Money Management

Choosing to sell your home can impact your finances in many ways. Find out why one writer and her spouse decided to wait to sell their home. 

My husband and I became first-time home buyers a little over four years ago — and what an adventure it has been. While we love many things about our current home, we’ve outgrown the cozy space. We discussed selling our home and planned to rent for at least a year while determining our must-haves for the next house we intend to purchase. But we’ve since decided to hold off and continue living in our home. I’ll explain a few reasons why we’re going to wait.

1. Rental costs are expensive

It’s no secret that rental prices have been rising throughout the country. While we can afford to spend significantly more on housing than what we pay right now, we didn’t like the idea of having to pay an outrageous price for a home rental. Since we’re used to living in a single-family home, we hoped to rent an entire home instead of an apartment.

We spent many weeks looking at rentals in our area to get a feel for prices. Finding a great house at a reasonable price was a struggle, even in our low-cost-of-living city. It didn’t help that we were looking for a single-family, cat-friendly rental home in highly-desirable parts of our city.

After visiting homes and seeing what was available, we decided to hold off on selling our place. We didn’t want to go through the stress of preparing our home for sale, only to move into a more expensive home that didn’t meet our wants or needs. Sometimes it pays to wait.

2. We’re locked into a low interest rate

When we bought our home in 2019, we secured a good interest rate on a mortgage. Since we have a 30-year fixed-rate mortgage, the rate will stay the same throughout the lifetime of the loan. But if we were to sell our home and buy another one, we would need to take out a new mortgage. Now that mortgage interest rates have risen significantly, a new loan would cost us much more.

According to Freddie Mac, the U.S. average rate for a 30-year fixed-rate mortgage for the week of July 13, 2023, is 6.96%. No, thank you! A higher interest rate can make your monthly mortgage payment much more expensive, making prioritizing other personal finance goals harder. Looking at current mortgage rates made us realize that it’s better to stay put for now.

3. We can afford to save and put extra money toward our loan

Another reason we decided to wait to sell our home was because we’re in a comfortable financial position right now. We have an affordable mortgage payment, which provides more opportunities for us to prioritize other financial goals. That includes making extra payments toward the principal of our home loan to save on interest fees and stashing extra cash in a high-yield savings account to save for a future down payment on a new home. It feels good to have the means to do this.

Staying in our current home and continuing to pay an affordable price for housing allows us to live a life we enjoy while working on our financial goals. If we had decided to sell and move into a rental that cost double what our mortgage payment is now, we wouldn’t be able to reach our goals as quickly as we’d like. Ultimately, this was a big decision for us to make, but I feel confident it was the right choice for us at this moment.

Consider how your finances might change before you sell

If you’re a homeowner who has been thinking about putting your home on the market, make sure you consider all the pros and cons. After selling your home, walking away with a big check would likely feel rewarding. But selling your home could significantly impact your finances.

If you sell your home, you’ll need to find another home to move into. That could mean having to pay for a costly rental or taking out a new mortgage with a more expensive interest rate. As with anything in life, it pays to consider how your choices will impact your finances. A big decision like buying or selling a home is one that requires careful thought.

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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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Amazon Prime might seem like it’s offering you great value. But is it costing you more than expected? 

There are plenty of good reasons to join Amazon Prime. For just $139 a year, you can score access to unlimited free two-day shipping on orders of any amount, plus added perks like free digital content. But while $139 may not seem like a lot to pay for a Prime membership, you may want to consider canceling yours if it tends to lead you to overspend.

Is your Prime membership costing you more than you think?

As of 2022, the average Amazon Prime member was spending $1,400 a year. By contrast, non-Prime members spend just $600 a year on Amazon. And a big reason for that discrepancy may be that having a Prime membership can make it easier to make purchases on a whim.

Non-Prime members have to meet a $25 minimum to snag free shipping on their Amazon purchases. And many people don’t like having to pay for shipping. As such, someone who wants a $13 item might just say “forget it” if they don’t want to spend roughly twice that sum to get their box shipped for free.

But when you have a Prime membership, you can buy a $9 or $12 or $16 item on a whim and have it shipped at no cost without really having to think about it. In the course of a year, though, those seemingly small, meaningless purchases can add up to a large amount.

Let’s say you make one impulse Amazon purchase a month at an average cost of $15. That may not seem like a large amount to be spending. But in the course of a year, you’ve just added $180 to your credit card tab. That’s problematic if you have debt you’re trying to pay off or if you’re trying to build up your savings account balance.

Also, Prime members commonly get access to deals during events like Prime Day. That, too, can lead to impulse purchases.

You might push yourself to make more purchases

For some people, getting an Amazon Prime membership is really an easy call. But if you’re worried about throwing your money away on a Prime membership, you may be inclined to specifically buy extra items from Amazon to justify your $139 a year outlay. That, too, could be costing you more money than expected.

