Money Management

My goal for the new year is to scale back on a habit that’s costing me thousands of dollars. Find out exactly how I plan to do it. 

I have a bad habit that cost me $8,064 in 2023. It took several deep breaths and a glass of wine before I could bring myself to log into my American Express account and tally up the total.

My big, lazy, expensive habit is that I order UberEats most nights. No, I’m not feeding a family of five. I live alone, but it turns out that the cost of ordering a sandwich, paying a smorgasbord of delivery app fees, and tipping 20% balloons quickly when you do it almost every single day.

I’m not planning to rid my life of UberEats in the new year, but I do intend to cut back substantially. Here’s how I plan to scale back my reliance on food delivery and add $3,575 to my emergency fund in 2024.

Why am I only aiming to save $3,575?

Sometimes you need to kick a bad habit by giving it up cold turkey. Changing a food habit is a bit trickier than, say, giving up cigarettes or beer. After all, you still gotta eat. I could tell myself that 2024 will be the year I avoid food delivery altogether and commit to three wholesome home-cooked meals every day. But I’d be lying to myself.

I’m giving myself some leeway because I know I’m most likely to stick with a goal if I don’t demand perfection from myself. Plus, I don’t think ordering UberEats is always a waste of money for me. I often order dinner because I’m working late and I can earn more from an extra hour of work than I’d save if I spent that hour cooking and cleaning up afterward.

Instead of aiming to give up UberEats entirely, my goal is to cut how much I spend by two-thirds. That would save me about $5,370 per year, or $448 per month. Since I’ll still need to eat, I’m increasing my grocery budget by $150 a month. That will pad my personal finances by an extra $3,575.

What I’ll need to do to curb my UberEats habit

There are a lot of bad habits I’ll have to break to cut my UberEats spending by two-thirds, including the following.

Procrastination

I’m a master at putting off work assignments and bill paying until the last minute, but it doesn’t stop there. I also tend to snack throughout the day instead of eating a real meal until I’m positively hangry, mostly because I don’t feel like cleaning up.

Having unrealistic goals

I know I don’t enjoy cooking, so why do I act like I’m going to morph into Julia Child whenever I walk into the grocery store? When I make my grocery list, I often scour Pinterest and wind up shopping for a bunch of recipes that take an hour or more and a dozen ingredients to put together. Then, all that food ends up withering away in my fridge.

So in 2024, I’m going to be realistic. I’ll start with recipes that require just a few ingredients and 10 to 15 minutes of time and purchase several frozen meals as a fallback.

Not keeping a real schedule

I’ve always been a night owl, but quitting my 9-to-5 job to become a full-time freelancer exacerbated my zombie tendencies. It’s a lot easier to get in the habit of preparing meals when you have a clear schedule. If I set a clear start time for my workday, I’m more likely to give myself a clear stopping point. Once making dinner becomes part of my daily routine, hopefully, it won’t prove so challenging.

How to actually stick to your New Year’s resolution

No matter what your New Year’s resolution, consider following the SMART goal format to set yourself up for success. Under this formula, your goals should be specific, measurable, achievable, relevant, and time-bound. Let’s break down what this looks like for the most common financial New Year’s resolution in 2024, which is to pay off debt.

That’s a laudable goal, but you’ll boost your odds of success if you focus a bit more. For example, using the SMART goal format, you may say, “I want to pay off $5,000 of credit card debt by the end of 2024 to save on interest and improve my credit.”

The goal is specific and measurable, so you have a clear picture of what success would look like. If you can free up $500 a month in your budget by cutting expenses or earning more, it’s realistic. It’s relevant in that you know the “why” behind what you’re doing. And it’s time-bound because you’re aiming to accomplish the goal by year’s end.

I’m honestly not sure whether I can accomplish my goal of cutting back my UberEats budget by two-thirds and saving an extra $3,575 in my bank account. But at least I’ve clearly defined my goal so I’ll know whether or not I’ve achieved it. Check back next year to see if I succeeded or flopped.

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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.American Express is an advertising partner of The Ascent, a Motley Fool company. Robin Hartill, CFP® has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Uber Technologies. The Motley Fool has a disclosure policy.

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You have options when you want to invest, avoid taxes, and set yourself up for a bright financial future. Check out two worth considering. 

