Money Management

It pays to maintain a large HSA balance. Read on to see why. 

Healthcare is an expense that tends to be largely unavoidable. Even if you’re a generally healthy person, at some point, you might get hurt and end up with a hefty ER bill. Or, you might end up needing to spend more money on medications when you’re older.

That’s why it’s so important to do what you can to save money for healthcare bills. And in that regard, you have options. You could contribute to a regular savings account. But if you’re eligible for a health savings account, or HSA, then it pays to put your money there, since you get a tax break on your contribution.

In this regard, HSAs are similar to traditional IRAs and 401(k)s. Fund an HSA to the tune of $2,000, and the IRS won’t tax $2,000 of your earnings the year you make that contribution.

Recent data from the Plan Sponsor Council of America tells us that HSA balances seem to be growing. And keeping your HSA well-funded is definitely a goal worth working toward.

HSA balances are up

The average HSA balance at the end of 2022 was $6,130. That’s up from $4,924 in 2021.

Now you may be wondering why it’s a good thing to have so much money in an HSA. And the reason is that HSAs are extremely flexible in that you can use your funds at any time. So the more of a balance you’re able to build, the more money you can reserve for healthcare during your retirement, when you’re likely to see your costs rise.

Furthermore, HSAs allow you to invest your balance so it grows into a larger sum over time. Not only are investment gains in an HSA not taxed, but neither are withdrawals, provided that money is used to cover qualifying healthcare expenses.

Should you increase your HSA contributions?

If you’re not contributing the maximum amount you can to an HSA, then it definitely pays to ramp up if that’s something you can afford to do. The more money you can bank for healthcare expenses, the more income you can shield from taxes, and the more of a balance you can grow eventually.

This year, your HSA contribution limit is $3,850 if you’re under 55 and have self-only coverage, or $4,850 if you’re 55 or older with self-only coverage. If you have family coverage, your limit is $7,750 if you’re under 55 or $8,750 if you’re 55 or older.

If you’re interested in contributing more than what you’ve put in so far this year but are worried that 2023 is almost over, here’s some good news. HSAs give you until the following year’s tax-filing deadline to make contributions. So you can fund your 2023 HSA all the way up to April 15, 2024.

And if you’re worried about overfunding your HSA, here’s another lesser-known rule. Once you turn 65, you can withdraw from an HSA without penalty to cover any expense — it doesn’t have to be healthcare-related. In that situation, you’ll be taxed on your withdrawal, but there won’t be any penalties to worry about.

So think about it this way. If you grow a large HSA balance and don’t end up needing to spend a lot of money on healthcare in retirement, you can always use your HSA as a general retirement account. That makes funding it to the max a really low-risk proposition.

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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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Buy now, pay later plans can land you in debt, but they can also up your shopping game if you’re savvy. Find out how to get the most value from BNPL. 

You’ve probably noticed buy now, pay later payment options popping up practically every time you make an online purchase. Buy now, pay later (BNPL) services like Affirm, Klarna, and Afterpay, let you split up a purchase into several installments. When you pay using BNPL, you’ll usually spread out the purchase price into four separate payments, the first of which is due at the time of the transaction.

When you pay with BNPL, you’re taking on debt. Shoppers should be aware that these services make most of their money from retailers who pay the fees because customers often overspend when they use BNPL. But if you understand the truth about BNPL services and exercise caution, this option can transform the way you shop. Here’s how.

1. You can avoid interest and late fees

Unless you have a 0% APR credit card (in which case, that 0% APR is always temporary), you’ll accrue interest on any balance you carry from month to month. If you’re carrying a balance between billing cycles, interest will start to accrue as soon as you buy something using a credit card.

One of the big appeals of buy now, pay later plans is that most don’t charge interest if you pay off the loan as agreed. Be aware, though, that many of these loans charge substantial annual percentage rates (APRs) plus fees if you’re late or miss a payment.

2. You can avoid a hard credit inquiry

When you apply for most credit cards or personal loans, you receive a hard inquiry on your credit reports, which can temporarily ding your scores by a few points. But applying for BNPL doesn’t typically result in a hard inquiry, which can be helpful if you’re trying to improve your credit and personal finances. Plus, even if you have healthy credit, there are times that you want to avoid opening a new line of credit or making a large purchase on a credit card — particularly if you’re applying for a mortgage.

3. You can avoid long-term debt

With credit cards, it’s often tempting not to pay off your balance in full each month because parting with your cash is painful. But when you use BNPL, you’ll only have about six weeks or so to pay it off. For some, that’s a downside, but it can be a positive if you’re looking to avoid long-term debt or you’re paying off credit cards and don’t want to add to the balance.

