Get the inside scoop on 2024’s top cars, as handpicked by experts. Den Rozhnovsky / Shutterstock.com
If you plan to buy a new car in 2024, hundreds of options await. There are more than 260 models for 2024, according to Consumer Reports. But the publication says a handful of these cars are truly outstanding. Consumer Reports recently compiled its list of the top 10 new vehicles for this year. There were some ties this year, bringing the list of the best cars to 13. Rankings were based on…
Contributing to a tax-deferred account can lower your taxable income. Learn about three accounts that let you make 2023 contributions until April 15, 2024. [[{“value”:”
Image source: The Motley Fool/Upsplash
Tax Day is fast approaching. But if you’re shuddering at the thought of a big bill, there may still be a few things you can do to shield some of your money from the IRS.
Your deadline for many of the financial moves that could lower your taxable income in 2023 was Dec. 31. For example, it’s too late to fund a 401(k) for 2023 or purchase a new EV and apply the $7,500 credit to your 2023 taxes. But there are a few options for reducing your 2023 taxable income that you can do up until Tax Day, which is April 15, 2024.
If you fund a traditional IRA, you may be able to deduct your full contribution. The maximum contribution for 2023 is $6,500, or $7,500 if you’re 50 or older.
The rules for deducting traditional IRA contributions are a bit complicated. In a nutshell, you can deduct your full contribution if neither you nor your spouse is covered by a workplace retirement plan, regardless of your incomes. But if you or your spouse has a workplace retirement plan, income restrictions apply to the tax deduction.
Note that you can also fund a Roth IRA for 2023 up until Tax Day. But because Roth IRAs are always funded with after-tax dollars (growth and withdrawals are tax-free, though), you won’t get an immediate tax break on your contributions.
You can still max out your health savings account (HSA) up until Tax Day. The maximum 2023 contribution is $3,850 for self-only coverage or $7,750 for family coverage, plus an extra $1,000 if you’re 55 or older. Any employer contributions you receive count toward those limits, so if you have self-only coverage and your company kicked in $1,000, you can only save $2,850 for 2023.
To fund an HSA, you need to have a high-deductible health plan (HDHP). The best part about an HSA: Not only can you deduct your contributions, but your withdrawals are always tax-free as long as you use them for qualifying medical expenses.
If you’re self-employed or work as an independent contractor, even if it’s just as a side hustle, you can still contribute to a SEP IRA, which is an IRA designed specifically for self-employed people, small business owners, and freelancers.
You have until April 15, 2024, to fund a SEP IRA for 2023, or whenever your business’s taxes are due. If you file for a tax extension, you get even more time to make SEP IRA contributions. For example, if your business taxes are due April 15 and you receive an extension, you can fund your SEP IRA for the 2023 tax year until Oct. 15, 2024.
For 2023, you can contribute up to 25% of your self-employment earnings or $66,000 — whichever is less. You can fund your SEP IRA even if you’ve made the maximum contributions to a Roth or traditional IRA for the year.
All of the options above allow you to lower your taxable income, but they also require you to effectively lock away your money. Early withdrawals from a pre-tax retirement account will usually result in income taxes plus a 10% penalty.
The penalties for non-medical withdrawals from an HSA are even steeper: You’ll pay income taxes, plus a 20% penalty on withdrawal on funds that aren’t used for a qualifying medical expense if you’re under 65.
In short, any of these options for reducing your tax bill require you to have money that you can afford to part with for now. If you’re worried that you can’t afford your taxes, you should still file a tax return and pay what you can. The IRS has several options for low-cost payment plans that can help get you on track.
But be sure to file your return by April 15 or request an extension. The failure-to-file penalty is much more expensive than the failure-to-pay fee.
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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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Savings accounts are simple, but you have other options for interest-earning bank accounts. Learn when to lean on CDs and money market accounts. [[{“value”:”
Image source: Getty Images
The chances are good that you’ve got some experience with savings accounts — and you might even have one of your own. The rates for online high-yield savings accounts are particularly noteworthy, and some of us have taken notice. According to savings account research from The Ascent, 31% of Americans have a savings account paying at least 4% APY.
The reason for higher APYs (annual percentage yields) is that we’re currently in a high-interest-rate environment. This is due to the Federal Reserve’s response to soaring inflation in 2021 and 2022 — it raised the federal funds rate 11 times in an attempt to bring inflation back down to earth.