Investing on a consistent basis throughout your lifetime is the most surefire way to build wealth and ensure financial freedom in retirement. Investing in certain types of accounts can not only help you build wealth, but can save you money on taxes right now.

Here are two of those types of accounts that millions of Americans can use to invest thousands of dollars and get a bigger tax refund in 2024 and beyond.

IRAs can save you money now or later

Individual retirement accounts, or IRAs, are designed to help Americans save money for retirement in a tax-advantaged way.

IRAs come in two main varieties: traditional and Roth. The main difference between the two is the tax treatment. Traditional IRA contributions can be tax-deductible, but eventual withdrawals in retirement are considered taxable income. Roth IRA contributions don’t qualify for a tax deduction, but qualified withdrawals are 100% tax-free. In either case, your money is free to grow and compound on a tax-deferred basis while in the account, meaning you won’t pay any capital gains or dividend taxes along the way.

Anyone can contribute to a traditional IRA, although to take a deduction, you must not have an employer-sponsored retirement plan, or your income must be under certain limits. And Roth IRA contributions are income-dependent, regardless of whether you have an employer’s retirement plan.

For 2024, the IRA contribution limit is $7,000 per person, with an additional $1,000 catch-up contribution allowed for people aged 50 and older. And it’s worth noting that you can still make IRA contributions for the 2023 tax year (and potentially save on your 2023 taxes) until the April 15, 2024 tax deadline.

RELATED: The Ascent’s Complete Guide to Taxes

HSAs can be an excellent option — if you qualify

Health savings accounts, or HSAs, are one of the most underappreciated types of investment accounts because many people simply think of them as ways to budget for healthcare expenses. But there are a few facts you need to know that might change your mind:

Money deposited into HSAs can be rolled over from year to year. They aren’t “use it or lose it” accounts like flexible spending accounts (FSAs).HSA money can be invested in mutual funds, exchange traded funds (ETFs), or even stocks.HSAs have a triple tax benefit that no other account does. Contributions are tax-deductible, investments grow tax deferred, and any withdrawals for qualifying healthcare expenses are tax-free.Once you turn 65, HSA funds can be withdrawn for any reason, not just for healthcare, so it can be used as a general retirement account as well.

There’s a good chance that healthcare will make up a significant portion of your expenses in retirement. According to Fidelity, the average 65-year-old couple in 2023 can expect to spend $315,000 on healthcare throughout retirement. And an HSA can help you do it in an extremely efficient way.

To be eligible for an HSA, you need to be enrolled in a qualifying high-deductible health insurance plan. But if you qualify, the 2024 HSA contribution limit is $4,150 for those with single healthcare coverage and $8,300 for those with family coverage.

Not an exhaustive list

To be thorough, there are other types of tax-advantaged investment accounts you may be able to use. For example, if you have self-employment income, there are specialized types of retirement accounts available, such as the SIMPLE IRA, SEP-IRA, and solo 401(k). Your employer might offer a 401(k) or other type of retirement plan. But the point is that there are some excellent ways to invest money for your future and save money on your 2024 taxes at the same time.

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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.Matthew Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Took on too much house? Find out why downsizing may not be a great solution right now. 

Home buyers are often cautioned to do their best not to take on too much house. But sometimes, it’s hard to know exactly what you’re getting into until you actually move into a home and find out what it costs to maintain it.

You might, for example, buy a home that works for you financially based on your mortgage payments and property taxes. But if the home is larger and costs way more than anticipated to heat, cool, and maintain, then you could end up in a tough financial situation.

If you’ve concluded that you bought too large a home and are struggling to afford it, you may be eager to sell it and downsize. But because of where mortgage rates are sitting today, that may not save you as much money as expected. It may not even save you any money at all. So a better bet may be to rent out part of your home rather than unload it.

A smaller mortgage at a higher interest rate may not save you much

A few years ago, had you been in a similar situation, selling a larger home and replacing it with a smaller one probably would have made more financial sense. Mortgage lenders were offering much lower interest rates on home loans than they are today. But because mortgages have gotten expensive to sign, the savings you reap by downsizing may be minimal today, or even nonexistent.

Let’s say you’re sitting on a 30-year, $300,000 mortgage at 3%. That has you paying $1,265 a month in principal and interest.

Downsizing your home and buying a new one might allow for a $200,000 mortgage instead. But if you’re forced to sign a new 30-year loan at 7%, which is roughly the average rate today, you’ll be looking at $1,330 a month in principal and interest. In other words, you won’t actually be saving money at all.

