Money Management

Scammers and thieves are just dying to get their hands on your money. Keep reading to learn how to spot one of their tricks — and protect yourself. 

Thanks to technology, it’s far easier for thieves to get their hands on your data and your money now than it ever was before. You can be minding your own business, filling your car’s gas tank in preparation for a busy day of running errands, and later find out your bank account or credit card has been compromised as a result. How does this happen?

The culprit is credit card skimmers, which are devices that are installed illegally on ATMs or point-of-sale terminals to steal PINs or other account data. The FBI reports that this means of theft costs us more than $1 billion per year. Let’s take a look at how you can spot an ATM or payment terminal that’s been tampered with, as well as learn a few ways to avoid losing money to this scam.

If you see these signs of tampering, watch out

If you’re in the habit of paying at the pump for your gas (I get it; it’s faster and a lot more convenient), you may be playing with fire. Skimmer devices connected to fuel pumps usually aren’t visible, and are instead attached to internal wiring, per the FBI. Any information collected from your credit or debit card will be transferred wirelessly or downloaded by the thieves later.

Thankfully, there may be visible signs that an ATM or point-of-sale terminal has been tampered with:

If you notice anything scratched, crooked, or otherwise damaged, that could be a sign of trouble.For ATMs, the skimmer generally fits right over the original card reader, except it may be curving outward (convex) from the machine, while the original card reader curved inward (concave).Be on the lookout for a keypad that is loosely fit in place, as it could have been added over top of the original. A scammer’s keypad is often used to record keystrokes, leaving your PIN vulnerable.They’re a lot harder to spot, but thieves have likely included a hidden camera alongside their modifications to the ATM or payment terminal. This will be to record you typing in that PIN too. It could have been added to the machine or a nearby light fixture.

Pay for your purchases and withdraw cash safely

Here are a few ways you can keep your money safe when paying by card:

Consider using a credit card whenever possible. Credit cards offer more robust financial protections than debit cards. Plus, when you pay by credit card, you’re in effect borrowing money from the credit card issuer, rather than tapping your own checking account.Be cautious in touristy or otherwise busy areas. It’s a lot easier for thieves to get away with this scam in places where people may be distracted and not fully engaged with their surroundings.Pay inside at the gas station or use the ATM inside the bank. I know it can be a drag to go inside and wait in line instead of paying at the pump, but it could mean keeping your money safe. The same goes for ATMs. If you can visit your bank during its open hours, you’ll find a safer ATM inside. It’s a lot harder for thieves to tamper with a machine that’s being watched by employees.Use cards with chips. Skimmers are more likely to target magnetic strip cards, as these are less secure.Cover the keypad when you enter your PIN. This is just in case a hidden camera is recording your movements — and your PIN.

Aside from the above tips, it’s also a swell idea to keep an eye on your financial accounts. Check in regularly on your bank account and credit card accounts to make sure you don’t see any unfamiliar charges. If you do, contact your bank or credit company immediately. Being a bit more mindful and engaging your powers of observation can go a long way toward keeping your money and data safe.

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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 might be tempting to use your 401(k) to pay off your house. Learn more about when it makes sense to do so and when it will cost you. 

Owning your house outright has its benefits: Your housing payment will be reduced significantly, you’ll have 100% equity to cash in, and you can close faster when you sell since your lender will no longer be involved in the transaction.

But here’s a dilemma: If you have enough money in your 401(k) to pay off your entire mortgage loan, should you do it? Or is it wiser to leave money invested and pay your mortgage off slowly over time?

Truth is: there’s not a correct answer. Let’s take a look at when it would make sense to pay off your mortgage with a 401(k) withdrawal and when you’re better off leaving the money in your retirement accounts.

When it makes sense to pay off your mortgage with your 401(k)

In general, it makes the most sense to pay off your mortgage with your 401(k) when the interest you owe on your mortgage exceeds the earnings you expect to make on your investments. This isn’t always easy to determine. But you might find yourself in this situation if you’re early in your mortgage and still haven’t paid the bulk of interest to your lender.

