Money Management

Making a plan for your accounts when you pass away can help your loved ones. Learn what happens to your credit cards and important info to leave behind. 

Most Americans have credit cards. A sizable 80% of consumers carry at least one, according to a study by The Motley Fool Ascent. But what exactly happens to those credit cards when the cardholder dies?

There’s a lot of misinformation on this subject. By knowing what happens to your credit cards when you pass away, you can plan ahead and make it easier for your loved ones.

Your credit cards aren’t canceled until the card issuer is notified

If a credit card company learns a cardholder is deceased, it will close that person’s credit cards. However, it won’t know you’ve passed away until someone provides notification. That’s why you should:

Make a list of all your credit cards and the card issuer.Give that list to a family member, friend, or the executor of your estate with instructions to cancel all those cards.Make sure they know not to use the credit cards. Even if they had your permission or were an authorized user on your credit card account, it’s fraud to use a deceased person’s credit card, including as an authorized user.In your instructions, don’t forget to mention requesting any rewards you’ve earned from the card issuer. If you used rewards credit cards, you can at least ensure someone gets to redeem your remaining cash back or points. If nothing else, they could be used to reduce your remaining card balance.

It’s important that your credit cards are closed as soon as possible when you pass away. Until then, they can still be used for transactions. Sadly, people who are recently deceased can be targets for credit card fraud. Identity thieves will take advantage of the possibility that no one is watching the account anymore.

The card issuer will also continue to expect your monthly payment. When it doesn’t receive a payment, there could be late fees and interest charges.

Now, these are all fixable issues. Your card issuer would almost certainly assist with resolving any fraudulent charges, as well as fees charged after your death. But it will save time and a potential headache for your loved ones if they get your cards canceled and don’t need to deal with any problems.

Your estate is responsible for your credit card balances

Before your beneficiaries can inherit your estate, it must first pay for outstanding debts. This includes your credit card balances.

Let’s say you leave behind $500,000 in banking, investment, and retirement accounts. You also have $10,000 in credit card balances when you pass away. The executor of your estate would first need to pay those credit card balances. Your beneficiaries would then inherit the remaining $490,000.

What if your estate doesn’t have enough money to pay off your credit card debt? In that case, your estate will pay what it can, and there won’t be anything left for your beneficiaries.

The good news is that in most cases, no one else is liable for your credit card debt when you pass away. There are, however, a few exceptions where another person could be responsible for your debt:

If you had a joint credit card, the joint cardholder will be responsible.If you had a cosigner when applying for the credit card, they will be responsible.If you were married in a community property state, your surviving spouse will be responsible.

Any time someone passes away, it’s hard on those they leave behind. Along with the heavy emotional toll, there’s also a lot to manage, including on the financial side of things. You can help with that by leaving detailed instructions for closing your credit cards. And, if you keep your balances to a minimum, you can ensure your estate doesn’t all go toward paying off credit card debt.

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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.Lyle Daly 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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Built-in appliances should automatically come with the house. But find out which other appliances may not always transfer to the new owner. 

When you’re buying a house, you need to know exactly what comes with the property. While you might assume you’ll always get appliances with the house, that’s not necessarily the case in every situation.

Here’s what you need to know about the rules for appliances changing hands before you get a mortgage, buy a house, and find yourself caught unprepared without the equipment you expected to have in your new home.

Some appliances should be included

When you buy a home, typically all of the fixtures in the house are included by default. This includes things that are physically attached to or built into the home and that would require tools or special equipment to remove.

Some examples of fixtures that would typically be included when a home is purchased include the following:

Wall ovensDishwashersBuilt-in microwavesHVAC unitsLight fixturesCeiling fansBuilt-in ranges or stovesRange hoods

You may still want to specify in your offer that these items should come with the house, just so there’s no confusion. But even if you don’t, it would be very unlikely that these semi-permanently attached appliances wouldn’t be included in a standard home sale.

Other appliances you may have to negotiate for

While built-in or fixed appliances are assumed to be included when a home is sold, this isn’t necessarily the case for other more moveable gear. For example, there are some kinds of household appliances that the current homeowner can generally take with them if they choose to do so. Examples could include:

RefrigeratorsNon-built-in microwavesWashersDryersAbove-ground swimming pools or hot tubsMounted televisions

If you want any of these items to be included with your home purchase, you need to talk with the sellers about whether they are willing to part with them as part of the sale. If the seller agrees to allow you to keep any of these appliances, that should be written in your offer so there is no confusion about what stays and what goes when the home closes.

