Money Management

The holidays are still several weeks away. Read on to see why this writer is narrowing down her shopping list now. 

The average consumer expects to spend $875 on the holidays this year, reports the National Retail Federation. And if I’m being honest, my total holiday spending will probably exceed that number.

Although we do our best to not go overboard on holiday spending in my household, I try to be generous with the people who are important to us, like family and friends. Also, I believe in being generous with my kids’ teachers because they work so incredibly hard.

Now, a lot of the holiday gifts I plan to buy are gift cards. But the items on my kids’ wish lists are actual things. And I’m certainly not going to hand my six-year-old niece a Target gift card and call it a day.

In previous years, I would wait until events like Black Friday to get the bulk of my holiday shopping done. But this year, I’m getting started in October. Here’s why.

I don’t want to miss out on great deals

Consumers may be wired to think that the best holiday deals are going to arrive during heavily promoted events like Black Friday and Cyber Monday. But one thing I’ve noticed in recent years is that many retailers offer better deals in the weeks leading up to Black Friday and Cyber Monday.

That’s why I’m focusing on making a holiday list now. I don’t like shopping without a list because then I’m not focused and am more likely to spend money on the wrong things. But if I make my list now, I’ll be in a better position to capitalize on the deals that arrive in early and mid-November.

I don’t want the items on my list to sell out

My kids tend to have some pretty specific requests for the holidays. And often, they’re reasonable, so when they make a list, I try to stick to it.

In recent years, though, I’ve run into problems with waiting too long and having the things my kids want sell out. Granted, this was a much bigger problem in 2021, when supply chain snags were a major issue, than in 2022.

But there were certain items I didn’t end up finding last year, and I don’t want a repeat this year. I figure that if I can get myself organized a little sooner, I can potentially avoid that issue. And that’ll also be one less thing to stress about.

It pays to get started now if you can afford to

Some people can’t afford to start their holiday shopping in October because they still need to work on their savings account balance. But because I’ve been putting money away for the holidays since January, I know that if I charge up a storm on my credit card in the next few weeks, I’ll have the ability to pay it off.

If you’re in a similar boat and can afford to start your holiday shopping now, then it pays to do so. You might benefit from numerous deals, not to mention get the peace of mind that comes with knowing you’ve checked the most important items off of your list.

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Opening a credit card is a big deal for your finances. Here’s how to tell it’s not the right move for you right now. 

There are some good reasons to open a credit card. One of the best reasons is that a card can help you build credit. Your credit utilization ratio and payment history are two huge factors in determining your credit score, and both can be positively impacted by getting a card, maintaining a reasonable balance, and paying your bills on time.

You can also earn rewards if you sign up for the right card, so you get cash back, miles, or points for merchandise based on spending you’d do anyway.

But while there are benefits to getting a card, not everyone should move forward with applying for one. You don’t want to do so before you’re financially ready. Here are three big signs that this may be your situation.

1. You already have a lot of high-interest debt

If you already have a lot of high-interest debt, dealing with what you owe could be smarter than signing on for new credit. For example, if you have payday loans, you’ll want to focus on paying those off first before you take any chances of digging a deeper hole for yourself. Paying off existing debt could also help you maximize the chances of qualifying for a good credit card with a generous rewards program.

Now if you have low-interest debt such as a mortgage loan or even an affordable car loan, this shouldn’t preclude you from opening up a credit card. If you’ve been responsible with making payments on those loans on time, this positive track record indicates you may indeed be ready to handle the responsibility of a credit card.

2. You have trouble keeping track of your current financial obligations

If you don’t know where the money in your checking account is going, if you overdraft your account regularly, or if you are late paying bills, then you don’t want to get a credit card.

A single late payment on a card could cause your credit score to drop by 60 to 110 points if your bill becomes 30 days past due. Your score will drop more if you’re repeatedly late or if you are 60 or more days behind on the bills. You’ll also get hit with late fees if you are late paying your card.

There’s no reason to risk these undesirable consequences by taking on a new financial obligation when you haven’t yet managed to learn how to handle the responsibilities you have already. Instead, focus on finding a system that works for you, such as using an app to track your bills or setting up automatic payments so you can be on time every time.

