Money Management

Curious to see what the typical homeowner pays on their mortgage? Keep reading to find out. 

Signing a mortgage today is not the same as signing a mortgage three years ago. In 2020, mortgage lenders were offering almost ridiculously low interest rates to entice buyers during a financial crisis.

But mortgage rates have hovered around 7% for much of 2023. And when you combine that with elevated home prices, it has the makings of a real affordability crisis.

You may or may not be surprised to learn that the average home buyer today has a monthly mortgage payment of $2,866, according to a new report from Redfin. That’s an increase of 20% from a year ago, when the average mortgage payment was $2,395. Today’s typical mortgage payment also represents an all-time high, Redfin says.

Based on borrowing rates, home prices in your area, and the funds you have on hand for a down payment, you might run some numbers to figure out what mortgage payment you think you can afford. But your mortgage calculations might be incomplete for one big reason.

You need to look at the big picture

Let’s say you’re buying a $300,000 home that you can make a 20% down payment on, leaving you to borrow $240,000. Let’s also assume you sign a 30-year mortgage at 7%. That leaves you with a monthly payment of about $1,600 for principal and interest on your loan.

Now, you’ll often hear that it’s wise to keep your monthly housing payments to 30% of your take-home income or less. So let’s say you bring home $5,400 a month. A monthly mortgage payment of $1,600 puts you at just under that 30% threshold, so you might assume you’re good to move forward with that sort of home purchase.

But that 30% guidance is meant to include your total housing costs, not just your mortgage. So, let’s say that on top of a $1,600 mortgage payment, you’re also looking at $100 a month in homeowners insurance and $200 a month in property taxes. Let’s say you’re also on the hook for homeowners association fees that cost $250 a month.

All told, your monthly housing costs are $2,150. If you bring home $5,400 a month, that’s about 40% of your pay, which is really high. If you allow that much of your income to be eaten up by housing costs, you may not have enough money left over to cover your non-housing expenses.

Ways to lower your mortgage payments

You can take a few steps to keep your mortgage payments as low as possible.

First, try to put down more money at closing. That could mean delaying your home purchase until you’ve saved more.

Next, work on boosting your credit score. The higher it is, the more favorable a mortgage rate you might qualify for.

Finally, consider different neighborhoods if the one you’re most focused on has higher home prices. You may want to look at a neighborhood that’s in the process of being built up. There may not be such a big demand for homes in a neighborhood like that, and so you might snag a bargain. And while you might have to wait things out for a couple of years until local amenities improve, you could end up in a situation where you’re able to get in and buy a really nice home before prices explode.

It may shock you to learn that the average home buyer today has a $2,866 mortgage payment. But whether the mortgage payment you’re looking at is higher, lower, or similar, run the numbers and consider your total housing picture to decide whether it actually works for you.

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Costco’s inventory tends to rotate. Read on to see which products may not be available come 2024. 

There are certain Costco products you can count on finding every week, barring a random supply chain hiccup. Grocery staples like produce, milk, and eggs, for example, are pretty much a staple. And it’s rare to walk into Costco and not find a wide selection of tissues, paper towels, and household cleaners.

But Costco does tend to rotate some of its inventory on a seasonal basis. And that means there are certain items you’ll only find at specific times during the year.

If you’re looking for Halloween costumes, for example, you won’t find them in April. But you probably will find them in late August through mid-October, or whenever they all sell out.

Right now, Costco has a host of awesome products on its shelves that may not be around once the new year arrives. So if they’re items you’re hoping to buy, you may want to do your shopping soon.

1. Gift baskets

Costco carries a limited number of gift baskets throughout the year. But right now, the selection of gift baskets you’ll find in stores and on Costco’s website is huge. So if you know you have some gifting needs in January, you may want to scoop up a basket before that selection gets whittled down.

That said, if you’re going to buy a gift basket now to hand to someone in January or beyond, check the items carefully, as some might be more perishable than others. You can generally get away with holding onto wrapped chocolates for a few months before their quality degrades, but be more careful with dried fruit and baked goods (even the packaged kind).

2. Toys

The toy aisle at Costco isn’t just a temporary one that’s put up during the holidays. You can find toys at Costco throughout the year. But now’s when Costco’s toy selection tends to be the largest. And often, you’ll find toy bundles at Costco that you won’t see elsewhere. So if you have birthdays or other occasions coming up in 2024 that you want to stock up for in advance, now’s your chance.

