Money Management

You can use a personal loan for just about anything. Even paying Uncle Sam. Read on to learn how a personal loan could be the answer to your tax bill. 

If you owe the IRS more money than you can pay right away, you have a few options, including a personal loan. Many people don’t realize that a personal loan can be used for more than debt consolidation and home renovations. Here’s how to compare personal loans with some of the other methods of borrowing money to pay your taxes to see which could be the best for you.

Can you use a personal loan to pay your taxes?

There are a few things you can’t use a personal loan for. Real estate is the most universal exception — after all, there is a reason mortgages exist, and if personal loans were allowed for real estate, it would allow borrowers to get around down payment requirements. College expenses are another common exception, and for a similar reason. Some lenders have other restrictions, such as business expenses.

However, paying your taxes is an acceptable use of a personal loan. Many lenders have a menu of options to ask how you’ll use your personal loan, and it includes things like debt consolidation, home renovations, and more. And “pay your taxes” is often on the list.

Personal loans come with fixed interest rates and steady monthly payments, and can be a solid option when it comes to paying the IRS.

Alternatives to using a personal loan

A personal loan can be a good financial tool for many different purposes, including paying your taxes. But it does have some drawbacks — mainly, you’ll have to pay interest and because it’s an unsecured type of debt, personal loans tend to have relatively high interest rates compared to some of the alternatives.

For example, if you own your home, it can be more economical to use a home equity loan or home equity line of credit (HELOC). Because these loans are secured by the equity you have in your home, they tend to have lower interest rates than personal loans. The obvious drawback, however, is that you’re effectively putting your home at risk if you are unable to pay the loan.

For an even lower interest rate, you may want to consider a balance transfer credit card with a 0% intro APR. Although credit card APRs have risen considerably in recent years, there are still readily-available balance transfer offers with a 0% intro APR for as long as 21 months. Just be sure you’ll be able to pay the debt back within the introductory period, as the average credit card APR is above 24% as of October 2023.

Finally, many people don’t realize that the IRS will allow you to set up an installment agreement that allows you to make monthly payments directly to the IRS for up to six years. These payment plans are relatively easy to set up. However, the IRS will charge you interest and late payment penalties on your debt, so one of the other options could be more economical.

How to find the right personal loan for your taxes

The bottom line is that a personal loan can certainly be a viable option if you owe the IRS money, but it isn’t right for everyone. Most personal lenders will allow you to check your interest rates without a hard credit pull, so a good place to start is to check out some of our top personal loan companies to see which could be the best fit for you.

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Is a Costco fee hike right around the corner? Read on to find out. 

Many people join Costco to save money on groceries and household essentials. The $60 annual fee (or $120 for an Executive membership) often more than makes up for itself in the course of a year of Costco shopping.

But while current Costco members may be okay with paying $60 or $120, it’s fair to say that nobody wants to see their cost go up if it can be helped. The reality, though, is that Costco is overdue for a fee hike. The question is, when will it happen?

A fee hike is inevitable

Costco last raised membership fees in June 2017. We’re now almost 6.5 years past that point, which, CFO Richard Galanti said during the company’s most recent earnings call, is a longer stretch between fee hikes than usual.

Galanti made a point to say that a membership fee hike is “a question of when, not if.” And he also said explicitly, “You’ll see it happen at some point.” But Galanti did not point to a specific date or time frame for raising membership fees.

Will Costco memberships go up in 2024?

As just mentioned, Costco has not said that it will be raising membership fees in 2024. But there are a few reasons why the warehouse club giant might decide to go that route.

For one thing, Costco is getting a new CEO. And while this isn’t always the case, sometimes, new management can mean new policies and other changes to how a business operates.

Also, Costco may have been hesitant to raise membership fees this past year or so due to soaring inflation and recession fears. But inflation levels have come down a bit, and consumer spending has held steady. The labor market has also remained strong. So if these economic conditions persist into 2024, which is likely, Costco might take the opportunity to raise fees before conditions worsen.

Finally, let’s remember that it has been longer than usual since Costco raised the price of a membership. It’s not going to want to do so late in 2023 and risk alienating consumers right in time for the holiday shopping boom. Instead, it’s more likely to wait beyond the holidays, which could align with a 2024 fee hike.

Should you keep your Costco membership if the price goes up?

The last time Costco raised fees, a basic membership went from $55 to $60 while an Executive membership went from $110 to $120. It’s likely that we’d see a similar pattern for an upcoming fee hike. That would take a basic membership up to $65 and an Executive membership up to $130.

