Money Management

A writer shares some of the wisdom her mother imparted onto her. Read on to learn more. 

Money was often tight when I was growing up. Going out to dinner was something we did once or twice a year at best, and usually, it was only for pizza.

My parents didn’t have the means to spend as freely as I do right now. Although I try to maintain a frugal lifestyle, I won’t hesitate to splurge on conveniences that make my life easier, whether it’s having my house cleaned by someone else or falling back on takeout meals when I’m too busy to cook.

But even though my parents didn’t have tons of financial resources at their disposal, they were always very financially savvy. And I’m really grateful for many of the money lessons my mom taught me as a child and young adult.

It was my mom, for example, who explained to me how credit cards work, and who taught me how to manage the first one I got when I went to college. My mom also taught me the importance of always having money in my savings account. And that’s perhaps the most valuable lesson she could’ve shared.

A financial lesson that’s served me well through the years

When I was in my teens, I held down different jobs and did my share of babysitting. And tempting as it was to spend the money I was earning, I instead made a point to put most of it in the bank.

That was the basis of the emergency fund my mom encouraged me to build. Since then, I’ve added to my savings through the years, banking things like bonuses at work and tax refunds when they would come my way. And before I knew it, I had enough cash to cover multiple months’ worth of bills.

Meanwhile, my emergency fund has bailed me out of a host of financial jams through the years — and helped me avoid credit card debt. My first car, for example, was a cheap used model in bad shape that got totaled in a minor accident. I used my emergency fund to buy myself a new car — one that wouldn’t go kaput during a 5-mile-per-hour collision.

My emergency fund has also spared me the cost and hassle of racking up debt through a string of home repairs. Over the past 10 years, I’ve had to replace two air conditioning systems, a deck, a washing machine, and a water heater. And those are only the major repairs that come to mind. Each and every time, I was able to raid my emergency fund and cover those costs in full.

A lesson I’m teaching my kids, too

A recent SecureSave survey found that 67% of Americans do not have enough money in savings to cover a $400 emergency expense. I don’t want my kids to ever land in that boat. And I also don’t want them to have to come running to me every time an unexpected bill pops up.

That’s why I make a point to encourage my kids to build savings — even though my oldest is only 11 and clearly isn’t tasked with covering any of his own expenses. I’m extremely grateful that my mom drilled it into me that emergency savings are key. And I want to do the same for my kids to set them on a solid financial path.

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Rent is actually getting up to 11% cheaper in some cities. Find out where to start searching for a rental home. 

Rent prices continue to fall. According to Redfin data, the median asking rent peaked in early 2022 and has dropped to $1,937. It’s technically the cheapest rent has been in 13 months, but rent still feels expensive for two reasons.

First, the price drop is negligible. Rent is about $100 more affordable than at its 2022 peak. Cheaper, but a far cry from pre-pandemic levels. Second, not all cities are cheaper for renters. Areas like Cleveland, Ohio, have sharply increased in price.

In some cases, things really have gotten cheaper for renters. According to Redfin, these are the 10 cities where rent has fallen the most since last March:

Austin, Texas Chicago, Illinois New Orleans, LouisianaBirmingham, Alabama Cincinnati, OhioSacramento, California Las Vegas, Nevada Atlanta, Georgia Phoenix, Arizona Baltimore, Maryland

Let’s take a closer look at the top three cities where rent has fallen the most since March 2022.

1. Austin, Texas (-11%)

Rentals are on serious discounts in the live music capital of the world. Generally speaking, rent prices surged post-pandemic, and they’re finally slowing their rise into the money stratosphere. In places like Austin, they’ve even dipped noticeably.

As of March, the median list price for an Austin listing had fallen from $2,335.44 to $2,104.

2. Chicago, Illinois (-9.2%)

Chicago also saw significant discounts in prices. According to one Redfin real estate agent, many homeowners became landlords during the pandemic, leading to more houses for rent. Combined with a national softening of rent demand, it’s pushed down prices.

As of March, the median rental price for a Chicago listing was $2,206.

3. New Orleans, Louisiana (-3%)

New Orleans listings dipped in price, albeit not much compared to last year. The New Orleans housing market is not particularly competitive right now, indicating a lack of interest in moving out. Landlords may be lowering prices to entice renters to the area — good news for renters.

As of March, the median rental price for a New Orleans listing was $1,792.

Rent prices are trending flat

Most cities on the list (barring Austin and Chicago) only had slight decreases in rent. More important is the overall trend in the rental market: Prices seem to be teeter-tottering to a standstill, neither rising nor falling dramatically.

According to Redfin, rent has fallen 0.4% since last March, but rent is still much higher than before the pandemic. It’s unclear whether prices will continue to fall from here.

Seasonality and recessions impact prices

Folks looking to rent may be interested in renting now or delaying their search to avoid high Summer prices, the busiest season for renters. Rent is typically cheapest during the winter, between December and February, when demand is lowest.

If the U.S. falls into a recession later this year (entirely possible), rent prices will likely fall. A recession may also impact salaries, so be cautious of relying on a downturn to drop rental prices — employees may lose their jobs, and workers may not get pay increases.

Renting is cheaper than homeownership in the short term. (Now that mortgage rates are up, that’s truer than ever.) Financial experts typically recommend that renters spend no more than 30% of their actual income on rent or mortgage payments.

Consider starting your search for a new home in cities where rent is getting cheaper, starting with the 10 cities where rents have fallen the most this year. Or check out the most affordable cities with the highest salaries and lowest cost of living to find out where folks are getting paid big to rent cheaply. Renters have options!

