Money Management

A writer explains how she built a complete emergency fund quickly. Read on to see how she pulled it off. 

From a young age, my parents always emphasized the importance of having money in a savings account. That’s advice I’m glad I took to heart.

Through the years, my emergency fund has bailed me out on numerous occasions. It allowed me to purchase a car when my old one was totaled in a minor accident, and it allowed me to cover costly home repairs without having to resort to expensive credit card debt.

Plus, having a solid emergency fund has just plain given me peace of mind during periods of economic unrest. I know a lot of people who lost their jobs during the Great Recession, and also, at the start of the COVID-19 pandemic. The knowledge that I had money in the bank during those times helped me avoid a lot of stress.

Now for many people, it can take years to build up a strong emergency fund. But I was able to build a six-month emergency fund in less than a year. Here’s how.

A smart post-college decision

I went to college four hours away from home, so living with my parents during my studies was never an option. My original plan was to get an apartment with friends in New York City after graduating, since that’s where I was looking for jobs and eventually found one.

But then I realized that if I were to move in with my parents, who live in Brooklyn, and simply commute to work from my childhood home for a year, I could do a lot of good things for my finances.

So I moved back home for a year after college. And doing so allowed me to not only pay off the debt I incurred in the course of getting my degree, but also, build up enough savings to cover six months of expenses. And when I say six months of expenses, I mean my estimated expenses upon moving out — not my expenses living at home, which were minimal.

When I lived at home that year, I chipped in for groceries, but my parents didn’t ask for any rent and I didn’t contribute toward utilities (even though I offered). That allowed me to sock the bulk of my earnings away.

I also made a point to spend very little that year, knowing I was trying to pay off debt (which thankfully wasn’t so much since I worked throughout college) and build up my savings. I dined out very infrequently, packed lunches almost every day to take to work, and didn’t go out at night often because I had specific goals I wanted to achieve.

A choice that paid off

I know a lot of people who, as full-fledged adults, barely have enough money in savings to cover one month of expenses, let alone six. And a recent SecureSave survey found that 67% of Americans don’t have the cash reserves in savings to cover an unplanned $400 bill.

Once I moved out of my parents’ house, I found that it was much harder to save money. So I’m glad I took the opportunity to build up an emergency fund that year after college.

After living on my own for four years of studies, moving back home was a humbling experience. And it wasn’t always easy. But I remain grateful to this day that it’s the choice I opted for, and that my parents were willing to let me return to the nest for a period of time.

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Selling stocks at a loss isn’t ideal, but you can use the situation to your advantage. Read on to learn more. 

Your goal in buying stocks is to make money. But there may come a point when you need to sell a stock at a price that’s lower than what you paid for it.

Maybe you bought shares of a company promising an innovative way to diagnose medical conditions, only its technology failed a year or so after you bought those shares. That sort of news is enough to make a company’s share price plummet and fail to stage a recovery.

As a general rule, you don’t want to sell stocks whose share price is down as part of a broad market tumble. If the stock market undergoes a correction (a period where stock values broadly fall 10% or more), it means there’s general turbulence — not that there’s something wrong with the specific investments you own.

But when you own stocks in your brokerage account that keep underperforming, and are unlikely to recover, then it’s often best to dump them and take a loss rather than have them take up real estate in your portfolio. You might, for example, dump a stock whose share price started out at $50 but has continuously dropped to the point where it’s now only worth $10, and you don’t see that stock ever climbing again.

The good news, though, is that you can use this type of loss to your financial advantage. Here’s how.

You can offset capital gains

Capital gains taxes apply when you sell assets at a price that’s higher than what you paid for them. If you buy shares of a given company for $100 apiece and sell them for $250 apiece, you’re looking at a $150 gain per share.

If you sell stocks at a loss in your portfolio, you can use your losses to offset capital gains. That way, you might wipe out your tax liability associated with those profits.

You can offset a limited amount of ordinary income

Let’s say you’re forced to sell a stock at a loss but you don’t have any gains in your portfolio to offset. In that case, you can use your loss to offset up to $3,000 of ordinary income per year.

So, let’s say you take a $5,000 loss on a given company and have $2,000 in capital gains that same year. In that case, you’d first wipe out those gains and then use the rest of your loss to offset your $3,000 of earnings. But in that situation, if there are no gains to offset, you’d simply offset $3,000 of income and call it a day.

Now you may be wondering what happens to that extra $2,000 loss. The answer is, it doesn’t go away. Rather, you can carry it forward to future tax years and offset gains or income at that point.

A silver lining

The whole point of investing money is to grow more wealth, and selling stocks at a loss achieves the opposite goal. But sometimes, it becomes necessary to sell a stock for a price that’s less than what you paid for it. And in those situations, you can at least take comfort in the fact that your loss can be used to lower your tax liability in one way or another.

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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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Curious as to what it takes to be in good financial shape by age 30? Read on to find out. 

It’s important to keep tabs on your finances, whether that means checking your credit card balances to make sure they’re not growing too large or peeking in on your checking account to ensure you can cover your near-term bills.

