Money Management

You can save hundreds of dollars by putting up an artificial tree, as long as you keep it for a long time. Take a look at the details here. 

I’m not here to tell you that buying an artificial Christmas tree is the right thing for your personal finances. But it could save you a ton of money. As an owner of an artificial Christmas tree, I can also say that not having to constantly give it water and vacuum up all the dead needles is a huge plus as well.

If you’re on the fence about which type of tree to buy this year, here’s how each one will affect your budget over the next 10 years.

Fake trees save you real cash

According to the American Christmas Tree Association (ACTA), the cost of a real tree is up 10% compared to last year, with the price ranging between $80 to $100. That’s no small sum of money, especially when you consider that the average consumer already plans to spend an estimated $975 on holiday gifts this year.

Of course, artificial Christmas trees aren’t cheap either. The ACTA says that 52% of consumers who buy fake trees pay $200 or less, and 27% pay between $200 to $400.

But despite their potentially higher cost, artificial trees also last a very long time. Faux trees can be used from 10 to 20 years.

I found a nice 7.5-ft pre-lit artificial blue spruce tree on Target’s website on sale for just $120 if you buy it online. If we assume that it will last 10 years, the low end of a fake Christmas tree’s estimated lifespan, then the only money put toward the tree over that time is $120.

Conversely, if you buy an average-priced live tree at about $90 every year, you’ll end up spending $900 over 10 years. If you subtract the $120 one-time cost of an artificial tree, the fake one will save your Christmas budget about $780 over the course of a decade.

Of course, inflation will cause real and artificial tree prices to increase in the next decade, which could impact the savings estimate. And if you buy a high-end artificial tree, it will take longer for the savings to kick in.

How to set up a quick Christmas budget

The decision to buy a real or artificial tree this Christmas may be driven more by your tradition than your budget. Growing up, I would have been appalled if my parents bought a fake tree. Now I have one, and the rest of my family does, too.

But there are few ways you can keep your holiday budget in check this season, no matter which tree you buy.

Set a gifts budget: The cost of small gifts can add up quickly, and it’s easy to overspend when you’re not keeping track. Set a firm amount and try not to go over the limit. It may be hard, but that’s kind of the point of budgeting.Set an experiences budget: This is separate from the gifts budget because there are lots of fun things to do during the holidays. Unfortunately, experience gifts are getting more expensive, so help reign in the costs by setting a budget for fun outings.Use apps to comparison shop: There are lots of apps that help you compare prices, saving you both time and money. Download a few and set reminders for items you want, so you know when they’re on sale.Find free things to do: This is a favorite of mine because I never know what my kids will appreciate anyway. My small city has some great Christmas lights downtown, a parade, and Christmas tree displays inside a few hotel lobbies. My kids will definitely ask for hot chocolate though, so it might not be entirely free.

I’ve definitely overspent during the holidays, but over the past few years I’ve realized that reigning in that spending and being more intentional about how I spend my time and money during the Christmas season actually helps me slow down and enjoy it more.

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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.Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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Carrying a credit card balance isn’t necessary to earn a good credit score, and it’s expensive, so you should avoid it if possible. Read on to learn more. 

A good credit score is very important. With good credit, you can get a mortgage loan that’s affordable or have your choice of where to rent since landlords won’t be concerned about your ability to pay. You can also qualify for the best credit cards and get tons of other benefits like more affordable insurance. And your credit record won’t cost you a job if you undergo a credit check, which somewhere around 15% to 30% of employers perform.

If you want to earn good credit, you have to show you can be responsible with borrowing. Using a credit card is a good way to do that. But do you have to carry a credit card balance in order to earn a good credit score? Here’s what you need to know.

There is no benefit to your credit of carrying a balance on your cards

Despite what you may have heard, there is absolutely no benefit to carrying a balance on your credit cards. Carrying a balance is not part of the credit scoring formula and, in fact, if you let the balance on your cards get too high, this could hurt your score.

You do need to use your cards in order to earn a good credit score, however. Payment history is the most important factor in the scoring formula, accounting for about 35% of your FICO® Score. You’ll want to be able to show you are charging purchases and paying the bills. And, if you don’t ever use your card, your card issuer could close the account, which could hurt your score since your mix of accounts and the age of your accounts are also part of the credit scoring formula.

But despite the benefits of using your cards, there’s no advantage to allowing your balance to carry over from month to month — and thus getting hit with interest charges. You can and should pay your balance in full and will still get all of the benefits associated with having a credit card on your record.

There are lots of downsides to carrying a credit card balance

There are plenty of reasons not to carry a balance on your credit cards, so it’s good there’s no benefit to doing so.

