Money Management

Moms often have great advice to share. But read on to see what bad financial advice you’re best off avoiding. 

I was fortunate enough to be raised by a mom who’s not only loving, caring, and the most generous person I know, but who happens to be a really smart human being. As such, I learned my share of important financial lessons — from her and my father — throughout my childhood.

But not every parent gives great financial advice. And if you’ve heard these tidbits before, you should know that following them might lead you to an unhappy financial place.

1. “Steer clear of credit cards at all costs”

Credit card debt is a really important thing to avoid. But avoiding credit card debt isn’t the same thing as avoiding credit cards. In reality, there are plenty of good reasons to regularly charge expenses on your credit cards.

For one thing, if you pay your bills on time every month, that could help you build credit. That could, in turn, make it easier to borrow money affordably when you need to.

Also, as long as you’re not carrying a balance forward and racking up interest on it, you can come out ahead financially by charging regular expenses, like gas, groceries, and household essentials, on your credit cards. That’s because many credit cards come with generous rewards programs that put cash back in your pocket for making those purchases.

2. “Never pay for a service you can do yourself”

You might have the ability to change the oil in your car or do your own home maintenance. But sometimes, it’s worth paying up to have the job done right. Making a mistake in the course of maintaining a home or vehicle could end up costing you more money over time.

Also, don’t forget that your time may be worth money, especially if you’re self-employed and have a full plate. It could, for example, make sense to hand someone $150 to do several hours of home maintenance if you can earn twice that amount by working rather than fiddling with tools.

3. “The sooner you pay off your mortgage, the better”

The longer you carry a mortgage, the more money you might spend on interest. And if you pay your home loan off early, you might save yourself a nice amount of money in the process.

But if you spend a large chunk of money to pay off your mortgage, you’ll have that much less left over to invest with. So if you happen to have snagged a low interest rate on your mortgage, then it might actually make a lot more sense to carry that loan but invest your cash in a brokerage account and generate a higher return on it. And if it makes you feel better, almost 10 million homeowners aged 65 and older still have a mortgage, reports Forbes.

If your mom gave you any of this advice, she no doubt meant well. But in reality, all of these tips have the potential to lead you astray. So before you decide to swear off credit cards for good, never spend money on home or vehicle services, and push yourself to pay off your mortgage early, think about whether that’s really the best thing for you.

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I like celebrating Mother’s Day. But read on to see which traditions I’m eager to shun. 

In 2022, the average person spent about $246 on Mother’s Day, according to the National Retail Federation. When you think about it, that’s actually not such a large amount of money to spend on the person who raised you and has taken care of you throughout your life. But for many people, that’s a credit card charge they can’t afford.

Now, if I’m being honest, my family can afford to spend something in that ballpark on Mother’s Day. But we generally don’t come close. In fact, our typical Mother’s Day tradition is spending the afternoon hiking and picnicking in the woods, which is basically a free activity minus the negligible cost of gas to get there.

A big reason my family doesn’t spend a lot of money on Mother’s Day is that most of the traditions or spending opportunities associated with that day are things I’m not a fan of anyway. Here are three traditions I won’t let my family spend money on.

1. Brunch

I’m not anti-brunch as a general rule. In fact, I’ll sometimes go out for brunch with my kids, husband, or friends.

What I am opposed to are those overblown Mother’s Day brunches, where you pay a small fortune of money for a pre-set menu that isn’t very good and are forced to sit in a jam-packed restaurant while frazzled waiters run around knocking into your chair and antsy toddlers make noise. And to be clear, I don’t fault the toddlers.

All told, I find the idea of Mother’s Day brunch unpleasant, so I don’t see why I’d agree to have my family spend any amount of money on it. If anything, we could always save brunch for another day.

2. Flowers

Some people enjoy getting a bouquet of flowers for Mother’s Day or on other occasions. But I’m just not someone who enjoys flowers. The way I see it, I have a hard enough time making sure my kids and dog are taken care of. I don’t need something else to have to take care of on top of that.

3. Jewelry

Many of my friends love getting jewelry on special occasions and showing it off. Other than my wedding ring, I don’t wear jewelry, and it’s not something I’ve ever really liked so much.

As a busy working mom who’s constantly doing things around the house and running from place to place, I actually find the idea of wearing jewelry cumbersome. Who wants to deal with a bracelet moving around your wrist while you’re trying to type on your laptop or do some cooking?

Because I’m not a fan of jewelry and it tends to be expensive, my husband knows not to buy it for me. And while I know my daughters would love for me to own more jewelry (so that they could ask to borrow it), they accept that it’s just not my thing.

