Money Management

Housing inventory needs to pick up, and one key factor is probably necessary to make that happen. Read on to learn more. 

Buying a home is not an easy proposition these days. Even if you can afford a mortgage loan, you might run into issues with not being able to find a property that suits your needs.

As of the end of September, there was only a 3.4-month supply of homes on the market, according to the National Association of Realtors. For context, it can take up to a 6-month supply of homes to meet buyer demand in full.

But it’s not as if housing inventory plunged in September specifically. Rather, housing inventory has been stuck in a rut all year. And things are likely to continue that way well into 2024 — and possibly beyond — due to one big factor.

Mortgage rates are keeping homeowners put

In 2020 and 2021, mortgage lenders were offering up record-low rates to fuel buyer demand. These days, however, mortgage rates are sky-high. And that’s keeping a lot of people from listing their homes and opening up the market.

As of Nov. 2, the average 30-year mortgage rate was 7.76%, according to Freddie Mac. The average 15-year mortgage rate was 7.03%.

By comparison, in 2020 and 2021, buyers were locking in 30-year mortgages at around 3%, and 15-year mortgages could be had for well under 3%. And it’s not just buyers who capitalized on those ultra-low rates. Many existing homeowners rushed to refinance their mortgages to take advantage as well.

As such, we now have a lot of property owners sitting on affordable mortgages who don’t want to swap them for a rate in the 7% range. And that’s understandable.

But until mortgage rates start to come down, housing inventory is unlikely to increase. And since rates might remain stubbornly high well into 2024 and possibly beyond, we could be in for many more months of stagnant inventory.

How to cope with limited inventory as a buyer

When you’re trying to purchase a home, not having much of a selection can be tough. It’s one thing to have to choose an evening gown for an upcoming gala when your go-to store only has three dresses in your size. You may not get exactly what you want, but you’re probably only wearing the dress once or twice. And you’re probably (or hopefully) not spending your life savings on it.

But a home purchase is totally different. There are only so many compromises you can make when you’re talking about a place you might live for the next decade or longer.

One thing that might help you navigate today’s housing market, though, is reminding yourself that homes can be updated. So as long as you buy a home that’s large enough to meet your needs, you can worry about some of the details later on.

For example, you may not want to spend the next 10 years living in a home with a lime green kitchen featuring linoleum flooring. But if you find a home with a sorely dated kitchen that has good bones and is large enough for your family, you could always buy it, gut the kitchen, and turn that space into whatever you want it to be.

Similarly, your wish list for a home might include things like a fenced-in yard and a nice deck. If those features aren’t available, find a home that just plain has a yard. You can fence it in and build a deck later on, as money allows for.

In an ideal world, you’d be able to buy a home that offers everything you’re looking for. But at a time when inventory is so limited, that may not happen. So do your best to be flexible and focus on properties that have the potential to become your dream home — even if they don’t start out that 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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Gala. The Motley Fool has a disclosure policy.

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If you’re not careful, you may spend more than planned when shopping for Thanksgiving. Find out what could go wrong if you overspend on holiday essentials. 

With Thanksgiving quickly approaching, you’re likely starting to stock up on food and drink essentials and plan how you will gather with friends and family. As you organize your holiday plans, it’s essential to keep your spending in check. If you’re not careful, it can be easy to go overboard and spend beyond your means, which could worsen your personal finance situation.

Don’t feel pressure to plan an elaborate affair

The holiday season offers the perfect opportunity to spend time with loved ones who we haven’t seen in a while. While it can be fun to gather and catch up over a shared meal, the planning and preparation process for a holiday event can be stressful.

If you’re hosting this year’s Thanksgiving dinner, don’t feel pressured to plan an elaborate event. You should always keep your finances in mind as you shop. The purpose of the holiday isn’t to impress others, but to spend time together. Try to keep that in mind when planning.

Here are a few things that can happen if you overspend.

You could go into debt

Many people use credit cards to pay for their everyday purchases. But it’s essential only to charge what you can afford. Otherwise, you could go into credit card debt. When your bill arrives, the best strategy is to pay the entire statement balance in full. If you don’t, you’ll pay credit card interest charges, which can add up fast — according to Forbes, as of this writing, the current average APR on a credit card is 27.81%.

As credit card debt accumulates, it can negatively impact your finances, including causing harm to your credit score. As you make plans to do your shopping for the upcoming holiday, make sure you set a budget and stick to it. That way, you can avoid going into costly debt.

You may have buyer’s remorse

Buyer’s remorse is when you have feelings of regret after making a purchase. Often, this happens after making a big-ticket purchase, like an expensive piece of electronic equipment that you don’t need. But you might also feel this way after spending too much money during the holidays.

The last thing you want to do is feel guilty after shopping for your Thanksgiving meal. You can avoid this by going to the store with a plan. Review sales fliers to find the best deals, and draw up a shopping list so you can stay on track while you load items into your cart.

