Money Management

Timeshare companies employ heavy-handed sales tactics. Keep reading to learn what you can do if you regret a timeshare purchase. 

The timeshare industry is worth a cool $8.1 billion. To put that into perspective, that’s a little more than the entire music industry’s revenue for a year. Before jumping into that pool of timeshare owners, consider how much the venture will likely cost you over the long term. You may also want to consider an exit strategy because getting out of a timeshare can feel next to impossible.

What is a timeshare?

If you’ve ever received an invitation for a free weekend getaway that seems too good to be true, the people behind it were likely selling timeshares. They offer weekend stays in return for a “few hours of your time.” While they have you in a room, they use phrases like “vacation lifestyle product” to describe what they’re selling.

Buying into a timeshare means sharing the cost of a vacation property with unrelated parties. In theory, you each own a fractional share of the property and take turns using it. Usually, timeshare owners use the property in week-long increments. Timeshare sales forces use this as a selling point. They tell prospective buyers that sharing the price of a vacation spot costs far less than purchasing a vacation home on their own.

Depending on the company, potential buyers may also be told that they can “trade” their property for another location, so they’re not committed to visiting the same spot year after year.

The purchase itself is relatively straightforward:

A buyer pays the initial cost of the timeshare. The average price is $24,140, according to the American Resort Development Association (ARDA). They either pay cash or finance their purchase.

The buyer pays a maintenance fee. While the cost varies by property, the fee averages $1,000 annually. This fee is due whether the timeshare owner visits the property or not.

The downsides of timeshares

We’re surrounded by advertisements for timeshare exit companies promising to help timeshare owners get out of their contracts. Given the number of challenges facing timeshare owners, it’s no surprise that many want a way out to improve their personal finances. Here are some of the issues timeshare owners run into.

Upfront costs

It’s easy to fall for a slick sales pitch, especially when a salesperson makes it sound like the purchase will benefit your family. They may say, “Your children and grandchildren will use this property for decades to come.”

The problem with falling for a slick pitch is that you may pay far more upfront than you’re comfortable paying. Before shelling out $24,000 (or more) for a timeshare, ask yourself if you have enough money in your emergency savings account to carry you through an economic downturn. Also, take a look at your retirement account. Are you on track?

Fees forever

As long as you own the timeshare, you’re responsible for paying your portion of upkeep. While annual timeshare fees vary by location and property type, you can be sure of one thing: The fee will increase over time.

Strict schedules

Unlike a vacation home you own, your visits to the timeshare will be strictly scheduled. Before you buy, you’ll likely hear whether your timeshare works on a “fixed-week” or “floating-week” schedule. If it’s a fixed-week, you’ll visit the property the same week each year. Floating-week means your week may be different each year.

A single timeshare unit can belong to 52 different families. That means that 51 weeks of the year may be spoken for, and you’ll have to make do with the week available. When money is coming out of the monthly budget to pay for a timeshare, limited vacation times can be frustrating.

Getting “stuck”

You’re not alone if you’re starting to think that a timeshare is not worth the money and frustration it will cost. Selling your fraction of a timeshare can be challenging, because it’s not like traditional ownership of a home via a mortgage loan. Once in, you remain financially responsible until you can find someone else to take over.

Chances are, you’ll lose money

If you decide to hire a timeshare exit company to negotiate your exit, you can expect to pay between $3,000 and $15,000, reports Fidelity Real Estate. And, if you decide to go it alone and advertise your timeshare for sale, it’s doubtful you’ll receive an offer for anywhere near as much as you’ve paid into the unit.

AARP offers this advice to timeshare owners who want nothing more than to get out:

Check with the resort. When you call, don’t just speak with anyone. Specifically, ask to talk with the person who handles “deed-backs” or “surrenders.” A deed-back or surrender is when you pay a fee and return the property to the company. Share the details. Once you have someone on the line, explain your situation in detail. Ask them to provide potential solutions. Even if you’ve heard it’s “impossible” to surrender your property, call the resort. They may not advertise their willingness to take possession of a previously sold timeshare, but it’s in their best interest to do so. After all, they’ll just resale it to another party.

A word of caution: AARP warns that the representative you speak with may try to talk you into upgrading your timeshare plan before it allows you to cancel. Prepare in advance to say no, then stick to your guns.

