Money Management

Having an extra $1,000 could work wonders for your finances. Read on for ways to boost your savings before 2023 wraps up. 

If your savings account could use a lift, you’re in very good company. An estimated 63% of Americans don’t have enough cash reserves to cover a $500 unplanned expense, according to SecureSave data.

But while working toward a $500 savings balance is a great thing, $1,000 in the bank could buy you even more financial protection. And while it might seem impossible to accumulate an additional $1,000 by the end of the year, with the right strategies, it could be doable. Here are a few tactics worth trying.

1. Pick up a side hustle

The holiday season will soon be upon us. And that means businesses are apt to need more hands on deck.

Some seasonal work can begin as early as late October. So if you’re able to get a side job that has you earning $100 a week, guess what? After 10 weeks, you’ll be $1,000 richer.

But to be clear, if you’re interested in getting a seasonal side hustle, you should really apply now. Data from Challenger, Gray & Christmas shows that U.S. retailers are expected to hire fewer seasonal workers this year. The sooner you apply, the more likely you may be to get hired.

2. Unload a car

Getting rid of a car isn’t something everyone can do. If you live in the suburbs and don’t have access to public transportation, this won’t be feasible. But if you live in an area where it’s possible to get by without a car, dumping yours could save you a lot of money.

AAA puts the average cost of vehicle ownership at roughly $900 per month. So getting rid of your car by, say, November, could make it possible to add $1,000 to your bank account by the end of December. Even if you’re forced to bear the expense of extra trips via ride-hailing apps after dumping your car, you might still come out $700 or $800 ahead on a monthly basis.

3. Automate contributions to a retirement plan

Perhaps you’re doing okay as far as an emergency fund goes, but you’re lacking in the long-term savings department. If that’s the case, a good way to grow your IRA or 401(k) by the end of the year is to automate contributions of $333 a month between October and December.

If you have an IRA, you can set up an automatic monthly transfer from your bank. If you have a 401(k), you can sign up for your employer’s plan and have contributions deducted from your income automatically.

Of course, you may be thinking, “But where’s that $333 a month going to come from?” That’s the tough part. You might have to cut back on spending to a large degree to make those contributions possible. And during the holiday season, that’s even more challenging. But if you enlist the help of friends and family members, you might manage to make it happen.

Tell your friends you’re committed to saving an extra $1,000 by the end of the year and ask them to join you in pursuing free entertainment on evenings and weekends. Tell your family that you’re eager to boost your long-term savings, and ask that they accept the fact that you’ll be giving out modest, homemade holiday gifts this year instead of extravagant ones.

Cutting spending to the tune of $333 a month won’t be easy. But you might end up really happy when you see your retirement plan balance grow by $1,000 in just a few months.

Saving $1,000 by the end of the year might seem like a tough thing. And it definitely is — don’t kid yourself. But just because it’s hard doesn’t mean you can’t do it. If you manage to hit that goal, you’ll get to start off 2024 in an even stronger financial position.

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After spending your career accumulating wealth, withdrawing from your savings can be terrifying. Here’s what to do in that situation. 

Some older people have the problem of entering retirement without a lot of savings to tap. But even if you have a robust IRA or 401(k) balance, it doesn’t necessarily mean you’re all set for retirement.

The reason? After spending decades growing your nest egg, the idea of spending it down can be terrifying. And whether you’re retiring with $100,000 or $1 million, you may be worried about running out of money in your lifetime.

A 2018 study in the Journal of Personal Finance found that for 50% of retirees, the idea of a declining retirement portfolio balance brought them discomfort even if that money was being spent for its intended purpose. So if you’re afraid to raid your retirement savings, you’re not alone.

Still, you don’t want to let that money just sit around doing nothing for you. And at some point, you may be forced to take withdrawals from your savings in the form of required minimum distributions, so you might as well get used to the idea ahead of time.

But that doesn’t mean you can’t take steps to alleviate your fears, either. Here are a few things you can do if you’re worried about tapping your nest egg.

1. Work with a financial advisor to come up with a safe withdrawal rate

So you’ve saved up a large chunk of money for retirement. Great. You may need that money to last 30 years, so it’s important to take withdrawals carefully. And a financial advisor can look at your savings balance, bills, and other income sources, like Social Security, to help you determine how much of your savings to withdraw each year.

