Money Management

Increasing your deductible is a great way to reduce your home insurance premiums. Learn more about the pros and cons of higher deductibles. 

Home insurance is a hot topic right now, as many Americans grapple with soaring premiums. Worse, some homeowners in parts of Florida and California are struggling to get any coverage at all.

One frequent piece of advice when it comes to lowering your homeowners insurance premium or getting an insurer to take you on is to raise your deductible. But that can be costly if (or when) you actually have to make a claim. Read on to learn some of the pros and cons of a high deductible.

How homeowners insurance deductibles work

A homeowners insurance deductible is the amount you pay before the insurer’s money kicks in. Here’s how that might look if you make a $5,000 claim:

If you have a $500 deductible, you’d pay the first $500 and the insurer would pay $4,500.If you have a $2,500 deductible, you’d pay $2,500 and the insurer would pay the remaining $2,500.

Deductibles often work as a fixed dollar amount, but they may also be calculated as a percentage or a mixture of the two. The key thing is that the higher your deductible, the lower your premium will be. According to analysis by Insurance.com, on average, you could reduce your premium by around $500 by a year if you increase your deductible from $500 to $2,500.

Let’s say you pay $2,000 a year in homeowners insurance. Figures vary by state and property, but that reduction could shrink your payment to $1,500. It’s a significant savings. Just be aware that if you needed to file a claim, you’d be on the hook for $2,500 of costs instead of $500.

Not only would you need to have that money tucked away somewhere, but if you had to make several claims, any savings would be wiped out. That said, if you had to make several claims, your premium would likely increase and there’s even a risk your insurer would not renew your policy.

How a high deductible can save you money

In really simple terms, if your annual savings add up to more than the extra deductible over time, you’d be ahead financially. So, let’s say you could swing the $500 annual discount above by increasing your deductible by $2,000. It would take four years before the savings covered the potential extra cost. After that, every year that passed without a claim would be a gain for you.

Premiums will no doubt continue to rise in that time, but you’d still pay less with a higher deductible. If you went six years without filing a claim, you could have saved $3,000. Given that Square State Insurance says households claim once every 10 years on average, the odds are in your favor. It could mean you’d save $5,000 in annual payments over a decade, and potentially only spend your deductible of $2,500 once.

But what happens if you need to claim and you don’t have enough cash? In an ideal world, you’d have enough savings to cover your deductible before you lowered your rate. Or you’d have been able to sock the cash you save by paying a lower rate into a high-yield savings account and build up a house emergency fund.

Sadly, we live in the real world, and disaster might strike when we are not ready. If you increased your deductible because you couldn’t afford your homeowners insurance, you might not be able to put extra money aside over time. Or perhaps you plan to save up for an emergency, but then something goes wrong immediately after you’ve increased your deductible.

In that situation, you may have to take on debt to cover the cost, which could wipe out any savings. Let’s say you put $2,000 onto a credit card because you needed the money quickly. At the moment the average interest rate on a credit card is over 20%. If you paid it down at $100 a month, it would take over two years and you’d pay almost $500 in interest.

Does raising your home insurance deductible make sense?

There’s no one-size-fits-all deductible. Raising your deductible can significantly reduce your annual homeowners insurance premium. But it also means you need to have more emergency cash on hand in case something goes wrong.

Take these steps before you increase your deductible:

Make sure you have enough money to cover the larger deductible: You might even have to pay a higher premium while you build up some savings. It’s stressful enough when things go wrong in your home without having to worry about how you’ll pay your part of the repairs.Crunch the numbers to see how much you’d actually save: We looked at average figures above, but every situation is different. For example, there’s no point in increasing your deductible to $2,500 if you’ll only save $100 a year.Think about how often you might actually file claims: Many homeowners are reluctant to file claims because it will increase their premiums. If that’s the case for you, it strengthens the case for a higher deductible.

Bear in mind that increasing your deductible is just one way to cut your home insurance costs. Others include rate shopping with top homeowners insurance companies to get the best deal. You may also be able to bundle your home and auto insurance. Plus, there may be some relatively low-cost home improvements — such as adding a security system — that could cut your premiums as well.

