Money Management

Car insurance prices rose six times faster than inflation last year. Read on to find practical ways to bring your insurance costs back down. [[{“value”:”

You may have noticed something unpleasant in your latest car insurance renewal notice: Your insurance premiums have gone through the roof.

A slight increase is normal, but most Americans have sticker shock when their policies renew because car insurance premiums jumped 20.6% over the past year, according to Bureau of Labor Statistics data.

Your car insurance premiums can rise for many reasons, like if you got a few speeding tickets, but many Americans’ car insurance premiums are up through no fault of their own. Here’s why they’re increasing and what you can do to help bring them down.

Why car insurance premiums are on the rise

Consumers are well aware by now how expensive many of their everyday purchases have become, thanks to soaring inflation. But car insurance prices have risen six times faster than inflation over the past year.

The average car owner now pays $3,017 annually, or about $251 per month. Here are some of the key reasons why insurance rates have increased recently.

1. Vehicles are more expensive

One factor insurance companies use to decide how much to charge you is what type of car you drive and how expensive it is to replace after a major accident. The average new car transaction price is now $47,401, up from $37,851 four years ago.

2. Repair costs are up

There isn’t any one reason repair costs are higher, but parts and labor shortages during the pandemic made repairing vehicles more expensive. There’s also a shortage of mechanics.

The National Automobile Dealers Association says the number of automotive technicians graduating from training programs each year isn’t keeping up with demand.

3. Insurance companies are making up for losses

Insurance companies have sometimes suffered losses in other parts of their business, like home insurance. Significant losses from storms and other natural disasters have caused some insurance companies to either stop issuing policies in some states or increase their rates.

How to lower your car insurance premiums

I just received my annual car insurance renewal notice, and you can bet I’ll be looking at it much more closely this year. With car insurance rates so much higher than they used to be, I don’t feel comfortable paying it without first trying to find a better deal.

Americans probably won’t be able to return their car insurance premiums to where they were a few years ago. But you can control car insurance costs by making a few personal changes.

Here are a few suggestions for lowering your insurance premiums:

Choose the right car: If you’re buying a new car, contact your insurance company for a rate quote before purchasing it. More expensive cars, in general, will cost more to insure. Hybrids and electric vehicle insurance policies are usually pricier as well.Improve your credit score: A higher credit score often results in lower insurance premiums. One of the best ways to quickly improve your credit score is to pay down your debts so your debt-to-income ratio is lower.Look for discounts: Every insurance company offers discounts. Bundling your home and auto insurance is a popular way to get a lower rate on your insurance. You can also take a defensive driver course or contact your insurance company about its good driver discounts if you haven’t had any speeding tickets or accidents lately.Shop around: Sticking with the same insurance you’ve had for years is convenient. But if you do that too long, you may miss out on cheaper insurance options. Spending a little time comparing companies will help you know whether you already have the best deal.

There’s no end in sight for when car insurance rates will stop their rapid increases. Until they do, it’s probably a good idea to keep an eye out for any changes to the industry and occasionally revisit your policy to see if there’s anything you can do to lower your rates.

Our best car insurance companies for 2024

Ready to shop for car insurance? Whether you’re focused on price, claims handling, or customer service, we’ve researched insurers nationwide to provide our best-in-class picks for car insurance coverage. Read our free expert review today to get started.

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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Contributing to an IRA is one of the best ways to prepare for retirement. Keep reading to learn what you can expect if you inherit an IRA. [[{“value”:”

By mid-2022, it was estimated that 40% of American households had funds invested in an IRA. But what happens to those funds if the original owner should die while there’s still money in the account? How does a beneficiary handle the windfall? Here, we share key facts about IRAs and what you can expect if you inherit one.

It depends who you are

The rules associated with inherited IRAs differ, depending on whether you’re the spouse, a non-spouse beneficiary, or someone else. Here’s how you can tell the difference.

Spouse: This one is easy; it means you were married to the deceased.Non-spouse beneficiary: You were the minor child of the original account owner, chronically ill or disabled, or a person who was not more than 10 years younger than the original account owner when they died.Someone else: Let’s say you’re a parent, much younger sibling, cousin, or friend. The options from which you have to choose will be slightly different.

You’ll have a decision to make

Being a beneficiary is an honor, but also a big responsibility. The first thing you’ll have to do is decide what you’re going to do with the money. Here are your primary options.

Take the cash (available to all beneficiaries)

You can always cash the IRA out in one lump sum and either spend it or tuck it away in your bank account. While this option may seem tempting, keep in mind that cashing out an IRA will result in paying income taxes on the taxable portion of the IRA distribution and missing out on potential tax-deferred growth on the balance.