Let’s say you realize it’s been three months since you’ve placed an order on Amazon. You might tell yourself to buy a $30 sweater so you’re using your Prime membership. But if you didn’t really need or want that sweater, you didn’t do yourself any favors financially, even though placing that order might make you feel better about paying for Prime.

Should you cancel your Prime membership?

If you don’t have a car and/or you have a busy schedule that makes it difficult to get to local stores, then a Prime membership can easily make sense — especially if you find that you order from Amazon on a frequent basis. But make sure the items you’re ordering are necessities, or items you’d be buying anyway, and not just forced or impulse purchases you don’t really need.

It’s easy enough to score free shipping from Amazon without a Prime membership — just bundle your purchases to meet the $25 free shipping minimum. So if you feel that your Prime membership is leading you to spend more than you should be, you may want to consider giving it up.

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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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Dollar Tree recently announced it would be cutting back prices. Keep reading to learn how this roll back is part of a larger plan. 

Much ado has been made about Dollar Tree’s announcement that the chain will cut some prices back to $1. As nice as a return to $1 price tags sounds, the adjustment is not quite what it seems. Here, we lay out what a store executive recently said about prices, and why Dollar Tree policies matter to so many people.

Dollar Tree started selling items for $1 in 1986

Dollar Tree first opened in 1986. At the time — as the store name would suggest — every item was priced at $1. In 2021, the discount retailer announced it would begin to raise some prices as part of a test. At that time, prices increased to $1.25 or $1.50. However, just as inflation has impacted the average household’s checking account over the years, inflation has made it tough for Dollar Tree to maintain its profit margin.

Aside from generic brands and smaller packages of familiar products, it’s not always easy for Dollar Tree to purchase products it can sell so cheaply. Which leads to the question of why the retailer would decide to roll back prices now.

Big changes planned

Dollar Tree CEO Rick Dreiling told conference attendees in June, “It’s pretty hard to have a banner like (Dollar Tree), and you have an item that everybody else has at $1, and you’re at a buck and quarter.”

Of the 8,000 or so items Dollar Tree sells, only 300 to 400 will be impacted by the price decrease. That’s roughly 5% of Dollar Tree’s inventory and unlikely to be enough to help consumers send their kids to school or save for retirement.

What draws attention in upcoming months may not be the relatively few items Dollar Tree drops the price on, though. What may take people by surprise are the number of new products with higher-than-expected prices.

The retailer has already introduced the idea of higher price points by introducing $3 and $5 items and placing them in what it calls “Dollar Tree Plus” sections. According to the Dollar Tree website, Plus sections will continue to expand in coming years.

With over 8,000 Dollar Tree stores in the U.S. and Canada, there are no plans to slow down. According to Jeff Davis, chief financial officer for Dollar Tree, there are plans underway for 650 new stores.

Food deserts

“Food desert” is a term used to describe a community that lacks access to grocery stores and fresh foods. The Institute for Local Self-Reliance (ILSR) repeats the claim that stores like Dollar Tree specifically seek out such communities when scouting new locations. However, it doesn’t believe that claim gets it just right.

ILSR believes that chains like Dollar Tree choose locations where space is cheap and there is a significant concentration of low- and moderate-income residents. According to ILSR, “Dollar stores create food deserts,” by leaving little market opportunity for grocery stores to take root or survive.

Whether ILSR’s assessment is correct or not, Dollar Tree’s inclusion of $3 to $5 frozen and refrigerated items has allowed it to introduce new storage coolers to 3,500 stores. Coolers hold proteins, pizza, ice cream, and other food products popular with customers.

It appears that as some prices drop, others will rise. Fortunately, Dollar Tree accepts manufacturer coupons in store, giving shoppers the opportunity to save money on groceries and other items they need.

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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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Did you know you can pack frozen water to get around the liquid limitations on planes? Discover other ways to save money and hassle when you travel. 

I’ve taken a solid mix of backpacking, vacations, and business trips, and I’m lucky to have traveled on everything from a champagne to a shoestring budget. With over 40 countries under my belt, I thought I knew all the ways to save money and reduce stress when you’re on the move. I was wrong. This year, I’ve picked up some new travel hacks that might surprise even the most seasoned traveler. Here are a few of them.

1. Freeze your liquids

These days, most — but not all — airports have water fountains where you can fill an empty water bottle once you’re through security. But that doesn’t always work, especially as some international airlines check again for liquids right before you board the plane. That second check meant I spent 7 hours without water on a delayed Avianca flight to New York. Granted, I could have paid for bottled water on board but I am stubborn and didn’t want to give the airline money for what feels like an inhumane policy.

If you want to carry liquid in bottles of more than 100 ml in your hand luggage, freeze them. According to the TSA website, “Frozen liquid items are allowed through the checkpoint as long as they are frozen solid when presented for screening.” Just be aware that your liquid might still get confiscated if it’s slushy or has started to defrost.