Our picks for best homeowners insurance companies

There are many homeowners insurance companies to choose from. We’ve researched dozens of options and short-listed our favorites here. Looking for a green build discount or easy bundle policies? Want an easy-to-use interface? Read our free expert review and get a quote today.

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.

 Read More 

Sisters are doing it for themselves — because no one else will do it for us. Discover the smartest ways to put your money to work for you. 

If you’re a woman and you have financial accounts in your own name that you manage, take a moment to give thanks. It hasn’t been very long since we even got this right as American women — it was the 1974 passage of the Equal Credit Opportunity Act that made it possible for us to open financial accounts without discrimination based on sex.

The ECOA predates my life, but by less than a decade, which makes it all the more remarkable that I can write about personal finance as a career — a job like mine would be quite difficult to do if I wasn’t allowed to get firsthand experience of what I write about.

On that note, from one woman to another (you, the reader!), here are a few smart money hacks you can jump on right now to put your money to work for you.

Maximize your savings

If you don’t have a high-yield savings account yet, this is a sign that it’s now time to open one. According to research from The Ascent about savings, just 31% of Americans have a savings account paying at least 4%. Those of us who do are earning passive income — our money is making more money for us. Personally, I’ve earned over $1,000 extra from my savings account this year — the bank I’m with is currently offering an APY of 4.25%.

Review our list of the best high-yield savings accounts and you’ll find APYs at 4%, 5%, or even more. Online banks tend to offer the best APYs since they don’t have the costs of maintaining physical bank branches like brick-and-mortar banks do. Pick out the best one for you (be mindful of fees, as they’ll eat into your returns) and start saving.

Invest for your future

The percentage of women who invest is on the rise — per research from The Motley Fool about women and investing, 67% of us invest outside of retirement plans, which is up from 44% in 2018. Unfortunately, our retirement income lags, at just 83% of men’s retirement income. This is due to a few factors, including a lack of financial education, less confidence in our abilities and judgment, and the gender pay gap (more on that below).

So what can you do? The best brokerage accounts make it incredibly easy to start putting aside money for your future. Don’t assume that you must have all the knowledge to start investing — it’s OK to start slow and build your knowledge over time. We cover a lot of investing topics here at The Ascent, so check out our articles on investing.

And don’t think that a successful investor must know a lot about different companies to pick stocks. If the prospect of this fills you with anxiety, try investing in an S&P 500 index fund instead. These track the performance of the broader stock market, which has returned an average of 10% per year for the last 50 years. Get started as soon as you can to take advantage of compound interest.

Get professional help

I used to think that financial advisors were only for rich people, but I was so wrong. I started meeting with a Certified Financial Planner early last year, and it changed my life. At the time, I had a lot of debt, no savings, and was feeling rather hopeless about my financial prospects. Plus, I wanted to buy a house but had very unrealistic expectations of what doing so would require. Thanks to the wisdom, encouragement, and support of my CFP, I spent 2022 turning my finances around. As 2023 comes to a close, I feel more confident than ever about managing my money.

If you’ve never met with a financial advisor before, I recommend finding one. Get someone who is a fiduciary (this means they must put your financial best interests ahead of their bottom line), and check their credentials with FINRA’s BrokerCheck database.

Learn your worth

You might think the gender pay gap is a thing of the past, but unfortunately, it’s not. In 2022, American women earned an average of just $0.82 for every $1 earned by a man, according to Pew Research Center. If you’re a queer woman, you’ve got the LGBTQIA+ pay gap to reckon with, too — queer women earn $0.87 per $1 earned by a typical worker, as reported by the Human Rights Campaign.

The best way to learn how much you’re worth is to research salaries for your field (Glassdoor is a great place to start), and to talk about money with all the women (and non-women) in your life. Yes, this includes discussing salaries with coworkers — regardless of whether your employer tries to forbid you from doing so, you have the right under the National Labor Relations Act of 1935. You may want to avoid talking about it while you’re working, though — save the conversation for outside of work hours.