Open an Inherited IRA (available to all beneficiaries)

Whether you inherit a traditional IRA, Roth IRA, rollover IRA, SEP IRA, or SIMPLE IRA, you have the option of using the money to open an Inherited IRA. Once you make the initial investment, you can’t make additional contributions, but the funds remain tax deferred and continue to grow over time. One advantage of an Inherited IRA is that it allows you to make withdrawals immediately without penalty. While Inherited IRAs make a lot of sense, when (and how) you’re expected to liquidate the account depends on whether you’re a spouse, non-spouse beneficiary, or someone else.

Roll it into an existing IRA (available to spouse only)

If an IRA is left to you by your spouse, you have the option of rolling the funds into an existing IRA. If that’s your first instinct, consider the following:

The required minimum distribution (RMD) rules and withdrawal penalties are exactly as they would be if you’d always owned the asset.If your spouse failed to withdraw the RMD prior to death, any undistributed funds must be removed from the account.

Choose not to accept the inheritance (available to all beneficiaries)

You always have the option of saying, “No, thank you.” Let’s say your financial situation is solid – perhaps you have a fully stocked emergency fund, have been saving for decades in a brokerage account, and have your own retirement savings all set (or nearly set) to go — and you believe the next eligible beneficiary would benefit from the money left in the IRA more. If so, speak with an attorney about passing on the inheritance yourself. This option is actually a bit complicated, so if your desire is to ensure the next eligible beneficiary receives the inheritance, action must be taken within nine months of the original account owner’s death.

Losing someone you care about is hard, made even more difficult when you have dozens of decisions to make. Still, if someone cares enough about you to name you as beneficiary on their IRA, do yourself (and them) a favor by reviewing your options and making the most of what they leave behind.

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Make sure you’re not overpaying when you shop online. Coupons could help you save more. Here’s how to use coupon codes to get a better deal. [[{“value”:”

I like to shop online because it’s convenient, saves me time, and I can shop around for the best deals. Coupon codes have been an excellent way for me to maximize my savings when placing online orders. You’re likely spending more than necessary if you’re not using promo codes at checkout. Find out how virtual coupons could save you hundreds of dollars each year.

Promo codes can unlock additional discounts

Many people shop when their favorite retailers are having a sale. In addition to shopping during a sale, there are other ways to save money when shopping online. I like to use promo codes or virtual coupon codes.

Many retailers have coupon codes that customers can enter at checkout to save money on their orders. If you like getting a great deal, it’s worthwhile to see if you can find a coupon code.

Before placing an online order, I check to see whether there’s a coupon code I can use to get a discount. If a code is available, I enter it during the checkout process. This makes it easy for me to get what I need while keeping more money in the bank.

How to find online coupon codes for your favorite retailers

Here are three easy ways to find promo codes quickly:

You can use one of the best coupon apps like Rakuten.You can search online and visit websites like RetailMeNot.You can download a shopping browser extension like Honey.

These resources make it easy to find coupon codes quickly. Some retailers also advertise coupons on their websites or in their email newsletters. If you’re a brand loyalist, check to see if your favorite stores promote discount coupon codes that could help you save more.

Here’s how I maximize my savings when shopping online

Unsure how to use online coupon codes?

I’ll show you the steps I take when shopping online to maximize my savings.

1. I add the items I want to buy to my shopping cart

First, I add the items I want to buy to my shopping cart. I do this after making sure I’m getting a good deal. If I’m ordering one specific item, I might choose the retailer with the best price. If it feels like I’ll be overpaying and it’s not something I need right away, I might wait to order. If I can time my purchase to order when there’s a sale, I can spend less money overall.

2. I look for coupon codes

Before placing my order, I look for active promo codes that could make my purchase more affordable. I check my Rakuten browser extension or RetailMeNot to see if any codes are available. Sometimes coupon codes aren’t available, but I always take a minute or two to check.

3. I enter payment details and place my order

Once the coupon has been applied to my order, I enter my payment details. I’m also a big fan of earning credit card rewards, so I’m strategic about which credit card I use to pay for my order. Using one of the best cash back credit cards is a great way to earn valuable rewards. Once I enter my payment details, I review the details of my order and place it. It’s that easy!

Don’t ignore savings opportunities

Shopping online during a big sale is one way to keep more money in your bank account. But make sure you take advantage of additional ways to save money. Using virtual coupons at checkout could help you get a better deal on your next online purchase. Check out our free personal finance resources for additional tips to save more money.

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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.
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Costco is big on customer satisfaction and has a generous return policy. But what happens when you abuse that policy? Read on to find out. [[{“value”:”

Years back, I bought a swimsuit for my son from Costco that he never ended up wearing that summer. Knowing I had a growing kid on my hands, I was mad at myself initially for not making that return in a timely fashion — I’d basically thrown my money away since the swimsuit was unlikely to fit the following season. When I shared my financial blunder with my husband, his response was, “Are you kidding? It’s Costco. They’ll take it back.”

