Money Management

You can sometimes buy items for just $0.01 at Dollar General. Find out how penny day works to score this great bargain. 

If you want to keep your credit card bills low, buying items that cost only $0.01 could be a great way to do it. After all, paying a penny for something allows you to use the spare change you find in your pocket or sofa to make a purchase rather than having to take money out of your bank account.

It may seem impossible to believe you could actually get something for a penny. But, it could be possible at Dollar General if you know one simple fact about how the store works.

This is what penny day is and how it can help you score deep bargains

At Dollar General, like at most stores, items are sometimes marked down. The official policy is that items are supposed to be priced as low as 90% off. After that, any remaining items that have not sold are supposed to be removed from the store.

When the products are supposed to be removed, they are priced at just $0.01. This is meant to alert employees that they’re supposed to be taken from the shelves. Often, however, employees are busy, the items don’t get removed, and they should ring up for a cent.

While not all clerks will sell these items to you for a penny, many will. If your store does, you can walk away with an unbelievable bargain on the item.

How to score items for a penny

If you want to take advantage of penny day, there are a few things you should know.

Markdowns usually occur on Tuesday, so that can be the best day to try to find penny items.Updated lists are published online each week detailing which products are for sale for a penny. Do not ask a store clerk, as these items are supposed to be pulled from the shelves, so employees will remove them rather than assisting you with locating them.If you want to buy multiples of an item on sale for a penny, bring all of them up at one time. Once a store clerk has been alerted to the fact that penny items remain on the shelves, they’ll remove the rest of them.If an item happens to ring up for more than a cent, you can always just ask to have it removed from your cart. This can be better than price-checking it first, which would alert the clerk to the fact it should have been removed from the shelf.

You’ll also need to be prepared for the fact there’s no guarantee the clerk will actually sell the item to you. So, you may end up disappointed depending on your store’s policy. And, different stores may mark down items at different times or pull items at different times, so if an item doesn’t ring up for a penny when you go, try to check back later on and see if the discount comes up.

The good news is, taking advantage of penny day at Dollar General is just one of many ways you can save by being a smart shopper. Use coupons and cash back apps, compare prices, and maximize your credit card rewards to help you get more for less.

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When you rent a property, you’re paying for a place to live. But, you do need to consider both the pros and cons of renting. Here’s why. 

There’s a lot of pressure to buy a house in America.

In fact, owning a home is described as part of the American dream and many people would prefer to make monthly mortgage payments because they feel like they are “throwing away money” when they send their rent to a landlord every month.

But, are you really wasting your cash if you rent? Is renting the wrong choice for everyone and is homeownership the surest path to wealth?

Renting can be the right choice in some situations

While you may want to buy a house in order to try to build equity, this only makes sense if you are in the right financial position to do so.

First and foremost, you have to be sure you are going to be staying put for a while. If you plan to move within around two to five years, then you could end up losing a lot of money if you try to buy a home.

There are high transaction costs associated with real estate sales. If you don’t live in a house long enough for property values to go up at least 6% or so, you likely aren’t going to be able to make enough on your home sale to get back the closing costs and fees you paid. In this case, buying a home could cost you rather than helping you build wealth by acquiring the home as an asset.

You also have to be sure you are in a good financial position to cover your mortgage costs and other costs of homeownership, such as property taxes and maintenance. In fact, you should budget around $1 for every square foot of living space for your home maintenance costs every year. If you cannot afford the house and you end up getting foreclosed on or struggling to invest any money because the property is so expensive, a home won’t help you build wealth either.

In these situations, since buying won’t improve your finances in the long term, you absolutely are not throwing away money renting. You are paying for a place to live that you can easily move away from without worrying about transaction costs. And, if it is cheaper to rent than to buy, you are paying for a more affordable place to live that won’t interfere with your financial goals.

