Money Management

Could homeownership be in the cards for you in 2024? Read on to find out. 

It would be more than fair to say that 2023 was not an easy year to buy a home. Not only were home prices elevated, but mortgages were expensive to sign from the start of the year through the end of it.

Things may not be much better in 2024. However, a good 41% of Americans plan to buy a home in 2024, according to a recent survey by Architectural Digest. If you’re hoping to join the ranks of 2024 home buyers, make these moves sooner rather than later.

1. Get pre-approved for a mortgage

Mortgage pre-approval is not the same thing as a mortgage lender officially giving you a home loan. But it’s a step in that direction.

The pre-approval process has you providing a lender with certain financial information that it then verifies. From there, you’ll be told what loan amount, if any, you’re pre-approved for. If your financial situation doesn’t change for the worse between the time of your pre-approval and the time of your mortgage application, then you generally won’t have a problem getting a mortgage.

It’s important to get pre-approved for a mortgage for two reasons. First, as you start searching for homes, having pre-approval sends the message to sellers that you’re a serious buyer. That could give you an edge over the competition. And that’s important seeing as how the U.S. housing market still sorely lacks inventory.

Secondly, your mortgage pre-approval letter should indicate the amount you’re approved to borrow. That could help you determine whether it’s a good time to buy a home based on what you can afford, and what price range you should be looking at.

For example, let’s say you’re pre-approved for a $240,000 mortgage, and you have $40,000 to put down on a home, giving you $280,000 in buying power. If properties in your preferred neighborhood are $330,000 to $350,000, it’s a sign that you may not be ready to buy in 2024. But if there are properties that range from $260,000 to $350,000, you’ll know which ones to consider.

2. Check your credit score — and give it a boost if it needs one

The higher your credit score, the more likely you are to not only get approved for a mortgage, but lock in a more competitive rate on one. If you’re eager to buy a home in 2024, check your credit score sooner rather than later. You can often access it via a bank or credit card account statement.

If your score is in the upper 700s or higher, then you’re in pretty good shape to get a mortgage and snag a favorable rate. If your score is lower, try your best to give it a lift. You can do so by paying incoming bills on time and correcting errors that may be lurking on your credit report.

3. Whittle down some existing debt

Mortgage lenders prefer to work with applicants who aren’t already loaded with debt. If you’re juggling some existing credit card balances, whittling them down could work to your advantage, as that might make a lender more comfortable with the idea of writing you a massive loan.

Also, the less outstanding credit card debt you have, the more your credit score has the potential to improve. Plus, when you’re looking at taking on the expense of owning a home, the last thing you want is to have to keep up with pre-existing debt payments. So if you can approach homeownership from a place where you have very little debt, or better yet, none at all, it could make the process a lot less financially stressful.

It’s encouraging to see that so many Americans are looking to buy in 2024 despite today’s tough housing market conditions. Make the above moves to put yourself in the best position to become a homeowner in the new year.

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Auto insurance can be costly. Drivers may qualify for a discount if they pay for a year or six months of coverage upfront. Here’s what you need to know. 

When you drive a car, there are many expenses to pay. Of course, there’s the initial cost of purchasing your vehicle and the expense of an auto loan if you’re financing it. You must also pay regular maintenance and repair expenses to keep your car in safe, working condition.

Another cost that drivers pay for is auto insurance. The price you pay can vary greatly, and factors such as your driving history, the type of car you have, and location can impact your rate. Some drivers pay much more than others for coverage.

Did you know that altering how you pay your car insurance bill could result in savings? Keep reading to find out why one writer pays her auto insurance premiums every six months. Drivers who are looking for additional savings may decide to follow the same strategy.

Unlock insurance discounts with this payment choice

Similar to other expenses, many drivers pay their auto insurance premium costs monthly. But that may not be ideal if you’re trying to maximize your savings. Many auto insurers offer discounts to drivers who pay their yearly or six-month premium upfront.

Switching how you pay your bill could result in significant savings, allowing you to keep more money in the bank. My auto insurer doesn’t offer an annual payment option, but it extends a discount to drivers if they pay their six-month policies in full. By doing this, I qualify for a 15% discount on my six-month policy rate.

I used to pay for coverage monthly, but several years ago, I switched to paying the entire six-month premium to unlock the savings provided. The first time I paid my six-month policy in full, it stung because I wasn’t used to spending so much at once. But I knew I was making a sound financial choice because I received a sizable discount.

If you’re a driver looking to trim some of your spending and want to find ways to reduce your insurance costs, you may want to see if your auto insurer offers payment discounts. Life is expensive, so any money saved is a win for your bank account.

Here’s how I financially prepare

For many people, paying a six-month or annual premium upfront is expensive. If you’re considering utilizing this payment strategy, make sure you can cover the cost of your bill without accumulating credit card debt. You should only pay with a credit card if you can pay the bill in full to avoid being charged expensive credit card interest fees.