Spending on what’s important to me

I have no problem with my husband surprising me with concert tickets or a fun day trip, whether as a Mother’s Day gift or for another reason. But Mother’s Day brunch, flowers, and jewelry are high on my “no thanks” list, so those are things we won’t be spending on anytime soon.

If you’re someone who feels similarly, talk to your family about what’s important to you and what isn’t. Your kids might buy you flowers on Mother’s Day with the best of intentions. But if you’d rather they not spend the money on something like that, it’s probably best to just speak up and be honest about it.

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Credit cards can help you build credit. Read on to learn how one writer was able to qualify for a lower mortgage rate thanks to using them. 

Credit cards are usually associated with spending money, not saving it. But, my credit card actually helped me save tens of thousands.

That’s not just because I have rewards cards that I’ve been able to use to earn cash back and miles. There’s actually an even more important — and more valuable — way that my cards have saved me.

This is the biggest benefit credit cards have had on my financial life

The biggest financial benefit that credit cards have had is that they have helped me to earn a good credit score.

I don’t really do much other borrowing, but I still have a credit score that is above 800 and this is because I’ve had multiple credit cards for a very long time. I’ve also paid them on time every time for many years, have a very high credit limit, and I don’t use much of my available credit.

Since I have used credit cards in a responsible way, my past payment history and low utilization ratio have been reported to the credit reporting agencies and have demonstrated that I’m a responsible borrower. This has helped me earn the kind of credit score and develop the type of credit record that puts lenders at ease.

As a result of my good credit score, I’ve been offered very competitive rates when I applied for a mortgage loan for every house that I bought. Since my mortgage was a necessity to buy a house, and since I was borrowing hundreds of thousands of dollars, qualifying for a loan at a low rate saved me tens of thousands of dollars.

For example, if you got a 30-year mortgage for $300,000 with a credit score of 760 to 850, Bank of America says you could have likely qualified for a mortgage at a rate of 6.458% (as of October 2022). This would come with a monthly payment of $1,888 and result in total interest costs of $379,653. But, with a credit score of just 620 to 639, your mortgage rate would have been about 8.047% at that time. This rate would have given you a monthly payment of $2,211 and total interest costs of $496,007.

Is it possible to build credit without a credit card?

Having a credit card — and using it responsibly — is clearly well worth it if you want to get a mortgage some day in the future and pay a lower rate.

Of course, it’s possible to build credit without a credit card. You can earn a good credit score with any kind of responsible borrowing, such as taking out a car loan or a personal loan. But, credit cards can be easier to get when you’re just building up your credit record, and they don’t require you to actually pay interest in order to earn a good score. So, they’re an ideal option if you want to make sure you’re building credit without enriching a lender.

The reality is, many people will need a mortgage to buy a home and if you suspect you will someday, consider getting a credit card. Using it wisely now will help you become an attractive borrower when the time comes to buy a home of your own.

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GM announced it will no longer produce America’s most affordable EV, the Chevy Bolt. Read on to find out if the dream of buying an EV dies with it. 

Well, it was fun while it lasted. That is, the dream of buying an affordable electric vehicle.

On Tuesday, April 25, GM announced it will stop producing the Chevy Bolt by the end of this year. The company will close its Orion Township, Michigan plant, where the Bolt is produced, and repurpose it to manufacture electrified versions of its Chevrolet Silverado and GMC Sierra.

The decision is hardly a surprise. Trucks and SUVs have wider profit margins than most sedans and hatchbacks, even if they don’t cost much more to produce. And given the narrow margins on most sedan EVs, it’s likely GM wasn’t earning much profit on its Bolts to begin with. The Bolt may have been the first “relatively” affordable EV in the U.S. — but affordable to whom is what GM is probably asking itself.

But the death of the Chevy Bolt has car buyers asking a question that’s almost as old as the metals that make them: Will carmakers ever — ever — make an EV that Americans earning a median annual income of $69,717 can afford?

Will an affordable EV ever be a thing?

Take heart — even after GM killed the dream, I’m a firm believer that EV makers will make electric cars that most Americans can afford.

First, let’s give our condolences to the Chevy Bolt. Because, despite its early death, the Bolt was the first affordable EV in the U.S.

Right now, the Chevy Bolt EV starts at around $26,500. If we factor in an EV tax credit of $7,500, then the sticker price drops to $19,000. The average new car, according to Kelley Blue Book, is more than $49,000. That means the Bolt is about 39% cheaper than the average new car.

But to drive the point home (carbon-free!), the next cheapest EV is the Nissan Leaf, which starts at $28,040. Even without the EV tax credit, which doesn’t apply to most foreign carmakers like Nissan, the Leaf is cheaper than the average new car. It’s still roughly 56% more expensive than the cheapest new car on the market (the 2023 Nissan Versa — $15,730), but it’s definitely not as expensive as the cheapest Rivian (the R1T – $69,300).