A few more steps to try

If you don’t get anywhere with the timeshare reps, you may have to resort to the following:

Stop paying annual fees. Although it’s not a great solution because the timeshare may report it to the credit bureaus, we mention this because it’s what some timeshare owners resort to. Your refusal to pay fees may push the resort to allow you to surrender your deed. While fees may erode your bank account, they don’t usually amount to enough to justify the resort bringing suit. Offer it on the resale market. You can market it anywhere, but sites like tug2.com provide forums where you can interact with other people in the same boat as you. As mentioned, you’ll likely get little or no money for the timeshare, but you may find someone willing to take over the annual fees.Consider a timeshare exit company as a last resort. The most important thing to remember about timeshare exit companies is that they don’t do anything you can’t do. For example, if you pay an exit company, they will call the resort on your behalf. The only reason to consider hiring an exit company is if you can’t stand the idea of dealing with the timeshare company.

There are millions of people worldwide who probably enjoy their timeshares and are glad they bought in. However, it’s essential to know that your experience might be different. And if your situation is not what you hoped, it’s good to know there is a way 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.Dana George 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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Do you spend a lot of money on groceries each month? Don’t miss out on the chance to earn rewards. Find out if a grocery store credit card is right for you. 

Now that we’re paying more to fill up our carts at the grocery store, you may be considering getting a grocery store credit card to earn rewards on your grocery spending. Some grocery retailers promote store-branded rewards credit cards to shoppers. But are these cards worthwhile?

Could a store-branded grocery card provide value?

It’s not uncommon for retailers to promote rewards credit cards. But before opening a new credit card account, you want to research so you choose a card that meets your needs and goals. These rewards cards may provide value if you’re loyal to a particular grocery store and your retailer offers a grocery store card. But it may not be the best option for every shopper.

Here’s what to consider when exploring grocery store credit cards:

Rewards rate: Not all cards have the same rewards potential, so reviewing the rate at which you’ll earn rewards when you make purchases with your card is essential.Purchase categories: Some grocery store cards allow you to earn rewards when you use your card to make purchases at other retailers or in several purchase categories, but not all do. Knowing this information can help you maximize the rewards you earn.Spending cap: Some rewards credit cards have a spending cap for higher rewards earning rates. If one card allows you to earn an unlimited 5% rewards on grocery spending, that’s much different than earning 5% rewards on up to only $2,500 in grocery purchases annually. Be sure to check whether there are spending caps that limit the grocery rewards you can earn with your card.Redemption options: Understanding your redemption options and how to redeem your earned rewards is key. Some retailers may allow shoppers to redeem their rewards as a discount at checkout, while others may apply rewards as a statement credit.Annual fee: Not all credit cards have a yearly fee, but many do. You should never open a new credit card without first checking if there is a yearly fee and reviewing your budget to make sure you can afford it.

Grocery rewards cards may be a better fit for some

Are grocery store credit cards worth it? Some may find these cards to be valuable. But if your local grocer doesn’t offer a rewards credit card or if the card’s features are unattractive, you may want to explore other options. Many other rewards cards and cash back credit cards exist.

Some shoppers use general grocery rewards credit cards, especially those who aren’t loyal to one grocery chain. You can use these cards to earn rewards when buying groceries at different retailers. Some cards may offer higher rewards rates and include valuable benefits.

However, It’s worth noting that some grocery rewards cards don’t allow shoppers to earn rewards at superstores like Target and Walmart. Additionally, some grocery rewards credit cards have spending caps, which could limit the rewards you’re able to earn.

Choose a rewards card that works for you

Only you can decide which rewards credit card will work best for your needs. As always, be sure to review the details of each card before deciding on the right one for you. If you spend significant money on groceries, using a grocery rewards credit card could be a win for your wallet. Check out our list of the best grocery credit cards to explore your card 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.Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target and Walmart. The Motley Fool has a disclosure policy.

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Getting more credit cards than you can handle may backfire and cause financial issues. See exactly what can go wrong when you have too many credit cards. 

Credit cards are a payment method first and foremost, but many of them have much more to offer than just that. Rewards credit cards earn points or cash back on your purchases. 0% APR cards start you off with a 0% introductory APR. And there are plenty of cards offering bonus opportunities or other useful benefits.

Because of all those valuable perks, some people decide to take advantage by opening lots of credit cards. It makes sense in theory, and it’s a popular way to earn more credit card rewards. After all, more cards means more bonus opportunities.

Even if it seems like a good idea, this approach can go very wrong and end up costing you money. Before you try it, you should know what can happen if you have too many credit cards.

You’re more likely to miss a payment

Every time you add a new credit card to the mix, you have to keep track of another due date. That makes it more likely you forget about a payment. It will always be easier to remember one monthly payment compared to two, two compared to three, and so on.

When you don’t make a minimum payment by the due date, the card issuer can charge you a late fee. If your account reaches 30 days past due, the card issuer can also report the late payment to the credit bureaus. This can lower your credit score by over 100 points.

