Money Management

Taking vacations is important to me. Here’s how I prioritize saving for them, so I don’t have to feel guilty about their cost. 

I’m usually pretty reasonable with my spending. While I don’t watch every dollar, I try to keep my fixed expenses below 50% of my income, and I diligently save at least 20% of what I make in either a brokerage account or my savings account.

There is, however, one area where I regularly splurge. I spend a small fortune every year on vacations and I do not feel a single moment of guilt about having that cash come out of my savings account. Here’s why.

I have a vacation fund I save in all year long

The biggest reason why I am happy to splurge on vacations and will almost always say yes to a trip is because I know I can do this without jeopardizing any of my other financial goals.

Since taking vacations is really important to me, I set aside money every single month in a special savings account that is just for travel spending. This is money I can use to pay for plane tickets, hotel reservations or Airbnb stays, or splurges while I am on vacation.

I keep costs down in other areas that don’t matter as much to me (for instance, spending almost nothing on clothing), and I contribute a good portion of my discretionary income to my special fund for vacations. This means my vacation fund always has a lot of cash in it — and I can spend it completely guilt free since that is what the money is there for. If I want to take a spur-of-the-moment trip, or buy a special drink on vacation, or splurge on a box full of cookies that cost $7 each while I’m away, I just do it without thinking about where the money will come from or whether it will set me back on big goals. I know the cash is there and ready just for that purpose.

Vacations are worth it to make family memories

While I could use my discretionary spending for anything, I’ve chosen to create my vacation fund and enable my guilt-free travel spending because taking trips provides me with more personal joy than most other things I could use my money for. I really value the memories I make on these vacations, so I’d rather give up other things to be able to make them happen.

My kids right now are at a really fun age where they want to travel with us and are excited about everything and I know that won’t always be the case. I also know someday they will have school commitments and sports and other things that interfere with our ability to go on vacation so often. While I have the time to make precious family memories, and while they still react to things with unbridled joy, I want to take them to as many places as I possibly can.

The thing is, there’s absolutely nothing wrong with guilt-free spending and splurging — as long as you don’t splurge in every area of your life and you make a plan to do it wisely. While vacations are my thing, something else may be yours — but whatever it is, find a way to set aside the funds to enjoy it without worry by sacrificing other things that don’t spark joy.

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When you leave a job, you risk forgoing some or all of your 401(k) match. Read on to learn more. 

There’s a reason companies commonly match worker contributions to 401(k) plans. Offering workers free cash for retirement is a great way to get them to stay on board.

If you’ve been saving for retirement in your employer’s 401(k), you may have been granted matching contributions along the way. But if you’re now gearing up to leave your job, you should know that you may or may not get to take those matching dollars with you.

It’s a matter of your company’s policy

Let’s be clear about one thing. Any funds that go into your 401(k) plan out of your own earnings are yours to keep, no matter what.

If you switch jobs and have contributed $15,000 to your 401(k) plan out of your paychecks to date, you’re guaranteed to be able to walk away with that $15,000 in retirement funds. It’s the matching dollars your employer has been handing over that may be in question.

Some companies impose a vesting schedule for 401(k) matches. If yours has one, you may not get to keep your match, or a portion of it, depending on the terms of that vesting agreement.

Let’s say it takes five years of employment to fully vest in your 401(k) match, and you vest at a rate of 20% a year. Let’s also say you also got a $3,000 match in your 401(k) and have been with your employer for a year. That means you may only be entitled to 20% of that $3,000, or $600.

Now some vesting schedules work a little differently where you have to remain an active employee through the end of your vesting period or you get nothing. So in the above example, you’d forgo your entire match for walking away from your job after a year.

Meanwhile, there are plenty of employers that don’t impose a vesting schedule at all for 401(k) matches. So if yours falls into that category, you can keep whatever matching contributions you’ve received when you leave your job.

What to do with your 401(k) when you leave your job

You may have the option to keep your old 401(k) where it is once you leave your job, but it’s generally best to move that money into a new plan so you don’t forget about it. In fact, there are more than 29 million unclaimed 401(k) plans in existence today, says Capitalize, and it would be a shame for yours to fall into that bucket.

If you have a new job lined up with its own 401(k), you could opt to roll your old 401(k) into that plan. Otherwise, you can open an IRA and move your 401(k) there.

Employer matches are a nice perk to have in a 401(k) plan. But it’s important to review the terms of your company’s vesting schedule before making plans to leave your job.

In some cases, it may be that sticking around for a few extra months spells the difference between getting to keep your matching dollars versus giving them up entirely. And given how hard it is to build cash savings, it would really be a shame to give up any amount of free money if you don’t have to.

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Costco has many great items available that can help you enjoy your summer more, including fun outdoor toys for kids. Check out some worthwhile finds. 

Costco is a wonderful place to shop for all sorts of products.

Because the members-only warehouse club offers affordable items, your checking account won’t take too much of a hit when you buy things at Costco. And, the store has a vast selection of household products, personal care items, groceries, and more.

Some of those items can help you to have a really great summer. In fact, it may be worth breaking out the credit cards to buy these items.

