Money Management

Choosing one path means missing out on another. Read on to find out how one writer’s story of how one choice altered their future. 

My husband and I have never been good about sitting still. Once we finished college, we committed ourselves to following his career. I could work from just about anywhere, so the decision seemed logical. I can’t begin to count the benefits of opening ourselves up to new opportunities, people, and experiences. We’ve been to places and met people who have enriched our lives immeasurably. But we’ve also paid a price.

Our decision

Throughout the years, we’ve moved 24 times. Except for staying put long enough for our boys to get through middle school and high school in one city, we’ve always been game to go wherever he was asked. As you might imagine, this lifestyle led to us buying and selling many homes.

We’d move to a new state (or country), decide to put down roots for a while, and then move on when something “too good to pass up” came along.

As you might imagine, buying and selling homes so often means we rarely make enough money on a property to write home about. We simply did not stay in one house long enough. In fact, the only home that provided an impressive profit was the one we sold in the summer of 2022, and that was mostly due to COVID-19 and the subsequent housing shortage.

The trade-off

The decision to move so often means we’ve never stayed anywhere long enough to pay a mortgage off. We currently carry a mortgage and know we’ll be taking it into my husband’s retirement (I hope to never retire).

There is no one-size-fits-all solution when it comes to retirement. For example, I frequently hear experts say that people should pay their mortgages off before retirement or, at the very least, downsize. However, we’ve planned for a retirement with a mortgage payment, and part of that plan was paying off all other debt. As long as we have no other debt, our post-retirement budget indicates that we’ll be fine.

The point is this: We know that if we’d planted deep roots and refused to move, we would not be in this boat. Any of our first five or six homes would be paid off by now. And that would have been really (really) nice. But that wasn’t what we wanted. What we wanted was to experience new places and meet new people. We wanted to see more of the world.

Despite what experts say about bringing a mortgage with us into retirement, we have no regrets. How could we? We have friends scattered across the globe, and memories of places we never thought we would ever get to visit.

But every decision comes at a cost. We traded a potential mortgage-free life for one of travel and experiences. While we’re convinced that it was the right choice for us, it would not be right for everyone.

Your decisions

Earlier, I mentioned that we have a post-retirement budget. Even if you’re too young to ever imagine yourself growing old, a post-retirement budget can serve as a GPS, showing you where you are, informing your decisions, and giving you an idea of how much money you’ll need to reach your goals.

A post-retirement budget is simple to put together, consisting of only three parts:

How much income you expect to receive: This includes Social Security payments, pension payments, bonds, rental income, and any other source of income you’re guaranteed.How much you expect to spend each month: This includes housing, food, utilities, transportation, health care, travel, and any other post-retirement dreams you’ll need to pay for.How long you expect to live: Let’s face it; none of us knows how long we have. However, there are plenty of life expectancy calculators online to give us a rough idea.

Once you have a rough idea of how much money will be coming in and how much will be going out each month, you also have a rough idea of how much you’ll need to save and invest.

A single visit with a good financial advisor will let you know if you’re on the right track. If you’re nervous about meeting with a financial advisor because you’re afraid you don’t have enough money or are embarrassed about past financial mistakes, don’t let that stop you. Financial advisors have seen it all, and nothing about you or your financial situation will shock them.

Last year, Bloomberg reported that nearly 40% of all U.S. homeowners own their homes outright. I may not be among them, but that’s okay. I have a plan of my own, and so can you.

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Lifestyle creep can get in the way of your financial goals if you’re not careful. See what you can do if lifestyle creep has become a problem for you. 

As you progress in your career, you’ll probably see your income rise. Across the United States, the median income increases with age, peaking for those between 45 and 64.

When you earn more, it’s tempting to start spending more. If you used to fly economy, you might switch to business class. Instead of doing everyday chores yourself, such as cleaning and grocery shopping, you may decide to hire people to do them for you.

The tendency to spend more as you earn more is called lifestyle creep, or lifestyle inflation. And contrary to popular belief, it’s not necessarily a bad thing. You should use money to improve your quality of life. That’s one of the reasons to work hard and raise your income when possible.

But lifestyle creep can get out of control if you’re not careful. You could find yourself overspending, to the point where it keeps you from improving your finances. If lifestyle creep is negatively affecting your finances, here are a few easy ways to put a stop to it.

1. Figure out where you truly want to spend more

When you’re making more money, there’s nothing wrong with spending more in areas that are important to you. The mistake people often make is spending more everywhere, including on things that don’t really matter to them.

Think about what types of spending bring you the most happiness. That could be luxurious vacations, a nice car, or getting meals delivered to save yourself time, to name just a few options. Figure out what you love spending money on, because then you’ll also know which areas aren’t worth spending more.