You might not enjoy the holiday

When you spend more than you can afford, it can cause added stress. When you’re feeling overwhelmed about your finances, it can be hard to live in the moment and enjoy what is going on around you. If you overspend on Thanksgiving, you may not enjoy your holiday gathering as much as usual. Make sure you make spending decisions that allow you to have a good time.

It can throw your budget off course for the rest of the year

If you overspend on Thanksgiving, you may end up in a difficult situation for the rest of the year due to budget issues. If you spent more than you intended in November, you’ll have even less to work with in December. If you need help managing your budget so your current financial situation doesn’t worsen, check out our list of the best budgeting apps.

Set yourself up for success

It’s not too late to plan a memorable and delicious holiday meal that fits your budget. Want to avoid overspending? Determine how much you can afford and make a shopping list to stay on track. By keeping your finances in mind as you shop, you can avoid the above problems.

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HSAs offer a world of tax savings and other perks. Read on for one circumstance where you should absolutely rush to open one of these accounts. 

When my husband switched jobs and our health insurance changed because of it, our out-of-pocket costs went up. But one silver lining was that our new health insurance plan made us eligible for a health savings account, or HSA.

An HSA is a special savings account you can use for medical expenses. It’s similar to a flexible spending account (FSA), only an FSA makes you spend down your balance every year.

HSAs let you carry a balance forward as long as you want to. In fact, HSAs actually encourage you to hang on to your money because you can invest unused funds to grow your balance into a larger sum.

Eligibility for an HSA hinges on being enrolled in a high-deductible health insurance plan. In 2024, that means having an individual deductible of $1,600 or more, or a family deductible of $3,200 or more.

You may be inclined to pass on an HSA even if you’re eligible for one. If you don’t tend to get sick or see the doctor often, you may want to just hang on to your money rather than put it into a healthcare-designated account where you’ll be penalized for non-medical withdrawals until age 65.

But you should know that HSAs offer a world of tax benefits. And if yours comes with one extra benefit, you’d be silly to say no to it.

When you get help funding your HSA

Just as some companies help employees by matching 401(k) contributions, so too do some employers fund HSAs on their employees’ behalf. In fact, your employer might contribute funds to an HSA even if you don’t contribute any money yourself. So if your health plan is compatible with an HSA and your employer offers that benefit, you’d basically be a fool not to open one.

Even if you don’t expect to spend a lot on healthcare in the near term, over time, your medical spending might rise. It’ll help to have an HSA balance you can tap once your healthcare spending needs increase.

Employer contributions count toward your annual limit

When your employer matches a contribution you make in your 401(k), it doesn’t count toward your annual allowable limit. But HSAs work differently. With an HSA, funds that your employer contributes do count toward your maximum contribution for the year.

In 2024, you can put up to $4,150 into your HSA if you have self-only coverage, or up to $8,300 if you have family coverage. And there’s a $1,000 HSA catch-up contribution available to savers aged 55 and over.

So let’s say you’re 29 years old and have self-only coverage. If your employer contributes $2,000 to your HSA on your behalf, it means the most you can contribute yourself is $2,150.

But either way, any money that lands in your HSA can be invested in a tax-advantaged manner. Investment gains in an HSA are tax-free, and so are withdrawals used for qualifying medical expenses.

Plus, HSA contributions are tax-free. So even if your employer is willing to kick in a nice amount of money, it pays to fund your HSA out of your own paycheck, too. It’s a great way to shield some of your income from taxes while setting yourself up with funds to cover healthcare expenses whenever they arise.

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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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Inflation and interest rate hikes have made it harder for people to pay their everyday bills. See what steps to take if you aren’t sure how to cover yours. 

If you worry about how you’re going to pay your bills each month, you’re not alone. The latest data from the U.S. Census Bureau Household Pulse Survey shows that 41% of people are in the same boat.

The statistics reflect what many consumers already know: Interest rate hikes and inflation continue to bite. Savings rates are declining, credit card balances are increasing, and some Americans are falling behind with their payments.

What to do if you can’t pay your bills

Not being able to pay your bills is beyond stressful, particularly when you have people who depend on you. It might help to know that you’re not alone. Importantly, there are steps you can take to get on top of things. Many people have been in the same position as you and found a way through.

1. Make a plan

When a problem feels too big or there’s no obvious solution, I often put my head in the sand and hope it goes away. Sadly, when it comes to your personal finances, that rarely works. In fact, ignoring financial issues often makes them worse. Instead, try to figure out how big the problem is and what steps you can take.

These moves will help you get a handle on things:

List out what you owe: Write down each bill and expense you have, when it is due, and how much it is. This includes housing costs, utilities, groceries, insurance, debt payments, and everything else you will need to spend money on. Look through previous bank account statements so you don’t miss anything.Map out your income: Work out what money you have coming in, and when you expect to receive it. Use this to work out how big the shortfall is. Also, think about ways you might bring in some extra cash, whether through a side hustle, renting out space, or selling unwanted items.Prioritize the essentials: There are consequences to late payments on all types of bills, but some are more severe than others. Housing, food, utilities, and transportation to and from work are more important than, say, your cellphone bill. If you’re not sure where to start, there’s a great worksheet on the CFPB website that explains the consequences of different missed payments and will help you know what to prioritize.