Your advisor, for example, might suggest a 3% withdrawal rate based on factors that include your lifestyle and age. If you have a $500,000 nest egg, that means you’d remove $15,000 a year.

2. Work part-time to limit withdrawals

You may be eager to stretch your savings as long as you possibly can. If you’re willing to work part-time as a retiree, you won’t have to take as much money out of your savings.

Financial benefits aside, working can be a positive thing to do in retirement. A job can serve as a social outlet and a means of staying busy without spending money. It might also get you moving at a time in your life when you may be growing increasingly sedentary.

3. Pay attention to the market

The optimal time to take withdrawals from a retirement account is when the stock market is up. Taking withdrawals when the value of your investments is down could lead to losses in your portfolio.

Sometimes, retirees have no choice but to tap their nest eggs when the market is going through a rough patch. But if you can time your withdrawals to when your portfolio is up, you’re apt to stretch your savings.

This is part of the reason it pays to work with a financial advisor. That person can monitor the market as well as your individual portfolio to help you determine when to take your withdrawals.

It’s natural to be nervous about the idea of raiding your IRA. But try to remember that the whole reason you sacrificed and saved throughout your caterer was to be able to enjoy retirement and cover your expenses without worry. So try your best to get on board with the idea of dipping into your savings, even if it initially falls outside your comfort zone.

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Despite the record increase in nominal home prices, real home prices have sunk to their lowest level in a decade. Learn how home prices have evolved since 1970. 

The U.S. housing market is a complex system, constantly impacted by a variety of factors such as economic conditions, political factors, and demographic changes. It is no secret that housing prices have increased in recent years, but just how much and why?

Nominal vs. real home price growth

When we consider the growth of home prices over time, we can consider the difference between nominal and real growth. Nominal home price growth refers to the market value of homes without considering inflation, while real home price growth adjusts for inflation.

In other words, real home price growth takes into account the increased cost of goods and services over time, while nominal growth does not.

In 2022, U.S. home prices grew significantly, even as interest rates climbed higher. However, the real growth rate was far lower. By Q4 2022, it had fallen to being flat year over year, making it the slowest real growth seen in a decade. This means that while home prices may appear to be increasing when not accounting for inflation, the actual increase is not as significant as it may seem.

When looking at home prices for the past 50 years, here are the highs and lows of the housing market for both nominal and real prices.

Home price growth the past 50 years

Here are the median home values for the first year of every decade since 1970. Prices are for both unadjusted and adjusted for 2020 prices.

1970

Median home price (unadjusted): $17,000Median home price (inflation-adjusted to 2020 dollars): $112,941

1980

Median home price (unadjusted): $47,200Median home price (inflation-adjusted to 2020 dollars): $147,879Price growth since 1970: 30.9%Average interest rate for 30-year fixed-rate mortgage: 13.7%

1990

Median home price (unadjusted): $79,100Median home price (inflation-adjusted to 2020 dollars): $157,169Price growth since 1970: 39.2%Average interest rate for 30-year fixed-rate mortgage: 10.1%

2000

Median home price (unadjusted): $119,600Median home price (inflation-adjusted to 2020 dollars): $179,331Price growth since 1970: 58.8%Average interest rate for 30-year fixed-rate mortgage: 8.1%

2010

Median home price (unadjusted): $221,800Median home price (inflation-adjusted to 2020 dollars): $263,604Price growth since 1970: 133.4%Average interest rate for 30-year fixed-rate mortgage: 4.7%

2020

Median home price (unadjusted): $336,900Median home price (inflation-adjusted to 2020 dollars): $336,900Price growth since 1970: 198.3%Average interest rate for 30-year fixed-rate mortgage: 3.1%

Since 1970, the nominal home price growth is 1,881.8% and the real median home price growth is close to 200%. In short, homes have nearly tripled in price.

In comparison, the total return of the S&P 500 during the same time period was 17,811.95% or 2,585.29% when considering inflation.

Factors driving home price growth

Several factors contribute to changes in home prices, including interest rates, economic performance, consumer preferences, supply and demand, and policy decisions. Today, a mix of factors are supporting higher nominal house prices.

First, the housing supply remains low. Total existing inventory stood at 1 million in April, under half the four-decade average. From 2000 to 2020, the annual U.S home construction fell short by 276,000 units compared to the preceding 30 years.

