as much. They’re worth knowing about if you’re a Prime member or thinking about signing up.

1. It could lead to spending more on Amazon

Prime members spend much more on Amazon. The average American spends $91.75 at Amazon per month, according to a survey by Upgraded Points. Prime members spend an average of $110 per month, compared to just $38 by non-members.

This isn’t necessarily a bad thing. When you’re paying for Amazon Prime, it makes sense to do as much of your online shopping as possible on Amazon. You can take advantage of free shipping and fast delivery times.

But fast and free shipping also makes impulse shopping much easier. When you need to pay $4.95 for shipping and wait several days to get your order, you might think harder about whether you really need it. When you can get it delivered for free, and Amazon even says you could have it today if you buy within 30 minutes, it’s more tempting to just buy it.

2. Some Amazon services still cost extra

You don’t get access to all Amazon’s services with a Prime membership. Some of them have their own separate memberships that you can buy with or without being a Prime member.

For example, if you like audiobooks, you may be interested in an Audible membership. There are a few options, with prices starting at $7.95 per month for unlimited listening to the Audible Plus catalog. If you want to sign up for Kindle Unlimited, that’s $11.99 per month.

Amazon Prime doesn’t get you a discount on either of those memberships, and they can make your monthly Amazon bill much more expensive. For those memberships in particular, consider getting a library card instead. Many libraries offer large ebook and audiobook catalogs that you can access online. I’ve saved thousands of dollars on ebooks and audiobooks thanks to my library card.

3. It’s less useful for members outside major cities

Amazon Prime is most useful if you live in a big city. Some of its services are only available in major metropolitan areas. For example, Amazon offers same-day grocery deliveries through Amazon Fresh. It’s a benefit that I loved using while I lived in Los Angeles. But it’s not available in most of the country yet.

Same-day delivery is another example. It’s available in more than 90 cities. While many Prime members can take advantage of this benefit, you might not if you live in a mid-sized city or a rural area. A Prime membership can still be worth it in that situation. Just make sure you won’t be missing out on any benefits you consider must-haves.

With all its benefits, Amazon Prime can easily pay for itself. I’ve been a member for over a decade at this point, and I love the convenience of it. Still, it helps to know about the good and the bad before you sign up.

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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.Citigroup is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.

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