Money Management

The point of joining Costco is to spend less, not more. Read on to see why you may not meet that goal. 

A basic Costco membership costs $60 a year these days, while an upgraded Executive membership costs $120. The Executive membership lets you score 2% cash back on your Costco purchases, so if you shop there often, it’s easy enough to make back that upgrade fee.

Typically, people join Costco with the intention of saving money. And Costco’s low prices certainly make that possible, even when you account for the membership fee you’re shelling out. But if you keep doing these things, you might end up wasting money at Costco rather than saving it.

1. Making too many impulse purchases

Costco tends to rotate a fair amount of its inventory on a seasonal basis. In the spring and summer, you’ll often see outdoor toys and swimwear. In the fall, you’ll see cozy fleece jackets and Halloween costumes. And during the winter, Costco’s aisles tend to be loaded with holiday decorations, and the toy section commonly grows more robust.

All of this extra seasonal inventory can open the door to temptation. After all, how can you say no to a gourmet chocolate gift basket during the holidays or an inexpensive flannel shirt to complement your fall wardrobe? But if you keep giving in to impulse purchases at Costco, you’re going to end up wasting money — and you might sorely regret that after the fact.

A better bet? If you want to keep your Costco spending in check, make a list of the items you need before heading over, and only visit aisles that have an item on your list. The simple act of staying out of those seasonal sections could be a huge money-saver.

2. Buying food you end up throwing out

Many people join Costco for the option to buy groceries in bulk, since that can be a huge source of savings. But if you keep having to throw out food purchased at Costco, then you aren’t doing your finances any favors.

Before you buy bulk grocery items, think about whether they really align with your family’s eating patterns. It’s tempting to buy a bulk pack of spinach when the cost for two pounds at Costco is the same as the cost for 10 ounces elsewhere. But if your family eats spinach once every two months, that’s probably not a very good buy.

Also, check expiration dates when purchasing bulk items at Costco, as some products have better ones than others. If you’re buying a large bag of chips, for example, you may find that the packages at the front of the shelf have a two-month expiration, whereas the ones in the back have dates farther out.

3. Not using your membership

Unplanned Costco buys and tossed food can result in wasted money. But one of the biggest wastes you might also fall victim to is simply not using your Costco membership at all. You might fall into that trap if your nearest Costco is still many miles away, or if your schedule is such that you just can’t make it over there during operating hours.

If that’s the case, though, you can look at buying groceries and other products through Costco.com. Although prices tend to be lower in stores, you can still reap savings with online orders. And that way, you’re also saving some money on gas.

But ultimately, it’s important to be realistic about your Costco shopping. If you realize you’re not going to make it to the store more than once or twice a year, then it may not be worth the money to hang onto your membership. A better bet may be to just tag along with a friend on the rare occasion you’re able to pay Costco a visit.

Costco can be a major source of savings. Just make sure you’re reaping those savings, too.

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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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Mortgage rates just keep climbing — what’s a prospective buyer to do? Read on to find out. 

I write this with a heavy heart, because the current average rate for a 30-year fixed mortgage has hit 7.57%, according to Freddie Mac. And since I am hoping to buy a home, ideally in spring 2024, this has me worried about what kind of rates I’ll see by then. When rates hit 7.49% a few weeks ago, PBS NewsHour noted that this was the highest rate since December 2000 — almost 23 years ago.

This is quite depressing for me, and it might be for you, too, if you’re also planning to buy a house. Keep reading to learn how to cope with this terrible market for home buyers.

Focus on your financial credentials

When you apply with mortgage lenders (more on that below), your finances will be thoroughly examined. So this is your chance to get ahead of any potential problems. What’s your credit score? It’s generally agreed that a credit score of at least 620 is a good target to aim for if you want to be approved for a mortgage loan.

Get copies of your credit report (free if you use AnnualCreditReport.com) and look for errors — if you find them, you can request that the credit bureaus remove them. And if you have the means to pay down some existing debt before you apply for a mortgage, that will help your credit score — and thus your chances of approval — by lowering your debt-to-income ratio.

Keep saving money

While you’re trying to find a home to purchase, keep putting money aside, if you can. The more money you have for a purchase, the better. Remember, you’ll likely need to make a down payment, and the more you can put down, the more you’ll save on mortgage payments. This is due to both qualifying for a lower mortgage rate (if you make a solid down payment, lenders see you as less of a risk) as well as getting to avoid paying for private mortgage insurance if you put at least 20% down.