If you find out you’re earning less than your male colleagues, for no discernible reason, open a discussion and a negotiation with management. And consult with an employment attorney if you need to.

As a woman, you’re unfortunately at a financial disadvantage, and no one will fix it for you — you’ve got to be the one to step up. Consider using these smart money hacks to get your finances in order. You got this!

Alert: highest cash back card we’ve seen now has 0% intro APR until nearly 2025

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

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.

 Read More 

If you save $506 per month for 30 years, you’ll have invested $182,160 of your own money. Learn how compound growth will make it into $1 million. 

Can you turn $182,000 into $1 million? Of course you can — and you don’t even have to buy a lottery ticket or send money from your bank account to a mysterious foreign prince who just needs help getting his fortune out of his country’s bank and who promises you a generous cut if you just forward some cash upfront.

How can you work this magic and make your $182,000 into a seven-figure sum? Here’s what you need to do.

An almost surefire approach to turning $182,000 into $1 million

If you want to turn $182,000 into $1 million, all you need to do is put the money into an investment account and make a simple, straightforward investment that anyone can make.

See, if you invest around $506 each month for 30 years, you will have put a grand total of $182,160 into your investment account. But because that $506 each month will have earned returns that were reinvested and that, in turn, earned you even more money, you would end up with a whole lot more than $182,160.

READ MORE: How Does Compound Interest Work?

Assuming you earned 10% average annual returns, you’d have around $1 million at the end of that 30-year period. You’d have increased your money by around 449.451% over time.

And you don’t need to be an investment genius to do that either. The S&P 500 is a financial index made up of around 500 large U.S. companies. The financial index has consistently produced 10% average annual returns over the long term, and you can invest in it easily by opting for an ETF that tracks its performance. You can invest in these by choosing one of our favorite ETF brokers.

Of course, you can potentially earn more than a 10% return if you’re good at selecting individual investments. But you don’t need to be Warren Buffett to take $182,000 and turn it into $1 million, as long as you give yourself a long investing timeline and are consistent with investing your money over three decades.

Starting working on your millions today

Being able to turn $182,000 into $1 million is the magic that makes it possible to retire with a substantial sum of money to provide for yourself.

The reality is that very few people — except for the extremely wealthy — could amass $1 million without investing wisely and earning returns that grow their wealth. You would simply have to save too much money. In fact, ending up with $1 million after 30 years if you didn’t earn any returns on investing your money would mean you’d need to save $33,333.33 every single year. Who can do that?

You don’t need to be scared of investing — and frankly, you can’t afford to be. And you can’t wait to get started. Make a plan today to put some money into a retirement account that comes with tax benefits like the ability to make deductible contributions, such as an individual retirement account (IRA). Research ETFs or mutual funds that charge low fees and that give you exposure to the S&P 500. Then sit back and watch your money grow, so you can amass your million.

Our best stock brokers

We pored over the data and user reviews to find the select rare picks that landed a spot on our list of the best stock brokers. Some of these best-in-class picks pack in valuable perks, including $0 stock and ETF commissions. Get started and review our best stock brokers.

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.

 Read More 

If your home is on the market, you can give potential buyers the chance to speak freely — and to imagine living in the property. Keep reading to learn how. 

When you have listed your property on the market and are looking for someone who wants to buy the home, you can expect that you will have to show the house. This means having potential buyers come through to take a look.

The exact number of showings that you’ll have are going to vary based on many factors, including the condition of your house, the real estate market, and a little bit of luck if you just happen to have the right buyers come through. In general, however, it’s normal to expect upward of 20 showings.

When these showings happen, you and your family should leave the house. Doing so will maximize the chances that the house will sell quickly and for a fair price. The goal being to earn enough money on the sale to pay off your mortgage loan and perhaps even make a profit.

Here are a few big reasons why clearing out during a showing makes sense.