For example, I love to travel. Even though I use travel credit cards to save where I can, it’s still one of my biggest yearly expenses, and an area where I’ve spent more over the years. On the other hand, I don’t own a car, even though I could afford one. I’ve avoided lifestyle creep in that area, because I know it’s not important to me.

2. Give yourself a waiting period before making purchases

It’s easy to get into the habit of making impulsive purchases, especially when your income has gone up. Something shiny catches your eye, like new shoes or a video game console. You know you can afford it, so you go ahead and buy it. A few weeks later, the luster has worn off, and you’re wondering why you spent that $300 on something you’re barely even using anymore.

Delayed gratification can help with this. Give yourself a waiting period before making purchases you don’t need. I’d recommend one week. If you still think an item is worth buying after the waiting period, then go for it.

I’ve saved myself from a ton of bad purchases this way. When you take some time to think it over, you often realize that it’s not worth the money.

3. Set a monthly savings goal

If you haven’t been able to save as much because of lifestyle creep, a monthly savings goal could help. You could commit to setting aside 20% of your income for savings and retirement, or any amount that works for you.

Once you’ve set a goal, take care of that first every month by transferring money to your savings and retirement accounts. As long as you’re able to pay all your bills and reach your savings goal, you can spend the rest of your money however you want.

Make sure to raise your savings goal as your income increases. A good rule of thumb is to save at least half of every raise.

4. Don’t outsource every small task

Outsourcing tasks can be a smart way to buy back your time. Instead of spending an hour or two on laundry every week, you pay for a wash and fold service. Instead of cleaning your apartment, you pay a housecleaning company.

If you outsource too much, it can put a strain on your finances. Once again, it’s good to prioritize here. Figure out how much you can afford to spend on convenience. Outsource the chores you can afford and that you really don’t like doing.

For example, my wife and I pay a housecleaner, because cleaning takes a lot of time and energy. We could also save time by ordering food deliveries or meal kits, but we normally prepare meals, instead. We both enjoy cooking, and we like having full control over our meals, so outsourcing that isn’t worth it for us.

Lifestyle creep is common, and some increase in your standard of living is normal as you earn more. Consider using the tips above to ensure that lifestyle creep doesn’t hold you back from saving money and building wealth.

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You may be sitting on a holiday purchase that isn’t worth keeping. Read on to see if that’s the case. 

If you made your fair share of holiday purchases this past season, you’re in good company. Data from Adobe reveals that consumers spent a whopping $222 billion between Nov. 1 and Dec. 31, 2023.

But some of the holiday purchases you made may be purchases you shouldn’t actually keep. Here are three signs that a given item of yours really needs to go back to the store.

1. You’re still paying it off and racking up interest

It’s one thing when your washing machine breaks and you need to charge a new one on a credit card in the absence of having the savings for it. After all, you need a way to clean your family’s clothing.

But it’s another thing to charge a non-essential expense on a credit card and pay off that purchase over time, racking up interest all the while. If that’s the case, then you’re better off returning any item that you’re still able to. Not owing all that money and interest could help you start the year on a better financial note.

Keep in mind that it’s not just credit card purchases you should consider returning if they’re not paid in full. If you financed purchases via a “buy now, pay later” plan — something consumers did during the past holiday season to the tune of $16.6 billion, per Adobe — then you may want to take those back as well. Even if you’re not paying interest yet, falling behind on your payments could cost you, so it’s best not to owe money on an installment plan.

2. You realize you may not use it as much as expected

Maybe you were so excited to scoop up an air fryer on Black Friday when prices were slashed. But if it’s now mid-January and you’ve yet to use that item more than once, then you may want to consider taking it back. Even if you got a good deal and you didn’t rack up debt when buying it, there’s no sense in spending money on something you’re not going to get good use from.

3. You were in a rush and didn’t shop around for a better deal

Holiday season shopping can be a bit frenzied in nature. Stores tend to be packed and deals tend to be abundant, which puts the pressure on to make quick decisions rather than slow down and do research.

If you bought a holiday purchase in a snap and feel you didn’t have time to research prices, do that now. If you see a better deal, then returning your initial purchase is pretty much a no-brainer if that option still exists.

Don’t wait to do those returns

The amount of time you have to make holiday returns will depend on the retailers you shopped at. But either way, given that we’re now a few weeks past the holiday season, if you have items you think need to go back to the store, then your best bet is to tackle that task sooner rather than later. You don’t want to run into a situation where you’re beyond a given item’s return window once you’ve decided it shouldn’t remain in your possession.

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A home is a valuable asset, and your homeowners insurance coverage protects it. Here’s how to decide if raising it makes sense for you this year. 

For most homeowners, their house is the most valuable asset they own. Not only that, but a home is the place that people keep all of their stuff, so just about everything of value is inside it.

