Money Management

Owning a home is more expensive than renting, due in part to having to pay for maintenance and repairs. Learn how you can save on these costs. 

I’ve been a renter for the majority of my adult life, and although my misadventure with homeownership in my 20s ended poorly, I got extremely lucky that I didn’t need to shell out much money for home maintenance when I owned. Now that I’m preparing to buy again next year, the costs I’ll face as a homeowner give me pause. As a renter, I’ve always been able to call my landlord if the hot water heater broke, if I had a wasp problem, or if there was a leak under the kitchen sink. Soon, problems like that will fall squarely under the jurisdiction of my checking account.

Unfortunately, home maintenance costs have reached all-time highs as of late. As reported by the Thumbtack blog, the average annual cost to maintain a single-family house rose by 8.5% between Q2 2022 and Q2 2023. Plus, the costs to maintain a townhouse and a condo over that same period rose 5.36% and 5.07%, respectively. No matter how you slice it, the privilege of being a homeowner comes with higher costs. Let’s consider a few ways you might spend less — or at least save more strategically.

1. Leave yourself a cushion when you buy

It’s often recommended that you make a 20% down payment when you take out a mortgage loan. This is so you can avoid having to pay for private mortgage insurance (PMI), which protects your mortgage lender should you be unable to pay your loan. However, I plan to put just 10% down when I buy my home.

This is a calculated decision on my part — I don’t want to wipe out my savings entirely when I buy. The odds are excellent that I will be buying an older home, and if life has taught me anything, it’s that I’m likely to encounter a necessary home repair before the ink is dry on my mortgage.

2. Stay on top of preventive maintenance

An ounce of prevention is worth a pound of cure, or so the old saying goes. To that end, try to be aware of how often certain tasks need to happen around your house.

For example, it’s much easier to clean your gutters before winter hits, snow falls, and water ends up freezing and creating ice dams that have the potential to cause expensive roof damage.

3. Make regular contributions to a home maintenance fund

Experts recommend saving in the neighborhood of 1% of your home’s value every year to cover maintenance costs, but you might want to save more. Depending on where you live, this could represent substantial money.

To make it easier on yourself, arrange for automatic transfers from your checking to your savings account. I recommend treating saving for maintenance as a necessary bill and paying yourself first.

4. Get multiple quotes for work

Unless you are in an emergency situation, you can likely talk to more than one contractor or repair person about a home repair.

Getting multiple price quotes can give you a fairly good idea of the average cost of a certain type of work in your area. It can also give you the chance to find the best price (and the best timeline — contractors book up fast) for what you need done.

5. Consider a home warranty

Home warranties have a mixed reputation. They do not fulfill the same function as homeowners insurance, and instead cover service calls, repairs, and replacements of appliances and home systems, like your HVAC.

One of my colleagues here at The Ascent swears by home warranties, and if you’re buying an older home (like I will be), it might be a good idea to explore your warranty options. Just be sure to read the fine print and make sure you’ll have the coverage you want and need so there are no expensive surprises later.

6. DIY — within reason

Some tasks at home should be handled by a professional. This includes a lot of electrical work, heavy-duty pest control, and possibly tasks like tree trimming and gutter cleaning, if you have a multi-story home and aren’t 100% comfortable on a ladder.

One of the wonderful things about living in the here and now is how many explainer and DIY videos you can find on YouTube. But it’s important to remember that unless you feel very confident in your abilities, it’ll end up costing you more to hire a professional after you’ve botched a home repair. And your safety is the most important thing.

If you’re buying a home or are already a homeowner, don’t kid yourself — owning a house isn’t cheap. But if you put money aside strategically, stay aware of potential issues, and shop around for repair and maintenance work, you might come out ahead financially.

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Being hit by an uninsured driver can make a bad situation worse. Here’s what you can expect if a driver without insurance crashes into your vehicle. 

An estimated 13% of those cars whizzing by you on the highway are driven by an uninsured driver. That translates to around 32 million people who are crossing their fingers and hoping they don’t get into an accident. So, what happens when one of those drivers T-bones your car or bumps into you in a parking lot?