You may also not be throwing away money if you can rent a place for less than it costs you to buy one and you invest the difference. The stock market has tended to provide a better ROI than real estate over time, so if you’re investing the extra you save due to renting versus buying, you could end up with a higher net worth in the end. Instead of throwing away money here, you’ll be paying for a place to live that enables you to do better things with your cash — as long as you actually follow through with investing.

Here’s how to decide if you should rent or buy

To decide if you should rent or buy, consider your financial situation, whether you’re ready for homeownership, and how much it costs to own versus rent. If it doesn’t make sense for you to buy due to these factors, renting is the right choice. It’s not a waste, since it’s buying the right housing option for your current situation.

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IRA profits are a good thing, but it’s important to know how they’ll impact your taxes. Read on to learn more. 

An estimated 36% of Americans have an individual retirement account (IRA). And if you’re eager to build a retirement nest egg, it could pay for you to open one as well.

IRAs come in two main varieties — traditional and Roth. There are other types of IRAs that are designed for self-employed individuals and small business owners, but those are less widely utilized.

The upside of saving and investing for retirement in a traditional IRA is that you get a tax break on your contributions. But there’s an additional tax benefit to be reaped when you invest in an IRA.

There’s no need to worry about a near-term tax bill

When you buy and hold stocks in a regular brokerage account, any time you sell shares at a profit, you have to pay capital gains taxes for that same year. In other words, if you score a $1,000 profit in your brokerage account at any point in 2023, you’ll have to reconcile that tax bill in the course of filing your taxes for 2023 (you may not have to actually write the IRS a check for capital gains taxes if you qualify for other deductions or credits, but the liability is still there).

With an IRA, gains in your account work much differently. The beauty of a traditional IRA is that gains in your account are tax-deferred, so you don’t face a tax bill on profits year after year. Rather, you pay taxes on those gains in the form of taxable withdrawals.

Let’s say you buy $2,000 worth of a given stock, and by the time you retire, it’s worth $8,000. That’s a $6,000 gain. But that doesn’t mean the IRS is going to demand its share of that $6,000 in one fell swoop. Rather, you’ll be taxed when you take withdrawals so that over time, you’re paying taxes on all of your gains in your IRA indirectly.

Does a traditional IRA make sense for you?

If you want to avoid having to pay taxes on investment gains in your retirement plan, then your best bet is to fund a Roth IRA, where investment gains and withdrawals are both tax-free. But one thing you should know is that Roth IRAs are funded with after-tax dollars, so you won’t get any tax benefit out of the money you contribute.

With a traditional IRA, funds you put in serve the very important purpose of exempting some of your income from taxes. And it’s that tax break that might make it possible for you to save for retirement in the first place.

That said, if you like the idea of getting a tax break on your retirement plan contributions and you also like the idea of tax-free gains and withdrawals, you could split your savings between a traditional and Roth IRA. There’s no rule stating that you can only save in one account versus the other.

You can also take a traditional IRA and convert it to a Roth later on should you decide you want the benefit of tax-free gains and tax-free retirement withdrawals. But when you do this type of conversion, you get hit with a tax bill, so you’ll need to plan for it carefully.

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Using a personal loan for a car down payment may not be allowed, and it can be a bad idea for your finances. Read on to learn why. 

When you buy a car and borrow to do so, your lender may require you to make a down payment on the vehicle. The required down payment can vary, but sometimes it could be as high as 10% or more of the car’s value. With the average price of a new car coming in at $48,008 as of March 2023, this could mean you need around $4,800 or more to get a vehicle of your own.

If you don’t have this much money in your bank account and you need a vehicle, you may be looking for options. And one solution that might seem attractive is obtaining a personal loan, since the proceeds of a personal loan can be used for just about anything you want.

But, can you use a personal loan as a down payment for a car? Here’s what you need to know.

Will your dealer allow a personal loan?

In many cases, your dealer is not going to allow you to use a personal loan as a down payment for a vehicle.

One purpose of the down payment requirement lenders put in place is to ensure you have some money invested in the vehicle so you have an ownership stake and want to keep the car (and keep making payments on the loan). If you get a personal loan, you won’t have this skin in the game and that makes lenders very nervous that you’ll default on the car loan.

