Money Management

You don’t need to bring home a six-figure salary to build up a large IRA balance. Read on to learn more. 

In 2022, the average U.S. household had an income of $105,555. But the median U.S. household income in 2022 was only $74,580. And when you have a median that’s well below the average, it’s an indication that a greater number of Americans earn less than $105,555 than those who earn more.

If your goal is to build up a nice IRA balance in time for retirement, then you may be worried about your ability to do so if you only earn a typical wage. But here’s some good news — you can do quite well for yourself if you start funding your IRA at a young age and put that money to work by investing it savvily.

A robust IRA balance could be yours

You’ll often hear that it’s wise to sock away 15% to 20% of your income for retirement savings purposes. But if you’re earning $75,000 a year, which is roughly the median U.S. household income, then that’s probably not realistic.

You need enough money to pay for housing, transportation, food, healthcare, and more. And there’s only so much cutting back on spending you can do.

But while it may not be reasonable to save 15% to 20% of your income when you earn about $75,000 a year, saving 5% of your income may be far more doable. That would have you socking away $3,750 a year, or about $312 a month.

If you simply put that $312 a month into your IRA and let it sit in cash, then you may not be so happy with your balance as retirement nears. But if you invest that money in stocks, you might build more retirement wealth than you could’ve ever imagined.

Over the past 50 years, the stock market has rewarded investors with an average annual 10% return, as measured by the performance of the S&P 500 index. So let’s say you manage to start saving $312 a month for retirement at age 27 and continue to do so until age 67, which happens to be full retirement age for Social Security. If your portfolio gives you that same 10% return, you’ll end up with an IRA balance of about $1.66 million. Yes, you read that correctly!

Don’t assume you’re doomed to a cash-strapped retirement

Clearly, it’s a lot easier to contribute a lot of money into an IRA when you earn $150,000 a year as opposed to half that amount. But you don’t necessarily have to pump loads of money into your IRA to amass a large balance in time for retirement. All you need to do is contribute consistently over time and make sure you’re investing your money in assets like stocks with a history of delivering strong returns.

To be clear, you probably won’t make money on stocks in your portfolio every year. The market is apt to falter at some point.

But the 10% return referred to above accounts for periods of strong market performance as well as recessions during which the stock market tanked. So if you commit to investing in stocks for many years, you might end up with a surprisingly high IRA balance in time for retirement — even if you never manage to earn a six-figure wage.

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 

Winter homeowners insurance claims can cost thousands of dollars. Here are five simple ways homeowners can prevent them. 

As a lifelong resident of Wisconsin, I’ve seen far more winter weather than I’d like. We’ve usually got snow on the ground for about five months and most years, it’s close to June before we see anything resembling warm temperatures. Some people might love that, but I am not one of them.

There are a lot of reasons for this, but one is all the extra work you have to do in fall and winter to protect your home against problems like frozen pipes or ice dams on your roof. But I much prefer tackling issues like that to filing costly homeowners insurance claims, and I’m sure you do too. So do yourself a favor and don’t forget about these five tasks as we move deeper into fall, so you can avoid contacting your insurance company to file a claim.

1. Insulate your pipes

One of the most common winter homeowners insurance claims is damage from frozen pipes. This is especially a concern for homeowners who keep their thermostats low in the winter. When pipes get too cold, they can burst. The average water damage homeowners insurance claim is about $12,514, according to the Insurance Information Institute, and some are a lot more expensive. Homeowners who are traveling may not even notice the damage has occurred for days or even weeks.

It’s best to head this problem off altogether by wrapping pipes with insulation to protect them from freezing in the first place. You can pick this insulation up at any home improvement store. Apply it to any exposed pipes in the attic, basement, or crawl space that are vulnerable to the cold.

2. Keep your gutters and downspouts clean

A lot of snowfall can lead to ice dams on roofs. This is where snow and ice melt and later refreeze on the edge of the roof, stopping water from draining properly. That could also lead to a water damage claim if the roof leaks as a result.