These efforts seem to have succeeded, as the most recent report from the Consumer Price Index noted that we were facing an inflation rate of 3.1% year over year — quite the drop from the record 9.1% in June 2022.
A lot of experts are predicting a drop in the federal funds rate this year, and when it happens, banks will likely reduce rates on deposit accounts, too. So now is a good time to consider CDs and MMAs, alongside savings accounts — especially if you want to diversify your savings. Let’s take a closer look at both.
As of this writing, you can find shorter-term (a year or less) certificates of deposit (CDs) with APYs over 5%. This is comparable to the best savings account rates available, but unlike a savings account, a CD comes with the chance to actually lock that rate in for the duration of the CD’s term. Your savings account’s rate can go up or down at any time — I’ve been watching mine tick up since 2022, which is always a cause for celebration. A higher APY means a higher return on my saved cash.
But if rates do indeed fall this year, I expect my savings APY to follow suit. If you open a 1-year CD today at a rate of 5%, you will get to keep that rate for the entire year, regardless of what rates at large do. This can be a boon if you have a chunk of money with a defined purpose and a set timeline not too far in the future (perhaps cash you’ve saved for a wedding or a home purchase in 2025). Just note that you could pay a hefty penalty if you have to break your CD term early.
Money market accounts (MMAs) are also seeing positive rate effects from that higher federal funds rate. Some of our favorite MMAs have rates over 5% too, and you might be wondering why you’d need one, especially if you already have a savings account and perhaps a CD or two. MMAs offer a perk that neither of these accounts have — easier access.
While you may still be limited in the number of withdrawals you can make from a money market account every month (thanks to old rules under Regulation D that some banks still enforce), you can often make them much more easily than you could with a savings account. A lot of savings accounts don’t come with an ATM or debit card, and you must access the money in them via a linked checking account.
But MMAs do often come with debit cards or even checks, eliminating a step if you need to take money out. This is why an MMA might even be a great place for your emergency fund — if you’ve got a surprise bill to pay and no time to wait, you can access your cash directly.
Having the ability to lock in a high APY or directly access your money with ease are great benefits. If they sound appealing to you, consider using CDs and MMAs to diversify your saved cash, especially while rates are still this high.
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 can 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.The Motley Fool has a disclosure policy.
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I’ve traveled to several continents without checking luggage. Here’s how I do it. Iurii Stepanov / Shutterstock.com
I stopped checking bags long before airlines started insulting their passengers by charging for it. The first time I went to Europe, more than 40 years ago, I took only a backpack that fit in the overhead. I’ve taken something similar to South America, Australia, New Zealand, Russia and back to Europe multiple times. Here’s why I’ve avoided checked bags for decades: I’m not saying I never…
People often go back and forth on getting a Costco membership. Learn about a few of the Costco perks that an ex-member misses the most. [[{“value”:”
Image source: Getty Images
Costco used to be my favorite place to get groceries, but I eventually stopped shopping there. I was only shopping for myself, and it always took longer than I’d like. And now I live outside the United States, without a Costco in sight.
If you’re trying to figure out whether you should buy a Costco membership, you’re probably going over the pros and cons. There are a few Costco perks I really miss that could help you make your decision.
Costco has a well-deserved reputation for low prices. It may not have the lowest prices on everything, but just about everything is competitively priced. You rarely buy something at Costco and feel like you got ripped off.
There are plenty of stores with low prices. The impressive thing about Costco is that it also has high-quality products. Many members drive 30 minutes or more to Costco instead of going to local grocery stores, because it offers much better meat, fruits, and vegetables.
I’ve moved around a lot as an adult. One of the most challenging parts of living somewhere new is finding a place to shop for groceries. You’re not sure which stores are the premium brands that will drain your bank account, or if the stores with cheap prices have lousy products.
Each time I’ve moved, I’ve found myself wishing there was a Costco nearby. It’s a place where I could be sure, just from the name, that I’m getting good deals on quality food.
Buying in bulk can be a smart move for your finances. If you know you’re going to use everything you buy, you can get a lower price by stocking up.
There’s arguably no store better for stocking up than Costco. From household staples to food, it sells many of its most popular items in bulk. This is great if you’re shopping for your family, or if you just go through a lot of any particular product.
