Money Management

Home sales have been sluggish, and there’s a good reason why. Read on to learn more. 

U.S. home prices have managed to hold steady in 2023. But home sales figures are a different story.

Data from Redfin finds that only 1% of U.S. homes changed hands during the first half of 2023. That’s the lowest share in at least a decade. But there’s also a very good reason for this trend.

Higher mortgage rates make selling a less appealing prospect

Many buyers are willing to sign a mortgage today, even if it means getting stuck with a higher interest rate. But while buyers may be resigned to higher mortgage rates, a lot of sellers aren’t willing to see their costs go up.

In 2020 and 2021, mortgage lenders were swamped with refinance requests when borrowing rates dropped to record lows. At this point, many homeowners have ultra-low mortgage rates that they don’t want to give up. And also, a lot of homeowners who didn’t refinance in 2020 or 2021 are looking at an uptick in rates if they were to list their properties and sign new mortgages now.

So all told, it’s just not an appealing time to sell. And if homeowners aren’t willing to sell, buyers won’t have properties to purchase.

When will home listings pick up?

A decline in mortgage rates could lead to an uptick in property listings. The problem, though, is that we don’t know when mortgage rates will drop to a notable degree.

In time, existing homeowners might learn to come to terms with today’s borrowing rates. But prospective buyers may have to sit tight a bit longer and wait for that to happen.

Of course, there’s one thing that might help solve the current housing inventory shortage — new construction. Housing starts (a measure of new construction) were up 3.9% in July compared to June, according to data from the U.S. Census Bureau. And housing starts in July were up 5.9% on an annual basis.

But it’s important to remember that housing starts are called that for a reason — they’re simply indicative of the beginning stages of new construction. It can take many months to not only construct a home, but go through the permitting and inspection process to make sure it’s suitable for occupancy. To put it another way, many of the homes being started in July likely won’t be available to purchase until 2024 at the earliest.

Still, all isn’t lost on the real estate inventory front. It may be that homeowners are hesitant to sell and give up their current mortgage rates now. But in time, they might change their tune. And that, combined with more opportunities for new construction, could give buyers a lot more options.

Where does that leave buyers who want to become homeowners before the end of 2023? Unfortunately, buyers may need to sit tight and wait for a rise in inventory, or otherwise be willing to compromise on the properties they buy. But those who put off homeownership until inventory rises get the benefit of being able to save more for a down payment, so that’s at least a plus.

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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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Don’t let summer travel debt linger. Read on for ways to get rid of it before the end of the year. 

If you spent a lot of money on travel this summer, you’re no doubt in good company. Data from Allianz found that Americans were expected to spend around $214 billion on travel this summer, and that 2023 summer travel spending was on track to more than double from pre-pandemic levels.

Of course, it’s one thing to rack up a large credit card balance due to travel costs and pay it off in one fell swoop. But if you’re unable to do that, and you allow your debt to linger, it might end up costing you a lot in the form of interest.

A better bet? Do what you can to shed that debt before the year comes to a close. Here’s how.

1. Consider a side hustle

Taking on an extra job isn’t easy when you have a jam-packed schedule to begin with. But chances are, you don’t have tons of money left over each month after paying your essential bills. If you did, you probably would’ve been able to pay off your vacation immediately rather than carry a credit card balance forward. And so in that case, a side hustle makes sense for a period so you can get ahead of that debt.

Keep in mind that side hustles can take on different forms. And you don’t necessarily have to commit to a preset schedule if that’s not doable for you. Rather, you can find a gig that’s more flexible, like driving for a ride-hailing company or doing things like web design or content editing at your own pace.

Granted, with web design and editing, you’ll generally have a deadline to stick to. But you may not have to commit to being at a desk or in a given place for preset hours every week.

2. Look at consolidating your debt

You might have a $2,000 balance on one of your credit cards charging 18% interest from your resort stay and a separate $3,000 balance on another card at 16% interest for your flights and activities. Not only can juggling multiple balances be stressful, but at those interest rates, you could be looking at losing a lot of money if you don’t knock out your debt ASAP.