Plus, unlike gift baskets, you don’t have to worry about toys expiring. You just need to worry about finding a place to keep them hidden from their intended recipients.

3. Fancy chocolates

You can find your fair share of chocolate at Costco at any time of the year. And it’s not just Hershey bars and similarly mass-produced items you’ll see online and on Costco’s shelves. You can find fancier stuff, like these delicious sea salt caramels, on a consistent basis.

But right now, Costco’s shelves are loaded with higher-end chocolate assortments that make a great gift or treat for yourself. And pretty soon, those are going to be gone, since Costco tends to stock them specifically for the holidays. So if you like the idea of fancy truffles, make your purchase sooner rather than later.

A lot of people are racking up large credit card tabs in the course of their holiday shopping, so now may not be the best time to stock up on items you don’t need right away. Keep your personal finances in mind. But if you think you’ll have a need for gift baskets, toys, and fancy chocolates in the new year, then you may want to load up now if you can afford to shell out the extra money. Wait too long, and you might have to sit tight until next November for these items to make a full-fledged appearance at Costco.

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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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Many local businesses had high hopes for Small Business Saturday. If yours didn’t pan out, here’s your game plan. 

The first Small Business Saturday shopping event took place in 2010. And since then, small businesses have relied on the Saturday after Thanksgiving to enjoy an uptick in sales and revenue.

But what if this past November’s Small Business Saturday was nothing but a big letdown? Maybe you didn’t get nearly as many customers as you expected. Or maybe you just couldn’t compete with the deals that retail giants like Target and Walmart were offering up on Black Friday and Cyber Monday.

You may be feeling down and worried if your Small Business Saturday sales numbers were truly nothing to write home about. If that’s the case, make these key moves ASAP to regroup.

1. Come up with a compelling year-end promotion

Many consumers end up rushing to finish their Christmas shopping at the last minute. So it’s definitely not too late to take advantage of the holiday boom.

Now’s a good time to come up with a great promotion that entices customers to give you their holiday business. Offer a free item with a purchase of a certain threshold, or a discount on purchases over a certain level. You may be surprised at the number of people who are willing to come in and swipe their credit cards to complete their holiday shopping lists.

Another idea along these lines? Extend your hours the week before Christmas so last-minute shoppers have more options for visiting your business.

2. Give consumers a reason to come back next year

The start of a new year can be a tough time to draw in customers. Many people resolve to cut their spending in the new year. So unless your business focuses on fulfilling an essential need, you may find that people are generally cutting back on purchases in January.

That’s why it pays to take steps now to entice people to show up once 2024 arrives. One promotion you may want to consider between now and Dec. 31 is a 10% off coupon (or some other percentage off) for purchases made between Jan. 1 and 31. Or, offer up a small amount of store dollars for customers to redeem in the new year.

3. Host events to draw in customers

Some people may be more apt to spend their money when they’re getting entertainment on top of a product. So to that end, see what wiggle room you have to host events in your space.

If you own a bookstore, see if you can find an instructor to host a writing workshop one evening a week. Charge a modest cover for the cheese and crackers you’ll put out and to cover your instructor’s fee, and see how it goes. You may find that customers end up opening their wallets to make purchases once they’re already in your store for another reason.

It’s hard when you anticipate a successful shopping event and it ends up falling short. But don’t let one less-than-stellar Small Business Saturday wreak havoc on your confidence. Instead, take steps to drive more customers to your door and set yourself up for success 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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Have big financial goals for 2024? Here’s how to pull them off without spending much — or any — money. 

You’ll often hear that it takes money to make money. And in the context of something like investing, that’s true. You can’t grow $100 into $10,000 over time if you don’t put in that $100 to begin with.

But you don’t necessarily have to spend money to save money, or achieve some of the other big goals you may be setting for yourself for 2024. Here are a few steps you can take to achieve your financial resolutions on the cheap.

1. Use free online tools to your advantage

The internet is loaded with no-cost resources that could make your financial resolutions far more attainable. All you need to do is look around and see what tools are available.

Many people resolve to boost their savings account balance when a new year arrives so they’re more prepared to handle surprise bills. You can use this emergency fund calculator to see how much money you should be socking away for unplanned expenses.