I remember being nervous when I approached customer service to initiate that return. (This was back when I wasn’t as experienced a Costco shopper as I am today.) Sure enough, Costco took the swimsuit back without a hassle. And the money I paid went back on my credit card.

Through the years, I’ve made my fair share of returns as a Costco member. But all told, the percentage of items I’ve taken back is relatively small compared to the total number of items I’ve purchased.

But what if your situation is different? What if you’re someone who makes a lot of Costco returns? Are you at risk of losing your membership because of that? The quick answer is, generally not. But you do need to be mindful of Costco’s policies.

A very fair approach to returns

I’ve shopped at a lot of stores, and I truly feel that no other retailer’s return policy is as generous as Costco’s. Basically, with limited exceptions, you can bring back any item to Costco at any time for a refund. It’s that simple.

Certain items have a 90-day return window, like electronics. And there are a handful of items you can’t return or get a refund for, like cigarettes, alcohol, gold bars, and live events. Interestingly enough, Shop Cards — Costco’s version of a gift card — are also non-refundable.

But otherwise, if there’s an item that doesn’t meet your expectations or needs, you can take it back, no questions asked. You can even return partially eaten food to Costco on the basis of simply not liking it. In that context, though, there are rules.

Not so long ago, I asked a customer service representative about food returns, and she said that Costco will absolutely take back anything where there’s a clear quality issue, such as if an item has spoiled ahead of its printed expiration date. She also told me that while Costco will accept eaten food on the basis of a customer not enjoying its taste, you have to make sure to return a reasonable portion of it.

For example, if you buy a Costco cake and bring it back 80% eaten, the store isn’t going to give you your money back. But if you bring it back with a small corner missing and explain that it really didn’t taste the way you thought it would, you’ll generally get your money back the first time. If you keep buying the same cake over and over and returning it on the basis of taste, Costco is probably going to say no.

Can you lose your Costco membership for making too many returns?

According to the customer service person I spoke to, there is such a thing as having your Costco membership revoked for abusing the store’s return policy. But you have to go to some pretty big extremes to have that happen.

For example, if you return 10 items a week, every week, or if you keep bringing back food items that are 70% eaten, Costco might flag your account. But for the typical consumer, losing a membership due to making returns isn’t something to worry about. Even if you return a few items per month, if it’s a small percentage of your total purchases and your returns are reasonable in nature — such as you’re bringing back unworn clothing with the tags still attached — then it’s really not an issue.

In fact, recently, the internet was in an uproar over a person who returned a couch to Costco two and a half years after buying it. If you’re worried about losing your Costco membership, pulling stunts like that aren’t recommended. But don’t sweat it if you end up returning that kitchen gadget that didn’t work the way you thought it would or the jacket that’s a bit too bulky on your spouse. These things really are a non-issue at Costco.

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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.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.

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The IRS has strict rules about taking a home office deduction. Find out if you qualify to deduct your office if you work from home. [[{“value”:”

Even with the pandemic mostly behind us, a lot of Americans are still working from home. A 2023 survey by the Pew Research Center found that about a third of U.S. workers who were able to do their jobs from home worked remotely full time.

If you worked remotely in 2023, you may be wondering if you can get a tax break for doing so. The IRS has strict rules for claiming a home office, though. Here’s what you need to know before filing your tax return.

Who can claim the home office deduction?

Prior to the Tax Cuts and Jobs Act of 2017, traditionally employed workers could deduct unreimbursed job expenses above 2% of their adjusted gross incomes. That included home offices. But the Tax Cuts and Jobs Act suspended business deductions for employees for tax years 2018 through 2025. That means if you’re a W-2 employee, you can’t deduct your home office on your federal tax return, though some states allow a deduction.

Under the current rules, you can only deduct your home office if you’re self-employed and use the space exclusively as a place of business. If you’re a W-2 employee but you also do freelance or independent contractor work on the side, you may be able to claim the home office deduction if you use part of your home exclusively for that work.

The space doesn’t necessarily need to be used for office space. For example, if there’s an area of your home that you use exclusively to meet with customers or store inventory, you’re allowed to deduct expenses related to that portion of your home.

The IRS is pretty strict about the word “exclusively” here. For example, if you have a room that you usually use as office space but it also serves as a guest bedroom, you’re not allowed to take the deduction.

There is an exception if you run a daycare from your home, though. The IRS doesn’t require exclusive use of a space used for daycare, but it does require that you calculate the percentage of time you use the space for such purposes.

What home expenses can you deduct?

