Money Management

Falling behind on a personal loan is bad news. Read on to learn more. 

There’s a reason so many people turn to personal loans when they need to borrow money. Personal loans are unsecured, so they’re not tied to a particular asset. As such, you can use the proceeds of a personal loan for any purpose. By contrast, when you take out a mortgage, you can only use your loan to finance the purchase of a home.

During the third quarter of 2023, U.S. personal loan balances reached $241 billion, up almost 15% from a year prior, says TransUnion. So if you borrowed via a personal loan over the past year, you were clearly in pretty good company.

But if you’re now struggling to keep up with your personal loan payments, it’s important to reach out to your lender right away. Defaulting on a personal loan could put you in serious hot water despite that loan not being secured.

Defaulting on personal loans still has negative consequences

If you fall far enough behind on your mortgage payments, you could eventually lose your home to foreclosure. And if you fail to make too many car loan payments, your vehicle could get repossessed.

Personal loans work differently. Because they’re not secured by a specific asset, you don’t necessarily risk losing a specific asset when you fall behind on your payments. But that doesn’t mean you won’t get hurt financially.

Any time you fail to pay a loan on schedule, it serves as a black mark on your credit report. That could drag down your credit score, making it hard (or even impossible) to borrow money the next time you need to.

It can take many years to recover from extensive credit score damage, too. So you may have to put off different goals, like buying a house, until that happens.

You should also know that if you default on a personal loan, your lender has the right to take you to court to get repaid. If a judgment is entered against you, you could risk having your wages garnished to some degree with a portion of your earnings going to your lender.

Plus, your lender may be able to put a lien on an asset you own, like a home. This doesn’t automatically mean it can or will force the sale of your home. But it could mean that if you decide to sell independently, your lender will have a claim to your sale proceeds to get repaid.

Don’t let your personal loan payments fall by the wayside

Clearly, failing to repay a personal loan can be a very bad thing. To avoid negative financial consequences (or at least minimize the blow), get in touch with your lender once you start having trouble keeping up with your loan payments. Your lender may be willing to work with you to get through that situation.

For example, let’s say you’re struggling with payments due to having lost your job. If you show your lender proof of that hardship, it may agree to let you pause your payments for a period. Your lender may also agree to a restructured repayment plan that’s easier for you to keep up with.

Falling behind on a personal loan is something you really don’t want to do. If that seems inevitable, the sooner you communicate your struggles to your lender, the less likely you’ll be to suffer the harshest of repercussions.

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Holiday debt could put a serious damper on the new year. Read on to see why avoiding it may be easier than expected. 

At this point, many people are downright consumed with holiday shopping. And if you have a giant list of gifts to tackle, you may be resigning yourself to closing out the season with a pile of credit card debt.

A recent TransUnion report found that 21% of consumers plan to spend more than $1,000 on the holidays this year, while 30% expect to spend between $501 and $1,000. That’s a lot of money to fork over if you don’t already have it in your savings account.

The problem with racking up credit card debt for the holidays, aside from the money it can cost you in interest and the credit score damage it can cause, is that being in debt can be a stressful thing. And if you incur a large balance now, it’ll mean starting off 2024 in a tough spot. So before you take on a load of debt this month, here are some moves worth making first.

1. Rethink the number of gifts you’re buying

It’s a really nice thing to want to shower everyone from your second cousin to your child’s teacher with a gift this holiday season. But if that’s not doable financially without you landing in debt, then look to cut back.

In the case of that cousin you only see once a year, a friendly card might do the trick in making them feel loved. And in the case of your child’s teacher, a handwritten note from your child with holiday wishes is a reasonable substitute when you just don’t have the cash to pay for an actual gift.

2. Replace physical gifts with the gift of your time

Let’s face it — there are certain people in your life you probably have to get a gift for. But that gift doesn’t have to be an item you hand over. Instead, consider the gift of your time.

If you have a sister whose kids are too young to stay home alone, give her and your brother-in-law the gift of a night of babysitting. For your dad, cook his favorite meal and give him the gift of a night of hanging out at your home eating a warm dinner and watching his favorite movie. And for your spouse, plan an activity you can do together that doesn’t cost a dime, like going on a nice hike.