One way I cope with the pricey bill is by stashing away money in my high-yield savings account throughout the year. When it’s time to renew my six-month auto insurance policy, I have the money already saved. I charge my rewards credit card so I earn rewards and then use my savings to pay myself back when I pay my credit card bill.

Now you know any easy way to save on insurance costs. Don’t ignore ways to save money if you’re working to improve your finances. Small life changes like this could help you keep more of your hard-earned money. For additional tips, check out our personal finance resources.

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

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It’s tempting to stretch things financially to buy a home you really love. But read on to see why that’s a bad idea. 

When you’re buying a home, it’s important to set a budget ahead of time so you can narrow down your search. And that budget should hinge on several factors, including:

Your down payment savingsYour incomeThe amount of money a mortgage lender approves you to borrow

But if you’re going to set a home-buying budget, you should make a point to actually stick to it. Some soon-to-be buyers might have other plans.

Almost half of U.S. home buyers say they’re willing to go about $50,000 over their budget to buy their dream home in 2024, according to a recent survey by Architectural Digest. But going over budget is a move you might truly end up kicking yourself for.

You don’t want to end up house poor

It’s easy to see why you may be tempted to go above your budget when buying a home. Let’s say you find a suitable home in your preferred neighborhood for $300,000, but you find a home you absolutely adore for $50,000 more.

You may have told yourself you’d limit your purchase to $300,000. But then you might think, “Hey, this is a home I might live in for the next 30 years, so it’s worth the stretch.”

The problem, though, is that stretching your budget might lead to a situation where you struggle to keep up with your housing costs, or non-housing costs because your home-related expenses are eating up so much of your money. That’s a stressful way to live.

Even if going over budget still technically allows you to keep up with your bills, your paycheck might be gone by the time your essential expenses are covered. From there, you might have no wiggle room to spend money on leisure or other things that make life pleasant.

To put it another way, going over budget on a home purchase increases your risk of becoming house poor. That’s not a fun way to live.

You don’t want to risk losing your home

Another reason you don’t want to go over budget on a home purchase? If you start to fall behind on your housing payments, you could risk losing your home to foreclosure.

Rest assured that this won’t happen after a single missed mortgage payment. But a series of missed payments could lead to you having to say goodbye to the home you fell in love with.

Set a housing budget and stick to it

It’s hard to say no when you’re looking at homes and you come across a property that’s over budget but fabulous. But if you bust your budget, you might really regret it after the fact.

To avoid that fate, set a rule that you’re only going to look at homes up to a certain listing price. And if you’re working with a real estate agent, let them know what the top end of your price range is, and request that they not show you homes that exceed it.

If you’re already working with a real estate agent who keeps showing you properties that are beyond what you can comfortably afford, ask them to stop. And if they don’t, find someone new to work with.

Remember, your real estate agent gets paid by selling you a home. But you’re the one who will be responsible for keeping up with the expenses that come with it. So if you have an agent who likes to push those limits, you may want to seek house-hunting help elsewhere.

It’s hard enough exercising self-control when sticking to a home-buying budget. You don’t need the person who’s supposed to be helping you leading you into a potentially poor financial situation.

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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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It’s important to invest your retirement savings. But should you keep any of it in cash? Read on to find out. 

To live comfortably as a senior, you’ll need savings. And it’s a good idea to house the bulk of your savings in an IRA or 401(k) for the tax benefits involved. Both of these accounts allow you to invest your money so it ideally grows into a much larger sum over time.

But should you invest all of the money you’re earmarking for retirement? Or should some of it sit in a savings account so you have some cash on hand?

Your strategy should hinge on your age

When retirement is many decades away, it’s smart to invest your money — pretty much all of it. Keeping it in cash might earn you around 2% a year or so in interest (keeping in mind that today’s bank account APYs of 4% and higher really aren’t the norm). But investing it might earn you 10% a year, since that’s the stock market’s average return over the past 50 years. So you want to capitalize on that growth opportunity.

However, as you get closer to retirement, it’s a good idea to move some of your long-term savings into cash instead of keeping it invested. The reason? Once you retire, you’re likely going to be withdrawing from your nest egg regularly. But what if the stock market suddenly tanks?

In that case, you risk taking permanent losses by having to sell investments for money at the wrong time. The same thing could happen to the bond market, too. If you own a lot of bonds and have to sell them at a loss, you’re in the same unfavorable position.

That’s why it’s important to keep some of your retirement savings in cash — but only once you’re nearing retirement. You probably don’t want to keep a portion of your nest egg in cash in your 30s or 40s. But if you’re 62 years old and expect to retire at 65, that’s a good age to start turning some of your assets into cash.

The right amount of cash to have on hand

During your working years, you should aim to have enough cash in an emergency fund to cover three months’ worth of living costs at a minimum. For retirement, you’ll really want more like one to two years’ worth.

The reason? Any market downturn that impacts your portfolio could be lengthy. You want to give yourself the opportunity to ride out a downturn while still being able to cover your bills.

