Money Management

A writer’s driving habits make an electric car a poor choice. Read on to see why. 

The time has come for me and my husband to replace our second car (since we live in suburbia without access to public transportation, we have to be a two-vehicle household). It’s a 2007 Toyota Prius that’s starting to show its age, and it’s also too small for our family.

We were initially contemplating the idea of getting an electric vehicle as our second car. But we’ve decided against it for one big reason.

An electric car doesn’t align with our driving habits

My husband and I tend to do two kinds of driving — very local or very far. During the school year, we commonly shuttle our kids around to activities in town, driving a few miles here and there. But when school’s out, we commonly take long road trips, sometimes driving for 10 hours or more in a single day to reach a destination.

That’s the main reason we’ve decided against an electric vehicle for now. The U.S. Department of Energy says that most all-electric vehicles can go 100 to 400 miles, and possibly a bit more, on a single charge. But there are times when my family wants to drive more than 400 miles in a single day. And the idea of having to pause our drive to charge a vehicle is highly unappealing.

Although it’s possible to charge an electric car in as little as 30 minutes and get several hundred miles of range out of that charge, when you’re on a 10-hour road trip, you don’t want to have to stop for half an hour and sit at a charging station — not when filling up a car’s gas tank takes under 10 minutes. And that assumes you can even find a charging station.

There are over 100,000 public charging outlets across the country, says the Department of Energy. But when you tend to take road trips to remote areas like we do, finding one can be difficult. And that’s not a risk we’re willing to take.

A plug-in hybrid is a good compromise for us

My husband and I have decided that a plug-in hybrid is a better choice for us right now than a fully electric vehicle. That way, we can drive locally on a charge without having to use gas, but we also get the benefit of a gas engine for longer trips.

At some point, we may consider going full electric if the infrastructure on charging stations improves, and if the makers of these vehicles manage to find a way to allow drivers to charge them in less time. But since we’re not there yet, a plug-in hybrid seems like a good compromise.

Of course, we’re well aware that replacing an aging car with a newer one is going to mean paying more for auto insurance. And of course we’ll have to deal with having a car payment — something we’ve been able to go without for a long time. But cars don’t last forever. So we’re doing our best to budget accordingly for our replacement vehicle and hope it ends up being a good choice.

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Having home equity gives you more borrowing options and allows you to walk away with more money during a home sale. Read on to learn more. 

The upside of buying a home rather than renting one is getting to build equity in a property you own. Home equity is defined as the difference between your home’s market value and the amount left on your mortgage loan. If your home is valued at $500,000 and you owe $150,000 on your mortgage, you’re left with $350,000 in equity.

As of the end of 2022, U.S. homeowners had about $270,000 in equity on average, says CoreLogic. But how exactly does having home equity help you? That’s an important thing to know.

Having equity buys you more borrowing options

Many people who need to borrow money turn to personal loans, which can be a cost-effective means of accessing cash. But if you have home equity, you can also borrow against it in the form of a home equity loan or line of credit. In that case, your home is used as collateral for your loan or line of credit, which means you may have an easier time qualifying to borrow, especially if your credit score is not only okay but great.

You can also use your home equity to your advantage when you do a cash-out refinance. When you go this route, you borrow more than your remaining mortgage balance and get the remaining funds as cash that you can spend any way you want. But the more equity you have, the more leeway you get to borrow beyond your remaining mortgage balance.

Having equity could lead to more money for you when you sell your home

Not everyone who sells a home does so at a profit. But the more equity you have in your home, the more money you might walk away with in the course of a sale.

Let’s say your home could sell for $500,000 and you have $350,000 worth of equity. Let’s also assume you can sell your home yourself and don’t owe a real estate agent’s commission. In that case, you stand to walk away with $350,000 after your mortgage balance is paid off. If you only had $200,000 in equity in this case, you’d only walk away with $200,000 following your sale.

How to build home equity

In many cases, you can build home equity simply by staying in your home for many years. That’s because property values have a tendency to rise over time.

But also, the more you pay down your mortgage, the more home equity you get to build. And if you’re eager to build home equity quickly, making extra mortgage payments when you can is a good way to go about it.

All told, having equity in your home gives you options to borrow money when you need to and walk away with money in the course of a sale. So while you don’t have to spend your days fixating on how much home equity you have, it’s definitely a good thing to be aware of. And you should also know that the more money you put into your mortgage, the more equity you stand to build.

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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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When you open your first CD, you’ll fund your account and then leave it alone for a set period of time. Find out when opening a CD can make sense for you. 

The short answer to what happens when you open your first certificate of deposit (CD) is: “Not a lot.” That’s part of the point of a CD. You get paid interest for leaving your money alone for a set amount of time. How long depends on your CD term, which can be anything from a few months to several years.

There’s a lot of excitement around CDs at the moment because some are paying APYs of 5% or more. Let’s say you invest $1,000 in a 3-year CD that pays a 4.5% APY. The interest on a CD usually compounds, so you can earn interest on your interest. You’d earn $45 in interest in the first year and over $140 in total.

Opening your first CD

Before you open your first CD, know that it’s not the same as a savings account. If you want to take money out of your CD before the term is up, in most cases you’ll have to pay a penalty. That makes it an ideal vehicle for, say, the dream vacation you plan to take in two years’ time. But it’s not so ideal for something like your emergency fund that you may need to access in a hurry.