Once you close on your mortgage, you’ll still need money in reserve. That house will be your responsibility, and you’ll need to pay for homeowners insurance, property taxes, and maintenance and repairs on an ongoing basis.

Shop around for a mortgage

OK, this one is absolutely crucial. You have so many options for mortgage lenders and mortgage types. Your financial situation will come into play here, so before you pick a random assortment of lenders to apply for pre-approval, consider factors like your credit score, employment, and whether you might qualify for a special type of loan.

If you’re self-employed like I am, you want to apply with lenders who will judge your finances based on tax returns, rather than W-2s or regular pay stubs. If you’re in the military or were in the past, you likely qualify for a VA loan, so apply with lenders who offer them. If you have a lower credit score (say, between 500 and 620) and are a first-time buyer (or it’s been three or more years since you owned a home), you should look at FHA lenders.

Apply with several lenders (at least three), and see what kind of offers you get. Be sure to consider expected closing costs and down payment requirements alongside the rate you’re offered in order to choose the right mortgage.

Find the right real estate agent

A real estate agent is a key member of your team, and you need all the help you can get in this market. So ask friends and family for recommendations, read online reviews, and find a few names you can follow up on. Before signing anything, talk to a few agents and make sure they understand your unique needs as a buyer.

For example, I don’t have kids, and the quality of the local schools matters not one whit to me — so any prospective agent I’d be working with wouldn’t need to consider school systems in finding homes for me to check out. It’s good to go into a meeting with an agent prepared with a list of questions. A good agent will have significant experience, a communication style you mesh with, and the ability to help you find the best home for you.

Take a deep breath

This is my last tip, but honestly, it’s one of the most important ones. This is such a tough market, and you might be feeling as if you missed the boat on buying a home — and there’s no going back in time. I’m in the same position, and honestly? It stinks. But while I originally hoped to buy this year, I changed my mind and decided to focus on 2024 instead — meaning I will surely end up with a much higher mortgage rate than I could’ve gotten if I’d acted sooner. But buying with a lower mortgage rate but with shakier finances and less money saved wouldn’t have done me any favors.

So take a deep breath with me — we can make the above moves, and we can ensure our finances are in the best shape possible before taking the plunge on buying a home. And hey, if rates come back down in a few years, we can always refinance.

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It’s easy to fall into the trap of thinking you don’t know how to manage your finances. Read on for a few ways to tell you’re doing fine. 

I don’t come from money, and finances were definitely something my parents worried about when I was growing up. We moved around often (nearly all of my childhood was spent in military housing or rental homes), and when we did take a vacation, it was a short one, and always of the road trip variety. As an adult, I’ve nearly always lived paycheck to paycheck, and I frequently worried that I was bad with money, and there was no way to change that.

But I spent 2022 whipping my finances into shape by increasing my income and paying off debt (and seeing my credit score jump by 100 points). And now that I’ve made this much progress, I can look back and appreciate how far I’ve come. We’re all beholden to our circumstances and upbringing, but it’s never too late to get better at managing your finances. Here are a few signs you’re doing better than you may realize.

1. You know where your money goes

Some people sign into their banking app, see how little cash is in their account, and sigh, “I just don’t know where all my money goes!” That said, if this isn’t you, you’re head and shoulders above those people. Budgeting is really no one’s idea of a good time, but knowing how and where you spend is a cornerstone of personal finance.

The good news is that to know where your money goes, you don’t even have to go all-in on a detailed budgeting app that gives every single one of your dollars a job. Some of my colleagues here at The Ascent take a different approach — Lyle Daly sets saving and investing goals, and then fits his spending around them. Christy Bieber automates her finances rather than strictly tracking spending.

Personally, I skew toward Lyle’s example, and as long as my bills are paid and my savings goals are met with every paycheck, I don’t sweat every single dollar. I have an earnings target that I aim for every week (as a full-time freelancer, I make my own work schedule and I’m not paid a set salary). I also keep track of how much money I’m supposed to have left in my checking account after I pay bills and send cash to my savings account. Staying on top of your balances (on credit cards, too) is another sign you’re doing OK with money.

2. You have a handle on your debts

Being in debt is no fun, but if you are, you’re certainly not alone. According to research from The Ascent on average household debt, the average American had $5,733 in credit card debt as of the first quarter of 2023. It isn’t being in debt (or not) that determines whether you’re bad with money, though. If you know roughly how much money you owe, and to whom you owe it (credit card issuers, other lenders, etc), you’re in good shape.