READ MORE: The Ascent’s Complete Guide to Mortgages

If you are negotiating for appliances, pay attention to factors such as their age and whether an inspector has assessed that they work well or not. There’s little use spending time and energy negotiating for a washer and dryer that are on their last legs — especially if you would have to pay extra money to convince the current homeowner to allow you to keep them.

You should also be aware of what appliances won’t come with the house when you buy it, as you will need to budget for those. If you aren’t going to get a washer or dryer or both, for example, you may need a few hundred dollars set aside to buy one of each once you move in.

By working with your real estate agent to understand exactly what is included, and by negotiating with the sellers to include appliances or other things that are important to you, you can maximize the chances you’ll end up with a successful home purchase that includes everything you desire.

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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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What’s harder — finding the right financial advisor or your soulmate? You may find that the process is similar. Read on to learn more. 

The experience of dating can be a harrowing one. You have to put yourself out there and potentially sit through numerous awkward conversations over coffee until you find someone you manage to click with. And who knows how much money you’ll spend along the way?

But if you’re someone who wants a romantic partner in life, then it’s important to put in the time to find the right person. And similarly, if you’re in the market for a financial advisor, you’ll want someone who can help you work toward your money-related goals, whether it’s buying a house, putting your kids through college, or retiring with a robust IRA balance.

Recent data from Northwestern Mutual found that 70% of wealthy Americans are working with a financial advisor — but that’s nearly double the amount of the general population. So if you’re without an advisor, you may want to ramp up your search.

But don’t be surprised if the process of finding one reminds you of dating. Here’s why that might happen.

1. You need to ask a lot of questions to find the right person

It’s important to find a romantic partner with similar goals and values to yours. If you want kids, it’s best to find someone who feels similarly about expanding their family. And you’ll probably have to ask your fair share of questions to determine if the person you’re dating is someone you can see yourself being with on a long-term basis.

Similarly, it’s important to find a financial advisor whose personality meshes with yours, and whose skills are likely to lead you toward your goals. So as you interview potential advisors, ask lots of questions. Some of those might include:

How much experience do you have?What investment strategies do you recommend for someone like me?What barriers do you see coming up on the way to meeting my goals?What’s your communication style?What fees do you charge?How often will you update me on my progress/how often we will sit down to meet?

2. You need to establish a level of trust

You can’t move forward in a romantic relationship without trusting the person you’re with. Similarly, you can’t put someone in charge of your money if you don’t trust that they’re an honest professional who has your best interests at heart.

One thing you may want to ask a financial advisor is whether they’re a fiduciary. A fiduciary is someone who must put the best interests of their clients first at all times.

Of course, trust is something it takes time to build. You may not want to put a financial advisor in charge of all of your money right away, but rather, ease in. As they prove themself, you can put additional funds in their care.

3. It can be very difficult to cut ties

If you’ve ever had to break up with someone you’ve dated, you know how hard it can be. Similarly, it’s not so easy to end a relationship with a financial advisor. And while the whole “it’s not you, it’s me” line works in both scenarios, that doesn’t mean it’s a comfortable situation to be in.

But just as there’s no sense in continuing a romantic liaison with the wrong person, so too is there no sense in continuing to work with a financial advisor who isn’t meeting your needs. And you’ll know you’re in the latter boat if you find that your advisor is hard to reach, doesn’t listen to your concerns, and doesn’t take the time to explain their strategy for your money. It’s also okay to cut ties with a financial advisor if their fee structure changes and it becomes too high for you to comfortably afford.

Working with a financial advisor could be a smart move. But it’s also important to find the right person for you and know what red flags to look out for, the same way you wouldn’t want to commit to a romantic partner who isn’t a good fit for you.

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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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It’s almost time to shop for the holidays, but it’s not too late to start saving. Here’s why it can be beneficial to save for holiday gift costs now. 

We’re at the beginning of October, and while it may feel too early to think about the upcoming holiday season, it will be here before you know it. It’s not too soon to start thinking about how you will afford the holiday gifts you plan to buy in the coming months.

I prepare for future financial expenses, like holiday gifts, by setting aside money throughout the year. When the time comes to cover an anticipated purchase, the money is already in the bank. Here’s why I’m already stashing away cash for my future holiday spending needs, and why you should too.