3. You don’t have a handle on your spending

If you aren’t living on a budget and you don’t trust yourself to not charge things on your credit card you can’t pay off in full, you should avoid getting a card. The average interest rate on a credit card was 21.19% as of August 2023. The last thing you need is to get a card, charge up a balance you can’t pay back, and get stuck paying interest for years at such a high rate.

Before you get a card, make sure you can use it wisely by limiting the amount of your available credit used to under 30%, paying your bills on time, and not charging more than you can afford to pay back in full when the statement comes due. If you don’t think you can do all that, wait to get a card until you’re confident you can.

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Your 20s are your first full decade of adulthood. Keep reading to learn what not to do when you’re just getting started with managing your own finances. 

When you are in your 20s, you have your entire financial life ahead of you. You have the power of time, and ideally, since you’re just getting started with your career and independent life, you won’t have already made too many money decisions that you come to regret.

You’ll want to be careful during this decade though, so you can avoid making errors as you begin to make decisions about how to manage your personal finances. In particular, there are three big financial mistakes you should be sure to avoid in your 20s.

1. Waiting to start investing

One of the biggest mistakes you can make when you’re young is not putting money into an investment account to save for your future.

You should sign up with your company’s human resources department to participate in your workplace 401(k) plan if you have one. Or you should open and put money into an individual retirement account (IRA) with a brokerage firm (almost any discount online broker makes this process easy by just filling out an online application). These accounts provide tax advantages for retirement savings and give you access to the stock market. You can invest in index funds or mutual funds that track market performance so your money can start growing.

Waiting to start investing is a terrible mistake because you miss out on years of compound growth. That’s what happens when the returns you invest are reinvested and help your money grow very quickly. Missing out on this compound growth means you’d need to invest a whole lot more later on.

Say, for example, you want to end up with $1 million in your brokerage account by the age of 65. The table below shows how much more this would cost you if you wanted a decade to get started.

Delaying investing by a decade ends up costing you an extra $66,546 out of pocket to end up with your $1 million. And it makes it a lot harder to come up with the money you need each month. Don’t do that to yourself. Start investing in your 20s.

2. Going into lots of debt

Using credit cards or taking on other high interest debt to make purchases is another huge mistake. When you borrow, you make your purchases cost more due to the interest that you pay. You’ll also be committing your future self to paying for purchases you’re making today.

Try to avoid debt if at all possible, unless it is debt you’ve taken on to improve your life. This could be getting a mortgage loan to buy a home when you’re financially ready or taking out a loan to start a business. Unless you’ll be increasing your net worth and making yourself wealthier in the long run by borrowing, just say no to debt when you’re starting out.

3. Committing to large fixed expenses

Finally, you also want to avoid committing to large fixed expenses. These are the expenses that recur every month. If you rent an expensive apartment or buy an expensive car with a car loan, these would be examples of committing to big fixed expenses.

The more of your money taken by fixed expenses, the less there is left over for other things. It’s a lot easier to just choose a cheaper apartment to live in one time and free up money for investing than it is to live somewhere expensive and have to skimp on restaurant meals and entertainment every month.

Fortunately, these three mistakes are pretty easy to avoid. If you can manage not to make them, you’ll be setting yourself up for a much more 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.
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.Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Costco sells more than just bulk food items. Diamond earrings, caviar, luxury watches, and more can be found at the wholesale club. Find out more here. 

Shopping at Costco is all about finding great deals, but that doesn’t mean your purchases have to be low-quality or even cheap.

We’re getting closer to the Christmas shopping season every day, and if you’re looking for some high-end gifts to give out without completely derailing your personal finances, you may want to consider some of these luxury items.

While not cheap, here are five luxury items you can buy at Costco for under $500.

1. Diamond stud earrings

Price: $429.99

A couple of years ago, I ordered a pair of earrings for my wife online and opened up the box to get a good look at them before I wrapped them up, only to find that it was completely empty. It was the most expensive box I’ve ever bought.

I didn’t buy the earrings from Costco, but the company has .33-carat weight diamond earrings that can be picked up at the Costco warehouse, potentially saving you the hassle I experienced. The 14kt white gold studs come with 26 near-colorless diamonds. Just be sure to check the box before you wrap it up.

