Money Management

Buying a house requires having a lot of third parties traipse through the home in question. Read on to learn why you need an appraisal and a home inspection. 

There are a lot of steps to buying a home. Even before you formally begin the process, you’re likely focused on tasks like saving a down payment and improving your credit score. Once you find a real estate agent and get pre-approved by mortgage lenders to see what kind of deal you can get, you’ll no longer be shouldering the work by yourself, and you’ll soon find yourself in a sea of various professionals weighing in and completing certain tasks.

Two big items on the home-buying checklist are getting a home appraisal and a home inspection. But what do these entail, and do you really need both? Let’s find out.

What’s a home appraisal?

If you’re buying a home with a mortgage loan (as is overwhelmingly likely to be the case), you’ll be required to get the home you want to buy appraised after your offer is accepted by the seller. A seller may also get a home appraisal ahead of listing a property, or you may need one if you want to refinance your mortgage. A home appraisal involves a professional home appraiser visiting the property and spending some time considering the condition of the home (inside and out), its size, the amenities it comes with, and more. The appraiser may also consider recent sales of similar properties in your area.

All of this information is used to figure out how much the home is worth in dollar figures. This is important because your lender will not give you more than the home is worth to purchase it. Ideally, your appraisal will find that the house is worth more than what you’ve offered. If the home turns out to be worth less, you’ll need to either negotiate with the seller for a lower price (and in this seller-friendly market, good luck) or come up with a larger down payment to make up the difference.

What’s a home inspection?

A home inspection is technically optional (unless you are buying with a government-backed mortgage loan such as an FHA or VA loan), but it’s strongly recommended when you’re buying. I personally recommend that you treat it as a requirement, because it can help you avoid a world of hurt as a buyer. A home inspection involves an in-depth look at a home’s physical condition, including the plumbing and electrical systems, the foundation, and the roof. If an initial overview inspection reveals potential issues with a certain part of the home, you may want to bring in a more specialized inspector.

You’ll get a report from the home inspector detailing the good, the bad, and the ugly with the house. If you have an inspection contingency in your offer (gosh, I hope so), you can then use this information to cancel your contract if the home requires too much work and the seller isn’t willing to lower the purchase price or fix the problems. Or, you can also elect to buy the home anyway, but it’s good to know in advance if you’re buying a money pit so you can adjust your expectations and budget accordingly.

Why do you need both?

As we’ve already seen, a home appraisal and a home inspection both involve taking an in-depth look at a property you’re hoping to buy. But each task exists for a different reason. If you’re buying with a mortgage loan, your lender needs to know for sure that it’s not lending you more than the home is worth. And even if you’re buying with a conventional mortgage loan and no inspection is necessary for it to go through, you’ll still want to know in advance about any potential problems with your dream house. In real estate, as in all things, knowledge is power.

As a home buyer, you’ll pay for the appraisal as a part of your closing costs, and will generally pay for a home inspection separately from all the bits and bobs that make up closing costs. While you may want to save as much money as you can on your home purchase, consider both an appraisal and an inspection to be necessary expenses.

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There are certain concepts every investor needs to understand. Improve how you manage your portfolio by learning about one important investing concept. 

When the value of your investments goes up, it’s natural to assume that you’ve made money. By the same token, when their value goes down, you might think that you’ve lost money. Lots of investors look at it this way, especially those who are new to investing, but this is actually a common mistake.

The reason you haven’t really made or lost money ties into the concept of realized and unrealized gains. Here’s what these terms mean and why it’s important to understand them when investing in stocks.

Realized vs. unrealized gains

Let’s say you invest $1,000 in a stock. After one year, it has increased in value by 10%, so it’s worth $1,100. You would have $100 in unrealized gains. The investment has increased in value, but you haven’t sold it at that higher price yet. You also wouldn’t need to report those investing gains on your taxes.

If you sell your investment for $1,100, you now have $100 in realized gains. You would need to report them and pay capital gains tax.

Investments you hold for longer than a year before selling are considered long-term capital gains. Investments you sell within a year are short-term capital gains and taxed as ordinary income. Long-term capital gains have lower tax rates than income taxes, so it’s advantageous to hold investments for longer than a year.

To sum it up, realized gains are the profits you make when you sell an investment. Unrealized gains are profits that you’ve made on paper but haven’t locked in yet by selling the investment.