2. Always carry zip lock bags

I started traveling with zip locks after the start of the pandemic when I needed a place to keep my face mask clean. Now you won’t find me without one. Use them for your liquids to avoid sticky shampoo leakages. Blow them up to make mini cushions for your breakables. Impulse bought chili oil in Mexico or fruit jelly in North Dakota? Pack it in a zip lock and your souvenir won’t stain your whole suitcase if it oozes. Plus, if you get hit by unexpected rain or decide to go sailing, a zip lock will keep your cellphone dry. It’s also a good place for a wet swimsuit.

3. Download an offline version of Google Maps

If you’re traveling internationally, roaming costs can quickly add up. It’s often worth buying a local SIM or using an eSIM to cut costs. You can also set data-heavy apps to only connect when you’ve got wifi. On which note, make the most of wifi wherever you’re staying and don’t be shy about asking for passwords when you’re eating out.

Even so, there may be times when you can’t connect to the internet, and it’s often at the worst possible moment. Don’t let that stop you from getting where you want to be. Install Google Maps on your cell and download an offline version of a map that covers the area you’ll be visiting. It’s also worth pinning your hotel or rental address as well as any places you want to visit. You can do it all before you set out.

4. Tie your charger to your keys

Before you leave the room you’ve been staying in, it’s worth doing a quick check inside the shower, electric plugs, and under the pillow. Those are the most likely places you’ll accidentally leave something behind. Even better? Tie your keys around your charging cable, so you can’t leave without them. Looping your charger around your shoe has the same effect — it’s about tying an easily-forgettable item to something you really can’t do without.

If you’re an Apple user, activate the “Find My” feature on your iPhone or iPad. This will help you locate a lost device. I also travel with a back-up power bank so I don’t get caught with no battery. There’s no point having an e-ticket if you don’t have enough power to show it.

The right travel credit card can save you hundreds of dollars

The travel hacks above can cut costs and hassle when you’re traveling. And, while it’s not a mind-blowing hack, in truth, a travel credit card can be a lot more helpful than a bottle of frozen water. For starters, a card that won’t charge foreign transaction fees is essential if you regularly travel abroad. Let’s say you have to pay 3% for every international payment on a trip to Europe. If you spend $2,000 on that vacation, you’d pay $60 in transaction fees alone.

The best travel credit cards often come with perks such as certain types of trip insurance and credits for travel-related costs. You may be able to get free checked luggage and a couple of cards even offer free companion flights (though they charge an annual fee). Finally, look for cards where you can earn decent rewards on flights, hotels, and other travel costs. Even better, if you can get a card with a hefty sign-up bonus, that might be enough to cover a return flight on its own. Weigh any fees against the benefits to ensure you get enough value.

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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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Emma Newbery has positions in Apple. The Motley Fool has positions in and recommends Alphabet and Apple. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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We’ve turned a corner as inflation is no longer wiping out wage increases. Find out what that means for your finances and the wider economy. 

What happened

Real average hourly earnings — wages adjusted for inflation — increased 1.2% year on year in June. The hourly wage in June 2023 was $11.05, up from $10.92 the year before. According to The Wall Street Journal, it’s the second month running where inflation hasn’t wiped out average wage gains.

So what

High living costs have put a big dent in people’s budgets in the past few years. The news that real earnings are finally outpacing inflation could mean this pressure’s starting to ease. Plus, per Bureau of Labor Statistics data, inflation is now at 3%. That’s a long way down from the 9% it reached last June.

However, we’re not out of the woods yet. The Federal Reserve is still treading a difficult tightrope. It wants to cool the economy enough to lower inflation, but not so much that we slide into a recession. In this respect, higher wages can be a double-edged sword. They help consumers handle spiraling inflation, but the fear is that they can also contribute to that inflation. Higher wages can push up the cost of doing business. If — and when — those costs get passed on to the consumer, prices go up even more. Wages, inflation, and interest rates are all connected.

Now what

If your wages have gone up, or your living costs have shrunk, you may be tempted to use that money to treat yourself. All the more so if you’ve had to cut back on non-essential spending to stay afloat. But if you can put any extra cash toward building financial resilience, it might make life easier further down the line.

For example, if you carry a balance on your credit card, focus on paying this down. Credit card interest can add up quickly and eat into your available funds. Depending on how much you owe, this debt can also increase your credit utilization ratio, which is the amount you owe vs. the total amount you’re able to borrow on your cards. A high credit utilization can dent your credit score, making it harder to borrow money if you need it.

If you don’t don’t have enough money in a savings account to cover an emergency, perhaps you could put a small amount toward this each month. Many financial experts recommend having three to six months’ worth of living expenses in an emergency fund. If this seems an unachievable goal, think about what would be feasible for you and try putting some money aside.

We’ve been hearing recession warnings for a long time. But some economists think the latest figures mean the U.S. could in fact avoid a severe economic downturn. Consumer confidence is increasing, earnings are growing faster than living costs, and inflation is slowing. Even so, given that things are still uncertain, using spare money to strengthen your finances makes sense.

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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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