Additionally, zoning restrictions in certain areas have imposed limitations on the number of housing units that can be developed on a given plot of land. Since the 2008 global financial crisis, around 64% of all authorized housing construction has consisted of single-family homes. Ultimately, this scarcity in housing has contributed to the surge in prices.

As interest rates have increased, homeowners have been hesitant to sell, and the number of mortgage loan applications has fallen. This is pushing home prices higher.

Another factor contributing to home price growth is the majority of primary mortgages have interest rates locked in under 4%. As of Sept. 7, the average 30-year fixed mortgage rate stood much higher, at 7.12%. This leads to the second problem, as homeowners may not be able to afford high interest rates. This led to a drop in demand for more expensive homes.

Demographic changes are also influencing the real estate market. Millennials, the largest generation in the country, are buying homes. This generational shift has led to changes in preferences for smaller homes in urban areas, instead of previously preferred suburban homes. These changes drive demand, especially in cities with high job growth.

The U.S. residential market has an estimated value of approximately $45 trillion, and historically, it has displayed a high sensitivity to fluctuations in interest rates. The recent surge in interest rates has yet to significantly impact housing prices, and if home prices continue to contribute to inflationary pressures, the Federal Reserve may pursue further rate increases.

How to survive this market

The current housing market is challenging for prospective buyers. But fear not, there are ways to navigate the tricky waters of home buying among stiff competition. First and foremost, it’s essential to have a clear understanding of your financial situation and create a budget that will help you determine what you can afford.

Work with a reputable local real estate agent who can keep you informed about new listings and offer valuable insights on the market. Be flexible with your home-buying criteria and be prepared to compromise on certain features. Finally, be patient and persistent, as finding the perfect home may take some time. Don’t rush this important decision, and if you aren’t ready to buy, take some time to save more — putting more money down can help you get a better deal on a mortgage loan. By following these tips, you’ll be on your way to finding your dream home in a difficult market.

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Not sure which discount store to shop at? Here’s a comparison between the two main competitors in the industry to help you decide. 

When it comes to finding the best deals and bargains, we all love to shop at dollar stores, right? Among all the dollar stores, the two largest players are Dollar General and Dollar Tree, which purchased Family Dollar in 2015. While both of these stores may look similar, there are still some differences between the two.

Growth of the chain dollar store

Dollar stores have gained popularity as a cost-effective option for shopping. In fact, 9 out of 10 Americans shop at dollar stores, and low prices are the No. 1 reason. In 2021, nearly half of all newly opened stores in the U.S. were chain dollar stores.

With over 35,000 locations, dollar stores outnumber the combined total of McDonald’s, Starbucks, Target, and Walmart. The proliferation of dollar stores can be attributed to their extensive product offerings at highly competitive prices.

Product quality

One of the major differences between Dollar General and Dollar Tree is the quality of their products. While Dollar Tree sells every item for just $1.25, the quality of these products might not be the best. Some of the products may not last for long, and you might have to replace them quickly.

On the other hand, Dollar General sells products that cost more, but you can expect the quality to be higher. So, if you are looking for better quality products that might last longer, Dollar General is the way to go.

Pricing

There’s no doubt that both of these stores offer affordable prices, but if you’re looking for more low-cost options, then Dollar Tree is the way to go. While Dollar General sells products ranging from $3 to $10, Dollar Tree sells everything for just $1.25. That means you can get more products at Dollar Tree with your allotted budget.

For 35 years, everything was $1 at Dollar Tree. But in November 2021, Dollar Tree announced that all of its merchandise would be raised to $1.25 — inflation strikes again. Even though it was a 25% increase, prices are still lower than many other competitors.

That being said, you can still find some great deals at Dollar General, which has become more of a discount retailer. Even with more brand-name products being introduced at Dollar General, the company advertises that over 2,000 items are still available for $1 or less. Dollar General also offers an app that offers significant discounts and savings every week.

When it comes to shopping, it’s easy to get excited when you see a low price tag. But just because something is cheap doesn’t necessarily mean it’s a good deal. Dollar stores are notorious for offering lower prices, but you may notice that many of their products are smaller in size.

The trick to figuring out if you’re truly getting a good deal is to compare the price per unit. This will help you compare apples to apples and avoid getting duped by a seemingly low price. You should take into account quality, even if that means paying a bit more in the long run.