Realized and unrealized losses work the same way

This concept also applies to investing losses. If you invest $1,000 in a stock, and its value drops to $900 a year later, you would have $100 in unrealized losses. If you sell, then those become $100 in realized losses.

A common piece of investing wisdom is that you haven’t lost any money until you sell. You may have on-paper losses, but if you continue to hold your investment, it could rebound. While that doesn’t mean you should hang on to every loser in your portfolio, if you think a stock is a sound investment, give it time to recover.

Why the concept of realized and unrealized gains is important

Having an understanding of realized and unrealized gains is important so you can make the best investment decisions for your taxes.

Unrealized gains are a huge advantage for long-term investors. No matter how much your investments increase in value, you don’t need to pay taxes on your unrealized gains. That’s one of the reasons why buying and holding quality stocks is such an effective strategy. You can build more and more wealth without increasing your tax liability.

A frequent mistake of new investors is realizing gains too quickly. For example, their $10,000 investment in a stock goes up to $11,000, so they sell. This is an example of short-term thinking, which is what you want to avoid. That stock could be worth twice as much 10 years down the road. By selling too soon, you give up future value for quick cash. You’ll also need to pay taxes on that $1,000 profit.

The thing to always keep in mind is that investing is for long-term wealth building. Your main focus should be regularly putting money into quality investments. These can be funds that invest in a large number of stocks, such as exchange-traded funds (ETFs), or individual stocks you pick yourself.

You shouldn’t need to sell investments too often, unless you no longer believe a stock is worth owning. Otherwise, it’s usually better to sit back and let your investments grow.

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Looking for ways to save money on prescriptions? Discover how becoming a member of the Costco Pharmacy could help you potentially save money. 

Paying for prescriptions can be expensive, especially if you don’t have insurance. However, finding affordable medications doesn’t have to be a struggle. One of the best ways to save money on prescriptions is by shopping at Costco Pharmacy. This warehouse store chain’s pharmacy offers incredibly low prices, so you could save hundreds of dollars each year.

Members get free access to Costco’s Membership Prescription Program (CMPP)

The Costco Pharmacy operates similarly to any other pharmacy. You bring your prescription to the counter, and the pharmacist will fill it for you. However, what sets this pharmacy apart is its low prices.

Costco can afford to offer such incredible deals due to its bulk-purchasing power. The company buys medication in large quantities, allowing it to sell them at lower prices than many other pharmacies.

Costco offers a number of benefits to its members, including the Costco Membership Prescription Program (CMPP). This program offers members significant discounts on a range of medications, including those for pets.

White anyone can purchase medication at Costco, members get this added benefit for free. The CMPP isn’t a substitute for health insurance, but aims to make healthcare more affordable by reducing the cost of necessary medications and services.

Save up to 80% on prescriptions

By leveraging its large purchasing power, Costco is able to negotiate with manufacturers and secure significant reductions on medication prices. According to Vivien Chan, Costco’s Health Solutions director, Costco passes 100% of the savings on to members. Costco even extends these discounts to members without a copay or those who have no insurance.

How much can a member potentially save? According to Chris Pierce, assistant vice president of Costco Health Solutions, “It’s not unheard of for our members to be able to get a prescription drug for up to 20%, 30% or even 80% off what they normally pay.”

Since the average person spends $1,300 per year on prescription medication, Costco’s CMPP could potentially save members over $1,000. For example, the cost of 90, 300mg Gabapentin capsules are over $20 at Walmart and Rite Aid. Costco members get it for less than $11, close to 50% off.

To save even more money, Costco Anywhere Visa® Card by Citi cardholders can earn up to 2% cash back on pharmacy purchases. Like all products, however, you should shop around to compare prices for your medications.

Over 19,000 pharmacies nationwide

The CMPP boasts an extensive network of over 19,000 pharmacies located nationwide, outside of Costco — so even members who don’t live near a Costco can save.

If you are a member, using your member discount at these participating pharmacies is a straightforward process. Simply present your Costco member card, and you will be granted the exclusive CMPP pricing. There is no need to find coupons, fill out applications, or do any other additional paperwork. Additionally, members can refill their prescriptions online or through the Costco app. The app will even notify you when it’s time for a refill, making it easier to stay on top of your medications.

The Costco Membership Prescription Program is a valuable benefit that can help you save money on your medical expenses. Whether you have a chronic condition that requires ongoing medication or you just need to fill a prescription from time to time, the discounts available through the CMPP can add up over time and help you keep more money in your pocket. So, if you’re already a member of Costco, be sure to take advantage of the CMPP and start saving money on your prescriptions today.