1. An H2OGO Underwater Oasis Spray Pool

If you have kids, this spray pool is an absolute must-buy for the warmer months.

It takes the fun of baby pools and running through a sprinkler to a whole new level. Your kids will not only adore getting sprayed by the built-in dolphin sprinkler, but they will also be able to splash around in the adorable little pool with a durable three-ply liner.

Best of all, at just $19.97, the cost of this amazing outdoor kids toy is unbeatable. In fact, this costs more than $10 less than inferior products that have much smaller pools for your kids to wade in.

2. An outdoor dining/fire pit set

This item is a bit more of a splurge, but it’s a great option if you’re hoping to upgrade your outdoor space because it’s actually like two products in one.

The Belmont 6-piece Outdoor Dining Set with Fire Table provides a place to eat and a cozy fire table that you can sit around to linger outdoors for longer after it gets dark. The set is a relative bargain at $1,599.99 (after saving $400) as a result of a current promotion. It’s also part of Costco’s Buy More, Save More Deals, which allow you to save between $100 and $500 by purchasing multiple qualifying items.

While that’s a big chunk of change, other fire pit/dining table combos that have less comfortable seating come at much higher prices, with many topping $3,600. So if you want a cozy outdoor place to dine, entertain, and sit fireside, check out Costco’s offering.

3. Pretty planters for your flowers

Nothing says summer like some beautiful flowers blooming. If you want to take your garden to the next level, this three pack of Varner 14.5″ planters is just what you’ve been looking for.

These planters are a convenient size to make attractive arrangements — without being so big that you won’t be able to move them at the end of the season. Of course, they’re also weather resistant so you can enjoy them even once the temperature starts to drop.

They come with convenient pre-drilled holes so you won’t risk overwatering your plants — and they cost just $27.49 for all three which comes to less than $10 a planter.

Costco is a great place for summer buys

These are just three of many great seasonal items Costco has to offer. You can buy everything from popsicles and drink mix for your kid’s lemonade stand to full playsets and raised garden beds.

The important thing is to always compare the prices on Costco products to competitors’, to make sure you’re staying within budget, and to use the right credit card to maximize your cash back or rewards on your Costco purchases. By doing so, you can get great summer items without busting your budget.

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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.Christy Bieber 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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A writer employed a specific strategy when signing her mortgage. Find out what it was. 

Years ago, my husband and I made the decision to upsize from our starter home to our current home. We knew we wanted kids, and while our old home was charming in its own right, it sorely lacked the square footage we expected to need once children came into the mix.

Not surprisingly, the home we upgraded to cost a lot more than what we sold our starter home for. But we made a large down payment on that home to keep our mortgage loan to a minimum. We also opted to employ one key rule that’s made the cost of homeownership much easier to keep up with through the years.

We made sure to buy a home we could pay for on one salary

My husband and I were both working at the time we bought our home, and have continued to both work since. But when we bought our home, we calculated how much house we could afford based on his income alone.

We figured that if we could swing our mortgage payments and other housing costs on only his salary, we’d have that much more wiggle room in our budget for things like home repairs, which we’ve faced our share of over time. And we also figured we’d be able to add more cash to a savings account if we weren’t relying on my income to cover our mortgage payments.

Another reason we bought a home we could pay for on my husband’s salary alone is that I’ve been self-employed for a long time, and my income is quite variable. Because of that, I’m far more comfortable basing our essential expenses on my husband’s salary, and then using my income for extras — things like travel or services like cable that we could always cancel in a pinch if we had to.

Meanwhile, since moving into our home 14 years ago, our property tax bill has risen by about $8,000. If you’re thinking that can’t possibly be true, recognize that New Jersey, where I live, has the highest property taxes in the country.

When our property taxes started to climb, it was very stressful. But because my income wasn’t earmarked or needed for our mortgage payments, we were able to cover the cost of those property tax increases by using my earnings without falling behind.

A rule that’s served us well

As a general rule, it’s important to keep your monthly housing costs, including your property taxes and homeowners insurance, to 30% of your take-home pay or less. And if you’re in a household with two earners, that 30% can apply to your joint income.

But in our case, we didn’t factor in my income when calculating what mortgage we could take on. And I’m really grateful we made that choice, because it’s made it much easier to cope with home repairs and surprise expenses. It’s also given us an opportunity to pad our savings so that we don’t have to lose sleep over the thought of an appliance breaking or yet another property tax hike.

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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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Removing your deadname on credit reports isn’t difficult, but does require some important steps. Read on to learn how to update your name. 

Credit bureaus use the legal name on your credit report to consolidate your crediting activities, which together form your credit score and can help you get approval for credit cards, loans, and applications for apartments and mortgages. If you change your name, it’s important to let these credit bureaus know, as doing so ensures your good credit activities continue to build your score and personal finances.

Fortunately, as part of a push to support transgender and nonbinary people, all three major credit bureaus — Equifax, TransUnion, and Experian — will let you change the deadname on your credit reports to reflect your legal name. The process isn’t complicated, but you will need to complete some steps beforehand and confirm your legal name with supporting documents. Let’s look at what you need to change your credit reports and what each bureaus asks you to provide to change your name.

