Money Management

We’re almost three-quarters of the way through 2023 and a recession has yet to strike. Read on to see how much comfort you should take in that. 

“Prepare for a 2023 recession.” These were the words so many economists were uttering in 2022 and the first half of the current year.

Yet we’ve made it to September, and clearly, a recession hasn’t hit. Unemployment levels are still low, jobs are still available, and things are generally looking pretty stable.

At this point, economic data is not pointing to a near-term recession. And financial experts are therefore changing their tune.

Bank of America U.S. Economist Michael Gapen said in August, “We have revised higher our outlook for growth in economic activity this year and next, and no longer expect the economy to fall into a mild recession.” And around that same time, Federal Reserve Chair Jerome Powell said that the central bank staff no longer anticipates a recession in 2023.

Clearly, this is all positive news. But it’s also not news to get overly comfortable with.

A recession is bound to strike eventually

It’s easy to think of a recession as a really scary period of economic decline. But actually, recessions tend to just happen from time to time, and they’re not always so monumental. Some are mild and have minimal impacts, while others are more notable but also short-lived.

While it’s pretty unlikely that we’ll enter a recession in 2023, the reality is that the economy is likely to fall into an extended slump at some point. Maybe that won’t happen in 2024, either. But could it happen in 2025? Perhaps. That’s why it’s so important to be recession-ready at all times.

How to make sure you’re ready for the next recession

We don’t know when the next recession is going to hit. But if you want to make sure you’re prepared, have at least a three-month emergency fund saved up. That means having enough money in your savings account to cover three months of essential expenses. So if your non-negotiable bills like rent, transportation, utilities, and food come to $2,500 a month, you’d ideally want a $7,500 savings balance.

If you don’t have much in the way of savings now, you can do your best to build it up over time. That could mean saving $50 this month, $75 the next month, and $100 the month after that.

And if you can’t get to a three-month emergency fund, so be it. But if that’s the case, try to save as much as you can so that if you were to lose your job, you’d have a way to pay your bills without having to immediately resort to credit card debt.

And speaking of that, shedding credit card debt can be a helpful thing ahead of a recession. If economic conditions decline and you’re out of work, the last thing you’d want is another monthly payment you’re on the hook for.

Plus, credit cards are notorious for charging high interest rates. The less you’re forced to spend on interest, the more you can potentially save.

We may have avoided a recession in 2023. But that doesn’t mean you won’t experience one at some point in your lifetime. Quite the contrary — you’re more likely than not to have to deal with a recession eventually, so the more you prepare ahead of time, the less stressful it’ll be.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Bank of America is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has positions in Bank of America. The Motley Fool has positions in and recommends Bank of America. The Motley Fool has a disclosure policy.

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As auto loan defaults rise, it’s getting tougher to finance a car. Consider these six tips for getting a loan if you’re shopping for a car. 

If you plan to buy a car soon, you may find that it’s getting harder to secure financing. In June, the rejection rate for auto loans increased to 14.2%, up from 9.1% in February, according to the Federal Reserve Bank of New York’s June SCE Credit Access Survey.

The reason: Lenders are getting jittery as high inflation and surging interest rates have pushed many consumers to take on more debt than they can afford. Delinquency rates for both auto loans and credit cards have recently surpassed pre-pandemic levels.

Because lenders are being pickier than ever, you’ll need to take a few extra steps before you head to the car dealership. Follow these six tips to secure auto financing in a tight credit market.

1. Save for a large down payment

Saving a larger down payment may not be an option if you need new transportation ASAP. But if you have some wiggle room, taking a few months to save can help your application get approved. When you put more money down on a car purchase, you’re less risky to the lender. Plus, you’ll lower your monthly payments and interest rates.

2. Improve your credit score

Again, if you need to buy a car right away, you won’t have time to increase your credit score. But if you have bad credit and can wait six months to a year to replace your car, it may be worth delaying your purchase until you can improve your credit.

If you don’t have open credit, try applying for a secured credit card to start building a positive payment history with the credit bureaus. Paying off a significant chunk of credit card debt can also help you improve your score quickly because it will lower your credit usage, which accounts for 30% of your credit score. You’ll also reduce your debt-to-income ratio, which could help your car loan application get approved.

