Money Management

Hiring a tax preparer depends on your specific needs and whether you want to pay for it. Read on to find out when it’s a good idea. 

A few years ago, I convinced myself I needed to hire a tax professional. I don’t like preparing my taxes, and I figured I was acting like an adult by handing my paperwork and receipts to someone in a suit.

Even though I’m self-employed, my taxes aren’t complicated. My wife was also self-employed on a very part-time basis during that period, so we had to pay the tax preparer twice for self-employed tax preparation.

The result was sticker shock. We paid more than $700 for some very basic tax preparation services that I could have done myself in just a few hours.

There are times, though, when hiring someone to do your taxes is certainly worth the cost. So, let’s take a quick look at why you may or may not want to hire a professional tax preparer this year.

When you should consider hiring a tax professional

While I didn’t feel that the cost of hiring a professional was worth it for me, there are plenty of times that it could be. Here are a just few times when you should consider hiring a professional.

You’re self-employed or employ other people.You have multiple income streams in addition to your regular job.You have a lot of investment income.You work in multiple states.You hate preparing your taxes.

These are pretty general topics, but they cover a lot of different ideas. For example, if you have a business and have lots of expenses, then it may be best to hire a professional to make sure you’re getting all the tax credits and deductions you deserve. Additionally, if your income is more complicated than just one W-2 or you rely on multiple investment income streams, hiring a professional may give you some peace of mind.

Additionally, if your taxes are complicated or unconventional in any way, you may want to hire someone to do it for you. For example, if you bought and sold a lot of cryptocurrency, it might be a good idea to hire a tax professional to help you navigate filing your return.

Of course, if you just hate doing your taxes and have some money to spare, there’s nothing wrong with outsourcing the job.

When you should consider doing your taxes

The flip side to all of the above is that it’s never been easier to do your taxes, thanks to all of the available tax preparation software out there. Here are a few reasons you may want to tackle your taxes yourself.

You want to save money.Your taxes are simple.You have straightforward income sources.You have extra time to spare.

About 50% of Americans prepare their own taxes using software, so you’re in good company if you go it alone. And one of the reasons many people may choose to do so is because of cost.

The average cost to prepare a 1040 tax return was $213 in 2021, but jumped to $248 this year. And the average business return went from $519 just two years ago to $604 now, according to data from the National Association of Tax Professionals.

The good news is that tax prep software is easy to use, and some software is even free. You can choose from a variety of programs — including TurboTax, TaxAct, and H&R Block — to find the best one for your needs.

If you hire a tax professional

If you end up hiring a tax professional, make sure to find one who has the right qualifications and experience. You can even check some tax professionals’ credentials through the IRS’s website.

The IRS recommends you find out about a tax preparer’s history and how much they charge. The agency also says never to sign a blank tax return and to review all details of your return before it’s submitted.

And, of course, going to any reputable or well-known tax preparation company will save you the trouble of vetting a tax professional on your own. Just remember to bring your checkbook.

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The best gift for an adult often isn’t one you get to tear the wrapping paper off of. Learn why actual money (or the equivalent) is an excellent present. 

The winter holidays are a great time to show your loved ones how important they are to you. If you have young children to buy gifts for, you’re likely not facing an uphill climb to decide what to get for them — kids are usually in favor of material items, like toys. And while they’re probably less thrilled when you buy them clothes, you’re best equipped to know what they need in the socks and underwear department.

But if you have children who are all grown up and out of your home, getting the right gift for them might require a bit more thought. And while you might assume they’d love to receive more “stuff,” take a beat and think that through. According to data reported by Red Stag Fulfillment, 33% of people surveyed in 2021 expected to return at least one holiday gift they received that year.

And a few years ago, the KonMari method of decluttering (invented and promoted by Marie Kondo, an organization consultant) spiked in popularity — Goodwill stores even saw a bump in donated items as a result of the Netflix show devoted to the process. So it’s reasonable to assume that a lot of us have enough “stuff,” and purchasing a physical object for an adult child that they must then store in their home might not be as welcome as you’re hoping. Here are a few better ideas for you.

Have you considered cash?

Honestly, cash (or a personal check, which can be easily deposited via mobile banking app) is a fantastic gift for a fellow adult. The holidays are an expensive, stressful time for so many people, and having a little extra spending money at the ready can be incredibly helpful.