You can set up autopay or payment reminders so you don’t forget when your payments are due, but there are still potential issues. For example, if you don’t have enough money in your bank account, an automatic payment could cause an overdraft fee.

You could end up in credit card debt

The biggest danger with credit cards is overspending and ending up in debt. Unfortunately, it can be hard to get out of credit card debt, especially because most cards have high interest rates. The average is currently over 20%, meaning $5,000 in debt could cost you over $1,000 in annual interest.

This can happen with any number of credit cards, but having a lot of cards increases the risk. When you have more credit available to you, it’s easier to fall into the trap of spending more than you should. And since you have more spending power, you can go deeper into debt if you aren’t careful.

You may overspend on annual fees

Many of the top credit cards charge annual fees, which can range from about $50 to over $500. These cards usually have more benefits, such as spending credits on certain types of purchases and elite status with airlines and hotels. If you can take advantage of a card’s benefits, you’ll most likely come out ahead on the annual fee.

However, when you have too many credit cards, it gets much harder to use all their benefits. Some of them might become a chore to use. For example, if a card offers a monthly spending credit, you may not always remember to redeem it. You could also find that some of your cards have overlapping benefits. If two of your cards offer the exact same airport lounge access, that doesn’t do you a whole lot of good.

When you have multiple cards with annual fees, it’s important to be realistic about how much value you’re getting from each one. Otherwise, you could end up paying fees that aren’t worth it.

So, how many credit cards should you have? For most people, the answer is one or two. By keeping it simple, you’ll have an easier time maximizing benefits. You’re also less likely to run into issues, such as missing payments or getting into debt. If you decide you want to add more, take it slow. Always make sure you’re comfortable managing the credit cards you already have before applying for any new ones.

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You’ll often hear that renting is throwing your money away. Read on to see why that’s not true at all. 

If you’re a renter and have ever been warned that you’re throwing your money away, you’re in good company. A lot of people will caution that when you rent a home, you’re simply helping to pay off a landlord’s mortgage when you could instead be paying off one of your own.

But renting a home has its benefits. In fact, financial guru Ramit Sethi is a big proponent of renting. In a recent tweet, he highlighted these benefits of paying a landlord for a place to live rather than owning a home yourself.

1. You might spend less on a rental

The amount of money you spend on rent every month might be more than what you pay in the form of a mortgage. But when you own a home, it’s not just a mortgage payment you have to contend with monthly. You also have to cover the cost of property taxes, homeowners insurance, and other added costs like maintenance and repairs. So all told, you might spend more as a homeowner.

One could argue that even if you spend more to own a home than to rent one, down the line, you’ll have the option to sell your home and make a profit. When you rent, that’s not possible.

But let’s imagine that renting a home for 30 years costs you $2,000 a month, or $720,000 all in. Owning a home during that time might cost you $3,000 a month, or $1,080,000 all in, when you factor in those additional costs. So even if you make a $250,000 profit on your home, you’d actually still come out ahead financially by virtue of having rented.

2. A rental gives you more flexibility

It’s a lot easier to move when you rent a home rather than own one. You can always opt to not renew a lease, or even attempt to break an existing one for a modest fee (in some cases, you may not even be looking at a fee at all, such as if you’re on a month-to-month lease and give your landlord 30 days’ notice).

So, let’s say you get a job offer across the country. If your lease is up in two months, you can probably pick up and move seamlessly. That’s harder to do when you own a home.

Plus, you might simply like the idea of being able to live in different cities or neighborhoods during adulthood. That’s much more feasible when you’re a renter.

3. Renters don’t have to deal with maintenance and repairs

Maintaining and fixing a home when things break isn’t just costly — it can take up a lot of your time. When you rent a home, all of that becomes your landlord’s problem. The result? More free time for you, and less hassle.

Homeownership clearly has its share of benefits. But don’t assume that renting is a poor choice. There are numerous advantages to being a tenant, so if that’s the situation you prefer, there’s no reason to get down on yourself for not buying a place of your own.

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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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Extreme couponing involves using coupons to get items for free or for pennies on the dollar. Read on for some secrets to making that happen. 

If you’ve ever been interested in saving money to bring down your credit card bills or accomplish other financial goals, you’ve probably come across the concept of extreme couponing.

Extreme couponing isn’t just giving the cashier a coupon or $0.50 off a jar of pasta. There’s much more to it if you want to truly save the maximum possible to keep the most cash you can in your bank account. In fact, here is the big secret to extreme couponing successfully.

