Money Management

Prime Day prompted a lot of people to spend money this year. Read on for tips if you overdid it. 

This year, Amazon Prime Day took place on July 11 and 12, and consumers were excited about the big event before it even kicked off. Not shockingly, Amazon made a killing on Prime Day. The online retail giant saw U.S. consumers spend an astounding $12.7 billion during those 48 hours, marking the highest Prime Day spending on record since the mega-sale event was introduced in 2015.

If you made your fair share of purchases during Prime Day, you’re no doubt in good company. But you may, at this point, be regretting your purchases — especially if you racked up a giant credit card tab and you have no idea how on Earth you’ll pay it off.

If that’s the boat you’re in, don’t panic. Here are some options to explore.

1. Consider returning some items that are still eligible

Though there are exceptions, you can generally return unwanted items to Amazon within 30 days. Since Prime Day wasn’t so long ago, some or all of the things you bought may be eligible for free returns, so take inventory and set priorities.

You may not want to get rid of the new vacuum cleaner your household really needs that you snagged at a discount. But if you can do without your new headphones, send them back and ask Amazon to refund your credit card.

2. See if you can cut your spending to pay off your Prime Day tab in full

Maybe you spent $300 on Prime Day purchases and you don’t have the money in your savings account to cover that tab. If that’s the case, and you put those charges on your credit card, you may not have to pay that bill for a good number of weeks.

So see if cutting your spending to a large degree is enough to cover your Prime Day balance. If you force yourself to truly only buy essentials over the next three to four weeks or so, it could free up enough cash to pay for your purchases without having to carry a credit card balance forward.

3. Pick up a temporary side hustle to cover your tab

Cutting spending may not be realistic for you, or it may not be enough to allow you to pay off your Prime Day tab if it’s on the larger side. But one thing you can do in that scenario is look at a temporary side hustle (or a permanent one, but that may not be so desirable).

The good news is that many businesses need help specifically during the summer. So if you want to enjoy your Prime Day purchases without the weight of debt holding you back, see what local options are available on evenings and weekends.

Or, find a job that’s not seasonal. There are plenty of gigs you can work at your own pace, like driving for a ride-hailing company.

Given the hype surrounding Prime Day, it’s not so surprising to learn that Americans spent a boatload of money during the big event. But if your purchases exceed what you can afford, make at least one of the above moves to compensate.

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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. Maurie Backman has positions in Amazon.com. The Motley Fool has positions in and recommends Amazon.com. The Motley Fool has a disclosure policy.

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If you win the Powerball, you’re not doomed to live out the lottery curse. These are the steps you should take to manage your new fortune wisely. 

Someone in California is $1 billion richer after picking the winning Powerball numbers Wednesday night. If you’re the lucky person who defied the 1-in-292,000,000 odds, you may be wondering: “Don’t most lottery winners end up broke within a few years?”

Whether you’re holding a winning Powerball ticket or you’re hoping to hit the jackpot someday, here’s what to do to avoid going broke.

1. Keep it quiet

When you win the lottery, your first impulse may be to shout your news to the world. Resist the urge to blab. Expect that if news of your big prize becomes public, you’ll be bombarded with scammers peddling “investment opportunities” and third cousins you’ve never met asking for money. Many lottery winners are also targeted by frivolous lawsuits.

The level of privacy you’ll be afforded boils down to where you bought your winning ticket. Eight states allow lottery winners to stay anonymous. But in most other states, winners can’t shield their identity. For example in California, where the winning ticket was sold, the winner’s name and where they bought their ticket will be a matter of public record.

Even if you can’t be completely anonymous, do whatever you can to stay out of the spotlight. If possible, avoid a news conference and posing for a photo with a giant check. You may want to set up a P.O. box, change your phone number, and make your social media profiles private or delete them altogether.

2. Hire an attorney, an accountant, and a financial advisor

Whenever you come into a huge amount of money, you want to assemble a team of professionals. It’s essential to hire an attorney, a certified public accountant (CPA), and a financial advisor. Look for professionals who have a solid track record of working with people who have received major windfalls, like inheritances and settlements, even if they haven’t worked specifically with lotto winners.

