Money Management

When I had a home inspection years ago, the inspector made a mistake when assessing the condition of the pool. Read on to learn what I did next. 

When buying a home, it’s typically a good idea to have an inspection performed. (Even if your mortgage lender doesn’t require it.) A home inspector can catch problems that the average person can’t and the expert advice that an inspector provides could potentially save you from buying a money pit if the house turns out to have a ton of problems.

Unfortunately, getting an inspection doesn’t always save you from big financial losses — as I learned the hard way.

My inspector made a big mistake

When I was going through the buying process with my first house many years ago, I had an inspector assess the property. One of my big areas of concern was about a crack in the swimming pool. The crack looked pretty minor, but we wanted to make sure it wasn’t going to be a big issue to fix, so we hired an inspector with pool experience.

The inspector said the crack was a surface crack that would cost a few thousand dollars, so we negotiated that amount off the price of the home from the sellers and we moved forward with getting our mortgage loan and buying the house.

Unfortunately, after the purchase when we went to make the repairs, it turned out that there were major issues with that crack that would cost over $10,000 to fix. The pool companies that visited to check out the pool noted that the inspector should easily have been able to see that and tell us about the extent of the damage.

My recourse was limited

In response to having to pay much more than I thought for the pool repairs, I contacted the inspector because I assumed they had some kind of insurance or guarantee to protect against mistakes. Unfortunately, that was not the case.

And when I talked to a lawyer who reviewed my contract carefully, the lawyer said that the inspector had included a clause in the fine print specifying that the only remedy for mistakes in the inspection was a refund of the money paid for the inspector to do the job.

This clause is common in home inspection contracts. It’s called an exculpatory clause, and it makes it really difficult to get an effective legal remedy. Unfortunately, suing the contractor for malpractice or professional negligence would not have been useful, thanks to this clause. I would have only been able to get back a few hundred dollars I paid for the inspection and not anywhere close to the amount of money that the inspector’s mistake actually cost me.

If you are getting a home inspection of your own, you should be aware that this exculpatory clause may be included and that it will limit the recourse that you have if the inspector messes up. It may be hard to find an inspector who doesn’t try to limit their liability this way, but you can always ask before you hire one.

You should also be aware that while an inspection should still identify major issues in most situations, it’s no guarantee every issue will be caught. And getting a home inspection doesn’t guarantee that you’ll know every problem you could face after you move in. Be sure you have some emergency money set aside before buying a home, just in case you’re faced with an unexpected issue soon after buying, like I was.

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FOMO can drive us to spend money we otherwise wouldn’t. Try these tips to find a better balance with your finances. 

The Fear of Missing Out, or FOMO, is that nagging feeling that if you don’t do, or buy, something now, you’ll regret it forever.

FOMO used to be something more or less reserved for the water cooler, where coworkers talk about their latest vacation. These days, however, social media and advertisers have ramped it up so hard we’re all facing FOMO every time we turn on a screen.

Pair that with an ever-increasing cost of living, and it’s no wonder U.S. credit card debt keeps hitting record highs.

You don’t have to let FOMO impact your finances, however. There are plenty of ways to find a balance between satisfying your FOMO and responsibly managing your finances. Here are a few tips.

1. Set aside a FOMO fund so you can partake responsibly

The goal of budgeting is never to eliminate all the joy from your life. You can set aside a little bit of “fun money” — or, in this case, a FOMO fund — so you can have the occasional splurge, guilt free.

One easy way to set aside FOMO funds is through credit card rewards. If you have cash back cards, for instance, you can save up your rewards to cover a monthly splurge.

I get a lot of travel FOMO, so I focus on saving up points and miles from my travel rewards cards to pay for annual bucket-list trips. You can do a surprising amount of travel for free with a smart card strategy.

2. Embrace free trials, discounts, and bundles

Giving into your FOMO doesn’t always have to mean spending a lot. So many services and products offer some type of trial or new customer discount these days that you can preview most things affordably — or even for free.

The only downside? Most are very limited. You need to plan a little to maximize your trials.

For example, if you’re curious about a streaming service and want to try it out, do a little research ahead of time to see what shows you may want to watch. Then, plan your trial for a time you know you’ll be able to settle in and enjoy a bit of binging. That way, you can check out all of the shows on your list during your limited trial.

If you can’t get an outright free trial, poke around the internet for a good discount code. You can often find great promos by checking company sites, social media pages, and coupon sites. Also, look for referral codes online or from friends and family.

Finally, check out any bundles or partnerships you may already be eligible to use. For example, many museums are part of a reciprocal program that offers free or discounted entry to members of other organizations. Lots of public libraries offer discounted tickets or free memberships to local venues. And even your credit cards could provide freebies or discounts in their offer portals.

