Money Management

Totaling a car is stressful, but it doesn’t have to be financially devastating. See how the best car insurance companies can help you get back on the road. 

In October 2021, I was in a minor car accident that totaled my vehicle. Despite my many years of getting in car crashes, this was my first time experiencing a total loss. Seeing how the process worked taught me a lot about car insurance. And it gave me a new appreciation for how the best car insurance companies take care of customers in their moments of maximum need.

How I totaled my car: A fascinating true story

My car-destroying crash happened while driving my kids to a soccer game. I was trying to enter the freeway in a poorly-arranged road construction zone with too much traffic. There wasn’t enough room for me to merge into my lane, and I suddenly had to stop without realizing how little stopping distance I had. I slammed on the brakes and collided with the car in front of me.

I wasn’t even going fast, but it was enough. My car was an old sedan (a 1997 Honda Accord) and the car I hit was a sturdy new Subaru SUV. Because the other car’s bumper was higher than mine, colliding with the other car’s rear undercarriage dented and wrecked my car’s headlights, hood, and most of my car’s engine.

I was buzzing with adrenaline, but not in a good way. I don’t remember the order that it happened, but somehow I managed to do everything on this list.

1. Check with the other driver

If you’re ever in a car crash, especially on the freeway, you should start by checking with the other driver to see if anyone was injured. Fortunately, no one was.

2. Exchange contact info and car insurance details

I gave the other driver a copy of my insurance card so they could file a claim against my liability insurance. I got a copy of their insurance too, and their name and phone number.

3. Take photos of the crash

One good thing about smartphones is that they make it much easier to get high-definition photos of car crashes. I took a few photos of every heavily dented angle, in case they were needed by my insurance company.

4. Call the police

Since no one was hurt and we didn’t need an ambulance, I didn’t call 911. Instead, I called the police non-emergency line and told them about the crash. A police officer arrived at the scene, reviewed the crash site, and filled out a police report about the accident. I wasn’t cited for a traffic violation — the police officer determined that I was not speeding or intoxicated or failing to maintain control; it was just an accident.

5. Call a tow truck for my car

My car was so badly damaged it wouldn’t start, so we needed a tow truck to get it off the freeway. The truck also arrived quickly, which was a big relief. Just by looking at my smashed-up car, the tow truck driver thought it might be totaled. I didn’t have roadside assistance coverage with my car insurance, so I had to pay the cost (about $100) to tow my totaled car to the tow company’s garage, where it would be inspected by my car insurance company.

6. Call my car insurance company

I called my car insurance company’s customer service line and told them I’d been in a crash and that I thought it was totaled. The customer service person explained the next steps of the process, and how long it would take. The car was out of my hands now; it would get towed to a garage and reviewed by the insurance company.

7. Get all the stuff out of the totaled car

The tow truck pulled my car off the freeway onto an exit ramp. I called my wife and she came to help me get all our stuff out of the car. We had to get the car completely cleared out — because the car was (likely) totaled, we weren’t going to see it again.

A few days later, my car insurance company called and notified me that yes, my car was officially totaled. They sent me an insurance assessment, showing how much money I would get for the car. Even though my car was 24 years old and ruined, it still fetched a surprising amount of money: I got about $2,000 in cash for my totaled car, after paying my deductible.

Lessons of total loss: Why I love my car insurance company

First of all, the most important thing is that no one was hurt. Cars can be replaced, but people are priceless. But here are a few of the personal finance and car insurance lessons that I gained from this experience:

I’m glad I didn’t need gap insurance: My car was old (1997 model) and fully paid off. I didn’t have an auto loan and I didn’t need gap insurance to cover the difference between what my car was worth and what I owed on a loan.I’m glad I had collision coverage: I’m glad I had more than minimum liability coverage. Because I had collision coverage, I was able to get some cash for my totaled car.I’m glad my car insurance company has great service: The best car insurance companies will help you take care of everything and guide you through the process for a totaled vehicle. The whole experience wasn’t “fun,” but my insurance company made it easier.

Bottom line: If your car gets totaled and you have collision coverage or comprehensive coverage, your car insurance company can help you get back on your feet. Don’t be too quick to cancel your collision insurance; your totaled car might be worth more than you think.

Our best car insurance companies for 2024

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

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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A Costco Executive membership costs $60 more than a basic membership, but there are times when paying this added cost is worth it. Here’s when it makes sense. 

A Costco Gold Star membership (the standard option) costs $60 annually, while a Costco Executive membership comes in at double the price, or $120.

Since you’re probably paying for a warehouse club membership in order to try to keep more money in your checking account, it may seem unnecessary to spend an extra $60 just to get a higher membership tier.

