Money Management

By focusing on certain property types, first-time investors can mitigate risks while increasing their chances for success. Read on to learn more. 

For those looking to start investing in real estate, choosing the right type of property can seem daunting. There are many factors to consider, such as location, tenant risk, and potential to grow your assets and savings account balance. In a recent podcast, the National Association of Realtors (NAR) shared three of the best property types for those just starting out in real estate investing.

Local market multi-tenant properties are key

Investing in local markets can be a great way to get started in real estate. By buying a property in an area that you know well, you can better understand local trends and potential for growth. In addition, investing in your local community can be a great way to give back. Look for properties that can attract multiple long-term tenants.

While investing in properties with multiple tenants is generally safer, there are opportunities for single-tenant properties. If you do decide to invest in a single-tenant property, look for one that is backed by a large stable corporation. These types of properties can provide a steady stream of rental income, with low risk of vacancy. Look for properties with long-term lease agreements in place, and strong financials from the tenant.

1. Storage facilities

Climate-controlled storage facilities are a great entry-level property type. These properties can be relatively low-maintenance, with tenants who are less likely to cause property damage. In addition, storage facilities can be in high demand, as people are always in need of extra storage space. Look for facilities with a mix of unit sizes, as well as security measures in place to protect tenants’ belongings.

2. Local office buildings

Investing in local office buildings can be a great way to diversify your portfolio. Look for buildings in areas with strong job growth, or in neighborhoods undergoing revitalization. You can attract long-term tenants, such as attorneys, accountants, and nonprofits, who want to lease space instead of buying property for their businesses.

3. Multi-family properties

One of the most popular property types for first-time investors is multi-family properties. These can include duplexes, triplexes, or small apartment buildings. With multiple units, these properties provide built-in diversification, with multiple tenants to help mitigate risk. Look for properties in areas with strong rental demand, such as those near universities, hospitals, or downtown areas.

Investing in real estate can be a great way to build long-term wealth. Do your research and work with a team of trusted professionals. They can help you find the right property and the right mortgage loan for your investment goals. Even if your credit isn’t that great, they can help you find the best mortgage loans for bad credit. By focusing on certain property types, first-time investors can mitigate risks while increasing their chances for success. Look for properties with multiple tenants, such as local office buildings, multi-family properties, and storage facilities.

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If you want to boost your savings, you can do it by cooking more at home and canceling unused memberships. Find out more. 

Saving an extra $20 a week can add up to more than you expect. In fact, over a decade, investing $20 extra per week into a brokerage account could net you $18,200, assuming a 10% average return on investment.

But, where are you going to get this extra money?

The good news is, there are options available to almost anyone. Here are three simple changes you could make to free up extra funds to boost your savings account balance.

1. Cook one more meal at home

One of the simplest lifestyle changes you can make has to do with where you eat your meals. Specifically, if you’re dining out on a regular basis and you give up just a few of those restaurant meals, you could save an extra $20 or more per week with minimal effort.

The average household spending on dining out is about $2,375 per year. That means the typical household is spending about $45 weekly on restaurant meals. If you cut this in half, you’d easily have $20 more per week to save for your future.

2. Cancel unused memberships and subscriptions

Memberships at popular gyms can typically cost anywhere from about $30 per month to as much as $200 per month or more. If you aren’t using your membership regularly or could switch to exercising at home or outside, you could redirect this money to savings.

Depending how much your gym membership was, canceling could be enough by itself or it could help you get closer to $20 extra per week. You may also have other memberships or services you subscribe to as well, such as cable or streaming plans. If you can pass on one or two of these because you’re no longer using it, this can open up the door to putting $20 extra per week in your savings account.

3. Be smart about your vehicle

At the end of 2022, the average monthly car payment for a new car was $717, while the average monthly payment for a used car was $563, according to Edmunds. Opting for the used car could be enough to save an extra $154 per month, which is well over your $20 a week goal. You can put this technique into practice the next time you buy a new car, freeing up the money you need to boost your savings account balance.

If you already have a car and aren’t planning on buying one anytime soon, keeping your current vehicle for as long as possible will also help you stash away at least an extra $20 a week. Once you’ve stopped making car payments because your loan is paid off, hold onto the vehicle rather than trading up and taking out a new loan. Instead, put at least $20 of the money saved from your car payment into your savings account and consider saving even more, until it’s necessary to buy another car.

