Money Management

I’m hoping to save more money by increasing my income. Here’s my plan for making it happen in the new year. 

In 2024, one of my financial goals is to save an extra $5,000. Specifically, I want to put $5,000 more into my brokerage account than I did in 2023. That’s a lot of money, but I’m hopeful I can accomplish my financial goal and make the investment by the end of 2024.

My plan for finding an extra $5,000 to invest is a simple one, and it’s one I feel pretty confident will work out. Here’s what I’m going to do to find the funds.

Here’s how I plan to save an extra $5,000

My plan for saving an extra $5,000 in 2024 is to increase my income by $5,000. Here’s why I’ve chosen this route, instead of cutting my spending.

If I break my $5,000 goal into a smaller monthly goal, to hit my target I need to save $416.67 per month. Now, I could try to cut that amount from my spending, but it would be really hard. I don’t spend that much on dining out and that makes up a good chunk of my entertainment budget. I also don’t have a car payment I could get rid of and I can’t easily change my fixed expenses, like my mortgage.

Basically, cutting my spending by $416.67 a month would be challenging and might involve making some lifestyle changes I’m not happy with and are hard to stick with throughout the year. I could try to do that, but I’d probably be setting myself up for failure since I’d have to force myself to do the right thing every month.

Rather than doing that, it’s easier to put in some extra hours at work and make an extra $416.67 each month. This is especially simple for me because I’m a freelancer and I have more control over how much I work. But, it’s actually doable for many people.

Side hustles earn $483 a month on average, so you could pick up a side gig if you also wanted to save $5,000 and boost your personal finances. Or, if you make $20 an hour and can work some overtime at your job and earn time and a half, you’d only have to work an extra 13 hours during each month — or just over three hours extra a week — to hit your target.

Doing a few extra hours of work a month can be a lot more sustainable than stripping all of the fun out of your life. And if you have a more modest goal than saving an extra $5,000 — like saving an extra $1,000 — you’d have to do even less.

You could also ask your boss about getting on the promotion track, try to negotiate a raise at your performance review, or look for a better paying job to increase your income without putting in those extra hours.

Could increasing your income help you accomplish your financial goals?

The reality is, making long-term changes to spending habits can be hard, especially if they involve continual small sacrifices. It can be far more beneficial to find ways to increase your income — especially if you can do so by expanding your skills or negotiating for a raise.

Just be sure when the extra money hits your bank account, that you route it to your goals so your efforts help you accomplish the things that matter to you.

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Want a good deal on a car loan for your electric vehicle? Learn more about green auto loans and special incentive financing from car companies. 

Are you concerned about climate change, tired of paying for gas, and in the market for a new car that could save you money on car maintenance? You might want to consider buying an electric vehicle (EV).

Although the sticker price of electric vehicles is typically a few thousand dollars higher than comparable gas-burning cars, recent EV tax credits are making electric vehicles more affordable. And prices of electric vehicles are coming down, as battery technology gets cheaper (and better), and more auto manufacturers launch new models of EVs.

Let’s look at the single best way to finance your new electric vehicle — with a green auto loan.

Green auto loans: Special financing for EVs

When you buy an electric vehicle, you can get an auto loan to help pay for your car, just like you would with any other car. But some banks and credit unions offer special discounts on auto loans for EVs. These are often called “green auto loans,” because they’re designed just for “green,” energy-efficient, environmentally friendly cars like EVs.

Getting a green auto loan can put more “green” dollar bills in your pocket. Not every bank or credit union offers these green auto loans. But if you can find a financial institution that does, you could save money on your car loan.

Green auto loans will typically have the same loan terms as a regular car loan, but with a small discount on the annual percentage rate (APR). For example, if a financial institution offers 7% APR on a 60-month loan for a new gas-burning car or truck, it might offer 6.75% APR on a loan for a new electric or hybrid vehicle.

Here are a few credit unions that offer green auto loans (rates effective as of Dec. 28, 2023):

Clean Energy Credit Union: Four-year loans for new electric or plug-in hybrid vehicles, interest rates as low as 6.39% APR.OnPoint Community Credit Union: Provides auto loans ranging from 30-60 months for new electric or hybrid vehicles; rates as low as 6.24% APR.Philadelphia Federal Credit Union: Loan terms up to 84 months; rates as low as 5.74% APR, plus a discount of 0.50% APR for new electric or hybrid vehicles.

Your exact APR and loan terms will depend on your credit score, the price of your vehicle, how much money you want to borrow vs. making a down payment, and other factors. Many credit unions also offer discount EV loans for used cars, but the APR will be slightly higher, and the loan term options will be more limited.

