Money Management

Freelancing can be a mixed bag. Read on to learn more about the benefits and drawbacks. 

If you’ve recently graduated from college, you’re probably eager to start earning a paycheck. And in that regard, you have choices. You could opt for a traditional job that pays you a salary, or you could try going freelance right away.

Between 2021 and 2022, the number of freelancers in the U.S. increased by over 20%, reports Zippia. And 51% of workers with a post-graduate degree work in a freelance capacity.

But you should know that freelancing can be a mixed bag, especially when you’re new to the workforce. Here are a few reasons you should — and shouldn’t — go freelance fresh out of college.

Reason No. 1 to go freelance: Flexibility

One of the hardest adjustments you might make as a full-time employee is having to be at a desk for preset hours during the week. When you go freelance, you get more leeway as far as your working hours are concerned.

If you’re not a morning person, you could choose to start your workdays in the afternoon and wrap up later at night. Or, you can opt to work weekends if you’d prefer to have shorter days with more breaks during the week.

Reason No. 2 to go freelance: Job satisfaction

Another great thing about being a freelancer is getting to choose the work you do. When you’re a salaried employee, you basically have to do what your boss says (within reason, of course). As a freelancer, you can say no to projects that don’t interest you or you feel will be too demanding of your time (assuming you have the financial flexibility to say no to work.)

Reason No. 3 to go freelance: The potential to earn more

When you’re hired to do a salaried job, you may be not eligible for overtime pay — which means during those busy weeks, you’re not seeing a dollar more in your bank account despite being chained to your desk. But as a freelancer, you get paid for all of the work you do. So the more you’re willing to push yourself, the more income potential you might have.

Reason No. 1 not to go freelance: Inconsistent income

Salaried workers get the same paycheck at preset intervals, and that can make it a lot easier to budget and cover living expenses. When you’re a freelancer, your income can be very inconsistent. You might earn $1,500 one month, $4,000 the next month, and $2,000 the month after that.

Here’s why this is especially problematic for recent grads. This may be the first time in your life when you’re 100% responsible for your finances. But if you’re not earning a steady wage, you might easily fall behind on your essential bills, whether it’s your rent, car payments, or credit card bills.

And speaking of the latter, you might end up racking up your fair share of credit card debt if your income varies too much. That’s hardly ideal given the amount of money you risk losing to interest.

Reason No. 2 not to go freelance: A lack of benefits

Salaried employees are commonly privy to workplace benefits that include paid time off and health insurance. As a freelancer, you don’t get benefits like that. If you want or need time off for vacation or personal matters, you have to carve it out yourself and make sure you can afford to not be earning money.

Then there’s health insurance, the cost of which can vary a lot but tends to be very expensive when you’re paying yourself. It’s common for salaried workers to have their health insurance premiums subsidized so their coverage isn’t as much as a financial burden.

Reason No. 3 to go freelance: Struggles with time management

When you’re new to the working world, it can take some time to develop strong time management skills. But you really need those to do well as a freelancer.

Granted, if you’re someone who always managed deadlines well at college, then you may be in a strong position to freelance. But if you were that person who was always cramming for tests or starting a 30-page paper the night before it was due, then freelancing may not be for you.

Working as a freelancer right out of college could end up being a great career choice. But it could also backfire on you. So make sure to think about the pros and cons before making your decision.

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Dollar Tree has tons of great options for summer fun. Check out these five items to purchase now. 

Warm summer weather is fast approaching, which means it’s time to get your summer gear. You could spend a fortune on your credit cards purchasing items to keep you cool and entertain yourself and your kids all summer long.

Or, you could keep more money in your checking account by checking out these five Dollar Tree items that are well worth buying right now.

1. Flip flops

Flip flops are the classic summer footwear, but they can come at a cost. You could spend upwards of $3 or more buying flip flops at places like Walmart or Old Navy. Or you could check out the cute selection of Dollar Tree flip flops for men, women, and kids.

The Tree’s flip flops come in adorable summer patterns and colors so you can find a pair to match every outfit. And they are surprisingly comfortable as well.

2. Summer dinnerware

Entertaining is more fun than ever during the summer since you can sit around on the patio and toss some food on the grill, rather than having to go to the trouble of cleaning your house and cooking a real meal for your guests.

But, even if you’re dining al fresco, you’ll want to set a beautiful table. And Dollar Tree can help you do just that. There’s a huge selection of festive dishes, cups, and serveware available, including surfboard shaped serving trays, stemless wine glasses with summer sayings, and even melamine watermelon bowls.

Many of these outdoor dining items are unbreakable and adorable, so your outdoor table will look better than ever.