These changes are easy to make once you get used to them, and in the case of the canceled memberships and the cheaper car, you only have to act one time to free up that $20 a week for the foreseeable future. If you make the lifestyle modifications ASAP, you can sit back and enjoy watching your money grow.

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Still sitting on your 2022 taxes? Read on to see if you can still file a return. 

As of May 5, the IRS had received over 141 million tax returns and processed the bulk of them. But what if you never got around to filing your taxes this year?

The good news is that it’s not too late to submit your 2022 return. But you may face a penalty for being late, depending on your situation.

When the IRS owes you money

As of May 5, the IRS had processed almost 94 million tax refunds. If you never submitted your taxes in April but are due a refund for 2022, the good news is that you won’t be penalized for being late with your return.

In this situation, the IRS doesn’t penalize tax-filers for one simple reason — by submitting your return late, you’ve allowed it to hang onto your money for longer. Since the IRS isn’t losing out financially, there’s no need for a penalty to come into play.

Now, you should know that you actually have three years from when taxes are due to submit a return. So technically, even if you don’t get around to submitting your 2022 tax return this month, or even this year, you won’t be out of time. However, if you don’t act quickly, you’ll have to wait that much longer for your tax refund to hit your bank account. And that’s just punishing yourself.

When you owe the IRS money

If you didn’t submit your 2022 tax return in April when it was due and you owe the IRS money from last year, the situation is different. In that case, you can, and should, still submit your taxes. But you should also do so as soon as possible — namely because at this point, you’ve already incurred a penalty for being late with that return.

The IRS imposes a failure to file penalty when you’re late with a tax return and owe money. That penalty is equal to 5% of the unpaid tax bill associated with your late return for each month or partial month you’re late, up to a total of 25%.

Note that this is not the same penalty for paying your tax bill late — that’s a separate penalty you’ll be assessed. Rather, you’re looking at a 5% penalty simply by being late with your tax return.

At this point, we’re already more than a month past the April 18 tax-filing deadline, but we’re not yet at the two-month mark. So if you manage to file your 2022 tax return before June 18, you can at least limit your penalty to two months.

It pays to get moving on your tax return

All told, you get three years past this year’s April 18 filing deadline to submit your 2022 tax return. But whether you owe the IRS money from 2022 or are owed money, it’s in your best interest to get that return submitted as soon as you can. This holds true even if you filed an extension on or prior to April 18.

If you got a tax extension, you won’t have to worry about the failure to file penalty if you owe money from 2022. But you’re accruing interest and penalties on your unpaid tax bill itself, so the sooner you get your taxes done and know what to pay, the better. And in the case of a refund, the sooner you get your money, the easier it might be to manage your bills or meet a goal you’ve been putting off due to a lack of funds.

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Have you ever been asked to show your receipt at Costco? Find out why this is standard practice and learn what employees are looking for when they do this. 

Costco is a warehouse club with locations throughout the U.S. and the world. To shop there, you’ll need to pay a yearly membership fee. For many people, shopping at Costco can provide savings on everyday essentials like groceries and household supplies.

There’s one routine that every shopper must go through after going through the checkout process: Every member is asked to show their receipt before exiting the store. This practice is standard at Costco and other warehouse clubs. Have you ever wondered why?

This is why you show your receipt before leaving Costco

After loading up your cart with essentials and paying, you’ll notice employees waiting near the exit doors. As you make your way closer, a staff member will ask to see your receipt. After verifying the details of your receipt, you’ll then be able to leave the store.

But what are the reasons behind this practice, and what are employees looking for when they quickly scan your receipt? A 2019 Business Insider article examined this practice. After speaking with employees of the popular warehouse club, Business Insider learned that staff members look for several things when reviewing Costco receipts.

Here are four things Costco employees check your receipt for before you leave your local club.

A code printed on the top and bottom of the receipt, which changes daily to show staff members the receipt was printed that dayAn item count on the bottom of the receipt to ensure you weren’t undercharged or overcharged for your purchasesHigh-end items like electronics, stamps, jewelry, and items over $300, which need supervisors’ initials on themLarge items, which have signifiers on the receipt to ensure employees do a final check of the bottom of the cart

Costco’s explanation for this routine practice

On its website, Costco notes that this practice is standard and is done at all locations to ensure that cashiers have correctly processed purchases. The company continued, “It’s our most effective method of maintaining accuracy in inventory control, and it’s also a good way to ensure that our members have been charged properly for their purchases.”

Should you join a warehouse club this year?

If you’ve been feeling sticker shock at the grocery store, you may wonder if a warehouse club membership could save you money. Becoming a Costco member may be a good personal finance move for you if you have a club near your home and don’t mind buying items in bulk.

