Money Management

Bitcoin just pushed above $57,000 on the back of the green light for spot Bitcoin ETFs and halving hopes. Find out what the top cryptocurrency’s recent rally means for investors. [[{“value”:”

The rollercoaster ride that is crypto investing is back in the headlines. Bitcoin (BTC) just surged to over $57,000, taking it to levels we haven’t seen since the end of 2021. Some experts believe this is just the start. Indeed, ARK Invest CEO Cathie Wood recently told CNBC she thinks Bitcoin could reach $1.5 million by 2030.

Is Bitcoin heading for a new all-time high?

Bitcoin is certainly having a moment. The recent SEC approval of a spot Bitcoin ETF has sparked an influx of institutional investment. Plus, there’s speculation that Bitcoin’s upcoming halving event will push its price upwards. It has done so in the past.

Speaking of the past, let’s step back to Bitcoin’s last high back in November 2021. Bitcoin peaked at almost $67,000 (per CoinMarketCap). At that point, the total crypto market had grown from less than $250 billion to just shy of $3 trillion in a matter of years.

It felt like everybody — from grandparents to influencers — was talking about cryptocurrency. NFTs were all the rage. U.S. consumers were flush with stimulus cash and more willing to take risks. The bulls told us the sky was the limit.

A year later, Bitcoin had fallen by over 75%. Popular cryptocurrency exchange FTX collapsed, sending shockwaves through the whole industry. Investor confidence was sorely shaken. People wondered whether crypto would ever recover.

Since then, Bitcoin has slowly erased its losses. Despite recession warnings, global upheavals, and economic uncertainty, the lead cryptocurrency has posted serious gains. In this context, there’s a good chance that Bitcoin might regain its glory days.

On top of which, we’re not in the grip of the same crypto frenzy as before. This fuels a hope that this is not another speculative bubble. Even so, the question isn’t whether Bitcoin is heading for a new high. The real question is whether it can hold its current levels and build on them.

The price is soaring. But what about fundamentals?

If you’re a buy-and-hold investor, fundamentals and long-term potential are what matter. The difficulty here is that cryptocurrency remains a highly volatile and risky asset. It still faces significant challenges if it’s to achieve its full potential.

Here are some things crypto investors should consider.

1. Do you understand the regulatory situation?

There are two sides to the regulatory coin. On the one side, we’ve seen the consequences of the limited regulation in the current market. FTX was able to siphon off client funds and perpetrate large-scale fraud. Chainalysis data shows over $20 billion in illicit crypto transactions in 2023, with money being used for fraud, ransomware, scams, cyber crimes, and other illicit activities.

On the flip side, if and when governments introduce stricter regulatory frameworks for crypto, it will almost certainly have an immediate impact on prices. In the long run, stronger regulation could build investor confidence, depending on what shape the rules take.

Meanwhile, the SEC is still pursuing cases against several top crypto exchanges. At the heart of those cases is an argument that many cryptocurrencies are unregistered securities. If the SEC wins in court, this could have serious implications for the whole industry. As an investor, these are all issues to be aware of.

2. Where will you store your crypto?

Cryptocurrency investing is not like buying stocks or keeping money in a savings account. If you leave your cryptocurrency on the platform where you bought it, those assets could be at risk if your exchange or crypto broker fails or is hacked. One way to guard against this risk is to buy into a spot Bitcoin ETF through a stock broker. Another is to store your digital assets in a crypto wallet you control.

3. What do you see as Bitcoin’s utility?

A lot of people who bought crypto in 2020 and 2021 did so because they were scared of missing out on the next big thing. That’s understandable, especially given the stories of soaring prices and people becoming Bitcoin millionaires. But sadly, fear isn’t a great basis for investments. Instead, try to base investment decisions on a solid understanding of what you are buying.

In this case, that means knowing what blockchain technology is and what people might use Bitcoin for. For example, Jack Dorsey believes Bitcoin could be the native currency of the internet. ARK Invest argues it could take a chunk of the global remittance market, play a role as digital gold, and work as a currency in emerging markets.

If you’re thinking about buying or selling crypto, do your own research and think about whether these theories hold water.