Keeping gutters and downspouts clear can get melting snow away from the roof so it doesn’t form an ice dam or leak into the home. But this may not always be enough.

3. Shovel your roof

Certain parts of roofs are more susceptible to ice dams than others. These include:

Eaves (the edges of the roof)Valleys where two roof slopes come togetherAround vents or chimneysThe north side of the roofAreas that are shaded

Shoveling snow away from these areas can further reduce the risk of ice dams and water damage.

4. Be careful with fire

House fire claims are also common during winter, as many light candles and fireplaces during this time. A lot of people also use space heaters. Left unattended, these can get out of control, leading to a total loss of the home in the worst-case scenario.

That’s why it’s crucial to never leave a fire unattended and to always turn off space heaters when no one is around. It’s also a good idea to keep a fire extinguisher on hand. Some insurance companies even give discounts to homeowners who do this because it can minimize the severity of a house fire, should one occur.

5. Trim trees around the home

Winter snow can also be a huge burden on the trees surrounding a home. If the branches get too weighed down, they might break off and could fall onto the home. This could lead to serious damage to the siding or the roof.

Removing branches over the home can make this less likely. It’s particularly important if there are any dead or diseased trees in the vicinity. Homeowners may need to hire someone to perform this task, especially if the tree is large or very close to the house.

These five tasks undoubtedly won’t be the highlight of your fall, but they’re worth the effort. Try to take care of the one-time tasks, like tree trimming, before winter really sets in. Then, schedule time to check for problems like ice dams or too much snow on the roof throughout the winter and tackle them as they arise.

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 

No amount of credit card debt is easy to pay off, but $50,000 can feel like climbing a mountain. Learn how to tackle $50,000 in debt here. 

It’s never easy to get out from under your credit card debt. But it’s one thing to have $6,473 (the average American credit card debt) and another to have $50,000 or more. At that level of debt, you’re likely paying hundreds each month — if not a thousand dollars or more — just to meet interest payments. And that’s not even putting money toward the principal, the heart that’s generating more debt.

Big debts call for big measures. If you’re sick of having this $50,000 debt dragging down your finances and lifestyle, here are three strategies that could help you pay it off.

Negotiate credit card interest rates

Credit card companies aren’t always the bad guys. In fact, even though they make money off interest payments, they also want you to pay them back, especially if you owe a high amount like $50,000. To that end, credit card companies will often work with borrowers to create a repayment plan that helps you eliminate the debt.

To negotiate your credit card debt, call the numbers on the backs of your credit cards and ask to speak to a representative in the debt settlement department. Once connected, explain what you’re going through and how you’d like to pay off the debt. You could even propose your own solutions, or ask them what payment plans they might offer.

For instance, some credit card companies will accept a smaller sum than what’s owed if you agree to pay it all upfront. Others will reduce your credit card’s interest rate for a specific period. During this time, they might set up a payment plan to ensure you pay the balance off before the reduced rate period ends.

Not every company will work with you. But it’s worth a try, especially if your credit score is low and your options are limited.

Eliminate high interest payments with balance transfer credit cards

The best balance transfer cards are designed to facilitate balance transfers. This is a transfer of credit card debt from one card to another.

For instance, the Wells Fargo Reflect® Card offers 21 months of 0% APR from account opening for balance transfers. During this time, you can carry a balance without paying credit card interest. It’s important to make a strategy and pay off your debt before the period ends, however, as the card’s APR will scale up once the promotion is over.

On the downside, balance transfer credit cards often impose balance transfer fees, usually about 3% to 5% of the total transfer. That means, for every $1,000 you transfer, you’ll likely pay between $30 and $50 in fees (you’d pay $1,500 to $2,500 to transfer a $50,000 balance). These cards will also cap how much you can transfer, and it’s usually the same amount as the card’s credit limit. It’s unlikely, then, that you’ll get a credit card that will accept the full $50,000.

