Money Management

Love shopping at Target? Read on to see when it pays to stay away. 

There’s a joke that it’s really not possible to do a shopping trip at Target without spending a minimum of $100. But that joke isn’t all that funny.

Many consumers are pretty cash-strapped these days due to inflation and can’t afford to make extra purchases. But shopping at Target can easily lead to that. So if these signs apply to you, it may be a good idea to steer clear of your local Target store until goods become cheaper or your personal financial circumstances improve.

1. You already have debt

During the first quarter of 2023, U.S. credit card balances rose to $917 billion, according to TransUnion. That’s a 19.2% increase from a year prior.

If you owe money on a credit card already, then the last thing you want is to risk adding to that debt. Doing so could really trap you in an unfavorable financial cycle. So if that’s the case, you may want to avoid shopping at Target until you’re debt-free. That way, if you end up falling victim to impulse purchases, they won’t necessarily push you deeper into a hole.

2. You always overspend when you shop there

There’s just something about Target that tempts people to stop exercising self-control. Maybe it’s the store’s cute apparel line or hard-to-resist housewares section. Even the snacks at Target are out-of-this-world delicious.

You may not have any debt right now. But if you tend to overspend at Target and you’re trying to save for a specific goal, whether it’s saving for retirement or buying a home, then you’re probably better off avoiding it.

3. You have cheaper options for food and essentials

Target’s prices tend to be competitive, but they’re not always the cheapest. If you’re hunting for non-perishable items, you may find that you can scoop them up at a lower price point at your local dollar store. And when it comes to perishable items, you may find that you can spend a lot less to feed your family at discount grocers like Aldi.

Furthermore, if you have a Costco membership, it could pay to do a lot of your food shopping there. You may also want to turn to Costco for household essentials (though to be clear, you should always try to compare prices when you’re buying food or things for your household).

When it pays to stay away

If you love shopping at Target, you’re in good company. But if these signs apply to you, then you may want to stay away, especially if your financial situation isn’t all that great right now. Besides, the longer you steer clear of Target, the more you might appreciate shopping there once your budget opens up and you’re able to scoop up fun items without having to stress over the cost.

In fact, one thing you may want to do is give yourself the reward of a Target run for meeting a specific financial goal, like paying off a credit card or getting to a certain balance in your savings account. That might motivate you to hit that goal even sooner.

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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 positions in Target. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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Don’t let the cost of homeownership make the rest of your life miserable. Read on to make sure you’re not about to take on too much house. 

Buying a home has a host of benefits. Not only do you no longer have to follow a landlord’s rule, but you get to build equity in a place of your own. But a recent New York Times article reveals that 27.4% of homeowners are cost-burdened, or “house poor.” And that’s a scenario you’ll really want to avoid.

You don’t want your home to become a burden

Taking on too much house can have serious financial consequences. For one thing, it might result in a scenario where you fall behind on your mortgage payments and risk losing your home. That won’t happen right away, but if you miss enough mortgage payments, it could result in foreclosure.

Even if you manage to keep up with your mortgage payments, if you take on too much house, you might risk falling behind on other bills, whether it’s utilities, car payments, or personal loan payments. You might also end up having to cut back on many of the things you love, like travel, social events, or dining at restaurants. Scaling back in those areas might seriously impact your quality of life.

How to avoid becoming house poor

Having a comfortable home could make your life better. But not having any money to spend on the things you enjoy might have the opposite effect. As such, it’s important to do what you can to avoid becoming house poor.

As a general rule, you can steer clear of that fate by keeping your housing costs to 30% or less of your take-home pay. That won’t guarantee that you won’t struggle to keep up with your housing costs, but it might lower your chances of that happening.

To be clear, though, when we talk about housing costs, it’s not just your mortgage payments you have to take into account. That 30% limit should include peripheral expenses like property taxes, homeowners insurance, and HOA fees, should they apply to you. Basically, you want to include any predictable expense you’ll be on the hook for in that 30% threshold to buy yourself a decent amount of flexibility.