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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 Costco Wholesale. The Motley Fool has a disclosure policy.

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Don’t overspend when planning your next trip. Costco members can get discounts on travel. Check out some Costco Travel perks you may not know exist. 

Many shoppers invest in a Costco membership to get a discount on everyday household essentials and groceries. But did you know that a Costco membership can also unlock travel discounts? If you enjoy traveling and like getting a good deal, you can save on your next vacation with Costco Travel. I’ll outline some little-known perks you can enjoy when using Costco Travel to help you get the most out of your warehouse club membership.

1. Score last-minute travel deals

Typically, travelers are encouraged to book their travel plans in advance for the best price, but if you’re a Costco member, you can save money on last-minute travel plans. Costco advertises limited-time travel deals to its members through Costco Travel. Don’t miss these discount opportunities if you’re craving a last-minute getaway and have a flexible schedule.

2. Some car rentals waive fees for a second driver

Some travel destinations have minimal public transportation options, so having a car is ideal. If you need to reserve a rental car for your next trip, you may want to book through Costco Travel. One perk you may not know about is adding a second driver to your coverage for free.

When booking cars through Alamo or Enterprise, the second driver fee is waived for rentals in the U.S., Canada, the United Kingdom, Germany, Ireland, and Spain. When booking a rental through Avis or Budget, the second driver fee is waived for car rentals in the United States.

The second driver must meet all renter requirements, be at the rental counter along with the primary renter, present a valid driver’s license, and present a major credit card in their name at the time of rental. This little-known Costco Travel benefit can help you keep more money in your checking account while helping protect a second driver during your trip.

3. Some Costco travel packages include freebies

Costco Travel lets you easily book hotels, rental cars, and cruises. But you can also buy vacation packages (which may include flights) for a simple, stress-free booking experience. When comparing travel package options, be sure to review all of the details carefully.

Many Costco Travel packages include extra freebies like dining credits, resort credits, or room upgrades. These additional freebies make your Costco membership more valuable and could free up money in your vacation budget for other travel expenses like food and activities.

4. Payment plans may be available

When booking through Costco Travel, you can pay for your trip over time. At checkout, you can pay the entire amount due or, if available, make a deposit and pay the remaining balance before the final payment date listed. You can pay the remaining balance online or by phone.

If you prefer to set up scheduled recurring monthly payments, you can contact Costco Travel to do so. Another option is to make one-time payments at your convenience through your online account. However, you may need to pay in full at checkout when booking a trip that starts soon. Don’t forget to use a cash back credit card for payment so you earn rewards.

5. Travel purchases count toward 2% rewards earnings

Costco offers two memberships: The basic membership, called Gold Star, costs $60 annually. The more expensive membership, Executive, costs $120 annually. Executive members earn 2% back on their Costco spending and can earn up to $1,000 each year. As an Executive member, your pre-tax Costco Travel spending counts toward your annual 2% earnings, so now you have even more motivation to book that trip you’ve been wanting to take.

Put your Costco membership benefits to use

The next time you plan a vacation, remember to consider using Costco Travel. Of course, comparing prices to see if you can find a better deal elsewhere is never a bad idea. But you may save money on travel costs by booking vacations through Costco Travel. The more Costco membership perks you use, the more value you get out of your membership and the more money you save.

For additional ways to save money, check out our free personal finance resources.

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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.Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Costco doesn’t want non-members shopping at its stores. Read on to see how you can benefit from Costco’s low prices without a membership of your own. 

A basic Costco membership costs $60 a year, while an Executive membership costs $120. In exchange for that higher cost, an Executive membership offers 2% cash back on all Costco purchases.

These fees are more than reasonable if you shop at Costco often. In fact, the savings you reap on things like groceries and household essentials might more than make up for the cost of your membership.

But what if you don’t have a Costco warehouse club nearby, or you don’t have a lot of storage space at home? In that case, a membership may not make sense for you. But you might still want the option to borrow a friend’s Costco card and visit the store on occasion.

Unfortunately, that may now prove difficult. Costco has been cracking down on membership sharing by having members show a personal photo ID at its self-checkout lanes. It’s similar to the policy it utilizes for its regular checkout aisles. And so the days of grabbing your neighbor’s card here and there to do your Costco shopping at your own pace may be over.