4. Are you prepared to lose the money you invest?

So far, Bitcoin has proven resilient in the face of significant upheavals. But as we’ve touched on here, it is early days. Plus, an investment that drops by 75% in a year will not suit everybody — even though it bounced back. If you invest money in crypto, know that there is a chance that you will lose it all.

Key takeaway

It’s heartening to see Bitcoin erase some of the losses of recent years. However, don’t allow its recent rally to blind you to the challenges ahead. Even if Bitcoin hits a new all-time high, it will still be a risky, volatile investment. If you want to invest in crypto, make sure that crypto only makes up a small portion of your total portfolio.

Our picks for 2024’s best credit cards

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 sign-up bonuses worth $200 or more, 0% intro APR for up to 21 months, and cash back rates up to 5%.

Click here to see our top 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.Emma Newbery has positions in Bitcoin, Cardano, Polygon, and Solana. The Motley Fool has positions in and recommends Bitcoin, Cardano, Polygon, and Solana. The Motley Fool has a disclosure policy.

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Earning a lot doesn’t mean you’re immune to credit card debt. But here’s how to avoid carrying a balance no matter how much you earn. [[{“value”:”

When we think about consumers with credit card debt, we may be inclined to imagine lower or moderate earners who rely on the ability to charge expenses in the absence of having the money on hand. But it may surprise you to learn that 24% of wealthy households racked up debt in 2023, according to a survey by Edelman Financial Engines.

Of course, credit card debt is problematic no matter your income, since it has the potential to cost you a lot of money in interest. It can also cause damage to your credit score if you rack up too much of it. So it pays to take these steps to avoid credit card debt going forward.

1. Check your balances weekly

It doesn’t matter whether you earn $150,000 a year or $35,000. If you don’t track your credit card spending, you risk ending up with a balance you can’t pay off in full.

So a good bet is to check your credit cards weekly rather than wait until the end of the month. This way, if you see by the mid-month point, for example, that you’ve already spent more than expected, you’ll know to cut back.

2. Keep your larger expenses affordable

You might eventually end up with credit card debt because you keep charging things like groceries or gas and don’t have enough money to pay your bills in full. But in reality, your weekly food bill or fill-up probably isn’t what’s causing you to land in debt. Rather, it’s most likely that your larger expenses are too costly given your paycheck.

Let’s say your housing costs are eating up 40% of your pay. That’s well beyond the 30% threshold that’s generally recommended. If you’re spending more than 30% of your income on rent, for example, consider moving to a new rental if you can do so affordably when your lease comes up for renewal. It could help you avoid ongoing debt because you’ll be freeing up more money for smaller but necessary expenses, like food.

3. When all else fails, throw your credit cards away

Some people just can’t break the habit of impulse spending. If you’ve tried to cut back on it or eliminate it numerous times and have failed, it may be time to stop using credit cards altogether — either that, or keep one credit card with a pretty low spending limit on hand for emergencies only.

It’s not like your risk of overspending is zero if you don’t have credit cards. But you may be less likely to overspend if you don’t actually give yourself access to credit.

It’s unfortunate that even wealthier folks are adding to their credit card debt. But breaking that habit could do a world of good for your finances, whether you’re wealthy or not.

And if you’re already in debt, try to come up with a payoff plan that has you free of it as quickly as possible. That could involve a combination of consolidating your credit card balances into a lower-cost personal loan and taking on a side hustle temporarily to free up the cash to make that loan balance disappear once and for all.

Our picks for 2024’s best credit cards

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 sign-up bonuses worth $200 or more, 0% intro APR for up to 21 months, and cash back rates up to 5%.

Click here to see our top 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.The Motley Fool has a disclosure policy.

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Carrying leftover debt from the holidays on multiple credit cards? Read on to see why a personal loan could make sense for consolidation. [[{“value”:”

The holidays are a popular time to rack up debt. And so if you’re juggling credit card balances from holiday purchases made in late 2023, you’re no doubt in good company.

Personal finance company Achieve found that 50% of U.S. consumers expected to take on debt to pay for their holiday purchases last year. But the longer that debt lingers, the more stressful and costly it has the potential to be.

