Money Management

Higher interest rates have been hurting consumers. Read on to see what’s in store for rates this year. 

Inflation has been wreaking havoc on consumers since the latter part of 2021, and the Federal Reserve has been doing its best to fight it. To that end, the central bank has raised interest rates nine times since early 2022. Those rate hikes have driven up the cost of borrowing, forcing consumers to pay more for everything from personal loans to auto loans to credit card balances.

See, the Fed needs consumer spending to slow down in order for inflation to cool. Inflation is generally the byproduct of an excess of consumer demand relative to supply. A good way to narrow that gap is to push consumers to spend less.

Rate hikes achieve this goal by not only making it more expensive to borrow money, but also, by leading to higher interest rates for savings accounts and CDs. When it becomes more attractive to save money, consumers tend to spend less of it.

But the Fed isn’t done fighting inflation. And because of that, consumers should not expect interest rates to drop in 2023. However, rates may also not climb much from where they are today.

Where things stand with inflation

In June 2022, the Consumer Price Index (CPI), which measures changes in the cost of consumer goods, was up a whopping 9.1% on an annual basis. In March, the CPI was up just 5% on an annual basis.

Clearly, that’s a major improvement. But it’s also not where the Fed wants inflation to be.

The Federal Reserve has long targeted 2% as its ideal rate of annual inflation. That rate, the central bank believes, tends to lend to a stable economy. Because the most recent CPI reading is still a ways off from 2%, we shouldn’t expect the Fed to lower interest rates anytime soon.

In fact, in late March, the Fed issued a statement that said, “The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run…The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.”

Since the Fed isn’t backing down on its 2% inflation target, we should not expect interest rates to decline until inflation is much closer to that point, or even at that point. Now, it may be that inflation manages to go from 5% to 2% within the course of the next seven months or so. But it’s not going to happen overnight, and there’s a good chance we won’t see 2% inflation at any point in 2023.

How to cope with higher interest rates

Because it’s gotten so expensive to borrow money, a good bet these days is to avoid taking out a loan if you can avoid it. If your car gives out on you and you need a new one to function, then an auto loan, for example, might be unavoidable. But 2023 may not be the best year to borrow money to renovate your house if the work at hand isn’t crucial.

At the same time, if you can, try to capitalize on today’s higher interest rates by putting more money into the bank. Seeing as how there are still rumblings about a potential 2023 recession, it’s a good time to boost your emergency fund. And the more cash you keep in a savings account, the more interest you stand to rack up.

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

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Financial abuse is, unfortunately, a common occurrence in many abusive relationships. Here are some ways to prepare financially before leaving your abuser. 

Domestic violence affects millions of people annually. One type of abuse that is not often discussed is financial abuse. According to the National Coalition Against Domestic Abuse, up to 99% of domestic violence victims experience this kind of abuse. For many victims, financial concerns present the most significant barrier to getting out of an abusive situation.

It’s possible to overcome financial abuse. Taking steps to prepare financially can give you greater confidence to leave and the financial means to thrive as you create a life free from your abuser. Below are a few ways to prepare financially before leaving an abusive situation.

1. Open a bank account

One sign of financial abuse is withholding money. In an abusive relationship, one partner may restrict access to money to maintain control. Having limited access to money can make it challenging to leave an abusive situation.

Something you can do to prepare your personal finances before leaving is to open a bank account in your name. Maintaining a checking and savings account in your name only allows you to keep your money safe without your abuser knowing about it.

2. Find ways to increase your income

If your abuser is the sole earner and controls the household income, leaving can be challenging due to financial concerns. If you can work, doing so can allow you to bring in money so you’re not financially reliant on your abuser.

Getting a side hustle, part-time, or full-time job is an excellent way to earn your own money so you can save. Some side hustles are home-based, which could be a good option if you can’t leave the house for work due to the abuse you’re experiencing.

If getting a traditional job is not possible, here are some money-making options to explore:

Sell unwanted items around the housePet sit or dog walkOffer to do small household chores or yard work for cashDonate plasmaAsk a trusted friend to borrow money

3. Stash cash and buy gift cards

Before leaving your abuser, having money aside for future expenses can be beneficial. As you determine your next steps, start stashing away cash. Keeping your money in a solo bank account that your abuser doesn’t know about is recommended to keep your money safe.

If you’re worried about your abuser noticing large cash withdrawals, consider using a debit card to get cash when shopping instead of getting money from an ATM. Many retailers allow shoppers to get cash back when they pay with a debit card. This strategy can help hide your actions. Another way to prepare is to buy gift cards when grocery shopping. Once you leave, you can use gift cards to purchase food and essentials so you don’t go without.

4. Open a credit card

Another way to prepare financially is to get a credit card. If you share a credit card account with your abuser, they can shut off access or remove you from the account — leaving you stranded. By opening a credit card in your name, you’ll have a financial backup plan ready for emergencies. Check out our list of the best credit cards to find the right card for you.

5. Protect your documents and financial accounts

Important documents like your Social Security card, passport, birth certificate, and marriage license may be kept from you by your abuser to maintain control. But you’ll need these documents later. Gather these documents and keep them in a safe place so they’re available to you in the future when it’s time to get your affairs in order.

