Secure your financial future before the big 6-0 hits! Monkey Business Images / Shutterstock.com
Advertising Disclosure: When you buy something by clicking links on our site, we may earn a small commission, but it never affects the products or services we recommend. Turning 60 is a major milestone. But before you hit the big 6-0, there are some key financial goals you’ll want to strive for. Whether retirement is on the horizon or still a distant dream, ticking off these financial bucket…
There are right ways and wrong ways to save money on your car insurance. Learn what to do — and what not to do. [[{“value”:”
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Of course, nobody wants to pay more for car insurance than they need to. However, like many different areas of personal finance, there are right ways to save money on car insurance, and some mistakes that should be avoided.
With that in mind, here are some of the car insurance mistakes that could end up costing you far more than you could hope to save, as well as a good way to save money that is often overlooked.
One of the easiest ways to save money on your car insurance is to choose a higher deductible. According to Progressive, the typical cost difference between collision insurance with deductibles of $500 and $1,000 is about 28%.
While choosing a higher deductible can certainly be a good way to save money, that’s only true if you’re financially prepared for the additional risk. At a minimum, you should have enough in emergency savings to be able to cover your entire deductible if you must pay it.
It’s a bad idea to falsify insurance documents, but it happens too often with car insurance policies. As one example, if the application asks if you’ve received any traffic tickets and you omit one from your total to keep your insurance costs low, it can be a big problem. The same can be said if you’re asked how many miles you drive each year, whether you park in a garage or on the street, and other questions.
To be sure, claiming that you only drive 12,000 miles per year when the real number is closer to 20,000, or “forgetting” to mention a ticket can result in a lower insurance premium. But it also could result in cancellation of your policy if the inaccuracies are discovered, and it could also cause your insurer to deny a claim if you’re in an accident, leaving you on the hook financially.
One of the most common car insurance mistakes people make is obtaining a single insurance quote and buying coverage. Many drivers mistakenly believe that all insurers use essentially the same underwriting process, and therefore your premium won’t vary much between insurance companies.
Nothing could be further from the truth. Different auto insurance companies consider factors like your age, marital status, credit score, and driving record differently. And you shouldn’t just shop around once, buy a policy, and be done with it — it’s important to get a few auto insurance quotes every couple of years. According to J.D. Power, only about one-third of car insurance customers shop for quotes each year — but those who do shop around save more than $350 per year, on average.
Most states have a mandated level of coverage that all drivers need. For example, in my state (South Carolina), drivers must carry liability and uninsured motorist coverage with limits of $25,000 bodily injury per person, $50,000 bodily injury per accident, and $25,000 property damage per accident. If you have an auto loan, your lender will also typically require you to carry collision and comprehensive (collectively known as “full coverage”).
One key point all drivers should know is that the minimum coverage limits are almost never sufficient to actually protect you. For example, what happens if I get the minimum limit of $25,000 for property damage and I end up at fault in an accident that totals a $70,000 SUV? And, the cost difference between minimum coverage and coverage with realistic limits can be smaller than you think. As a personal example, I maintain limits of $100,000/$300,000/$100,000 for my liability insurance, which gives me peace of mind as I drive.
Of course, you’d rather pay less for auto insurance if you can. But there are right ways to save money, such as shopping around for coverage and using higher deductibles if you’re in a financial position to do so responsibly. There are also bad ways to save money, such as not buying enough coverage or lying on your insurance application. Avoiding the mistakes discussed here can help keep your costs low while also making sure you’re well-protected.
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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.Matthew Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool recommends Progressive. The Motley Fool has a disclosure policy.
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Thinking of selling your home this year? Read on to see why you may want to wait. [[{“value”:”
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In December, existing home sale prices were up 4.4% from a year prior, according to the National Association of Realtors. If you’ve been on the fence about selling your home, you may decide to do so now, while prices are still high and inventory is generally low. After all, when there’s less competition on the market, your chances of snagging a more favorable sale price are higher.
But while you may be eager to sell your home this year to take advantage of market conditions, that’s not necessarily the best bet. And you may want to hold off if these signs apply to you.
If you’ve been unhappy at work for quite some time, you may be in the process of plotting a career change. But until you make a firm decision, it could pay to sit tight and hang onto your current home.
Maybe you’ll be offered a job that sounds great but comes with a lower salary than expected. You may be willing to take a pay cut for a better opportunity. But if so, then it’s probably not the best time to move. A new home could mean added expenses your new paycheck can’t cover.