Here are some questions to consider:

How long do you want to tie up your money for?

CD terms typically vary from six months to five years. One way to decide which CD term is right for you is to think about when you may need to access your money. Usually, you’ll find that longer terms pay higher APYs. That’s not the case right now, primarily because banks aren’t sure what’s going to happen in the coming three to five years.

As a consumer, that mismatch can make it harder to decide between a short- and long-term CD. Bear in mind that interest rates might fall in the years to come. This could make it worth locking in at a higher rate now, even if that rate is lower than you’d get with a shorter-term CD.

What type of CD is best for you?

There are several different types of CD, including traditional CDs, jumbo CDs, and no-penalty CDs. Learn about what each one does, and look into the minimum deposits involved. Some CDs don’t require any deposits, but others may have minimums of $500 or $1,000. The minimums on jumbo CDs can run to $100,000.

Which bank or credit union offers the best rates?

Shop around to find the best CD rates that match your CD term and minimum deposit. Make sure that the account you choose is FDIC insured, as this will protect you against bank or credit union failure. It’s also worth thinking about how you want to receive the interest. Some CDs make regular interest payments throughout, while others pay a lump sum at the end of the term.

Getting the most out of your CD

The trick with every savings or investment vehicle is to understand what it does, and what the pros and cons are. This can help you know when to use it. For example, the benefits of a CD are that you get a decent fixed rate of interest for a set amount of time. The downside? Your money will be tied up and the returns may not keep up with inflation. There are times when a savings account, money market account, or investment account might make more sense.

Here are a few different ways to get the most out of your CD:

Take action before your CD ends: Many CDs will automatically rollover into a new one if you don’t do anything at the end of the term. That might mean you get a lower rate, or unintentionally tie up cash you need. Don’t just forget about your CD — set a calendar alarm so you can actively decide what to do with your money when the time comes.Consider CD laddering: CD laddering is essentially a strategy that gives you the high APYs of CDs without sacrificing flexibility. Let’s say you have $5,000 that you want to put into a CD. Rather than putting it all into a single CD, you might stagger your investments. You could put $1,000 into a 1-year CD, $1,000 into a 2-year CD, and so forth. Each year, another CD would mature and you’d have the option to use or re-invest that money.Avoid early withdrawal penalties: There is such a thing as a no-penalty CD, but the rates may not be as high as a traditional one. Otherwise, if you make an early withdrawal, you’ll pay a penalty. This could equal several months of interest, depending on the CD. Think carefully about when you might need that money, and consider using a high-yield savings account if you’re not sure.

Bottom line

Opening your first CD can be an important step. It’s a pretty safe way to earn a guaranteed rate of interest on your money. Used correctly, it can be a valuable tool in your savings and investment arsenal.

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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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A business owner needs more than a great idea or fabulous product. Here’s how the SBA helps secure the funds needed for a business to grow globally. 

There comes a time when a small business owner recognizes the need to expand operations into the global market. However, expansion can be expensive, and not all entrepreneurs have enough money sitting around to make their dream a reality. That’s where the Small Business Administration (SBA) can help. The SBA offers to guarantee loans, including one called the Export Working Capital Program (EWCP). Here, we break down how the EWCP works, who’s eligible, and how it can take your business to the next level.

At a glance

EWCP loans are for businesses that can generate foreign sales but need additional working capital to make it happen. If you have a solid plan in place but don’t have the funds to make it a reality, an EWCP loan can help bridge the gap.

How it works

A business owner visits a local SBA-approved bank. Unlike a personal loan, the loan they apply for is guaranteed by the SBA, meaning the SBA will pay 90% of the loan back if the business owner fails to make payments.

In addition to SBA Form 1920, the business owner will supply information as requested by the lender. The interest rate is negotiated by lender and borrower, but cannot exceed the maximum set forth by the SBA. In other words, the SBA limits the rate a small business owner can be charged, thereby helping control their costs.

The business owner needs to have “skin in the game” by providing collateral. Collateral consists of any business inventory related to exports and, if the borrower owns 20% or more of the business, a personal guarantee must be made.

In most cases, it’s the SBA that decides whether the loan is granted, based on the documentation gathered. If the loan is approved, loan proceeds are deposited into the business’s checking account within five to 10 business days.

If the loan is not approved, the SBA can work with the business owner to come up with other financing options.

One important note about the EWCP: An EWCP loan is typically geared toward a specific exporting goal or series of specific goals. Unless extended by the SBA, the repayment term is 12 months for both a single-transaction loan and revolving loan. A business owner must have a clear picture of how the money will be spent and how long it will take to realize a profit.

How EWCP loans can be used

There are two primary factors that go into approved uses of how an EWCP loan can be used. The first is that funds must be used to further a business’s export efforts. The second is that it must be used in such a way as to be repayable in one year (unless extended by the lender). Here are some of the ways businesses make the most of an EWCP loan:

Covering the costs associated with manufacturing exported goodsBuying goods and services for exportPaying for standby letters of creditFinancing foreign accounts receivablePaying to have communication such as project proposals, emails, and receipts translated into a foreign language

How to apply

The application process begins through the SBA. To be eligible, a business must have been in operation for at least 12 months and the Export Management or Export Trading Company must take title to goods being exported.

As business owners well know, sometimes having a good business idea is not enough. They need the financial resources to bring those ideas to fruition. In some cases, the EWCP provides the perfect solution.

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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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