Money Management

Every business starts with an idea. Check out four great questions that Ramit Sethi recommends to help you find a profitable business idea. 

Lots of people have thought about starting their own businesses. It’s an exciting and potentially life-changing step to take, especially if you’re feeling stuck in your current job. If your small business is successful, it could make a huge difference in how much money you make.

The challenging part, at least in the beginning, is coming up with a business idea. Many don’t even get past this part. After all, it’s frustrating when you feel like you’re drawing a blank during every brainstorming session.

Ramit Sethi, the star of How to Get Rich on Netflix, has quite a bit of experience in this area. He’s a successful entrepreneur himself, and he has popular courses teaching students how to launch their own businesses from scratch. He also gives out plenty of free advice, and he has shared four smart questions you can ask yourself to find a profitable business idea.

1. What do I already pay for?

Think about the products and services you pay for in your everyday life. Examples may include meals at restaurants, personal training sessions at the gym, and tutoring in new skills you’d like to learn. If you pay for something, then you can bet other people are willing to pay for it as well.

Remember to look at the things you already buy from multiple angles for more ideas. Let’s say you buy clothes regularly because you’re interested in fashion. The first business ideas that come to mind are probably clothing stores and design, but these are far from the only options. You could also become a personal stylist and help clients improve their wardrobe, or go to thrift stores and sell your finds online.

2. What skills do I have?

Your skills can be an excellent source of inspiration for potential business ideas. Spend some time thinking about what you do well. Maybe you’re great at graphic design, email marketing, or meal planning. Chances are that you’ve developed all kinds of skills so far, and many of them could be turned into a business.

Watch out for imposter syndrome here. People often second-guess whether they’re really good enough to turn a skill into a profitable venture. You don’t need to be the best in the world at something to make money doing it. If you’re better at it than the average person, that may be enough.

3. What do my friends say that I’m great at?

This is another way to figure out the answer to what your skills are. Sometimes it helps to take an outsider’s perspective at what you do well. Consider what your friends would say if you asked them this question. Or, make it easier by just asking them directly.

4. What do I do on a Saturday morning when everyone is asleep?

If you’re like me and your answer is “sleeping, just like everyone else,” go ahead and swap the time frame for whenever you’re free and unburdened by anything else. No work, no family commitments, when you’re able to do whatever you want.

With this question, you can see where your interests lie and what you’re passionate about. A business requires a large time commitment. It helps if your business is something you’re already interested in and spend your time on.

By asking yourself these questions, you’ll probably be able to come up with a solid list of business ideas. From there, you can look at them more closely, discard the ones that won’t work, and test out the ones that have the most potential.

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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.Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.

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Putting your home up for sale? Read on to see why you may want to wait for multiple offers. 

There may come a point when you decide it’s time to sell your home. Maybe you want to downsize and spend less on a mortgage loan. Maybe you want to buy a home in a different city or neighborhood. Or maybe you no longer want to be a homeowner and would rather rent a home instead.

Either way, once you do your part to fix up your home and list it, all you can really do from there is sit back and wait to get offers. And you may be inclined to accept the first offer you get on your home.

But unless it’s a really amazing number you’re presented with, you may not want to jump at that initial offer. Rather, waiting for multiple offers to roll in could work to your benefit, especially in a housing market like the one we’re in today.

It could pay to be patient

Getting an offer on your home can be exciting — especially if you have a buyer who’s willing to pay your asking price, or, better yet, more than your asking price. In recent years, both have been common.

In 2021 and 2022, around 80% of sellers sold their homes for at least their asking price, including 35% who received more than their asking price, according to data from Clever. Now that makes a lot of sense for 2021’s housing market, which was red hot due to the fact that mortgage rates were so low.

In 2022, mortgage rates rose substantially, so bidding wars weren’t as common that year as they were the year prior. But still, there’s a reason so many sellers were able to command a price that was higher than their asking price for their homes last year: Low inventory.

Real estate inventory has been sluggish for years, and that’s still the case today. As of the end of April, there was only a 2.9-month supply of homes for sale, as per the National Association of Realtors. It normally takes a four- to six-month supply of listings to meet buyer demand in full.