Even though home prices are generally up right now, if you want to get a decent offer on your home, you need to present it in the best possible light. But if your home clearly needs work and you don’t have the money to make repairs, then you’re probably better off waiting. Sometimes, even a simple cosmetic issue could spell the difference between getting your asking price versus having to settle for much less.
One thing you should know is that you may be able to borrow against the equity you have in your home to make repairs. But then, you’re looking at a loan you’ll have to pay off. And these days, interest rates on loans are high on the heels of the Federal Reserve’s interest rate hikes. So while the option to borrow might exist, it’s not necessarily the best time to do so.
Your credit score doesn’t matter in the context of selling your current home. Potential buyers aren’t going to run a credit check on you. But if you’ll need a mortgage to finance your next home, then poor credit could be a pretty big problem.
Mortgage lenders usually require a minimum credit score of 620 to qualify for a conventional home loan. If your score doesn’t meet that threshold, you may want to work on boosting it before selling your home and putting yourself in a position where you need a mortgage to buy a new one.
While your score might improve enough in 2024 to qualify for a home loan, that’s not something you can bank on. Boosting a credit score can take time, especially if you’re doing so by trying to establish a stronger payment history and paying down existing debts. So if you’re not currently in a position to get a mortgage, you may, unfortunately, be in the same boat by the end of the year.
You might think that now’s a great time to sell your home. It’s true that home prices are up, inventory is down, and mortgage rates are high. But while you might walk away with a nice price for your current home, you might end up struggling to find a new one that’s affordable. As such, if you realize that 2024 is not a great year to sell your home, it may be for the best.
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There are some significant differences between how the haves and have-nots manage their money. But it’s not always about personal choice. Learn more here. [[{“value”:”
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As anyone who’s ever struggled with money knows, the amount you have access to makes a huge difference in how you approach your finances. And, contrary to often-peddled criticisms of how people with fewer means manage their money, there are a lot of reasons beyond personal choices that differentiate their habits from the rich.
Here are three key differences between how the haves and have-nots use and approach money.
One key aspect here is the ability to use your funds in a way that is beneficial to your future finances. For those who are living paycheck to paycheck on an already trimmed-down budget, for example, the number of choices you have is significantly smaller than it is for rich folks. After all, if you’re struggling to put food on the table, it’s unlikely that you’ll allow yourself to consider saving for future emergencies that aren’t yet impacting you when those funds are already unavailable. The idea could even seem laughable because of how impossible it seems.
Conversely, if you have money to put into savings, and a significant amount of it, too, you can start thinking about protecting those assets because you have the means to do so and it’s the best option available to you.
There are knock-on effects to this lack of choices for lower-income people, too. For example, they may be losing out on the interest that could come with an emergency fund in a high-yield savings account. And, over time, any money they do stash away in a basic checking account (as might be the case since lower-income folks may need faster access to any savings they accumulate) could be losing value thanks to inflation and comparatively poor returns on those accounts.
A recent study from the Motley Fool Ascent found that millionaires are less concerned with credit card interest rates compared to the average American. Instead, they put more stock in travel and cash back cards, favoring those types of rewards. And it’s easy to understand why: When you reach the upper echelon of earnings, taking on debt isn’t necessarily a concern since you may already have the funds to pay off your balances. And, at certain levels, paying interest isn’t even a significant financial threat.
For example, let’s say a millionaire racks up $20,000 in credit card debt, with an 18% interest rate. If they make the minimum monthly payment, they’d pay $21,556 in interest alone over a 93-month period. That represents roughly 0.28% of their annual income, assuming $1 million in earnings. That’s less than a single percent of their earnings. But for someone making $30,000 pre-tax, that represents about 9.3% of their income. So it makes sense that low-income individuals might focus on saving money on high-interest debt instead of getting rewards.
For the wealthy, taking on debt doesn’t necessarily work the same way as it does for the rest of us. Or, at least, they are able to use it in a way that typically isn’t afforded to the less well-off. For example, let’s say a millionaire has $500,000 that they could use to purchase a house outright. They may still choose to take out a mortgage, and use that money to invest in another opportunity to make money, such as a new business. That means the return on that investment could eventually outpace the interest rate on their mortgage. In other words, they can use debt to make more money, and minimize their losses. This is a simplified example, but the principle applies.
