Money Management

It’s important to build retirement savings. Read on for tips on how to do so on an income that’s well below the average. 

You’ll often hear that it’s important to save for retirement rather than rely on Social Security alone to pay your bills down the line — especially since those benefits pay the average recipient less than $2,000 a month. But what if you don’t earn a particularly high salary? In that situation, you might struggle to carve out room for IRA or 401(k) contributions.

The Ascent reports that the average U.S. income is $97,962. If you’re pulling in $50,000 a year, it means you might have a lot less leeway on the long-term savings front than someone earning almost double that amount.

The good news, though, is that you can save for retirement on $50,000 a year. You just need to set priorities and make sure you’re not wasting money on needless expenses.

It’ll help automate the process

As a general rule, it’s a good idea to set aside 15% to 20% of your income for retirement savings each year. But if you earn just $50,000 a year, you may not be able to do that. And that’s okay.

Saving 3%, 5%, or 10% of your income is better than saving nothing. So if that’s all you can swing right now, so be it.

That said, to see what sort of retirement plan contribution is feasible every month, you’ll need a budget. Set one up using a spreadsheet, budgeting app, or even paper.

Start by listing your essential expenses — things like your rent and car payments, grocery bills, healthcare costs, and utilities. Then, see what you’re left with. From there, you can allocate funds for your retirement plan and then divide the rest of your money for things like streaming services, social outings, and trips.

You may end up with less money to spend on the things that make you happy. And yes, that’s hard. But you might also get better at determining which luxuries are really worth paying for.

Once you’ve figured out how much money you can afford to contribute to an IRA account or 401(k) — keeping in mind that it may be as little as $50 or $100 a month, which, again, is okay — put the process on autopilot so you’re able to stay on track.

If you’re funding a 401(k), you’ll have to automate the process, because your contributions will be deducted from your earnings. But if you’re going the IRA route, find one with an automatic savings feature, and then arrange for some money to leave your checking account every month at a preset interval.

The key is to start somewhere

You may be earning $50,000 a year right now, but you never know how much your income will grow through the years. It may be that three years from now, you’re earning $60,000 a year. And in 10 years, you might be pulling in a six-figure salary.

Ideally, you’ll increase your retirement plan savings rate as your income rises. But for now, do your best based on what you earn. If you prioritize retirement savings and start making those contributions, you’ll give yourself a solid foundation to build on in the course of amassing long-term wealth for the future.

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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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The outside of your home matters more than you think when it comes to selling it. Read on to learn why most real estate agents say to focus on improving curb appeal. 

To call the current housing market a challenge might be understating it just a bit. Low mortgage rates, but soaring home prices and high demand from buyers in 2021 were followed by spiking mortgage rates over the course of 2022. The average rate on a 30-year fixed-rate mortgage loan was 3.22% as of the first week of 2022, and as of this writing, that same mortgage comes with an average rate of 6.32%, per Freddie Mac. As higher rates have made getting a mortgage loan less feasible for many people, sellers are having a harder time commanding higher prices for their homes — and may struggle to find qualified buyers, period.

Luckily, there’s a way to get potential buyers’ attention and help your home put its best foot forward if it’s time to sell. The National Association of Realtors (NAR) recently released the 2023 Remodeling Impact Report: Outdoor Features, and this guide notes that a full 92% of agents surveyed suggest that sellers focus on improving their homes’ curb appeal before listing. Let’s take a look at why curb appeal is so important, and discuss a few ways you can improve yours if a home sale is on the horizon.

Why does curb appeal matter?

The crucial role of curb appeal also found near-universal acceptance by the agents surveyed by NAR; 97% believed it is important for attracting home buyers, while 98% believed that buyers find it important, too. Put simply, that first look matters in all kinds of situations, including viewing a home for sale. As the saying goes, “You only have one chance to make a good first impression.” If potential buyers see a home with an overgrown lawn, dirty siding and windows, and a cluttered front porch, they could be turned off before they even come inside your home.

Simple ways to improve curb appeal

If you want to sell your home for the best price possible and in a timely fashion, try focusing on these areas to improve your curb appeal:

Paint your front door: If your home’s front door is looking a little dingy and sun-faded, it’s a great time to give it a shiny new paint job. The color matters too; a 2022 study from Zillow found that homes with black or slate blue front doors commanded as much as $6,449 more than did similar houses with different front door colors.Spruce up your porch: Now is the time to really play up that porch. If you have outdoor furniture, make sure it’s clean and arranged to look inviting. Consider adding a few potted plants and maybe a colorful outdoor rug.Revamp your landscaping: Even just mowing and edging your lawn will make a world of difference, but if you can spend a bit of money to hire a professional landscaper or perhaps just invest in some new plants for your yard, it’ll make a world of difference.