Granted, with some people, it’s hard to get away with this strategy. Your seven-year-old is probably going to want a toy as opposed to a night of bonding with you. But if you can replace at least some physical gifts with the gift of your time, you can potentially steer clear of debt.

3. Pick up a side hustle

When you’re busy working, shopping, running a household, and making holiday plans, finding the time for a side gig may seem downright impossible. But if you’re able to boost your earnings modestly in the coming weeks, you can potentially cover your purchases and avoid debt.

Think about gigs that are very flexible — things like data entry you can do from home and driving for a service like Uber, which you can sign up for as your schedule allows. Even if you’re not able to fit much side work into the month of December, any extra dollar you earn is a dollar you don’t have to borrow.

Many people routinely incur debt during the holidays. But that could really put a damper on the new year. So consider these strategies before closing out the 2023 holiday season with a lingering credit card balance.

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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 Uber Technologies. The Motley Fool has a disclosure policy.

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You can use your Sam’s Club membership to save money on holiday treats. Here are some Christmas treats you may want to stock up on before they run out. 

Now is an excellent time of year for snacks, desserts, and other goodies. Many of the treats you’re seeing on display are holiday-themed or feature ingredients that are seasonal. If you have a Sam’s Club membership card in your wallet, you’ll want to check out all the holiday goodies the popular warehouse club offers before they disappear off the shelves. Here are the Sam’s Club Christmas treats you won’t want to miss.

1. Blue Diamond Snickerdoodle Almonds

If you’re looking for a festive snack that is the perfect afternoon snack, you’re going to want to pick up a bag of Blue Diamond Snickerdoodle Almonds. This limited-edition treat is available at Sam’s Club. The almonds are roasted and covered with a sugar and spice blend. While prices may vary by location, you can expect to pay $9.98 for a 20-ounce resealable bag.

2. Canada Dry Winter Variety Pack

This Canada Dry Winter Variety Pack is just what you need for all your holiday gatherings. Whether you’re looking for a festive cocktail mixer or want to have some non-alcoholic beverages available for guests, Sam’s Club can help. Flavors include classic, blackberry, and cranberry. A 36-pack of 12-ounce cans will cost you $17.88.

3. Member’s Mark Caramel Pecan Topped Brie

Are you searching for the perfect addition to your Christmas charcuterie board? You can get a 14-ounce package of Member’s Mark Caramel Pecan Topped Brie at your local Sam’s Club. Whether you’re serving up a spread at home or for a holiday party, this will surely be a great accompaniment. At just $8.87, this sweet and savory find won’t drain your bank account.

4. Member’s Mark Hot Chocolate Bombs

Sam’s Club has Member’s Mark Hot Chocolate Bombs on shelves now. While these might not be Christmas-themed, they’re perfect for a cozy winter weekend at home. Each milk chocolate bomb is filled with marshmallows. You’ll get a seven-pack for $9.98. With this treat at home, there’s no need to spend money on expensive hot cocoa from a coffee shop.

5. OREO Winter Treats Cookie Variety Pack

Are you looking to spruce up your kid’s lunch this December? The OREO Winter Treats Cookie Variety Pack is perfect. Each box includes 40 individual snack bags. You’ll get 25 snack packs of Double Stuff OREO cookies and 15 OREO Red Creme holiday snack packs. Each snack pack has a festive design and includes two cookies each, making them ideal for school lunches. At less than $14 a box, this treat won’t result in a costly credit card bill.

Is a Sam’s Club membership worth it?

If you’re not yet a Sam’s Club member but have been thinking about joining, you may wonder if a yearly membership is worth the cost. For many people, a warehouse club membership helps them save money on everyday expenses like groceries and household goods. Since many items are sold in bulk, you can get a deal and be stocked up on essentials for a while.

But before joining, you’ll want to consider your typical shopping habits and budget. You might also want to browse available products on the Sam’s Club website to get a feel for what items are sold at your local club. Since membership starts at $50 per year, it may be worth joining for a year to see if it provides plentiful savings for your household.

You’re not alone if you’re looking for ways to keep more money in your pocket. Life continues to get more expensive. Check out our personal finance resources for money-saving tips.

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A higher income makes it easier to reach your money goals. See the steps one financial writer is taking to increase his income by $10,000 next year. 

