Money Management

A Roth IRA is a tax-advantaged retirement account that allows you to make tax-free withdrawals as a senior. Discover a less-discussed reason to open one. 

You have several choices when it comes to retirement accounts. If your employer offers a workplace 401(k) and makes matching contributions, you should always contribute the amount necessary to get your full match before you do anything else. HR can help you do that.

But after you’ve maxed out your match and claimed all the free money your employer has on offer, you may want to consider putting additional funds into a Roth IRA. There are many benefits to a Roth opened at a brokerage firm, but one little-known advantage has to do with how your Social Security could be impacted by your decision to invest in one.

This surprising benefit could be reason enough to invest in a Roth IRA

Roth IRAs work differently from traditional 401(k) and IRA accounts. You don’t get to deduct any contribution that you make to this account from your taxes, so your taxable income doesn’t go down in the year you make the contribution. However, once you get to retirement, as long as you’ve followed some basic guidelines, you get to take your Roth IRA money out and spend it without being taxed on it.

You probably already know that if you’re thinking about investing in a Roth. But what some people don’t know is that there’s another benefit to a Roth. It has to do with whether your Social Security benefits are going to be taxed or not.

Social Security retirement benefits were not taxed at all for a long time, but that changed in 1984 when the program was amended to try to shore up its finances. One change was that benefits became partly taxable if your countable income is above a certain threshold. The table below shows when you might get stuck paying taxes on benefits.

You’ll notice that the term “countable” income is used, though. And that’s where the Roth IRA benefit comes in. See, countable income is half your Social Security, all taxable income, and limited types of non-taxable income (such as MUNI bond interest). Because Roth IRA distributions aren’t taxable, they aren’t part of your countable income at all.

This is a huge benefit for those with money in a Roth IRA. You can take as much money out of this account as a senior as you want to in order to provide yourself with money to live on, and you won’t have to worry that doing so will cause you to suddenly start owing taxes on Social Security.

Should you open a Roth IRA to avoid Social Security taxes?

Currently, around half of all households that receive Social Security retirement benefits could be taxed on them, according to the Senior Citizens League. And that number is only growing because the thresholds at which benefits become taxable are not indexed to inflation. That means they don’t go up over time, even as incomes naturally increase over time.

As a result, there’s a very good chance you could potentially have to give the government a cut of your retirement checks. If you don’t want to do that, opening a Roth IRA to avoid the risk of Social Security taxes could be a great move. Just remember to max out your 401(k) match first, because passing up free matching funds is never worth it.

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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.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Christy Bieber has positions in Citigroup. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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While you may be tempted to throw every spare dollar at your debt, it’s often better to save up an emergency fund first. Here’s why that’s the case. 

If you owe money on credit cards or have other debt, making a plan to pay it back ASAP is a smart choice. But before you begin sending extra monthly payments out of your checking account to your creditors, it’s a good idea to accomplish another important thing first. Here’s what it is.

Do this before you begin paying off debt

Before you start making extra payments toward your debt, make sure you have between $500 and $2,000 in a savings account as an emergency fund. The specific amount will vary depending on your income; higher earners should aim for around $2,000 and those who earn less can target the lower end of that range.

It may seem strange to put money into a savings account and let it sit there while you pay interest to a creditor. But it’s actually really important that you do this, even if that means you have to just make minimum payments on your debt and put off paying extra toward principal for a few months.

You should put this money into a savings account so it’s there for you as an emergency fund. Ideally, over the long term, you’ll want to save an emergency fund amounting to three to six months of living expenses. It can take a really long time to save up that much, though. If you start with a “mini” emergency fund of around $500 to $2,000, perhaps you won’t have to pause debt payoff for that long and you’ll still have some emergency savings.

Here’s why it makes sense to save up an emergency fund first

So why would you want to save up an emergency fund if you’re in debt, rather than just focusing on getting your debt paid down as soon as possible? There’s a very simple reason. Emergencies can and do happen at any time, to anyone, and you don’t want to be caught unprepared.

Pew Charitable Trusts found a whopping 60% of households had experienced an emergency over the prior 12 months. You very well could be one of those people who faces surprise expenses. That’s especially true if it’s going to take you a few years to pay off your debt in full. It is almost inevitable that some unplanned expenditures will crop up during that time.

When surprise expenses happen, you don’t want to go back into debt to pay them and undo progress you’ve made on reducing your existing balances. Doing so could be demoralizing and undermine your efforts at debt repayment. It may also not be easy or feasible to just borrow your way out again when an emergency strikes, as it can take time to get a personal loan and not everything can be put on a credit card.