3. Negotiate your trade-in

If you’ll be trading in a vehicle, make sure you negotiate the best price possible since you can use the money you get toward your down payment. Be sure to negotiate your trade-in separately from your vehicle purchase. You can research your car’s value using Kelley Blue Book or Edmunds, then get quotes from third-party online car retailers, like CarMax, that make cash offers on trade-ins.

4. Get pre-approval from a lender

You can apply for an auto loan on your own so you’ve secured financing before you set foot on the dealership lot. Once you’ve negotiated the car price, you can see if the dealer can beat the financing offer you have in hand through its network of lenders. While this option is typically best if you have good credit, some online lenders specialize in lending money to people with bad credit.

5. Ask someone to cosign

If you’re having trouble getting approved for auto financing, you could ask a family member or friend with better credit to cosign the loan. But before you make this request, you need to be absolutely certain you can afford the payments. Your loved one is taking a risk on you. One late or missed payment could damage their credit.

6. Consider buy-here, pay-here dealers only as a last resort

You’ve probably heard advertisements for no-credit-check auto loans. These are typically offered by buy-here, pay-here dealerships, where the dealership is both the seller and the lender. They often base approval on your income and frequently require a large down payment.

If you need a car and can’t obtain financing through a bank, credit union, or traditional dealership, a buy-here, pay-here dealership may be your only option. But only consider these dealerships as a last resort. The interest rates and fees are often exorbitant, plus many require you to make payments weekly or every other week. Some dealerships will even require a tracking device in your vehicle so they can repossess your car if you miss a payment.

Shopping for a car? You need two budgets

Before you shop for a car, you need to have two separate budgets — one for your monthly payment and the other for the overall price of the car. Focus on the overall car price, rather than the monthly payment, when you negotiate with the dealer. Many dealers will try to talk you into a monthly payment that fits in your budget, but extend the loan over 72 months or even 84 months — which, of course, means you’ll pay a lot more interest. Aim to finance a vehicle over 60 months or fewer.

If you’re struggling to get approval for a car loan, you may need to shop for a cheaper car, put more money down, or find a cosigner. As always, it pays to shop around, so be sure to get quotes from multiple lenders. Even if you have poor credit, you may be able to find a lender who can work with your situation.

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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 easier than ever to accumulate large amounts of digital data. Find out why that can be bad for your bank balance and your productivity. 

I am a digital hoarder. I hate deleting anything. That serves me well when I need to find an email my aunt sent me a decade ago or come up with photos for someone’s birthday book. But it’s getting expensive, it’s bad for the environment, and my laptop, tablet, and phone are all groaning under the stress of all those extra files.

The cost of being a digital hoarder

The idea of accidentally deleting something I might need fills me with abject horror. I keep everything, from emails to screenshots of payments. Everything is safely tucked away, just in case.

That said, several of my friends (and likely some readers) are filled with the same level of horror at the almost 100,000 emails in my inbox and the very idea that I’d opt to pay more rather than send some things to the digital trash can. And pay more I do:

I pay Google $1.99 a month on my personal account. But I’ve almost maxed out the 100GB I get for that and I’m considering paying for more.I pay $1.99 a month for Google storage on my business account.I pay a further $2.99 a month to Apple for iCloud storage.

Each individual payment seems relatively small — it wouldn’t even buy me a latte in Starbucks. But if you add in the money I’ve spent on external hard drives and USBs, it comes to well over $100 a year. Frankly, that’s money I’d rather have in my savings account. And that’s before you factor in the $600 I’m about to spend on a new smartphone, purely because my current one has run out of memory.

Since I’m already hanging my dirty digital laundry out in public, I’ll let you in on another secret — and a hidden cost of all that electronic clutter. It slows my computer down and makes me less productive. On top of all those files, I currently have 20 different open windows, each with multiple tabs. Ultimately, there are better ways to manage both my browsing and my storage, which could save me time and money.