While not all items sold at Costco are sold in bulk, many are. You want to make sure you have the space to store what you buy and you can put everything to use before expiration. Before investing in a membership, you should look at the Costco website or mobile app to see if the products you usually buy (or similar alternatives) are available at your local club.

Finally, consider the cost of a yearly membership and make sure it fits your budget. If you can afford a membership and get value out of it, you may save a significant amount of money on the cost of groceries and everyday essentials. The more money you can save, the more plentiful your checking account balance will 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.Natasha Gabrielle 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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Each day that lawmakers in Washington fail to reach a consensus, the U.S. gets closer to defaulting on its debt. Find out what would happen in this extreme scenario. 

The idea that the U.S. might not be able to pay its bills is simply mind blowing. So much so that right now, many investors — some of whom have done this dance before — are fairly sure it won’t happen. However, if lawmakers can’t agree to raise the debt ceiling in the coming weeks, the unthinkable may become reality and the world’s largest economy might default on its debt.

To be clear, the chances of this happening remain extremely slim. But the consequences would be devastating, not only for your investments, but also for the country. Treasury Secretary Janet Yellen is warning of an “economic and financial catastrophe” on social media. JPMorgan CEO Jamie Dimon is also using the word “catastrophic.” Let’s dive in and find out what’s going on and what it might mean for your investments.

What is the debt ceiling anyway?

The debt ceiling or debt limit is the amount the U.S. can borrow. The country runs at a deficit — it spends more than it brings in — so it needs that borrowed money to continue to pay its bills. It’s a bit like a limit on a credit card. Lawmakers in Washington need to approve any increase to the limit. With a divided government, it’s proving difficult to find a consensus.

Right now, the debt limit is set at just over $31 trillion, a point the U.S. crossed in January. Since then, the Treasury has been using so-called extraordinary measures to move money around and meet its obligations. But time is running out. Yellen says the Treasury might exhaust these measures in early June.

Has this happened before?

The debt ceiling was established over 100 years ago. According to the Congressional Research Service, it’s been raised more than 100 times since then. Indeed, Congress has always increased the limit when needed: It would be unprecedented if it does not raise the debt ceiling in time. The closest we have come to the brink in the past was in 2011 when, per Vox, the U.S. came within 72 hours of defaulting on its debt.

OK, so is it all just doom mongering?

Without getting into politics, think of it like a game of chicken. Nobody wants to crash the car, but there’s some serious brinkmanship going on. For investors, one difficulty is that the closer we get to the edge, the more panic there will be and the more confidence will be eroded. In 2011, when the U.S. came dangerously close to default, Standard & Poor’s downgraded America’s credit rating. The stock market dropped dramatically, though it rose again by the end of the year.

How would an actual debt default impact my investments?

There are a couple of different scenarios in terms of a default. A brief one, where let’s say the U.S breaches the debt ceiling and lawmakers quickly resolve the situation. Or a protracted one, which White House analysts warn could trigger a sharp decline akin to the Great Depression. In the case of a protracted default, it’s estimating a 45% drop in stock valuations. Bear in mind that this figure comes from a group of people who want the debt ceiling situation resolved as soon as possible. Even so, the prospect of your investment account or retirement fund losing almost half its value is pretty dire.

A recent UBS research note described an outright default as a “disruptive event that could spark a sharp sell-off in stock prices.” However, it says it is difficult to know how bad it will be because this has never happened before. “Because a default would be unprecedented, the magnitude of the market decline is difficult to estimate, but we would expect it to be very meaningful,” continued the report authors.

We’re already seeing the effect on Treasury bills, which are usually viewed as a safe investment. Bond markets would also suffer. Indeed, even without a default, if uncertainty causes credit rating agencies to downgrade the U.S., it would impact the value of all government-backed investments.

Why aren’t stock markets already crashing?

According to the Financial Times, there are two reasons for “relative calm” on the stock market. “One is that analysts and investors broadly believe cool heads will prevail,” it writes. The other? “Just as it is not possible to be a little bit pregnant, ‘it is hard to price in a little bit of default.'”

How can investors react to all this?

Faced with such a dramatic potential drop in the value of your portfolio, the temptation to sell is understandable. But this may not be the best move. What if you sell today, and politicians agree to raise the debt ceiling tomorrow, causing prices to shoot up in a relief rally? Having an emergency fund and a diversified portfolio helps, but It’s difficult to mitigate the risk of an unlikely yet potentially catastrophic event.