If you want to get out of debt and stay for good, build your mini emergency fund first. That way, once you shift over to debt payoff, you’ll have this financial cushion. You can rely on it if you need to, so your debt repayment efforts aren’t undone by a stroke of bad luck that comes your way.

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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.Christy Bieber 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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From rotisserie chicken to pantry staples, here are five fabulous Costco deals that all cost under $10. 

Costco is a favorite among bargain hunters. But because it’s a place where you typically buy in bulk, it’s often not great when you only want to spend a few bucks. Believe it or not, though, there are some deals at Costco for $10 or less. Here are five amazing Costco finds that will set you back no more than $10.

1. Rotisserie chicken

Not surprisingly, the $4.99 rotisserie chicken tops this list. Costco debuted its famed bird for $4.99 way back in 1994. It briefly raised the price by $1 during the Great Recession in 2008, then knocked it back down to $4.99 one year later. Had Costco raised its prices to keep up with inflation since 1994, that chicken would cost $10.48 today.

Costco’s rotisserie chicken will always be a fan favorite for those looking for an effortless dinner. Just be aware: Costco keeps the prices low because its rotisserie chicken is what’s called a loss leader. The warehouse giant is willing to lose money selling them because it knows it can get customers into stores, where they’ll probably buy more than just a chicken.

2. Hot dog and soda combo

Costco has raised the prices of many of its food court items in recent years, but the price of one perennial favorite shows no signs of budging: the hot dog and soda combo, which has cost $1.50 since it debuted in 1985. Adjusted for inflation, the hot dog and soda combo should cost $4.28. Last year, during a quarterly earnings call, Costco chief financial officer Richard Galanti said the warehouse giant could keep the $1.50 price point “forever.”

3. Kirkland Signature Creamy Almond Butter

You can use almond butter as a salad dressing ingredient, slather it on toast, put it in baked goods, or just eat it straight from the jar. If you’re the type who likes to devour almond butter by the spoonful, you don’t want to pass up a 27-ounce jar of Kirkland Signature Creamy Almond Butter, available for just $7.99. That works out to less than $0.30 per ounce. By comparison, a 16-ounce jar of Trader Joe’s Creamy Almond Butter Salted costs $6.99.

4. Olde Thompson Kosher Sea Salt, 5 lbs

Sea salt has plenty of uses that go beyond cooking. You can use it for cleaning, as an exfoliant for your skin, and sprinkle it around your garden to keep unwanted bugs away. For just $5.99, you can score a 5-pound jar of Olde Thompson Kosher Sea Salt and keep it handy for all your household and kitchen needs.

5. Bisquick Pancake & Baking Mix, 96 Ounces

Bisquick is another one of those things that’s handy to keep in your pantry. You can use it to whip up a quick batch of pancakes or waffles for breakfast or keep it on hand for a variety of baked good recipes. A 96-ounce box of Bisquick is available at Costco for $8.89. It’s normally priced at $10.99, but there’s a $2.10 manufacturer’s discount that’s good through Oct. 8, 2023.

What are the best deals at Costco?

Since Costco tends to sell large quantities, you’ll typically find that a lot of the best deals cost well above $10. Regardless of the exact price, it usually makes sense to buy products at Costco that have a long shelf life. For example, even if you find great deals on fresh produce and milk, you probably don’t want to load up on these items unless you’re feeding a large crowd, as they’ll go bad quickly.

Also, make sure you look beyond the grocery department for savings. For example, getting your prescriptions from Costco Pharmacy or using Costco to fill up your gas tank could also save you money.

If you want to maximize the benefits of your membership, try shopping with a Visa credit card that offers rewards. (Costco only accepts Visa credit cards.) That way you can earn travel rewards or cash back when you load up on groceries and other necessities.

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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.Robin Hartill, CFP® 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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Fun doesn’t have to cost a fortune. Try these ideas for some frugal family fun. 

The price of everything has gotten more expensive, and our bank accounts are definitely feeling it. But your finances aren’t in charge of your fun — you are!

Oct. 1 is Frugal Fun Day, a day dedicated to finding ways to have fun that don’t cost a fortune. And yes, contrary to all that expensive marketing, you absolutely can have fun with friends and family while keeping things frugal. Here are just a few ideas to help kickstart your adventures!

1. Geocaching

Geocaching is a modern take on treasure hunting, albeit a bit scaled back. You can use your phone’s GPS to track down hidden caches. Inside you’ll find a trinket left by the previous explorer. Trade for your own trinket to leave a surprise for the next adventurer.