That’s why it pays to look to consolidate. If you qualify for a balance transfer offer with a 0% introductory APR, that may be a route to consider — if you think you can pay off your balance in full by the time your introductory period comes to an end.

Otherwise, you may want to look at an installment loan with a fixed interest rate. If you sign a personal loan, you might end up only paying 7% interest on your debt, which, based on the numbers above, is an improvement. Plus, you’ll get the benefit of predictable monthly payments. And the higher your credit score, the more favorable a personal loan rate you’re likely to snag.

Taking vacations is important. It allows you to get a break from the grind and share new experiences with family (or in some cases, experience new things yourself). But you don’t want your summer vacation to result in lingering debt that makes your life difficult and costs you a ton of money in interest. So it pays to do what you can to shed that debt as quickly as you reasonably can.

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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.
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It’s become more common for restaurants to impose a credit card surcharge or processing fee on customers. Read on to see how that might impact you. 

There was a point when swiping my credit card at a restaurant wasn’t even a question. After all, why not score some cash back for a purchase I was already making?

But over the past couple of years, a growing number of restaurants in my town have started imposing a credit card surcharge on customers. And it’s not just my town. This past summer, my husband and I traveled to several states and found the same practice upheld there too.

It really raises the question: Is it even worth using a credit card at restaurants anymore?

When you lose out financially

My go-to credit card is my Costco Anywhere Visa® Card by Citi, which gives me 4% on gas up to a certain limit (which I don’t come close to exceeding), 2% back on Costco purchases, and 3% back at restaurants. At one point, swiping that card at restaurants was an easy call. But these days, it doesn’t always make sense for us.

There are some restaurants in my town that charge a 3.5% surcharge on credit card transactions. So even with my card giving me 3% back at restaurants, I still lose out financially in that situation.

Now, you may be wondering why restaurants have adopted this practice, and the reason is that tight margins and inflation have basically forced them to. Credit card processing fees are the third-highest expense for restaurants, behind food and labor costs, according to a report by The New York Times. So basically, to stay afloat, many restaurants have reached the point where they have to pass those fees along to customers.

Should you just pay cash?

Restaurants are required to inform customers if they’ll be charged extra for using a credit card. So if you’re not sure whether you’re better off paying cash or using your card, run the numbers.

If you get 3% back from your credit card and you’re being charged more than that in the form of a surcharge, cash makes more sense — if you have it on you. If you’re being charged a 2.5% fee but get 3% cash back from your credit card, use the card. And if you’ll break even, then you might as well use your credit card simply to avoid another trip to the ATM.

In fact, I can admit that I’ll sometimes use my credit card to pay a restaurant bill even when that’s not the most cost-effective option, due to the convenience factor. It’s annoying to have to constantly run over to the ATM, and I don’t like the idea of keeping hundreds of dollars in cash in my wallet.

So if I’m looking at a 3.5% credit card surcharge but I know I’ll get 3% back on my purchase, I’ll sometimes just swipe my card at a restaurant despite coming out a loser in that transaction. But for the most part, I’ve started carrying more cash on me for the express purpose of being able to dine out without being charged a fee. And you may want to do the same.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has positions in Citigroup. The Motley Fool has positions in and recommends Costco Wholesale and Visa. The Motley Fool has a disclosure policy.

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Your homeownership costs go well beyond your mortgage payments. Read on to learn more. 

Mortgage lenders want to get repaid, so they tend to be at least somewhat judicious about giving out home loans. In other words, you’re not going to qualify for a $500,000 mortgage when your income can only support a $100,000 loan.

But one mistake many home buyers make is looking at the monthly mortgage payments they’ll be liable for and thinking, “Okay, I can handle that.” It may be that you’re able to comfortably afford a given mortgage payment based on your income. But what about the additional costs of owning a home?

Recent data from Zillow and Thumbtack found that the average U.S. homeowner is spending $1,180 per month on top of a typical mortgage payment. The extra costs include property taxes, homeowners insurance, utility costs, and essential home maintenance. And those are expenses you need to factor into your monthly bills if you’re looking to purchase a home of your own.

