Money Management

“No spend” weekends, weeks, and months are all the rage. Read on to see why this writer didn’t get much out of the experience. 

No matter what stage of life you’re in, it’s important to have a solid emergency fund — enough money in the bank to cover a minimum of three months’ worth of expenses. Given that 67% of Americans couldn’t cover an unplanned $400 expense, as per a recent SecureSave survey, it’s clear that many people have work to do.

One route you may decide to take to build up your savings is to have a “no spend” period, whether it’s a weekend, week, or month. The idea behind a “no spend” period is to limit your expenses during that time to essentials only — things like groceries and gas for your car so you can go to work — but avoid spending money on anything non-essential.

So, let’s say you’re having a “no spend” weekend. You’d be allowed to replace the milk in your fridge when it runs out. But you wouldn’t be allowed to pick up a latte from your local Starbucks.

I can see why a “no spend” period can be helpful to people who need to give their savings a boost. But I tried several “no spend” weekends and found that they didn’t do much for me at all.

Aggravation without the upside

As someone who writes about personal finance, I commonly offer advice on how to build savings and the importance of doing so. And I’ll sometimes suggest a “no spend” period to facilitate that goal.

But I don’t like to offer up advice without trying it out myself. So I’ve made myself implement a few “no spend” weekends to see how feasible it is to stick to only buying essentials.

In reality, a “no spend” weekend is quite doable. So is a “no spend” week and even a “no spend” month. But it’s also, frankly, not an easy system to uphold. So if you don’t have a pressing reason to save money, it may not be worth it.

That was my experience, at least. I make a point to maintain a pretty robust emergency fund and have a decent chunk of cash socked away already for retirement. I still try to push myself to save money on an ongoing basis, because it’s hard to predict when something will go wrong with my house or car, or when I might find myself staring down a large medical bill and dipping into my cash reserves to cover it.

But because I’m generally a good saver and I have savings already, I found my “no spend” weekends to be nothing more than annoying. During my last one, I forced myself to cook dinner after a long afternoon of hiking with my kids when spending $20 on a pizza would’ve made the evening far more pleasant. And did the $20 in savings do a lot for my finances? Not really.

A good option when your savings really need work

If you’re someone whose savings could really use a lift, then I’d recommend trying a “no spend” period and seeing what it does for you. I commonly tell people without savings to stop spending money on non-essentials and sock away every dollar possible until they have some sort of cushion. So the “no spend” idea falls in line with that.

But if you’re someone who already has a nice amount of savings and you’re looking for a boost, whether to have more comfort or meet a specific goal, like going on vacation, then I’m not sure a “no spend” period is the best answer. You may end up denying yourself small purchases that make life much easier or more pleasant.

In fact, the next time I want to give my savings an extra lift, I’ll probably just try to work more rather than go through a “no spend” period. And you can do something similar by picking up a side hustle instead of banning non-essential spending for a period.

Either way, you’re sacrificing something. It’s just a matter of which sacrifice is more or less painful 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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Starbucks. The Motley Fool has a disclosure policy.

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Selling your home for a price that’s not high enough to cover your mortgage could be problematic. Read on to learn more. 

There may come a point when you want or need to sell your home and can’t afford to wait. Maybe you lost your job and can no longer afford your monthly mortgage payments. Or maybe you have to move for a new job and can’t put off a sale.

It’s generally best to sell your home at a time when its value is up. But you might get stuck having to sell at a time when your home’s value has declined.

In fact, your home’s value might not be high enough when you sell it to pay off your mortgage. It’s a situation that’s known as being underwater on your home loan, and it’s unfortunately not a great one to be in.

When you have to sell your home for less than what you owe

A few things might happen if you’re selling your home for less than your mortgage balance. In some cases, you might have to dip into your own savings account to cover the difference.

Let’s say you owe your mortgage lender $140,000 but your home can only sell for $130,000. In that case, you might have to take a $10,000 withdrawal from your personal cash reserves to make up that difference.

But that assumes you have the money. If you don’t, then you may need to get your lender to agree to a short sale.

In a short sale, you sell your home at market value and your lender writes off and forgives the remainder of your mortgage balance. So in this example, a short sale would have your lender agreeing to take $130,000 to satisfy your mortgage in full.

A short sale is something your lender must agree to. You can’t make the decision to sell your home for less than your mortgage balance on your own and expect your lender to just roll with it (though to be clear, you can make that decision if you’re the one who will be making up the difference with your own cash reserves).

In some cases, a lender might say no to a short sale. But it will commonly say yes because a short sale is easier than going through the foreclosure process, and it might be less costly for the lender.

You should know, however, that a short sale will show up on your credit report, and it will stay there for seven years. That could cause your credit score to drop, making it harder to borrow money the next time you need to.

Some other options to look at

Perhaps you want or have to move immediately but your home can’t sell for a price that will allow you to pay off your mortgage in full. In that case, one option to look at is keeping your home, renting it out, and waiting for its value to rise before selling.

This will generally only work if you can command enough rent to cover your costs of ownership. If your monthly mortgage payment is $1,200 and you can only rent out your home for $1,000, you may not be able to afford that $200 monthly difference.

All told, selling a home for less than your mortgage balance could have unfavorable consequences one way or another. So if you can somehow avoid that situation, you’ll be better off for it.

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Borrowing to cover living expenses? You’re not alone. Keep reading to find out what to do about it. 

