Money Management

Costco is known for its low prices. But read on to see how you can save even more. 

Many people join Costco for the express purpose of being able to save money on groceries, household essentials, and other purchases. But if you play your cards right, you can lower your Costco tab even more. All you need to do is follow these tricks.

1. Look out for monthly sales

Costco runs different sales each month. It pays to look online or at the deal book members get in the mail to see what’s available at a discount.

Now it’s generally not a good idea to buy something simply because it happens to be on sale. But if Costco is discounting items you use regularly, then stocking up during sale periods could result in a lot of savings. This especially applies to items that aren’t perishable and don’t have an expiration date, like toilet paper.

2. Get an Executive membership

An Executive membership at Costco costs $120, which is double the cost of a basic membership for $60. But in exchange for that higher fee, you’ll get 2% back on all Costco purchases you make. And if you spend more than $3,000 in a calendar year, you’ll come out ahead financially with an Executive membership.

Meanwhile, with an Executive membership, you’ll get a yearly rewards certificate in the amount of the cash back you’ve accrued. You can use that certificate to pay for your Costco purchases instead of handing over cash or whipping out a credit card.

3. Buy Kirkland products instead of brand names

Kirkland is Costco’s signature brand. And if you’re willing to give it a try, you might end up spending less in the course of your shopping.

Case in point: You can buy a 120-pack of Kirkland coffee pods for $38.99, or $0.33 per pod. A 72-pack of Starbucks coffee pods will usually cost you $42.99, though right now you can snag $6 off. But even so, that brings your cost per pod to $0.51.

4. Shop in stores instead of online

You might find a host of great Costco deals online. But often, prices are lower in stores than what you’ll see listed online. This especially applies to groceries.

If you’re close enough to your nearest Costco location that shopping in person is feasible, then it could result in a nice amount of savings. Plus, this way, you can hand-pick your produce instead of having someone else do it for you.

5. Fill up on samples instead of springing for a food court lunch

Costco’s food court features an array of low-cost meals, including the famed $1.50 hot dog and soda combo. But why spend any money on food you consume on the spot when you can load up on free samples instead?

Granted, this strategy may not work so well if you go to Costco early in the morning, before those samples are ready, or late at night, when they’re less likely to be available. But if you go during lunchtime, you may find that after 11 or 12 delicious bites of food, you’re full enough to skip the food court trip. Oh, and in case you were wondering, it’s totally okay to go back to the same Costco sample area for seconds, provided there’s plenty to go around.

Shopping at Costco can be a money-saving endeavor in its own right. But if you follow these tips, you might get away with spending even less than you normally would.

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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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When the interest rate on an adjustable-rate mortgage changes, it’s not always a bad thing. Read on to learn more about one writer’s experience. 

You’ll often hear that signing an adjustable-rate mortgage is a risky move. And there’s some truth to that.

Unlike a fixed-rate mortgage loan, where you’re guaranteed the same interest rate throughout the life of your loan, with an adjustable-rate mortgage, your loan’s interest rate can change over time. This means there’s a chance your mortgage payments could get more expensive.

So why would anyone sign an adjustable-rate mortgage in that case? The reason is that you’ll often snag a lower interest rate on an adjustable-rate mortgage than on a 30-year loan — at least initially. If you’re buying a starter home and don’t expect to be there very long, it may be that by the time the interest rate on your adjustable-rate mortgage is able to change, you’ll have sold it.

But the fact that adjustable-rate mortgages can change over time isn’t always a bad thing. In fact, in my case, it worked to my benefit.

My monthly mortgage payments went down, not up

Years ago, my husband and I had an adjustable-rate mortgage. Only once the time came for our loan’s interest rate to adjust, guess what happened? Instead of rising, the rate on our loan went down — and so did our monthly payments.

Now, it happened to be that we didn’t get to enjoy those lower monthly payments for all that long. The interest rate on our adjustable-rate mortgage dropped at a time when we were gearing up to sell our home. And our home happened to get scooped off the market quickly once it was listed.

But still, it was nice to have lower mortgage payments than we were used to for a period of time. In fact, it kind of felt like someone was just handing us free money. And since we were selling our home and buying a more expensive one, having the extra money helped with our down payment.