After the auto accident

As long as no one is injured, drivers typically exchange insurance information following an auto accident. However, you may find it tough to do if the other driver is uninsured. They may either lie about their coverage or refuse to speak with you.

In either case, you should always call the police after an auto accident, no matter how minor. For one, your insurance company is going to want a police report in order to process your claim. But just as importantly, law enforcement can quickly determine who’s at fault and determine who has insurance.

“Hey, I’ve got a cousin who can fix that for you”

Ideally, the person who caused the accident will have enough money or assets to pay for your losses. And you do have the option of suing them in court to try to get them to pay. However, anyone who doesn’t have enough money to purchase auto insurance probably doesn’t have enough money lying around to pay for your repairs.

And heaven forbid that anyone gets injured in the accident, because someone is going to have to pay medical expenses.

A word of warning: If the uninsured driver asks you not to call the police or tells you they know someone who can fix your vehicle, do not listen. While it’s sad that they can’t afford car insurance, you have to look out for your own financial interests.

Who will actually pay?

The reality is that your insurance company is the one that is probably going to have to make repairs. However, it won’t do so unless you have uninsured motorist coverage.

Uninsured motorist coverage is not part of a standard auto insurance policy. When you purchase a policy, you have the option of adding uninsured and underinsured motorist coverage. This coverage provides protection in case you’re hit by an uninsured driver.

As long as you have uninsured motorist coverage added to your policy, your insurer will pay for the damages the at-fault driver should have paid. That includes damage to your vehicle and medical expenses.

Coverage for uninsured motorists is required in some states, but even if you live in a state that does not require such coverage, it’s a good idea to request it. The cost of uninsured motorist coverage varies by state and insurer, but you may be surprised to learn that adding it to your coverage will likely cost less than one meal at a fast food restaurant per month.

It is vital to add uninsured motorist coverage to your policy before an accident occurs to be covered. You can’t call your insurer after an accident, add the coverage, and expect it to pay damages. Again, the good news is that uninsured motorist coverage is quite inexpensive.

After uninsured motorist coverage is added

Once coverage is in place, you know you don’t have to worry about who’s going to pay if you’re in an accident, even if you’re driving in Florida, where the percentage of uninsured drivers is 26.7%, or Mississippi, where 23.7% of folks on the road are uninsured.

If an accident occurs, make sure everyone in the car is safe, pull off to a safe spot if your car is drivable, and exchange information with the at-fault driver. Call the police right away, and as soon as the police have everything sorted out, give your insurance company a call.

Hopefully, you never experience an auto accident. But if you do, and if the other driver is uninsured, uninsured motorist coverage can get you back on the road.

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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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The typical romance scam costs victims $4,000. Find out how to quickly spot them. 

Nigerian princes have nothing on the latest scam strategy: romancing money straight from your wallet. It sounds wild (not to mention emotionally devastating), but it’s true.

In 2022, nearly 70,000 people reported being scammed out of their money, according to the Federal Trade Commission (FTC). That’s actually not much: it represents less than 0.001% of the U.S. population. But the vast majority of scams aren’t reported.

So, how bad is it? Terrible, if you’re the one being scammed right now. Romance scams bruise your heart and cost you a pretty penny. The median reported loss from a romance scam is $4,400, according to the FTC. Yikes. That, right there, is rent money.

But how can you tell if your internet lover is scamming you?

How to tell if you’re being scammed

According to an FTC report, romance scams follow predictable schemes. Here’s how to tell if your internet lover is seriously scamming you:

Why do they want your money? Check for scammer excuses. (See below)How do they want your money? Check for scammer payment requests. (See below)

You don’t have to point fingers to determine whether you’re being scammed. You can check for signs your beau is scamming you without confronting them. Check for the following red flags common to romance scams.

Red flag No. 1: They use scammer excuses

Romance scammers may be lacking in the creativity department. Over three-fourths (75%) of scams hinge on one of the following lies:

I/someone I care about is sick/hurt/jailed.I can teach you how to invest.I’m in the military and stationed far away.I need help with an important delivery.

Think twice when your online beau — whom you’ve never met in person — uses one of these excuses to ask you for money. They’ll often mention it in casual conversation days after meeting you. Many scammers attempt to earn your sympathy before asking you to send money.