One of the biggest downsides of carrying a balance is the most obvious downside — it would be really costly. See, the average credit card interest rate is 21.19% as of August 2023. If you get stuck paying interest on your cards, you’re going to make all of your purchases a lot more expensive.

Letting your balance grow too much can also hurt your credit rather than helping it. If you use more than 30% of the credit available to you, that hurts your credit utilization ratio (a measure of credit used versus credit available). Credit utilization is the second-most important factor in the FICO credit scoring formula. A lower one is better than a higher one.

These downsides should be enough to convince you that carrying a balance is not the right move if you’re trying to build credit. Instead, sign up for a credit card if you don’t already have one, make a few small charges on it per month, and pay the card in full each month.

If you can’t qualify for a card because you don’t have credit yet, a secured card should be available as long as you can make a deposit equal to your credit limit. Apply for one today so you can start building credit — and be sure to pay your balance in full each month as you do it.

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Are you keeping track of what you’re spending on the holidays? Read on to see why not doing that is a big mistake. 

If you’ve been putting off holiday shopping, you’re probably well aware that you can’t really get away with that much longer. Only a few weeks remain before Christmas, and you don’t want to find yourself frantically hitting the mall at the last minute to complete your holiday gift list. If you do that, you’ll risk having the things you want sell out, and you might get stuck paying more in the absence of being able to shop around for a deal.

But as you go about the process of tackling your shopping list, there’s one big mistake you should aim to avoid. And it’s one that many consumers might unfortunately end up falling victim to this season.

Don’t let yourself end the holidays with debt

Only 32% of Americans have a holiday gift budget, according to a recent survey by CouponFollow. This means a good 68% of consumers aren’t sticking to a holiday shopping budget and are instead just winging it. If you’re taking a similar approach, you may be setting yourself up for a rather disastrous start to 2024.

If you spend on the holidays too freely, you might end up with a credit card balance that lingers well into the new year. That could cost you a lot of money in interest.

But that’s not all. Some people don’t realize this, but too much credit card debt relative to your total credit limit could cause your credit score to dive. This is true even if you’re making your minimum monthly payments on time every month. A plunging credit score could stop you from meeting certain financial goals in 2024. Those might include:

Renting a new home (a lower score could mean not passing a landlord’s credit check)Buying a new home (a lower score might stop you from getting approved for a mortgage)Renovating an existing home (you may not qualify for a loan to finance your planned improvements)

A better approach to the holiday season

Starting a new year with debt is, frankly, no fun. So rather than run that risk, set a budget for your holiday shopping. First, see how much money you can spare from your December paycheck after accounting for your essential bills. Next, see what your savings look like.

You don’t want to dip into your emergency fund to cover the cost of holiday purchases, because that money is supposed to be there for unplanned expenses. But if you have, say, a separate vacation fund, that’s money you could conceivably tap to buy gifts and other holiday items — with the understanding, of course, that the more you use for the holidays, the longer you might have to wait to take that trip.

Another thing you can do is look around your home for gift cards you may not have used yet. You may, in some cases, be able to redeem those to pay for gifts so you don’t have to shell out money.

Either way, have a game plan for your holiday spending. Otherwise, you might start 2024 on a rather sour note.

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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.
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Could home buyers get some relief in 2024? Experts aren’t so sure. Read on for what we know. 

The average 30-year mortgage rate has pulled back considerably since topping 8% in October. The average interest rate on a new 30-year, fixed rate mortgage is now 7.17%, according to the latest data from the Mortgage Bankers Association.

While this is certainly encouraging, mortgage rates remain more than double the level of two years ago. Prospective home buyers are wondering when relief might arrive and when it might become cheaper to sign a new loan with a mortgage lender. While nobody knows for sure what will happen, some of the most widely followed mortgage industry experts recently shared their projections.

What the experts are predicting

Some real estate experts have made 2024 mortgage market predictions as of late. A few offered specific projections, while others are reluctant to give specific numbers but still shared some valuable insights. Here’s a roundup of some of the major predictions to know. Unless otherwise noted, the projections are for 30-year, fixed-rate mortgages.

Real estate website Realtor.com has one of the more optimistic projections, forecasting that rates will drop to 6.5% by the end of 2024. The National Association of Realtors expects rates to steadily decline to 6.3%. The Mortgage Bankers Association and Wells Fargo’s Economics Group are predicting 6.1% and 6.05% average rates, respectively, by the end of 2024.

Real estate brokerage and technology platform Redfin recently released its predictions, which include a 1% decline in average home prices and a surge in new listings. And a big part of that is Redfin’s expectation of mortgage relief, with the company’s experts predicting mortgage rates will steadily decline throughout the year, ending 2024 at about 6.6%.

