Money Management

Some families are used to boarding a plane. Read on to see why my family is more likely to hop in the car when we want to go away. 

When you say the words “road trip,” you might imagine a five- or six-hour journey in the car. But my family has taken the concept much further than that.

Through the years, my family of five has completed dozens of road trips, some of which had us clocking in 5,000 miles or more. (I believe our longest stretch to date is New Jersey to Montana, with many stops along the way.)

Now, some people will tell you that the idea of a multi-day road trip with kids is far from appealing. And to be fair, road trips aren’t for everyone. But here’s why my family commonly jumps in the car when we travel and almost never boards a plane.

1. Driving tends to be cheaper

My husband and I save money during the year and do our best to bank credit card points so we can take our family on vacation. But even so, we’ve found throughout the years that driving places is a heck of a lot cheaper than getting on an airplane.

The average cost of a domestic flight in the U.S. is around $380 this year, according to the Bureau of Transportation Statistics. But because there are five of us, that might put our average cost at $1,900 — and that’s not including getting to and from the airport or checking luggage.

Also, while the average cost of a flight in 2023 might be $380, some destinations are a lot more expensive to get to. When we drove to Montana a few summers back, we were looking at around $5,000 to fly out as a family. Between paying for lodging, gas, and food on a multi-day drive, we spent around $2,000 to get there by car instead.

2. We don’t want to deal with delays

Although flight delays seem to have become more commonplace in recent years, the reality is that they’ve always been a problem. And when you’re traveling with young kids, the last thing you want is to have to wrangle bored little humans in the airport for hours on end while you wait for your plane to show up.

The upside of traveling by car is that aside from traffic, we don’t have to deal with delays. And when traffic holds us up and my kids get bored, at least it happens within the confines of our vehicle, and we don’t have to worry about them running all over an airport to burn off energy.

3. We get to discover new things on our journeys

Although my family tends to drive to save money and avoid the hassle of air travel, the reality is that we like getting off the beaten path and discovering new things, whether it’s hiking trails, overlooks, local museums, or restaurants. On a recent road trip, we tasted what’s billed as “America’s Worst Apple Pie.” (Spoiler alert: It was delicious.) Had we flown to our destination, that’s an eatery we never would’ve come across.

Now to be fair, we specifically bake in extra time during our road trips to explore new places on a whim. But to us, that’s a big part of the fun.

Consider the upside of driving

Long road trips aren’t for everyone. And if you’re someone with limited vacation time, then driving when you travel may not work well for you.

It can also be more economical to fly to your destination if you’re single. And if you’re not bringing kids along, you may be better equipped to deal with airport delays.

But if you’re tired of paying sky-high prices to fly and your last few trips have been aggravating due to extensive delays, then you may want to consider driving to your next vacation destination rather than flying. You’ll need to crunch the numbers to see what makes sense financially, though, keeping in mind that if you can’t do your road trip in a day, you’ll be looking at spending money on lodging on top of gas and food.

But let’s say it costs $500 to fly to your next destination and you’re able to drive the 500 miles it takes to get there in a day. If your car gets 25 miles to the gallon and gas is $3.50 a gallon, you’re looking at spending just $70. That leaves you with an extra $430 to spend on a nicer hotel, food, and entertainment at your destination. Or you can bank the difference and reserve it for your next vacation.

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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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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The Fed has raised interest rates numerous times since early 2022. Read on to see when it might put a stop to that. 

Interest rate hikes have been a pain for many consumers since the Federal Reserve started implementing them in March 2022. Since then, the central bank has raised interest rates 11 times. And with three additional Fed meetings scheduled for 2023, we may not be done with rate hikes in the near term.

Of course, the Fed is apt to stop hiking rates eventually. The question is, when?

Why we may not be done with rate hikes

The Federal Reserve has long maintained that 2% inflation is optimal in the long run. It’s this level, the Fed feels, that’s most conducive to long-term economic growth and stability. Meanwhile, as per July’s Consumer Price Index, annual inflation was sitting at 3.2%. That’s reasonably close to the Fed’s target — but not there yet.

To be clear, inflation is looking a lot better than it did in June 2022, when it peaked at 9.1%. But it could still take a while to get from 3.2% to 2%. Think of it like you would a diet. Someone who’s looking to shed 40 pounds might lose the first 30 with relative ease. It’s those last 10 pounds that are more likely to stubbornly stick around.

