Money Management

Home values in Texas are below the national average, but that doesn’t make it easier to buy one. Learn what programs are available to help you with your first mortgage. 

Everything is bigger in Texas, as they say, but one thing is surprisingly not-so-big: home values. According to Zillow, the average home value in Texas is about $300,000 in 2023, which is well below the national average of $348,000. That’s not so bad, considering that homes in some states, like California, can be more than double the national average.

First-time home buyers, however, might still find it difficult to save enough down payment for a $300,000 house, let alone pay 2% to 5% of the home purchase in closing costs. If that’s the case, just know the Texas Department of Housing and Community Affairs (TDHCA) and the Texas State Affordable Housing Corporation (TSAHC) offer assistance programs to make your first mortgage more affordable. Let’s take a look at the top three.

1. TDHCA My First Texas Home

What is it? A low interest 30-year fixed-rate mortgage. You may also get up to 5% of the mortgage amount in down payment and closing cost assistance.

How does it help? Snagging a low interest rate can make your monthly mortgage payments more affordable. The 5% in down payment and closing cost assistance can also boost your savings.

Who’s it for? First-time home buyers with a minimum credit score of 620 who meet income requirements and are purchasing eligible properties. You also need to work with a lender who has been approved by the Texas Homebuyer Program.

2. TSAHC Home Sweet Home Loan Program

What is it? A 30-year fixed-rate mortgage with up to 5% in down payment assistance.

How does it help? The 5% in down payment assistance can come as a grant (which you don’t have to pay back) or as a deferred second mortgage, which is forgiven after three years, so long as you don’t sell or refinance.

Who’s it for? Home buyers who meet certain income requirements and who are buying properties below the price limits set by TSAHC. You can take TSAHC’s eligibility quiz to see if you qualify.

3. TSAHC Homes for Texas Heroes Program

What is it? A mortgage assistance program for veterans and public service professionals. It’s nearly identical to Home Sweet Home, except that it also offers $500 in savings via a free Mortgage Credit Certificate (MCC).

How does it help? Like Home Sweet Home, you can get down payment and closing cost assistance in the form of a grant or forgivable second mortgage. In addition, TSAHC will pay for the fees associated with applying for a Mortgage Credit Certificate (MCC). A MCC gives you 20% of what you spend on mortgage interest each year as a tax credit, effectively reducing your mortgage rate.

Who’s it for? Professional educators, law enforcement officers, firefighters and EMS personnel, veterans and active military, correction and juvenile correction officers, and healthcare workers.

Other ways first-time home buyers in Texas can save

In addition to the assistance programs listed above, individual cities in Texas may also offer help in the form of second mortgages, deferred loans, and grants. Federal first-time home buyer programs are also available, as are low or no down payment mortgages, such as:

FHAVAUSDA

All in all, if you’re looking for an affordable home in Texas, using a combination of grants, government-backed loans, and assistance programs can lower the bar of entry and help you buy your first house.

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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 positions in and recommends Zillow Group. The Motley Fool has a disclosure policy.

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Household debt in the U.S. has reached an all-time high, but one age group has the highest debt of all groups. Read on to find out which one. 

Debt is an increasingly significant problem that affects people of all ages in the United States. From auto loans to mortgage repayments, debt has become a way of life for most Americans, and it can be a struggle to keep up. Total household debt has reached an all-time high. Read on for a breakdown by age group and type of debt.

Total debt at all-time high

Based on the data amassed by the Federal Reserve Bank of New York’s Center for Microeconomic Data for Q2 2023, American households collectively hold a remarkable $17.06 trillion in debt. This notable rise in debt, almost $3 trillion since the end of 2019, has impacted individuals across all age groups. The age group with the highest debt is 40 to 49, totaling $4.38 trillion, followed by the 50-to-59 age group and the 30-to-39 age group. Conversely, the age group with the least amount of debt is the 18-to-29 age group.

When comparing pre-pandemic debt trends (Q4 2019), individuals aged 70 and above have experienced the most significant increase, with their debt surging by more than 30%. This is followed by a 25% increase in debt for individuals aged 30-39, and a 19% increase for those aged 60-69. The lowest rise in debt is for individuals aged 18-29 at 8.15%, while those aged 50-59 experienced a 16% increase.

Type of debt by age group

The types of debt that each generation carries vary significantly. For those aged 30 and higher, mortgages are the leading source of their debt, accounting for nearly three-quarters of it.

While mortgages are the leading source of debt of all age groups, the number of mortgage originations have dropped considerably since reaching its height in Q3 2021. With the rise in interest rates and home prices, the number of new loans have dropped by approximately 65%.