But there are some perks that could make a Costco Executive membership worth it — in some cases. Here’s what to consider to decide whether an upgraded membership is worth the additional personal finance hit.

Will your cash back cover your added membership fees?

When deciding if a Costco Executive membership is worth paying for, you should consider whether you might earn enough cash back to cover the membership fee.

See, the entry level Gold Star membership costs $60, but you don’t get any cash back from Costco with this tier (you can, however, earn rewards on your credit cards just like you would with any spending you do).

Costco’s Executive membership, on the other hand, costs $120 a year, but you can earn a 2% annual reward on qualifying purchases up to a maximum annual reward of $1,000. If you buy $250 worth of stuff at Costco every month — which is pretty easy to do — the $3,000 that you spend there over a year would earn you $60 cash back and would cover the Executive membership fee.

If you spend more than that, you could earn more cash back than you paid for the upgraded membership and upgrading would be an easy call.

Take a look at how much you’re spending with your current warehouse club membership and what your budget looks like for the upcoming year to see if you’re likely to get enough of a bonus reward to offset the added costs of an upgraded membership.

Will you use the other Executive membership perks?

Depending on just how much you spend at Costco, the Executive membership may or may not pay for itself. But there are other perks beyond just the 2% annual reward that Costco provides. Executive members also get bonus discounts on other services Costco provides.

For example, all Costco members can get discounted checks, but Executive members save an extra 20% when they are ordering them. So, if you’ll be making use of this feature to order checks for your personal bank account (or maybe your business bank account), you can factor that in when deciding if paying the extra $60 a year for the upgraded membership fee is worth it.

Ultimately, many people — especially occasional Costco shoppers who just use the warehouse club and not other added services — will find the Gold Star membership works just fine. But if you’re going to Costco often for groceries and gas, purchasing big-ticket items like appliances or booking travel through Costco, or making use of the many other partner services Costco offers, then the upgraded membership will make good sense for you.

Look back over your past spending and the services that you typically use in order to decide which membership tier makes sense for you. If you want to change the tier of your membership — including downgrading if the Executive level no longer makes sense — you can stop by the membership desk at your local club or call the membership department at 1-800-774-2678.

Be sure to take the time to do the math, so you can get the right membership level for you in 2024.

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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.Christy Bieber 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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You may have a pile of gifts to take back to the store. Read on to make sure you don’t end up making a huge blunder in the process. 

At this point, a lot of people have moved past the “cheer and joy” phase of the holiday season and are dealing with the aftermath. For many folks, that involves taking inventory at home and figuring out which gifts should stay versus go.

The National Retail Federation said last year that $173 billion worth of holiday gifts are expected to be returned for the 2023 holiday season. So if you’re gearing up to lug a haul back to the store, you’re not alone. But one thing you really don’t want to do in the course of making holiday returns is settle for store credit. Going this route could end up hurting you financially.

The problem with store credit

What’s wrong with store credit instead of cash or a refund on your credit card? Well, a few things. First, unless it’s a store you shop at frequently, you run the risk of forgetting about your credit or not having an opportunity to use it.

Also, you never know when a given retailer might go under. Just look at big names that recently bit the dust, like Bed Bath & Beyond. And unfortunately, the risk of a retailer shuttering might be even greater when you’re talking about a local or small business. A $20 credit to your local candle shop is going to be worth $0 if that store closes its doors.

Furthermore, let’s say you run into a financial jam and need extra money. A cash refund is money you can use to pay an unexpected bill. And getting $30 or $40 back on your credit card gives you that much more leeway to charge expenses as needed. If your car ends up needing work that costs $200, you can’t just offer up a $30 credit to Candles R Us as partial payment.

How to make sure you get your money back

If you’re the recipient of an unwanted gift and you weren’t given a gift receipt, then store credit may be your only option. But if you purchased a gift your spouse or child doesn’t want, you have more options.

If you don’t have your receipt but paid for your items with a credit card, a retailer may be able to look up your purchase that way and issue you a refund accordingly. And if you bought holiday gifts at Costco, you should know that each purchase you make is tied to your membership. So even if you tossed your receipts, a customer service representative should have no problem looking your purchases up and issuing a refund.

Finally, if you’re eager to avoid a scenario where you’re stuck with store credit, aim to return your unwanted holiday gifts as soon as possible. Different retailers have different policies when it comes to accepting returns. But the closer to the holidays you are, the more likely you are to fall within a retailer’s window. Beyond that point, store credit may be your only option — if it even is an option.