2. Picnic

You can plan a lovely picnic just about anywhere, with just about anything. Forget a fancy spread; just pack whatever’s handy and head out the door! Find a neighborhood park, local lake, or just set up in the backyard — a great picnic is as much about the company as the scenery.

3. Build a fort

This is a great activity to do indoors or out, with anything you have: that collection of Amazon boxes in the garage, a few spare throw blankets, sturdy couch cushions — the sky’s the limit. You don’t need to be a kid to enjoy it, either; engineering is fun at any age!

4. Game night

We’re not talking about expensive video games. Break out the old-school board games, a cheap deck of cards, or even a dollar store checkers set. Have a group? Play in teams or set up a tournament to keep things interesting. Want to take it to go? Find a nearby bingo game or see if the local senior center has an all-ages card night.

5. Camp out

A couple of inexpensive camp chairs and a bag of marshmallows can turn a regular evening hangout sesh into an early autumn camp out. If you like to sleep outdoors, bring a tent and make it an overnight adventure. More of a bed person? Watch the sun set, then head home to hit the memory foam.

6. Act like a tourist

Many of us take our hometowns for granted. Spend the day exploring historic or tourist destinations surrounding your local area. (You can find a lot of this info online.)

7. Thrift store (or closet) cosplay

You don’t need to go full-throttle to put together a fun outfit based on your favorite characters. Hit a local thrift store — or just your own closets — to see what you can put together. Bonus points if you and your friends put together your own cosplay contest.

8. Volunteer

Not only is volunteering free for you, but it can really make a difference to others, too. (It’s also a great way to combat loneliness!) Check with local nonprofits for opportunities in your area.

9. Go on a scavenger hunt

The internet is awash with free scavenger hunts you can perform around your town. You can even find birthday or holiday themed adventures.

10. Hit a local sporting event

Many of us get priced out of professional sports, but that’s hardly the only way to catch a game. Local high school and college sports can be just as entertaining — if not more so — as pro-level games, and they’re far more affordable.

Other ways to save on entertainment

Even if the activity you want to do is on the pricier side, there are ways to make it a bit more frugal:

Share the cost: Many places offer discounted per-person rates for larger groups, so it can pay to call ahead.Look for coupons, specials, or trials: Some places may offer free trials, weeknight specials, or first-time promotions.Rewards credit cards: There are a bunch of cards that earn bonus rewards on entertainment purchases. And look in your card issuer’s discount portal for special deals.

So much of having fun is about your attitude. If you go into the experience with an open mind, you’ll be surprised where you can find the frugal fun!

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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.
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Elevated home prices are posing a big challenge for buyers. Read on for ways to make a home purchase happen even when prices are up. 

Today’s housing market is an unquestionably challenging one for home buyers. Not only is it very expensive to sign a mortgage, but home prices seem to keep going nowhere but up.

In July, home prices rose 1% on an annual basis, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index. That marks the sixth consecutive month of home price gains and represents a record high.

If you’ve been trying to buy a home, you may be frustrated with record-high prices and mortgage rates. And just as mortgage lenders don’t seem to be on the cusp of cutting borrowing rates, home prices don’t seem to be on the verge of falling.

What should you do if you really don’t want to keep postponing your home purchase? Believe it or not, you have some options. Here are a few you can explore.

1. Don’t go for the most desirable zip code

You may have your heart set on a neighborhood that’s in high demand. But you’re also more likely to pay a premium for a home that’s located in a neighborhood where many buyers really want to live.

A better bet? Research neighborhoods that are under development and work with your real estate agent to identify one that has good potential based on things like amenities and construction projects in progress. You might pay a lot less for a home in a neighborhood like this. And then, there’s a chance that once it’s completely developed, the value of your home will climb, giving you more options.

2. Buy a home jointly with someone else

It’s a big myth that if you want to buy a home with someone else, that other person has to be your spouse. If you don’t have a spouse, you can team up with a family member or friend and buy a home together. Pooling your financial resources might give you more options and allow you to build equity in a home together.

That said, you’ll need to be careful when entering into one of these arrangements. That means setting clear ground rules in writing so there’s no confusion as to who’s financially responsible for what costs and who’s on the hook for things like maintenance and upkeep.

You’ll also need to draw up guidelines that dictate what will happen if one of you wants to sell the home before the other does. It’s not a bad idea to get a lawyer to help draft this type of agreement when you’re talking about an asset as substantial as a home.

3. Buy a home you can rent out as well as live in yourself

Perhaps you have enough savings to cover a down payment on a home at today’s prices, but keeping up with your mortgage payments and peripheral expenses will be a stretch. In that case, you can look to a home that has rental potential. A property with a separate finished basement, for example, could fit this bill.