On the other hand, auto loan balances and originations have continued their upward trajectory, a trend that has been consistent since 2011. Similarly, credit card debt has also risen. Among different debt categories in this quarter, credit card balances and delinquencies changed the most compared to other types of debt, following a period of remarkably low delinquency rates during the pandemic.

Delinquency rates, which measure how often people don’t pay their bills on time, got a bit worse but are back to the same level as before the pandemic started. Additionally, credit card balances showed a rapid growth in the second quarter.

How to pay down your debt fast

If you want to take your own debt balance down, the first step is to create a plan. This plan should include a budget that details how much money you have coming in each month versus how much you have going out. From there, determine which debts have the highest interest rates and focus on paying those off first.

You might consider consolidating your debts into a loan with one monthly payment with a lower interest rate. Another helpful tip is to cut back on unnecessary expenses, such as eating out or purchasing non-essential items. Remember, paying down debt takes time and dedication, but with a solid plan in place, it’s possible to achieve financial freedom. Don’t be afraid to seek help from a professional advisor or debt counselor if needed. Your financial future is worth the effort.

Debt is often regarded as a necessary aspect of life. However, the consequences of being in debt can be severe, especially if there is a lack of financial planning and oversight. Ignoring your debt can lead to lower credit scores, difficulty securing future loans with low interest rates, bankruptcy, or even foreclosure. Additionally, excessive debt can cause mental and emotional stress that may affect other areas of your life.

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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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Becoming an Instacart driver can help you make money, but there are also costs. Find out when driving for Instacart is worth it. 

If you’re looking to make extra money, becoming an Instacart shopper and driver is an option. Instacart drivers shop for groceries and deliver them using their personal vehicles. As of 2022, about 27% of online shoppers in the U.S. reported using the delivery app. But is driving for Instacart worth the time and the vehicle wear and tear?

How much do Instacart drivers make?

With many app-based side gigs, figuring out how much you can actually expect to earn gets complicated. Instacart is no different. Your earnings will depend on the orders you accept, your location, Instacart promotions to incentivize drivers, and tips.

One clarification: This article focuses on whether it’s worth it to become a full-service shopper, an independent contractor role that includes receiving a 1099. As a full-service shopper, you handle both the shopping and the delivery. You get to choose when you work. Instacart also has in-store shopper roles that don’t require making deliveries. However, in-store shoppers are actually part-time employees who work a scheduled shift.

Glassdoor estimates that Instacart drivers make an average of $19 an hour, including base pay and tips. Its likely range for driver pay (which represents the 25th percentile and 75th percentile) is $16 to $22.

Things work differently if you’re a California driver, though: Drivers are guaranteed to make 120% of the local minimum wage from the time they accept the order until delivery, plus $0.34 per mile driven between the store and delivery address.

One thing to note: In July 2023, Instacart slashed its base pay — the minimum amount drivers receive for an order — from $7 to $4. Because this cut was relatively recent, Glassdoor’s averages probably don’t yet reflect it.

Other factors to consider

In deciding whether to accept any job, the question boils down to how much your time is worth. But when you’re driving for Instacart or working any 1099 role, there are a few additional considerations.

As a 1099 employee, you won’t receive health insurance or other benefits. You also won’t have payroll taxes automatically deducted for your earnings, so you’ll need to set aside money and file quarterly estimated taxes.

You also need to account for your vehicle-related costs. Even if you earn the $19 hourly average, you’ll have less money once you pay for gas and additional maintenance costs.

Also, personal auto insurance policies only cover personal vehicle use. You’ll probably need to add commercial coverage to your policy in case you get into an accident while making deliveries.

Is driving for Instacart worth it?

Before accepting any work, consider the opportunity cost, which is basically what you could be doing with your time instead. That said, here are some situations when driving for Instacart may make sense:

You want to make money driving but don’t want to transport passengers. If you’re concerned about unruly passengers but want to use your car to make money, driving for Instacart is a good option. Keep in mind, though, that you’ll still probably have to communicate with customers.You’re seeking a flexible side gig. Instacart lets full-service shoppers work whenever they want and won’t penalize you if you don’t accept an order.You want a side gig that doesn’t require an upfront investment. Instacart has a fairly low barrier to entry. You’ll need to be at least 18 years old, authorized to work in the U.S. or Canada, and have a smartphone (iPhone 6s/Android 5.0 or newer), plus a functioning vehicle with minimum insurance.

How to make more money on Instacart

If you’re seeking to boost your Instacart earnings, here are some things to try:

Take orders during peak hours. You can use Instacart’s shopper app to find times when demand is greatest up to a week in advance. Demand usually peaks during weekends and holidays.Shop multiple orders at once. If you’re organized enough to shop multiple orders at once and pay for each one separately, doing so can maximize your earnings. You can also save on gas by delivering several orders at once.Look for bonuses. When driver supply is low, Instacart pays bonuses to get more drivers out there. You can also earn sign-up bonuses if you make a minimum number of deliveries in your first 30 days and referral bonuses if you get people to sign up to drive using your code.Treat customers well. Communicating with customers about their orders, including any substitutions, and bagging their items with care can help you maximize tips. Instacart prompts customers to tip extra whenever you get a five-star rating.