Of course, given how high mortgage rates and home prices are today, you might have a hard time finding a home that allows you to stick to that 30% limit. If that’s the case, you may want to consider putting off homeownership until your income increases or the cost of buying a home or signing a mortgage comes down.

Now, you may have some wiggle room with that 30% limit if you have other major expenses that are notably low. If you’re looking at buying a home in a walkable city where you won’t need a car and your public transportation costs will be minimal, then you may be okay to spend more like 40% of your income on housing, since you’re spending virtually nothing on another major expense.

But otherwise, don’t make the mistake of buying a home that will leave you house poor. Going that route could result in a world of regret and financial stress.

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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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Buying a house is hard enough, but it’s far more complicated when you’re crossing state lines. Here’s what to expect. 

Buying a house can be a long, hard process, even if you’re just moving down the street. But when you add the complications of an interstate move on top of the process, well, it’s going to get much harder.

That’s not to say it’s not doable. People do it every day (I’m in the middle of it as we speak). But it’s definitely going to be more expensive than a local move, so it’s important to know what to expect.

You earn a lot of frequent flyer miles

Of course, it seems obvious that you’re going to need to do at least a little traveling to your destination, especially if you’re going to make a six-figure home purchase. No matter how much travel you’ve already planned on, however, chances are that there’s going to be more travel than you thought.

For one thing, the houses in many areas are selling like proverbial hotcakes. If you’re in a fast-moving real estate market, the good houses could have multiple offers within days — or even hours — of hitting the market.

If you prefer to physically visit your potential future home before you put in an offer, this could mean you need to make multiple trips to your destination, probably on short notice. (It could be beneficial to get a small storage unit in your destination city, in which you can keep some personal items, like toiletries. This will reduce how much you need to pack on your subsequent trips.)

The travel doesn’t stop once you’re under contract. It’s highly recommended that you be physically present for the home inspection, which could mean another trip depending on the timing. (In fact, I’d argue that if you have to choose between being present for the showing or the inspection — go with the inspection.)

After the inspection, you can take a travel break while waiting on the appraisal and the title. You can even digitally sign a lot of the early contracts and applications. The closing is another matter. Plan to be required to show up at the closing so you can pay your closing costs and sign the formal documents in person.

The silver lining on all of this? Think of the miles you can earn with your trusty travel rewards credit card. (I got to explore a ton of interesting — and not-so-interesting — airport lounges.)

You may need in-state pay stubs

For many home buyers, a key part of making the purchase is the loan. Unfortunately, this is another task that can get harder when moving states.

In this case, it’s all about your income. The mortgage lender will need to know that your income won’t be adversely affected by your move. If you’re a remote worker or self-employed, you may get away with a letter confirming that your income isn’t location-dependent. Similarly, if you’re starting a new job, an offer letter could be enough for some lenders.

But a letter from your employer may not always be enough. Hourly workers, in particular, may have to jump through extra hoops to show they will have the same pay and hours. In the worst case, some banks may require that you provide one or two pay stubs from your new state to show an unchanged income level.

Ask your mortgage provider early in the process their rules on proof of income so you aren’t blindsided by qualifications that could throw you off track.

Don’t forget the moving costs

The entire horse and pony show of buying a house can be enough to make you lose sight of something just as important: Once you close on the house, you still need to move into it.

Moves, especially long-distance moves, are expensive. So don’t forget to keep your moving costs in mind while shopping for a house. Between the cost of travel, the closing costs, the down payments — your bank account can dwindle in a blink if you’re not careful.

Don’t let anyone tell you an interstate move is easy. It’s definitely not. But it’s not impossible, either. You just need to plan well — and well in advance — to ensure you’re not hit with unexpected complications.

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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 mild recession isn’t as bad as a major one. Read on to see what a 2023 economic downturn might entail. 

It’s hardly a secret that it’s gotten very expensive to borrow money, whether in the form of a credit card balance, personal loan, or mortgage. And the reason is that the Federal Reserve has been hiking up interest rates in an effort to slow the pace of inflation.