For that reason, it’s very important to have homeowners insurance. Most people buy this coverage when closing on their house since their mortgage lender requires it. But even those who have already bought an insurance policy may need to increase it periodically.

So, should you get more coverage in 2024? Here’s how to decide.

Has the cost of rebuilding the home increased?

Homeowners typically have dwelling coverage to pay for their property. This coverage would pay to rebuild or repair a home if a covered loss happens.

If a homeowner had replacement value coverage (as opposed to market value coverage), the insurer would pay the cost to rebuild. This is what most people should sign up for, rather than coverage that pays what the house is worth — even if it’s not enough to rebuild the home as it stands.

Even with replacement value coverage, there’s a policy limit, though. Say, for example, a homeowner had a $350,000 limit, but their home cost $400,000 to rebuild. The insurer would only pay a maximum of $350,000 minus any deductible if the house was destroyed.

Building costs have been going up. As of summer 2023, 82.5% of construction materials had seen cost increases since 2020 and the average price increase was 19%. Any homeowner who hasn’t increased the limit on their dwelling coverage yet may wish to talk with an expert about what rebuilding would cost — and should seriously consider increasing home insurance coverage to make sure the policy limit is high enough to pay for the entire rebuild.

Has the value of personal possessions increased?

Most homeowners have personal property coverage as well as dwelling coverage. Unsurprisingly, it pays to repair or replace their personal property.

This coverage for personal items also comes in the form of either market or replacement value coverage. Again, replacement value coverage is almost always the best option. After all, the market value of a 10-year-old couch is surely much less than it would cost to buy a comparable couch in today’s market.

Homeowners who have bought more personal possessions, or who have bought more expensive possessions, should think about increasing their coverage. It’s especially important to realize that most policies have lower limits for some property, such as a $1,500 or $2,500 cap on furs or jewelry or art. So, it’s very important for homeowners who have bought some of these possessions to think about getting special additional coverage for them.

Are any coverages missing?

Finally, homeowners should read their policy, see what coverages they have, and make sure they are fully protected against any losses they couldn’t cover easily out of their checking account if something went wrong.

Some common coverages people may forget to sign up for include:

Additional living expense coverage, which ensures a homeowner has money to live elsewhere while the home is being rebuilt or repaired after a covered loss.Flood insurance, which is important for homeowners whose property might flood, since a standard policy won’t pay for this kind of damage.

Homeowners should read through their insurance agreement, consider the losses they’re most likely to experience, and talk with their insurer about adding coverage for any damages they aren’t protected against.

Any homeowner who finds they are without the coverage they need, or who has too little coverage based on policy limits, should reach out to their homeowners insurance company today, before it’s too late and they experience a loss their policy won’t pay for.

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There are lots of popular vacation activities. Discover the surprising activity Americans put at the top of the list. 

If you were to guess the top vacation activity, you might go with trying new restaurants, hitting the beach, or going shopping. Those are all fun things to do on vacation, but they’re not the most popular.

In Skyscanner’s 2024 Travel Trends Report, Americans were surveyed on their main activities for their next vacation. The No. 1 activity is a shocker — and it’s something people do every night.

Sleeping tops the list of vacation activities

It turns out that travelers want a literal dream vacation. One-third (33%) of American travelers chose sleeping as one of the main activities for their next vacation. That put it ahead of shopping (30%), wildlife spotting (20%), and nightlife (19%).

Some travelers are even building trips around quality sleeping opportunities. Sleep tourism is growing in popularity, and a growing number of people are searching for information about sleep retreats online. These sleep retreats, by the way, aren’t cheap. Many of them cost $2,000 to $3,000, and retreats at luxurious locations can cost over $10,000.

Sleep tourism definitely isn’t something I had on my 2024 bingo card. At least among the people I know, sleep was never considered a main vacation activity. It was all about having fun and exploring a new place, and spending too much time sleeping was actually something to avoid.

But travelers have gotten much more mindful about their sleep health, and realized that their sleeping habits back at home may be lacking. Three-quarters (75%) of U.S. travelers say they’re not getting the recommended seven to eight hours of sleep per night at home. So it’s understandable why they’d want to rest up on vacation.

How to sleep better while on vacation

Even if you’re not interested in paying for a full-blown sleep retreat, there are plenty of more affordable ways to sleep well while you travel. Some travelers struggle with this, especially when crossing time zones and dealing with jet lag.

You’re much more likely to sleep well on vacation if you prioritize this in your travel planning. Here are a few budget-friendly tips that can help:

Consider the noise level when booking a hotel/vacation rental. Read reviews to see what previous guests are saying about the noise. If you’re renting a home, try to find out if it’s in a quiet area. One way to do this is by looking it up on Google Maps and seeing what’s nearby. Trust me, if there’s a bar next door, it’s going to be hard to sleep.Use your destination’s time zone right away. Do your best to eat meals, go to bed, and wake up based on that time zone. It can be tough at first, but it helps your body adjust.Get plenty of fresh air and physical activity. These can make it easier to get to sleep and improve the quality of your sleep. Among U.S. travelers, 19% said the fresh air and physical activity were reasons they sleep better on vacation.