You don’t have to use a special “green auto loan” to buy an EV. You can use a regular car loan. But if you see an auto loan offer with an APR and terms that you like, you can contact a bank or credit union to get pre-approved for a car loan before you start shopping for your new electric vehicle. Understanding your options for down payment sizes and monthly payments can help you make a confident offer on an electric vehicle that fits your budget.

Other options for cheap EV car loans

If you have good credit, sometimes you can get the best deals on car loans directly from the car companies. Depending on the overall car-buying market, car companies may offer special deals and incentives, with low-APR financing for new car purchases.

Here are a few examples of good deals on new car loans for electric vehicles, as of Dec. 28, 2023 (all loan rates and terms depend on customers’ credit):

Ford: Buy a new 2023 Mustang Mach-E GT or Premium model and get a loan of 60 months at 1.99% APR. Offer ends Jan. 2, 2024.Toyota: Buy a new all-electric 2023 Toyota bZ4X and you could qualify for a 48-month loan at 3.99% APR (depending on your credit score). Offer ends Jan. 2, 2024.Volkswagen: Buy a new 2023 Volkswagen ID.4 electric vehicle and you could get 3.9% APR for 72 months. Offer ends Jan. 2, 2024.

Bottom line: Along with EV tax credits of up to $7,500, there are a few options for cheap EV car loans that can make your electric vehicle more affordable. Owning an EV still comes with some costs, like maintenance, car insurance, and charging. But with a low-APR car loan and no costs for gasoline, an electric vehicle can be cost-competitive. To get the lowest APR on a new electric vehicle loan, check with the car companies for the latest financing options and incentives. Or get pre-approved for a green car loan from a bank or credit union near you.

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BNPL payments often stick around for longer than you planned. Here are some suggestions for paying your purchase off quickly. 

Buy now, pay later (BNPL) has quickly become a popular way for many people to pay for everything from new furniture to vacations. Nearly half of U.S. adults have used a BNPL plan at least once, allowing them to pay for a purchase over installments.

However, the downside of BNPL is that some people carry their loans for too long and can sometimes miss payments, which can potentially result in high interest and late fees. Data from Statista shows that 13% of BNPL users have had to pay extra fees or interest on their buy now, pay later plans.

Here’s how to tackle your BNPL debt quickly so you can get your personal finances back on track.

The fastest way to pay off BNPL purchases

Without question, the fastest way to knock out your buy now, pay later debt is to use money from your savings account to pay off the total amount immediately. Paying off the entire balance will ensure you don’t incur any late payment fees and will also keep you from accruing any additional interest on the amount you owe.

While this strategy is straightforward, it’s also difficult to pull off.

The latest survey from The Motley Fool Ascent shows Americans’ median savings account balance is $1,200, which means it could be financially strenuous for some to pay off their BNPL purchases immediately.

But if you have enough money in your savings account to cover your BNPL total, consider using it. Sure, it’ll leave you with less available cash, but you can set up monthly automatic deposits for the same amount that would otherwise go to your BNPL payments to quickly rebuild your savings.

Two additional ways to pay off your BNPL purchases quickly

If you don’t have the cash on hand to immediately pay off your buy now, pay later purchases, here are a couple suggestions to help you tackle the debt fast.

1. Make larger payments

This may be the simplest way to pay off your BNPL purchase faster. With this strategy, you pay more on your installment payments than required. For example, if you pay $100 monthly for your installment plan, you could pay $125 instead. Doing that four times will equal the same amount as one additional payment.

2. Use the debt snowball method

Using the debt snowball method could be helpful if you need to pay off multiple BNPL purchases. This debt payoff strategy focuses on paying off your smallest debts first, then works up to the large ones.

Let’s say you have two BNPL accounts. One monthly payment of $25 goes toward a $500 balance you owe for a new phone. The other is $75 per month toward a $1,500 balance for a new sofa. With the debt snowball method, you make extra payments toward the $500 phone first and pay it off as soon as possible.

Once it’s paid off, you add the monthly $25 phone payment to the $75 monthly sofa payment so you’re paying $100 per month for the sofa. Putting an extra $25 per month toward the sofa will help you pay off that balance faster and get you out of debt quicker.

While it can be overwhelming to have BNPL balances, the first step toward getting rid of them is confronting the problem and coming up with a solution. Creating a budget can help you manage your monthly expenses and help you discover areas where you might be able to cut back on spending and put the extra cash toward your buy now, pay later accounts.

And if you need extra help managing your debt, including BNPL accounts, check out some helpful tips for how to pay off debt.

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Want to get a bigger tax refund with charitable giving? It’s harder than you might think, but learn how it can be done with careful tax planning. 

Are you looking forward to getting charitable giving write-offs on your tax return? It might be harder than you think. Ever since the IRS rules changed with the Tax Cuts and Jobs Act of 2017, it’s become more difficult for most people to get a tax break for charitable donations.

