Money Management

Becoming a millionaire is a big goal. But read on to see why I won’t go to certain lengths to achieve it. 

There are 5.3 million millionaires in the U.S. And while that might seem like a large number, it’s actually only about 2% of the adult population.

Of course, reaching millionaire status is a goal many people strive for. And I’m not going to lie — I’d love to be able to enter retirement with $1 million or more so I can enjoy that period to the fullest.

To work toward that goal, I’m willing to make sacrifices. I specifically took on a mortgage loan that’s less than I can afford so I’m able to save money on an ongoing basis. And I’m willing to drive a boring car if it means being able to pump money into my IRA.

But there are certain sacrifices I’m not willing to make to become a millionaire. Here are three things I refuse to give up.

1. Quality food

Because my after-school routine is very frazzled, I often lack time to cook. But that doesn’t mean my family doesn’t get fed quality meals.

I’ll often outsource my cooking to local restaurants I get my takeout from. It’s an added expense, but I’d rather spend the money there than save by purchasing fast food that’s far less healthy.

Also, when I do cook at home, I’m often preparing vegetable-heavy meals. Produce can be pricey, but I prioritize it in my budget because I want my kids consuming plenty of it.

I could clearly spend less money on food and save the difference. But eating is something we do regularly. It brings us joy and sustains us. I’m not willing to skimp there.

2. Experiences with my family

My family tends to take a lot of inexpensive trips, including day trips. But even low-cost vacations and outings cost money.

Still, I’m not willing to cut back there just to save a little extra money each year. The trips we take allow us to bond and make memories. They allow us to enjoy the outdoors and spend time with each other in the absence of screens and distractions. I won’t sacrifice that for an extra few thousand dollars in my retirement plan.

Now that said, one thing we don’t tend to do is take trips that include fancy resort stays. And we rarely fly to our destinations because that’s more expensive than driving. But because we tend to spend modestly on trips, I feel even less guilty about taking them, as opposed to putting that money away in a savings account.

3. Donations to important causes

There are certain charities I support on a regular basis, including one that sends sick kids to camp for the summer. It’s important to me to be able to donate money to organizations I feel do good work. And I also like to donate to local fundraisers to support my friends’ kids and their activities.

I could easily cut back in this area and pad my IRA instead. But I believe in supporting a good cause, so I plan to continue doing that, even if it means retiring with less.

To become a millionaire, you most likely will have to sacrifice something. It may be time so you can work harder and earn more money, or it may be an expense, like a second car or even a primary one.

There’s nothing wrong with working toward becoming a millionaire — as long as it doesn’t ruin the way you want to live your life in the present. On my end, I believe I’m doing a good job of striking a balance, but it’s also good to draw a line and know which sacrifices I’m just not willing to make.

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Keeping a credit card on file with your primary doctor and pharmacy can save you a world of hassle. Read on to see why. 

There are certain expenses in life that are pretty much unavoidable. We all need to pay for shelter, transportation, groceries, and healthcare.

The latter can be an exceptionally large expense. In 2021, Americans spent an average of $12,900 per person on healthcare. And between health insurance premiums, copays, deductibles, and medications, it’s easy to see why.

Meanwhile, I make a point to pay all of my medical expenses with a credit card. That way, I can rack up rewards or cash back on those necessary bills.

But I recently learned the hard way that not keeping a credit card on file with my pharmacy could result in a major headache. So I’ve since changed my ways, and you may want to do the same.

It’s all about convenience

Medical providers and pharmacies, including mail-order pharmacies, will often give you the option to keep a credit card on file and authorize payments up to a certain amount. That was an option I didn’t take advantage of until recently.

Before I made that change, though, I received a bill in the mail from my mail-order pharmacy for $0.37. Since I’m used to paying all of my bills electronically, I figured I’d log onto the pharmacy’s site, get into my account, pay my tiny little bill, and be done with it.

Only things got complicated very quickly.