It enables potential buyers to talk freely

When buyers come to your home, they will likely want to talk about its features with their real estate agent and with their co-buyer(s), if they have one. They may want to discuss whether they could love your bathroom if they changed out that “hideous” wallpaper, for example.

If you’re there, they may not feel comfortable asking the questions they want of their real estate agent or having the discussions they need to decide if the home is the right place for them. This could subconsciously make them less likely to follow up with a mortgage lender about purchasing the property.

It allows buyers to more easily picture themselves in your home

You want people to be able to see themselves living in your home and building their dream life there. Unfortunately, if you are at the property during showings, this can interrupt their ability to create a vision of this fantasy life.

You don’t want the visitors to your home thinking about or focusing on who lives there right now, as that may make them less likely to move forward with purchasing. It will be more difficult for them to picture their own future there.

It allows you to avoid hurt feelings

Finally, chances are good that you don’t want to hear bad things about your home — especially if you’ve decorated or designed it yourself or if you’ve created a ton of memories over the years there. If you hear a potential home buyer criticizing your home, that can sting.

There’s no reason to subject yourself to this, especially if the potential buyers can give feedback to your real estate agent. They can then (politely) pass on any advice that might be relevant to changes you could make to increase the chances of a sale.

The bottom line is this: It’s definitely a pain to clear out for multiple showings — but if you want to sell your house as quickly as possible and for the best price possible, it’s worth doing. Ideally, if you’re not there, the right buyers will be able to envision themselves in your space and you won’t have to endure that many showings in the end.

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.The Motley Fool has a disclosure policy.

 Read More 

Summer travel is a major priority for a lot of people. Learn why one writer didn’t mind spending big on vacations this year. 

The average annual spending on vacations among Americans is $2,743 per trip, according to a recent study conducted by Go City. Americans also indicated they need an average of three annual vacations.

This summer, I took more trips than that, and I also spent more than that. My family went on 11 different camping trips and, while we kept costs reasonable by staying in our RV, we still spent a fortune out of our checking account going on all those vacations.

I know that I’m extremely lucky to be able to do that, as many people can’t take as many trips, both because of the cost and for practical reasons like having to be home for a job. I can do my work anywhere, so my trips were working ones. But while I recognize that I’m super privileged to manage traveling so much, I also don’t regret spending the money even for a minute. Here’s why.

I didn’t take on debt to go on vacation

One big reason why I don’t regret spending money on vacations is because I paid for the trips out of the money I saved. I worked hard and made cuts in other areas to fund my savings account and be able to afford my summer travel.

If I had gone into debt and was still stuck paying the bills for my summer travels well into fall and beyond, I would be left wishing I hadn’t taken so many trips. That’s because I would find myself with less money right now and would have to scrimp and save to pay for vacations that are long gone.

If you want to increase your travel in a way that brings you joy and not financial stress, consider what else you can eliminate from your budget that may not be as important to you. Would you be willing to drive an older used car or skip some restaurant meals out, or maybe switch to thrift store shopping instead of buying designer clothes if it meant you could hit the road on more dream trips?

I didn’t compromise other financial goals

Another reason I don’t regret going on so many vacations is that I didn’t have to compromise other financial goals to do it. I would definitely wish I’d made different choices if I had stopped contributing to retirement savings or putting money into my children’s college funds just to go RV-ing.

There’s absolutely nothing wrong with enjoying life, as long as you do it in a way that doesn’t put your future (or your loved ones’ future) in jeopardy. Take care of the necessary expenses first and then travel or do whatever you like with the money you have left over. That way, you can spend it guilt-free without regrets.

I made lasting memories with my children

Finally, the biggest and most important reason why I don’t regret spending money to go on vacation this summer is because I made amazing memories with my kids. You have 18 summers with your children, and making the most of them is one of the best things you can do with your money. If you’re a parent of young children, spending on experiences can be a lot more rewarding for both you and the kids than just buying more toys.

Now, you may have different things you’re passionate about besides travel — but the bottom line is, you can cover those expenses without regrets if you work your financial plans around them. Figure out how much money you need to do what you want with your time, then work your budget around both accomplishing that goal and taking care of your future. Cut the other things that don’t matter to you as much so you can get the very best value from your money and will be left delighted with the way you spent it.