3. Sand toys

If you have kids, a trip to your nearest beach is a must-do to create awesome summer memories that will last almost as long as it will take you to clean up all the sand your kids track home.

The good news is Dollar Tree has a huge selection of sand toys so your kids can play for hours (and perhaps even give you time to indulge in that summer beach read). Check out oversized shovels, plastic beach buckets, and beach toy totes to carry all your new goods.

4. Squirt guns

Water wars are a summer classic and Dollar Tree will let you build an entire squirt gun arsenal. You’ll have a vast choice of different squirt guns, including double-barreled options, huge H2O blasters, and classic water squirters.

Just be sure you get an extra squirt gun or two for yourself so you can get in on the game. Since the squirt guns cost just $1.25, you’ll easily be able to afford to do that.

5. Grilling gear

Grilling tools can be very expensive, and they’re also notoriously hard to keep clean and in good condition since you’ll be cooking over a hot fire. Plus, sometimes your tools will get forgotten and left out in the elements.

But Dollar Tree offers deluxe barbecue spatulas, basting brushes, and barbecue forks at rock-bottom prices. You can pick up a couple of these to keep for home and for summer tailgating parties too.

Each of these five items will make your summer a lot more fun, without putting a strain on your budget, so check out Dollar Tree today so you can bring them home.

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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 Walmart. The Motley Fool has a disclosure policy.

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Interested in purchasing a starter home? Read on for some guidelines that’ll help you avoid making the wrong decision. 

Mortgage rates are elevated these days, and home prices are still pretty high. Because of this, you may want to consider purchasing a starter home if you’re looking to buy in 2023.

A starter home is one that’s generally on the smaller side, and it may not be so updated. A good 59% of prospective buyers say they’re looking to buy a starter home or fixer-upper this year, according to TD Bank’s First-Time Homebuyer Pulse. And that may not be a bad idea if you’re looking to keep your mortgage payments to a minimum.

But the last thing you want to do is buy the wrong starter home. To avoid that, aim to follow these rules in the course of your search.

1. Make sure your home can accommodate your family comfortably

It’s one thing to forgo the five-bedroom house you’re hoping to own eventually because home prices are so high these days. But it’s another thing to cram a family of five into a two-bedroom, one bathroom home when you know that’s just not going to be a great setup.

Buying a starter home doesn’t have to mean being uncomfortable and cramped. So make sure whatever home you buy is large enough to fit your family — both your current one and your future one. If it’s just you and a spouse right now, but you know you have plans to have a couple of kids within the next few years, you’ll want to make sure your home can fit them as well.

2. Try not to take on too many big repairs

It’s not uncommon for starter homes to need updates. But there’s a difference between a few renovations and a host of major repairs.

You may look at a home whose kitchen needs some upgrades and decide that’s something you can handle logistically and financially. But think twice before buying a home that needs a plumbing overhaul. Not only might that be very costly, but it might make it so you can’t really live in your house while the work is being done.

3. Always run the numbers

You’ll generally pay less money for a starter home than a larger one. But that doesn’t automatically mean you’ll be able to afford a starter home in your target neighborhood.

Before you make an offer on a home, run the numbers to see what you can afford, keeping in mind that your total monthly housing costs should really be kept at or below 30% of your take-home pay to avoid a financial crunch. And that 30% should encompass not just your mortgage, but also, your property taxes, homeowners insurance, and any other predictable, recurring monthly costs.

Buying a starter home can be a wise move when you’re a first-time buyer on a budget. That way, you can build up some equity in a property you own and use it to upsize down the line. But do keep these pointers in mind when searching for your starter home so you end up with a property that’s affordable and that you actually enjoy living in.

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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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Where you stay when you’re away from home matters for your happiness and your bank account. Read on for the questions to ask to pick a vacation homebase. 

Vacation season is finally upon us, and after a few years of COVID-19 limiting our movements and shrinking our worlds, many people are itching to get back out there and see some new sights. Here’s what you should ask yourself to determine whether to book a vacation rental or a hotel for your next trip. And while saving money is always important, I’d caution you against making it the only consideration when deciding.

How long will I be away?

Considering the length of your trip should always be your first move when you’re making this decision. If it’s just a quick overnight or weekend away, it’s usually best to opt for a hotel room. You won’t have to worry about potentially complicated check-in procedures or cleaning up after yourself (not to mention paying what could be a hefty cleaning fee, in the wake of COVID-19 and Airbnb’s mandated enhanced cleaning process) when you’re already exhausted from your trip. Plus, when it comes to hotels, what you see on the internet is generally what you get.