If you’re not sure whether it pays to keep your membership at a higher price, just ask yourself a simple question: How much do I save per year by shopping at Costco? If your savings on grocery purchases and other goods you buy there consistently exceeds $65 or $130 (or whatever the official new cost of a membership is), then you have your answer.

Also consider the convenience factor of shopping at Costco. For some people, loading up on bulk items saves them multiple trips to other stores. That means not having to spend the time doing additional shopping runs and not having to pay for gas. So that, too, could be a benefit of keeping your membership even if its cost goes up.

All told, we don’t know when Costco will raise its fees, but we know it’s going to happen at some point. You may want to tell yourself the cost will go up in 2024 so you’re not shocked if it actually happens.

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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 Costco Wholesale. The Motley Fool has a disclosure policy.

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For many people, it’s time to choose health insurance coverage. Read on to see what consequences might ensue if you choose the wrong plan. 

For many people who get benefits through their employers, open enrollment at work has officially begun or is set to begin shortly. Meanwhile, open enrollment for those buying insurance themselves through HealthCare.gov begins on Nov. 1.

You’ll need to think carefully about the type of health insurance you’re signing up for. If you choose the wrong plan, it might cost you more than expected. Here’s why.

1. Choosing a plan with a low deductible might cost you more in premiums

Whether you’re buying a plan on HealthCare.gov or choosing one that your employer will subsidize, you’ll generally get the option to elect a low-deductible plan versus one with a higher deductible. And you may be inclined to choose the low-deductible option because the idea of a higher deductible can be scary.

But remember, when you opt for a low deductible, it usually means signing up for higher premium costs. And that could have you spending more money all in.

See, your health insurance premiums are an expense you have to bear no matter what. Your deductible will only come into play if you actually need medical care.

So, let’s say you choose a plan with a $1,200 family-level deductible and monthly premiums of $250. Let’s say you also have the option to get a plan with a $3,200 family-level deductible and $150 premiums.

The first option might seem like the better one initially. If you’re paying $3,000 a year in premiums plus a $1,200 deductible you have to meet, that’s $4,200. If you pay $1,800 a year in premiums plus you have to cover a $3,200 deductible, that’s $5,000.

But you may not have to meet your entire deductible. If you only end up paying $800 into your deductible, you’ll lose out financially with the low-deductible plan. In that case, you’re paying $3,800 all in, versus $2,600 on the high-deductible plan with the lower premiums.

2. Choosing a high-deductible plan could hurt you if you wind up getting hurt or sick a lot

In some cases, it pays to opt for a high-deductible insurance plan, such as in the example above. But that math only works if you’re someone who doesn’t tend to need a doctor all that often. If you have health issues or a gaggle of kids who constantly need the pediatrician, then a lower deductible plan could end up being more cost-effective.

Of course, you’ll want to look at costs like copays in addition to your deductibles and factor those into your decision, too. It may be that a higher-deductible plan also comes with higher copays that force you to dip into your savings account more so than with a lower-deductible plan.

3. Choosing a lower-deductible plan could mean forgoing the benefits of an HSA

Enrolling in a low-deductible plan might seem like the best choice. But doing so means giving up access to an HSA. That could hurt you a ton, because you’ll lose out on some important tax benefits.

Funding an HSA means shielding some of your immediate income from taxes. HSAs also let you invest your balance, and gains in these accounts aren’t taxed. So if you contribute $5,000 to an HSA next year and it grows to $30,000 through the years, you’re getting to walk away with a cool $25,000 profit without owing the IRS a dime.

Plus, let’s say your tax rate is 22%. A $5,000 HSA contribution saves you $1,100 by shielding that income from the IRS. So that’s something to factor into your calculations.

To qualify for an HSA next year, you need a minimum deductible of $1,600 for individual coverage and a minimum family-level deductible of $3,200. So even though you might risk spending more on a high-deductible plan if you end up needing a lot of medical care, consider the near-term and long-term tax benefits you’re giving up with a low-deductible plan.

It’s super important to choose the right health insurance plan — that should be obvious by now. So one of the best things you can do is give yourself ample time to review your choices. Don’t wait until the last minute to sign up for a plan, because the more rushed you are, the harder it might be to make a sound decision.

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The average side hustle doesn’t make as much money as you might think. But there are some gigs that are well worth your time. Check out a few examples. 

I was a freelance writer for about 10 years — picking up writing jobs in addition to working full time or going to school — before I finally struck out on my own. The transition wasn’t easy, but starting slow and building up my experience over time eventually led to bigger clients and more pay.