Your gift could pay for a takeout order during a time of year where your child has a lot less energy to cook, or it might even defray the cost of an essential (but unplanned) expense, like a car repair or higher-than-anticipated electric bill. And if the idea of just handing over a pile of cash isn’t appealing, how about buying (or making, even better!) a nice card to go with it? A heartfelt message and the gift of cash is guaranteed to be appreciated.

Gift cards for useful purchases are also great

Some folks have negative opinions of gift cards because they’re very easy to buy (you can get them anywhere, including Costco), but I think they’re great, actually. Just take the time to pick out an appropriate one for the recipient — if they live far away, don’t assume they have access to the same movie theater or discount store chains that you do. I recommend focusing on Target, Amazon, Costco (actually, non-members can visit to spend a Costco Shop Card), or a local grocery store. Or you can opt for a Visa or Mastercard gift card, as these can be used anywhere that accepts plastic payments like credit cards. Again, a nice card and a handwritten message can make a gift card a more festive present.

If you’re shopping for an adult child or another self-sufficient relative, don’t assume a hand-picked sweater or kitchen appliance will make their heart sing. Instead, give a gift that will make their life easier and less expensive — and spare them having to stand in a return line or store yet another item in their home.

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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. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, Mastercard, Netflix, Target, and Visa. The Motley Fool recommends the following options: long January 2025 $370 calls on Mastercard and short January 2025 $380 calls on Mastercard. The Motley Fool has a disclosure policy.

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Houseguests are inevitable sometimes, especially around the holidays. Learn how to make the most of the time together without breaking the bank. 

The holiday season is practically here, and for a lot of people, this means they will either be visiting friends and family or *gasp* called upon to host visitors. The winter holidays are already a large source of extra expenses and stress for a lot of people — according to data from the National Retail Federation, Americans are expecting to spend an average of $875 this holiday season.

If it’s your turn to play host this year, you might already be dreading it. Thankfully, there are a few ways to keep your costs down and also keep your mental health in check.

1. Borrow gear strategically

If you’re staring down a turkey that you need to roast but don’t own a roasting pan, how will you cope? You might assume your best move is to turn to Amazon or your favorite housewares retailer and plunk down a credit card to buy a pan. But do you really need to own and store something you might use just once a year — or once a decade? I say no.

Instead of buying the gear that will make it easier to host extra people in your home (which could include cookware, air mattresses, or dining chairs), see if you can borrow them. Ask friends or neighbors who are perhaps traveling for the holidays or otherwise not responsible for hosting family if they’re willing to loan you these items so you can save the cash.

2. Plan a menu in advance

It’s true — meal planning before you go to the grocery store really can save you money. This is even more true when you’re responsible for feeding a crowd. If it’s your turn to host this year, figure out in advance what you want to feed everyone, and go through your pantry, fridge, and freezer to see what ingredients you already have on hand. Be sure to use one of our favorite grocery rewards credit cards to get beaucoup cash back on your food purchases.

Make sure you plan at least one meal consisting of takeout or a restaurant visit, too. I’m betting your visitors would love to sample the unique cuisine in your hometown, and supporting a small business during the holidays is always a great move. Plus, you’re going to get tired of doing dishes sooner or later.

3. Buy some items in bulk

If you have a Costco membership, now is the time to flex it. Paper products are a slam dunk for bulk buying, especially when you’ve got extra people around to use more toilet paper and paper towels. You might also want to consider how much milk you’re likely to go through if you have houseguests. And if you’re cooking for a crowd, you might find savings on bulk meat, vegetables, and other essential ingredients for your holiday dinner.

4. Give your guests a local “guidebook”

If you have the time, I recommend doing some research into local attractions before your guests arrive. Give your city’s social media pages a scroll (or even get a copy of the local paper), and see what events are happening while you have visitors — I bet your local parks, museums, and libraries will have free or low-cost fun available.

Don’t forget to recommend your favorite local coffee shops and lunch spots. If you encourage your visitors to explore the area on their own (with your helpful hints), you’ll buy yourself some precious peace and quiet, even while you’re playing host.

5. Accept help

Finally, if any of your gracious guests offers to provide help, be it in the form of bringing a dish for a potluck meal, buying a bottle of wine, or even grabbing some extra paper goods to contribute, let them. If they ask what to bring, I recommend asking for dish towels and inexpensive food containers so people can take leftovers home. Ideally, your guests will also decide to chip in for a restaurant meal while they’re visiting (I don’t know how to compel them to offer this, but maybe you can drop some strong hints).