Another reason I’m bullish about affordable EVs: Their prices have been dropping. Take the Bolt, for instance. A 2017 Chevy Bolt cost around $37,500 new and had an EV range of roughly 238 miles. A 2023 Chevy Bolt is $10,000 cheaper ($26,500) and has an EV range of 259 miles. Less money with more EV range? Pinch me.

Okay, okay, you’re right — the Chevy Bolt is dead. But what about a Tesla? Well, the story isn’t as encouraging with Tesla, nor with any pure EV maker. But even Tesla has dropped the price of its vehicles. In 2022, you could buy a Model 3 for roughly $48,490. Today you could buy the same car for around $39,990.

Should you buy an EV in 2023?

Most vehicles produced by EV makers (such as Tesla, Rivian, Lucid Group, and Promerra) are not affordable. Not in 2023, at least.

But you can still buy the 2023 Chevy Bolt and get the EV tax credit, which could put the starting price at $19,000. The 2023 Nissan Leaf is also affordable, even if it doesn’t qualify for the tax credit. The next cheapest EV would be the Hyundai Kona, which is priced at about $35,000.

If you’re thinking about buying a vehicle from a pure EV maker, like Rivian or Tesla, I would reconsider. These companies are working to reduce production costs and sell EVs at lower prices, especially as Americans grow impatient with their lack of affordability. Even waiting until 2024 could mean saving a few grand on a new EV.

But if you’re gung ho about buying an EV in 2023, I would browse the best auto loans to see which lender will give you the best rate. In a high rate environment, even knocking your interest down a few percentage points could help you save thousands over the long run. In addition, I would also compare different car insurance companies, as buying insurance for an EV can be more expensive than a gas-powered car.

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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 positions in and recommends Tesla. The Motley Fool has a disclosure policy.

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Costco lets members return some pretty questionable items, like moldy food and used clothes. Read on to learn how returning some items may jeopardize your membership. 

Costco is one of the few retailers that will let you return just about anything: moldy strawberries, dead plants, clothes that don’t fit, brown bananas. So long as you bought it at Costco, you’re almost guaranteed to get a refund, no matter how long it’s been since you made the purchase.

This lenient return policy may be one of the best perks of a Costco membership. But for Costco it can translate into major losses, questionable returns, and blacklisted customers whose memberships are just one return away from being permanently revoked.

How to get banned from Costco for life

According to a Business Insider report, Costco members can get flagged if they make too many returns. More importantly, Costco can revoke your membership indefinitely if it thinks you’re trying to take advantage of its return policy.

As Costco states on its website: “Costco reserves the right to refuse membership to any applicant, and membership may be terminated at Costco’s discretion and without cause.”

While Costco doesn’t state how many returns it takes to get banned, numerous stories suggest persistent abuse will put you on Costco’s radar.

For instance, a former Costco member told Business Insider her membership was canceled after she tried to return a printer — eight years after she purchased it. The manager at her Costco refused to refund the printer, not because it was as old as two presidential terms, but because this particular member had a long history of returning items. After taking her complaint to Costco’s senior vice president of Northeast operations, Costco sent her a termination letter: she was no longer a member of Costco, even though the company did give her a refund on the printer (plus ink!).

Persistent abuse is assessed on an individual basis and left to the discretion of Costco managers. That doesn’t mean you can avoid Costco’s surveillance by returning items to numerous Costco stores. But what it might mean is that one store manager will have a shorter fuse than others and put you on a blacklist for a return that they think is unreasonable.

What can you take back to Costco?

Costco has few restrictions on what you can return. Right now, the company won’t officially accept returns on electronics after 90 days, products with a limited useful life expectancy (like tires and batteries), wine, and cigarettes.

Everything else is typically fair game.

This lenient policy has produced some wild and unbelievable returns. While you can’t believe everything you read on Reddit, one thread in particular named some ludicrous items: dead plants, a 13-year-old frozen fish, a half-consumed steak, a used summer bathing suit (returned in September), and a dead Christmas tree.

To be sure, these items would likely blacklist you. Costco would refund your purchase, but eventually it might refund your membership, too.

If more Costco members try to game the system, Costco would likely join other retailers — like L.L. Bean — in adding guardrails to its lenient return policy. Until then, you’ll have to use your discretion in what you think is a reasonable return and what would likely exploit Costco’s generosity. A revoked membership won’t hurt your credit score. But it can hurt your personal finances if you can no longer save on great deals that Costco offers.