Nearly half of all Americans have a side hustle, according to data from Pymnts and LendingClub. People are seeking out additional sources of income across different socioeconomic classes as well, with 27% of high-income earners and 26% of middle-income earners working a side gig.

But not all of the money made from side hustles is life-changing. The average side gig generates $473 per month — or about $5,700 per year to put into savings.

If you’ve ever thought about starting a side hustle, here are three lucrative gigs right now and a few things you should consider before you quit your day job.

High-paying side hustles

Some gig workers are only looking for a little work to help them improve their personal finances or keep up with inflation. But if you want to maximize your time and potentially turn your side hustle into your full-time gig, here are a few of the top-paying freelance jobs, according to Upwork.

1. Public relations manager

If you like writing press releases, helping companies set their PR strategies, and communicating with media contacts, this could be a great side hustle. Upwork says public relations consultants earn between $50 to $100 per hour and that demand for this job will increase 8% by 2031.

2. Media buyer

This side gig involves placing ads across digital, print, and broadcast platforms, or even running social media ad campaigns. Companies of all shapes and sizes need ads, making this job available in many industries. The estimated pay range for a media buyer is between $50 to $200 per hour.

3. Artificial intelligence professional

This can include a variety of skills, including computer programming for natural language processing. Upwork says demand for AI programmers will increase by 21% by 2031 and that side gigs in this field pay between $30 to $60 per hour. But there are other AI side hustles as well, like creating pitch decks, that can make freelancers up to $1,000 per project.

What to consider before starting a side hustle

Setting up a side hustle won’t take you much time, but managing it — along with your day job — may be trickier. Here are a few tips that may make the process go a little smoother.

Plan out your time: Any time I felt overwhelmed by my freelance writing, it was usually because I didn’t manage my time well enough. Learning some time management basics could go a long way in helping you avoid that kind of stress.Consider learning a new skill: If you can’t figure out what you want to do as a side hustle, developing a new skill might be the best route. There are lots of great apps for doing this, including Skillshare.Don’t quit your day job: There were times when I wanted to quit my regular job and freelance full time. The problem was that I didn’t have enough clients to make it happen. I had to be patient and wait for the right time to turn my side hustle into a full-time job, but it was well worth the wait.

Most people don’t get rich with their side hustles. But taking the time to find out which jobs pay the most — and what skills you can develop to pursue them — can help you get started with earning additional income.

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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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Owning a car is expensive, and that cost rises every year. Here’s how much to expect and how to keep the cost of ownership down. 

It’s that time again: AAA’s annual look at the latest Your Driving Costs (YDC) data. And in what will likely be a shock to no one, the average cost of owning a new car has gone up yet again.

Last year, we were saddened to see a $1,000 year-over-year annual increase. This year, it’s worse. The new car that cost an average of $10,728 a year to own in 2022 will now set you back $12,182 — that’s an increase of $1,454, or nearly 12%.

From a monthly perspective, that amounts to $1,105 a month to own a new car. (While I would have once joked about that being a rent/mortgage payment, housing costs have gotten so high that it wouldn’t be funny — or true — anymore.)

What costs are considered?

One important thing to consider is how AAA is calculating this number. I mean, what is it actually including? Turns own, it’s a pretty thorough list:

DepreciationFinance feesFuel/charging costsInsuranceTaxes and registration feesMaintenance and repairs (including tires)

As you can see, AAA’s ownership cost is looking at the money you’re losing and not getting back. To put it another way, imagine you added up all the money you spent on your vehicle from the time you bought it to when you sold it. Then, subtract the price you paid to buy it. Now, divide the rest by the number of years you owned it. That’s the number this study is estimating for the average new car.

Inflated sales prices, rates, and insurance costs are to blame

AAA’s analysis attributes the jump in ownership cost mostly to higher purchase prices, which impacts your financing costs. The average MSRP (manufacturer’s suggested retail price) of new vehicles in the study rose 4.7% over last year to a whopping $34,876.

Depreciation gets a mention, with AAA saying the projected rate of depreciation for new vehicles is $4,538. That’s up 24% from last year, likely due to the used car market starting to stabilize after COVID-era tumult.

Higher interest rates may also be partially to blame for increased ownership costs. The average rate on an auto loan has gone up by more than 2% since this time last year, topping 7.8% for a 60-month loan as of August 2023. If you have a $30,000, 60-month auto loan, a jump from 5% to 7% APR could mean an extra $30 on your monthly bill and more than $1,500 in interest over the life of your loan.