1. I don’t need additional stress during the holiday season

I’ve already been saving up to pay for holiday gifts, so I feel less stressed this winter. Following this strategy helps to keep my anxiety in check during an already stressful and busy time of year. I feel prepared, knowing I have the cash to cover the gifts I’ll buy.

2. It’s easier to stay on budget while shopping

Since I already set a shopping budget and created a savings plan earlier this year, I know how much I can afford to spend on holiday gifts for my friends and family. With my savings already set aside in the bank, I can easily stay on budget as I shop. Budgeting for future expenses is a big part of my personal finance plan.

3. I don’t want to risk a credit card debt problem

Saving for holiday shopping throughout the year also helps me avoid credit card debt. When I do my holiday shopping and swipe my credit card at checkout, I feel confident that I can afford to pay my entire credit card balance when the bill arrives.

You may rack up debt if you don’t save up for costly purchases before you charge your credit card. Paying your entire credit card bill is best to avoid interest charges. Credit card interest is expensive, so credit card debt can quickly get out of hand if you’re not careful.

Don’t wait to plan for how you will pay for holiday gifts

For many people, buying holiday gifts is a yearly occurrence. Instead of shopping for and worrying about how you will afford gifts a few weeks before the holidays, thinking about your shopping budget and how you will pay for presents earlier in the year is beneficial.

The first step is to set a budget so you don’t overspend. Plus, don’t feel pressured to spend more than you can afford. Then, it’s a good idea to start saving. If you set aside money throughout the year, you can save up well before you do your shopping.

If you do save money over the course of the year, keep your savings in a bank account that earns interest. You’ll make money as your cash sits in the bank. You can automate the savings process so money is transferred from your checking account to your savings account regularly for simplicity.

It’s not too late to start saving for holiday gifts

If you’re reading this and are worried that you haven’t yet saved up for your holiday shopping needs, don’t fret. There is still plenty of time to prepare financially before the holiday season begins.

If you don’t want to stress about money during the holiday season, outline a shopping budget and start saving now. If you need help, check out these budgeting apps. Even some money saved can make a difference and help you make your holiday shopping trips more affordable.

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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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You can’t control many factors in the market and the economy. Here are a few tips for keeping a level head with your investments. 

Investing your money is a wise way to prepare for your financial future. But many factors can impact your investments, both good and bad. For example, if you own stocks, you’ve likely noticed that the S&P 500 stock market index has rocketed about 18% higher over the past year.

Part of that growth has come from investor optimism about artificial intelligence and a surprisingly resilient economy. However, some factors can negatively affect your investments, including inflation and bear markets.

Let’s take a closer look at four big things that impact your investments in the short term and how you can keep a long-term perspective when they come along.

1. Inflation

Inflation is when the value of your money decreases. Over time, money is worth less than it used to be as prices increase. And while this is a regular occurrence in economies, there are times when inflation surges higher over a short period.

Unfortunately, that’s what’s happened in the U.S. over the past few years. The COVID-19 pandemic caused many businesses to shut down and destabilized supply chains. Then, as businesses opened back up, a shortage of workers caused a hiring spree among many companies that helped push wages higher. That wage boost then caused the prices of goods and services to rise. Add to all that an influx of cash from stimulus checks and low interest rates for mortgages and borrowing money, and the economy started running hot.

With a surge of inflation recently, the actual returns in your brokerage account are worth less than they would have been if an inflation spike hadn’t occurred, reducing your buying power.

Additionally, inflation can impact companies that you may be invested in by making it more expensive to hire workers or pay for materials to make their products. This can eat into their profits and impact their share price, which in turn, affects your investment portfolio.

2. Deflation

It would be reasonable to assume that if inflation hurts investments, then deflation — a decline in the price of goods and services — would be a good thing for investments. But it’s a little more complicated than that.

When deflation occurs, the value of cash goes up. This may encourage some people to save their money rather than risk investing it. And when fewer people invest their money in the stock market, asset prices may fall, causing your investments to lose value.

Additionally, when the cost of goods and services declines, it can negatively impact company profits, which can cause stock prices to fall.

3. Bull markets

A bull market is a general term that means that stock prices are up and are expected to continue doing well. A common definition of a bull market is when asset prices have increased by 20% or more from their recent low.