But one number you may not be as aware of is your net worth, and understandably so. That’s because your net worth may not be totally obvious to you without doing some digging and running a bunch of numbers.

Not sure what net worth even is? That’s okay. It’s basically the sum of your various assets minus any debts you have outstanding. As a very basic example, if your only assets are a $30,000 savings account balance and a home worth $300,000, but you owe $200,000 on an outstanding mortgage, it brings your net worth to $130,000 ($330,000 – $200,000).

By age 30, you may not be totally thrilled with your net worth. But remember, net worth tends to increase with age. And you have plenty of time to bring yours up.

Do you have a decent net worth for someone your age?

Data from Empower shows that the average person in their 30s has a net worth of $260,090. But that doesn’t tell the whole story.

First of all, someone in their 30s could be 38 or 39. If you’re 30 years old, it means they’ve had almost a decade longer to work, earn money, invest money, and accumulate wealth. They’ve also had that much longer to pay down a mortgage and build equity in their homes.

Also, while the average net worth for 30-somethings is $260,090, the median net worth is $38,343. And when you have a median that’s well below the average, it indicates that a larger portion of people have less than the average net worth rather than more.

So, let’s say your net worth is $130,000 at age 30. That would seem to indicate you’re in a pretty solid place financially. So would a net worth in the ballpark of $38,000. A net worth of $6,000, on the other hand, might tell you that you may want to consider some changes that allow you to grow more wealth in the coming years.

How to boost your net worth

If you’re not happy with what your net worth looks like, or you are happy with it but want to see it increase, there are steps you can take to make that happen. First, keep budgeting wisely so you’re continuously carving out money for your savings.

Next, invest funds you don’t need for near-term goals or emergency purposes. Putting money into an IRA or brokerage account could help you grow it into a larger sum than what a savings account might allow for.

Plus, the sooner you’re able to whittle down your debt, the less money you’re apt to lose to interest. This doesn’t mean you should rush to pay off a low-interest mortgage. But if you’re carrying a credit card balance, chipping away at it is a smart move.

Remember, it takes time to build up your net worth, and at age 30, you’ve probably been working full-time for less than a decade. So cut yourself some slack if your net worth isn’t as high as you’d prefer it to be. But also, don’t assume that number won’t increase exponentially over time.

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Looking to get away for the holiday weekend? Read on for some great East Coast spots to put on your list. 

For many people, Memorial Day weekend marks the beginning of summer. And if it’s been a while since you’ve taken a trip, you may be looking to get away for the holiday weekend. If you’re on the East Coast and don’t want to travel too far, here are some options worth exploring.

1. The Finger Lakes, New York

Located about four to five hours from New York City, the Finger Lakes is a glorious destination for people who love nature. The area is loaded with amazing waterfalls you can hike around, and it features trails for people of all fitness levels. Wine lovers will appreciate the abundance of wineries, and foodies might appreciate the area’s large farm-to-table scene.

2. Cape Cod, Massachusetts

Memorial Day weekend may not make for the best or warmest beach conditions on Cape Cod, so if you have your heart set on swimming in the ocean for the holiday weekend, things may not quite work out. But Cape Cod is still a great destination for families. You can walk on the beach, play mini golf, enjoy gourmet sweets in the area’s many ice cream shops, and stroll through quaint towns with character. And if you love seafood, you’ll probably find your fair share.

3. Williamsburg, Virginia

If you love history, then it pays to head over to Williamsburg and immerse yourself in all things colonial. Then there’s Busch Gardens, an awesome amusement park that’s great for families with young kids and older ones alike. You can also simply kick back and take a riverside walk if that’s more your speed.

4. Savannah, Georgia

If you’re looking for a nice getaway this Memorial Day weekend, why not treat yourself to some Southern hospitality? Explore Savannah’s historic district during the day and indulge your inner spook with a nighttime ghost tour. In between, treat yourself to some fudge, pralines, and the different delightful sweets Savannah is known for.

5. Baltimore, Maryland

If you have kids, Baltimore is a destination worth putting on your Memorial Day weekend list. Explore the Inner Harbor and visit the National Aquarium and various museums. Then, check out the area’s parks and shopping before settling down with a nice bowl of clam chowder as a reward. You can also book a harbor cruise if the weather is warm and inviting.

Book your travel strategically

All of these destinations are ideal for the upcoming holiday weekend, but you might end up spending a fair amount on food, lodging, and entertainment. That’s why it pays to use the right credit card when booking your plans. You may want to swipe a travel rewards credit card that gives you extra cash back at hotels, attractions, and restaurants. And if you’ll be traveling by car, make sure to use a credit card that offers extra cash back for gas purchases.

Even though it may be more expensive to book a hotel due to it being a holiday weekend, if you have the free day off from work, getting away this Memorial Day weekend could be more than worth it. And no matter which destination you choose, you’re apt to enjoy the change of scenery and chance to do something different.

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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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