It could pay to consider consolidating your various credit card balances into a personal loan. Here are a few ways you might benefit.

1. You’ll only have one monthly payment to make

If you owe money on four or five different credit cards right now, well, that’s four or five monthly payments you’ll need to make. Having multiple payments could increase your chances of forgetting at least one and having your credit score get dinged accordingly.

With a personal loan, you’re making a single payment each month. You can set a reminder on your calendar so you don’t miss your payment’s due date. You may even be able to set up an automatic payment so your loan is taken care of without you having to do anything.

2. Your interest rate will be fixed

When you carry balances on credit cards, there’s the potential for your various interest rates to rise. That could make it much harder to fit your payments into your budget.

With a personal loan, you get a fixed interest rate put in place at the time you sign your loan. As such, the monthly payment you start out with is the same monthly payment you’ll owe until your loan is paid off in full.

3. Your interest rate might drop substantially

The average credit card interest rate as of this writing is 27.91%, according to Forbes Advisor. Now, the interest rate you get on a personal loan will hinge heavily on your credit score. And the higher that number is, the more favorable your interest rate is likely to be.

But all told, you may be looking at a significantly lower rate on a personal loan than what even your least expensive credit card is charging you today. So consolidating into a personal loan could save you a bundle of money.

Make sure to shop around

There’s no need to juggle multiple credit card balances when you could instead make your life easier by consolidating those debts into a single personal loan. But don’t just rush to take the first loan offer you get. Instead, shop around so you can compare rates across different lenders.

Also, if your credit score isn’t so great, before you apply for a personal loan, at the very least, check your credit report and see if you spot any errors. Correcting a mistake that paints you in a bad light (such as an erroneously listed delinquent debt) could result in a fairly quick credit score boost. And from there, you may find it much easier to snag a good interest rate on a personal loan.

Our picks for 2024’s best credit cards

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 sign-up bonuses worth $200 or more, 0% intro APR for up to 21 months, and cash back rates up to 5%.

Click here to see our top 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.The Motley Fool has a disclosure policy.

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Springtime can see an increase in flooding. Here’s why homeowners should think about investing in flood insurance now. [[{“value”:”

Floods aren’t usually what comes to mind first when thinking about the worst natural disasters, but underestimating them is dangerous. They’re the most common natural disaster in the world, and the average home has a 26% chance of suffering flood damage in 30 years compared to just a 9% risk of fire damage.

Many think their homeowners insurance has them covered, but the truth is a real gut punch to the wallet. To be truly protected, separate flood insurance is a must. Here are three reasons why.

1. Floods are some of the most common — and expensive — natural disasters

Floods are some of the most expensive natural disasters. Just one inch of water in a 2,500-square-foot, two-story home causes an estimated $72,162 in damages, according to the Federal Emergency Management Agency (FEMA). Four feet of water in a home can amount to six figures in damages.

2. Traditional homeowners insurance doesn’t cover flood damage

It’s largely due to these high costs that homeowners insurance companies stopped covering flood damages. Paying out too many of these claims could compromise the company’s financial security, leaving them unable to pay for other covered disasters.

3. Some mortgage lenders require it

Mortgage lenders in areas at high risk for flooding may require their homeowners to have a flood insurance policy to get approved. This protects their investment so they don’t lose a bunch of money if a flood damages the property.

How to buy flood insurance

Flood insurance is available through the National Flood Insurance Program (NFIP). This isn’t the sort of policy homeowners can buy online, though. They’ll have to talk to an insurance agent who can help them get the coverage they need. Cost varies significantly depending on the home’s location. Low-lying and coastal areas typically pay much more than inland homes on higher ground.

The average flood insurance policy costs $1,808 per year, and there are deductibles as well. It can be tough for some homeowners to squeeze into their budgets, but it’s still much more affordable than paying for flood damages out of pocket.

A flood insurance policy includes up to $250,000 of coverage for the home itself, including the foundation, electrical and plumbing systems, and finishings. It also includes $100,000 to cover personal belongings damaged by flood waters.