Once you have an idea of what you can pay, think about how to manage the shortfall. In some situations, it may make sense to get a personal loan or other form of borrowing to tide you over. Think carefully before you do this, as you may be kicking the can further down the road. Plus, you’ll have to pay interest on the borrowed funds, which could make things harder long term.

2. Contact your creditors

It can be really difficult to call the people you owe money to, but those conversations could ease some of the pressure. Rip off that bandage and pick up the phone. If you’re worried about the conversation, make some notes first. You’ll need to tell them why you can’t pay and how you plan to catch up on the overdue payments.

Be prepared to explain your situation in detail and show that you’re ready to work with them. You might be able to work out a payment plan, so think about what you would be able to afford. If this is a short-term issue, you might be able to defer the payment. Ask the name of the person you speak to, and follow up with an email or letter confirming what was agreed.

3. See what help is available

Unpaid bills can be a bit like black mold — the consequences quickly spread and worsen. The sooner you can get back on top of your payments, the better. See if there’s help available at a local or national level that could get you back on your feet.

Here are some places to try:

Utility bills: Check out the USA.gov page for programs that might help you cover energy, phone, and internet bills.Rent or mortgage: The Department of Housing and Urban Development is a good place to start in terms of help with rent or mortgage payments. Also, see if there are any housing assistance programs in your state.Debt management: There are some great organizations that can help you handle debt, but beware of scammers. Use the National Foundation for Credit Counseling to find someone accredited, and don’t trust anyone who asks you to pay in advance.Food benefits: Over 40 million Americans receive SNAP food benefits monthly, which can help keep food on the table. If your circumstances have changed, you may be able to claim benefits (or qualify for more money if you already receive SNAP). For emergency assistance, find out what food pantries and soup kitchens operate in your area.General assistance or advice: United Way (211) maintains a database of resources and organizations. Give them a call and explain your situation.

What happens when you don’t pay your bills?

If you fall behind with your bills, your credit score will almost certainly take a hit. That might make it harder for you to borrow money and can impact the cost of other services, such as insurance. You may also have to pay late fees and interest charges. Those aren’t ideal, but they’re easier to manage than some of the other consequences.

After a certain period, your debt will likely be passed to a collection agency, and the debt collectors will chase you for payments. If you have a secured loan, such as a mortgage or auto loan, where your home or car is collateral, these may be at risk.

There are no easy answers when the bills are piling up. But the more proactive you are about getting on top of your payments, the more likely you’ll be able to avoid the more serious consequences.

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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.JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Emma Newbery has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

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Sometimes, the nature of your work can make it so that your income doesn’t count when signing a mortgage. Read on to learn more. 

When my husband and I bought our home, we were able to lock in a fairly favorable mortgage rate. But when rates plunged in 2020, we decided to take advantage by refinancing our existing 30-year loan to a 15-year loan.

Doing so raised our monthly mortgage payment a bit. But we were thinking long-term in the course of that decision, and we decided we were willing to increase our monthly mortgage payments to save a boatload on interest in the long run.

When applying to refinance our mortgage, our lender required us to provide certain financial information, including recent tax returns and details of our income. But my income didn’t end up counting toward our mortgage application, despite the fact that I had earned six figures the year before. Here’s why.

When vetting your income is too much of a hassle

When you’re a salaried employee, providing proof of income to your mortgage lender isn’t all that difficult. You can generally get away with showing copies of recent pay stubs and a recent W-2 or tax return.

When you’re self-employed, verifying your income becomes much harder. It’s often not enough to just present a copy of a recent tax return. And even bank account statements showing money flowing in isn’t enough.

Rather, if you’re self-employed as a mortgage applicant, you’ll generally need to show a history of uninterrupted self-employment income for at least two years, says Rocket Mortgage. On top of that, you may need to provide information that includes a list of current clients or contracts, a copy of business licenses you hold, and a letter from a professional organization that can attest to your membership.

Some of these things can be difficult to come by. I don’t happen to be a member of a professional organization, for example. And even things like copies of contracts can be tricky.

That’s why it made sense to just not count my income at all when we refinanced our mortgage. Our lender informed us it would make the process a lot less cumbersome. And since we were able to qualify for the loan amount we were looking for based on my husband’s income alone, it made sense to just go that route.

Be mindful of applying for a mortgage if you’re self-employed

It is possible to qualify for a mortgage when you work for yourself. But expect to have to jump through extra hoops if you’re applying for a mortgage while self-employed. And don’t be surprised if the process of closing on one takes longer.

One thing you may want to do is research requirements for self-employed applicants before you apply for a mortgage and have them ready to go. That way, you won’t hold up the process if you find your dream home and want to close on a mortgage quickly.

While it was certainly frustrating to not have my income count toward our mortgage refinance, I didn’t make a stink about it since we didn’t need it. Had things been different, I would’ve had a hassle on my hands. I guess I’ll chalk it up to one of the many downsides of being self-employed.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

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 recommends Flow. The Motley Fool has a disclosure policy.

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