Ideally, you’d also have a plan to pay off that debt, but if you’re still in the knowledge-gathering phase on that, I have some advice for you: increase your income. Living on ramen noodles is unsustainable once you’re out of college, and allowing yourself no opportunities for discretionary spending will eventually lead to frustration and misery. If you’re trying to slay the debt dragon, consider taking on a side hustle or some freelance weekend work, or even ask for a raise at your main job, if it’s been a while. Any new money you can bring into your household will not already be earmarked for bills, so you can roll it toward your debt.

3. You have emergency savings

The commonly held, oft-repeated wisdom is that a proper emergency fund should consist of three to six months’ worth of expenses. This is great advice, but in a world where 63% of Americans couldn’t cover a $500 emergency out of their savings (according to SecureSave), this might not be possible or realistic for many people.

Carve out money to save (possibly from that side hustle?), but know that any amount of savings can help you out of a jam. If all you can save is $25 a month (this was me, for many years), that money will still grow in a high-yield savings account, and the next time you have to cover a surprise expense, it’ll be there for you. And even if it’s not enough to pay the whole bill, but only amounts to, say, $400, that’s still $400 you won’t have to borrow — or pay interest on.

If you think you’re bad with money, take a moment to consider the list above — if it describes you, you’re doing better than you realize. And if it doesn’t, now you have a short list of goals to help you feel more secure with your finances.

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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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Autumn winds are blowing — right through my leaky windows. Learn some tried-and-true tips to stay warm without going bankrupt. 

Fall has officially arrived (and summer’s last strangled gasp ended the first week of October in my part of the world). As I write this, I’m employing a few of the tips below, and by the time you read it, I’ll have completed the rest of my personal lower-heating-bill to-do list. I live in a place that gets very cold and snowy winters, so I don’t mess around. Here are eight ways you can keep your winter heating bills under control, too.

1. Change your air filters

Before you even consider turning your heat on for the first time when it gets cold, it’s a good idea to change out your furnace air filters. Doing so will make your heating system more efficient. Plus, you won’t have the pollen and dust mites of spring and summer blowing out your vents, making you sneeze. And since we’re coming up on cold and flu season (not to mention another COVID-19 winter), do yourself a favor and take this step to minimize how many boxes of tissues you’ll go through.

2. Cover your windows

If you’re a renter like I am, there’s very little you can actually do to permanently improve your home’s energy efficiency — so I recommend leaning on as many temporary solutions as you can find. My current rental has extremely old leaky windows in the kitchen, living room, and dining room, and since I don’t like paying to heat the outdoors (and can’t replace the windows), I buy plastic sheeting and use it to seal winter outside. You can get the plastic and double-sided tape in a kit at stores like Home Depot, for just a few dollars. Just be sure to measure your windows first, so you know you’re buying the right size.

3. Reverse your ceiling fans

If you have ceiling fans, you can use them through winter, too. In summer, your fans should spin counterclockwise, but in the winter, you can switch them to spin clockwise instead. This will pull cold air near the ground upward and distribute warm air more evenly throughout your living space.

4. Schedule an energy audit

Did you know that you can actually hire a professional to come to your home and make recommendations for improving your energy usage? It’s true! This service might be available through your utility company or even your state or local government. And if you’re making improvements that could qualify you for a tax break (such as installing solar panels), you’ll need to have an energy auditor certify your home anyway.

5. Sign up for budget billing

Another service you might be able to access through your utility company is budget billing. I signed up last year, and the company calculates my monthly bill based on historic usage, and every few months, my bill is adjusted (up or down) to reflect actual usage as well as the changing cost of gas and electricity.

Note that this doesn’t actually make your bill cheaper (use my other tips for that), but it does end the game of Heating Bill Roulette you might currently be playing. This is when you take a deep breath before opening your bill and cross your fingers that it’s not higher than your checking account can bear. Instead, you get more predictable bills — the company should notify you if your bill will be changing the following month.

6. Install a smart thermostat

Once again, homeowners have the edge over renters here. I’m fortunate that my current rental (as well as my last one, come to think of it) has a programmable (or “smart”) thermostat. Since I no longer work outside my home, I keep it set to maintain a constant temperature of 64° F all winter long, but if you go to an office for your workday, there’s no reason to keep your home as warm as you usually do during that time. Set it to go down to a lower temperature while you’re away, and maybe also at night (and add an extra blanket to your bed).