Be careful with an adjustable-rate mortgage

Although signing an adjustable-rate mortgage worked out well for me, I will caution that if you opt for one of these loans, you should prepare for its interest rate to rise over time. Also, don’t assume that refinancing out of an adjustable-rate mortgage will be a viable option. If mortgage rates are expensive at the time your loan’s rate starts to adjust, that won’t help.

Of course, you may be tempted to get an adjustable-rate mortgage right now due to how expensive it is to sign a mortgage. In fact, a recent survey by Rocket Mortgage found that 43% of buyers found the idea of one appealing. And in late 2022, adjustable-rate mortgages made up about 9% of all new mortgage applications.

But if you’re going to go this route, make sure to leave some wiggle room in your budget in case your rate adjusts upward over time and your monthly mortgage payments increase. And, make a point to keep your credit score in good shape so that should the opportunity arise to refinance out of an adjustable-rate mortgage, you’ll be able to jump on 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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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In May, new home sales jumped 20% from a year ago. Read on to find out why home buyers are opting to buy new. 

I spend way too much time browsing houses on Zillow, but I’m not alone in my hobby. The company says it has more than 200 million unique viewers every month. One thing I’ve noticed in all my hours of scrolling is that there are far fewer existing homes for sale than there used to be.

And the latest National Association of Realtors (NAR) data backs up my anecdotal observations. In May, existing home sales were down 20% compared to last year.

But while existing home sales have fallen, another interesting trend has occurred. The latest U.S. Census Bureau data shows that sales of new construction homes surged 20% in May compared to the same period last year.

There are two reasons why home buyers are seeking out new homes and shunning older ones.

1. New homes may have more financial incentives

In June, more than half of home builders offered incentives to home buyers, according to the National Association of Home Builders. Incentives may include down payment assistance, a lower mortgage interest rate, or a builder covering the closing costs for a buyer.

For example, the average amount buyers pay for closing costs — which include the fees paid to lawyers, lenders, and home appraisers — is about 3% to 6% of the loan amount, according to Rocket Mortgage. But some home builders are willing to pay large portions of the closing costs. Two home builders in my part of the Southeast are currently offering between $8,000 to $15,000 toward closing costs.

So let’s say you’re buying a new construction home for $300,000, and your closing fees are 4% of the home price, equalling $12,000. If the builder offers $10,000 toward closing costs, you’d only need to pay $2,000 in closing fees.

While home sellers can offer some assistance like this too, there’s one thing most of them can’t do: Give you a lower mortgage interest rate.

As of this writing, the current interest rate for a 30-year mortgage is about 6.86%, but Yahoo Finance recently reported that many new construction home buyers are getting a 5% interest rate. One home builder in my area offers an interest rate as low as 4.99% on select homes if you use that company’s preferred mortgage lender.

The difference between those two interest rates is significant when you compare the monthly mortgage payment. If you buy a $300,000 home — with a 20% down payment — and have a 4.99% interest rate, you’ll pay $288 less per month than if your interest rate is 6.86%.

With the median selling price for a house reaching $416,300 in May — up 31% over the past three years — it’s no surprise home buyers are looking for any type of financial incentive they can get.

2. There are fewer existing homes on the market

Even if prospective home buyers would prefer to purchase an existing home, there are fewer to go around these days. A recent report from the NAR found that 27% of buyers who purchased new construction homes did so because of a lack of inventory of previously-owned homes.

The problem for potential buyers is that some homeowners who purchased a home over the past few years don’t want to sell because they have a lower mortgage interest rate than what’s currently available. The result is that the current supply of existing homes on the market is about half of what it was in 2019, per NAR data.

New homes historically account for between 10% to 15% of available homes on the market. But with far fewer existing homes being listed for sale now, new homes made up 31% of total housing inventory in May, according to the National Association of Home Builders.

More of the same for the housing market

Recent comments by Federal Reserve Chairman Jerome Powell indicate that the federal bank may continue raising interest rates to fight inflation. If it does, then mortgage interest rates will likely rise as well. All this means there could continue to be far fewer existing homes for sale than in the recent past — and far fewer homes for me to swipe through on the Zillow app.

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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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Don’t need to spend your entire HSA balance? Don’t sweat it. Read on to see how you have options for your extra money. 