It’s also recommended that you protect your financial accounts from your abuser. If you access any of your financial accounts online, be sure to use private, secure passwords that your abuser can’t guess. It’s also not a bad idea to regularly clear your search history on your mobile phone and computer to keep your online activity private.

Help is available

As you plan your exit strategy, don’t neglect available resources. You’re not alone and don’t have to navigate this difficult journey without help. Remember that your safety is most important. If you’re a domestic violence victim and need immediate assistance, contact the National Domestic Violence Hotline at 1-800-799-7233. Text and online chat support are also available. Help is available 24/7.

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The stock market is 100 times more profitable than the average savings account. Find out how the market can help you beat inflation. 

According to USDA data, egg prices have halved since the beginning of this year, returning breakfast omelets to the menus of hungry Americans. But the Consumer Price Index pegs general food inflation at 8.5%. If groceries feel pricey, well, they are.

Finance guru Suze Orman recently tweeted that investing in the stock market is a smart way to dodge inflation. It’s a stance she’s held firm on for quite some time. Here’s why.

What is Suze Orman’s viewpoint on stock investing?

According to Orman, cash — in savings accounts, short-term CDs, or money market deposits — is excellent for an emergency fund (Orman loves her emergency funds). But long term, folks earn more by investing in the stock market. That goes double when inflation runs rampant.

Inflation eats into long-term savings. The more the dollar inflates, the less your savings are worth. You can combat inflation in three ways: (1) by shoving more money into your savings account, (2) by spending all your money the moment you receive it, or (3) by earning high returns by investing in the stock market.

Orman advocates you invest a portion of your savings in the stock market.

The stock market provides high-enough returns to cancel the harmful effects of inflation. The stock market has returned an average of 10% per year over the past 50 years. That’s more than 100 times the average savings account return (0.07%).

The math is straightforward. But there are legitimate reasons not to take Orman’s good advice.

There are risks to investing in stocks

The stock market is volatile. The S&P tumbled 12% in a week at the beginning of the pandemic. But just as suddenly, it bounced back, soaring to record highs at the beginning of 2022 before declining to present levels. If the stock market were a plane, it would be grounded. Permanently.

To take advantage of the market’s inflation-beating returns, investors must be prepared to invest long-term and hold through times of turbulence. If you anticipate withdrawing money within the next five years, consider putting it into something more liquid (e.g., your favorite money market account).

It wouldn’t do to withdraw invested money while the market is down. A high-yield savings account is safer and can lessen inflation’s influence over your money. But the best way to combat inflation with stocks is to develop a long-term investment strategy.

Inflation-proof your stock portfolio

The best way to combat inflation is to stick with a strategy that’ll earn you high returns. You can do so by sticking to tried-and-true long-term investing strategies:

Diversify into 25+ stocks. That way, you maximize the chance of making money (and minimize the possibility of losing it).Automate investments. You can set up automatic investing through your favorite investing app. It makes sticking with an investing strategy easy.Stick with what you know. The more confident you are in your investments, the less likely you’ll panic sell during a downturn. It’s okay to stick with what you know!

These days, there’s an app for everything. Brokerages are no exception. The best stock brokers make investing simple and profitable. Consider taking Orman’s advice and investing in the stock market to dodge inflation. But to make the most of your investments, stick to an investment strategy and hold for the long term.

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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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The Dollar Tree has many fun items, but that’s especially true during summer. Here are some things I can’t wait to buy. 

Shopping at the Dollar Tree is something I enjoy doing year-round. I feel like I get a great bang for my buck there, as I can buy a ton of different kinds of stuff without doing too much damage to my bank account.

The summer, however, is an especially fun time to visit my favorite dollar store and give my credit cards a workout buying some favorite items. In fact, here are some things I can’t wait until the summer season to buy.

1. Pool toys

The Dollar Tree has a great selection of fun pool toys for my kids. There are the classic pool noodles, of course, but there are also plenty of other great items to play with, including wind-up toys that float in the water, boats, diving toys, and inner tubes. These toys make it really fun to swim with my kids and help my son practice his diving so he can develop his skills.

2. Seasonal dishes

Spending money on dinnerware is one of my weaknesses, and I have tons of different table-settings for different occasions. Fortunately, I don’t have to spend a fortune to buy them because the Dollar Tree has beautiful seasonal dishes.

Last year, I bought some lovely china with bright-colored lemons on it for summer, and this year I’m excited to see what new tableware comes in. There’s usually both china as well as melamine products. So depending on what is available, I may get melamine for outdoor use or china for indoor entertaining.

One thing I know is that there will almost assuredly be some cute plates, glasses, or both that I feel I need to buy.

3. Gardening supplies

I love to garden and I can indulge my habit with Dollar Tree items. The Dollar Tree has cute little planters in multiple colors so I can get colorful flowers to fill them and set them around my deck. I especially like the stylish plastic planters because then I don’t need to worry about the kids tipping them over.