How to do a digital declutter — and save money

Sadly, holding on to so many files and emails hurts more than my bank balance. If I were to be the victim of cyber crime, criminals would have access to much more personal information simply because of the volume of data I store. Plus, it may be called cloud storage, but the data centers that store all those files, pictures, and videos are very real. They consume huge amounts of electricity and have massive digital footprints.

Here are three steps to decluttering your digital life.

1. Understand why you’re holding on to those files

According to an article in Oxford Academic, there are four types of digital hoarders. Understanding which category you fall into can help when it comes to hitting the delete button. Some people are accidental hoarders — they didn’t intentionally keep all those files, they just built up over time, perhaps because they weren’t sure how to manage them. Others are anxious hoarders, saving information haphazardly just in case they might need it in the future. In contrast, organized hoarders have a system and store things through carefully curated filing systems. Finally, compliance hoarders keep data because they need to for work.

2. Break it down into achievable steps

Start by taking a look at what you actually have, where it is stored, and what it is costing you. You may be surprised at how much data is duplicated, and how many easy wins there are.

Files: It is easier to find and track files if they have names and are sorted into folders. Take time to organize your files, just as you would with a physical filing cabinet. Then you can decide what folders to back up on the cloud, what to leave on your computer, and what to move to an external hard drive.Photos and videos: I used an app to clean up my photo storage. Not only did it weed out all the duplicated pictures and videos, it also automatically found similar images and kept the best one. I signed up for a free subscription and uninstalled the app after my purge. It’s also worth naming the photos you keep and putting them into folders.Emails: There are a few approaches here, including simply deleting all your unread messages. Try sorting by sender and bulk delete anything from companies trying to sell you something. Depending on what mail tool you use, you might be able to sort by file size and delete all the really big ones.

You don’t have to do it all at once, but try to set aside half an hour a week to do your digital decluttering. I have made a plan of what I’ll tackle each week and blocked out the time in my diary. Setting clear steps means I’m less likely to procrastinate or push the job to another day.

3. Change your habits

Once you’ve got your digital storage under control, the next trick is to keep it manageable. Try unsubscribing from newsletters you rarely read and setting up different email accounts for specific purposes. Use one ‘spam’ address for any marketing or other sign up that’s likely to fill your inbox. If you don’t want to do it as you go along, plan a time each month when you’ll sort through new data.

The cost of digital storage is deceptive. Not only can a couple of dollars each month add up, it also doesn’t include the cost of, say, a new phone or storage devices. Nor does it account for the productivity cost of drowning in data. Purging my photos and emails is reducing both my stress and costs, which — much as I hate to admit it — can only be a good thing.

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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.Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Emma Newbery has positions in Apple. The Motley Fool has positions in and recommends Alphabet, Apple, and Starbucks. The Motley Fool has a disclosure policy.

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If you want to spend less money on travel costs, becoming an AARP member may be worthwhile. Here are a few travel discounts available to AARP members. 

Many people utilize paid memberships to save money on everyday expenses. Amazon Prime and Costco are some examples of paid memberships that can offer savings. But AARP is another membership that can help you save money — and it’s affordable to join. While many adults over 50 join AARP, anyone can pay to become a member.

Once you become a member, you can get entertainment, dining, shopping, and insurance deals. Members can also save money on travel costs. Whether you like road trips, international getaways, cruises, or domestic adventures, AARP travel discounts can probably help you keep more money in your bank account. I’ll outline a few members-only travel deals below.

1. Save 10% or more on stays with IHG Hotels & Resorts

Need to book a hotel and don’t want to overpay? AARP members can save 10% or more off the best available rate at over 6,000 IHG Hotels & Resorts properties worldwide. This discount is available when booking online or by phone with IHG Hotels & Resorts.

2. Get up to 35% off rental car rates with Budget

If you’re planning an upcoming road trip, an AARP membership can help you save money on car rental expenses. Members can save up to 30% off base rates or up to 35% with Pay Now bookings. You can also get a free upgrade on compact through full-size car bookings, when available, and add an additional driver for no extra fee. These deals are available when making reservations online or by phone with Budget.