For example, let’s say you took out a 30-year mortgage on a $450,000 home in January 2023, with a 30% down payment ($135,000) and a mortgage rate of 7.5%. The total interest you’ll pay on this $315,000 loan is $478,428. Between January and May, you paid roughly $7,870 in interest, which leaves $470,558 unpaid.

Let’s also assume your 401(k) contains $350,000 invested in 30-year Treasury bonds with an interest rate of 4%. If we include your earnings on bonds ($14,000), you’ll pay roughly $7,574 this year in interest, which breaks down like this:

Total interest paid in 2023: $21,574Total bond earnings for 2023: $14,000Difference: $7,574

Let’s assume nothing changes for 30 years: You have the same mortgage rate, and the government doesn’t default. Over 30 years, your bond earnings would cancel out a significant portion of your mortgage interest, but you would still pay roughly $58,428 more in interest than the return on your bonds ($478,428 − $420,000).

Now, there are a lot of variables overlooked here: you could refinance your mortgage, invest in stocks with higher rates of return, or sell your house. Plus, you have to pay a 10% penalty if you withdraw from your 401(k) before the age of 59 ½ and a massive withdrawal will put you in a higher tax bracket — both of which could narrow your margins.

But my point is simply this — for certain home buyers, the math may justify withdrawing money from your 401(k) to pay off your house, even after factoring in taxes and withdrawal penalties.

In general, this might be true if you have a relatively long time horizon and can use freed up cash flow to replenish your 401(k). Or it could be true if your rate of return on investments is low but your mortgage rate is high.

When it doesn’t make sense

I’ll go ahead and say it: For most home buyers, the math likely doesn’t justify using your 401(k) to pay off your mortgage.

For one, you could pay a significant amount for penalties and taxes. The penalty for withdrawing before you’re 59 ½ is 10% of the withdrawal amount. For the example above, you would have to pay $35,000 simply for withdrawing $350,000. Additionally, you have to add the $350,000 to your taxable income, which could lead to a hefty tax bill.

But by far the largest cost to you is opportunity. Selling off 401(k) investments means forgoing future returns. It can also mean missing out on the market’s best days, which, according to a study by Fidelity, could mean sacrificing hundreds of thousands in potential earnings.

Should you pay off your house with your 401(k)?

Regardless of the math, you might want to pay off your mortgage with a 401(k) if you’re nearing retirement and want to lower your monthly housing costs. Likewise, if debt stresses you out, you might save your mental health by owning your home outright and eliminating the possibility of a foreclosure.

But I strongly recommend doing the math first. See if it saves you money over the long run, or if the sacrifice is simply too great to justify the costs.

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

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New to Costco? Read on to see how you can avoid some major rookie mistakes. 

Shopping at Costco could result in a world of savings for you. By purchasing items you use regularly in bulk, you might be able to lower your credit card bills without having to cut back on the things you need.

But if you’re new to Costco, there are certain traps you might succumb to. Here are three in particular you should try your best to avoid.

1. Not signing up for an executive membership right away

A basic Costco membership costs $60 a year, while an executive membership costs $120. If you’re new to Costco, you might assume that it’s best to start with a basic membership and see how that goes rather than commit to the more expensive option right away. But actually, it could pay to get an executive membership the moment you join Costco.

With an executive membership, you get 2% back on your Costco purchases. And you might as well start getting that cash back the moment you begin shopping at Costco.

If you’re worried you won’t spend enough at Costco to make the upgrade to the executive membership worth it, you should know that you can always downgrade your membership after the fact, and Costco will refund you the difference. In other words, if you don’t rack up enough cash back to justify the extra $60 you’re spending on an executive membership, Costco will issue you a refund to make you whole. (If you only make back $40, for example, Costco will refund you $20.) So all told, there’s really no risk involved.