The Dollar Tree has plenty of other gardening supplies as well, including watering cans, metal plant hangers, garden stakes, and even kneeling pads to make gardening more comfortable. I always end up filling a cart every summer with this gear to make my yard more beautiful.

4. Flip-flops

I prefer to be barefoot as much as possible in the summer but since that’s not always possible, flip-flops are the next best thing. I wear them everywhere, and I like to keep some at home as well as on my camper so I don’t have to pack them.

Fortunately, the Dollar Tree lets me buy multiple pairs of cute flip-flops so I can match them to my outfits. I don’t have to worry if they get sandy at the beach or wet at the pool because I can always carry a spare pair or two.

As summer arrives, I’ll be buying all of these items for sure — and I can’t wait until the day comes when they arrive in my local store and I can add them to my cart.

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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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Without sufficient auto insurance, drivers could be left without the coverage they need for many kinds of disasters. Read on for three types of coverage to purchase. 

Buying auto insurance provides crucial protection against losses if something goes wrong with a vehicle. While it may not be fun to see auto insurance premiums withdrawn from a bank account, paying for the right kinds of coverage could prevent a lot of future heartache.

Specifically, it’s important for most drivers to buy these three kinds of auto insurance to avoid being left with major regret.

1. Uninsured motorist coverage

Although almost all states require drivers to have liability insurance coverage, many people disobey these rules. In fact, a study by the Insurance Research Council found about 1 in 8 drivers were uninsured.

When these uninsured drivers cause a collision, crash victims who would normally be able to get their damages paid by the at-fault driver’s liability insurer will be in a tough spot. They may not be able to get the at-fault driver to pay anything, especially if that driver doesn’t have insurance and assets they could try to collect against.

In these situations, uninsured motorist coverage could pay for losses crash victims experienced — but only if those crash victims had chosen to buy uninsured coverage. Without this policy, it is very likely victims would be left with uncompensated losses and could really regret not having this protection in place.

2. Collision coverage

Unlike liability insurance, collision coverage is rarely required. But that doesn’t mean it isn’t important. A driver without collision coverage who causes a crash themselves would have zero protection from an insurer. This would mean having to pay out of pocket for repairs or even buy an entire new vehicle if the car was totaled.

No one wants to be out thousands of dollars or more because they accidentally hit a deer or caused some other kind of crash by mistake — and these kinds of crashes can happen to anyone, even the most careful drivers. Not having collision coverage in these situations could be a huge regret.

3. Comprehensive coverage

Crashes aren’t the only thing that can go wrong with the car, which is why motorists without comprehensive coverage could be left wishing they’d made a different choice. Comprehensive coverage is optional, but most people will want to buy it because it pays for many covered issues that could arise beyond a motor vehicle accident.

Comprehensive coverage is the kind of insurance that would pay if a tree fell on a car, if the vehicle was stolen, or if a rock flew up and shattered the windshield. Non-collision losses can still be expensive, so drivers who don’t put this protection in place could be out a lot of money and be left with a lot of regret.

Ultimately, most drivers will find they are better off having too much protection against losses rather than too little. Adding additional coverage doesn’t cost much more and the losses that can occur without these protections in place could be very substantial.

Drivers without collision, comprehensive, and uninsured motorist coverage should consider contacting their insurer ASAP to find out how much additional coverage would cost. If the cost is reasonable — which it likely will be — consider signing up to avoid regret.

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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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Bed Bath & Beyond is winding down operations. Read on to see what businesses might fill those empty storefronts. 

What happened

Bed Bath & Beyond has filed for bankruptcy and will be winding down operations over the next couple of months. Not only does that mean the loss of a beloved home goods chain, but it also means that neighborhoods will potentially have to grapple with vacant storefronts. But the good news is that a number of known discount retailers are already making plans to take over those empty storefronts.

So what

Bed Bath & Beyond has closed 400 stores over the past year and still has almost 500 more to shut down, including 120 buybuy Baby locations. But discount retailers like Ross, TJ Maxx, and HomeGoods have already stepped up to take over those vacant or soon-to-be vacant storefronts, reports CNN. And retailers that include Five Below, Nordstrom Rack, and Burlington may take over those spots as well.

“A lot of great real estate is going to come available into a market where there’s been no vacancies,” said Brandon Isner, the head of retail research at CBRE, a commercial real estate firm. “It will not take long for retailers to occupy those spaces.”

Now what

In an age when inflation is wreaking havoc on so many people’s finances and forcing consumers into credit card debt, having access to discount retailers is a good thing. Families with children in particular often have to spring for new clothing and things like school supplies on a regular basis, so being able to access those items at a lower price point is key.

But that’s not the only reason it’s important to see those empty Bed Bath & Beyond locations being filled. Empty storefronts have the potential to drive property values downward. And many retailers have been hesitant to sign new commercial leases in the wake of the pandemic.

Since 2020, the share of consumers doing their shopping online has grown, so a lot of businesses are less interested in physical real estate and are more invested in ramping up their online presence. But that’s bad not just for commercial real estate investors, but property owners, too. If discount retailers continue to scoop up those vacant Bed Bath & Beyond stores in short order, it might allow home values to hold steady, leaving homeowners with more equity in their properties to tap.

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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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