Combining deals to score items for free or for pennies on the dollar

The key to extreme couponing is not to take advantage of just one deal but to take advantage of multiple deals at the same time. By stacking the deals available to you, you can get great prices on items.

Here’s an example of how this might work:

A store is running a buy-one-get-one-free deal on a shampoo that costs $3.The manufacturer of the shampoo had a coupon for $1.50 off a bottle in the Sunday paper a few weeks before the store sale that has not expired yet.The store is running a promotion where you can get $5 off a $20 purchase.

If you had multiple shampoo coupons and there was no limit to the deal, you could buy 16 bottles of the shampoo. Due to the buy-one-get-one-free deal, you would “pay” for eight bottles at a cost of $24 so you would qualify for the $5 off a $20 purchase. And you could use 16 buy-one-get-one-free coupons if you had multiple Sunday paper inserts or had purchased them online. The 16 coupons for $1.50 each would add up to $24 so you would get all of the bottles of shampoo for free plus another $5 worth of merchandise you didn’t pay for due to the $5 off $20 promotion.

This is a simplified example since you might not necessarily want to buy 16 bottles of shampoo — you could maybe buy four or eight bottles and combine that with another coupon deal or two in order to get the $5 off $20 coupon.

The point is, you would want to put together a combination of store sales, manufacturer and online coupons, and other special promotions in order to pay either nothing or very little for everything you were buying.

How easy is it to implement this secret of extreme couponers?

Extreme couponing is both easy and difficult at the same time. If you know the techniques and tricks, it’s simple to put together the deals, but it can take some time and effort to do it.

The first thing you’ll need to do is figure out how to combine different promotions. There are entire forums dedicated to this at websites like Slickdeals.net.

You would also need to make sure you have the right coupons in place, which often means having multiple coupons. You can buy a bunch of Sunday papers or get inserts from friends and clip and store coupons in a binder or folder or you can buy multiples of coupons online.

Finally, you’d need to take the time to go to different stores to get the deals of the week — and, often, buy things you don’t really need in order to make the promotions work. These items can be resold or donated.

Ultimately, it’s up to you to decide if taking these steps are worth your time and effort. Some people enjoy the process, and if you have the spare time and want to save money this way, it’s certainly worth trying.

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Ramit Sethi says smart people often try to overanalyze mundane decisions. Read on to find out why he believes this is a money mistake. 

Managing money can be a challenge even for people who are pretty smart about most aspects of their lives. In fact, finance expert Ramit Sethi has identified one big money mistake smart people make often. Here’s what it is.

Are you making this common money mistake?

According to Sethi, smart people often focus on the wrong things when it comes to managing their money and controlling their spending — and it can cost them.

“Common money mistake that smart people make: trying to over-analyze the mundane,” Sethi said. “Should I switch savings accounts to eke out an extra 0.2%? (Who cares). What if I prepay these taxes but get a refund on those? (Who cares). How can I optimize our spend on broccoli? (GTFO).”

As Sethi points out, it’s really tempting to focus on these small decisions because you feel like you have direct control over them — and often harbor misconceptions about how big of an impact micromanaging your financial life and making tiny cuts to your credit card spending can actually have.

“It is really hard for ANYONE to fight for simplicity — but especially smart people! They take pride in their ability to ‘beat the system’ and figure out loopholes. But they don’t know when to stop. This need to optimize is ultimately a key driver for American unhappiness,” Sethi warned.

How can you overcome it?

If you are trying to grow your bank account, dealing with the little stuff can indeed feel easier. After all, reducing grocery spending is something most people can find a way to do — whereas, developing a smart money philosophy and making meaningful changes to your relationship with money can be a lot harder.

Sethi recommends focusing on big-picture decisions rather than on these little mundane details, and he’s absolutely right. He urges you to focus not on issues that will affect your bottom line by a few dollars here or there but instead to dedicate your time to bigger-picture matters like increasing your income, reducing investment fees, and keeping big expenses like your housing or car payment under control.

The bottom line is you need to keep some perspective on what money decisions actually matter in the long run. And, most of the time, this does not involve cutting simple day-to-day expenses (unless your spending is really out of control).

Giving up your latte and saving $5 a day is going to make a small difference, but increasing your income by getting a big raise or starting your own business is going to make a big difference — as is making sure your housing costs are less than 25% of your budget so you have the ability to save and invest enough.

Overcoming this money mistake is a matter of deciding what’s worth your time and effort. If a decision you are thinking about or a change you are considering making is going to make a negligible difference in how much you are actually able to sock away in a brokerage account, don’t bother worrying about it. Instead, devote the time you’d spend on it to identifying a step you can take that could affect your bottom line by thousands — or even tens of thousands — over the year or longer.

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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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