When the market makes significant gains, it’s clearly a good thing for your investments. If investors are generally optimistic about the economy and company growth trajectory, more people will invest in the market and drive asset prices higher.

The one negative aspect of a bull market is that some stocks can become overvalued and might have more potential to fall in the future when a bear market comes along.

4. Bear markets

Bear markets are generally defined as a decline in the stock market of 20% or more over two months.

This is, of course, bad for your investments because the significant decline can erase previous gains your online portfolio has made. In some cases, the decline can be so severe that it erases stock returns that took years to grow.

Bear markets are a normal part of the investing cycle but can be particularly painful if you’re in or nearing retirement. For example, if you entered retirement with $500,000 in stock investments, but then a bear market drove down the market by 20% in just a few months, you may be left with just $400,000 in your portfolio.

This is one of the reasons many people begin to diversify their investments — across stocks, bonds, and cash — as they near retirement. If a bear market occurs and you’re more diversified, you’ll be less impacted than if you have all your money in stocks.

Keep a long-term investment perspective

While you can’t change what happens with the economy or the stock market, you can help yourself by keeping a long-term perspective on investing. This will look different at different stages of your life.

For example, if you’re 30 and a bear market comes along, you likely don’t have anything to worry about. The market will eventually rebound, and the drop likely won’t impact your long-term retirement plans. In that scenario, it’s best not to make rash decisions to sell your stocks. In fact, it could be an excellent time to open your favorite trading app, find undervalued stocks, and buy them.

For retirees or people nearing retirement, a long-term perspective may mean holding onto the money you already have — rather than trying to aggressively increase it. That’s why most financial experts recommend spreading out your investments the closer you get to retirement.

The critical thing to remember, no matter what age you are or how much money you have invested, is to keep a cool head when things get tough.

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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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I have an emergency fund but I haven’t had to rely on it for almost five years. Here’s why I no longer need to touch my emergency savings — but why I still have it anyway. 

This January, it will be five years since I’ve taken any money out of my emergency savings. I have six months of living expenses kept in a high-yield savings account, and I’ll keep it there in case I need it — but I have not had to rely on it in almost half a decade.

This is not because I’m immune to things going wrong. Instead, there’s another very simple reason why I can leave my emergency savings alone while also not reaching for the credit cards when I need to pay for costs that aren’t part of my normal routine.

Here’s why I haven’t relied on my emergency fund in a long time

The reason I have not had to touch my emergency fund in a very long while is because I have dedicated savings for most of the expenses that cause people to turn to their emergency fund in the first place.

An emergency fund is there in case of job loss or an income disruption, but it’s also there to cover unexpected expenses. With studies showing 60% of households had experienced an unexpected financial shock over the past year, many people face surprise costs.

The reality, though, is that a lot of expenses that people treat as a surprise or an emergency are actually somewhat predictable. For example, people often tap their emergency funds to:

Cover medical billsPay for home repairsPay for car repairs

Now, it’s absolutely true that you can’t know when you’re going to need to see a doctor or go to urgent care or replace your air conditioner. But, it’s also equally true that at some point, you’re going to have to see a doctor, fix something at home, repair your car, or get a new one. And, while you can’t predict when you’ll need money for these things, you know you’ll need it at some point.

Since I’m aware that these expenses are going to creep up, I have dedicated savings accounts for all of them. I also have a dedicated savings account for “unexpected kid costs,” for situations like when my children outgrow their clothes before I thought they would, or need a whole bunch of birthday party gifts at one time.

Because I have savings for the most common types of “emergencies,” I don’t have to turn to the money in my emergency fund. That cash is there in case something truly surprising goes wrong. I have the peace of mind that I can cope with a real disaster that there’s no way to predict.

Saving for expected surprise expenses could help you be more financially secure

Saving up a general-purpose emergency fund is an important first step if you want to make sure you don’t end up in debt or living paycheck to paycheck. But once you have accomplished that, and are on track for retirement savings and debt payoff, you may want to also start dedicated savings accounts to prepare for the costs you know will hit some time but can’t predict when.

Consider having a home repair fund that you contribute 1% of your home’s value into each year, as well as a car repair fund and a copay or medical care fund as well. The amount you’ll need to put into each of these can vary depending on factors like how old your car is and your max out-of-pocket cost for health insurance. Look at your financial situation, figure out how much you’d need to be ready when these inevitable “surprise” expenses come your way, and start saving for them today.

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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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