Zillow calls predicting mortgage rates a “nearly impossible task” but says the recent inflation data points toward rates holding steady for at least the next few months.

According to Freddie Mac’s latest Economic, Housing, and Mortgage Market Outlook (November 2023), home prices will rise by 2.6% in 2024, more than most other forecasts are projecting. And while the agency didn’t make a specific 2024 mortgage rate prediction, it did say that mortgage originations will remain low, while only starting to increase in 2025.

Fellow mortgage giant Fannie Mae gave a more specific projection, and likely not one that prospective home buyers want to hear. Fannie predicts mortgage rates will average 7.3% in 2024 (roughly where they are now) and not fall below 7% until mid-2025. Goldman Sachs agrees, also predicting that mortgage rates will remain above 7% throughout 2024.

Nobody has a crystal ball

The first, and most important, takeaway is that nobody has a crystal ball that will predict with accuracy what mortgage rates will do. If you had asked 10 experts at the beginning of 2022 (when rates were about 3%) where they would be at the end of that year, none of them would have said rates would more than double. There is a lot that can happen in a year, as we’ve seen, and these experts are making the best projections they can using the information they have now.

Having said that, it does seem that virtually nobody thinks that mortgage rates will go up. The general consensus is that the average 30-year mortgage rate will end 2024 somewhere between 6% and 7.3%, and even at the midpoint of that range, it would make a big difference in the average new borrower’s monthly payment.

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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.Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Matthew Frankel, CFP® has positions in Goldman Sachs Group, Wells Fargo, and Zillow Group. The Motley Fool has positions in and recommends Goldman Sachs Group and Zillow Group. The Motley Fool has a disclosure policy.

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There’s no need to bust your budget on Chanukkah. Keep reading to see how you can avoid that fate. 

Chanukkah is a festive holiday that falls late in the year. Sometimes, it overlaps with Christmas. Other times, it comes much sooner, leaving those who celebrate to scramble to finish their shopping and preparation on time.

Like Christmas, Chanukkah has the potential to be a very expensive experience. So if you’d rather not run up a giant credit card tab this Chanukkah, here are some common mistakes you’ll want to steer clear of.

1. Buying big-ticket gift items for all eight nights

It’s common for people who celebrate Christmas to get more than one gift. And so there’s certainly nothing wrong with giving your kids more than one gift for Chanukkah, too.

But because the holiday is eight nights long, there can be a lot of pressure to come up with a fabulous present each and every night. And if you succumb to that pressure, you might end up raiding your savings account in a very big way.

Instead of doing that, set ground rules with your kids. Consider buying a bigger-ticket gift the first and last night of the holiday. Then, for the nights in between, focus on smaller items that don’t cost a lot — things like cozy socks, beauty products, or fidget toys. You can also decide that you’re going to skip the gifts altogether some of those nights and hand out chocolate coins, or Chanukkah gelt, instead. You can pick up a 50-piece bag from Amazon for under $20.

Another option? Do something together as a family over the holiday instead of exchanging gifts one night. A movie night with popcorn and sweets might easily take the place of yet another board game or doll.

2. Going overboard on decorations

Colored lights and a giant tree are hallmarks of Christmas. For Chanukkah, not so much.

You might choose to string some lights in celebration, but the cost of going all out on decorations can be significant — even if you’re only illuminating them for eight nights. So if you’re looking to limit your spending, skip the decorations. Or have your kids make some signs and hang them up inside your home.

A big part of celebrating Chanukkah is lighting a menorah every night and displaying it somewhere prominent, like a window. Doing that is a great way to brighten your home without having to jack up your electricity bill or spend a pile of money on electric lights from the hardware store.

3. Feeling compelled to dress for the occasion

The matching pajama trend isn’t just a Christmas thing; plenty of people who celebrate Chanukkah tend to jump on that bandwagon as well. But before you spend a small fortune on identical pj’s for your family, think about whether you really need them and whether anyone in your household will actually wear them outside of those eight nights.

Target, for example, has Chanukkah pajamas that cost $25 for adults, $15 for kids, and $12 for toddlers. So let’s say your household consists of two adults, two school-aged kids, and a 2-year-old. If so, you’re looking at a whopping $92 for nighttime clothing that might spend the bulk of the year tucked away in the back of your closets — and that your kids will outgrow quickly.

As is the case with any holiday, celebrating Chanukkah could become quite costly if you let it. But if you avoid these mistakes, you can avoid financial regrets in the course of enjoying the Festival of Lights.

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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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Maurie Backman has positions in Amazon and Target. The Motley Fool has positions in and recommends Amazon and Target. The Motley Fool has a disclosure policy.

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