Increasing your income is arguably the most impactful financial change you can make. Whether your goal is to get out of debt, save enough in your emergency fund, or invest more so you can retire early, earning more money can help.

I’ve been setting ambitious income goals for myself over the last few years. Next year, I plan to increase my income by at least another $10,000. Since I’m a freelancer, I have some control over how much I make, but it’s not going to happen on its own.

After a lot of planning, I’ve come up with a few ways to boost my income next year. If you have the same goal, here’s what I’m going to focus on.

Working more efficiently

As a freelancer, my income depends on how much I work and how efficiently I work. My No. 1 goal is to improve my efficiency. I’m not doing poorly right now, but I feel as if there are a couple of areas where I could get better.

Organization and time management, in particular, aren’t my strong suits. I’ve normally had more of a go-with-the-flow approach. While I have a general plan for each day, I don’t follow a strict schedule of work time and free time.

For 2024, I’m going to add more structure to each day, week, and month. I’ll use time blocking to map out my days, stay on track, and minimize distractions. And I’m already working on fixing my habit of “multitasking.” For me, that always turns into wasting time, bouncing from task to task, without making much progress on any of them.

Saving time in other areas of life

Right now, I have a good work-life balance. I like having free time, and I know that I wouldn’t enjoy cutting into that to work more. But I’ve found a way to be more productive without giving up my free time.

There are a lot of mundane tasks and errands that take time out of my day. That’s why I’m going to prioritize convenience going forward, even if it costs me more money. Buying back my time is well worth it to me. Here are a few examples:

I’m going to outsource more tasks: I already have a housekeeper. I’m also planning to start using a laundry service, hire an accountant to handle my taxes, and outsource anything else I find that I don’t want to handle myself.I’m going to get groceries delivered more often: I spend about two hours per week on grocery shopping right now. While I don’t mind grabbing groceries at the store, I’d like to cut down the amount of time I spend on it.I’m going to buy equipment for a home gym: Getting to the gym takes me about 15 to 20 minutes each way. By working out at home, I’ll save at least 30 to 40 minutes per day.

Adding new skills and sources of income

A method that has already worked well for me is adding more sources of income. I used to write mainly about credit cards. While those are still a focus of mine, I’ve branched out quite a bit. I now cover many areas of personal finance, do some copywriting, and occasionally write more in-depth research pieces.

Covering many different topics and types of assignments gives me more opportunities to make money. I’ve also been able to land high-paying work that isn’t part of my original wheelhouse.

I want to continue doing this next year. There are a couple of ways I plan to make it happen:

I’ll continue building my skill set: I regularly read books and online content about finance and writing. I’m also looking into online courses.I’m exploring online business opportunities: An online business may not pay off right away, but it could become an additional source of income in the future.

Putting it all together

As you can see, I have a few areas I’m going to focus on next year. Time blocking and better organization should help me work more efficiently. I can also save at least a few hours per week by outsourcing tasks and spending more on convenience.

Just with those changes, I could earn another $50 per day, which is already $12,500 per year. I’m sure that building my skills and developing income streams will pay off, as well, either next year or down the road.

If you want to increase your income next year, start planning how you can do it now. The methods above might work for you, depending on your situation. Or, you may decide to focus on different areas. Either way, by having a plan ready, you’ll be able to hit the ground running in 2024.

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Teenagers with earnings can set themselves up for a very successful future. Read on to learn more. 

Ask many parents how their teenage children spend their free time, and you’ll often hear a combination of “phone,” “social media,” and “video games.” But some teens don’t just spend their after-hour school immersed in electronics. Rather, they work on a part-time basis.

Holding down a job is a great thing for teens. Not only does it give them real-world skills and experience that could help them become gainfully employed in adulthood, but it also gives them a paycheck. That’s money they can use for leisure, so they’re not constantly hitting up the Bank of Mom and Dad.

If you have a teen who’s working, you may be encouraging them to stick at least some of their earnings into a savings account. That way, they’ll have money on hand for a rainy day. But there’s another account you should try to introduce your teen to — and encourage them to fund.

It pays to contribute to a Roth IRA

Retirement is apt to be the last thing on any given teenager’s mind. In spite of this, if you have a teen who’s working, it pays to talk up the benefits of contributing money to a Roth IRA.