If you keep one to two years’ worth of expenses in cash, you’ll be able to avoid selling assets for that long. In fact, if you’re the more conservative type when it comes to risk, you could even opt to keep three years’ worth of expenses in cash. You’ll lose out on some growth by doing that, but it might give you more peace of mind.

With that said, different people have access to different income streams in retirement. If you own a rental property that generates steady income, for example, you may be able to get away with keeping a little less cash on hand.

But for the typical person, one to two years’ worth of cash in the bank is generally best. Just don’t make the mistake of moving that money over too early in life.

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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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Costco gift cards can help you save money at your favorite stores. Check out which 17 gift card bundles are 20% off. 

In case you haven’t noticed yet, Costco sells gift card bundles to popular stores and restaurants at a hefty discount. In fact, it’s one of my favorite personal finance tips for Costco members. If you’re already shopping at these retailers, you could save 10% to 30% just by buying their gift cards on Costco’s website. While Costco frequently updates its selections, you can currently save at least $20 on the following $100 gift cards.

1. Lyft

Price: $79.99Value: $100Limit: 2 per membership*Available while supplies last

2. Peet’s Coffee

Price: $74.99Value: $100 (five $20 e-gift cards)Limit: 4 per membershipValid at most locations (full list found here)

3. Instacart

Price: $79.99Value: $100Limit: 2 per membership*Available while supplies last

4. Fandango

Price: $79.99Value: $100 (four $25 e-gift cards)Limit: 5 per membership

5. Domino’s

Price: $79.99Value: $100 (four $25 e-gift cards)Limit: NoneValid at most locations (full list found here)

6. Dave & Buster’s

Price: $79.99Value: $100 (two $50 e-gift cards)Limit: 5 per membershipValid at all Dave & Buster’s U.S. locations

7. Sullivan’s Steakhouse

Price: $69.99Value: $100 (two $50 e-gift cards)Limit: 10 per membershipValid at 13 locations

8. Bowlero

Price: $69.99Value: $100 (four $25 e-gift cards)Limit: 5 per membershipValid at locations nationwide

9. Romano’s Macaroni Grill

Price: $69.99Value: $100 (two $50 e-gift cards)Limit: 10 per membershipValid at 41 locations (full list here)

10. Pinstripes

Price: $69.99Value: $100 (two $50 e-gift cards)Limit: 10 per membershipValid at 11 locations (full list here)

11. Topgolf

Price: $79.99Value: $100 (two $50 e-gift cards)Limit: 5 per membershipValid at any U.S. location

12. Spafinder

Price: $79.99Value: $100 (two $50 e-gift cards)Limit: 5 per membershipValid at thousands of spas, salons, yoga, and fitness centers (use Spafinder’s website to find locations near you)

13. Golden Corral

Price: $79.99Value: $100 (two $25 physical gift cards)Limit: None statedValid at over 350 U.S. locations (full list here)

14. Candy Crush

Price: $79.99Value: $100 (four $25 e-gift cards)Limit: 2 per membership

15. IHOP

Price: $79.99Value: $100 (four $25 e-gift cards)Limit: 5 per membershipValid at over 1,600 locations (full list here)

16. Chuck E. Cheese

Price: $79.99Value: $100 (four $25 e-gift cards)Limit: None statedValid at over 400 locations (full list here)

17. Red Lobster

Price: $79.99Value: $100 (four $25 e-gift cards)Limit: None statedValid at over 600 locations (full list here)

How Costco gift cards work

Costco sells most of its gift card bundles online, though it does sell a smaller number in its stores. Typically, the gift cards it sells at warehouse stores are for local or regional businesses, while those sold on its website are geared toward nationally recognized brands. If your gift card is electronic, Costco will deliver it to your inbox, after which you can use it directly or upload to your retailer’s app. If your gift card doesn’t cover the full purchase amount, you can use a cash back credit card to earn extra rewards on top of your savings.

Pay close attention to Costco’s fine print on each gift card. As noted above, some of these have limitations on how many you can buy per membership, while others are restricted to specific locations. And when Costco says it has a limited supply of gift cards, it’s not bluffing. In fact, not too long ago, I wrote about Costco’s Airbnb gift card. A few days later, Costco ran out of supply and took it off its webpage.

One last caveat. Most of these gift cards are for stores and restaurants that fall under the category of nonessential spending. In fact, only Instacart could really be considered “essential” and even then only if you purchase groceries through the app. If you’re trying to control your spending, then these gift cards might not be the best idea, even if they save you money.

Finally, if none of these gift cards appeal to you, take a look at Costco’s website to see what other options are available. Even just knowing what gift cards Costco sells could help you in the future. You never know when you might find yourself at a Dave & Buster’s (or Chuck E. Cheese), thanking yourself for getting that extra $20 of gift card value to beat that high score at Skee-ball.

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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 positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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