Red flag No. 2: They use scammer payment methods

In 2022, 1 in 4 victims (25%) reported sending gift cards to scammers. Weird, but true. Fake lovers will ask you to walk into Walmart, buy cards, and send the codes. For reasons. Which they have. It’s all very under the table.

Scammers get your money in other ways, too:

Cryptocurrency (19%): Scammers ask you to send them crypto.Payment apps (15%): Even the best payment apps are used by scammers.Bank wire transfer (14%): Scammers ask for transfers from your checking account.

Keep an eye out for scammy payment requests. They’re often strangely complicated, and they never involve meeting you face to face. That, right there, is a red flag the size of Texas. Real lovers should be willing to take your money in person — they should want to meet you, too.

What you should do if you think you’re being scammed

Don’t send money to someone you suspect of scamming you.

First, stop sending scammers money for any reason, even if they claim to be investing it or doing you a favor. Even if they keep asking you.

You are in control of your relationships. It is 100% within your rights to ghost the heck out of anyone at any time, especially if they’re showing typical scammer behavior. It’s also within your right to refuse to send someone money for any reason.

If you’re ever in doubt, ask a friend or family member. A trustworthy third party may be able to help you spot a scam before it hits your bank account. Explain the situation, and listen to their thoughts. They can help you sort through messy emotions and weigh the pros and cons of sending money.

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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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Credit or debit? Both can be used to pay for purchases, but discover why one writer goes hard on credit cards. 

Not too long ago, I made a big change to my wallet: I stopped carrying a debit card. Instead, my only methods of payment that stay with me at all times are a few of my favorite credit cards. As a result, I no longer make purchases with a debit card and instead whip out a credit card to cover my tab at restaurants, grocery stores, gas stations, and beyond.

While this has added an extra step to my life when it’s time to pay bills (I have to take the time to log in and pay off the credit cards), it’s come with a few highly worthwhile benefits.

1. Security and purchase protections

Credit cards are a far more secure way to pay for purchases than debit cards. Your credit limit isn’t a reflection of your bank account the way a debit card is. Using your debit card means you (or anyone who may have access to your card, either physically or because they’ve stolen your account information) are withdrawing and spending directly from your checking account balance.

In addition, credit cards have very robust purchase protections and other policies designed to protect consumers. The best credit cards have $0 liability policies, so if someone gets access to your card information and makes unauthorized charges, you will not be responsible for paying them off.

With debit cards, your protection from unauthorized charges decreases over time. If you report fraud or the loss of your debit card to your bank within two days, you’re liable for up to $50 of unauthorized charges. But you’re liable for up to $500 if you delay reporting the problem. Wait 60 days or longer, and you could be facing the loss of all the money in your checking account.

2. Building credit

My credit score is over 800 these days, and I’m pleased as punch about that. It means that I qualify for better credit cards and higher credit limits, and every time I make a purchase on a credit card and pay it off, I’m signaling to my card issuers that I can be trusted with borrowed money.

Payment history reflects 35% of a FICO® Score, and it’s really no wonder that it’s the most important factor, percentage-wise. If you want to borrow money (be that in the form of a credit card, a personal loan, or anything else), the lender will want to know whether you’ll pay that money back.

A strong history of repaying money says just that, and translates to a higher credit score. This is especially crucial if you’re gearing up to borrow a large amount of money — I’m hoping to get a mortgage loan to buy a home next year, and using my credit cards for purchases and paying them off is helping ensure I can do just that.

3. Maximizing rewards and cash back

Credit cards give you the chance to earn rewards and cash back on your spending in a way that most debit cards simply don’t. Yes, rewards debit cards exist, but changing banks to one that offers a rewards debit card isn’t something that interests me right now. And I have created an excellent stable of credit cards that help me earn at least 1.5% cash back (and often more) on every purchase. For example, I have a grocery rewards credit card that’s paid me almost $270 back on grocery purchases since the start of 2023, which is absolutely staggering — it’s like getting more than two weeks’ worth of groceries for free.