It’s good to be aware of the debt ceiling debate, but try not to make panic investment decisions, as these rarely work out well. As a buy-and-hold investor, it’s worth remembering that the stock market eventually recovered after the 2011 drop. Indeed, over 40% of financial advisors surveyed by SmartAsset said that riding it out may be the best way forward.

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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.Emma Newbery has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Payday lenders charge $10 to $30 in fees for every $100 borrowed. Find out how quickly those fees can add up and make a bad financial situation worse. 

If you’re in a tight spot financially, a payday loan may sound like the solution to your problems. The trouble is that they charge huge fees and can quickly become extremely expensive. Here’s why Your Rich BFF warns her followers to think again.

Why Your Rich BFF hates payday loans

In a recent video about common financial scams, Vivian Tu (aka Your Rich BFF) zeroed in on payday loans. “I absolutely hate these because they prey on lower income folks who don’t have a lot of options and need cash in a hurry,” she said.

Payday loans are usually very short-term loans of around $500 or less, though the amount could be as much as $1,000. As the name suggests, the idea is that the cash will tide you over until your next payday. The problem is that the interest rates and fees are so exorbitantly high that borrowers can quickly be trapped in a cycle of debt.

According to 2013 research from Pew Charitable Trusts, the average payday loan size is $375. The research says it takes the average borrower five months to repay the loan at a cost of a whopping $520 in interest and fees.

How payday loans add up

Let’s say your car breaks down tomorrow and you don’t have cash to cover it. You borrow $500 from a payday lender for two weeks. According to the CFPB, payday loans usually charge around $10 to $30 in fees for every $100 borrowed. That works out at an APR of around 400%. To put that in context, the average APR for a credit card is around 20%, per the Federal Reserve.

Back to that $500 loan. If you get charged $15 for every $100 you borrowed, you’d owe $75 in fees come payday. That’s already a lot to pay for a two-week loan. But for many payday borrowers, it is only the start. All too often, people can’t pay back the initial loan and can get stuck taking a second, third, or fourth payday loan — all with sky-high fees.

If you didn’t have $500 for the initial car repair, it may be difficult to come up with $575 two weeks later. This is where things get even harder. In some states, your lender may give you a rollover. This means, you’d pay the $75 you owe in fees and then extend the original loan and pay more fees. When it comes due, you’d owe another $75 in fees as well as the original $500. That’s $150 in fees — and more if you roll it over a third or fourth time.

Alternatives to payday loans

If you’re struggling to keep your head above water financially, it can feel like a payday loan is the only option. Unfortunately, while a payday loan may solve your immediate issue, the high fees can mean you’ll face more financial stress further down the road.

Here are some alternatives that won’t come with such a high price tag:

Personal loan: Depending on your credit score, you may be able to qualify for a top personal loan with an APR of 7% to 35%. Pay attention to the fees, loan term, and total interest you will pay.Borrow from friends or family: Borrowing from loved ones can be fraught with difficulties, particularly if you don’t repay the money. However, if someone is willing and able to help you out, it could help you avoid the vicious cycle of payday loans.Get an advance from your employer: If you have been in your job for a while, you might be able to get an advance on your paycheck from your boss. Find out whether your company has a policy in place about salary advances, and think about the best way to frame your request.Credit card: Many financial gurus will warn you of the evils of carrying a balance on your credit card. It can cost a lot in interest and damage your credit score if your credit utilization gets too high. However, sometimes it’s about choosing the lesser of two evils. Credit card debt is less costly and harmful for your financial stability than a payday loan.Emergency fund: If you have any cash in a savings account, use this rather than a payday loan. Emergency savings are designed for exactly this type of situation.Talk to your creditors: If you can’t pay certain bills, it’s worth talking to your creditors to see if you can work out a payment plan to reduce your monthly payments for an agreed period of time.Find additional cash: Do you have unwanted items at home you might sell? Or can you take on extra hours at work? If you have a side hustle, could you put in some more time in the coming weeks?

Bottom line

Truth be told, payday loans are not actually scams. They are still legal in many U.S. states. That said, some states have banned them outright and others have put restrictions on the fees they can charge and how many times people can roll their loans over.

Scam or not, payday loans can quickly make a bad financial situation even worse. If you don’t have an emergency fund and need cash urgently, try to find another way. If you can borrow from a more trustworthy lender at a lower rate or find another way to get the cash, you could save yourself a world of pain further down the road.

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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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