Healthcare can be a huge expense at any stage of life, so it’s important to save for it. And in that regard, you have options.

You could pump money into a regular savings account and dip in as needed. Or, you could save for healthcare in a tax-advantaged manner by funding a flexible spending account (FSA) or health savings account (HSA).

If you have an FSA, you may be aware that if you don’t spend down your entire plan balance by the end of the year, you could end up forfeiting funds. But HSAs work differently. In fact, having extra money in an HSA is not a bad thing at all.

When you’re left with a surplus

HSA contributions currently max out at $3,850 for self-only coverage and $7,750 for family coverage (and they’re set to rise in 2024). If you’re 55 or older, you’re allowed to make a $1,000 catch-up contribution to your HSA, the same way savers 50 and older can make a catch-up contribution to an IRA.

But let’s say you’re single and put $3,850 into your HSA this year, only you end up with just $1,000 worth of medical bills. That leaves you with $2,850 to spend. The good news, though, is that you don’t have to spend it now.

Unlike FSAs, HSAs don’t force you to deplete your plan balance every year or risk losing your money. Quite the contrary — HSAs are built to encourage you to carry funds over from one year to the next.

Unlike FSAs, HSAs allow you to invest money you don’t withdraw right away. Investment gains in an HSA are then yours to enjoy tax-free, and withdrawals are tax-free when used for qualified medical expenses.

So, let’s say you’re left with $2,850 in your HSA at the end of the year. You could conceivably invest that money for another 25 years until you need to withdraw it. If your investments generate an average annual 8% return during that time, which is a bit below the stock market’s average annual 10% return, that $2,850 will grow into about $19,500.

In fact, one thing you may specifically want to do with your HSA is try not to spend your entire balance every year, but rather, invest some of that money and reserve it for retirement. At that stage of life, you might need more money to spend on healthcare, and money might be tighter due to you not working. So it’s a good thing to have that extra cash.

There’s really no risk

You might worry that leaving too much money in your HSA will mean potentially losing some down the line if you don’t end up needing all of it for healthcare purposes. But here’s another cool feature of HSAs. Once you turn 65, you can take a withdrawal for any purpose without incurring a penalty. That withdrawal does not have to be medical in nature.

So, let’s say you end up with a $200,000 HSA balance in retirement and you find that you’re only spending $5,000 a year on healthcare. Unless your retirement lasts 40 years, at that pace, you won’t end up using your entire balance. But if you’re 65, you can start withdrawing funds for non-medical purposes, and all that’ll happen is you’ll be taxed on your withdrawals. That’s no different than the taxes you pay on traditional IRA withdrawals.

All told, having extra money in an HSA is a good thing. So if it’s your first time funding one of these accounts and you’re left with a surplus at the end of the year, that’s definitely nothing to panic over.

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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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Love to stream movies and TV shows but don’t like paying full price? Find out how to enjoy services like Starz and AMC+ for $0.99 a month this Prime Day. 

You may already be aware that Prime Day is coming up next week. On July 11 and July 12, Prime subscribers can score members-only deals on electronics, clothes, kitchen items, everyday essentials, and more. But Amazon has plenty of early deals to shop, too. If you’ve been thinking about adding a new streaming service to your rotation, Amazon could help you save money. The online retailer has several streaming services discounted for Prime members, and you could save up to 90% by taking advantage of these offers now through July 12.

Get more streaming content at a discount with these deals

Subscribing to streaming services can be an excellent option if you’re looking for affordable entertainment options that you can enjoy at home and while on the go while you work to reach your personal finance goals. Here are a few streaming service deals that are available to Amazon Prime members now through July 12, 2023:

AMC+: $4.49 monthly for two months, then $8.99 monthly.Cinemax: $0.99 monthly for two months, then $9.99 monthly.Hallmark Movies Now: $0.99 monthly for two months, then $5.99 monthly.Paramount+: $5.99 monthly for two months, then $11.99 monthly.PBC Documentaries: $0.99 monthly for two months, then $11.99 monthly.PBC Kids: $0.99 monthly for two months, then $4.99 monthly.Starz: $0.99 monthly for two months, then $9.99 monthly.