Don’t assume that every check you write to charity, or every box of unused household items that you drop off at Goodwill, is going to help you save money on taxes. The truth is more complicated.

Let’s look at a few surprising stats that show the real impact of tax deductible charitable donations — and who can qualify to receive them.

Stat No. 1: 90% of people take the standard deduction

Many people might not realize this, but the IRS only allows tax deductions for charitable giving if you itemize deductions on your tax return. And because the standard deduction has increased so much in the past few years, it’s harder for most people to itemize. Most people are better off taking the standard deduction. The best tax software can help you decide which choice is right for you, with easy questionnaires.

About 90% of U.S. taxpayers use the standard deduction, according to IRS data. This can be a good thing in some ways. Just taking the standard deduction can help you file taxes more quickly, and for most people it’s the best way to reduce your taxable income. But if you take the standard deduction, your charitable donations don’t count for tax purposes. Donating to nonprofits is still a good, generous thing to do, but the IRS won’t give you any extra deductions.

Stat No. 2: $13,851 is the minimum amount you need to itemize deductions

If you’re determined to get those sweet tax deductions for charitable giving, you need to make sure your itemized deductions add up to more than your standard deduction amount. For a single person in 2023, the standard deduction is $13,850. For married couples filing jointly, it’s even higher: $27,700.

If you want to reduce your taxes with charitable giving, you need to make sure that all of your itemized deductions add up to the largest possible total. Here are the types of expenses that are included in itemized deductions:

State and local income taxes (SALT) and real estate taxes — but you can only deduct up to $10,000 of these taxes per householdState and local sales taxes — you can choose to deduct these taxes instead of your state and local income taxes, but you can’t deduct bothPersonal property taxesMortgage interestDisaster losses from a federally declared disasterSome medical and dental expenses — but only the costs that are greater than 7.5% of your adjusted gross income (AGI)Gifts to charities

If your other itemized deductions add up to a number that’s pretty close to your standard deduction amount, you can boost your tax refund by giving a little extra money to charity. Let’s look at two examples of how taxpayers can use charitable giving for tax planning:

Example No. 1: Frank, single person in California

Frank is a single professional in California with an income of $150,000 per year. Frank rents an apartment and doesn’t pay property taxes or mortgage interest. Since he’s a high earner in California, a state with relatively high income taxes, Frank is paying more than $10,000 per year in state and local income taxes. But because of the SALT deduction cap, Frank can only deduct $10,000 of that amount.

If Frank donates no money to charity, he’ll only have $10,000 of itemizable deductions for his federal tax return, which means he should take the standard deduction ($13,850) instead. But if Frank wants to reduce his federal tax bill, he can write a check to charity for $3,851 (or more) to get over the top of that standard deduction amount.

Example No. 2: Jaime and Rebecca, married couple filing jointly in Florida

Jaime and Rebecca live in Florida and are homeowners. Florida has no state income tax, but this married couple is paying $8,000 per year in mortgage interest and $7,000 per year in local real estate taxes on their home. Rebecca has also been going through treatment for cancer, which has caused them to incur an extra $7,000 of out-of-pocket medical expenses (beyond 7.5% of their AGI). Without any charitable donations, Jaime and Rebecca would have $22,000 of itemizable deductions — which leaves them better off taking the standard deduction ($27,700) instead.

But if they give donations to charity in the amount of $5,701 (or higher), Jaime and Rebecca can get charitable giving write-offs, and start to reduce their overall tax bill beyond the standard deduction.

Stat No. 3: 15% of all charitable tax deductions went to people earning less than $100,000

The biggest tax breaks for charitable giving go to people who have the most money. That’s because people with higher incomes pay higher marginal tax rates and are more likely to itemize deductions. According to stats from the Tax Foundation, in 2020, taxpayers who earned less than $100,000 claimed 15% of all tax deductions for charitable donations. Meanwhile, 45% of these tax breaks went to people earning $1 million or more.

Bottom line: Even if you’re not a wealthy person, even if you’re far from the top marginal tax bracket, that doesn’t mean there’s no hope of getting a tax break from charitable donations. But plan ahead. Add up your itemizable deductions throughout the year, and be prepared to make one big sizable donation at the end of the year to put you over the top.

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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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Anyone who gets married in 2024 should seriously consider purchasing life insurance. Learn more about this vital financial move. 

Getting married means making many financial and personal changes.

It also means committing to new shared obligations. Even those couples who choose not to have a joint bank account may opt to move into an apartment or house and share the costs, or take on other obligations that require two incomes.

Since marriage is a merger of financial lives, there’s one extremely important step to take after tying the knot in 2024. Here’s what it is.