As I’ve learned, not every supermarket makes it easy to buy in bulk. I was recently shopping for salmon at a local grocery store. Now, I love salmon and eat it often. This store had no option to buy in bulk — the best price was on these tiny packages that didn’t even weigh half a pound. Once again, while having to grab five of these, I found myself wishing I was at Costco.
The size of Costco’s warehouses puts most stores to shame. The average grocery store is 38,000 square feet. The average Costco warehouse is 146,000.
This has its drawbacks. Shopping trips to Costco tend to take longer. No one in history has said “I’m just going to run in and grab a few things” before a Costco visit. And if they did, they were lying.
But personally, I’d always take that over a cramped supermarket. I’ve been to many stores where the aisles are so narrow, you can’t even turn your cart around. It’s annoying to constantly navigate around other people in tight spaces. The fact that Costco’s warehouses have so much space makes for a more enjoyable shopping experience.
Costco is an excellent brand, and it can be a good place to shop for just about anyone. Even though it’s ideal for families, it can work well for single shoppers, too. If you’re looking for quality products at low prices, a store where you can buy in bulk, or a place to shop that doesn’t feel so cramped, consider getting a Costco membership.
Our experts carefully review the most popular offers and select those that are worthy of a spot in your wallet. These standout cards come with fantastic benefits like generous sign-up bonuses, long 0% intro APR periods, and robust rewards.
Click here to learn more about our recommended credit cards
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.Lyle Daly 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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Your credit score is a factor that’s considered when you borrow against your home. Here’s why. [[{“value”:”
Image source: Getty Images
Whenever you apply for a loan or credit card, you’ll have a hard inquiry done on your credit report. A lender will also check your credit score to make sure it’s not taking on too much risk in loaning you money.
If you have a higher credit score, it sends the message that you’re someone who’s timely with bills and doesn’t tend to fall delinquent on debts. A lower credit score, on the other hand, sends the message that you may not have the strongest history of paying on time or managing your debt well.
Lenders need to be especially careful with borrower credit scores when giving out unsecured loans, like personal loans. These loans aren’t tied to a specific asset, so if you default as a borrower, your lender may be out of luck.
Home equity loans, on the other hand, are secured. If you fail to repay a home equity loan, your lender could eventually force the sale of your home to get its money back.
Because of this, you might assume that your credit score doesn’t matter when you’re taking out a home equity loan. But here’s why you’re wrong.
It’s true that in an extreme situation, a lender could force your home into foreclosure to recoup an unpaid home equity loan balance. But that could be a complicated, costly, and time-consuming endeavor.
Remember, lenders make money by collecting interest. They’re not in the business of selling homes and figuring out what to do with the proceeds. So when a lender writes you a home equity loan, it still wants to make sure you’re likely to pay it back. And while it can take some comfort in the fact that the loan is backed by the equity you have in your home, ultimately, it wants you to write out a monthly check.
That’s why your credit score does matter when you’re borrowing against your home. Even if you have plenty of equity, if your credit score is truly poor, it could stop you from getting approved for a loan.
Although you might need decent credit to qualify to borrow against your home, you don’t necessarily need excellent credit. U.S. Bank, for example, says that to qualify for a home equity loan, you need a minimum credit score of 660. That’s an OK credit score, but it’s not outstanding.
This doesn’t mean your credit score won’t impact your loan’s interest rate. The higher your score is, the more competitive an interest rate you’re likely to snag. The point, however, is that while your credit score does matter when applying for a home equity loan, you don’t necessarily need a top credit score to qualify.
That said, if you’re interested in paying less for a home equity loan, then it makes sense to try to boost your credit score before you apply. If you have time, work on paying incoming bills promptly to boost your payment history. You can also try paying off some credit card balances, which might help if your current credit utilization is high.
Finally, check your credit report for errors. Perhaps a simple piece of incorrect information is dragging your credit score down. Getting it corrected could give your score a boost, leading to a more affordable home equity loan.
Our experts carefully review the most popular offers and select those that are worthy of a spot in your wallet. These standout cards come with fantastic benefits like generous sign-up bonuses, long 0% intro APR periods, and robust rewards.
Click here to learn more about our recommended credit cards
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 U.S. Bancorp. The Motley Fool has a disclosure policy.
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