Renting part of your home may be a better bet

Because mortgage rates are so high right now, it could pay to look into renting out part of your home and waiting things out if you’re having trouble keeping up with your costs. Renting out space within your home has its drawbacks, like having to deal with a tenant and potential issues and noise.

Those issues, however, can be mitigated by doing a thorough screening on any potential tenant that includes not only checking references, but also speaking to previous landlords to verify that they didn’t run into any problems. Also, you may find that having a tenant isn’t so intrusive if your home has a truly separate space you can rent out, like a finished basement or garage. Plus, you may be able to negotiate certain maintenance items into your tenant’s lease. That could spare you the burden and cost of having to do all of the work yourself.

You might assume that selling your home is your best bet if you’re struggling to keep up with the costs. But selling may not help your personal finances. Collecting rental income, on the other hand, could make it possible to manage your housing expenses without having to uproot yourself in the process.

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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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Tipping on a cruise might seem like a big expense. Here’s where it goes and what you should know about prepaid gratuities. 

Just like restaurant and hotel personnel on land, many cruise ship employees depend on gratuities as part of their income. One thing that cruisers often have to decide is whether to prepay their gratuities before they sail.

Cruise lines have different names for it. But virtually all major cruise lines have a recommended amount that each traveler should pay to the crew in gratuities. Virgin Voyages is one big exception, and a few of the ultra-luxury cruise lines also include gratuity in your cruise fare.

When it comes to paying gratuities, you have two main options. You can prepay your gratuities before you sail, or you can choose to have them charged to your onboard account. While neither is necessarily a bad option, here’s why it might be better for your personal finances to pay ahead of time.

How much do cruise ship gratuities cost?

The exact amount of gratuity the cruise lines add to your tab depends on the cruise line and type of room you have. According to popular travel guide Frommers, you should expect to pay $16 to $23 per day, per person, although it can be higher or lower in some cases.

Just to name some of the most common examples:

Carnival Cruise Lines’ daily gratuity rate as of December 2023 is $16 per person, per day for standard rooms and $18 per day if you’re staying in a suite.MSC Cruises charges $14 per day for adults (12 and older) and $7 for children ages 2-11.Norwegian is one of the more expensive options, charging $20 per person, per day for most rooms, and $25 per day for rooms in the Haven or higher-end suites.Royal Caribbean’s automatic daily gratuities cost $16 per person, per day for standard rooms and $18.50 for suites.

Where do your gratuities go?

One of the most common questions asked by newer cruisers is “Why can’t I just tip people directly?” And you can certainly give tips directly to those who serve you — for example, I typically give a tip to my stateroom attendant and dining room servers on the last day of the cruise.

However, one important point to keep in mind is that some of the automatic gratuities are given to people you don’t directly interact with. The split depends on the cruise line, and most don’t share specifics, but some of the behind-the-scenes employees get a portion of the gratuities paid.

Note that certain other purchases often have gratuities added to them. For example, it’s common for a beverage package to have a gratuity attached to it (either added separately or included in the published price) and for purchased drinks at bars to have an automatic 18%-20% gratuity. And there are other situations where it is customary to tip before, during, and after your cruise, such as the luggage handlers who take your bags at the port and send them to your room.

What happens if you don’t prepay gratuities?

If you don’t choose to prepay gratuities, they will likely be added to your onboard account when you sail.

Of course, gratuities are not mandatory, and you can ask to have them removed from your statement, usually by visiting the guest services desk. But keep in mind that it isn’t just the people you interact with on the ship that depend on your gratuities for a portion of their income.

Should you prepay, pay on board, or tip as you go?

There are two big reasons to prepay gratuities on your cruise. First (and the main reason I always do it) is so I can get all of my major expenses out of the way before I step on board. I’d rather have as little as possible charged to my credit card at the end of my trip. And second, cruise ship daily gratuities tend to increase over time. By prepaying, you’re locking in the current rate — if the cruise line’s gratuities increase before you sail and you didn’t prepay, you may have to pay a higher rate.

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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.Matthew Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool recommends Carnival Corp. The Motley Fool has a disclosure policy.

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Business class tickets sell for more than seven times as much as economy seats. Take a look at why it may be worth the extra cost. 