Account for all of your homeownership expenses

The problem with getting approved for a mortgage is that lenders don’t always account for the added costs that come with owning your property specifically. If you’re buying an older home, for example, that costs $500 a month to heat and another $500 a month to maintain, that’s not necessarily an expense your mortgage lender is accounting for when writing you a loan. So you need to do your research and account for those costs before committing to a home purchase.

If you’re in the process of trying to buy a home, don’t just look at the cost of your mortgage payments and property taxes. Rather, talk to the owner about what it takes to keep the home standing. And contact insurers so you know how much you might spend on a homeowners policy. If you have it in your head that homeowners insurance will cost you $1,000 a year when your price is closer to $2,000, that’s a big difference.

Avoid going overboard when buying a home

A general rule of thumb to avoid overspending on a home is to keep your predictable housing costs to 30% of your take-home pay or less. So if you bring home $5,000 a month, you’d want your mortgage payment, property taxes, and homeowners insurance, which are all predictable costs, to amount to $1,500 or less.

The problem with this formula, though, is that it doesn’t account for variable expenses like utilities and maintenance. And if those are higher than usual for your home, your finances could get thrown for a major loop.

So again, that’s why it’s so important to try to research the costs of owning your specific home. And if you’re unable to get a good sense of what it’ll cost to own your home outside of your mortgage, property taxes, and insurance, try to limit those expenses to 20% or 25% of your income so you have more wiggle room to tackle your other costs.

Owning a home can be a rewarding experience, but it can also be an expensive one. And that’s okay, as long as you’re prepared for that expense. But if you aren’t, you might struggle financially once your new home becomes yours, so do as much digging as you can ahead of time to try to avoid that scenario.

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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 Zillow Group. The Motley Fool has a disclosure policy.

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Just because you have pet insurance doesn’t mean you don’t need to save on top of that for your animal’s care. Read on to see why. 

It’s unfortunate that 42% of pet owners have gone into debt because of their pets’ needs, according to data from Lemonade. But putting pet insurance in place could potentially help you avoid that situation (or at least avoid it to some degree).

A pet insurance policy might pick up the tab (or the bulk of it) when your animal needs costly surgery or medical treatment. And having pet insurance might spell the difference between getting stuck with a massive load of credit card debt or not.

But even if you have pet insurance, it’s important to have savings for pet care. Here’s why I make a point to set aside funds for my dog’s care on a regular basis.

You might still have to shell out some money

Having pet insurance gives me peace of mind. But it doesn’t give me a free pass to not save for my dog’s care every month.

See, like many insurers, my pet insurance company requires me to pay for my dog’s services out of pocket and then submit a claim. If that claim is approved, I get reimbursed. But that doesn’t always happen right away. So I still need a way to be able to pay for my pet’s care on the spot and potentially wait beyond my credit card bill’s due date to get paid back.

Now, I’ll also say that in addition to saving a preset amount of money every month for my dog’s care, I have a separate pet care emergency fund. The purpose of this is to cover a large medical expense that my insurance company may not pay for.

My dog has a pre-existing condition — arthritis. So the pills he takes daily to manage that condition aren’t covered by our insurance policy. Thankfully, they’re not so expensive.

Meanwhile, it may come to be that one day, my dog needs surgery to treat his arthritis, only it’s not a covered expense since it relates to a condition he had before our pet insurance policy was put in place. I would hate the idea of seeing my dog suffer due to a lack of funds on my part. So I have several thousand dollars socked away in the bank just in case I’m ever forced to pay for a major medical expense my insurance won’t pick up the tab for.

Always be prepared

Owning a pet means taking on a lot of responsibility, financial and otherwise. But it’s important to make sure you have money available to cover your pet’s care. And it’s a good idea to have a pet emergency fund, just in case.

Years ago, my friend’s dog needed a $12,000 surgery, and her insurance policy had an $8,000 limit for that particular issue/procedure. So even with insurance coverage, she still had to shell out $4,000 of her own. Take that as a lesson to build up your own cash reserves so you’re never forced to skimp on care for your pet due to a lack of funds.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

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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Since Costco doesn’t advertise frequently, you have to hunt out its best deals. Learn which products pose the best savings opportunities here. 