First, I forgot my password and had to reset it. Then the reset link didn’t work. Once it did work, I encountered a problem logging into my account and got blocked out. I had to call up tech support to get my account unblocked, at which point I was able to go in and make my payment.

All told, I spent over 20 minutes paying a $0.37 bill. That was 20 minutes I couldn’t spend working and earning money.

And that’s why I’ve since made a point to keep a credit card on file with that pharmacy as well as my primary care doctor’s office. That way, smaller bills can just be charged to my card automatically and I don’t have to be bothered with actively paying them.

An option worth considering

The problem with keeping a credit card on file for medical bills is that you don’t want your card charged with a large sum without you knowing it. Let’s say you rack up a medical bill for $84 and don’t realize that charge was processed during a given billing cycle. That could result in a situation where you’re unable to pay your credit card bill in full.

However, there is a workaround. First of all, providers who allow you to keep a credit card on file will generally make a point to send you a text or email when a charge is being processed. But also, you can instead get into the habit of logging into your credit card account every week and checking your balance to see what charges you’re looking at.

Another solution is to only authorize charges of up to a small amount. At my doctor’s office, I set that limit at $25, which should generally be enough to cover whatever copay I’m looking at. If it’s a larger sum, I want to know about it and see that bill anyway.

You could authorize your providers to charge your card up to a small amount that you’re comfortable with. That way, you may be able to avoid a scenario where you’re spending time making payments of less than a dollar.

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You’ll often hear that the rich benefit the most from the tax code. Read on to see if that’s true or not. 

No matter how much money you earn or have, taxes are something you have to deal with. But you can minimize the amount you have to pay the IRS each year by taking advantage of tax breaks like credits and deductions.

You’ll often hear that the tax code is unfair because it’s designed to give wealthy people the most benefit. But that really doesn’t tell the whole story.

How the wealthy benefit from the tax code

Filers across all income levels can reduce their IRS burden by claiming tax deductions, which serve the purpose of exempting a portion of earnings from taxes. A $1,000 tax deduction means the IRS isn’t taxing $1,000 of income. But that means different things to different filers.

Our tax system is a marginal one, where your highest dollars of income are taxed at a higher rate than your lowest dollars of income. The higher your income, the higher a tax bracket you fall into.

Here’s how that can benefit wealthy people. Let’s say you’re single and earning $250,000 a year, which puts you in the 35% tax bracket. If you claim a $1,000 tax deduction, based on your tax bracket, you get to enjoy $350 of tax savings.

Now, let’s say you’re single earning $50,000 a year. That puts you in the 22% tax bracket. For a $1,000 deduction, you’re getting $220 worth of tax savings, which is clearly less than $350.

Another way wealthy people tend to benefit from the tax code is by taking advantage of long-term capital gains tax rates in their investment portfolios. A single tax-filer earning $250,000 pays just 15% on long-term capital gains, as opposed to 35% on short-term gains, which apply to investments held for a year or less before being sold.

Now to be fair, people of all incomes can take advantage of the fact that long-term capital gains are taxed more favorably than short-term gains. But wealthy people are also more likely to have money to invest with. In fact, the Brookings Institution found that about 80% of the tax benefit from the lower rate on long-term capital gains applies to the top 1% of taxpayers, and 92% of that benefit applies to the top 10%.

When the wealthy don’t benefit from the tax code

It’s true that by nature, the rich can end up with more benefit from tax deductions. And it can also be argued that the wealthy are more likely to get to claim certain tax deductions in the first place.

Take the mortgage interest deduction. Someone earning $250,000 a year is more likely to be in a position to buy a home than someone earning $50,000.

But let’s also remember that certain tax breaks phase out at certain income limits. So the wealthy are commonly excluded from those.

For example, the Child Tax Credit can be a huge source of savings, but it phases out for singles earning $200,000 and married couples earning $400,000. Similarly, education credits like the Lifetime Learning Credit are off the table for singles earning more than $90,000 or married couples earning more than $180,000.

What’s more, the IRS allows tax-filers to deduct medical expenses that exceed 7.5% of their adjusted gross income. Higher earners might spend a lot on healthcare, but they’re less likely to be able to claim this deduction.