The problem, though, is that costly borrowing has the potential to fuel a recession. If consumers get fed up with sky-high borrowing costs, they’re apt to start spending less. That has the potential to impact the economy in a negative way.

In fact, the Federal Reserve itself has acknowledged that a mild recession is likely in 2023. But what exactly might that entail?

Without a crystal ball, we can’t say for sure. But here’s what a mild recession might do to the economy.

Unemployment numbers could rise, but not drastically

A major recession has the potential to upend the economy and drive unemployment levels upward in a very big way. But a mild recession might lead to just a modest uptick in unemployment.

Of course, that’s not a great thing for the people who might find their jobs on the chopping block. But if unemployment doesn’t rise all that much, it means that those who find themselves out of work might have an easier time getting hired elsewhere.

From a stimulus perspective, a mild recession is unlikely to lead to another round of federal aid. Lawmakers have approved stimulus checks in the past during periods of raging unemployment. A mild recession is unlikely to get us to that point, which means Americans should not expect to see a windfall hit their checking accounts.

Stock values could fall — or not

A mild recession could impact stock values, but that’s not guaranteed to happen. In 2020, when unemployment levels were astronomical, the stock market, after a temporary dip, had a really strong year. So recessions and stock market downturns don’t always go hand in hand.

Still, it’s a good idea to make sure your investments are diversified. That way, if the stock market does experience its share of volatility, you may be less likely to face major losses.

And remember, too, that you don’t officially lose money on stocks until you actually sell them at a lower price than what you paid for them. So if you load your savings account with plenty of cash, you may not have to liquidate your stocks at a loss when a need for money arises.

The housing market could hold steady

A mild recession could lead to a decline in home buyer demand. But home values are unlikely to drop for one big reason: The market today sorely lacks inventory on a national level.

As of the end of April, there was only a 2.9-month supply of available homes, according to the National Association of Realtors. It can easily take a 6-month supply to fully satisfy buyer demand.

Even if the supply-demand gap narrows during a mild recession, we’re unlikely to see demand outpace housing supply because of where inventory is at today. So all told, prospective home sellers don’t necessarily need to panic.

A mild recession might only cause a fraction of the damage that a full-blown recession has the potential to produce. But it’s still a good idea to prepare for a downturn nonetheless. You can do so by shoring up your savings, paying off high-interest debt, and boosting your job skills so that your employer might have a harder time letting you go should money get tight.

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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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It’s best to pay all your bills on time, including your credit card bills. Find out what to expect if you forget to pay your credit card bill or pay it late. 

Paying your bills on time is essential, but sometimes mistakes happen. If you use credit cards, there may come a time when you forget to pay your credit card bill by the due date. There are several consequences to be aware of when this happens. Find out what you can expect to happen if you forget to make a credit card payment on time.

Credit card fees cost you money

When using credit cards, being aware of potential fees is essential. If you forget to pay your credit card bill by the due date, your credit card issuer will charge you a late fee. Extra charges like this impact your checking account balance. Paying your credit card bill on time every month is the best way to avoid late fees.

If you miss a payment or pay late, interest will begin to accrue. Credit card interest is charged when you don’t pay your entire card balance. Depending on how late you pay your bill, your credit card issuer may apply a penalty APR to your outstanding balance, which could be costly.

If you’re not careful, credit card interest charges can pile up quickly and lead to a credit card debt problem. While getting out of debt is possible, making decisions that allow you to avoid credit card debt can reduce stress and help you boost your overall personal finance health.

Beware of this potential consequence

Your missed or late credit card payment could result in additional consequences. Paying your bills on time is vital if you hope to have a good credit score. Late payments can hurt your credit score. Late payments aren’t reported to credit bureaus until they’re at least 30 days past due. However, if you pay your credit card bill more than 30 days late, you may see a negative mark on your credit report.