Because housing inventory is still low, you may not want to accept the first offer you receive after putting your home up for sale. Even if the offer seems generous, waiting for additional offers could leave you with a much higher sale price — especially if you end up with multiple interested buyers who get into an extended bidding war.

Now in a buyer’s market, it can be a good idea to accept the first offer you get when selling a home if it’s a good one. But since that’s not the case today, accepting your first offer could mean walking away with a lower sale price.

When your first offer is extremely generous

It’s generally a good idea to entertain multiple offers on your home rather than settle for the first one you get. But if your initial offer is truly amazing, then it could pay to accept it.

Let’s say you’ve listed your home for $500,000 and a seller offers you $550,000. That’s a full 10% above your asking price.

It may be hard to get a better offer than that. So in that case, accepting your first offer could be a smart bet.

But if your first offer is for $505,000, that’s only 1% above your asking price. In that situation, holding out at least a bit could work to your benefit. Even if another buyer only comes in at $507,000, that’s still more money in your pocket.

Either way, though, if you’re not sure whether to accept the first offer you get on your home, ask your real estate agent for their input. Based on their knowledge of the local market, home prices, and buyer demand, they should be able to advise you on whether to take the first offer you get and run with it, or sit tight and wait for more buyers to make competing offers.

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Property taxes and home values go hand in hand. Read on to see how renovations could lead to a higher property tax bill. 

When you buy a home, there are numerous expenses you take on. In addition to a mortgage loan, you also have to bear the cost of homeowners insurance, upkeep, and repairs.

And then there are property taxes to think about. Your property tax bill is generally calculated by taking your home’s assessed value and multiplying it by your local tax rate.

The more updated your home is, the higher your property tax bill is likely to be. So that’s something you’ll need to consider when planning for renovations.

How much will renovating really cost you?

When you improve your home, there’s a cost involved, whether it’s $1,000 for new carpeting or $40,000 for a new kitchen. But in addition to the cost of your renovation itself, you have to anticipate an added cost — a higher property tax bill.

Now in some cases, a minor home renovation won’t change your property tax bill. Swapping grungy carpets for newer ones likely won’t have an impact on your home’s assessed value, so a project like that shouldn’t lead to a higher bill.

But a major renovation could drive your property taxes upward in a very big way. This especially holds true if you’re increasing your usable living space — for example, finishing an unfinished basement or putting on an addition.

Bob Villa says you can expect your property tax bill to increase for upgrades that are permanently attached to your home, like an inground pool. Also, adding a bedroom or bathroom could raise your property tax bill, because even though you’re not necessarily adding square footage to your home, you’re carving out more useful spaces.

How will your city or town know to raise your property taxes after a renovation?

Most homes get assessed on a preset schedule. It could be that assessments are done once a year, once every other year, or once every three years.

When the time comes for your home to get an assessment, someone will show up to your property to physically examine your space. From there, they’ll be able to compare what they see to your home’s last assessment to figure out if anything has changed.

Let’s say that as of your home’s last assessment, your basement was unfinished. If it’s since been finished, that’s something your assessor will note, and that will go into determining your property’s assessed value.

Also, your assessor will likely review permit records in the course of assessing your home. If they see that you were issued a permit for a new inground pool, that alone will clue them in to the fact that your home has a new feature that’s apt to change its value.

Don’t get caught by surprise

All told, renovating a home can be expensive. But don’t forget to account for the added cost that might ensue in the form of a higher property tax bill.

In some circumstances, your town may be able to tell you what sort of increase you’re likely looking at based on the permit application you submit, which should outline the scope of the work. That won’t always be the case, but it’s worth asking.

If your town tells you that adding a deck will likely increase your property tax bill by $400 a year, that at least gives you a number to work with. Ultimately, though, you’ll need to wait for your home’s next assessment to see what the impact really is.

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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’re selling a car that you owe more on than it’s worth, you will have to pay off the full balance. Don’t assume you can keep making car payments. 

Car loans are a common way to purchase a vehicle, especially as car prices have been rising. The average auto loan balance in 2022 hit $22,612, which was a 7.7% increase from the year before.