It’s not uncommon to be in a position where you’re returning gifts after the holidays. But do your best to avoid having to settle for store credit, because it may not end up doing you much good.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Have dreams of becoming a full-time freelancer? Don’t forget to consider how your finances will change. Find out what money moves you should make first. 

In 2024, many workers are looking to make career moves. While some hope to land a raise or transition into a better-paying job with a new company, others are ready to try freelancing. There are many benefits to freelancing, including greater flexibility and independence. But you want to ensure you’re financially prepared.

Are you ready to try freelancing in 2024? Here are a few money moves you may want to make first so you’re well-prepared for the transition.

1. Establish an emergency fund

Unexpected circumstances can arise anytime, whether you’re an employee or a freelancer. Costly unplanned bills for car repairs or medical expenses can quickly eat away at the money in your checking account. Before you dive into freelancing in 2024, it’s best to have a solid emergency fund so you can cover unexpected expenses that come your way.

Now is an excellent time to start building your emergency fund so you’re prepared. Deciding how much money to stash away is a personal choice, but having at least three to six months of expenses saved for emergencies before fully committing to freelancing is not a bad idea. You’ll feel more confident knowing that you have extra cash on hand for emergencies.

READ MORE: Emergency Fund Calculator

2. Reduce your expenses

Reducing your expenses can also be a wise move to make before you leap into freelance work. Building a thriving freelance business can take a lot of time and effort. Cutting spending can be beneficial because you’ll have fewer costs to worry about as you grow your business, which can help reduce your financial stress.

If you need guidance finding ways to reduce your monthly spending, budgeting apps can help. Using one can give you more awareness of your spending habits, so you can make positive changes. These apps also make setting and following a budget easier. It’s best to avoid overspending so you don’t risk racking up costly credit card debt.

3. Plan for how you’ll afford healthcare and other benefits

If you’ve previously worked a traditional job, your employer likely provided benefits like paid vacation time and health insurance coverage. They likely also covered some of the costs associated with these perks. As a self-employed worker, you’ll be responsible for any benefits you wish to enjoy. These additional costs can be a shock if you’re unprepared.

Before making the move to full-time freelancing, you’ll want to budget and save up for paid time off and have a plan for how you will afford other benefits you may be used to, like healthcare coverage. It’s also essential to consider your retirement planning needs and determine what steps you will take to reach your goals. Now is the time to research your options before you dive in, so your finances don’t suffer.

4. Make sure you can afford to cover your living expenses in full

Before leaping into the freelance lifestyle, make sure you can afford a drastic lifestyle change like this. While your work situation may change, you’ll still need to pay your existing living expenses. Many people start freelancing part-time before committing fully to ensure they can earn enough money to afford all their bills.

Before quitting your job, consider whether doing a part-time trial run makes sense. Doing this can give you time to build your client and project base and decide if freelancing is ideal for you. The last thing you need is additional financial stress caused by lack of money.

If you’re brand new to this type of work, research online to get a better feel for typical rates in your industry. You want to know ahead of time how to price your work so you’re paid fairly and can afford your lifestyle. Social media groups can be excellent resources for this kind of research.

Always keep your finances in mind

As you make changes in the new year, don’t forget to keep your finances in mind. Life as a small business owner and freelancer is very different from that of a traditional employee, and your finances will be impacted if you make this kind of career move.

For additional financial tips to help you navigate your journey, check out our personal finance resources.

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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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With the central bank projecting rate cuts in 2024, today’s top-paying CD rates may not be here much longer. Find out what that means for CD ladders. 

If you’ve been tuned in to the high rates on certificates of deposit (CD) this year, you’re probably aware that the party is almost over. Word on the street is that the Federal Reserve could start cutting its federal fund rate next year, which would directly impact the APYs that banks offer on CDs and savings accounts. While many 12-month CD rates are still above 5%, there’s no telling how long they’ll stay that high.

For CD shoppers, that means now might be the best time to ladder high CD rates before monetary policy pushes them back down. Here’s why.

CD ladders give you some flexibility with your savings

CD ladders combine short and long terms to help you access your savings at regular intervals. For example, if you had $25,000 in savings, you could divide your money between CDs of different maturities, such as $5,000 in a three-month CD, $5,000 in a six-month CD, $5,000 in a one-year CD, $5,000 in an 18-month CD, and $5,000 in a two-year CD. That way, you’re never more than six months from accessing a portion of your savings.

Laddering CDs like this can solve one of the main problems with CDs: the early withdrawal penalties. Most CDs come with a penalty equal to a set period of interest for any withdrawals before maturity. For instance, an 18-month CD may charge you 180 days of interest if you liquidate your CD before the 18 months are over. Even worse, you’ll pay that penalty regardless of if you earned 180 days of interest, which would be a loss of your principal if you didn’t.