1. Obtain a court-ordered name change

First, you’ll have to go through your state’s procedure to change your name legally. Often this involves filing a petition for a change of name at a local court in the state where you live. You’ll have to bring certain identifying documents with you to court, like your birth certificate, and you might need an affidavit from someone close to you confirming your deadname and actual one. Since the requirements differ by state, it’s best to check out your state’s criteria, which you can find on the National Center for Transgender Equality‘s site

2. Report your legal name to banks, lenders, and credit card companies

Once you’ve changed your legal name, your next step is to update the deadname on your financial accounts. This means banks, credit card companies, or any other entity who’s reporting crediting activities to the three credit bureaus. You can request copies of your credit report from all three bureaus to get an idea of which accounts need to be updated.

TransUnion requires you to complete this step before changing your deadname on its credit report, while Equifax and Experian strongly recommend it. Either way, keeping your financial accounts and credit reports under the same name ensures your reports aren’t missing information or activities, which could affect your credit score.

3. Update your legal name to the three major credit bureaus

Each of the three credit bureaus has a different procedure for updating your name. Fortunately, the hard work is mostly behind you, and now you just have to show credit bureaus the right identifying documents to get your deadname removed. Let’s look at what each credit bureaus requires.

Equifax

To change your name, sign in to your Equifax account using your deadname, then navigate to the dispute center. Once you’re in, Equifax will ask you to upload identifying documents, such as:

Court-ordered name changeSocial Security number (this could be your updated SSN card)Piece of mail, such as a bank statement, with your current addressState driver’s license number or passport with your date of birth

After you submit these documents, Equifax will work on updating your credit report to reflect your actual name.

TransUnion

TransUnion requires you to update your name on all financial accounts linked to your TransUnion credit report. Once that’s done, you’ll submit the following documents to the address below:

Name change court orderA letter with your Social Security number, date of birth, and address

TransUnion Consumer Solutions
P.O. Box 2000
Chester, PA 19016-2000

Experian

Experian has an online portal where you can upload documents. Basically, you just need to upload your court-ordered name change, an identification card (with your deadname or actual one), and a dated bank, insurance, or utility statement. After you upload these, Experian will typically change your name within 10 business days.

Fortunately, credit bureaus are on your side and support your decision to change your name. If you need help updating your name on their credit reports, reach out to their help centers or call them at their respective numbers. Finally, it’s a good idea to check your credit reports once your name change submission has been accepted, especially since you can request one free credit report weekly at AnnualCreditReport.com until the end of 2023.

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There are tax implications when you do a Roth IRA conversion. Read on to learn what to expect. 

It’s important to save for retirement no matter what plan you opt to do so in. If you don’t have access to a 401(k) plan through your employer, then you may opt to save for retirement in an IRA instead.

IRAs come in two main varieties — traditional and Roth. And there are pros and cons to both.

With a traditional IRA, you get a tax break on the money you put into your retirement plan. From there, investment gains in your plan are tax-deferred. This means you don’t pay taxes on investment gains year after year, but rather, when the time comes to take withdrawals, which are subject to taxes in retirement.

With a Roth IRA, you don’t get a tax break on the money you contribute to your account. However, investment gains in a Roth IRA are yours to enjoy tax free. And withdrawals are also tax free.

Some savers opt to put their money into a traditional IRA because they want the immediate tax savings. But if you go this route, there may come a point when you decide that a Roth IRA will better serve your needs in retirement.

In that case, you have the option to convert your traditional IRA to a Roth IRA. But you should know that doing so could leave you with a pretty sizable tax bill, so you’ll need to plan carefully for that conversion.

It could pay to move your money over

Not having to pay taxes on your retirement plan contributions could do you a world of good. Many older Americans face financial stress once they stop working and are forced to live on a combination of Social Security and savings rather than an ongoing paycheck. So not having to pay taxes on the money you remove from your nest egg could be a major source of relief.

Furthermore, if you expect to be in a higher tax bracket in retirement than you’re in now, then a Roth IRA could make a lot of sense. Plus, with a Roth IRA, you won’t have to take required minimum distributions from your nest egg, whereas those are required with a traditional IRA. And not having to remove funds from your IRA year after year allows you to keep enjoying tax-advantaged growth on your investments, not to mention potentially leave some of that money behind to your children or other heirs.

How a Roth IRA conversion works

With a Roth IRA conversion, you simply transfer funds from a traditional IRA into a Roth account. You can often do so directly for a seamless rollover.

However, you should know that any funds you move over are taxable the year you do your conversion. And you’ll need to make sure you’re equipped to handle that tax bill.

So, let’s say you have $20,000 in your traditional IRA and you decide to convert that entire sum to a Roth IRA this year. This means you’ll have to pay taxes on $20,000. If your tax rate is 22%, that would leave you owing $4,400, which is hardly a small sum of money.

If you’re thinking about converting a traditional IRA to a Roth IRA, it could pay to consult with an accountant or tax professional and get their advice. They may be able to help you plan for that rollover so the associated tax bill isn’t such a blow.

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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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