Just make sure you pay off the loan with your debit card instead of a credit card. Otherwise, you could wind up indirectly paying interest on BNPL purchases by way of your credit card’s interest rate.

4. You can take advantage of a good deal

Sometimes, a great deal doesn’t sync with your pay schedule. If there’s a deal you want to take advantage of, but you won’t get paid for a few days and you don’t want to pay with credit, BNPL could help you seize a bargain.

Be cautious here, though: Only use BNPL to land a deal if you’re buying things you actually need, like new tires, a laptop for school, or a replacement for the couch your dog destroyed. Good deals can be found every day, and using BNPL to chase too many of them could drive you into debt.

5. You can avoid higher-interest debt

It’s essential to look at the alternatives to BNPL, such as a 0% APR credit card or in-store financing. But if you’re facing a pressing need and you’re considering high-interest alternatives, like payday loans or a credit card cash advance, BNPL is usually the better option. Once you pay off your BNPL loan, aim to build at least a three-month emergency fund so you have cash on hand for future crunches.

How to avoid debt with BNPL

If you’re considering a BNPL loan, follow these tips to avoid borrowing more than you can afford:

Use BNPL for necessary purchases only. Save up for purchases you don’t need right away.Don’t take out more than one loan at a time. Because BNPL lenders usually don’t report to credit bureaus, borrowers can often get approved for more than they can afford to repay.Budget for each of your payments. If you think you’ll fall short on one of your payment due dates, consider whether you can cut an expense or earn quick cash with a side hustle or a few extra work shifts.

Finally, be sure you actually read the details of any payment plan before you agree to it. If there’s something you don’t understand or you’re not confident you can repay the loan, it’s a sign you should pass.

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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.Robin Hartill, 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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When goodies go on sale at Costco, prices can get remarkably competitive. Check out these deals that even cover the cost of membership. 

So, you want to join Costco but you’re not sure about paying the $60 fee. I get it. I mean, $60 is a lot of money to pay just to get in the door. How can you be sure it will be good for your personal finances?

Well, one surefire way to get your money’s worth out of a Costco membership is to make it all up in one purchase. After that, everything you save is just gravy.

Costco’s regular prices are always pretty good, so when something goes on sale, it’s often worth a shopping trip. These five deals that will save you at least enough to cover the cost of membership.

1. Keurig K-Supreme Plus Special Edition Single Serve Coffee Maker

These popular little coffee machines are pricey for a reason: They’re easy to use, they’re convenient, and they make pretty good coffee. This bundle from Costco includes the Keurig K-Supreme Plus Special Edition, which has a removable reservoir and built-in water filter. Plus, Costco includes 18 coffee pods of various flavors, as well as a reusable filter for folks who prefer to grind their own beans.

Sale price: $99.99 (if you order online, you’ll also pay $9.99 shipping)

The numbers: If you’re not a Costco member, the best deal you can find on this model is from Keurig itself, which will sell you just the machine for $109.99 if you sign up for the starter kit and commit to 12 months of auto-shipped pods (It’s up to you to decide on value there).

Other than that, you’re looking at $149.99 for just the machine from most retailers, plus another $10 tp $15 for the reusable filter and whatever value you assign to the 18 pods. All in all, you’re getting at least $60 in value from the Costco bundle over buying elsewhere if you find it in store.

>> Not a Costco member? Check out these alternatives on Amazon here. <<

2. Vitamix Immersion Blender 5-piece Set

Immersion blenders are fantastic tools, offering a convenient way to blend in any container, and would make a nice gift for a foodie or cook. Costco’s bundle also includes a variety of accessories, including a whisk attachment (great for mixing batters), mini chopper, blending jar, and handy storage case.

Sale price: $174.99

The numbers: If you only want the blender, you can save money by buying it on its own; at time of writing, Walmart has it for $115, and most other retailers have it for $125. If you then want to buy the accessories, you’re looking at another $129.80. So if you want the accessories, the Costco bundle will save you around $64 — enough to cover the cost of your membership (with a little left over).

>> Not a Costco member? Check out these alternatives on Amazon here. <<

3. Celestron 90AZ-SR Refractor Telescope With Smartphone Adapter

Astronomy can be a fantastic gateway into the world of natural science, inspiring folks of all ages to dive deeper into the world around them. This is a solid entry-level model that will show you some of the more prominent sights in the solar system, such as Saturn’s rings and Jupiter’s moons. Plus, the included smartphone adapter makes it easy to take photos to share your new hobby!

Sale price: $119.99

The numbers: Right off the bat, you’re coming out ahead on this thing, since the $119.99 sale price at Costco is $61 less than the next-closest I could find (Amazon, $181.53 at time of writing). But only the Costco listing includes the smartphone adapter, which costs an extra $17, so you’re actually coming out ahead by a membership plus $17.