3. Use logic to stop those FOMO spirals

No matter how top-of-the-line your devices started out, they always seem to look shabby compared to the brand-new products hitting the market basically all the time. But I’ll tell you a secret: The new stuff is rarely that much better than what it’s replacing.

Sure, sometimes you get some stellar, mind-blowing improvements from one iteration to another. Most of the time, though, you’re looking at incremental improvements that you probably wouldn’t even notice anyway.

The best way to put these things into perspective is to compare the features side by side. (Most retailers make this pretty easy with handy comparison charts.) Chances are good you won’t notice any “updates” that are really worth the cost of a brand-new device.

4. Remember that your value isn’t dependent on what you buy

Social pressures can be a big cause of FOMO. You may think your social group won’t like or appreciate you as much if you can’t share directly in their (pricey) experiences.

Your value to your friends should go well beyond what you choose to — or can afford to — buy or spend money on. So it’s understandably painful if you find yourself excluded from your social group because you don’t have a piece of fancy tech or because you can’t afford to go on an expensive trip.

That’s no reason to go into debt to stay a part of the group, however. It may simply be a sign that you need to look for new friends that better share your financial values and/or suit the place you are in your life.

As with any relationship, sometimes you need to break up with old friends if you aren’t compatible anymore. It can be sad, but it’s a natural part of life.

A fear of missing out is something we all get from time to time. But you can’t let FOMO ruin your finances. Hopefully, some of these tips can help you find the right balance.

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Opting for itemized deductions when you file your 2023 taxes could make more sense due to rising interest rates. Find out why. 

Itemizing tax deductions lost its luster for most taxpayers with the passage of the Tax Cuts and Jobs Act of 2017. The law nearly doubled the standard deduction, which is the amount any taxpayer can subtract from their tax bill, regardless of their actual expenses. For tax year 2018, the first year that the new law was in effect, only 11.4% of taxpayers itemized deductions, according to the IRS.

But this year, more Americans may benefit from itemizing deductions. The reason? Rising interest rates.

Why more taxpayers can benefit from itemizing

You can only itemize tax deductions if you don’t claim the standard deduction. For tax year 2023, i.e., taxes that are due by April 15, 2024, the standard deduction by tax-filing status is:

$13,850: Single or married filing separately$20,800: Head of household$27,700: Married filing jointly

Some common deductions you can take if you’re itemizing include:

Mortgage interest on up to two homesInterest on a home equity loan or home equity line of credit (HELOC) if the money is used to substantially improve the residenceState and local income taxes, sales taxes, and property taxesCharitable donationsUnreimbursed medical and dental expenses that exceed 7.5% of your adjusted gross income (AGI)

If you recently bought a home or borrowed money to improve your home, itemizing could make a lot more sense than it did in recent tax years because you probably paid a significant amount in interest.

For example, suppose you got a $350,000 mortgage at the beginning of 2021 and locked in a 3% interest rate. If you have a 30-year fixed mortgage, you would have paid $10,400 in interest during the first 12 months of the loan. That’s a hefty sum, but it still would have been lower than the 2021 standard deductions of $12,550 for single filers and $18,800 for married couples filing a joint tax return.

Now let’s say you borrowed $350,000 in January 2023 to buy a home. But because interest rates had risen, your interest rate was 6%. During the first year of the loan, you’d pay $20,883 in interest. If you’re a single filer, itemizing now makes sense because your interest payments were higher than the standard deduction. Even if you’re married and filing jointly, itemizing may still make sense when you factor in other deductions, like property taxes.

Should you itemize or claim the standard deduction?

The answer to this question is: Do whichever results in the lower tax bill. If your itemized deductions add up to more than the standard deduction, itemizing is the right move. But if the sum of your itemized deductions is less than the standard deduction, going with the standard deduction makes sense.

Be aware, though, that some deductions are known as above-the-line deductions, meaning you can claim them even if you don’t itemize them. Examples include traditional IRA contributions (assuming you meet the eligibility requirements to deduct them), health savings account (HSA) contributions, and interest paid on a loan for education.

The best tax-filing software typically makes it easy to figure out whether to claim the standard deduction vs. itemize. But if you have any questions about what you’re allowed to deduct or if your tax situation is complicated, be sure to work with a tax professional.

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Variety is the spice of life. But trying new things can be expensive. Here are a few tips for keeping things fresh without breaking the bank. 

I’m a big proponent of the old saying, “Variety is the spice of life.” I really love trying new things. Foods, hobbies, adventures — I’m always looking for something new to explore. Occasionally, I discover something truly great. Sometimes, I find something I never need to try again.