For those who are not wealthy, however, debt can work less as a tool and more so as a financial safety net. For instance, someone who doesn’t have room in their budget to cover an unexpected $500 car repair, and needs that vehicle to get to work, might choose to charge that cost to a credit card, and simply pay the interest for as long as it takes to pay off that balance.
Having more money can be more difficult to manage because there is more of an element of choice. But for those who are living paycheck to paycheck, the lack of financial choices often necessitates a completely different approach to money management, even if that means giving up some opportunities. So it’s important to keep that in mind when considering how different classes of people approach their finances.
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The median checking account balance in the U.S. is $2,800. If those funds aren’t immediately needed, here are five better places to put them. [[{“value”:”
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When the Federal Reserve Board conducted its 2022 Survey of Consumer Finances (SCF), the median household checking account balance was $2,800. However, there’s nothing magical about the number $2,800. Say a person has $2,800 in their checking account but has $5,000 in bills due. That doesn’t paint such a rosy picture. But what if the same person has $10,000 in checking with $5,000 in bills due? That might seem better at first glance, but in reality, that’s not necessarily a great scenario either.
Keeping extra money in your checking account may feel good, but it’s not always the best financial decision. The reason is simple: Money kept in a standard checking account fails to keep up with inflation. In other words, it will be worth less next year than it’s worth this year. Here are five other spots where your extra funds are far more likely to benefit you.
If you’ve never put money in a high-yield savings account before, here’s what you need to know:
Like other deposit accounts, high-yield savings accounts are FDIC insured (at FDIC-member banks) or NCUA insured (at NCUA-member credit unions). That means if your bank or credit union goes belly up, your account will be insured for up to $250,000 per depositor, per bank or credit union, per category. In other words, your money is safe.You don’t have to open a high-yield savings account at your current bank or credit union. You can shop around to your heart’s content. As of this writing, some high-yield accounts are paying an annual percentage yield (APY) of more than 5%.It’s fast and easy to open a new account. Given the number of online banks (with fabulously low overhead), you don’t even have to leave home.
If you read many personal finance articles, you may think we harp on building emergency savings accounts. Spoiler alert: We do, but there’s a really good reason for it. An emergency savings account is like a dam you build up around your finances. It’s there to protect you when an unexpected storm (like illness or job loss) hits.
Imagine it’s the 4th of July. A neighbor is setting off bottle rockets, one lands on your roof, and a large portion of the roof burns. You have homeowners insurance (whew!), but your deductible is $2,000. Having an emergency account means being able to cover your deductible without going into debt. Otherwise, you may find yourself using a credit card to cover the deductible and paying interest on the debt until it’s paid in full.
In short, an emergency fund can save you money.
Ask anyone who refuses to carry high-interest debt from month to month. Chances are, they’ll tell you they’ve watched someone they care about struggle with debt, or they’ve struggled with it themselves. Rather than allow money to linger in checking, why not apply it to the kind of debt that slowly strangles your finances?
Here’s a quick illustration of what we mean.
You have a credit card with a $5,000 balance. The interest rate is 19%. Without fail, you make a monthly payment of $125 toward the balance. Still, it takes you five years (60 months) to pay the credit card off in full, and you end up paying $2,771 in interest. That’s $2,771 you could have used to replenish your emergency fund or to pay off another high-interest debt.You use the extra money in your checking account to pay off the high-interest debt. Now, instead of paying interest, you have an extra $125 per month to build up an account that pays you interest.
Most banks offer MMAs, a cool interest-bearing account that may best be described as a combination of checking, savings, and investment accounts. Here’s a quick rundown of MMA highlights:
Pays interest (with some banks currently offering an APY over 5%)Most come with checks and debit cards, making withdrawals easyAs long as the MMA is an FDIC or NCUA member, funds are insured up to $250,000.You can make unlimited monthly deposits to an MMA, although your financial institution may limit how many checks you can write against the account without paying a fee.
A certificate of deposit (CD) is also a great place to keep your money safe while watching it grow. A CD is like a savings account with a twist: Unlike with a savings account where you have more flexibility to withdraw your funds when needed, you generally promise to keep your money in the CD for a specific amount of time. In return, a bank or credit union promises to pay you a set amount of interest. Terms (the amount of time you promise to leave the money) vary — typically ranging from three months to five years. Interest rates also vary based on the term you choose. Like other deposit accounts, CDs offered by banks and credit unions are insured for up to $250,000.