Alert: highest cash back card we’ve seen now has 0% intro APR until nearly 2025

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

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.

 Read More 

A little three-digit number can have a major impact on your finances. Learn how good credit can make life easier (and cheaper) for you. 

A few vital pieces of information really come in handy in your adult life. These include your Social Security number, your driver’s license number, and your credit score. Financial expert Tori Dunlap calls your credit score “your adulting GPA,” and this assessment is spot on.

Credit scores (everyone has multiple credit scores, because three consumer credit bureaus compile information about your financial history) fall into a range between 300 and 850. Whether you have good credit (or not) depends on where you fall on the scale.

According to research from The Ascent about Americans’ credit scores, the average credit score is 714, which is indeed considered good credit. Here are a few ways that having it (for a FICO® Score, good credit is 670 and up) can save you money and indeed make your life easier.

1. A cheaper mortgage loan

While mortgage loans can hardly be called “cheap” these days (as of this writing, the average rate for a 30-year fixed-rate loan is about 8%, according to Freddie Mac), having good credit will help you get a better rate overall. Since a home is a large purchase (perhaps the biggest you’ll ever make), and mortgage loans are repaid over a long period (often 15 to 30 years), it’s worth it to get the lowest rate you can. And hey, while rates are high right now, they likely won’t be forever — if you’ve got good credit, you can more easily refinance to a lower rate when they fall.

2. Better credit cards

The best credit cards are geared toward consumers with good or excellent credit scores. If you’ve ever dreamed about earning points or miles for travel, or 5% or 6% cash back rates on your purchases, know that having good credit makes you an attractive borrower to credit card companies. After I got my own credit score to over 800 a year ago, I was tickled to apply for and be approved for a stellar grocery rewards card — earning a high rate of cash back on one of my largest expenses has been a win for my finances.

3. The ability to finance big purchases

You’ll likely need to make a large purchase at some point in your life (other than a house, that is). Having good credit means you’re more likely to be approved for personal loans and car loans. Plus, you’ll snag the lowest interest rates available for these loans — the ones lenders reserve for the most well-qualified borrowers.

4. No security deposits for utility services

When you move to a new place and have to sign up for utility services in your name (like electricity, water, and gas), you might have to cough up a chunk of money for a deposit if you’ve got a shaky credit history. This way, the company will get paid if you miss bills. Maintaining good credit could mean avoiding a deposit — and since moving is expensive enough, you definitely don’t need the additional hit to your checking account.

5. An easier time getting hired

Some employers run credit-report-based background checks on prospective employees. If this is part of the process to get a job for you, you’ll know about it (as the employer will have to get your permission, thanks to the Fair Credit Reporting Act). If you’ve got a solid history of on-time payments and paying off debt, it could help you snag a job offer.

6. Savings on auto insurance

Finally, your credit also comes into play when you get an auto insurance policy. According to Allstate, insurance companies can generate a credit-based insurance score that helps them determine the likelihood of needing to pay out claims. Having better credit apparently correlates to making fewer auto insurance claims.

How do you get good credit?

The good news is that you can improve your credit yourself — no shady “credit repair” services are necessary. Try these tips:

Make all payments on time: This is the easiest way to boost your credit score, and it has a huge impact — payment history makes up 35% of your FICO® Score. Making on-time payments shows lenders that you’re responsible with borrowed money.Pay down existing debt: If you can manage to send more money toward your debts every month, it’ll decrease your credit utilization ratio, bumping up your score.Apply for new credit sparingly: I know, I have my eye on a few more credit cards myself. But for good credit, it’s best to apply for new accounts infrequently — think six months between credit applications. Each new credit inquiry dings your credit score.

Since good credit can save you money, it’s worth working on yours if it could use some help. Have a look at our guide for how to increase your credit score for more tips.

Alert: highest cash back card we’ve seen now has 0% intro APR until nearly 2025

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

 Read More