Product variety

If you’re looking for a wider variety of products, then Dollar General is the store for you. It has a vast selection of products ranging from groceries and cleaning supplies, to electronics, clothing, and beauty products.

Additionally, it sells branded products from various well-known manufacturers. Dollar General offers high-quality private brands as well as trusted products from leading American brands including Clorox, Procter & Gamble, Kimberly-Clark, Unilever, Kellogg’s, General Mills, Nabisco, Hanes, PepsiCo, and Coca-Cola.

On the other hand, Dollar Tree sells products solely for $1.25, which limits its selection of products. However, with the recent price increase, Dollar Tree has reintroduced items that were constrained by the $1 price point. It added many name brands to the mix and began to “materially expand its offerings, introduce new products and sizes, and provide families with more of their daily essentials.”

Store locations and layout

Dollar General is the largest dollar store with over 19,000 locations, more than double the number of the 8,000 Dollar Tree stores. In 2015, Dollar Tree bought Family Dollar, bringing the total number of locations to 16,000.

When it comes to the store layout, each Dollar General store is about 7,400 square feet compared to 8,000 to 12,000 square feet for a Dollar Tree store.

Dollar General stores have wider aisles, which makes shopping more comfortable, and they are bright and inviting. On the other hand, Dollar Tree stores are more bare bones. There is a noticeable difference between the two, with Dollar General stores outpacing Dollar Tree when it comes to shopping experience and quality of products.

Which one is better?

The biggest perk of shopping at Dollar Tree is that you never have to question the price of anything you pick up. Everything is $1.25. However, while the prices are still incredibly affordable, the quality and availability of some items are not as high as Dollar General.

Dollar General is particularly known for its wider selection of brand and non-brand name products. One downside of shopping at Dollar General is that its prices can vary, making it a less predictable budget shopping destination.

When selecting a dollar store for shopping, there is no one-size fits all answer. Every chain has its advantages and disadvantages. The product assortment varies across stores depending on the season, location, and availability. When deciding which store to shop at, consider your individual preferences and needs. Do you prioritize variety over quality? Are you looking for specific seasonal products or staples that are always available? Taking the time to weigh your options can help you find the perfect dollar store for your shopping needs.

Both Dollar General and Dollar Tree offer convenience and value for your money. So which one takes the crown? There’s no easy answer to this. It ultimately depends on what you’re looking for. If you’re on a tight budget and want everything to cost just $1.25, then go for Dollar Tree. But if you’re looking for a wider selection of quality products and can spend a little more, then choose Dollar General. In any case, both stores give great value and convenience, and the choice comes down to personal preference.

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Your portfolio balance might fall during a stock market correction. Read on to see why you shouldn’t panic. 

Investing in stocks isn’t for the faint of heart. That’s because the stock market has the potential to swing wildly from one day to the next. And over a period of time, it’s more than possible for your portfolio to lose value due to changing stock prices.

In fact, your portfolio might take a more serious tumble during a stock market correction. So it’s best to know what to do — and what not to do — when a stock market correction hits.

What is a stock market correction?

A stock market correction refers to a period when a broad market index, like the S&P 500, loses more than 10% of its value but less than 20%. And there are different factors that have the potential to lead to a stock market correction.

A recession, for example, can cause stock values to drop as investors lose confidence in the economy on a whole. And sometimes the market can simply overheat.

When stock values climb continuously, after a period of time, investors might come to the conclusion that those companies aren’t worth as much as the market seems to think they’re worth. Investors might then start to pull away from the market, leading to a drop in stock values.

It’s not always possible to predict when a stock market correction will hit. But there are often warning signs, like rising unemployment rates and seeing too many stocks that are overvalued.

How to avoid losing money during a stock market correction

Some stock market corrections are short-lived. Others can last longer.

During a stock market correction, you might see your portfolio lose quite a bit of value. For example, if the broad market is down 15% and you have a $100,000 brokerage account balance, during a correction, the value of your portfolio might fall to $85,000. And that can certainly constitute a tough blow. But one thing you must remember is that if you don’t sell off stocks when their value is down, you won’t lose money.