Unfortunately, many people end up taking out car loans with long payoff times — and drivers often put very little money down when they purchase. This can mean that many people end up underwater. That’s what it’s called when you owe more on the car than you could sell it for. For example, if you owe $20,000 on a car with a fair market value of $15,000, then you are underwater.

If you find yourself in this situation, it’s important to understand the reality of what being underwater means for you. Unfortunately, many people don’t realize the impact of this state of affairs and they end up making a financial mistake.

Don’t make this error if you’re underwater

If you are underwater on your vehicle and you decide you no longer want to own the car for some reason — whether because you are tired of big car payments or you don’t need it any more — you may assume that you can just sell the car and keep paying on your car loan until you’ve covered the remaining balance.

For example, in the above scenario, you may believe you could just sell the car for the $15,000 that it is worth, pay down most of your big car loan balance, and simply keep making payments on the outstanding $5,000 loan amount that is due after your car is sold. Sure, you would be paying debt on a car you don’t have any more — but you would have a much smaller loan balance to worry about.

Unfortunately, this is not the reality. Typically, in order to sell the car, you would have to pay off the existing car loan in full before you could move forward. So, you would have to find some solution to dealing with the $5,000 unpaid balance and that solution can’t be to sell the car and worry about it later.

This could be a huge problem if you really do need to sell, but can’t do so because you don’t have $5,000 (or whatever amount) to pay off the difference between what the car is worth and what you owe.

What should you do if you’re underwater on a car loan?

Since you can’t sell a car and keep making payments on its loan when you’re underwater, you will need to explore other options if you need to offload a vehicle you owe a lot of money on.

The best option would be to try to save money to pay off the extra you owe on the car above its fair market value. You could make extra payments on your car loan each month to pay your loan balance down faster so you can get out of being underwater. Or you could make a large lump-sum payment for the difference between what you owe and what you get for the car when you sell it.

If you don’t have the cash to do that, you could try to borrow using a personal loan and use the proceeds from that loan to pay the difference between the car’s worth and its loan balance. Or, if you are getting a new car, you could try to borrow enough on that car loan to repay your current vehicle debt and fund your new vehicle purchase — but this just increases your chances of ending up underwater again, since you’d be taking out a larger loan for the new car

None of these are great options, but you’ll need to decide which ones make sense for you — unless you can just hold onto the car for a while longer and try to pay down your loan quickly. This way, you won’t keep losing ground as the car’s value decreases faster than your loan balance falls.

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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 monthly mortgage payment on a million-dollar house depends on your interest rate, property taxes, and other factors. See some examples here. 

Buying a home is part of the American Dream for many, and so is becoming a millionaire.

But, what if your dream is to own a house valued at $1 million? Unless you are very wealthy, you’d probably have to take out a mortgage to buy a lavish mansion with a seven-figure price tag. So, what would the mortgage payment look like if you did?

Here’s what you’d pay each month for a $1 million home

If you want to buy a million-dollar house, you’d likely need to make a down payment. Very few mortgage lenders allow you to get approved for a loan without putting money down since there’s a lot more risk if you have no skin in the game. And, it’s even less likely a mortgage lender will offer you a loan to buy a $1 million house unless you put money down.

In fact, many lenders require you to make a pretty large down payment — sometimes to the tune of 20% or 30% — if you want to get approved to buy such a costly property. So, that would mean if you were hoping to purchase an expensive place like this, you’d need about $200,000 (or more) down.

If you made a $200,000 down payment, that would leave you borrowing $800,000. And the monthly mortgage payment on that $800,000 loan would vary depending on the interest rate you were offered, as well as what loan term you chose. For example:

If you borrowed $800,000 on a 30-year fixed-rate loan at 8.00% interest, you would be looking at a monthly payment of $5,870 for principal and interest on your home loan.If you borrowed $800,000 on a 15-year fixed-rate loan at 6.50% interest, you would be looking at a monthly payment of $6,969. Your monthly payment is higher, even though your rate is lower, since you’d be cutting your repayment time in half.