In addition to cash back applied to my credit card, I can translate my rewards into money savings on travel, thanks to travel credit cards. I’ve had a few hotel stays in the last couple of months (and a few more upcoming) that were partially subsidized by credit card rewards points. And one of the roundtrip flights I booked for a vacation I’m taking with a partner next year was covered almost entirely by points. My debit cards sure don’t offer perks like these.

Should you opt for credit over debit?

I haven’t mentioned one particular pitfall of opting for credit over debit: It can be very easy to end up in debt. Remember, with a credit card, you’re not spending your own money directly the way you are with debit. If you spend down your checking account balance via your debit card, that’s it, you’re out of money.

But if you have a credit card, you’ll need to take care that you’re only charging what you can afford to pay off — and ideally, within the next month, so you don’t incur interest charges. If you are confident that you can stay out of trouble, using a credit card for all your purchases can be a great way to protect yourself, build credit, and earn rewards.

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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 often cheaper to buy an apartment than a house. Check out the reasons why one writer changed his mind about potentially purchasing an apartment. 

I’ve lived in apartments for most of my adult life. Last year, my wife and I started discussing the possibility of buying one, and we even viewed a few in person. We liked the idea of having a place that was completely ours. Apartments seemed to be the most convenient option, both because of the lower cost and being located in more walkable neighborhoods.

After experiencing more of the downsides of apartment living firsthand, we’ve changed our minds completely. If we decide to buy in the future, we’re definitely going with a house. If you’re a first-time home buyer considering different housing options, it’s important to know about the drawbacks of buying an apartment.

There’s always the risk of nightmare neighbors

When you live in an apartment, you normally have a lot more neighbors than you would living in a house. You also live in much closer proximity to them.

That’s fine if everybody’s respectful and gets along well. But either I have the worst luck ever, or there’s practically always an annoying neighbor. In my case, I’ve had the pleasure of living next to:

Neighbors who threw loud parties five nights a week during peak COVID-19Families who let their kids play in the shared driveway — and glared at anyone who dared to use said driveway for actual drivingNeighbors who left their dog alone to bark all daySome guy who was constantly accusing his wife of cheating on him (this one was low-key entertaining, at least)

Those are just some of the lowlights. Neighbors like these are bad enough when you’re renting. I would never want to be stuck next to them for years.

Poor management can also be an issue

Management is another factor that can make or break your experience in an apartment. If you have a complaint, you may need to take it to the property manager. If something in the building breaks down, like a washing machine in a shared laundry room or equipment in the gym, it’s typically the property manager that sets up repairs.

This is another reason buying an apartment doesn’t appeal to me. I’ve experienced how frustrating it is when management doesn’t repair a building amenity for months.

You can at least check reviews and get an idea of how responsive a building’s management is before you buy. But even if management is good now, that doesn’t guarantee it will stay that way for the decades that you’re paying off your mortgage.

You don’t have much privacy or space

One of the other cons of living in close proximity to neighbors is the lack of privacy. You have your own space, but other people have their own space right next to yours. I value my privacy, and apartment living never feels completely private.

Lack of space is another drawback for me. There are certainly large apartments out there. But they tend to be smaller than houses, and they’re getting smaller. The average apartment size has decreased 54 square feet over the past 10 years, according to a RentCafe study. You also don’t have nearly as much outdoor space with an apartment as you do in a house with a yard.

Be sure before you buy

For me, there’s just too much that’s out of my control with an apartment. Neighbors, management, and building rules are all things that aren’t up to you and can affect your quality of life. I don’t mind living in an apartment as a renter, but committing to live in one for years is too much of a risk.

That doesn’t mean buying an apartment is a bad idea. It could make sense for you, especially if any of the following are true:

You live in an expensive area. In cities with a high cost of living, apartments are sometimes the only affordable housing option.An apartment would be more convenient or a better fit for your lifestyle. For example, if you’d be much closer to work living in an apartment, it may be worth saving time on your daily commute.You prefer apartment living. If an apartment is more your style than a house, then buying one could be a good decision.

Before any home purchase, think about whether you can see yourself living there for at least the next five to 10 years. If you’re unsure, it’s probably best to wait. If you’re excited about a place you’ve found and know you’d want to stay there long-term, that’s when you should start reaching out to quality mortgage lenders.

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

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