The holidays are almost here, and you might be feeling quite overwhelmed at the prospect of opening your home to friends and relatives. Just remember, you like these people, and sharing this time with them is the most important part of the holidays. Rely on the tips above to make your hosting experience as smooth and cost-effective as possible.

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

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The days of 3% mortgage rates aren’t coming back anytime soon, but you might be surprised what you can find. Here’s what you should know. 

The average 30-year mortgage rate in the United States recently passed 8% for the first time since 2000 — and even after a recent pullback, the average fixed rate still sits at 7.86%. Just to put this into perspective, this means the monthly principal and interest payment on a $400,000 30-year loan is now 72% higher than it was at the beginning of 2022 when the average rate was hovering around 3%.

While it’s unlikely that 3% mortgage rates will come back anytime soon for home buyers, there could still be some ways to get a mortgage loan that is significantly cheaper than the average. Here are three strategies in particular you might want to look into.

1. Check out new homes

New homes are making up their highest share of the real estate market ever, and for good reasons. For one thing, existing home inventories are at a generational low, so it can make more sense to simply walk into a builder’s sales office and buy a home.

In addition, many new home builders are offering promotional financing deals with mortgage partners — essentially, the builder is paying to buy down your interest rate to well below the average rate. As one example, regional builder Dream Finders Homes is offering a 5.99% fixed interest rate with even better rates of 3.99% and 4.99% during the first two years on move-in ready homes.

2. Find an assumable mortgage

Many people don’t realize it, but there are several types of mortgages that can be assumed by new buyers upon the sale of a home. For example, if someone is selling the home and has an assumable loan with a 3.5% interest rate, you could potentially buy their home and simply take over their mortgage as-is.

The bad news is conventional mortgages aren’t assumable. But all three of the major government-backed loan types (FHA, VA, USDA) are. A buyer can even assume a VA loan if they’ve never served in the military.

As you might imagine, there’s quite a bit of competition among buyers when it comes to finding a property with an assumable mortgage, so finding one could require some creativity and research on your part (working with a good real estate agent can help, too). But if you can find one, it could make owning a home far more affordable.

3. Pay for a lower interest rate

Finally, if you have a substantial amount of cash, it could be worthwhile to buy down your mortgage rate by paying discount points. If you aren’t familiar, 1 discount point is equal to 1% of the loan amount, and you can typically get at least a 0.25% interest rate reduction by agreeing to pay 1 point.

Sure, the upfront cost of paying mortgage points can seem like a lot. But one smart exercise is to figure out your monthly loan savings with a mortgage calculator and multiply it by 360 months for the entire term of the loan. You might be surprised how much you could save in interest over the years compared to the upfront expense.

The bottom line

As mentioned, you’re not likely to find a mortgage with a 3% or 4% interest rate again anytime soon. Even if you can find an assumable mortgage with a rate in this range, be prepared to pay a premium for the home itself as a result. But the point is that there are ways you might be able to find mortgage rates that are significantly lower than the 8% 30-year loan rates that are prevalent in the market right now — if you know where to look.

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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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The 30-30-30-10 system is a budgeting system that could simplify your finances. Keep reading to learn how it works. 

If you want more money in your bank account, you’ve probably heard that you need to make a budget in order to make that happen. After all, creating a spending plan should allow you to avoid relying on credit cards and use your money more wisely.

The problem is, pretty much no one actually likes budgeting. It can be a giant pain to sit down and figure out where every dollar should go, so most people don’t consistently do it. And even if you make a budget, it can be hard to stick to it.

The good news is, there are alternatives worth considering — like the 30-30-30-10 system. Never heard of it? Here’s how it works.

This is how the 30-30-30-10 system works

The 30-30-30-10 system is a percentage-based system for allocating your dollars. It’s similar to other approaches, like the 50-30-20 system, but tweaks them slightly. With the 50-30-20 system, you keep fixed expenses to 50% of income, save 20%, and use the other 30% for discretionary spending.

The 30-30-30-10 system breaks things down a little more. If you follow it, here’s how you’d use your money:

30% of it would go toward housing30% of it would go toward necessities30% would go toward financial goals10% would be used for personal spending

Financial goals could be investing for retirement and saving for a house or for big purchases. Necessities would be the purchases you have to make, like groceries and a car payment. And the remaining 10% would be yours to do what you want with.