3. Get up to a $200 onboard credit with Holland America Line

Calling all cruise goers! Your AARP membership can unlock savings on your next cruise. When booking a cruise with Holland America Line, you can get up to $200 in onboard credit per stateroom. Total credit varies based on the length of the cruise and stateroom chosen. This deal is available to members when booking online or by phone with the cruise line.

4. Get a discount of up to $200 on select British Airways flights

Members can also save money on airfare costs. When booking flights on the British Airways website, AARP members can save $65 on World Traveller and World Traveller Plus fares and $200 off Club World fares when purchasing roundtrip transatlantic tickets.

5. Save 10% on hotel stays at Wyndham Hotels & Resorts

Here’s another hotel discount you won’t want to miss. When booking stays at eligible Wyndham Hotels & Resorts properties, you’ll get 10% off the best available room rates. This deal is available to members who book online or by phone with the hotel chain.

Here’s another way to save on travel expenses with AARP

The above travel discounts are only a sampling of deals available. Another way AARP members can spend less on travel is by booking reservations through the AARP Travel Center. You can easily book travel arrangements through this travel booking portal and take advantage of discounts that allow you to stretch your vacation budget further.

No matter how you book your travel arrangements, don’t miss out on the opportunity to earn credit card rewards. By using a travel rewards credit card, you can earn points or miles and later redeem them for flights and hotel stays, making for more affordable vacations.

When using credit cards, make sure you only charge what you can afford so you don’t get charged interest. Since credit card interest is high, credit card debt can quickly add up. You can avoid credit card interest charges by paying your entire credit card balance off every month.

Still unsure if it’s worthwhile to join AARP? Check out these little-known perks of an AARP membership. It costs $16 per year to join, or $12 per year with auto-renew. Additional membership discounts are available if you sign up for a multi-year membership. Using the deals offered through AARP could be a major win for your personal finances.

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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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon.com and Costco Wholesale. The Motley Fool recommends InterContinental Hotels Group Plc. The Motley Fool has a disclosure policy.

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Women wield massive financial influence, but our spending is often considered frivolous. Discover which aspects of “girl math” are worth hanging onto. 

When it comes to personal finances and money management, I think we all have a few little tips and tricks to make it easier. For example, I’m a big believer in the philosophy of “pay yourself first,” which means putting aside money you’re saving as soon as you get paid, and treating savings contributions as a bill you must pay rather than an afterthought. That way, money hits your savings account as soon as you get it, and you’re not left scrambling to find cash to save at the end of the month.

One set of tricks that has recently gone viral thanks to TikTok is called “girl math.” Let’s take a closer look at this trend, and assess whether it can actually have a positive impact on your finances and bank account balance.

What is girl math?

Women have an absolutely staggering influence over the economy — according to Cake Ventures, we control or influence a whopping 85% of consumer spending. Unfortunately, women are also often stereotyped as being less financially savvy or more inclined to spend money in frivolous ways. “Girl math” is a tongue-in-cheek way of describing the very real thought that goes into a lot of spending decisions women make.

One example of girl math is the thought that if you return a purchase you made and your credit card is refunded, you actually made money on the deal. Or if you take a vacation or attend an event that you paid for months ago, it’s free (since the act of shelling out money on it was a while ago). Or if an item is on sale and you don’t buy it, you’ve actually lost money. Or anything that costs less than $5 is free.

Many aspects of girl math are silly, but there are actually a few gems buried there — and a few potentially dangerous money moves.

Where girl math works

One aspect of girl math that is absolutely worth taking to heart is the concept of cost per usage. Let’s say you’re considering whether to spend $400 on a dress. If you know that you can wear the dress to four upcoming events/occasions, you’ve got a per-usage cost of $100. That’s already sounding more reasonable. And maybe you can then list the dress for sale online and expect to make at least $100 on it, making one of the times you’ll wear it free and reducing your all-in cost to $300.

It’s always worthwhile to calculate how much use you’ll actually get out of a purchase — and if you’ll get more or better use out of the more expensive version of an item, that could make it worth the money spent.

Using girl math to justify small purchases (more on that below) is also solid. Remember, your morning latte is not the reason you can’t afford to buy a home, and if spending a small amount of money on something you enjoy makes you happy, there’s nothing wrong with that. Spend more of your mental energy focusing on the big money questions — such as housing and transportation costs, and how to increase your income.