7. Employ a space heater

I love space heaters — for less than $100, you can warm a small space and keep your central heat turned down. Space heaters are best used in a room with a door that can be closed; I’m writing this article from my home office while a space heater runs and keeps me (and my three cats, who also love a good space heater) warm. Just be smart about space heaters: Never run it if you’re not in the room, protect it from falling over, and keep it away from anything flammable, plus pets and kids.

8. Put on a sweater

Okay, this last one is classic Dad advice, but some of that Dad advice is actually pretty good! It’s tempting to just crank up the heat if you’re feeling chilly at home, but if your goal is to pay less this winter, this move will undo the progress you’ve made with my tips above. Instead, go put on a sweater (or a cozy hoodie). You can also invest in a soft throw blanket to keep on your couch. And if you have pets, you may just find that they’re more game to snuggle with you if you’re under a blanket — this is especially true of cats, I have found.

Winter is coming — are you ready? Make the above moves to keep your heating bills under control.

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To buy, or not to buy? That is the question. Keep reading to learn whether becoming a homeowner might be right for you. 

Despite what folks of an earlier generation may tell you, buying a home isn’t your only path to wealth. While it’s true that becoming a homeowner can have that effect (and it’s also one of the ways generational wealth is passed down), you can still save and invest money for your future if you rent.

That said, there are other excellent reasons to buy — getting a stable place to live with predictable monthly payments (for your mortgage, at least) being chief among them. If you’re thinking about taking the plunge, here are some signs the time is right for you to take out a mortgage and buy a home.

1. You’ve truly reckoned with the costs (all of them)

Owning a home is expensive. It’s easy to think that if you can afford a mortgage payment, you can afford a home, but don’t count on this. If you’ve actually looked at your total costs (in as much as you can estimate them, that is), which include property taxes, homeowners insurance, and maintenance, and have determined you can handle them, then buying might be right for you.

2. You have emergency savings

Remember all those costs we just discussed? Are you ready to pay them? While no one can predict the various problems that could crop up with a house (although, getting an inspection before you buy can certainly point you in the right direction), having cash saved up can help you cope. Going into debt the first time something breaks at home would really stink, so aim to have three to six months’ worth of savings (in the form of an emergency fund) before you buy a home.

3. You have cash for a down payment and other buying costs

Yes, you need even more money to buy a house! A mortgage lender will be a lot more willing to offer you a home loan if you have a solid down payment. A 20% down payment is recommended (and can help you avoid paying for mortgage insurance on a conventional loan), but isn’t necessary — just remember that the more you put down, the smaller your payments will be. And other money goes into buying a home, in the form of closing costs. Plan and save for these, and go into a home purchase with confidence.

4. You’re settled in your area

It’s best to look at buying a home as a longer-term commitment than you may be used to as a renter. For example, I recently lived in three different rental properties in less than a year, and buying/selling three homes in less than a year would be a losing financial proposition. As such, don’t buy a home unless you plan to stay put for at least five years. If you love your area, want to stay for a while, and can afford a home there, you’re well-positioned to buy.

5. You’re not being pressured into it

Your older relatives who think you should buy a home may mean well, but they probably don’t understand that the world is different now. Housing costs rose 74% from 2010 to 2022 — while the average wage increased only 54% in that same timeframe. If your desire to own a home is coming from within, rather than as a result of pressure from family or friends, you might just be in a good place to buy a home.

6. You’re ready to take care of a home — financially and otherwise

Depending on your landlord, you might not have to lift a finger or whip out your credit card when something goes wrong with your rental home. That is what you’re paying for when you pay rent — the peace of mind that comes from knowing you don’t have to pay to fix a broken hot water heater or remediate a wasp infestation.

Guess what, though? Once you own a home, those problems are yours. And even the non-catastrophes that come with a home fall on you — better clean out those gutters and take care of the landscaping. If you’re ready for this, it could be a good time to buy a house.

7. You can be realistic about this housing market

This is a tough market to buy in. Unfortunately, you’ll be dealing with higher mortgage rates on top of a limited supply of homes for sale (which makes sense — people who have mortgages at 3% aren’t chomping at the bit to sell and take on a new mortgage at 7% or higher). You won’t have a ton of homes to choose from, and competition will likely be fierce. If you understand this, you’ll be in a better position (at least emotionally) than someone who assumes they’ll be able to easily buy their dream home for a great price right now.

Buying a home isn’t something to be taken lightly. If most (or ideally, all) of the signs above apply to you, you can feel better knowing you’re buying for the right reasons and with your eyes wide open about all that’s involved.

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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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