You probably also don’t need to be told that auto insurance rates have increased quite a bit over the last few years. (My own went up more than 20%, despite filing zero claims.) That extra expense can add a significant amount to your overall ownership costs.

How to keep car costs down

Certain parts of car ownership are out of your control — besides having good credit, you can’t really impact loan interest rates, for instance — but there is a lot you can do to minimize your losses:

Pick the right vehicle. Depreciation is impacted strongly by the specific make and model of your vehicle. If a vehicle has a good reputation, it will resell for higher prices even as it gets older. Choosing a vehicle known to be more reliable also means it will likely be cheaper to repair and maintain.Keep up with regular maintenance. Car repairs can get expensive quickly when things break. You can help prevent (many) things from breaking by having your vehicle serviced according to the manufacturer’s recommendations. (You can find these in the owner’s manual that came with the vehicle. If you don’t have it, you can likely find it online.)Shop around for your insurance. Auto insurance is a huge part of the cost of owning a car, and it gets higher every year. Before blindly renewing your current policy, take a few minutes to compare auto insurance rates with a few companies (or pop into an insurance agent’s office to have them do it for you). You could easily shave $100 or more off your insurance by switching companies.Shop around for your lender. You absolutely don’t need to finance your car purchase through the dealer. Sometimes they have decent terms, but you’ll often be better off getting an auto loan from your favorite bank or credit union. It may offer you better interest rates and fewer fees.Don’t get blinded by flashy — but ultimately useless — features. Manufacturers are adding all kinds of nonsense to vehicles these days. But how big of a screen does your car really need when you only drive it to and from work, Target, and that bagel shop down the street? Avoid paying extra for things you won’t use enough to get value from them.

If you’re lucky enough to be shopping for a new vehicle, give the decision the gravitas it deserves. This is an expensive purchase you will need to live with for many years. It’s easy to get swept up in the fun of a fancy new car, but keep a firm hold on your finances. That new car smell will wear off long before your loan is repaid!

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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.Brittney Myers has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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Wondering how your long-term savings stack up? Read on to find out. 

You’ll need money in retirement to cover your bills outside of Social Security. Those monthly benefits will only replace about 40% of your pre-retirement income if you earn an average wage. If you’d rather not subject yourself to a 60% pay cut in retirement, then saving on your own is crucial. And you can do so in an individual retirement account (IRA), 401(k), or combination of both.

You may be in the early stages of your career with a minimal retirement plan balance. Or maybe you’re in your late 40s or early 50s and are curious as to how your savings compare to the average person’s. Recent data from the Federal Reserve tells us that among people with retirement savings, the average balance as of 2022 was $331,400. And if you’re thinking “holy heck, my balance is nowhere close to that,” stop right there.

The only reason to panic about a low retirement plan balance is if you’re right on the cusp of closing out your career and don’t have any time to play catch-up. And even then, all isn’t lost, though you may need to make some adjustments to your plans.

But if you’re years away from retirement, don’t sweat it if your IRA or 401(k) balance doesn’t come close to the average. You may be able to boost your nest egg without having to part with a whole lot of cash.

A tough comparison

Before we talk about building up a large nest egg, let’s get one thing out of the way. The average retirement saver might have a balance of $331,400, but if you’re only a few years into saving for the future, then you might understandably have much less.

Remember, there’s a big difference between being 25 and 55 in the context of retirement savings. So give yourself some grace if your balance isn’t close to $331,400.

Also, remember that the Federal Reserve is calculating retirement balances across all savers — including higher earners. It may be that a small percentage of very high IRA or 401(k) balances are driving the average up.

How to boost your retirement plan balance

It may be that you have very little money saved for retirement. You might even have none saved as of yet. Don’t freak out. When it comes to building a nest egg, time is a very effective tool. So is the stock market. Put them together, and you might end up with a lot of wealth over time.

Over the past 50 years, the stock market has delivered an average annual return of 10%, as measured by the S&P 500. If you load your IRA or 401(k) with S&P 500 stocks or index funds (funds that track that index), you might enjoy that same return over time.

So, let’s say you’re able to contribute $200 a month to a retirement plan over 30 years. You’ll be looking at about $395,000 at the end of your savings window thanks to that 10% average annual return on your investments. And while it’s certainly not easy to part with $200 a month, especially if you have a lot of expenses, if you earn a typical wage, it may be doable with careful planning and spending.

If your retirement plan balance is comparable to the average saver’s, or, better yet, higher, congrats! That’s a big accomplishment. But don’t stress if your balance is much lower, because in time, you might see it take off in a really big way.

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