So, for example, if you brought home $5,000 a month, you’d want to spend $1,500 per month on housing and the same on necessities. You’d transfer another $1,500 into retirement accounts and other savings accounts. Then, you’d have the remaining $500 left to spend on whatever you’d like.

Pros of the 30-30-30-10 system

There are some definite benefits to the 30-30-30-10 system.

For one thing, it allocates more money to financial goals than other approaches like the 50-30-20 percentage based budget. Since you ideally should be saving around 15% of income for retirement, saving only 20% of your income won’t give you much extra money to use toward other goals. But if you aim to set aside 30%, you’d end up with more money to set aside for both long-term and short-term objectives.

The simplicity of this system (and any other percentage-based budgeting technique) is also a big advantage. As long as you set up your housing costs and other essential costs so you can stay within the 30% limits for these categories, you could have the money for these expenses (and for your goals) taken directly out of your bank account. That would make it easier to stick to your plan — and you’d be able to spend the remaining 10% of your money guilt-free.

Cons of the 30-30-30-10 system

There are some downsides too, though. First, it’s really hard for many people to put 30% of their entire income toward financial goals — especially people who live in a high-cost-of-living area and who may not be able to limit housing costs to only 30% of income. Second, keeping personal spending to just 10% of what you earn doesn’t leave you a whole lot to enjoy life. It may be easier to reduce fixed expenses (or housing costs, depending on where you live) rather than constantly limiting what you can spend on fun purchases.

Ultimately, you should consider whether this budgeting breakdown looks like the way you’d want to allocate your funds. If not, you can try the 50-30-20 system or devise a percentage-based system of your own that allows you to save enough for a secure future.

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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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Many of the homes you’ll find available today are part of an HOA. Read on to see why that won’t work for me. 

If you’re looking to buy a home today, there’s a reasonable chance you’ll come across an available property that’s part of a homeowners association, or HOA. HOA-USA says there are over 370,000 homeowners associations in the U.S. This represents more than 53% of the owner-occupied households in America.

Now, I know some people would rather not buy a home in an HOA because of the fees. When you buy in an HOA, you pay monthly dues on top of your mortgage.

But HOA fees don’t really bother me in theory. The way I see it, yes, it’s an extra expense on top of the money I owe my mortgage lender. But in exchange, I’m probably getting some benefit, like access to a pool that’s been maintained on my behalf or a manicured lawn I didn’t have to work on myself.

But while I don’t necessarily mind the idea of HOA fees, I still won’t consider a home in a HOA. Here’s why.

1. I love dogs

I love dogs and currently own one. If I had it my way, I’d own more. And hopefully, one day I’ll be able to convince my husband of such. But one situation I refuse to land in is not being able to bring a dog into my home because my HOA prohibits that due to its size or breed.

This isn’t to say that buying a home in an HOA will automatically mean having difficulty getting a dog. But it’s fairly common for HOAs to ban certain dog breeds or impose limits on the size of a dog. That’s something I refuse to deal with.

2. I own a business

Owning my own small business is sometimes a nuisance because I have to deal with all sorts of administrative tasks and paperwork on top of my actual work. But I happen to enjoy working from home. And I want the option to continue doing that for as long as I’m able.

Some HOAs, however, prohibit homeowners from running a business from home. In some cases, that doesn’t apply to every home business. My business is content production. It’s not noisy and it doesn’t involve having people constantly coming in and out of my house.

But technically, an HOA can bar you from running any type of registered business from your home. I can’t take that risk.

3. I don’t like being told what to do

One of the reasons I deal with the expenses of homeownership rather than pay rent and let a landlord handle things like upkeep is that I like to make my own rules. And if I’m going to pay for a home, I want to be able to call the shots — all of them.

So the final reason I wouldn’t buy a home in an HOA is that I simply don’t enjoy being told what to do. Why put myself in a position where I can’t have the shutters or bushes I want because it doesn’t conform to somebody else’s taste? To me, that’s just silly.

It’s not always easy to find a home outside of an HOA. So if you’re looking to buy, you may have no choice but to take on the rules and obligations of a homeowners association. And you may also find that buying in an HOA isn’t so bad.

But before you sign a contract that binds you to HOA regulations, read through the rules carefully and make sure you can live with them. You don’t want to regret your home purchase because the rules you now need to follow impede your lifestyle in one way or another.

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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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