Similarly, we’ve come a long way with inflation since last June, but there’s more work to do. And the Fed might continue to raise interest rates until inflation is closer to 2%. Since we don’t know when that’ll happen, it’s hard to say when the Fed will stop raising interest rates. It would be premature to assume that rate hikes won’t happen in 2024.

What should you do about rate hikes?

It’s important to understand how interest rate hikes might affect your personal finances so you can take steps to protect yourself — or potentially capitalize on them. Higher interest rates mean it’s more expensive than usual to borrow money, whether in the form of an auto loan, personal loan, or home equity loan. Because of this, you may want to hold off on borrowing money if you’re able to.

For example, you may be saving money to buy a new car. But now’s a pretty bad time to finance one, so if you’re able to keep driving an older vehicle for longer, that could be a wise move.

You should also know that interest rate hikes have the potential to drive the cost of carrying a balance on a credit card or home equity line of credit (HELOC) upward. That’s because these products tend to come with variable interest rates. So if you owe money on one of these, the sooner you can pay off your balance, the better. And if you can’t pay off your balance anytime soon, at least budget for higher monthly payments.

Finally, you can take advantage of today’s interest rate environment by putting more money in the bank if you’re able to do so. Higher living costs may be making that impossible, and that’s understandable. But if you happen to have spare cash, now’s a great time to stick it into a savings account or CD so you can score a higher interest rate.

The Fed is apt to stop raising interest rates at some point — we just don’t know when. So it’s important to keep tabs on the Fed’s actions, especially if you’re someone who’s looking to borrow money or already owes money on a line of credit.

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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.Maurie Backman has positions in Target. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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Loan modification can be a good solution when you can’t keep up with your current mortgage and refinancing isn’t a good option. Read on to learn more. 

Many people sign a mortgage feeling confident in their ability to pay it back when they’re supposed to. But sometimes, life happens. You might lose your job and find yourself forced to take another at a lower salary. Or, your expenses might increase due to medical issues or having children.

If you’ve reached the point where you’re struggling to keep up with your monthly mortgage payments, you’re probably aware that falling behind is not a good solution. That could eventually put you at risk of losing your home.

Of course, foreclosure may be more avoidable these days because U.S. homeowners are sitting on a whopping $30 trillion in home equity. With property values so high, you may be in a position to simply sell your home and walk away clean rather than go through the process of foreclosure and face the credit score damage that ensues.

But what if you don’t want to sell your home? What if you want to somehow find a way to stay put?

That may be possible via a process called mortgage modification. And it’s a route your mortgage lender may be surprisingly open to.

When refinancing isn’t really an option

Homeowners who find themselves struggling to keep up with their monthly mortgage payments can often turn to refinancing as a solution. This involves swapping an existing mortgage for a brand-new one — ideally, at a lower rate that results in lower payments.

But right now, mortgage rates are so high that refinancing won’t be a cost-effective solution for most borrowers. That’s why you may want to look at loan modification instead.

Mortgage modification is the process of working with your lender to change the terms of your existing home loan agreement. To be clear, you’re not getting a new mortgage — you’re simply tweaking an existing one.

How does that help make your home more affordable? You might currently be on the hook for $1,200 monthly mortgage payments based on your current repayment schedule. Your lender might agree to extend your repayment period, thereby reducing your monthly mortgage payments to $900 apiece. That’s an amount you may be able to afford.

Why mortgage modification is something lenders agree to

Clearly, mortgage modification could be helpful to you as a homeowner. But what’s in it for lenders?

Well, the quick answer is that mortgage lenders have one goal — to get repaid. If changing the terms of your mortgage allows that to happen, that’s really the main thing your lender cares about. And while your lender might be accepting a lower monthly payment by modifying your loan, it would no doubt rather get paid $900 a month than not get any of the $1,200 you’re supposed to be sending in.

All told, loan modification is a route worth exploring when your home becomes hard to afford. Have that conversation with your lender before you start missing mortgage payments so you don’t have to worry about credit score damage or, worse yet, run the risk of foreclosure.

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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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No time to cook? Read on to see how Costco can bail you out. 

As a working mom, the one thing I struggle to do more than anything else (besides keeping up with laundry) is put food on the table. Thankfully, it’s not because my family can’t afford to buy groceries. Rather, it’s that I have almost no time to cook during the week.

I get up early in the morning to work before my kids go to school, and then I work during the day while they’re in school. Between the hours of roughly 3:30 p.m. and 8 p.m., I then assume the role of unpaid Uber driver, shuttling my kids to various activities while trying to cram things like homework in between.