>> Not a Costco member? Check out these alternatives on Amazon here. <<

4. DJI Mini 3 Pro Drone Bundle

This bundle from Costco includes the very popular DJI Mini 3 Pro drone, which shoots exceptional footage in 4K HDR and weighs less than 0.55 lbs. You’ll also get two extra batteries, a battery charger, and a 128GB microSD card.

Sale price: $699.99

The numbers: I couldn’t find this same bundle for sale elsewhere. You can find just the DJI Mini 3 Pro drone and remote in several places for $759.99.

So before you even add the extras, you still get back your $60 in Costco membership fees on the price of the drone alone. Plus you get the bundle extras. One battery on DJI’s website costs $65, so the extras from Costco are worth a minimum of $130.

>> Not a Costco member? Check out these alternatives on Amazon here. <<

Stacking deals with bonuses

Before you run out and spend a couple hundred bucks on a great Costco deal, consider how you’re going to pay. If you’re going with a credit card, there are a few considerations:

You can only use Visa credit cards in stores. You can use Visa or Mastercard credit cards on Costco.com.When it comes to credit card rewards, warehouse/wholesale clubs are their own bonus category. If you don’t have a card that earns bonus rewards at wholesale clubs, consider a flat-rate cash back rewards card.Many great no annual fee cards have nice welcome bonuses that only require you to spend $500 or so. A welcome bonus could be a nice way to get some extra cash back on all that holiday spending.

Costco can be a great place to save money — if you can get past that fee. But I’ve just shown you at least a few of the ways you can score a Costco membership without worrying about whether you’ll make up for that costly membership fee.

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As an Amazon Associate I earn from qualifying purchases.

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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Brittney Myers has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, Mastercard, Visa, and Walmart. The Motley Fool recommends the following options: long January 2025 $370 calls on Mastercard and short January 2025 $380 calls on Mastercard. The Motley Fool has a disclosure policy. Read More 

Having a rigid schedule and waiting to book your travel could cost you. Here’s how to save money on your winter travel plans this year. 

Even where I live in the South, winter is quickly setting in, and on cold mornings, I begin dreaming of warmer places and abundant sunshine. That impulse is felt by millions of people around the country, causing many people to pick up their phones and hunt for winter travel deals.

If you’re planning your winter travel right now and don’t want to bust your budget, here are a few mistakes to avoid so you don’t overpay.

1. Waiting too long to book your vacation

While finding last-minute travel deals is possible, it’s likely you’ll pay more for your flight and hotel if you wait too long to book your travel.

The simple reason for this is that fewer flights and hotel rooms will be available the closer you get to your travel dates, so companies may not have any incentive to offer you a deal.

Instead, try to plan out your winter travel. A report from CheapAir.com found that the most reliable window for booking a cheap flight is between 46 and 164 days in advance.

2. Packing too much

Baggage fees are no joke these days. Nearly every airline charges for additional bags, and some even charge for one checked bag. Bureau of Labor Statistics data shows that baggage fees totaled $6.8 billion in 2022.

If you’re going somewhere warm for your winter travel, you may be able to easily cut back on how much luggage you bring. It may get a little trickier to do so if you’re visiting a destination where you’ll need lots of warm clothes, but taking time to think through what you need could save you some serious cash.

3. Not using credit card rewards you’ve accumulated

Overlooking your credit card rewards could be a big mistake when booking winter travel. Many credit cards offer points, cash back, or airline miles that can accumulate throughout the year.

This means you may be able to use hotel points or airline miles to lower your travel costs or even use your cash back rewards to pay for some of your travel expenses.

Similarly, if you travel frequently, it could be a big mistake not to have a travel credit card that allows you to earn rewards. You can even select a credit card specific to your preferred airline, such as a Delta Airlines credit card.

4. Not remaining flexible

Being flexible is one of the best ways to save on travel any time of the year, including for your winter vacation. Having rigid times for your flight times, dates, and what airports you leave from can all keep you from finding a good deal.

Instead, try to be as flexible as possible. Maybe your travel dates can’t change, but you can leave earlier or later in the day than you previously planned. Or, if you can’t change flight times and dates, perhaps there’s another airport nearby you can fly out of or return to that could lower your ticket prices.

The same goes for hotels. Switching around the dates or shifting away from expensive weekend bookings could help you reduce your costs.

Avoiding all of the above can help you save on your winter travel, but remember that there are almost always hidden fees when traveling, including resort fees, airline seat selection, and booking fees.

It’s a good idea to map out your travel budget ahead of time to figure out how you’ll pay for your trip. It may include using money from your savings account mixed with travel rewards. However you choose to pay for it, make sure you’ve tried to avoid these costly travel expenses to maximize your travel budget.

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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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