CD ladders could also solve the problem of partial withdrawals. If you’re withdrawing before maturity, most CD providers require you to liquidate the entire balance — even if you just want a small portion of your savings. Laddering CDs, however, would spread your money out and could help you leave some of your money invested. For instance, if you needed $5,000 to cover a surprise HVAC repair, you could liquidate one of your five $5,000 CDs, leaving $20,000 still invested in the others. You’d still pay a penalty, but it would be less expensive than liquidating a single CD worth $25,000.

Why you shouldn’t wait to ladder your CDs

By and large, the main reason for laddering your CDs is to lock in today’s high interest rates before they disappear.

Already, many short-term CD rates are starting to creep back. Banks and other financial institutions are speculating that the Fed is finished with its cycle of interest rate hikes, and it’s adjusting CD rates accordingly. If inflation continues to cool, it’s likely the Fed would start cutting the federal fund sometime in 2024, which would essentially spell the end of this era of high interest.

A CD ladder would lock you into today’s high rates for a period that could extend five years. The idea is that you could be earning high interest at a time when the ongoing rate is several times lower. In essence, you’d get a guaranteed stream of income paying out at a higher-than-average rate.

All in all, if you’ve been contemplating building a CD ladder, now might be the time to take action. Rates aren’t going to stay this high for much longer. Take a look at some of the top-paying CDs and start planning out your CD ladder before it’s too late.

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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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A close friend of mine is anti-Costco for a reason I happen to find ridiculous. Read on to see what it is. 

We all have people in our lives who are set in their ways to some degree or another. One friend of mine, for example, will not pay for parking. If there’s a concert she wants to go to that can’t be accessed by public transportation, she won’t attend if she’ll be charged a fee to park her car at the arena.

And I have my own hangups, too. In my state (NJ), grocery stores are no longer allowed to give out disposable bags at checkout. If you stop into the store having forgotten to bring a reusable bag, your choice is to carry your items out by hand or purchase a reusable bag on the spot.

The latter is something that bugs me. So I’ve been known to walk out of my local Shoprite carrying a stack of cereal boxes in my arms with those red “paid” stickers on them to save myself the cost of a new bag.

Because I take this stubborn approach to refusing to buy a bag at the supermarket, I can relate pretty well to other people’s personal finance hangups. But one thing I struggle to get past is my good friend’s refusal to join Costco for what I consider to be a pretty silly reason.

When you’re hung up on a membership fee

Unlike regular supermarkets, Costco is a store you have to join to gain access to. Right now, a basic membership to Costco costs $60 a year, while an Executive membership costs $120. The latter option gives you 2% cash back on all Costco purchases, though, including those made online.

My close friend has a large family and spends a small fortune on groceries every week. She can clearly benefit from a Costco membership for the option to buy in bulk. And I’ve even offered to take her to Costco with me and get her in on my membership.

But my friend refuses to give Costco her business because she doesn’t believe in having to pay to be able to go to a store. So even though she wouldn’t be the one paying in this case, she’s still opposed to the idea of paying in general.

While I can see her point, one thing my friend doesn’t realize is that it’s because of those fees that Costco can offer such competitive prices on the items it stocks. Since Costco gets a lot of revenue from membership fees, it doesn’t need to make as much of a profit on each item it sells — hence the lower prices.

In fact, I shop at Costco once a week and usually save myself at least $20 on groceries and household items compared to what I’d spend at a regular supermarket. So while I’m paying $120 a year for an Executive membership, that fee pays for itself in under two months based on my shopping habits.

Look at the big picture

If you’ve avoided joining Costco due to the cost of a membership fee and not wanting to pay it, I highly suggest that you try to look at the big picture and see if you stand to save money all in by shopping there.

One thing it pays to do is find a friend or neighbor with a membership, visit your local store, and check out prices for yourself. Don’t just look at Costco’s online prices — many products are considerably cheaper when you buy them at a warehouse club store.

If you can see yourself shopping at Costco frequently, then you may find that the savings you reap on your purchases well exceed the cost of your membership fee. And remember, too, that Costco guarantees customer satisfaction. So if you’re unhappy with your membership, you can cancel at any time and get an immediate refund.

I really do hope for my friend’s sake that she’ll change her mind about Costco one day, because I know her grocery bills are brutal. But just as I refuse to pay for a bag to put my groceries into, I have to accept the fact that paying for Costco just isn’t something she wants to do. Still, I think it’s important for non-Costco members to recognize that there’s a reason the warehouse club giant charges those fees — and that they shouldn’t necessarily be a deal-breaker for membership.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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