But that doesn’t mean you need to spring for a Costco membership to take advantage of the warehouse club giant’s ultra low prices. Here are some ways to shop at Costco without a membership of your own.

1. Use a Costco Shop Card

A Costco Shop Card is a gift card to use at the store. And while you have to be a Costco member to buy a Shop Card, you don’t have to be a member to use one. So if you have a Shop Card, you can flash that at the door instead of a membership card, and you’ll be let in. And you won’t have to show ID verifying your membership at checkout if you use a Shop Card.

So, let’s say your friend normally lends you their Costco membership card once every few months. What you can do instead is Venmo your friend $200 and ask them to buy you a Shop Card in that amount that you then spend at your leisure.

2. Shop online

Some of the products you’ll find on Costco’s website are members-only items. You won’t even be able to see what they cost without a membership.

But many of the items sold by Costco online can be purchased by anyone. So that’s another way to get around the issue of not having a membership of your own.

You should know, however, that in many cases, the prices you’ll see online at Costco are higher than what you’ll find at the store. This especially applies to groceries.

3. Go with a friend

Costco members are allowed to bring their children and up to two guests to their local warehouse club store. So if you don’t want to buy your own membership, just ask a friend or neighbor to bring you along the next time they’re doing their shopping.

Now, the one catch is that only Costco members can make Costco purchases in stores. So technically, your friend or neighbor will need to check out for you in this situation. But that’s an issue that can easily be resolved with a quick Venmo or another form of reimbursement.

Costco memberships are fairly affordable, so it could pay to buy one so you have the option to shop there whenever you want. But if you don’t want to go that route, rest assured that there are other ways you can buy the things you want at Costco.

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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 Costco Wholesale. The Motley Fool has a disclosure policy.

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Federal law doesn’t require insurers to finish your claim in a certain timeline. Learn how long it could take in your state. 

After your car is involved in an accident, it can seem like forever before your claim is finally settled. Sometimes you can be waiting weeks or, if the accident involves multiple cars and injuries, a month or longer.

Generally speaking, however, car insurance companies will settle a claim within 30 days after you file it. Whether your car insurance company will take 30 days, however, will depend on the type of claim you’re filing, state laws, and the claim volume your insurer is receiving at the time.

Depending on the incident, you could be waiting a short time — or a long time

To give you an example of a complicated claim, I’m in the middle of one right now. Recently, my car was parked on a street in Portland and was hit by a reportedly drunk driver (if you’ve been following my car saga, this is the car I got after my Prius was flooded and two cars after my Kia was totaled in a hit-and-run accident). The car was hit at midnight, some witnesses called the police, and the driver left his information — everything except his insurance.

The driver hasn’t returned my calls, and the Portland Police Department can’t give me his insurance information, since I live in Oregon and he lives across the bridge in Washington. My insurance company said it would investigate and find out who is insuring him. The last time I spoke to my adjuster was on June 20, and the day I filed my claim was June 5, over a month ago.

As in my case, car insurance claims often come to standstill simply because there’s a breakdown in communication. That breakdown could happen between you and your insurance company, your insurance company and the other parties involved, the other parties’ insurance companies and your own, or the other parties’ companies among themselves. As you can imagine, the more parties involved, the longer claims can take.

A car accident between two drivers, for example, in which one of the drivers admits fault, would probably take less time than an accident involving four or five drivers where fault was not easy to determine. If car insurance companies have to investigate which driver is at fault, it could slow down the claims process, especially if drivers are not cooperating or have lawyers to back them up.

Some states do offer drivers some protection by giving car insurance companies a strict timeline. For example, in California, car insurance companies must settle claims within 85 days after they’re filed, while in Texas, insurers have 35 days. For more information, research your state and see if a strict claims timeline is in place.

What can you do to speed up a claim?

The best way to accelerate an insurance claim is to provide all information upfront, including police reports, photos, and insurance information of other drivers, and to answer adjusters’ calls or emails promptly.

If the claims process drags out longer than 30 days, your state may require the insurance company to explain why it’s taking so long. Even in states where that’s not required, your adjuster or insurance company should give you updates on your claim, as well as reasons for any hiccups.

As far as what you can do before an accident, I would consider getting insurance with companies who are the best at handling claims. While I’m all for a great deal on car insurance, it might not be worth the low cost if the company can’t deliver great service when you really need 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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