If you plan to subscribe to any of the streaming services above, make a note on your calendar to check in with yourself in two months so you can decide if you want to continue paying for these services at the regular price. If you don’t do this, you may be surprised when you see you were billed for the usual subscription amount when your credit card statement arrives.

Other early Prime Day deals you may want to shop

These aren’t the only discounted finds available on Amazon. We’ve written about some of the best Prime Day deals to help you plan for the big shopping event. Here are a few resources you may want to review as you prepare to shop the best deals:

Don’t Wait for Prime Day: These 5 Amazon Finds Are on Sale Right NowGet Over $20 in Credits for Amazon Prime Day6 Amazon Prime Deals You Can Shop Before Prime Day 2023Amazon Prime Day 2023 Dates Are July 11 and July 12: Here’s How to Score the Best Deals

Don’t ignore your finances while you shop Prime Day deals

Prime Day is a major can’t-miss event for many people who like shopping online. If you have a Prime membership, you may want to take advantage of a deal or two to keep more money in your checking account. But it’s important to review your budget before shopping.

You don’t want to overspend or put yourself at risk of accumulating credit card debt. Knowing how much you can afford to spend and going in with a plan can help you stay on track as you shop. Check out our free personal finances resources for additional ways to save money.

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

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A Costco membership can save you money. But did you know Costco can help you take care of an important funeral expense? Find out how you can save hundreds. 

Costco is an ideal place to shop if you enjoy getting a discount. You probably already know about some of the most popular items you can buy at Costco. Groceries, toiletries, electronics, beauty products, clothes, furniture, and home accessories are some of the most well-known items sold at the warehouse club. But there’s another item you may be surprised to learn you can save money on by using your Costco membership card.

Costco can save you money on this funeral expense

Believe it or not, you can buy a casket from Costco. The retailer has several casket options, and they’re all affordable. Knowing that you can buy one at Costco before needing to plan a funeral can be helpful, especially if you want to avoid overspending.

Most of us spend our time thinking about the expenses that need to be paid during our lifetimes. As morbid as it may sound, planning for your funeral costs while alive is not a bad idea. While it may be uncomfortable to think about, it can be helpful to your family and friends.

Planning for this expense before you die can ensure you have enough money in your savings account to cover the cost so your loved ones don’t have to carry the financial burden.

You could save hundreds of dollars or more on a casket

How much will a casket from the warehouse club cost you? It depends on which one you choose. Caskets listed on the Costco website range in price from $1,149.99 to $1,599.99. While that may sound expensive, it’s not when considering the cost of buying a casket elsewhere.

According to the National Funeral Directors Association, the national median cost of a metal casket in 2021 was $2,500. The national median price for a wood casket that same year was $3,000. It’s not unheard of to pay even more than that when buying a casket directly from a funeral provider. Whether purchasing a casket for your eventual funeral or getting one for someone you recently lost, buying it at Costco could help you avoid credit card debt.

Costco delivers caskets to funeral homes

Here’s something else you may not realize. Costco delivers caskets to funeral homes. Not worrying about transporting it yourself can help reduce stress during a difficult time.

The Federal Trade Commission (FTC) requires funeral homes to accept any casket purchased from an outside source, so you don’t need to buy it directly from the funeral home. It’s also illegal for funeral providers to charge extra fees to handle a casket purchased elsewhere.

On its website, Costco states that caskets can be shipped free of additional shipping charges to 48 states and the District of Columbia. But caskets can’t be shipped to Hawaii or Alaska.

Here’s what you need to know about Costco’s delivery timelines: Orders placed before 10 a.m. P.T. are delivered by 5 p.m. local time after three business days. This is important information if you’re currently making funeral arrangements and are short on time.

Don’t neglect to prepare for funeral costs

A casket is only one potential cost associated with a funeral. Research from The Ascent shows that it’s not uncommon for funerals to cost between $10,000 and $12,000. Are you wondering how to finance a funeral? One way to prepare for your future funeral costs is by purchasing a life insurance policy and designating a beneficiary to manage the funds after you die.

When life gets busy, it can be too easy to focus on only the present. But don’t forget to consider funeral planning expenses. As part of your personal finance strategy, you can prepare for these costs during your lifetime so your loved ones can focus on grieving your loss when you’re gone.

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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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