In our example, an $85,000 portfolio balance represents the value of your holdings at a single moment in time. If you leave your portfolio alone and ride out a stock market correction, you may find that your balance is back up to $100,000 in seven months, and that it’s up to $105,000 a few months after that.

In fact, over the past 50 years, the stock market has undergone 28 corrections. And guess what? It managed to recover from every single one.

As such, your best bet is to simply leave your portfolio alone during a stock market correction. Doing so could be your ticket to avoiding losses.

That said, there is one change you should feel free to make to your portfolio during a stock market correction, and it’s buying new stocks if you can afford to. Stock prices tend to get discounted during a correction, which gives you a great opportunity to add valuable assets to your portfolio without having to pay what they’d usually trade for.

As an example, if there’s a stock you’d like to own that normally trades for $100 a share, during a correction, you might be able to scoop it up for $85 a share. So the advice to leave your portfolio alone during a correction mainly applies to selling off stocks, not buying new ones.

All told, stock market corrections are fairly common, so it’s best not to panic over one. Just remind yourself that the losses you’re looking at aren’t permanent, and that might help you maintain a positive outlook during an otherwise challenging time.

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Appraisers look at many factors when deciding what a home is worth, including what properties nearby have sold for and how yours compares. Find out more. 

If you are taking out a mortgage loan, chances are good that your lender is going to require an appraisal on the home.

During the appraisal process, a trained professional will visit the home you are hoping to buy to determine its fair market value. The appraiser will then tell the bank what they think the house is worth to ensure that the home is worth enough to guarantee the loan.

But what exactly does an appraiser look at when visiting a home? Here’s what you need to know.

Key factors an appraiser considers when valuing a home

When estimating what a home’s market value is, an appraiser will look at comparable properties that have sold recently in the area. Basically, the appraiser will try to find other houses that sold in the past year or so that are near to where your house is and that are as similar to it as possible.

Of course, no two houses are the same. So the appraiser will make price adjustments based on how your home differs in key ways from the comparable sales. Here are some of the factors appraisers look at when making price adjustments:

Lot sizeView from the lotQuality of the constructionAge of the propertyProperty’s conditionNumber of rooms above-gradeGross living areaType of heating and cooling system in placeWhether the home has any energy-efficient fixturesNumber of garages/carportsNumber of porches, patios, and decksWhether the property has a poolWhether there is a fireplace

For each of these key criteria, the appraiser will decide how much to add (or subtract) from your home’s value based on how it differs from the comparable properties. For example, I am in the process of buying a home and I recently had it appraised. Here are some adjustments the appraiser made based on how my house compared with recent sales:

My lot was 5,662 square feet bigger than a comparable home, so the appraiser added $50,000.My lot has a water view, and the comparable homes do not, so the appraiser added $20,000.My home had 576 fewer square feet than a comparable home, so the appraiser subtracted $28,800.

Here’s how this works in practice: Let’s say that a comparable home sold for $400,000, and the difference between that house and the home you’re buying was that your lot was bigger. The appraiser would add $50,000 (or whatever amount the appraiser deems is appropriate) to account for the size discrepancy. That could indicate your house is worth $450,000. But if your house was 576 square feet smaller, they would then subtract $28,800 to estimate your home’s worth at $421,200.

By making these adjustments based on all of the important criteria, the appraiser can get an idea of what your house should be worth.

What don’t appraisers consider?

While appraisers consider many things when deciding what a house is worth, there are some factors that shouldn’t really matter.

For example, appraisers usually don’t subtract anything from your home’s value if the house is cluttered or messy. Since this condition can easily be changed, it doesn’t impact the house’s value.

And while appraisers do give your home a quality score, which impacts its worth, they don’t necessarily give you a whole lot of added value for specific aesthetic upgrades. For example, a top-of-the-line kitchen with luxury appliances and designer granite countertops and a kitchen of a similar size and age but with mid-range appliances, cheaper cabinets, and entry-level granite aren’t really going to be treated much differently for purposes of assessing the home’s worth.

Ultimately, you can’t really do much to control how much a home appraises for either as a buyer or seller, short of making major upgrades like adding square footage or doing serious remodeling. You’ll just have to hope that the house appraises for enough to satisfy a lender when you’re going through the buying process.

Number of rooms above grade to renegotiate the price or put more money down to stay within your mortgage lender’s guidelines for how much you can borrow relative to what the home is worth.

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