The biggest downside to my thirst for novelty is the cost. I try not to be too wasteful in general, but when that weird food we try doesn’t appeal to anyone in the house, well, it tends to wind up in the garbage.

Life is too short to eat gross food.

Unfortunately, that means I often have to eat the cost of the wasted item instead. So, how do I keep that vital bit of variety in my life without breaking the bank? Here are a few of my strategies for trying new things on a budget.

Look for free trials and new customer promos

I can’t remember the last time I paid full price to try out a new service. I’ve found that everything from streaming services to meal delivery kits to the local gym will offer promos or discounts to new customers.

If you don’t see a promo on the company’s website, check its social media pages. If that doesn’t work, do a quick search for promo codes. You can find these in blogs and coupon sites. Referrals can also be a great way to get a discount or freebie.

Just don’t forget to cancel. Always set a reminder to cancel your free trials and subscriptions before you’re billed. Put an alert on your phone, jot it on a physical calendar, plaster your monitor in Post-it notes — whatever it takes for you to remember to cancel.

One survey found 42% of people are paying for subscriptions they don’t use simply because they forgot about them. Don’t let this be you. Set that reminder and cancel at least two days before your renewal date so it has plenty of time to go through the system before you’re charged.

Check shopping portals for deals and discounts

There have been a surprising number of products and services I’ve been able to try for free, or at least at a discount, thanks to my credit cards — and not just because of rewards. I’m talking about the discount and deal portals that many issuers offer.

For example, if you want to try a meal subscription service, check your Chase Offers or Citi Merchant Offers portals first. I constantly see offers for many popular meal kits here, and have saved at least $100 through these offers on my Chase credit cards.

The Amex Offers portal can also be a great source of deals. I earned hundreds of dollars in statement credits and bonus rewards on my Amex credit cards through offers for goods and services I wanted to give a try.

Maximize credit card rewards and bonuses

And speaking of credit cards, let’s not forget credit card rewards. I often save my cash back rewards to pay for little splurges here and there, letting me try new things without biting into my monthly budget.

Then there is the travel. Most of the leisure travel I’ve done over the last five years has been thanks to travel rewards credit cards. I transfer points and miles to pay for flights and hotels, and even redeem to cover rental car costs.

To get the most out of my rewards, I’m always looking to maximize what I earn. This means choosing the best card for each of my purchases. I also open a few new cards a year to take advantage of welcome bonuses on larger purchases.

Be selective about samplers and variety boxes

There’s a lot to be said about being able to try a variety of products at once, especially if you can do so at a reasonable price. That’s where finding a good sampler or variety pack of something can provide a great experience.

However, you need to crunch the numbers before you buy to make sure you’re actually getting a decent deal. If you can buy everything individually for the same price (or less), then the bundle isn’t a good value. Similarly, if you’re only really interested in a few items in the pack, then you may be better off trying them individually.

Make sure to compare the per-quantity price of something. For example, if a product is liquid, compare the price per ounce, rather than looking at the price per bottle. This gives you a fairer apples-to-apples comparison on prices between different sizes.

While bundles and samplers can be good, avoid anything that doesn’t tell you what’s inside ahead of time. While I can understand the appeal of “mystery” boxes, they’re rarely going to provide you with a good personal value. At best, you might like a few items, but the chances that you like — and can use — everything in the box are next to zero.

Trying new things is good for you. It can give you a gentle push outside your comfort zone. But it shouldn’t push your budget out of its comfort zone. Use these tips to keep costs down while still keeping things fresh.

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An HSA provides tax savings unlike any other account, but I’m not eligible for one. If you are, here’s why you shouldn’t miss the chance to invest in it. 

There are a few different tax-advantaged accounts that offer you the ability to save for your future while paying a little less to the IRS. However, there is one account that stands apart from the others because it offers a triple tax break.

I wish I had access to this account, but unfortunately I don’t — and not everyone does. If you’re one of the lucky ones who can use it, you absolutely shouldn’t pass up the chance. Here’s what the account is, along with some details about what makes it so great.

This account offers unbeatable tax breaks

One of the best accounts for tax breaks is a health savings account, or HSA. These accounts allow you to:

Invest your money and deduct the amount you invested in the year you contributed to the account.Grow your money tax free and leave it invested for as long as you want.Withdraw your money tax free if you’re using it for a qualifying medical expense or withdraw it for any purpose after age 65 and just be taxed on distributions as ordinary income — the same way you would for a 401(k).

If you are using the money in your account to cover medical expenses, you get that triple tax break. You basically don’t ever have to pay taxes on the money you invested or on the gains that came from your investment. Since many seniors face high medical bills and spend tens of thousands of dollars paying out-of-pocket care costs for expenses Medicare won’t pay for, an HSA can be a really great way to save for retirement.