2. Not sampling items before buying them

There’s a reason Costco gives out samples of many of the products it has in store — it wants to entice customers to try new things and make the decision to bring them home. You might think that taking advantage of those samples is being greedy or grubby, but it’s not.

Rather, it’s a smart move, because while you might think you’ll enjoy a soup or cheese or snack you’ve never tried before, in reality, you might find it less than appealing. And you’re better off discovering that before you spend $20 on a bulk supply.

Better yet, if you have kids who are picky eaters, make them sample new items at Costco before buying them. That way, you can get their approval before handing over your money.

3. Shopping when everyone else does

Weekends tend to be crowded at Costco, which shouldn’t come as a shock. But battling crowds at Costco could mean missing out on some terrific deals.

Sometimes, wandering the aisles of Costco will lead you to discover low-cost products you didn’t realize the warehouse club giant stocked. But if you’re in a jam-packed store, you’ll be less likely to want to browse, and you’ll be more likely to want to get in and get out quickly.

Incidentally, if you’re stressed over crowds, you may not pay as close attention to the items you’re putting into your cart. That could lead you to grab food items with a shorter expiration window when there are items with a better date nearby on the shelf.

Getting a Costco membership could end up saving you a nice amount of money. But be careful to avoid these traps when you’re first starting out.

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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 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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Own a small business? Read on to see what near-term move you should prioritize. 

Work at some small businesses tends to pick up naturally during the summer months. If you run a restaurant with an expansive outdoor patio and waterfront view, then you may find that your busiest time is between Memorial Day and Labor Day. Similarly, if you run a retail shop in a beach or lake community, you may find that customers keep pouring in during the summer because they’re in the area due to vacationing there.

It’s for this reason that small businesses commonly need extra hands on deck during the summer. Challenger, Gray & Christmas says that teens are looking at 1.1 million summer jobs this year. And while that’s actually a decline from previous years, it still spells opportunity.

However, if you need to staff your small business for the summer, you should really get moving quickly. Colleges will be letting out for the summer break any day now, and you want to line up some employees before all the students in your community are committed to other employers.

A good strategy for hiring help

At this point, you don’t have a lot of time to find summertime employees. So if you’re going to post a job, here are some pointers to help ensure that you get quality applicants:

State the requirements clearly. If experience is needed, let that be known. And if you’re willing to train newbies, say that, too.Explain what the commitment is. Will workers get flexible scheduling? Will there be preset hours every week? And will the gig run the entire summer? (Keep in mind that if your busy season lasts through Labor Day weekend, many colleges resume before then.)What wage will you be offering? If you don’t want to stick to a specific number, at least offer up a range so that prospective summer employees know what to expect.Is there the potential for ongoing work after the summer? Some college students may want to line up a job now that they can continue with, albeit at a reduced pace, once their studies resume. If that opportunity is available, make it known.

Questions to ask prospective employees

Chances are, you don’t want to have to repeat the hiring process midway through the summer. So your best bet is to ask prospective hires the right questions from the start to make sure you find the right people for the job. Some questions you may want to incorporate into your interview are:

Why do you want this job and what are you hoping to get out of it? Note that some students might simply say “I want money to put in my savings account,” and that’s not necessarily a bad thing.What schedule can you commit to? It may be that some applicants are taking summer classes and can’t necessarily work all day, every day.How many weeks can you work this summer? Even if you need 12 weeks’ worth of extra help, it may be worth it to hire someone with a great attitude and experience for 10 weeks if that’s all they have available. But you probably don’t want someone who can only work for seven or eight weeks.

Addressing your summertime staffing needs is something to take care of right away. So if you’re behind in that regard, get your job listing up as soon as you can and carve out time in your schedule for interviews. You may also want to specifically see about publicizing job openings at college campuses nearby (or via online job boards connected to those schools) so potential candidates are made aware of them.

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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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