Because I’m rarely in my house during the late afternoon and evening, finding the time to cook is a challenge. And so I frequently find myself placing a takeout order and picking up a quick meal on the way to soccer practice because it’s my only option. Or I’ll sometimes order delivery if I don’t even have time to make that stop.

Takeout and delivery can get expensive, though. So my preference is to find ways to save money on food while getting my family fed.

Thankfully, Costco stocks a variety of premade meals that you can buy in advance and reheat when you’re pressed for time. And you may want to pick up a fan favorite that just hit the shelves again.

Costco’s Chicken Pot Pie is back

In recent weeks, Costco has reintroduced fall favorites like its pumpkin pie and pumpkin streusel muffins. But if you visit your local Costco now, you might find its famed Kirkland Chicken Pot Pie in stock, too.

The Kirkland Chicken Pot Pie generally retails for $3.99 a pound (though Costco prices can vary by location). And so for a 5.5-pound dish, you’ll be looking at roughly a $22 credit card tab.

However, considering that the Kirkland Chicken Pot Pie can feed my entire family for multiple meals (well, not me, because I’m a vegetarian, but the rest of my crew), that’s a price worth paying. By contrast, I commonly spend $30 to order a pizza and large salad for my family to share, and that’s for a single meal. For us, the Kirkland Chicken Pot Pie is a much better deal.

Now, the one caveat with Costco’s Chicken Pot Pie is that heating it in the oven can take a while. But that’s where your microwave comes in. Simply throw a portion on a plate and enjoy it a couple of minutes later.

A better option than meal delivery kits

If you’re someone like me who has zero time to cook during the week, then you may be inclined to fall back on meal delivery kits. But to me, Costco’s Chicken Pot Pie is a better option for a couple of reasons.

First, some of these kits send you a batch of ingredients with instructions on how to put them together. This is something I don’t have time for because I’m not in my house long enough.

Secondly, the one time I did try a meal kit where your food was pre-cooked and all you had to do was heat it up, I found myself spending almost $10 per portion, which is comparable to what I’d spend on Thai or Chinese takeout. So it didn’t seem worth it. Since I can easily get eight servings out of Costco’s Chicken Pot Pie, for $22, I’m looking at $2.75 per portion instead of $10.

Of course, your circumstances might be different. Maybe you have more time to cook and therefore don’t need to rely on Costco, takeout, or meal kits. But if your schedule is comparable to mine, then the Chicken Pot Pie could be a lifesaver.

That said, before you buy one, make sure your family will actually eat it. I have one daughter who isn’t such a fan but will consume it in a pinch. My son, meanwhile, doesn’t like the “pie” component of the Chicken Pot Pie, but he’ll eat the inside. So all told, I’m able to cobble together a meal.

But one thing you don’t want to do is spend $22 on a Chicken Pot Pie only to end up tossing most of it in the garbage. So if you’re not sure if your family will enjoy it or not, try seeing if Costco has it out in sample form in the coming weeks and make your pickiest eaters try it first. That could help you avoid wasting money. But if you do decide to bring home a Kirkland Chicken Pot Pie, you can look forward to a warm, comforting meal that many people will agree is just about perfect for fall.

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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.Maurie Backman 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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Costco is known for its competitive prices. Read on to see how the warehouse club giant pulls that off. 

Skinny Pop popcorn bags for just $0.50 per serving. A 62-ounce jar of M&Ms for just $18.99. These are just some of the low prices you might find on Costco.com. And since prices tend to be even lower in warehouse club stores, it’s clear that shopping at Costco could result in a world of savings.

So how does Costco do it? Here’s the scoop.

Costco uses membership fees to offset its costs

Costco currently charges $60 a year for a basic membership and $120 for an Executive membership. The Executive membership gives you 2% cash back on all Costco purchases, including those made online.

Some people refuse to join Costco because they don’t like the idea of having to pay to simply enter a store where they’ll then, in turn, spend money. But it’s important to realize that it’s those very membership fees that allow Costco to offer the ultra-low prices it’s known for.

Costco even says on its website: “Our goal is to provide the best products at the lowest prices available—and we mean anywhere. The membership fee is crucial to achieving this goal because it covers our overhead and allows us to operate the business at margins much lower than other retailers (these savings get passed on to you, of course).”

In fact, Costco doesn’t make a point to offer discounted memberships like Sam’s Club sometimes does. That’s because Costco is confident that its prices are low enough for members to recoup their fees via savings on buying groceries and household essentials throughout the year.