3. Decide whether you want annual payments or a lump sum

The winner of Wednesday’s Powerball will have the option of claiming a lump sum of $516.8 million or receiving an annuity consisting of 30 annual payments that increase by 5% each year. So you’d receive about $33.33 million the first year, followed by $35 million the next, etc.

These are exactly the type of decisions you should make with the assistance of the financial pros you’ve hired. If you opt for the lump sum, as most lotto winners do, work with your team to develop an investment and withdrawal strategy. Of course, if you opt for the lump sum, you’ll have over half a billion dollars in cash, so you don’t need to earn big gains. Aim for a conservative mix of investments to preserve the principal without taking major risks.

If you’re concerned that you’ll be one of those Powerball winners who succumbs to the lottery curse, consider taking the annuity. Even if you make mistakes with your money, you’ll have more funds coming in.

4. Plan for the tax bill

Whether you take the $516.8 million lump sum or you annuitize the $1 billion, expect to pay a lot in taxes. Lottery agencies are required to withhold 24% of prizes above $5,000 for federal taxes. But either option will easily push you into the 37% tax bracket, so that will leave you owing a large chunk to the IRS.

Again, consult with your financial professionals about tax strategies. You’ll pay taxes on the lump sum amount upfront, while an annuity would spread out the tax bill over time. While you’d have to pay a huge tax bill at once with the lump sum, at least you’re locking in current tax rates. If you choose the annuity, your future payments could be taxed at an even higher rate if tax rates go up.

You’ll also need a plan for estate taxes — something you probably didn’t need to worry about before you won your jackpot, as estates valued at $12.92 million or less aren’t taxed as of 2023.

5. Decide how generous you want to be

An important topic to discuss early on with your attorney, CPA, and advisor is how much of your money you want to give away. Remember, everyone will have their hand out once word spreads that you’ve won the lotto.

Try to set a budget for how much of your newfound wealth you’ll give to loved ones and charities. If you give away more than $17,000 (or $34,000 if you’re married) to any individual in 2023, you’ll need to file a gift tax return with the IRS. You can make unlimited gifts to individuals for up to $17,000 (or $34,000 if you’re married), but any gift above that amount will trigger a gift tax return. Making gifts to individuals while you’re alive — referred to in estate-planning parlance as lifetime giving — won’t lower your income tax bill, but it can reduce the size of your taxable estate.

Also consider whether you want to give money to charity, either by making donations, or establishing a charitable trust or foundation. Charitable giving can help you lower both income taxes and estate tax liability.

6. Update your estate plan

When your financial situation changes drastically, it’s important to update your estate plan. A last will and testament may be sufficient when your finances are relatively simple. But you’ll probably want to set up a trust so you can have greater discretion over how your assets are distributed.

For example, you may not want your kids to inherit hundreds of millions of dollars when they turn 18. Setting up a trust would allow you to dictate that the payments will be made in installments, or set certain requirements for them to receive their inheritance.

Should you bother playing the lotto?

Assuming you’re not in possession of a $1 billion Powerball ticket, maybe you’re wondering: Is it worth spending your money to play?

Before you play the lotto, make sure you’re taking care of your other financial priorities. That means you’re not carrying high-interest debt, you have an emergency fund, and you’re funding your retirement accounts.

Remember how low those odds of winning are: For the latest drawing, it was less than 1 in 292 million. It’s fine if you want to set aside a few bucks from your entertainment budget to play, but picking the winning ticket certainly shouldn’t be part of your financial plan.

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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.The Motley Fool has a disclosure policy.

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Child care costs continue to rise in the U.S. The Biden administration hopes to make this expense more affordable for low-income families. Find out how. 

Child care is not an affordable expense in the United States. The Biden administration recently announced a proposed set of actions that could reduce the cost of child care for many low-income families. The administration has proposed a Department of Health and Human Services (HHS) rule change to strengthen the Child Care and Development Block Grant (CCDBG) program. These changes could help thousands of families save money.

Child care is unaffordable for many American families

Unfortunately, the cost of quality child care in America continues to rise. According to a recent Care.com study, 59% of parents polled plan to spend over $18,000 per child for these costs in 2023. A similar 2022 poll found that 58% of families planned to spend over $10,000 per child.

With those figures in mind, it’s easy to see how child care expenses could quickly drain the checking accounts of hard-working families. For many households, this necessary expense causes added financial burden.