Someone earning $50,000 a year can deduct medical expenses once their annual spending exceeds $3,750. Someone earning $250,000 a year can’t deduct medical expenses until their total exceeds $18,750. So in this case, a person earning $250,000 who racks up $18,000 in medical bills (which is a lot of money even for a higher earner) can’t get any tax break at all.

Tax breaks exist for everyone

It’s easy to see why the tax code might seem like it’s set up to favor the rich. But ultimately, there are tax breaks in there for everyone — you just need to know where to look. If you’re a lower earner, for example, you might qualify for the Earned Income Tax Credit, a fully refundable credit that can be worth thousands.

And if you’re not sure what credits and deductions to claim, it could pay to seek help. The IRS’s Volunteer Income Tax Assistance (VITA) program is available to tax-filers earning $60,000 or less. Sitting down with someone knowledgeable could open the door to tax savings you never even knew about.

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If your dream wedding dress is one you can’t afford, you don’t necessarily have to write it off. Read on for some options. 

If you’re getting married and are planning a big wedding, setting a budget for that event is important. The average wedding cost $30,000 in 2022, according to The Knot. That’s a sum of money most people don’t just have lying around in a savings account.

As it is, you may be looking at taking on some amount of debt — credit card or otherwise — in the course of having a wedding. So it’s important to try to keep that debt to a minimum. As such, it’s a good idea to break down your wedding expenses one by one and figure out how much you can afford to spend on each specific item.

But what if you’ve set a certain budget for a wedding dress, only to then find the perfect dress that costs more than what you’ve allocated? The average wedding dress cost $1,900 last year, says The Knot, so you may have budgeted that amount yourself. But if your dream dress costs $2,500, you’re in a pickle.

The reality is that you may have to accept the fact that your wedding dress is out of your price range. But before you do, it’s worth exploring these two alternatives.

1. See if you can negotiate a lower price

Is the wedding dress you fell in love with last year’s model? If so, you may be able to get your bridal store to come down on price. Do some research on your dress before writing off the idea of purchasing it, because you never know what leeway you might have to negotiate.

Similarly, it’s common for bridal shops to put out floor samples of different dresses. If your dream dress happens to also be available as a floor sample, you could consider asking to buy that one and negotiate a discount based on its wear and tear.

For example, let’s say your dress has a price tag of $2,500 but the bridal shop is willing to sell you its floor sample for $1,600. Even if you have to spend $200 to get that dress pressed and cleaned, you’re still within your $1,900 budget, and you’re paying a lot less than $2,500.

2. See if you can slash other wedding costs

It may be really important to you to show up to your wedding in a dress you love. You don’t want to go over budget on your wedding in total, because that might really wreck your finances. But if you’re willing to cut back in another area, you might be able to swing your dream dress after all.

Let’s use the numbers above — you’ve allocated $1,900 to a wedding dress purchase and the one you love costs $2,500. The Knot puts the average cost of a wedding cake at $510. If you’re a baker and you’re willing to whip up your own cake, you could almost cover that $600 difference right there.

Similarly, the average cost of paper wedding invitations is also $510. Invite guests by email instead, and you can make up most of that cost (not to mention make responses easier to track, since you’re not reliant on the U.S. Postal Service to deliver your RSVP cards).

In some cases, you may have to be willing to give up your dream wedding dress if it’s tremendously expensive and over budget. But remember, there are so many fabulous wedding dresses out there. And just because you’ve fallen in love with one doesn’t mean you won’t find another you love. So if your over-budget wedding dress doesn’t end up working out, do not assume that your big day is doomed by any means.

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A pet-friendly home doesn’t have to be hard to sell. Here are three pet-friendly upgrades that can help your home move. Read on to learn more. 

Your home is your home and there’s nothing that forces you to make upgrades that help improve its value. But if you do ever need to sell or refinance, having put some money into improvements that increase its value can help you longer term. For example, if you have pets and are wanting features that help you both have happier lives, there are some upgrades that can help more than others.