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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 positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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One of the less talked about issues with homeownership is biased appraisals. Read on to learn about both avoiding and fighting them. 

As a real estate professional, I was always told to trust the appraisal process. Appraisers are highly trained, they know what they’re looking at, and, above all else, they’re unbiased. And, for the vast majority of the appraisers I ever met, that’s absolutely true. But it’s not true 100% of the time, based on new findings by the Brookings Institution.

Although it’s difficult to put numbers to exactly how many homes are affected by under-appraisal, Brookings is trying very hard to at least measure the effect of it. It found that homes in majority-Black neighborhoods are 1.9 times more likely to appraise under their contract prices and had a median appraisal 15% less than in neighborhoods with fewer than 1% Black residents.

That’s not nothing.

Since it’s Fair Housing Month, we thought we’d share some tips to help ensure you have the best shot at an unbiased appraisal this year, whether you’re selling your home or simply planning a mortgage refinance.

(In all honesty, I wish this piece didn’t need to be written at all, but if we can save someone the stress, frustration, and general unfair treatment that comes with a biased appraisal, I’ll feel we’ve done something to make the world a little bit better.)

1. Depersonalize your home

Appraisers are people, too, and sometimes they make very bad choices, consciously or unconsciously. Taking down family photos and removing any items that might be used to identify your religion, race, gender, country of origin, or your familial status may seem extreme, but giving the appraiser a blank slate can help give you an even playing field. If you’re selling, you’ll need to pack those things anyway.

2. Freshen up your curb appeal

It’s an old real estate trick that the better a home’s first impression, the better it will show. That means the appraiser should be greeted with a tidy lawn; well-tended landscaping; maintained fences; and clean siding, doors, and gutters. It’s a little extra work, but the impact can be significant. Just remember that appraisers judge your home based on its condition, which is a highly subjective measure. A better first impression can lead to a better grade overall.

This really goes for anyone, even if they’re not at risk of a Fair Housing violation. It’s just extra insurance if you happen to be a member of a protected class that might experience under-appraisal.

3. Tidy up your interior

Appraisers are supposed to be able to look past clutter, but in my experience, this isn’t always the case. I’ve seen homes gain significant value simply by removing old carpets or decluttering between owners, without any other changes, so I know that tidying up has an effect. Even if you can’t pull out dated carpets, start decluttering your home as soon as you have a contract (or know you’ll be applying for a new mortgage).

Rent a storage unit and start filling it with items that you don’t absolutely need, or borrow a friend’s garage. The less stuff you have in general, the less likely you are to tip off the appraiser that you’re anyone but whoever they envision as the average homeowner.

How to fight a low appraisal

Should your appraisal come in significantly lower than you and your real estate agent anticipated, there are ways to fight it.

1. Ask for a copy of the appraisal

You can’t fight what you don’t know, so get a copy of that appraisal as soon as you find out there’s an issue. Contact the mortgage lender and ask for it directly, or have your real estate agent do it for you, so you can check for actual factual inaccuracies that can be easily disproved.

2. Get a ballpark figure of your home’s value

Ask your real estate agent (or the agent who sold you the house, if it’s a refinance) to perform a comparative market analysis (CMA) to help establish what your home’s value should be. This is, in essence, a portion of what appraisers do to determine your home’s value. A good agent can perform these fairly quickly, especially if they’re very familiar with your neighborhood. Zillow and other online platforms are not necessarily accurate judges of value, and you should not rely on them.

3. Ask for a reconsideration of value

With the appraisal and a CMA in hand, you can request that the bank reconsider the value of your home. If you can prove that other similar homes have sold nearby for the same or more than yours appraised for, or that there’s a factual inaccuracy in the appraisal, you’ve got a lot of reason to demand what is essentially a reappraisal. Again, this won’t work with Zillow data; you’re going to need hard data from a real estate professional. The process at each bank is a little bit different, but you’ll definitely need the documentation to prove your case.

4. Hire your own appraiser

This is not something I would ever suggest anyone do out of pocket until they’ve exhausted all possible angles, because it feels like a tax on someone who has already been discriminated against. But if you absolutely cannot move the bank to do a reconsideration of value (ROV) any other way, you can hire your own appraiser. Usually, the CMA is proof enough, but if it isn’t, a full appraisal will get the bank’s attention, especially if it differs wildly from the one that’s under value.

Federal Fair Housing applies all year long, but during April, we put a point on it. If you’ve experienced discrimination in appraisals, mortgage lending, or other housing issues, it’s important to address it right away.

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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.Kristi Waterworth has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Zillow Group. The Motley Fool has a disclosure policy.

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