Financial guru Ramit Sethi is a big proponent of this way of thinking. Stress less over that $5 latte and instead fight for the raise your employer owes you and make sure you’re saving enough for retirement or any other goals you’ve set for yourself.

Where girl math doesn’t work

Girl math isn’t all gold, however. The notion that cash doesn’t count as real money can certainly be a dangerous one, especially if you do a lot of your spending in cash. While it is true that debit and credit card spending comes with a “paper trail,” it’s important to remember that cash spending still counts and if you go overboard, it can negatively impact your finances.

Similarly, if you spent money on something in the past, it hasn’t somehow become free. And a sale at your favorite store doesn’t mean you lose money if you don’t buy something. Money returned to you when you return a purchase hasn’t put you ahead — it’s just gotten you out of the red.

Ultimately, getting in the habit of spending money intentionally (even if it’s on purchases others might consider frivolous) can make you more mindful and also help you budget. Those $5 coffees you treat yourself to should ideally be figured into your budget, so you know how much they’re costing you and can plan for it.

Like any other viral trend, proceed with caution

The idea of girl math is a fun one, and I’ve definitely had conversations with female friends and colleagues in the personal finance space about how we justify our spending to ourselves and others. But take girl math with a grain of salt, and ensure your purchases of all kinds are adding to your life in positive ways.

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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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If you own a home, you must take good care of it. That includes handling maintenance and repair tasks. Find out what happens if you ignore proper upkeep. 

Before becoming a homeowner, you should ensure you’re ready for the responsibility. In addition to being financially responsible for making your mortgage payments, you’ll be responsible for staying on top of necessary maintenance and repairs and the costs associated with these tasks. Not taking proper care of your property can result in negative consequences.

RELATED: Best Mortgage Lenders

Ignoring property maintenance can result in home damage

Many homeowners aren’t promptly taking care of necessary home maintenance and repair work. A study from Nationwide Agency Forward found that 44% of homeowners are delaying routine home maintenance tasks. The study also found that 31% of homeowners are delaying necessary repairs and renovations.

It may seem like you have plenty of time to complete home maintenance and repair projects, but that may not be the case. Delayed maintenance can result in damage to your home, and existing damage can quickly worsen the longer it’s ignored. Don’t wait to take care of important home projects like this if you want to keep your property in good condition.

Delaying home upkeep can negatively impact your finances

Additionally, delaying repairs and maintenance could harm your personal finances. An unexpected repair could quickly become more costly if you wait to take care of it. Your best bet is to keep up with regular upkeep of your home to avoid an expensive repair bill. If you’re worried you won’t be able to afford a home repair project, here are a few ways to pay for home repairs and maintenance.

Delayed repairs could result in an insurance claim denial

You likely pay a significant sum of money on annual homeowners insurance premiums to protect your property. You may assume you’ll always be covered and eligible to file a claim when damage occurs to your home because you pay for coverage.

But you may not realize that delaying repairs for a known issue could impact whether your claim is covered. You must follow the conditions outlined in your homeowners insurance policy, which may spell out that you must promptly take care of repairs for known issues or risk denial of coverage when making a claim.

If you were unaware of this, you’re not alone. The same study mentioned above found that one in four insurance agents said their typical customers were unaware that delaying necessary home maintenance can affect their home insurance policy.

Stay on top of maintenance and don’t delay repairs

Your home is an investment that costs a lot of money. Ensure you’re treating your home with the proper care it deserves. By staying on top of routine maintenance, you can keep your home in great shape and avoid expensive damage. If you’ve been prioritizing regular maintenance tasks, that’s great news — you’re taking the right steps!

If you ever suspect that home repairs are needed, contact a professional as quickly as possible to assess the situation so the problem doesn’t worsen or become more expensive. It may cost you money, but you’ll feel better knowing you addressed the situation immediately.

Regularly continuing to your emergency fund is one way to prepare for future home repair costs. Doing this means you’ll have the money you need before an expensive repair bill arrives. We recommend keeping your emergency savings in a high-yield savings account so you earn interest as your cash sits in the bank.

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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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