So you might, for example, spend $60 a year on a basic Costco membership. But if you shop at Costco once a month and save $15 on food and household products each time you go, you’re spending $180 less per year. So all told, you’re coming out ahead by $120, which means you’re not “losing money” to your membership fee.

Will Costco soon raise its fees?

The last time Costco raised fees was in 2017. At that time, the cost of a basic membership rose from $55 to $60, while the cost of an Executive membership rose from $110 to $120.

There’s been talk that Costco will raise fees again pretty soon, because it’s been more than six years since its last fee hike. Prior to 2017, the warehouse club giant raised fees in 2011. So if we follow that pattern, it would make sense to see membership fees increase if not by the end of 2023, then at some point during the first half of 2024.

Whether a Costco membership will still be worth paying for at that point will hinge on your shopping habits and the amount of savings you’re able to reap. But remember, if your fee goes up by $5 or $10 (which would likely be the case based on Costco’s last hike), that higher fee is making it possible for Costco to continue offering you great products at low prices. And chances are, if it’s worth paying $60 or $120 for a membership now, it’s going to be worth it to you to pay a little bit extra in the future.

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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.Maurie Backman 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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When I shopped around for a mortgage, I got five different quotes. Here’s why I got so many, and why it pays off to compare options. 

Because I am in the process of buying a home, I have spent a lot of time getting financially prepared. One of the most important things that I did was to get multiple quotes from different mortgage lenders.

Here’s how many quotes I obtained, along with some insight into why I got so many different loan estimates.

Here’s how many mortgage quotes I got

When I started shopping around to find the perfect mortgage, I made the choice to get five different quotes. I obtained quotes from:

Lenders that I had a pre-existing relationship with: I have a business bank account with one institution and a personal bank account with another. Both have sent me targeted advertisements promising benefits if I get my mortgage through them. I also have my investment and credit cards with a third financial institution and was promised a discount in my mortgage costs if I borrowed with them. I got quotes from those three places.Lenders that have a solid reputation: I also decided to get quotes from two online lenders that have solid reputations for making the borrowing process easy and quick and offering an all-digital borrowing experience.

While I could have shopped around more, most of the quotes I got were pretty similar. Because of that, getting these five different loan estimates seemed as if it was enough to give me a pretty clear idea of where I stood.

Getting mortgage quotes does take some time, especially since I’m self-employed and had to enter quite a bit of information about my income and assets. So I didn’t see the point in continuing to ask lenders for rates when so many of the quotes I received were so similar as it was.

How many mortgage quotes should you get?

The exact number of mortgage quotes you should get is up to you and comes down to how much time you want to spend shopping around.

In most cases, though, three to five quotes is a good number. Unless you’re seeing a ton of variation in pricing from one lender to another, you can usually feel pretty confident that you’ve done a good job shopping for the best rate after getting three to five estimates.

There are a few caveats to consider, though, to make sure you truly are shopping around in a smart, effective way.

Look for mortgage lenders that do not require a hard credit check

Many lenders will allow you to check rates without putting an inquiry on your credit report (although a hard credit check will eventually be necessary when you submit your full application). This is important because too many inquiries can hurt your credit score.

While lenders and credit reporting agencies usually group together multiple inquiries over a short-term period with the assumption you were shopping around for a loan, you may be asked to explain each inquiry when you go through the full mortgage application process.

That’s what happened to me. I got one quote that required a hard credit check and then went with a different lender, so I had to write a letter of explanation about that inquiry. If you don’t want to explain a half dozen inquiries, stick with lenders that offer soft credit checks at the start.

Get rate quotes from different kinds of lenders

Banks, credit unions, and online lenders all offer mortgages. You’ll want to get quotes from all different kinds of lenders to see which is better for you.

I thought that going with one of the banks I do business with would be the best deal, especially since I was offered discounts, but that turned out not to be the case for me. An online lender was better than a large national bank, even though I’d been given special offers. But I wouldn’t have known that if I didn’t branch out beyond my comfort zone and given other mortgage issuers a chance.

Don’t limit your options. Be sure to really take the time to see all the offerings out there. Ultimately, the difference in my rate — and thus monthly mortgage payments — was dramatic, and I might have missed finding the right loan had I stopped at just three quotes.

You should also remember that the process of getting quotes takes time. Start looking online and comparing rates well before you actually go to look at your first potential home. You can find the right lender, get pre-approved, and be ready to make an offer when the home of your dreams comes along.

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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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