While you can take money out of your HSA at any time in your life when you have a qualifying medical expense, keeping the money invested for as long as possible in order to let it grow and use it as a senior can be especially beneficial since you do get to enjoy tax-free compound growth. This is the growth that happens when your money earns returns, which are reinvested and earn returns of their own.

Are you eligible to contribute to an HSA?

I am unfortunately not eligible to contribute to an HSA because I don’t have the right kind of health plan — and many other people also can’t use this account. You can only contribute to an HSA if you have a qualifying high-deductible plan. For 2024, this means your plan must:

Have a minimum deductible of $1,600 if you have self-only coverageHave a minimum deductible of $3,200 if you have family coverage

Your plan also has to comply with certain requirements for maximum out-of-pocket limits, and you must not have other coverage that disqualifies you from using an HSA. If you are buying your health plan from Healthcare.gov, you can filter the plans available and pick only plans that are HSA eligible. If you already have a plan, or have coverage through your employer, you can ask your insurer or the company you work for if you’re allowed to contribute to an HSA.

If you are eligible for an HSA, you should make sure you contribute to it out of your bank account so you can get the great tax benefits this plan offers. For 2024, those with self-only coverage can contribute up to $4,150, while those with family coverage can contribute up to $8,300. Those age 55 and older can add an extra $1,000 catch-up contribution as well. Start working on making your contributions ASAP so you can get as close as possible to maxing out these limits and taking full advantage of the tax breaks on offer.

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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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Did you know traveling comes with health benefits? Read on for tips to make your next adventure more affordable in the new year. 

Taking a vacation not only gives you the chance to relax and unwind, but it can also have health benefits, including improving your immune system. Unfortunately, it can be expensive to get away.

If you’re hoping to take more vacations in 2024 and want to do so without credit card debt, there are ways to make that happen. Just follow these simple tips to fund your trips without hitting your personal finances too hard.

1. Choose affordable destinations

Picking less expensive places to go can make a huge difference in how often you’re able to vacation. Last summer, my family and I went on 12 different camping trips — almost all of which were within five hours of our house in our RV. We got to see a ton of amazing places in the United States, all for less than what it would have cost to splurge on a fancy week-long trip in Europe that included airline tickets and luxury hotels.

2. Look for discount opportunities

Taking advantage of discounts is another great way to take more trips, since the less your vacation costs, the more money you have to spend to go see another destination.

We booked some hotel rooms while properties were running Black Friday specials, saving over 30% in some cases. We also took advantage of discounts that campgrounds offered for camping during the week or at the beginning of the season, which saved us about 25% compared with full price. And we purchased discounted theme park tickets from a local grocery store at a 10% discount.

3. Cut back in other areas

If travel is important to you, cutting back on other spending can free up more money for you to go on vacations in 2024.

For example, we don’t really care about clothing in our house, so I buy my kids used clothing at consignment sales and save about 40% to 60% compared with buying brand-new items. And since I work from home, I keep my clothes forever since I don’t need to be fancy (I’m still wearing some shirts from college!).

Take a look at where you’re spending money that’s not adding as much to your life as an extra vacation would. You may decide you’d rather give up eating lunch out at work every day, or that you can make coffee at home and redirect the money from your morning latte right into your vacation fund.

4. Start a travel savings account

To make travel a priority — and make sure you have the funds to do it — start a dedicated savings account where you can transfer money each month to fund your vacations. Make contributing to it a line item in your budget and make sure you’re putting at least some cash into it on a regular basis. If you get a windfall like a cash gift or a bonus at work, put that into your travel savings account, too. Or if you manage to slash your grocery or dining out or other spending in a particular month by being especially frugal, you can move that into your travel savings as well.

5. Get the right travel credit card

Finally, getting a good travel credit card can help you to earn rewards that pay for some of the cost of your vacations — or that make your vacations a little cheaper. We have an American Airlines credit card that gives us a free checked bag, which saves us $30 per person, per trip. We also got bonus rewards for booking flights with American and for using our credit card, and we ended up earning enough miles to pay for one entire free trip.

You should make sure that your travel card is well matched to the travel you like to do. For example, we fly a lot, so an American Airlines card made sense for us. There are many airline credit cards available offering a whole range of travel perks, so check out the options from your preferred airline. If you like to take road trips, consider a card offering bonus cash back or other rewards on gas. Or if you stay in hotels, a hotel-branded card could get you perks like discounted rooms and early check-in.

If you follow these five tips, ideally you can find affordable vacation destinations, have plenty of money to visit, and have a travel card that helps you cut costs so you’ll be able to afford an extra vacation or two (or more) 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.The Motley Fool has a disclosure policy.

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