You can get a one-way flight from New York City to Barcelona, Spain, in basic economy for as low as $250. It’ll cost you almost double — $450 — for a nonstop economy flight.

If you want to go in business class? You’re looking at about $900 at the low end, and a whopping $3,000 if you want a nonstop flight.

Yeah, for those who did the math, that’s a 7.5 times increase from economy to business. Which raises the question: What about flying business class can make it worth more than seven times the cost of a regular economy seat?

A lot — but it’s surprisingly hard to quantify.

What business class includes

Comparing various classes shows you really do get a lot of perks with a business class ticket.

Check-in and screening

Before you get anywhere near the plane, you get a couple of interesting perks. For one, your first two checked bags are free. Some airlines also allow an extra carry-on bag for free.

Checking in those bags can be easier, too. Most airlines offer priority check-in lanes for business class passengers. Depending on the airport and airline, you may also be able to go through a priority security line.

Before the flight

Once you’re checked in, you can hover at the gate before your flight — or you can enjoy an airport lounge. Most international business class passengers will also get complimentary access to the airline’s (or their partner’s) lounge.

Once your plane is ready, priority boarding will let you head to your seat near the front of the line.

On the plane

The onboard experience is where a lot of the value comes for most of us. To start, business class has dedicated overhead bins, so you usually won’t have to worry about finding space for your bags.

And then there’s the seat. Honestly, this is what it’s really about. All the best business class cabins include roomy lie-flat seats that, as the name suggests, fold flat into an actual bed. It’s not exactly a queen-size memory foam mattress, but it’s worlds better than anything you’ll get in the other cabins. If you normally toss, turn, and wind up with a sore back after a long trip in coach, a lie-flat seat is a marvel.

Oh, then there’s the in-flight meals. On longer flights, you’ll get two proper meals (typically both dinner and breakfast on an overnight flight). Dinner will undoubtedly feature multiple courses, including an appetizer and dessert. And the food will often be off of a separate menu from the rest of the passengers — a premium one usually curated by some renowned self or other.

Valuing the perks isn’t very straightforward

Some of the things I listed above are relatively easy to value. For example, your first checked bag will typically cost about $30. Your second bag is more expensive, usually $40 or so. (And, ironically enough, you’ll pay even more for checked bags on the “discount” airlines.) So, the two free checked bags you get from booking business class have a base value of about $70.

But not everything is so cut and dry. You can put a price on lounge access — but only sort of. A day pass to the American Airlines Admirals Lounge will run you $79 apiece, for instance. But not every lounge will let you buy day passes, and many lounges limit them if there are crowding issues (which is often). This means the access included with your ticket may have more than its face value.

Most of the perks that come with business class are simply impossible to value the same way. It will truly depend on how you personally value the perks.

If you’re someone who can sleep anywhere, then having a lie-flat seat is probably not as valuable to you as it would be to someone who has trouble sleeping on planes. And depending on what you need to do when you get off that plane, a good night’s sleep alone could be worth the extra $1,000 to upgrade to business class.

Similarly, folks who aren’t picky about what they eat or who prefer to pack their own snacks won’t get as much from the upgraded food choices in business class as people with pickier palates. (While the food wouldn’t be the only reason I’d upgrade, I definitely place some real value on the better quality — and quantity — of the food provided to business passengers.)

TL;DR: It’s up to you to decide

In the end, it comes down to this: You’re not going to make up the cost of the upgrade in checked bags and other easy-to-calculate savings. It’s down to how much you value all of the associated perks, and whether they’re worth the (much) higher cost of a business class ticket.

Or you could just use points and skip all that paying-$3,000-a-pop nonsense.

Airline frequent flyer rewards programs let you use airline miles to pay for flights, including business class flights and upgrades. You don’t even need to fly to earn airline miles; a lot of great travel rewards cards let you earn points and miles on everyday spending.

One or two big credit card welcome bonuses could easily cover a one-way business class flight to most places when redeemed wisely. Sure, it takes a bit of research, patience, and diligence to master using travel rewards. But it saves me $3,000 a ticket, letting me travel basically for free.

All of this isn’t to say that everyone will love business class and think it’s worth every penny. As I alluded to above, if you’re someone who can sleep no matter which part of the plane you’re on, then you absolutely can (and probably should) skip the upgrade and save your money. Put it toward a fun adventure at your destination!

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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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