Money Management

Looking to buy a home? Read on to see why it’s so important to find the right real estate agent. 

If you’re looking to buy a home, then it pays to find a real estate agent to help guide you through the process. In 2021, 86% of home buyers used a real estate agent, according to the National Association of Realtors.

But if you hire the wrong real estate agent, the home-buying process could become far more stressful and unrewarding. And in some cases, using the wrong real estate agent could mean falling into a dangerous financial trap.

When you choose the wrong person for the job

Many real estate agents are great at what they do and are dedicated to customer service. But if you find a real estate agent who isn’t so motivated, it could result in you missing out on a lot of new listings as they hit the market. And at a time when the broad real estate market is sorely lacking in inventory, that could be a problem.

But that’s far from the worst thing that might happen when you use the wrong real estate agent. Real estate agents commonly work on commission, so when you buy a home, they get paid (usually not by you, the buyer, but they get paid nonetheless). And the more expensive a home you buy, the more money a real estate agent stands to make.

The wrong agent, however, might push you to make an offer on a home that’s out of your price range simply to snag a commission. And if you go that route, you risk a host of financial consequences.

For one thing, taking on too much house could mean falling behind on housing expenses or other bills. That could result in credit score damage. And even if you do manage to swing the costs associated with owning a more expensive home than you wanted, you might end up having to pinch pennies day in, day out. That’s not exactly a great way to live.

That’s why you’ll need to be careful when choosing a real estate agent to work with. And also, you may want to err on the side of not hiring an agent who comes off as overly pushy and aggressive from the start.

It pays to shop around for a real estate agent

Just as it’s a good idea to shop around with different mortgage lenders before signing a home loan, so too is it a good idea to talk to different real estate agents before hiring one. That way, you can get a sense of how they work and what their personalities are like.

It’s also a great idea to ask for recommendations from friends, neighbors, and other people you know in your area. If someone you trust endorses a specific real estate agent and says they had a great experience working with them, then that should give you more confidence in that potential choice.

That said, you’ll also want to do your own research. Ask each agent you speak to what their experience entails — both in general and in the area you’re looking to buy in. And ask how they’re helping clients navigate the challenge of low inventory in today’s market. Taking the time to ask the right questions could help you land on the best choice.

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The average credit card balance is $5,910 per borrower, according to Dave Ramsey. Here’s why that’s such an alarming figure. 

Using credit cards is very common, and with good reason. It’s possible to earn generous rewards using rewards cards. And credit cards can help you build credit. They can also help you fund purchases you can’t pay for all at once — although, they do have high interest rates, so this may not be the best approach unless you have a 0% APR card.

With so many people using cards, you may wonder what the average balance carried on them is. Finance expert Dave Ramsey recently shared this statistic, and it may surprise you.

Just how much are Americans charging on their credit cards?

According to the Ramsey Solutions blog, the average credit card debt balance per borrower in the fall of 2022 was $5,910 per person. As Ramsey pointed out, “That’s more than three times the average mortgage payment.”

Having a credit card balance that exceeds your monthly housing costs is obviously not ideal — especially if you are carrying that debt from month to month and are paying interest on it. Credit cards tend to charge high interest rates so if you owe thousands, you could end up taking many years to become debt-free and spending a small fortune in the process.

Say, for example, you owe $5,910, your card has a 17% APR, and you’re paying $143 per month. It would take you 63 months to become debt-free and you would pay total interest costs of $3,042.52, so you’d end up sending your creditor a whopping $8,952.52 over that time.

How can you pay down your credit card balance?

If you have a large balance on your credit card, you should seriously consider making a plan to repay what you owe so you can avoid enriching your creditors at the expense of your own future financial security. A big credit card balance can rob you of the chance to use your income for other things since you’ll be sending money to the credit card companies month-after-month.

One of the best ways to repay your credit card debt is to reduce the interest rate on it using a balance transfer credit card or a personal loan. If you can bring down your interest rate and make extra monthly payments, more of that money can go towards reducing the balance owed instead of just paying interest without actually lowering the amount of your principal.

If you transfer the balance of your high-interest cards to a balance transfer card with a 0% rate for a period of time (such as 12-16 months), you should try to pay enough each month to pay the balance in full by the time the promotional rate expires. If you use a personal loan to repay credit card debt, you will have a fixed timeline for repayment based on whatever the personal loan’s repayment term is.

If your credit card balance is as high as the average American’s, or even higher, then considering these other options could be very important to deal with your debt and ensure that the amount you owe doesn’t impact your ability to build a secure financial future.

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There’s a lot of misinformation out there about credit cards. Read on to avoid a major trap. 

Americans on a whole aren’t strangers to credit card usage. And as of the end of 2022, total U.S. credit card balances sat at $930 billion, according to TransUnion.