If you’re planning to stay more than a night or two, however, consider a vacation rental (and by this, I mean opt for renting an entire place, as opposed to the “room in someone’s house” option on Airbnb). Vrbo and Airbnb are two of the bigger names in this space, but there are certainly others out there (and in some resort or tourist areas, you might find that some property owners have their own website to arrange rentals at their properties). A hotel room can get tiresome, and if you’re going to be away from home for a while, you’ll likely appreciate having access to more comforts.

Am I traveling solo or with others?

Your second most important consideration for choosing a stay is how many people you’ll be housing. Vacation rentals really shine when you’re traveling with a group, as you can split the cost of accommodations without sacrificing as much comfort and privacy. Even if you love the people you’re traveling with, chances are you don’t necessarily want to cram into a hotel room or two when you have the chance to rent a small house or apartment and ensure everyone gets a comfortable place to sleep and a little space to spread out.

How close do you want to be to tourist destinations?

It stands to reason that if you’re traveling for pleasure, it’s to see things you can’t see at home. As such, consider the location of potential places to stay. If you opt for a hotel, you can generally expect them to be found closer to tourist attractions (perhaps walking distance in a big city), as well as in clusters along major highways (convenient for road trips, but definitely not the most scenic locations).

Vacation rentals could be anywhere, especially if you choose one via Airbnb or Vrbo, as you could very well be renting out someone’s personal home, or a room/separate apartment in it. It might be easier to manage your vacation activities from a rental if you have access to a car (either you’ve rented one or driven your own).

As an example, I just got back from a road trip to an international city, and I opted to rent a vacation home in a suburb about a 20 minutes’ drive from the city proper. It was quieter and more scenic than staying in the city would have been, and since I had a car, I could drive to the city to visit museums and restaurants. If I’d flown in and been without a car, staying in the city would have been much more convenient to those attractions.

Do I want to cook?

If you want your vacation to include no cooking or washing dishes of any kind, I 100% understand. However, if you’re going to be away for more than a couple days, having the ability to cook even simple meals could save you quite a bit on your vacation. Staying in a vacation rental with kitchen facilities will make this much easier. On my last trip, I decided to eat out for just one meal per day (because I was on vacation, after all), and have the other two in my rental.

And don’t think you need to whip up gourmet meals with expensive ingredients, either. I opted for fresh pasta and sauce from the grocery store for one lunch, a frozen pizza for another, and I bought enough granola bars to cover breakfast every morning there (and made use of the coffeemaker on site). Think simple (and cheap!) when it comes to vacation rental meals.

The price question

Regarding price comparisons between your options, it’s a good idea to actually run those numbers yourself based on length of stay and the factors important to you. In the case of my last trip, I’d have paid $475 more if I had opted for a hotel room of the type I normally book (with a hotel brand whose loyalty program I belong to) for a six-night stay (Saturday to Friday). And I wouldn’t have had access to the beautiful waterfront walking trail I used every morning, let alone a full kitchen to help me save money on food.

Asking the above questions and running your actual costs will help immensely when it’s time to decide where to stay on your next vacation. And while you’re at it, I recommend picking one of the best travel credit cards out there to get extra cash back or points on travel purchases, and ideally one that will help you avoid foreign transaction fees if you’re venturing beyond U.S. borders. Bon voyage!

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Buying a house just means swapping a rent payment for a mortgage payment, right? Well, no. Read on to learn more about the costs of owning a home. 

It’s a conversation I’ve had several times — the one where you talk about bills with a friend who owns a house, and find out that you pay more in rent every month than they do on their mortgage loan. I admit, it’s not a great feeling, especially as they’re building equity while I am…not. But I take a lot of comfort in the fact that the cost of owning a home is both different and ultimately more than the cost of renting one.

Financial guru Ramit Sethi is committed to telling his followers the differences between renting and owning, and is especially willing to acknowledge that buying a house isn’t necessarily right for everyone. I am hoping to take the plunge myself, but I’ll be going into my second instance of buying a home with my eyes wide open and in full understanding of all the costs involved, both upfront and behind the scenes.

Let’s take a look at some of those overlooked costs that people tend to forget about when comparing their mortgage payment to your rent payment, and see why Sethi is right to caution followers about heedlessly jumping into homeownership without considering all of them.

Rent is the maximum you’ll pay…

Sure, my monthly rent cost is likely higher than many people’s mortgage payment in my small city of older and often smaller homes. But that’s not the whole story. As Sethi recently put it on Twitter, “rent is the maximum you’ll pay, but your mortgage is the minimum you’ll pay.” What does this mean?