If your dealer won’t let you use a personal loan, then this option is off the table.

Can you qualify for both a personal loan and a car loan?

There’s also another potential obstacle to using a personal loan to make a down payment on a car. You will have to apply for both the personal loan and the car loan. And, it is possible that you won’t be able to get approved by both lenders.

Lenders typically consider how much debt you have relative to your income when deciding if you are allowed to get a loan or not. If you take out a personal loan in order to get the money for a car down payment, this is going to show up in your credit record. Your auto lender may find you owe too much relative to what you earn, or more simply be concerned that you’re taking on so many financial commitments at once.

Now, if you have plenty of income, you may be able to qualify for both the car and personal loans — especially if you also have a good credit score. But, you can’t count on that being the case. You don’t want to get a personal loan for a down payment, only to find out that this action cost you the chance to borrow anything for the car at all.

Is using a personal loan to buy a car really a good idea?

Finally, you should stop to think about whether it’s actually a smart move to use a personal loan to buy a car. You’ll be taking on a lot of obligations that could make affording the bills harder if you do that. And, if you have to sell the car or if it is totaled in an accident, you may not get enough money to pay off both the auto and personal loan.

For all of these reasons, you should usually steer clear of using a personal loan for a car down payment. Instead, wait to buy your car until you’ve saved up the funds you need. It may take a little longer, but you won’t regret it.

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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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Some employers offer life insurance coverage, but there are pros and cons to getting it. Here’s what to know about employer-provided life insurance. 

Life insurance is an important type of protection most people should have. In some cases, employers actually offer life insurance policies as a workplace benefit. When this is an option, it may seem convenient to simply buy coverage through an employer rather than shopping independently for an insurance policy and having to pay premiums directly out of a checking account.

But, is getting life insurance through an employer the right choice? Here’s what happens when people obtain this coverage through work.

Coverage should be available regardless of health

In many cases, the life insurance policies employers make available are policies that any employee can enroll in — regardless of health status. This means even people who might not be able to buy a policy independently due to a history of illness can usually get workplace coverage.

This is a major benefit for people who need to protect their loved ones but who have pre-existing conditions that make getting coverage difficult. Anyone who needs life insurance but who can’t get it outside of work should definitely sign up for as much coverage as their employer offers.

The employer may subsidize premiums

Employers sometimes pay part or all of a worker’s life insurance premiums as a workplace benefit. If that’s the case, there is no reason not to take advantage of the chance to put this protection in place for family members. Even if it makes sense to purchase additional coverage elsewhere, there’s no reason to pass up discounted or free life insurance.

Workers just need to be sure that when an employer is subsidizing life insurance, the employee is able to name their own chosen beneficiary. This is different from corporate-owned life insurance, which makes the company the beneficiary when a worker dies.

There may be coverage limits that are too low

When employers offer life insurance coverage through the workplace, there are often limits on how large the death benefit can be. These limits are not always very high. As a result, a worker who gets life insurance through their job may not have enough protection in place for loved ones.

A good rule of thumb is that most people need a death benefit that’s about 10 to 12 times their income. If a life insurance policy offered through an employer does not provide the chance to get such a substantial death benefit, then the worker may need additional supplementary coverage on top of what the employer’s insurer is offering.

Life insurance coverage could be lost with a job change

Finally, there’s a big risk to be aware of when buying life insurance through work. In some cases, losing the job would mean losing the insurance coverage. And that could be a huge issue if a health issue has developed or the worker has aged and can no longer buy separate independent coverage when the workplace life insurance is lost.

Workers should strongly consider getting their own separate life insurance policy outside of work even when an employer offers coverage, as a result of the risk of losing the policy as well as because of the potentially low coverage limits. Life insurance isn’t something to mess around with, and if a workplace policy doesn’t provide the necessary long-term protection, employees owe it to themselves to take matters into their own hands.

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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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