Or, let’s say you’re hoping to buy a home in 2024. You can use this mortgage calculator to determine what monthly payments you might be facing, based on home prices in your preferred neighborhood and the amount of money you have on hand for a down payment.

2. Don’t pay to get help with budgeting

It’s more than possible to meet different financial goals without committing to a strict budget. But there’s a reason financial gurus tend to talk up the benefits of budgeting. Having a good sense of where your money is going month after month could make it easier to limit your spending and free up cash for different objectives, whether it’s paying off debt or saving for home improvements.

Now, you could work with an accountant or financial advisor who could help you set up a budget, but that’s an expense that’s probably not so necessary. Instead, you may want to turn to a budgeting app. There are plenty of free options you can access, and many of the apps that do cost money aren’t terribly expensive.

Before you pay for an app, though, look into a free trial. In many cases, you’ll get 30 days to see if it’s something worth spending money on.

3. Find an accountability partner

Maybe you’re hoping to max out an IRA in 2024. Or maybe you want to save $5,000 to make a down payment on a car.

You may have a better chance of meeting your goals if you can find someone to support you along the way. And in return, you can offer reciprocal support so your partner can meet their goals, too.

Keep in mind that you don’t necessarily have to find someone who’s working toward the exact same goals you are. Maybe you’re trying to save for a vacation while a friend is building an emergency fund. Ultimately, the tactics you employ to achieve either goal will likely be similar, so you can easily work on them together and encourage each other along the way.

You may be excited to tackle your financial New Year’s resolutions. And thankfully, you may find that you can pull yours off without having to tap your personal financial resources too heavily along the way.

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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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Worried about higher taxes? Read on to see if you should be — and what to do about it. 

Taxes are a part of life, no matter your age or earnings. But naturally, you probably want to pay as little to the IRS as possible.

You may be worried about your tax bill going up in 2024. And under certain circumstances, it might. But there are also steps you can take to make up for that.

Reasons your tax bill might rise in the new year

Different scenarios might lead to a higher tax bill.

1. You’re earning more money

The U.S. tax system is a marginal one, which means you pay a higher rate of tax on your highest dollars of earnings. If you get a big raise, or you boost your income substantially with a side hustle, you might fall into a higher tax bracket, resulting in a larger bill.

2. You’re making more money in your savings account

Savings accounts are paying generously these days, as are CDs. And while that’s a good thing in theory, it could be a bit problematic from a tax perspective.

The interest you earn from a savings account or CD is taxed as ordinary income — meaning, at the highest rate that applies to you. So, let’s say you have $20,000 in savings and normally earn 1% interest on your money. That’s $200 in interest over a year. If you’re now earning 5% due to the higher interest rates that are available today, that’s $1,000.

Remember, too, that when you earn money from a salaried job, you have taxes taken out of your paychecks as you go. With interest income, you just collect your money. So at the end of the year, you have to settle up with the IRS by paying them a portion.

3. You’re making money in your brokerage account

When you make a profit in your IRA, it does not result in an immediate tax bill. But when you sell stocks or other assets at a profit in a regular brokerage account, you are on the hook for capital gains taxes the year you make that sale. So that, too, could lead to a higher tax bill in 2024.

How to offset a higher tax bill

If you’re worried about owing more money in taxes in 2024, you can take steps to minimize that hit.

1. Contribute to a tax-advantaged retirement plan

Putting money into a traditional 401(k) or IRA will shield some of your income from taxes, provided your contributions don’t exceed the annual IRS limits. In 2024, these limits are $23,000 for a 401(k) if you’re under 50, or $7,000 for an IRA if you’re under 50. If you’re 50 or older, these limits rise to $30,500 and $8,000, respectively.

2. Fund an HSA

Like a traditional IRA or 401(k), HSA (health savings account) contributions are tax-free. You can put in up to $4,150 in 2024 for self-only coverage or up to $8,300 for family coverage in 2024. If you’re 55 or older, you get to contribute an additional $1,000 on top of whichever limit applies to you.

3. Be charitable

Donations to registered charities can serve as a tax deduction. Just make sure you keep records so you know what to claim. You can also take a deduction for the donation of different goods, from clothing to furniture to even your vehicle. Note that you can only claim a tax deduction from donations if you itemize on your tax return.

Nobody wants to see their tax burden increase. But the good news is that there are things you can do to pay the IRS less, even if your tax bill is higher than what it’s been previously.

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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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