The upside: Let’s say you put your money in a CD with a term of three years. That means the bank or credit union can’t lower the rate it pays you, even if interest rates tank during that time.
The downside: If emergency strikes and you need to withdraw your money before the term of your CD expires, you could get hit with an early withdrawal penalty.
Leaving a “buffer” of money in your checking account makes perfect sense when you’re trying to avoid overdraft fees. However, it makes little sense if you’re losing out on interest you could be earning by depositing a portion of it into another account and watching it grow.
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Going out less than you used to? You might be part of a new trend called the “Introvert Economy.” See what it means for your finances and your social life. [[{“value”:”
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The past few years of pandemic isolation and social distancing seem to have caused long-lasting effects on Americans’ social lives — and on the economy. According to recent data cited by Bloomberg, Americans are going out for dinner earlier in the evening (if they go out at all). Younger generations are drinking less alcohol, and less money is getting spent on alcohol at bars and restaurants. Americans are spending less time socializing and more time shopping online, watching TV, or playing video games.
Bloomberg columnist Allison Schrager calls this trend the “Introvert Economy.” Americans seem to have gotten accustomed to spending lots of time at home, shopping online, and watching streaming services. Have you noticed a decline in your urge to socialize? Are you going out less often than you used to? Are you spending less money at restaurants and more money on food delivery apps? If so, the Introvert Economy might be shaping your life.
Let’s look at what the “Introvert Economy” means for your personal finances — and how you can use this trend to save more money in 2024.
One downside of spending more time at home is that many people use the extra hours to shop online. And sometimes, they’re buying stuff that they can’t actually afford. A recent study from Intuit Credit Karma found that 27% of Americans are “doom spending” to cope with stress.
Just because you’re spending more time at home doesn’t mean that you’re automatically going to save more money. It’s easier than ever before to shop online, sign up for subscriptions, and have money go flying out of your bank account. Even if you’re not doom spending, even if you’re socializing to a healthy extent, every Economic Introvert should consider signing up for a budgeting app.
The best budgeting apps can show you where you’re spending the most money each month, and help you find ways to save. Maybe you can cut back on Introvert Economy splurges like takeout meals, delivery fees, or expensive clothes that you’re not going to wear to social events anytime soon.
One downside of the Introvert Economy — if you’re not careful — is that you can sometimes fall into habits of just staying home all the time and self-isolating, and go into “goblin mode.” Especially if you work from home and live alone, it’s easy to fall into a pattern where you stop showering, you stop exercising, you stop engaging with the world outside your four walls. (Glad this has never happened to anyone I know!)
Try to be mindful of how you’re spending your time. Even if you’re not socializing as often as you used to, try to create structure and routine for your days. Try to make conscious choices about how you spend your time and money. If you’re trying to save money by cooking more meals at home instead of going out for dinner, recognize that deliberate choice — and track your progress.
But if you’re unintentionally falling into self-isolating habits, if the money you save on restaurants is just getting spent online on stuff you don’t really need or want, if you’re spending so much time at home not because you “want to” but because you can’t think of any other ideas…then this can be bad for your personal finances and your personal wellness.
It doesn’t matter if you save thousands and thousands of dollars if you end up losing touch with loved ones and suffering harm to your mental health. Don’t let the Introvert Economy totally take over your life. No matter how introverted you are by disposition, you still need to see friends and loved ones. You still need to exercise and get out in the world.
Sometimes people get so focused on financial wellness and savings goals that they lose sight of the everyday fundamentals of what makes life worth living. Don’t be afraid to spend money on the things and experiences that improve your mental health and physical wellness. Splurge on a gym membership if it helps you stay active. Meet friends for a nice restaurant dinner if it helps you feel better-connected and more energized. Plan an affordable vacation so you have a new reason to get out of the house.
Bottom line: There’s nothing wrong with being an introvert. But the rise of the so-called “Introvert Economy” could be a troubling sign that too many Americans are self-isolating to an unhealthy extent. Instead of living your life entirely on screens and online shopping apps, look for ways to reconnect to the outside world. Even if you need to spend some money to get out of the house, investing in fun experiences and relationships can improve your overall wellness — and might even help your personal finances.
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When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has nearly tripled the market.*
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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 Intuit. The Motley Fool has a disclosure policy.
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