How do pet-friendly features improve your home’s value?

If you think about when you bought your home, there have to be some houses that stuck out for you because of some kind of special features they had. Maybe one had a bay window, or space for a freezer, these bonuses don’t have to be huge to get a buyer’s attention. The same goes for pet-friendly features.

According to a recent survey by Pew, 62% of Americans own pets, and of those, 97% consider the pet a member of the family. That means the odds are in your favor that if you also have a pet, features you install in your home for that pet will be appreciated by the next buyer, if you choose options that will help them care for their pets and are low maintenance.

On the other hand, it’s also important to consider future buyers if you aren’t absolutely certain you’re in your final house. Especially if you’re financing home upgrades, you’ll want to be sure they’ll improve your home’s resale appeal enough to get a buyer quickly. After all, that person will also likely be securing that home with a mortgage, and you’ll need to be sure the home you’ve made will appraise well.

Three pet-friendly features to consider

When some people think of “pet-friendly” features, they imagine things like dog-specific doors and ramps, but pet-friendly features can have a much wider appeal. Here are a few of my favorite pet-friendly features that also help improve your home’s resale potential.

1. Wooden fencing

Yep, it’s that simple. A really nice fence can help sell your home, especially if it’s a tall wooden privacy fence. Not only do they make your home more secure, they can help a homeowner with a dog who is an escape artist feel more confident about making an offer on your home, knowing they won’t need to do anything else to keep their furry friend safe. According to fencing experts at HoCo Fence, installing a nice fence can return up to 60% of the cost of the fence in property value.

Of course, for this to work, you have to put in a nice fence, it needs to be at the back of your home, and it should create a sense of privacy for future buyers. An older fence is OK, provided it’s still in good shape, you’ve recently sealed it with paint or water sealant, and it blends well with the landscaping. If your fence is badly damaged, consider fixing it up to improve your home’s standing with mortgage lenders. For example, those that specialize in FHA mortgages can be very picky about these things.

2. Walk-in shower

Dog showers are all the rage in some parts of the country, and for good reason: a lot of dogs need to be washed. But, they are really limited in what you can do with them if you don’t have a dog or plan to get one. This leaves potential petless buyers scratching their heads at the thought of the dog shower in the utility room or back bathroom.

Instead of adding a dog shower, consider a basic walk-in shower. There’s very little difference besides scale, and you’ll have better access to your dog than you would in a more narrow dog shower. If you’re strapped for space, of course, a dog shower may make more sense, and can still be useful for other purposes, like cleaning dirty winter boots. If you’ve got an extra bathroom with a tub, though, converting it to a walk-in shower can add extra buying appeal for a wider range of people, including pet owners, seniors, people with a variety of mobility issues (not simply wheelchair users), and even parents of small children.

3. Screened porch

If you have a cat instead of a dog, or a lot of cats, a catio is a must-have feature. But a catio is a very specific kind of structure that’s not very useful for someone without a cat. Fortunately, a screened porch makes an excellent catio, giving your fuzzy friend plenty of space for sleeping in sunbeams without all the risks associated with roaming. And you can share it with them, too!

Unlike a catio, a screened porch will return well, even if you build it from scratch, rather than just screening an existing porch. The return on investment for a screened porch at the time of sale is up to 84%, depending on where you live. Just take the cat shelves down before you list your home — or don’t — and let your potential buyers imagine themselves (and maybe their cats, too!) lounging in your mega catio on all the warm days of spring and the cool days of fall.

In addition, a screened porch can grow up to be an outdoor kitchen very easily, depending on the configuration, so it’s really a great pet-friendly feature that can do so much more.

Pet-friendly and functional features are great for your home’s future, too

Choosing to install pet-friendly features that are also highly functional for other future owners can make your home not only a paradise for your pet, but a very special find for potential buyers down the road. Whether adding fencing for a secure and private yard or a walk-in shower that can be enjoyed by people (and pets) of all ages, striking a balance between your needs and those of future owners is the key.

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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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