The downside here is that you’ll be living with a tenant, meaning you’ll have to play the role of landlord. The upside is that you’ll have someone subsidizing your mortgage while you gain equity in your home.

Keep in mind that you’re more likely to find a tenant for this sort of arrangement if you buy a home in a city center near jobs or in a college town where housing is pretty much always needed. This strategy may not work as well if you buy a home in a random suburb that largely caters to families. It’s one thing for a budget-conscious college student to move into somebody’s basement, but getting a family of four to do the same may be a harder sell.

Today’s real estate market is definitely challenging. But that doesn’t mean your only strategy is sitting back and waiting for home prices to come down. If you’re willing to make some adjustment to your plans, you may find that homeownership is attainable now after all.

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There are some unique methods for making money on TikTok. Find out how you can tap into this growing space to start generating income now! 

TikTok, the video-sharing app, has become one of the most popular social media platforms in recent years. With over 1 billion active users, this app has taken the world by storm, especially among younger generations. Like other social media platforms, you can make money on TikTok through sponsorships, affiliate marketing, and merchandising. However, TikTok has some unique ways of making money not seen on other platforms. Here are some of the little-known ways to make money on TikTok.

1. TikTok’s Creator Fund

To directly earn money from TikTok, you can join the TikTok Creator Fund, where you will be rewarded for producing TikTok videos. According to TikTok, it is a “way of celebrating and supporting creators for dedication, ingenuity, and spirit.”

To participate, you need a minimum of 10,000 authentic followers and accumulate at least 100,000 views within the last 30 days. Additionally, you must be 18 or older and reside in the U.S., U.K., Germany, France, or Spain.

The funds allocated for qualifying videos under this program are influenced by various factors including video views, engagement, and adherence to the Community Guidelines and Terms of Service.

2. TikTok’s Video Gifts

Video Gifts, another way to make money on TikTok, presents users with the opportunity to accumulate Diamonds through virtual gifts sent by viewers in the comments section of videos. TikTok awards Diamonds based on a video’s popularity and the number of gifts viewers send.

Every video has a chance to be rewarded by TikTok through Video Gifts. According to TikTok, “this can inspire you to spend more time crafting quality videos and drive viewers to show their appreciation to you for doing so. Win-win.”

To turn on Video Gifts, go to your Creator Tools in Settings and toggle the Video Gifts function. If viewers want to send you a gift, they can tap the comments icon on the video they’re watching and select the gift icon next to “Add comment.” Not all videos are eligible for gifts — only those with an icon in the comments section.

You can redeem Diamonds for money from TikTok. You can see how much money your Diamonds are worth in your TikTok balance. If you want to get money from your Diamonds, tap “Withdraw” and enter the amount you want. The money will be sent to your bank account.

3. TikTok’s LIVE Gifting

LIVE Gifting is when viewers send you Gifts on a LIVE stream. Gifts are a fun way for viewers to show they like your content, their reaction to it, and how much they enjoy it. When people send you gifts during the live stream, thank them! At the end of the live stream you can see how many gifts were sent.

People who are 18 or older can show appreciation by sending Gifts. People need to buy Coins first. Then they can use them to activate Gifts, which are stickers and animations in the LIVE room. The amount of Coins it takes for each Gift varies.

To send a Gift, people must go into the LIVE and open the gift panel then hit “Send.” If a viewer hasn’t bought Coins before the LIVE, they can click on the Gift icon at the bottom of the screen to follow prompts to purchase them during the LIVE stream.

TikTok gives Diamonds as rewards for good quality content and contributions to the platform. Like TikTok’s Video Gifts, the number of Diamonds you receive determines how much money you can make from TikTok.

4. Tips

The tips feature allows people who like your content to show their support by giving you money. A processing fee might be taken out of the tip. This is a way for you to connect with viewers and make money at the same time. Viewers also feel good knowing they are helping you create content they enjoy.

To start getting tips, go to Settings and Privacy, then pick Creator Tools, and then select Tips. Click Apply and follow the instructions on the screen. If you don’t have a Stripe account yet, it will take you there so you can set one up. It may take up to 48 hours for approval from Stripe before you can get tips from people who view your profile page.

TikTok wants people to feel safe when they show their support for you. To protect everyone, viewers can give a maximum of $100 each time and no more than $500 in one day. They are also limited to 100 transactions per day.

TikTok has opened up a world of opportunities for creators around the world. Whether you are looking to earn some extra cash or build a career as an influencer, TikTok has something in store for you. The little-known ways to make money on TikTok mentioned above are just the tip of the iceberg. With some creativity and persistence, you can turn your TikTok account into a lucrative business venture.

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

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