Sometimes, when money gets tight, consumers have no choice but to fall back on credit cards to pay their bills. In those situations, it’s common to carry a balance forward for months or even years at a time, since credit cards generally give you that flexibility.

But if you think that carrying a large credit card balance and paying it off over time is a great way to build credit, you’d be mistaken. Here’s why.

Don’t fall into this credit card trap

It’s true that using a credit card can be more conducive to building credit than paying for purchases in cash all the time. When you pay cash, there’s no record of your payments for a reporting bureau like TransUnion to see. But when you charge expenses on a credit card and make your payments each month, that payment activity gets reported to the credit bureaus. And if you’re timely with your payments, it could help your credit score improve.

Because of this, some consumers are of the impression that racking up high credit card balances and paying them off over time is a good thing that will help their credit scores improve. But actually, not only might that move hurt you financially, but it might also hurt your credit rather than help it.

While your payment history is a big factor that goes into calculating your credit score, so too is your credit utilization ratio, or the amount of revolving credit you’re using at once. If your utilization ratio climbs above 30%, it has the potential to damage your credit score. And so if you accrue too high a balance on your credit cards, you might get dinged from a credit score perspective, even if you’re able to make your minimum monthly payments on time.

That’s why if you’re looking to build credit via credit card usage, a better bet is to charge some expenses on your card — ideally, one with a generous rewards program so you benefit along the way — and then pay your bills in full every month. That activity alone could really help your credit score improve. And if you pay your bills in full monthly, you won’t lose money to costly interest charges.

Be an informed consumer

There’s a lot of bad personal finance information out there, so as a consumer, it’s important to read up on how to best manage your credit cards and build credit. Using a credit card regularly definitely has the potential to help your score improve. But you don’t want to put yourself in the position where you’ve racked up expensive debt along the way.

You should also know that another way your credit cards can help you build credit is by keeping the same ones open for many years. The length of your credit history plays a role in establishing your score, too, so it’s a good idea to find a few credit cards you can see yourself using for a long time.

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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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Living in an HOA neighborhood has had some benefits, including the area being nicely maintained. But there’ve been some downsides, too. Find out more. 

A little over a year ago, I bought a property and moved into a neighborhood that had a homeowners association. I’m not usually a fan of HOAs, but we didn’t plan to stay in the house long term and the neighborhood had a lot of features we were interested in.

Now, after having lived there for more than 12 months, here are the things I’ve loved — and hated — about being in an HOA.

Love: The neighborhood upkeep

The HOA in our neighborhood plays a very active role in making sure that properties are maintained. The monthly dues that we pay include lawn cutting, as well as assistance with mulching and landscaping. The association has kept our lawn at the perfect level and has mulched several times already, so our yard always looks great with no effort on my part.

The HOA also enforces standards on all of the homes in the neighborhood. This means everyone power washes their driveway pavers, maintains their paint job, installs pretty fences if they need a fenced yard, and generally keeps their home in nice condition.

It’s very pleasant to drive through a neighborhood where all the houses look nice and well-maintained, and that is definitely not always the case outside of an HOA neighborhood.

Love: The amenities

Our neighborhood also comes with tons of amenities, which the HOA takes care of. We have several community pools, for example, including one with a lazy river and a waterslide. There is a restaurant in the neighborhood that has pretty decent food as well, and there are multiple playgrounds for my kids and even a full soccer field where they can go play.

We use these amenities all the time and they make living in our neighborhood a lot more enjoyable than living in a community that doesn’t offer these added features outside our door.

Hate: The fee increases

One of the biggest downsides of our HOA neighborhood is that the fees are substantial. And, they became even more of a burden since we moved in because the association voted to raise the fees last year.

We don’t have a mortgage loan on this house and our housing costs are well below what we can afford. As a result, it wasn’t impossible for us to absorb the fee increase — although we weren’t very happy we’d be paying more without getting added services.

For some people, though, the HOA fees have really become a financial burden and some of our neighbors are even considering moving because the costs keep going up. This is a big downside, both because of the impact on my wallet and because of losing good neighbors.

Hate: The silly rules

Finally, the last thing I dislike about the neighborhood HOA are the silly rules it imposes.

For example, you have to get permission to do something as simple as set out a bird feeder or a small flag on your own property. You can’t keep your garage doors open and you must bring your trash cans in and out within a certain timeframe. You’re also required to spend $75 a month at the neighborhood restaurant.

While I theoretically see the value in some of these rules — like the restrictions on outdoor decor — many of them are nothing more than a pain and don’t really have a positive impact on property values.

If you’re considering moving into an HOA neighborhood, it’s important to consider what it will offer to you and whether you’re OK with the rules in exchange for the amenities and perks. Not everyone will decide it’s right for them, so don’t rush into the choice.