Driving for Instacart can be a good way to supplement your income and earn money quickly. But be sure to consider the costs, as well as whether your schedule allows you to drive at peak times, to determine whether this is the right side hustle for you.

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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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Keeping your cash in a high-yield savings account can boost your bank account balance. Find out how much interest you can make with $30,000 in the bank. 

Many Americans are saving up so they’re prepared for future life expenses. Anyone with an emergency fund should consider where they keep their extra savings. By opening a high-yield savings account, you can maximize the interest you earn from your savings. Are you wondering how much money you can make with $30,000 in the bank? Let’s take a look at how much you can earn with this much money in a high-yield savings account.

Earn more money with a high-yield savings account

Many banks offer savings accounts, but they’re not all created equally. Banks with savings accounts that earn interest use an annual percentage yield (APY) to describe the returns a customer can expect if they keep their money in their savings account for one year.

If you have a savings account, it’s essential to review the APY so you know what to expect. It’s common for brick-and-mortar banks to offer low APYs for their savings accounts. Your small, local bank may offer as little as 0.01% APY. At that meager rate, you won’t earn much.

But the good news is a high-yield savings account could offer much more. Many banks offer 4.00% APY or higher for these accounts.

$30,000 in savings accumulates this much interest

To determine how much interest you’ll earn, multiply your initial deposit ($30,000) by the APY your bank account offers. Doing this will show you how much you’d make if you kept your cash in the bank for one year.

For the below calculations, I used a 0.01% APY for a standard savings account and a 4.50% APY for a high-yield savings account. The bank accounts on our list of the best high-yield savings accounts have APYs ranging from 4.15% to 5.05% — so I chose a rate in between.

The following calculations assume a $30,000 deposit with no additional deposits made to your account:

I don’t know about you, but I’d rather earn $1,350 than $3. Beyond opening a bank account with a higher APY, boosting your earnings potential takes no additional work. Talk about a win!

Compound interest is on your side

As you can see, you can earn a significant amount of cash by keeping $30,000 in the bank for one year. But you can earn even more thanks to compound interest, which is interest that you earn on interest. The longer you keep your cash in your bank account, the more you’ll earn.

To give you an idea how you can benefit from compound interest when you have a savings account, here’s how much money you’ll make if you keep $30,000 in a high-yield savings account for anywhere from one to five years.

Again, the calculations below assume you make no additional contributions beyond the initial deposit. You’ll earn even more if you continue to make deposits into your account.

Here’s a breakdown of the potential earnings:

Wow! That’s $7,385.45 earned in five years, assuming the APY doesn’t change. Keep in mind that APYs can change over time, so your APY likely won’t stay the same rate forever.

Do this to earn more interest

If you have $30,000 saved up, congratulations! That’s a massive accomplishment. But make sure you’re keeping it in an account that earns interest. Check the APY so you feel confident that you’re earning as much interest as possible. If you’re not earning at a great rate, consider opening a high-yield savings account to boost your bank account balance without doing any extra work. Money earned from interest can be a 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.The Motley Fool has a disclosure policy.

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If your CD from last year has a rock-bottom rate, is it worth withdrawing for a new CD contract? Here’s the math you need to know. 

If you locked into a certificate of deposit (CD) last year, you may be looking at today’s rates through watery eyes. Not only have CD rates exploded to levels we haven’t seen in decades, the Federal Reserve’s rate hiking campaign may push them even higher. That raises a compelling question for previous CD owners: Should you break a CD contract to lock into today’s jaw-dropping rates? Let’s take a look.

Yes, if the interest you would earn is greater than the penalty you would pay

Unless you have a no-penalty CD, your CD contract likely has a clause stipulating early withdrawal penalties. Often, the penalty for withdrawing early means forfeiting a portion of the interest you’ve earned, along with the closure of your CD account. In general, the longer your CD term, the more hefty the penalty. And yes, the penalty can exceed the amount of interest you’ve accumulated.

That said, if the interest you forfeit is less than the interest to be gained on a new CD contract, it might be worthwhile to break your contract.

Let’s look at an example. Let’s say you’ve deposited $5,000 into a 2-year CD with a rate of 2.50% and the penalty for withdrawing early is six months of forfeited interest, which would be $62.50. You’ve earned 13 months of interest, which is about $135.42. If you were to walk away now, you would be left with $72.92 after the penalty is deducted.