When used as one tool among other debt repayment strategies, however, it can be effective in saving you money on interest.

Consider debt consolidation loans

Debt consolidation loans combine balances from different credit cards into one monthly loan payment. The APR on these loans is often lower than credit cards, so you can take the savings on interest and put it toward your principal. Unlike balance transfer credit cards, many of these loans have high enough limits to allow a $50,000 transfer.

You might need to make some sacrifices

Hang in there. As tough as this time feels, staying focused and making a plan can be what you need to chip away at your credit card debts. Most importantly, as you win — because you will beat this debt — be sure to celebrate the victories along the way. Paying off $50,000 in debt is a serious accomplishment, so plan for something exciting to help you get there.

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.Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

 Read More 

Mortgage interest rates are at a two-decade high, but some people still want to move. Read on to find out why they’re boxing up their belongings. 

There’s no getting around the spike in housing costs over the past few years. Inflation, a shortage of houses, and soaring interest rates have all contributed to an upheaval in the housing market.

The result is that the average home price is now $416,100, up nearly 29% from mid-2020. And while the high housing costs keep many people from moving, it’s not slowing everyone down.

Some people still need to move, and the latest Redfin data shows why Americans are considering loading the moving van.

1. They want more space

Americans are apparently willing to sign on the dotted line with a mortgage lender to get an extra bedroom or another bathroom. Wanting more space was the top reason people said they’re likely to move in the next year, with 33.8% of respondents citing it as the main reason, according to Redfin.

This matches up with data showing American homes continue to grow. In the 1960s, the average single-family home was 1,500 square feet, but that climbed to more than 2,500 square feet at the end of last year.

2. To be with or closer to family

The next most popular reason for Americans’ desire to move was to be closer to family, with 22.6% citing it as the reason they’d consider moving.

Redfin’s survey shows that people are willing to move further than before the pandemic, with 26% of home buyers looking to move to a different part of the country, up from 19% before the pandemic.

3. For a lower overall cost of living

Inflation has driven prices for nearly everything higher over the past few years. And with mortgage interest rates at a two-decade high, many Americans are considering moving to lower their overall cost of living.

Redfin says 21.6% of survey respondents said a lower cost of living is why they’re considering moving in the next year.

4. To get a better deal on a home

I can relate to this one. I regularly search on Zillow for cheap or inexpensive homes in different parts of the country…I don’t find much.

The Redfin survey showed 20.5% of respondents said getting a better deal on a home is the main reason they’re considering moving. These Southern cities look like a better deal for those looking for cheaper housing.

5. To live in an area that better aligns with social values

This one caught me a little off guard because I assumed that moving for a job would certainly be on the top five list of reasons to move. However, Americans seem increasingly interested in moving to an area of the country where others share their social values.

Just over 19% of respondents are considering moving within the next year for this reason, much higher than the 15.6% who said they’re considering doing so for a new job.

How to plan for buying a home

No matter your reasons for wanting to move, if you’re planning to buy a house, there are a few steps you can take now to help yourself get ready.

Make sure your credit is in good shape: The better your credit score, the better your chance of securing a loan and getting a lower mortgage interest rate. Pay your bills on time, pay off credit card debt, and dispute any discrepancies on your credit report. Check out The Ascent’s guide for increasing your credit score for tips.Save as much money as possible: Mortgage lenders will assess your credit and what assets you have. So, lowering your debt is part of the equation, as is boosting your savings. You can get an FHA loan with as little as a 3.5% down payment, but lenders will also want to see you have money in a savings account to cover other home-related expenses.Shop around for the best lender: While there are standard lending practices, not all lenders will look at your savings, credit history, employment, and debt in the same way. That’s why it’s essential to compare the best mortgage lenders for your needs.

If you end up moving, good luck with the process (I’m busy the Saturday you plan on moving, by the way), and don’t forget that even if you can’t score an especially desirable interest rate now, there are options to refinance your mortgage in the future.

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