Eliminate forgetfulness with these tools

If you’re forgetful, you may be looking for strategies to help you stay on top of your bills. Your credit card issuer provides account features that can help you eliminate forgetfulness. Here are two useful features that are available to you as a credit card user:

Automatic payments

You can enable automatic payments through your credit card account. You can set up this feature through your credit card company’s website or mobile app. When you do this, your bill will be paid automatically on the due date. To avoid being charged interest, it’s recommended that you set up your automatic payments so your entire card balance is paid.

Payment reminder alerts

Another account feature that is available to you is payment reminders. If you don’t like the idea of automating the payment process, this is an alternative solution to explore. You can set up payment reminder alerts through your online account to receive a notification before your credit card bill is due. You can choose how many days before the due date you want to get an alert.

Do this if it’s your first time making a late payment

If it’s your first time missing a payment, it’s worthwhile to reach out to your credit card issuer to request a fee waiver. It may waive the fee if it’s your first time missing a payment or paying late. While it may decline your request, you’ll never know unless you ask — so make the call!

Take extra care to avoid missed payments

Now you know what to expect if you miss a credit card payment or pay your bill late. If you want to avoid extra fees and negative marks on your credit report, staying on top of your bills is a must. If you’re considering getting a new credit card, check out our list of the best credit cards.

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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 have multiple financial goals, you’ll need to prioritize. Read on for three ways to decide what to focus on first. 

Setting financial goals is important for your future. And, chances are good, you’ll have multiple goals you want to work on.

While you can often aim to accomplish many different things simultaneously, like investing in a brokerage account for retirement and paying down debt, you often end up needing to prioritize what to do first.

There are three different approaches you can take to decide which goals to prioritize. Here’s what they are.

1. Consider what will have the biggest impact on your net worth over the long haul

While there may be many things you want to accomplish with your money, ultimately the underlying purpose of those objectives is often to end up wealthier. So, think about what will make the biggest impact in achieving that objective.

For example, paying off high-interest credit card debt as quickly as possible can save you a ton of money — far more than paying off your mortgage early. If you eliminate a monthly credit card payment, you can also then redirect that money toward other goals.

On the other hand, investing can leave you with more wealth in the end than paying off your mortgage early. Since you can reasonably expect a 10% average annual return by investing in the S&P 500 and your mortgage interest rate is likely well below 10%, you should probably focus on devoting more of your money toward investing rather than making extra mortgage payments.

2. Think about what you’re most motivated about doing

While it makes financial sense to put your focus on accomplishing goals that will improve your net worth, managing money isn’t just about math. When you make everyday spending and saving decisions, your motivations matter as well.

The reality is, if you are excited about accomplishing a particular goal, you’re much more likely to do what it takes to make it happen. For example, if you really want to pay off your mortgage and own your home free and clear, you may be willing to give up dining out or even work some extra hours to get money to do that. But if you aren’t as excited about investing for whatever reason, you might not be willing to put in the work to invest more.

In this situation, even though you’d theoretically be better off devoting extra cash to your investments rather than early mortgage payoff, you might actually end up in a better position if you focus on getting rid of your home loan since you’re more likely to do what it takes to accomplish that quickly.

3. Consider how difficult accomplishing each goal will be

Finally, you may want to think about how difficult accomplishing each financial goal will be. For example, if you’re working on paying off a few different debts and you could repay one very quickly and the other will take years to repay, you may want to work on paying off the debt with the lowest balance first. This would help you score a quick win that could keep you on track.

This doesn’t mean you should give up on accomplishing your hardest goals, especially as they are usually your most important ones like saving for retirement or amassing a large enough down payment to buy a house. But if you can devote your extra money to accomplishing some simpler things first to help you develop the habits you need to make these big goals happen, then it may be worth doing that — especially if you’re having a hard time with money management.

Ultimately, the best approach to deciding which goals to prioritize is going to vary depending on your situation. And, you can work on more than one thing at once. Just be sure you’re making a conscious plan for where your extra money should go and not trying to do too much at once so you end up accomplishing nothing at all.

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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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