Money Management

Is pet insurance a waste of your money? Read on to see why you’re likely to appreciate having it. 

When you bring a pet into your world, you take on a host of expenses, from food to routine medical care to supplies. But there’s another cost it pays to factor into your budget when you’re adopting a pet — pet insurance.

Some people might insist that pet insurance is nothing more than a waste of money, and that you’re better off taking the funds you’d spend on premiums and sticking them into your savings account instead. But you may find it interesting to learn that 99.5% of pet owners who purchased pet insurance do not regret doing so, reports Marketwatch, based on the results of a recent survey. And that’s a pretty telling statistic.

The upside of having pet insurance

The money you spend on pet insurance is money you won’t have available for other purposes or expenses. So you may be hesitant to buy pet insurance, especially if your pet is currently healthy.

Now, it’s true that if you pay your pet insurance premiums for years and never have to use your policy, you’ll have technically thrown your money away. But you could easily say the same thing about life insurance. And isn’t it a great thing to buy a term life insurance policy lasting 30 years only to never have your loved ones cash in on it? That means you didn’t pass away during those three decades — woo hoo!

Similarly, it’s a very good thing to buy pet insurance and never have to file a claim against it. That would mean that your pet remained healthy year after year.

But what if you’re not that lucky? Your pet might have great health when they’re young. But as they age, they could get sick or wind up needing surgery. Or, they could get injured at any time and require a costly life-saving procedure. Would you ever want money to stand in the way of helping your pet survive?

And there lies the value of having pet insurance. Putting a policy in place isn’t about getting your money’s worth year after year. It’s about making sure that if something catastrophic were to happen, you’d be able to give your pet the best care possible.

Shop around for the best policy

People don’t tend to spend money on expenses that offer them no value at all. The fact that the overwhelming majority of pet owners don’t regret buying pet insurance sends the message that these policies are worth holding onto, even if just for the peace of mind.

Of course, this doesn’t mean you shouldn’t take steps to snag the most affordable coverage. Take the time to shop around with different pet insurers and compare your options. And don’t just look at premium costs. Rather, look at what you’re getting for those premiums.

Perhaps one pet insurance policy you’re looking at pays 80% of allowed claims, whereas another pays 90%. The policy paying 90% might cost a few dollars more per year, but that higher price could be worth paying given that your pet could end up needing a $5,000 surgery.

But don’t write off the idea of pet insurance as a waste of money. If you love your pet, which you surely do, it could end up being the best money you’ll ever have spent.

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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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Closing credit card accounts could impact your credit score. Read on to learn more. 

There may come a point when you decide you’d like to close a credit card account. Maybe that card charges an expensive annual fee, and you’re not racking up enough cash back or reward points to make that fee worth paying. Or maybe you’re not being charged an annual fee, but you’ve found a replacement card with a better rewards program and don’t want an extra open account in your name.

It’s important to know that closing a credit card account could impact your credit score. But whether your credit score sustains damage in that scenario will hinge largely on how long your account has been open.

What goes into your credit score?

FICO is the most commonly used credit scoring model in the U.S. And these are the five factors that go into calculating a FICO® Score:

Payment historyCredit utilization, or amounts owed on revolving lines of creditLength of credit historyCredit mix (loans, credit cards, etc.)New credit accounts you’ve opened

These factors all carry a different amount of weight. Your payment history accounts for 35% of your FICO® Score, while your credit utilization accounts for 30%. The length of your credit history accounts for 15%, while credit mix and new accounts each make up 10% of your score.

It’s for this reason that being late with a single bill payment has the potential to cause a lot of credit score damage — because your payment history carries so much weight in calculating your score. Opening several new credit card accounts in short order could also cause credit score damage, but it generally won’t be nearly the same amount of damage as what you’d face by being 90 days late making a bill or loan payment.

Be careful when closing credit cards

Since the length of your credit history accounts for 15% of your credit score, you’ll want to be careful when closing credit card accounts. But generally speaking, the newer an account is, the less damage your credit score will face when you close it.

Having long-standing credit card accounts is good for your credit score because it shows consistency on your part as a borrower. And so let’s say you currently have three credit cards open plus a mortgage you’ve been paying off for six years, with two of those three credit card accounts having been open for eight years.

If the third account has only been open for 18 months and that’s the account you close, chances are, the damage to your credit score won’t be so substantial. That’s because it won’t shorten the average length of your open accounts. On the other hand, closing one of the credit cards you’ve had open for eight years could cause your credit score to drop, because in that case, you’re shrinking the average length of your open accounts.

Now, this isn’t to say that you should continue to pay an expensive annual fee for a credit card you rarely use just for the sake of keeping that account open and avoiding a small hit to your credit score. Just be aware of the potential consequences of closing a longer-standing account.

Also, if you have a long-standing credit card that doesn’t charge an annual fee, you may want to consider leaving it open. Find a small recurring expense to charge on that account and just pay the bill in full every month to maintain it. It’s an easy move worth making to avoid what could be a modest hit to your credit score, but an unwanted one nonetheless.

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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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The IRS just announced a host of key changes for 2024. Read on to learn more. 

A lot of us don’t really think about taxes until the time comes to file a return. But it’s important to have a pulse on your tax situation at all times. And part of that means knowing what tax bracket you fall into. The IRS just announced a new set of tax brackets for 2024, along with some other key changes you’ll want to know about.

Introducing the 2024 tax brackets

If you’re not sure what a tax bracket is exactly, fear not. The U.S. tax system is a marginal one that has you paying more tax on your highest dollars of income.

If you earn $100,000, you’re not going to pay the same tax rate on that entire sum. Rather, your lowest dollars of earnings will be taxed at one rate, and your highest dollars of earnings will be taxed at another.

With that in mind, here are the tax brackets for 2024:

You’ll notice that the tax brackets are different for married couples filing jointly than for singles, which makes sense. It would be unfair to impose the same set of income requirements for what could potentially be a dual-income household as a single-income household.

Going back to our example, though, let’s say you’re single and earning $100,000. That puts you in the 22% tax bracket for 2024. But you’re only going to pay a 22% tax rate on about half of your income, since only $47,151 to $100,525 falls into that bracket.

You should also know that your tax bracket is not the same thing as your effective tax rate. Your effective tax rate is the percentage you owe on all your taxable income. That includes not just your earnings from a job, but also, income from interest in a savings account and/or capital gains in a brokerage account. An accountant will usually tell you what your effective tax rate is when they complete your tax return.

Other tax changes are in store for 2024

In addition to announcing a new set of tax brackets, the IRS has also made a number of key updates for 2024. Some highlights include:

A standard deduction of $14,600 for single tax-filers, an increase of $750 from 2023A standard deduction of $29,200 for married couples filing jointly, an increase of $1,500 from 2023A maximum $7,830 Earned Income Tax CreditA flexible spending account limit of $3,200, up from $3,050 in 2023An adoption credit of $16,810, up from $15,950 for 2023

If you’re curious as to how next year’s tax changes will impact your finances, it’s a good idea to sit down with your accountant and discuss them. Many people only reach out to their accountants as the tax-filing deadline gets closer. But having a conversation at some point in November could benefit you. This way, your accountant can tell you what to expect in 2024 and offer tips on last-minute steps you can take in December to reduce your tax burden for 2023.

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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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