Research from The Ascent found that the real cost of owning a home comes down to expenses that I simply don’t have as a renter. In fact, for the year 2019, homeowners paid an average of $8,609 more than renters did on housing costs. I don’t pay property taxes (more on those below) or for significant maintenance or repairs on my apartment in an old two-family home. I’ll note that my maintenance and repair costs have not been $0, because I am a can-do sort of person and like to take on projects that improve my quality of life.

I didn’t have to pay the closing costs on this place, or make a down payment. When I signed my lease, I paid a deposit equal to one month of rent. And when it’s time for me to move (ideally into a home I’ve bought for myself), I won’t have to sell my home. I might even get that deposit back.

…but your mortgage is the minimum you’ll pay

If I owned this place, on the other hand, my costs would be numerous and could potentially be vast. Going back to Sethi’s tweet, he was referring to comments from Reddit users about property valuation increases, which were going to result in them owing a lot more in property taxes on their homes. Unfortunately, this is a common occurrence in these days of skyrocketing home values and correspondingly higher property taxes, and it’s a concern for homeowners.

Over time, you’ll pay down your mortgage, and if you remain in the home long enough to pay off the loan, you’ll own your house free and clear. But other costs don’t go away. Your property taxes have the potential to climb, and it’s likely that maintenance costs will also increase over time as your home ages. And if you bought an older or fixer-upper home to begin with, you’ll likely be putting a lot of money into it at the beginning of your period of owning it, too.

Sethi is absolutely correct to say that your mortgage is the minimum you’ll pay to own a house. Therefore it’s wise to plan for additional costs that are sure to crop up. And aside from those property taxes and maintenance costs, you can’t forget about homeowners insurance, which is an absolute must, as it can protect you from a catastrophe.

If you’re a renter like I am, don’t be fooled by those who insist they’re one up on you by virtue of paying less on a monthly mortgage payment than you do in rent. Take a deep breath, and remember everything you don’t have to pay for. And if you’re dreaming of homeownership, be sure to consider the potential total costs, not just how much a mortgage payment might be.

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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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Saving to buy a home? Here’s why you might consider opening a CD to hold some of that cash and give it time to grow. 

It’s fair to say the first big expense (and perhaps the biggest hurdle) you’ll face on the road to homeownership is your down payment. While it’s not true that you must make a down payment of 20%, if you do, it will likely be easier to get approved by a mortgage lender — and perhaps also result in a lower interest rate. Plus, you won’t have to pay for private mortgage insurance (also known as PMI), which will help you save money on what is already going to be a consequential money move.

There are a few options for where to keep your down payment

Whether you’re planning to make a 20% down payment or not, you might wonder where you should keep that cash. If you’re still actively saving, it’s likely easier to open a high-yield savings account, because right now, they are paying upwards of 4% APY, which could generate a nice return on your thousands of dollars’ worth of down payment. You could also consider a money market account for the same reason (plus, you’ll get easier access to that money if a home purchase is in the very near future for you). You can keep adding money to both of these accounts over time.

But let’s face facts. It’s not a great time to be a potential home buyer, as mortgage rates are holding steady over 6%, and there just isn’t a sufficient supply of homes on the market to satisfy all who want to buy. So let’s say you’ve got your down payment ready, and you’ve decided to relax for a few months (or longer) and see where interest rates go. This is a very valid choice, especially since a home purchase ideally isn’t something you rush into. Have you considered opening a CD?

Why consider a CD for your down payment?

A certificate of deposit (CD) might just be the solution you’re looking for in the meantime. Unlike a savings or money market account, when you put money into a CD, you’re agreeing to lock it away for a period of time (often three months to five years or longer), in exchange for earning interest on it. If you withdraw the money before the CD term is up, you’ll lose some of that earned interest as a penalty. This could be a good thing, as you won’t be tempted to withdraw early for expenses other than buying a home.

The best CDs are paying upwards of 5% right now. Those rates may start to come down if the Federal Reserve takes a break from hiking interest rates, so if you’ve been considering a CD, now might just be the time to open one.

CDs have another thing going for them: safety. After several high-profile bank failures in 2023, a lot of people are nervous about keeping large amounts of money in the bank. But just like a savings account or a money market account, CDs are FDIC insured, meaning that up to $250,000 of your money will be returned to you in the event of a bank failure.

A certificate of deposit might not be the first place that comes to mind when you decide where to keep money you’ve saved for a goal several months or years in the future (like a home purchase), but they are worth thinking about. And with the potential for rates to fall later this year, if you’re thinking about a CD, strike now and lock in a good rate so you can protect and grow your cash.

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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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