It helps if you can book a quality hotel or home rental. And if you have a long flight, a business-class seat certainly makes it easier to rest on the way. While these can be expensive, keep in mind that you don’t need to pay for all your travel costs in cash. Many people save by using travel credit cards. These cards earn points that you can put toward your major travel expenses.

Improving your sleep quality at home

Sleep is an important part of your life, and getting quality sleep shouldn’t just be something you do on vacation. If you’re one of the people who uses vacations to catch up on sleep, it’s a good idea to focus on sleeping better at home, too.

If your bed isn’t the best, consider investing in a better one. I usually wouldn’t refer to a consumer product as an investment, but in this case, it is. Spending money on a quality bed is an investment in yourself and your health. You’ll be better rested, so you’ll feel better during the day.

Getting enough sleep also reduces your risk of many diseases. Considering how expensive health care costs can be, prioritizing sleep is a smart move for your health and your finances.

Bed and bedding can be a big expense, but there are also plenty of free ways to get better sleep:

Stick to a consistent schedule. Go to bed and wake up at the same time every day. Your body will get used to this, which makes falling asleep and waking up easier.Sleep for seven to eight hours per night. Most people need about this much sleep. Any less, and you’ll likely be sleep deprived.Do a relaxing activity before you sleep. Reading is a good option. There are also meditation apps, such as Calm, that have sleep meditations available.

It’s normal to get great sleep while you’re on vacation. You’re probably more relaxed, and you might also be getting more physical activity than usual exploring a new city. Just make sure you also do what you can to sleep well when you’re back at home.

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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.Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.

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Life insurance doesn’t have to be expensive. Here are a few ways to keep your premiums down. 

The cost of nearly everything has spiked over the past few years, and insurance prices haven’t escaped the increase. Life insurance applications rose significantly during the height of the pandemic and are still above 2019 levels. And insurance companies could soon factor in the potential long-term health effects of COVID-19, making some policies potentially more costly.

Thankfully, you have options to lower your life insurance premiums. Some are easier than others, but even implementing a few could help you reduce your insurance costs.

1. Pick the right coverage

Like other types of insurance, there are always different tiers you can choose. The trick is to find the right amount of coverage without overspending.

The simplest way to find the right coverage is to add up the debt you want to be paid off with a life insurance policy should you pass away unexpectedly. Ask yourself how much money your family would need to cover bills, debts, and any additional money they might need to cover the loss of income.

Then, find a policy that covers the amount you’ve come up with, or near that amount, that stays within your budget. For most people, choosing a term life insurance policy will be cheaper than signing up for whole life insurance. Term life insurance gives you coverage for a set period and then expires, ensuring you don’t pay for a policy you no longer need.

2. Compare rate quotes

It’s easy to assume that all life insurance companies will offer the same policies at the same prices, but that’s not always the case. Just as mortgage lenders and credit card companies look at the same borrower differently, insurance companies write policies differently.

This means you should compare life insurance quotes from different companies to ensure you get the best deal. Look closely at what coverage they’re offering, how long the policy is good for, and how much your monthly premiums will be.

If finding cheaper life insurance is your goal, one of the best ways is to get quotes from a few insurers and compare what they offer. Remember, you’ll likely be paying the premium for many years, so comparing quotes could save you significant money.

3. Get into healthy habits

As with any insurance policy, companies decide how much risk they’re taking on when offering policies and set premiums based on that risk. This means that the healthier you are, the more likely it’ll be that you’ll pay less for your life insurance.

Of course, there are some things you can’t control, like your age or genetic vulnerabilities. But something you do have control over, like smoking, can significantly impact your premiums.

Some companies offer life insurance without requiring a health exam, but you’ll usually pay more. Instead, find a policy that requires the exam. Not only will you find out more about your own health, you’ll likely end up paying less for your life insurance policy.

4. Reconsider risky hobbies

You’ll likely pay extra for your life insurance if you’re into extreme hobbies like racing motorcycles or skydiving. While you don’t have to give up your hobbies, you may want to consider which ones you do and how different insurance companies view that activity.

Not all companies look at risky hobbies the same way, so if you’re scuba diving on the weekends, you may want to spend some extra time shopping for the best deal.

Thankfully, you can find the right life insurance policy for you online easily these days. And with many companies providing fast quotes for policies, you can quickly start comparing policies after answering a few questions.

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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.The Motley Fool has a disclosure policy.

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