You can deduct quite a few expenses pertaining to the portion of your home that’s used for business purposes — but only that portion. For example, if you have a 1,000-square-foot home and the space you use exclusively for business purposes is 100 square feet, you’ll most likely be able to deduct 10% of your overall home expenses for the following:

RentMortgage interestReal estate taxesUtilitiesHome insuranceMaintenance and repairsCasualty lossesDepreciation

Note that you can’t deduct expenses that are unrelated to the part of your home used for business. For example, the IRS specifically states that deducting lawn care costs or expenses related to painting a different part of your home isn’t allowed.

You don’t need to have a separate room that’s used only for business to take the tax deduction, but it needs to be a space that’s dedicated solely to business purposes. For instance, if you have a desk area in your living room that you only use for business, you could measure the square footage of that space. Then, you’d deduct expenses related to that portion of your home.

Does the IRS consider a home office suspicious?

One common concern about deducting home office space is that it might look suspicious to the IRS and could trigger an audit. But the IRS won’t automatically audit you just because you claimed a home office on your tax return.

One potential red flag for the IRS is if you deduct an especially large portion of your home as a place of business. Deducting 10% of your home space may not be suspicious, but you could raise eyebrows if you claim that 50% of your home is office space.

If you’re claiming a home office space on your tax return, be sure to keep careful records of any expenses you incur. Measure the space carefully to be sure that the percentage you’re claiming as business space is accurate. That way, if you get audited, you can show that your home office deduction was 100% legitimate.

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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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Systemic problems can lead to inflated medication costs in the U.S. Read on to learn more reasons why this may be happening to you. [[{“value”:”

If you’ve noticed that you’re paying quite a bit more this year for prescription medications, you’re not the only one: Among drugs that saw increases from January 2022 to January 2023, the average price increase was 15.2% — that translates to $590 per drug — according to the Office of the Assistant Secretary for Planning and Evaluation (ASPE).

It can be frustrating to see such rises, and it can make you question why something that clearly can be available for less money is now costing you more. To answer that, here are three reasons why your medication prices may be going up in 2024.

1. High development costs

Creating a new medication takes a lot of time, resources, and money. In fact, according to audit, consulting-, tax-, and advisory-service provider ​​Deloitte, it costs about $2 billion to bring a new drug to the market. So once that drug has been approved by the Food and Drug Administration (FDA), drug companies can choose to price the drug high to recoup costs.

Let’s take a look at one of the most expensive drugs on the market: cancer medications. From 2012 to 2017, the U.S. spent $6.8 billion more on such brand-name drugs, even as the costs in other parts of the world spent nearly $2 billion less.

And keep in mind that the drug company behind these brand-name medications can raise prices more than once per year. So it’s easy to see how these can balloon out of proportion the longer you’re on a medication, messing with your budget.

2. Drug monopolies

Opting for generics is often touted as the best way to save on medication prices, but what happens if your medication is only available from a single source? That drug monopoly could be why you’re paying so much for your medicine.

In fact, while multi-source drugs tend to see higher percentage increases in prices, single-source ones see the highest real-dollar increases. According to the ASPE, the average price change for single source drugs was 7.4% (or $958), while the average increase for multi-source drugs was 26% (amounting to just $69) from January of 2022 to the same time the next year.

There’s also a 20-year span after a new drug is developed during which the pharmaceutical company has a patent on that drug. So unless it agrees to produce a generic version, there is up to a two-decade time period during which it controls the costs. (Keep in mind that development alone doesn’t mean the company can start selling, so the time period can be reduced by years while the FDA is reviewing the drug.)

3. Systemic issues with drug pricing

There are several factors within how the government deals with and regulates (or rather, fails to regulate) drugs that impact how much you pay.

Lack of federal government regulation: There is no federal regulation for drug prices, outside of Medicaid. In other words, there aren’t any built-in protections for those who rely on medication to stay alive and maintain a good quality of life if they don’t qualify for Medicaid. For them, the costs can theoretically increase forever.Lobbying to keep the status quo: Although there have been pushes to create a way to regulate drug prices, lobbyists from the pharmaceutical industry can take steps to block them. They also tend to have much more money to put toward pushing their agenda than consumer-focused groups aimed at drug price regulations.Payoffs to delay generics: Drug companies are allowed to pay companies seeking to create generics to hold off on making those cheaper drugs. This is called a “pay for delay” deal.

There are so many factors working against drug affordability that it’s really no wonder the costs have risen so high. That’s why it’s important to do everything you can to save on medication costs. As a start, it’s best to use generics whenever possible, seek out preferred medications for your insurance plan, get a 90-day supply to reduce your copays, and shop around at pharmacies to find the best prices.

Our best car insurance companies for 2024

Ready to shop for car insurance? Whether you’re focused on price, claims handling, or customer service, we’ve researched insurers nationwide to provide our best-in-class picks for car insurance coverage. Read our free expert review today to get started.

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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