2. Osetra caviar

Price: $279.99

If you’re planning to host a fancy holiday party, you may be able to do all of your shopping at Costco — caviar included. Costco sells a two-ounce set of Pacific Plaza golden Osetra caviar for just $280, making it a great luxury item to buy at a semi-affordable price.

Costco says on its website that the facility that sells this caviar produces some of the “best amber gold Osetra the world has to offer” and that it will compare to the best caviar on the market.

3. All-Clad 11-piece non-stick cookware set

Price: $429.99

I’m not a good home cook, though I make a great fruit smoothie nearly every day. But if you’re a legit home chef on the lookout for some high-end non-stick pans, Costco could be your best bet.

You can score an 11-piece set of All-Clad’s pots and pans made with heavy-gauge hard anodized aluminum for under $430.

4. Citizen men’s atomic watch

Price: $399.99

I’ve been thinking about getting a Casio calculator watch like the one I had when I was kid, but if your taste in watches is slightly classier than mine, then Costco has you covered. The company is selling the Citizen Eco-Drive Promaster Land atomic watch, which is powered by light, for just under $400.

It’s no calculator watch, but considering that it has atomic timekeeping, synchronized time adjustment in 24 cities worldwide, and is water resistant to 200 meters, I guess it’s pretty cool, too.

5. Authentic Wagyu Japanese A5 beef cubes

Price: $249.99

Costco is known for its $1.50 hot dog meal, but if you want to take your beef quality just a few notches higher, the discount warehouse can help you with that purchase, too.

Costco offers a three-pack of 16 authentic Wagyu Japanese A5 beef cubes wrapped in Applewood bacon for a cool $250. Wagyu beef is considered some of the best beef in the world, imported from Japan. It even comes with a certificate of authenticity, which I will demand for all of my meat purchases from now on.

How to find the best deals at Costco

If you’re not into shopping for luxury items at Costco and just want to save money, here are a few tips.

Download the Costco app: The Costco app will not only make it easier to see what’s available in the store and online, but you can also click on the “Savings” link at the top of the app to see what deals are currently available.Check your mailbox: If you prefer the offline method, Costco mails out its Coupon Book every few weeks, showing some of the best in-store and online deals.Keep an eye on the gift card rack: Costco often sells gift cards that give you a lot of bang for your buck. For example, recent deals at Costco include discounts on airline gift cards, restaurants, and movie theaters.

Whether you’re looking for luxury items or discount bulk items, Costco likely has what you’re looking for. And if you score the Wagyu Japanese A5 beef cubes, I’m free this weekend. I’ll bring a salad.

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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.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Chris Neiger has positions in Apple. The Motley Fool has positions in and recommends Apple and Costco Wholesale. The Motley Fool has a disclosure policy.

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Wondering what November has in store for home buyers and sellers? Here’s what you need to know. 

It’s been a tough go for prospective home buyers. And those looking to sell their homes actually don’t have it so easy, either.

Mortgage lenders have been charging eye-watering rates. Granted, today’s rates aren’t the highest they’ve ever been. But they’re the highest rates we’ve seen in over two decades.

Because of how high rates are, it’s been difficult for buyers to afford a home. And it’s been difficult for current homeowners to make a move.

After all, many people signed mortgages or refinanced to rates in the 3% range in 2020 and 2021. Who wants to swap a rate like that for a rate that’s around 8%?

Unfortunately, it’s unlikely that housing market conditions will improve for buyers in November. Here are a few things to expect.

1. Mortgage rates will stay high

In late October, the average 30-year mortgage rate was about 8%, as per Freddie Mac. And rates could rise even more in November.

Even if they don’t, we’re unlikely to see rates fall. And that could keep a lot of buyers out of the market and keep would-be sellers from listing their homes.

For context, the principal and interest payment on a $200,000, 30-year mortgage at 3% is $843. The principal and interest on that same loan at 8% is $1,468. That’s not quite double, but it’s a lot more.

2. Home prices will remain high

The National Association of Realtors (NAR) reports that in September, the average existing home sold for $394,300. That’s a 2.8% increase from a year prior.