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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.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Cole Tretheway 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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Costco isn’t just for food and toilet paper. Read on for some of the more surprising items it carries. 

When you think of Costco, you might conjure up an image of an oversized shopping cart loaded with bulk snack items, cleaning products, and toilet paper. But actually, Costco’s inventory is massive, and the warehouse club giant offers a vast selection of everything from apparel to toys to electronics.

If you shop at Costco often, it won’t surprise you to learn that you can buy a laptop, lounge chair, or even a new wardrobe at your local warehouse club store. But you may not realize that the following items are available at Costco, too.

1. High-end designer purses

Costco is known as a store that customers on a budget tend to frequent. But you can actually buy some pretty high-end items at Costco — ones that might get you close to hitting your credit card limit. If you’re the fashionable type, for example, you may be pleased to learn that you can buy a Prada handbag from Costco. In this case, however, you’ll have to buy it online and not at a store.

2. Jewelry that costs more than $10,000

It probably won’t come as a surprise to learn that Costco carries jewelry. But you may not realize that you could easily drop upward of $10,000 at Costco on a single piece of jewelry.

You should also know that while Costco has a very generous return policy, diamonds over 1.00 carat are subject to extra scrutiny. In those situations, Costco will issue you a Jewelry Credit Memo when you make your return. Then, a Costco gemologist will inspect your return for authenticity, and your refund will be processed in full once that’s confirmed.

3. Tickets to Major League Baseball games

Seeing sporting events live has gotten expensive. If you’re a Major League Baseball fan, though, you may be in luck. That’s because Costco offers ticket bundles that allow you to score event tickets at a lower price than what you’d normally pay. These offers do restrict you to specific games, so you’ll need to check the dates each offer includes. But they also come with free food and beverages, which could be a huge money saver.

4. Full-sized swimming pools

You might assume that you can purchase a blow-up swimming pool at Costco — the type you fill up on an as-needed basis when your little kids want to take a dip. But actually, Costco sells full-sized above-ground pools that you don’t inflate and deflate daily, but rather, keep using all summer long.

Of course, these types of pools require special installation that Costco may not be able to provide you with. And you might also need a permit to install one, so that’s something you’ll want to check with your town or municipality before making a purchase.

5. Standby whole-house generators

People who live in areas that are prone to power outages often make the decision to purchase portable generators. When the power goes out, you simply run some extension cords into your generator so you can power a few appliances, like your fridge, until it’s restored.

Standby generators work differently. These generators cost many thousands of dollars and they’re designed to tap into your gas line to power your entire house in the event of a power outage. Best of all, they do so automatically. And Costco sells these generators, which could end up being a smart investment for your home. In fact, if you’re going to buy one of these (whether from Costco or another source), it could pay to see if doing so lets you snag a discount on homeowners insurance.

If your goal is to save money by shopping at Costco, then the above items may not be high on your list. But it may be helpful to know that Costco carries them in case a need or desire to buy them arises.

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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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Buying a home that’s a stretch financially isn’t a great move. Read on to see why. 

When my friend and her husband set out to buy a home early this year, I wished them luck. And I hoped they’d manage to find a place they could afford given today’s home prices, mortgage rates, and limited inventory.

On the plus side, my friend found a home pretty quickly. And it’s a home she really loves. It’s roomy, updated, and it has a nice amount of storage, which I know is important to her.

Here’s the problem, though. I know for a fact that my friend stretched her budget to buy this home. And now, she has an expensive mortgage payment to tackle every month.

When she asked whether I thought she was taking on too high a mortgage given her and her husband’s income, I was honest and said that yes, I thought it was a bit of a stretch. But ultimately, they had fallen in love with the house and decided to move forward.

My friend’s plan is to wait for mortgage rates to come down and then refinance her home loan once that happens. Doing so could lower her monthly payments.

The problem, though, is that mortgage rates may not drop for years. And until that happens, my friend has left herself with very little financial wiggle room.

A precarious financial situation

Given what my friend and her husband are now spending on their house, there’s little to no money left over for them at the end of each month. In fact, my friend just stopped funding her IRA account to manage her housing expenses, and her husband has reduced his 401(k) plan contributions.

What’s also alarming to me is that my friend and her husband have a very small emergency fund. It’s advisable to have at least three months’ worth of bills in your savings account. My friend and her husband have maybe a month’s worth, tops. And a big reason is that they raided their savings to come up with the down payment for their home.

All told, my friend’s finances are shaky right now due to her home purchase. And while she’s hoping to find ways to boost her income via some side hustles, all told, I think she got in over her head by buying too much house.

Don’t make the same mortgage mistake

These days, home prices are high, as are mortgage rates. The median home price sold in March was $375,700, according to the National Association of Realtors. And the average interest rate on a 30-year mortgage today is 6.39%, according to Freddie Mac.

The home my friend bought cost considerably more than $375,700. (To be fair, we live in an area where a starter home might cost $500,000, and her home, though comfortable, is fairly modest for the area.) The mortgage rate she locked in is somewhere in the mid-6% range, too.

But based on her household income, she took on too much house. And I hope she doesn’t end up getting herself into serious debt while she waits for mortgage rates to come down so she can lower her monthly home loan payments.

A lot of people these days are no doubt signing mortgages and hoping borrowing rates come down in time. But you should absolutely make sure you can afford your housing costs based on today’s rates before moving forward with a home purchase.

My friend can barely do that. And if she’s forced to cover her current mortgage payments for several years without a drop in costs or a boost in pay, then her finances might take a serious long-term hit.

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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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