Put this insurance coverage in place to protect a spouse

Anyone getting married in 2024 should likely buy life insurance if they don’t already have a policy in place.

Buying life insurance will protect a surviving spouse from potential disaster. Say, for example, that a married couple commits to buy a house and pay a $2,000 mortgage payment together with each person contributing $1,000 from the income they make.

If one spouse dies, the other might face foreclosure if they don’t earn enough to pay the extra $1,000 that was coming from their partner’s earnings — unless life insurance is in place to provide the funds to cover those costs. A death benefit could help a surviving spouse stay in a shared home and not worry about where the money will come from to pay the bills.

Purchasing coverage right away also means there will be no concerns about whether a policy will still be available if other big lifestyle changes happen later. For example, many married couples end up having kids together. And raising a child is really expensive, with parents spending about $310,605 to raise a child until age 18.

If one spouse develops a pre-existing condition after getting married and before a child is born, that person might not be able to buy life insurance at an affordable rate (or buy it at all) when their son or daughter enters the world. If they pass away unexpectedly, the surviving parent is without the money they need to cover the child’s expenses to adulthood.

Buying life insurance is simple and important

The bottom line is, spouses who share a life come to depend on each other’s income or services (in the case of stay-at-home spouses or parents).

An untimely death that leads to the loss of that money or support could have huge financial consequences that are hard to cope with. No married person should take the chance of dying before they get covered, or take the chance of waiting to get covered and becoming unable to do so due to medical issues that develop unexpectedly.

There’s no reason to risk a spouse’s financial security when buying life insurance coverage is so simple. Most people can get quotes for affordable term life insurance policies online and sometimes they may not even need a medical exam before getting covered. Purchasing a policy that would pay a death benefit of about 10 to 12 times income is usually sufficient, and it ensures that a surviving spouse could maintain their quality of life — and continue providing for children — if the worst happens.

Anyone getting married in 2024, or who has gotten married recently and still doesn’t have life insurance, should start shopping for a policy today before it’s too late.

Our picks for best life insurance companies

Life insurance is essential if you have people depending on you. We’ve combed through the options and developed a best-in-class list for life insurance coverage. This guide will help you find the best life insurance companies and the right type of policy for your needs. Read our free review today.

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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I under-pay my taxes each year so I’ll owe the IRS in 2024. Keep reading to learn why I’d prefer to keep more of my money for longer. 

In most years, I owe the IRS money when I file my taxes. This puts me in the minority, as most Americans get a refund.

It may not sound like a good thing to have to send the IRS money every year out of my checking account. But, the reality is, I’m very glad that I owe money for two key reasons. Here’s what they are.

1. I owe more because I earned more

There’s one big reason why I’m really glad that I owe the IRS more money for the 2023 tax year. My income went up. The more money you make, the more you’re taxed both because your tax bracket can climb higher as your income grows and because you are taxed on a percentage of what you make.

While it’s not super fun having to give the IRS a cut of my extra income, I do get to keep most of it. So, I’m happy to have a higher income that I’ll be taxed on, even though that does mean a bigger IRS bill.

If your income has gone up and you’re a freelancer like me who pays estimated taxes, you probably know that you’re responsible for paying in money to the IRS quarterly each year — and your estimated tax payments are often based on your prior year’s earnings. So, if your income does increase, be sure you’re setting aside some extra funds when tax day comes so you’re ready to send the money to the IRS.

For me personally, as soon as I realized I was going to earn more this year, I started setting aside extra savings to make sure I’d have enough to pay all that I owe to the IRS.

2. I pay the minimum needed to avoid penalties so I don’t give the IRS an interest-free loan

I’m also very glad that I’ll owe the IRS money because it means I didn’t give the government an interest-free loan. When you get a tax refund, you’re just getting back your own money you overpaid. And you don’t get any interest paid to you in return.

If you’d kept the extra money from your refund instead and just paid the minimum you need to avoid tax penalties, you could have done other things with it — like investing it and paying down debt. Let’s say you overpaid the IRS by $100 per month and you don’t get your tax refund until April. That’s about 16 months you could have been earning interest on all that money. You’d have missed out on around $52 in interest you could have earned if you kept the money in a savings account paying you 4.00% annually.

If you’re getting a refund this year and you don’t want to do that next year because you’d prefer to keep your funds until you’re actually required to send them in, it’s an easy fix. You can adjust your withholdings with your employer or change the amount you’re sending in for your estimated taxes if you’re self-employed. The IRS has a withholding estimator you can use to help you get the right amount that should be withheld from your taxes.

As you can see, there are good reasons to be glad to owe the IRS money. Start working to increase your income — and adjust your withholding — if you want to end up owing the IRS in the upcoming tax year like I do.

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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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