You weren’t thinking about walking away, until you saw a 5.51% rate on a 12-month CD. At that rate, you would earn $275.50 after 12 months. That seems like a pretty good deal, but is it worth breaking up with your old CD?

In this case, it would be worth breaking the old CD contract. If you keep your money in the old CD, you’d be left with $250 in interest after the CD term ended in 11 months. The new CD would earn you about $275, a difference of only $25. But if we add in the $72.92 from the old CD, you’d have $347.92, almost $100 more than if you had kept your old CD.

Do the math for yourself

Take a look at your CD contract and figure out if you’ll come out on top by closing a CD and opening a new one at today’s rates. If the difference between the forfeited interest and the interest you would earn is positive, then nine times out of 10 you’ll likely fare well breaking up with your old CD.

The best CD rates right now come with short terms, such as 6 months or 1 year. But you might find a compelling rate on a long-term CD, such as:

3 years4 years5 years

One thing to consider is that CD rates may or may not have peaked. The Fed is watching the economy carefully and isn’t afraid to raise rates if it thinks it will help it achieve its inflation goals. If the Fed raises rates again, CD rates would likely get a tiny bump.

That’s not to suggest you should try to time the CD market and open one when rates hit their peak (whenever that is). But you may have some time to let your current CD accumulate interest — or perhaps even mature — before you close your account and pay the penalty. Either way, closing an old CD for a new one is certainly worth considering, especially if your old CD has a rock-bottom rate (like 1% or lower). Take a peek at today’s top-paying CDs and see if it’s worth breaking your contract for one.

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Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 12x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023.

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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From baby boomers to millennials, find out how wealth is distributed across generations in the U.S. Read on to learn which generation is the wealthiest. 

It’s no secret that America has become an increasingly wealthy nation. But what may surprise you is just how some generations have had more success than others when it comes to developing and keeping their wealth. Here are the differences by generation when it comes to assets and liabilities.

Assets by generation

The United States has $159 trillion in assets, and baby boomers own half of that. However, baby boomers are only 21% of the country’s population. This statistic showcases the significant wealth of boomers in America. The following charts, based on Q1 2023 data from the Federal Reserve, will help you understand the wealth pattern by each generation.

Baby boomers’ largest asset category is equities and mutual funds, where they own 56% of the national total. In comparison, Gen X owns 26% and millennials own just 2%. For all generations except for millennials, their assets are almost evenly distributed between real estate and equities.

Millennials, on the other hand, hold more of their wealth in real estate than any other generation, owning six times more than they do in equities and 12% of the total national value. This indicates that millennials generally prefer to invest in physical property rather than financial assets.

Liabilities by generation

Americans have over $18 trillion in total debt. The largest liability across all generations continues to be mortgage loans, making up close to 70% of all liabilities. Millennials carry the most consumer credit card debt, holding over $2 trillion of the national total. This figure accounts for 42% of the total credit balance, indicating that consumer credit is a significant factor in the financial make-up of this generation.

In comparison, boomers have only $0.5 trillion and Gen Xers hold $1.4 trillion in consumer credit. Out of all the generations, Gen X has the most debt, carrying almost 40% of the total national liabilities.

Net worth by generation

Baby boomers’ share of net worth is 53%, almost more than double that of Gen X, who hold 28%. Millennials’ net worth is about 10% of the baby boomers and just 6% of the national total. This shows that millennials still have a ways to go in building their wealth.

How to build your wealth

Building wealth is not an easy task, but it can be done with hard work and the right mindset. The first step is to establish your financial goals and develop a solid plan to reach them. Look to increase your income with a side hustle or by getting a raise. Another important step is to invest your money in assets that will appreciate over time. You can invest in stocks, real estate, or mutual funds, to name a few.

Another crucial aspect of building wealth is to reduce your expenses and save as much as possible. This can be achieved by creating a budget, cutting unnecessary expenses, and living below your means. It’s also important to stay informed and constantly educate yourself on financial matters. Additionally, it’s important to protect your assets by purchasing insurance. You should also work on establishing an emergency fund to provide cushion in the event of job loss or other unforeseen circumstances.

Building wealth requires discipline, patience, and the willingness to take calculated risks. By staying focused on your goals and consistently working towards them, you can create a secure financial future for yourself and your loved ones.

Understanding wealth distribution across generations is vital. It helps us understand how different generations manage financial assets and provides insights into challenges and opportunities for each generation. Baby boomers have amassed a significant amount of wealth, but they will pass it on to future generations. Millennials must focus on building assets and reducing debts. It’s worth remembering that finances are fluid, and everyone has the opportunity to develop their assets. Take a moment to reflect and gauge where you stand and consider what you can do to improve your financial status.

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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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