The good news is that anyone with earned income can fund a Roth IRA. That includes kids under age 18.

However, children of that age do need an adult to serve as a custodian for that account until they’re old enough to manage their own assets. That typically happens at age 18, though in some cases, the requirement may be 21. At that point, what happens is that a custodial IRA gets converted into a new account in your child’s name only.

Roth IRAs offer a couple of really neat tax benefits. First, investment gains in a Roth IRA are tax free. Withdrawals are also tax free, which is a nice thing in retirement, since many people find that money can get tight once they’re no longer working.

Plus, while a Roth IRA is technically designed to be a retirement account (hence the “individual retirement account” that IRA stands for), it can actually double as a college savings account for your child. So if you have a child who’s holding down a job at age 16 and they end up needing money for college at age 21, that’s another source to tap.

Funding a Roth IRA early on could go a long way

It’s not the easiest thing to talk a teen into socking money away for retirement. But here’s a good way to convince yours that it’s a smart move.

The stock market, over the past 50 years, has had an average annual return of 10%, as measured by the performance of the S&P 500 index. So let’s say your child invests $5,000 in a Roth IRA at age 17 and leaves that money alone for 50 years. If it generates that same 10% return, that $5,000 will grow into about $587,000.

Meanwhile, many people retire with a lot less money saved than that. So let’s say your child earns $5,000 in the course of a year from an after-school job. Investing that $5,000 alone could technically serve as your child’s entire nest egg. (Of course, it’s a good idea to encourage your child to continue to save for the future, but a nest egg worth close to $600,000 is far from shabby.)

Your teen may be eager to spend their earnings on outings with friends or gadgets. But you can really set your child up for a financially secure future by encouraging them to stick their earnings into a Roth IRA instead.

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You might think you have extra time to fund your retirement savings. Read on to see why waiting too long might backfire on you. 

You’ll often hear that it’s important to fund your IRA consistently over time. And the more time you give your money to grow, the more wealth you stand to bring with you into retirement.

The average American retires at age 61. But what if you’re planning to work longer than the typical American? What if you love your job and intend to plug away at it well into your 70s? If that’s the case, you might assume that you can wait longer to start saving and investing for retirement. But that’s a decision that might sorely backfire on you.

Don’t give up years of investment gains

The problem with waiting longer to start saving for retirement is that for each year you delay funding your IRA, you give up the chance to enjoy investment gains.

Let’s say you’re able to sock away $300 a month for retirement savings. Over the past 50 years, the stock market, as measured by the S&P 500’s performance, has generated an average annual return of 10%. That accounts for both good years and bad. If you invest your savings heavily in S&P 500 stocks or index funds, there’s a good chance you’ll enjoy a comparable return yourself.

So, let’s say you begin saving that $300 a month for retirement at age 41 with the goal of retiring at 71 — 10 years later than the typical retiree. In that case, if we apply a 10% return, you’re looking at a nest egg worth about $592,000. That’s certainly a nice amount of money. And it’s more than the typical 70-something has in retirement today. That figure is $113,900, according to Northwestern Mutual.

However, watch what happens when you start saving $300 a month 10 years sooner. Increasing your savings and investing window from 30 years to 40 years boosts your nest egg’s value to almost $1.6 million. That’s roughly $1 million more than what you’d be looking at by waiting until age 41 to start saving rather than doing so at 31.

Don’t assume you’ll be able to retire late

Another issue with putting off IRA contributions due to an anticipated late retirement? You may not end up getting to work as long as you’d like to. It’s not uncommon to be forced out of a job due to health issues as you age. And if your company folds when you’re in your early 60s, you might struggle to get hired elsewhere.

Even though it’s illegal to discriminate against job applicants on the basis of age, it’s also hard to prove that a given employer is doing that. But as you might imagine, companies aren’t always so open to hiring people who are likely to be on the verge of retirement.

So all told, waiting to fund your IRA could put you in a seriously bad spot if your plans don’t work out as expected. That’s why your best bet is to start contributing money to that account as soon as you’re able to.

Remember, you can always start off with modest contributions and increase the amount of money you put in over time. But that way, you can benefit from investment growth early on while protecting yourself in the event that you’re forced to retire earlier than planned.

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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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