Home prices may not rise much in November since, if anything, buyer activity tends to slow down toward the end of the year. If there’s no increase in demand, we may not see an increase in home prices.

But home prices are also unlikely to come down. So buyers shouldn’t expect much relief.

3. Housing inventory will remain low

Nobody wants to sell a home right now unless they’re somehow able to take their proceeds and buy a replacement home outright in cash. Buyers are just really turned off by today’s mortgage rates. Because of this, we’re unlikely to see more homes hit the market in November.

Meanwhile, as of late September, there was only a 3.4-month supply of available homes on the market, per the NAR. It commonly takes a four- to six-month supply of homes for there to be enough inventory to satisfy buyer demand. In fact, it’s this lack of inventory that’s keeping home prices up at a time when you’d expect them to be falling due to higher mortgage rates.

Tough times all around for the housing market

All told, November is apt to be a hard month to buy. And while sellers can benefit from a lack of competition, they’re in the same boat as buyers when it comes to looking at expensive borrowing rates for a new home.

If you’re going to try to buy a home in November anyway, crunch your numbers carefully and aim for total housing costs that don’t exceed 30% of your take-home income (your paycheck minus deductions). That 30% should include your mortgage payment, property taxes, homeowners insurance, and HOA fees, if applicable — basically any recurring, predictable expense associated with owning your home.

Going beyond that limit is risky. Taking on higher housing costs might put you at risk of falling behind on home-related bills or other expenses that are essential. So if you can’t stick to that limit, it may be best to put off homeownership until market conditions are more favorable.

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Hate paying taxes? Read on for ways to get out of them — without breaking the law. 

Most of us would probably agree that taxes are a drag. And the bad news is that it’s pretty difficult to get out of paying taxes completely. It’s technically possible to do so if you’re a low enough earner, but then, well, you’re living on very little. So that’s not ideal.

But while you may not be able to get away with paying the IRS $0 year after year, you should know that there are plenty of actions you can take to set yourself up to pay less tax. And the best part? They’re completely legal. Here are some IRS-approved tricks that could save you a bundle.

1. Holding investments for a year and a day before selling them

When you sell investments in your brokerage account at a profit, you’re required to pay taxes on your gains. But in some cases, you may not have to.

Capital gains are grouped into two categories: short term and long term. The former applies to assets held for a year or less before being sold, while the latter applies to assets held for at least a full year and one day.

If you hold assets long enough to qualify for long-term capital gains, you can lower your tax burden on those gains. And if your income is low enough, you may not have to pay taxes at all.

People who are single with an income of $44,625 or less or married filing jointly with an income of $89,250 or less get to enjoy a 0% tax rate on long-term capital gains. By contrast, a single person earning $30,000 a year would be subject to a 12% tax rate on short-term capital gains.

2. Contributing to a traditional retirement plan

When you put money into a traditional 401(k) or individual retirement account (IRA), you get a tax break on your contribution. And that means you’ve shielded some income from the IRS’s reach.

Let’s say you contribute $3,000 to a 401(k) and you fall into the 22% tax bracket (meaning, that’s the rate of tax you pay on your highest dollars of earnings). Not paying the IRS taxes on that $3,000 of income could mean saving yourself $660. But no matter what tax bracket you fall into, it pays to fund a retirement account so you’re not paying taxes on at least a portion of your wages.

3. Tracking business-related expenses and claiming the right deductions

If you’re self-employed, you should know that you’re allowed to claim deductions on your taxes for expenses incurred in conjunction with doing business. You just need to keep an accurate record of those expenses and know what you’re allowed to claim.

Let’s say you have a side gig that pays you for reviewing different video games. You may be eligible to deduct the cost of those games on your taxes (an accountant should be able to tell you if you can deduct the entire cost there, or part of the cost). And if you buy accounting software to help you track your earnings, that, too, should be an allowable deduction.

If you’re starting your own venture or are first going from being a salaried employee to being self-employed, it could pay to sit down with an accountant and discuss potential deductions. That way, you’ll know what records to focus on maintaining.

The tax code is loaded with ways to pay the IRS less — you just have to know what those entail. If you time the sale of assets strategically, pump money into the right retirement plan, and claim appropriate deductions, you can potentially save yourself a whole lot of money on taxes.

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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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