Those interested in purchasing a flood insurance policy shouldn’t wait to do so. There’s typically a 30-day waiting period before the policy goes into effect. Spring is just around the corner and that brings a lot of snowmelt and rainstorms that could easily spill over into flooding. Set aside a few minutes to investigate flood insurance policies now to spare yourself some major potential stress later.

Our picks for 2024’s best credit cards

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 sign-up bonuses worth $200 or more, 0% intro APR for up to 21 months, and cash back rates up to 5%.

Click here to see our top 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.The Motley Fool has a disclosure policy.

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Deductions help you exempt income from taxes. Read on to learn about some of the ones you may be eligible to claim. [[{“value”:”

At this point, a lot of people are starting to get serious about filing their 2023 taxes. And when doing yours, you may be eager to claim all of the tax deductions you’re entitled to.

But first, let’s do a quick refresher on tax deductions, since they’re often confused with tax credits. A tax credit is a dollar-for-dollar reduction of your tax liability. This means that a $1,000 tax credit is worth the same amount of money to anyone filing a tax return.

A tax deduction, on the other hand, serves the purpose of exempting some of your income from taxes. But your related savings depend on your individual tax bracket.

So let’s say you’re entitled to a $1,000 tax deduction and fall into the 22% tax bracket. Your deduction will be worth $220 in tax savings. If you’re in the 35% tax bracket, that same deduction will be worth $350.

With that out of the way, here are some valuable deductions you may be entitled to claim this year.

1. The mortgage interest deduction

Your mortgage payments themselves are not tax-deductible. Rather, it’s the interest on your mortgage that you’re able to deduct if — and this is a big if — you itemize deductions on your tax return. Actually, most of the items on this list are off-limits if you claim the standard deduction on your taxes.

You can deduct interest on your first $750,000 of mortgage debt ($375,000 if married filing separately) if you signed your home loan on or after Dec. 16, 2017. Otherwise, you can deduct interest on your first $1 million of mortgage debt ($500,000 if married filing separately) if your loan was put in place before that date.

2. The SALT deduction

The SALT, or state and local tax, deduction has a limit of $10,000, and it encompasses state income tax and property taxes. If you itemize on your tax return, you can claim this deduction, but keep in mind that the $10,000 limit includes both income and property tax.

In other words, let’s say your state income tax bill in 2023 was $5,200, and you also paid $6,000 in property taxes. You’re limited to a total of $10,000 between the two.

3. The medical expense deduction

Racked up a lot of medical bills in 2023? If you’re itemizing on your tax return, you can deduct medical expenses exceeding 7.5% of your adjusted gross income (AGI).

Here’s how that might work. If your 2023 AGI was $60,000, then medical expenses beyond your first $4,500 in outlays are deductible (since $4,500 is 7.5% of $60,000). So if you incurred $5,000 in medical expenses in 2023, only your last $500 of that total is deductible. The first 7.5% is a wash, so to speak.

4. The educator expense deduction

Teachers commonly dip into their own pockets to purchase classroom materials and supplies. As an educator, you’re eligible to deduct up to $300 in such expenses on your 2023 tax return. If you’re married to a fellow educator, you can each claim up to $300 for a maximum combined deduction of $600.

What’s unique about the educator expense deduction is that normally, the ability to claim deductions in the first place hinges on itemizing on your tax return. But this is one expense you can claim even if you don’t itemize.

5. Charitable deductions

Gave money to charity in 2023? If you kept records of those donations and you itemize on your tax return, you can take a deduction for contributions to qualified charities.

And it’s not just monetary donations that are eligible for a deduction. If you donated goods, you can claim a deduction for their fair market value — meaning, their worth at the time of your donation, as opposed to their value when you first purchased them. To be clear, though, you’ll need records of the goods you donated, and they must have gone to a registered charity to take a deduction.

In most cases, the deduction for charitable cash contributions is limited to 60% of your AGI. But unless you’re in a position to be extremely generous with your money, this cap usually isn’t an issue. For context, on a $50,000 salary, you’d have to donate more than $30,000 of your income to exceed that limit.