Some families are forced to reduce their working hours, leave the workforce, or piece together child care solutions. But the Biden administration hopes to make child care more affordable for low-income families in the U.S.

Proposed changes would help families and child care workers

The CCDBG program supports 1.5 million families each month with the cost of child care. On July 11, Vice President Harris announced a proposed rule that would do the following:

Cap child care copayments at no more than 7% of a family’s income.Encourage states to waive copayments for families at or below 150% of the federal poverty level.Improve financial stability and encourage child care workers to participate in the CCDBG program by ensuring they get paid on time based on program enrollment, not attendance.Encourage states to accept online applications and make siblings of children who already receive the subsidy presumptively eligible for benefits, to make it easier for families to access the CCDBG program.

How eligible families would benefit financially

The high cost of child care is something that impacts many American families. Vice President Harris had the following to say when announcing the plan, “This is a critical issue for almost every family in our country,” She continued, “Low-income families often spend one-third, one-third of their yearly income on childcare, more than they spend on their rent or mortgage.”

The HHS estimates that between 2005 and 2021, the average family child care copayment increased by nearly 20%. High copayments make it difficult for low-income families to afford participation in the CCDBG. The proposed copayment cap could make it more feasible for families to participate in this child care assistance program.

An estimated 80,000 families would see their child care payments reduced under this proposed plan. For families at or below 150% of the federal poverty level, copayments could be eliminated — saving some families hundreds of dollars each month. Any money saved could be used to cover other essential bills, improving the personal finances of many households.

Share your thoughts on the proposed changes

The public is encouraged to submit comments on the proposed rules. Comments are due 45 days after July 13, 2023. The public plays a vital role in the HHS rulemaking process. If you have thoughts regarding the cost of child care in America and the proposed changes mentioned above, you can submit a public comment on or before Aug. 28, 2023. To do so, visit Regulations.gov and search for the proposed rule by searching docket number: 2023-14290.

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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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Your library may provide free access to some of the subscriptions that you send money on. Find out which ones you can get for free from the library. 

You may already be using your library card to check out books. But many libraries offer much more than books to their communities, and you could save money by utilizing the free resources that your public library provides.

For example, did you know you can use your library card to access subscriptions at no cost? While not every library has the same ones available, many offer free subscription access to its patrons. By saving money on subscription costs, you can stash more money in your savings account. I’ll outline some subscriptions that may be available at a library near you.

1. Ancestry

Before you take your credit card out of your wallet to pay for an Ancestry subscription, check to see if your local public library offers access for free. Ancestry has a library edition, and many libraries provide free access to patrons. If your library offers this, you can search census data and vital records to research your genealogy and learn more about your family’s origins and history. You can login and research from your home computer or local library.

2. Mango

You can learn a new language without touching your bank account. Many libraries offer free access to Mango, a language-learning app. The app has over 70 world language courses. The courses are interactive, and you can work at your own pace. Check to see if your library offers this subscription so you can take your language skills further.

3. The New York Times

The New York Times is yet another subscription that may be available if you have a library card in your wallet. If you like to keep up with the news, it’s worthwhile to see if your library provides free digital access to The New York Times. If available through your library system, you’ll get a digital access code you can use to login wherever you are.

4. Kanopy

Do you enjoy watching movies but don’t love the price the popular streaming services charge for access? You may want to ask your librarian if Kanopy is available. Kanop is a streaming service made available to libraries and universities, and with a library card, you can watch thousands of independent and documentary movies without spending a dime. This could be an excellent addition to your rotation of streaming apps.

5. Consumer Reports

Consumer Reports is an excellent resource to read product reviews and learn more about products before you buy them. However, it’s a paid service. The annual cost for digital access is $39. But you may be able to access Consumer Reports for free through your public library system. Before you spend money on a subscription, check to see if your library offers this.

Get more out of your library card

If you have a library card, ensure you’re using it well. Most libraries provide much more than books; you don’t want to miss out on the many free resources available. We’ve written about how to use your library card to rent tools and other items for free, and now you know more about some subscriptions you may have access to with your card.

Taking advantage of free resources through your library card can help you keep more money in your checking account. Spending less money on subscription fees and using other resources that your library provides can allow you to prioritize your personal finance goals.

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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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