Temperatures aren’t the only thing breaking records this summer. For the first time ever, credit card balances have topped $1 trillion — and show no signs of coming down. A tumultuous economy in past years has put many Americans in a difficult position, between high inflation and the interest rates meant to slow the economy. Read on to learn more about how we got here and what to do now.

Borrowing to live

As the price of necessities rises, workers are being forced to spend more of their earnings just to keep their heads above water. And when budgets are already stretched thin, it’s not surprising that some Americans are going into debt just to pay the bills.

For the last two years, everyone has been talking about inflation. Whether you’ve seen gas prices jump, “shrinkflation” reduce your normal grocery haul, or used vehicle prices soar, inflation has hit nearly every major spending category. The inflation of recent years has hammered American workers by upping the price of basic necessities.

Wages tend to trail inflation, so many households are over the edge of their budgets while waiting for their income to catch up. The simple math is that when expenses exceed income, the deficit needs to be made up somewhere. For many households, the easiest option is to pay for necessities with a credit card — and carry a balance in the short term.

Balances are likely to grow

Unfortunately, those who borrow during peak inflation will continue to face economic headwinds as the Federal Reserve fights inflation by increasing interest rates. As a result, balances will compound at an even quicker rate than before.

The Federal Reserve, tasked with managing post-pandemic runaway inflation, uses interest rates to cool the economy down. By raising rates, it becomes harder for banks and consumers to borrow money, and in theory reduces big-ticket purchases like homes and new cars. However, for consumers that are already carrying variable-rate debt, the results can be devastating.

Most credit cards offer a variable interest rate, meaning the rate you pay on the card is related to interest rates throughout the economy. When a credit card issuer raises interest rates while you’re carrying a balance, that balance grows at an even faster rate than before. And when rates are rising like they are now, that can increase your minimum payment and put you in a difficult situation.

Here’s what you can do

If you are carrying a large balance on your credit card, and are in a position where you cannot pay it off, you still have options.

With a balance transfer credit card, you can transfer some or all of your existing debt onto one card offering up to a year (or more, for some cards) of no interest charges. This type of card may offer some breathing room, but you must carefully read the terms and have a plan to pay off the debt during that time. You may also be able to negotiate your interest rate with a lender based on your payment history or financial circumstances.

For many Americans, the last few years have been difficult financially. Inflation forced many into debt, and rising interest rates are making it difficult to escape. Borrowers are not completely out of luck, however, and taking the right steps today can put you back on track for a debt-free 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.The Motley Fool has a disclosure policy.

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Struggling with daycare costs? Read on for some ways to ease the burden. 

If you work and have young children who aren’t old enough to attend school, then paying for daycare might be inevitable. And unfortunately, you could be in for some pretty steep costs.

Care.com reports that the average weekly cost of daycare is now an astounding $284. That’s up from $186 in 2013. And it’s also the cost you might be looking at per child, which means that if you have more than one, your daycare bill might easily end up costing you half of your paycheck or more.

Many parents have to dip into their savings accounts to keep up with daycare costs. And for some, the cost of care is so high that it drives them to drop out of the workforce altogether.

But that’s a move you may not want to make. For one thing, you may be reliant on your employer to provide your family with health insurance. And also, taking a long career break could make it harder to reenter the labor force once your kids are older. So if you have no choice but to keep paying for daycare, here are some ways to potentially make it more affordable.

1. Shop around

Any time you’re looking at a financial transaction, whether it’s signing a mortgage or buying a new car, it’s a good idea to compare your options. Similarly, that’s a route you should take with daycare if there are different providers in your area.

Unfortunately, though, you may not have many daycare centers to choose from. According to Care.com, 75% of parents say there are fewer than six daycare centers within a 20-minute drive of their home. But if you live somewhere with multiple options, compare rates.

Don’t wait until the last minute to do so, though. Daycare centers commonly have long waiting lists, so if you’re pregnant with your first child, the time to shop around is when that baby is still in the womb.

2. Ask for a sibling discount

Having to bear the cost of daycare for more than one child at a time could be horrendously burdensome. That’s why it pays to ask for a sibling discount — even if your daycare center doesn’t immediately offer one. You never know if yours might be willing to work with you.

And if you can’t get a sibling discount, ask about a prepayment discount if that’s something you can swing. You might, for example, snag a reduced rate if you’re able to pay for a month of care at a time rather than pay by the week.

3. Ask family to help out

You may not be able to burden your family with having to watch your child on a full-time basis. But if you have a retired parent or in-law nearby, asking them to look after your child just one day a week could go a long way.

Similarly, you may be able to work out an arrangement with another family in your area. Let’s say a neighbor of yours with a young child works weekends but is off on Mondays and Tuesdays. You could agree to watch their child on Saturdays if they watch yours on Mondays, thereby saving yourself each a day of childcare fees.

4. Request a more flexible work schedule

If you have a very young child, it may not be feasible to work from home and look after them at the same time. But having a more flexible schedule could make it so your child is spending fewer hours at daycare. And that could result in a lower weekly bill.

Talk to your employer about your situation and see what they can do. It may be that your company is back to in-person work. But if you’re a valued employee who’s been with the company for quite some time, they may be willing to bend their policy by, say, letting you work from home twice a week. That could make it so you only need to pay for a half-day of care on those days, which could trim your costs quite a bit.

Unfortunately the cost of daycare has gotten to the point where many parents can’t afford to work. If you’re struggling to pay for daycare, see if any of the above moves work for you. And if they don’t, you may want to consider going freelance so you can set your own hours. You may find that working 15 hours a week yields you more money than working 40 hours a week, if the former doesn’t require you to pay for childcare at all.

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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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