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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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This writer is no stranger to returning food to Costco. Read on to learn about her experience doing so. 

One of my favorite things about shopping at Costco is getting to save money on groceries. I buy a lot of my produce, dairy products, and non-perishable food items at Costco, and it commonly results in a much lower credit card tab compared to my regular supermarket.

But another great thing about Costco is its commitment to customer service. Through the years, I’ve returned more than $100 worth of food items to Costco, and I’ve never had a problem doing so.

Costco’s very generous return policy

Since January 2014 (which is as far back as the helpful customer service representative could look at my account), I’ve returned $46.72 worth of produce to Costco and $69.60 worth of non-perishable food. So all told, that’s about $116 worth of food I’ve taken back.

In many cases, the reason I took food items back boiled down to early spoilage or inferior quality. And the customer service representative who ran the above numbers for me assured me that any time there’s any issue with quality, you can bring back a food item to Costco and get a full refund. This holds true even if you’ve used a portion of the product before returning it.

I once remember bringing back an unopened bag of spinach because it started to look wilted before its expiration date. Costco gave me a full refund without a problem, but I expected that.

Another time, though, I had purchased a two-pack of feta cheese. We were finishing up our first pack without issues when I noticed that the second sealed, unopened pack had mold in it, even though the cheese had several more weeks to go before its expiration date. When I took it back to Costco, I asked for a 50% refund, the logic being that I’d gotten to enjoy 50% of my purchase. The customer service representative said it was their policy to give a 100% refund in that situation, and that’s what happened.

Not only can you return food items that have quality issues, but you can also return items you feel don’t meet your expectations. If you try a new bakery line product, for example, and find it cloyingly sweet, you can generally take it back to Costco, say you didn’t like it, and get a refund.

However, the customer service representative I spoke to said that you can only do this within reason. If you start to return every other item you buy once it’s already been opened and partially consumed, your membership will be flagged and you may be denied the option to make such returns. You might even, in an extreme situation, be denied a membership renewal.

What’s more, she said, if you’re going to return a food item due to not liking it or the item not meeting your expectations, it generally can’t be more than 50% eaten. You can’t, for example, return a cake that’s 90% gone and claim it wasn’t good.

A great store all around

All told, there are lots of savings to be reaped when you shop at Costco. But savings aside, it pays to do your food shopping at a store that clearly puts customers first. And Costco certainly fits that bill.

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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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Being foreclosed on is not a good thing at all. Read on to see how you might be able to avoid it. 

During the pandemic, many U.S. homeowners fell behind on their mortgage payments after losing their jobs. At the time, there were protections in place that prevented those people from losing their homes to foreclosure. But now that those pandemic-era benefits are a thing of the past, the number of foreclosures in the U.S. is rising.

Almost 96,000 properties were foreclosed on during the first quarter of 2023, according to real estate data provider ATTOM. That’s a 22% increase from the same quarter in 2022.

Of course, being foreclosed upon is nothing short of a nightmare for the people who end up in that situation. Not only does it mean losing a home, but it also means sustaining extensive credit score damage. So if you’re having trouble keeping up with your mortgage payments, your best bet is to reach out to your mortgage lender and try to work out a solution.

When you can’t keep paying

These days, many U.S. homeowners have a fair amount of equity in their homes. If you’re not underwater on your mortgage — meaning, your home could sell for a high enough price to pay off your mortgage balance in full — then you may have the option to sell your home if you can’t make your mortgage payments any longer. But if you’re looking to stay in your home, this option clearly won’t be ideal.

In that situation, the most important thing to do is reach out to your lender and let it know you’re having difficulty making your payments. From there, your lender might come back with a few options that allow you to stay in your home and avoid foreclosure.

One option that may be available to you is forbearance. Forbearance allows you to pause your mortgage payments for a period of time. You won’t be considered delinquent on your mortgage if your loan is put into forbearance.

Another option you might be able to work with is loan modification. When you go this route, you don’t get a new mortgage as you would with a refinance. Rather, the terms of your existing mortgage are changed to make your loan more affordable to you.

Under loan modification, you may be able to lower your monthly payments by extending your repayment window. That could mean paying your lender for a few extra years, but getting the near-term relief you need to keep making payments.

Your lender may be surprisingly willing to help

You might assume that your lender won’t do a thing if you run into an issue with paying your mortgage. After all, why would it when it could simply foreclose on your home instead?

But one thing to realize is that foreclosure is not a pleasant process for lenders, either.

Lenders want to collect their interest and make money. They don’t want to have to deal with home sales. So often, lenders are motivated to do what they can to avoid foreclosure — not necessarily out of the goodness of their hearts, but because it’s less logistically and financially taxing. That’s why reaching out to your lender really is your best bet when you’ve run into hard financial times and you’re at risk of falling behind on your mortgage payments.

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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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