Clearly, there are many different deductions available that have the potential to save you money. If you’re not sure which ones you’re eligible to claim, your best bet is to hire a tax professional. They’ll be able to tell you not only which deductions you’re entitled to, but also, the amounts you should be claiming.

Our picks for 2024’s best credit cards

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 sign-up bonuses worth $200 or more, 0% intro APR for up to 21 months, and cash back rates up to 5%.

Click here to see our top 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.The Motley Fool has a disclosure policy.

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Is the high price of car insurance causing you to cut back on groceries? Find a better way to save money on auto insurance premiums. [[{“value”:”

Car insurance just seems to keep getting more expensive. And now the total cost of car ownership is forcing many Americans to rethink their personal finances and find savings in other ways. A recent survey from car ownership app Jerry found that Americans are cutting back on other everyday spending to help cover the ever-rising costs of car insurance.

Let’s look at a few ways that Americans are trying to save money to keep up with car insurance bills — and how you can lower your premiums in 2024.

1. Spending less on groceries, restaurants, and clothes

According to Jerry’s State of the American Driver 2024 report, 58% of Americans are cutting back on spending on restaurant meals, clothing, and groceries because of the rising price of car insurance and other car ownership costs. A whopping 69% of millennials and 80% of Gen Zers are cutting back on these other expenses so they can keep paying for their cars.

There’s nothing wrong with being frugal in your everyday spending and getting the best deal on groceries. Many people love to save money by cooking at home. But if the cost of car insurance is holding you back from enjoying life or having fun evenings out with friends, it might be time to shop around for better insurance price quotes.

2. Cutting back on car insurance coverage

The Jerry survey also found that, in response to skyrocketing premiums, 22% of drivers bought less car insurance coverage than they wanted in 2023. Younger drivers were especially likely to cut back on coverage: 32% of millennials, and 39% of Gen Zers, chose to settle for less insurance protection than they would have preferred.

It’s true that raising your deductible or opting out of certain optional coverages can reduce your auto insurance premiums. But sometimes this can leave you exposed to extra costs if you get in a crash — like rental car cost and towing.

Even if you can’t afford comprehensive coverage and you’re comfortable taking the bus or paying for your own rental car in case your vehicle ends up at the body shop for a few weeks, think long and hard before you cancel your collision coverage. Choosing a liability-only insurance policy can leave you vulnerable to disastrous out-of-pocket costs. Unless your car is extremely old and worth very little money, it could still be worth insuring in case of a total loss.

3. Sharing driving data for safe driver discounts

With rising car insurance premiums hitting people’s budgets hard, more drivers are showing an interest in telematics car insurance, where people can sign up to share driving data with their insurance companies. The Jerry survey found that 54% of drivers would be willing to let their insurance companies monitor their driving electronically in exchange for the possibility of a lower premium.

If you’re open to sharing some of your driving data with your insurance company, you may want to try telematics insurance in 2024. The best insurance companies that offer these special safe driver discounts give you the chance to lower your premium by as much as 30%-40%.

Bottom line

The whole point of owning a car is that it’s supposed to give you freedom, choices, and put your life in motion. Your car is supposed to help you go shopping for stylish outfits, take weekend road trips, and meet your friends for dinner at a nice restaurant. Your car should not be so expensive that it forces you to give up all of those fun experiences!

If car ownership costs are impacting your finances and sapping the joy out of your life, it’s time to make some changes. But based on recent survey data, it looks as if many people are making a surprising mistake: they’re not searching for better auto insurance prices. The Jerry survey found that only 38% of drivers shopped around for car insurance. The Ascent’s recent research also shows that 52% of drivers compare auto insurance quotes “rarely” or “never.”

Don’t assume that you’re stuck with your current auto insurance company, and don’t feel like you have no options. Even if you’ve recently had a car accident, you might be surprised at how affordable a different insurer or policy might be. Making the effort to shop around for auto insurance price quotes could be an underrated way to save money on insurance.

Our picks for 2024’s best credit cards

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 sign-up bonuses worth $200 or more, 0% intro APR for up to 21 months, and cash back rates up to 5%.

Click here to see our top 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.The Motley Fool has a disclosure policy.

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