With either of these options, there’s no doubt you’d need to make a pretty generous income in order to afford a million-dollar property — especially since you should aim to keep your housing costs to 25% of your take-home income or less.

Don’t forget other costs of ownership

Your monthly mortgage payment probably would not just cover principal and interest. In fact, many lenders require you to also include extra money in your monthly mortgage payment to cover the costs of property taxes and homeowners insurance. Your lender will determine the amount you must pay each month to cover these costs and will collect the cash and keep it in an escrow account until the bill comes.

So, you’d also need to factor in these costs when determining how much you’d have to pay each month. These costs can vary a lot depending on where you live, local property tax rates, and the risk your house presents (a house in a flood zone, for example, might cost much more to insure).

Say, for example, your property taxes were $15,000 annually and your insurance was $2,000 — both reasonable estimates for a million-dollar house. This would add an additional $1,417 to your monthly mortgage payment ($17,000 / 12). So, you could be looking at a total monthly payment of $7,287 for a 30-year fixed-rate mortgage at 8.00% interest once you add your escrow payments to the principal and interest cost.

You need to make sure you take all the monthly expenses of any home into account — especially a million-dollar one — when you decide if owning a particular property is right for you. If you worry about where the money to make the payments is going to come from, you shouldn’t move forward with the home purchase.

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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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Like REI, Costco sells outdoor equipment, such as tents and kayaks. Read on to learn which store has the better deals. 

REI is a major recreation store that sells gear and attire for nearly every outdoor activity: hiking, camping, snowboarding, cycling, kayaking, canoeing, paddle boarding, climbing, running, and traveling.

As a consumer cooperative, REI is owned by its members. However, unlike Costco, you don’t need a membership to shop there. For those that pay the $30 for a lifetime membership, REI will give you 10% back on eligible purchases (paid as an annual “dividend” every March), special discounts and coupons, and a 365-day return window.

In comparison to REI, Costco is a vastly different store but it also sells some outdoor products. And for those budget-conscious granolas, Costco’s low prices on outdoor equipment could help you get outside without hurting your personal finances. To show you how both compare on price, let’s look at two popular outdoor products sold at both stores: kayaks and tents.

Who has cheaper kayaks?

For a one-person sit-in kayak, Costco has a slightly lower retail price. Here’s how the two compare on a Pelican model:

To be fair, these kayaks are slightly different from each other, but they share many characteristics. They’re both 10 feet long, weigh 40 pounds, and come with a Poseidon paddle. The REI kayak comes with a cockpit table, while the Costco model comes with a cartop carrier.

At face value, the Costco kayak is cheaper. However, if you’re an REI member, you’ll get 10% back, which is about $43. Even though that money will come to you as a voucher in March, it makes the true price of REI’s kayak about $13 cheaper than Costco: $387 versus $400.

To make things more complicated, the Costco kayak would likely be cheaper if you purchased it online and bought more than one. Buying two will save you $100, whereas buying three would save you $200. If you bought two, you would spend $700, whereas at REI you would spend about $774.

Who has cheaper tents?

Neither company sells the same tents as the other. But if we compare similar products based on specifications — such as the tent’s peak height, surface area, and number of people who can fit — Costco has lower prices. Here’s how they compare for a two-person tent:

Even with the 10% REI discount, Costco’s model is still cheaper: $40 versus $67.50. Of course, these tents have some differences (the Cedar Ridge tent, for instance, is about four inches taller). But if you’re looking for a budget tent, Costco has the lower price for one that fits two people.

Here’s how they compare for a six-person tent:

Here, the big difference is that the REI tent uses “darkroom technology,” which blocks out about 90% of sunlight and could help you sleep in after sunrise. But for a savings of $130, you can buy an affordable six-person tent from Costco — sunlight and all.

Which store is better for outdoor equipment?

If you’re not concerned about brands or specifications — in other words, you just want a paddle board that floats or a kayak that doesn’t sink — your local Costco will likely offer a cheaper way to pick up outdoorsy activities. However, for those granolas (and I’m one of you) who want more selection, REI could definitely suit you, even if it means paying a little extra. Even so, I would still compare REI with Costco, as you might be surprised at what you can find in the warehouse.

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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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