When I first got a Costco membership, I had already heard about the free samples, the $1.50 hotdogs, and the great savings on bulk items. What I wasn’t expecting, however, was just how many different items Costco actually sells. No lie — I think I went in for seltzer and CLIF Bars and came out with an air fryer and some socks.

One problem with finding Costco’s best products is that the warehouse retailer doesn’t spend money on advertising and leaves it up to customers to dig out the treasure it’s buried. I’m not complaining — a low marketing budget means lower prices — but it might leave you purchasing items at higher prices simply because you didn’t know Costco sold it cheaper.

With that in mind, let’s take a look at some lesser-known products at Costco — as well as some all-time favorites that deserve more praise.

1. Sheds

Building a shed on your own can get expensive (most homeowners pay between $4,000 and $6,000, according to HomeAdvisor). But if you’re willing to do-it-yourself, Costco will sell you a shed and ship it to you as a flat-pack for about half the price. Right now, you can buy an 8 ft. x 12 ft. wooden shed for $2,000 (after a $600 discount) or a 10ft. x 12ft. for $2,400. Compare that to Sam’s Club ($2,700 for an 8′ by 12′ and $2,500 for a 12′ by 10′) and the savings on Costco sheds are pretty incredible.

2. Car insurance

Yes, Costco can help you buy cheap car insurance. While the warehouse doesn’t underwrite car insurance policies itself, it can get Costco members exclusive discounts through its partner, CONNECT, which is backed by American Family Auto. According to Costco, you can save around $600 in the first year you switch by buying Costco car insurance.

3. Greenhouses

For another head-scratcher, Costco is also in the greenhouse business. Similar to its sheds, Costco sells greenhouses as pre-assembled flat-packs that you’ll build yourself. Its greenhouse prices are generally lower than competitors, but you’ll need to be handy to put it together.

4. Gift cards

My absolute favorite Costco product — gift card packages. Costco often sells bundles of gift cards for as much as 25% off the pack’s face value. For example, I’ve seen Southwest Airlines gift cards with a total value of $500 priced at $449.99, $50 of Cinemark gift cards for $40, and $100 of Miller Paint gift cards for $69.99.

5. Wine

Costco sells multiple types of wine, like Pinot Grigio, Cabernet Sauvignon, and Prosecco, and from popular regions, like Bordeaux, Toscana, Napa Valley, and Friuli Grave. To be fair Costco wine isn’t the cheapest you can buy — it’s hard to beat Trader Joe’s “Two Buck Chuck” — but if taste is as important as price, it’s worth giving these Kirkland Signature wines a try.

6. Tires

When Costco is offering promotions on new tire installations — like $150 off four tires — its prices can be far cheaper than its competitors. Costco tires also come with a free five-year roadside hazard warranty and lifetime maintenance service for each tire. These are often sold as separate services at other tire shops, but Costco will throw it in for free.

7. Clothes

Finally, don’t underestimate Costco’s selection of clothes. When compared with Amazon and other ecommerce sites, Costco’s clothes are often cheaper or at least on par with them. For instance, you can buy a Pendleton Ladies’ Rain Jacket on Costco.com for $58.99, whereas a similar Pendleton jacket is sold on Amazon for $125.

The best credit card to use at Costco

If you’re a frequent Costco shopper, there’s probably no better combination than a Costco Anywhere Visa® Card by Citi and a Costco Executive membership ($120). When you use both at checkout, you’ll earn 4% back on most purchases, giving your personal finances a big smile. A Costco Executive membership also automatically subscribes you to The Costco Connection magazine, which is another way to find great products at Costco.

As the seven products mentioned above demonstrate, there’s a lot more to Costco than just groceries and $1.50 hot dogs. Keep digging online and in the warehouse — you might be surprised at what great products you might find.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Citigroup is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool recommends Amazon.com, Costco Wholesale, Southwest Airlines, and Visa. The Motley Fool has a disclosure policy.

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