It might not be the absolute best time to be selling your home, thanks to those higher interest rates. But with a little care and attention to detail, you can make your home look great from the outside and attract the right potential buyer to make an offer.

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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 Zillow Group. The Motley Fool has a disclosure policy.

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Debt is a part of life for millions of people. There are a lot of good ways to handle it — but this isn’t one of them. 

Sometimes, when something seems too big or too scary to deal with, I ignore it. I deliberately, consciously choose to ignore that thing — and hope it goes away on its own.

Unfortunately, this almost never works. In fact, 99 out of 100 times, it simply makes everything worse. And if it’s anything to do with my personal finances, well, “worse” invariably means “more expensive.”

And that’s exactly why the absolute worst thing you can possibly do when you have debt is to ignore it. Trust me, it isn’t going to magically go away.

Interest fees are debt fertilizer

In the best case scenario, ignoring your debt only makes it grow. That’s right, the best outcome is you wind up with more debt.

How much your debt grows will depend on your interest rate. The higher the rate, the more quickly your debt will grow.

Consider this: The average APR (annual percentage rate) for a credit card is about 20%. If you start with $5,000 in credit card debt, that 20% APR rate means you’ll add more than $500 to your debt in just the first six months.

And it only gets worse from there. Your credit card interest compounds. That means each time interest is calculated, it’s based on both your original balance and any interest fees you’ve accrued. So now your debt will grow even faster. It’ll go from a backyard bean plant to something Jack could climb.

Your credit also pays a price

As if the rapidly increasing debt wasn’t enough of a problem, there’s also your credit scores to consider. And this is especially true if you wind up missing payments in your effort to hide from your debt.

A single missed payment — that is, a payment that’s more than 30 days late — can cause your credit score to drop dozens of points. You could go from having excellent credit to average credit almost overnight.

What’s that mean in practical terms? Any efforts you make to get new credit are going to be much, much harder. Thinking about a consolidation loan? Get ready for higher rates. Want another credit card since your others are maxed out? You may struggle to get approved.

Any options you have for tackling your debt that require good credit — like the consolidation loan mentioned above — should be done before you’ve missed payments, not after. Ignoring your debt until your credit is also a problem only makes matters that much more difficult to correct.

Reducing debt takes active work

As tempting as it can be, ignoring our financial problems doesn’t make them go away. It takes active involvement to make your debt shrink, shrink, shrink — and finally disappear.

Don’t think you can get away with simply auto-paying your minimum required payments, either. The credit card company isn’t setting those based on what will help you pay off your debt quickly. They’re based on milking the interest fees of that debt as long as possible.

Instead, you need to set your own monthly payments, based on how much you can afford and how long you want to spend paying off the debt. You can use our credit card payoff calculator to explore different repayment scenarios until you find something that works for you.

Debt can be scary. But it’s rarely forever — even when it feels like it. Make a plan, then follow through with it. Over time, as you watch your debt dwindle and fade, you’ll be glad you didn’t ignore it.

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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.Brittney Myers 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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Should you use Apple Pay Later to avoid interest? Find out how this buy now, pay later service works and what you need to know before applying for a loan. 

Apple recently introduced a payment service called Apple Pay Later, which is available to Apple users in the United States. Users can split eligible online and in-app purchases into four equal payments spread over six weeks with no interest charges. This loan service could make for an excellent way to spread out the cost of a purchase without paying credit card interest.

What to expect with Apple Pay Later

As buy now, pay later (BNPL) loans become increasingly popular, more and more installment loan offerings are available to consumers. Apple recently announced its new Apple Pay Later service, which will allow users to split up larger payments without being charged interest. Apple users can apply for loans of $50 to $1,000 through Apple Wallet.

Apple Pay Later can be used for in-app and online purchases made on iPhone and iPad with merchants that accept Apple Pay. Eligible purchases can be split into four equal installments. Users will have six weeks to pay off the loan without incurring interest. The first payment will be due right away and each additional payment will be due every two weeks.

When applying for a loan, Apple will perform a soft credit pull. This means the application will not impact your credit score. However, once a user accepts a loan, their actions could impact their credit. Users can manage and track their loans through Apple Wallet. To avoid additional debt, users are unable to pay back their loans using credit cards. Instead, they will be asked to link a debit card as their loan repayment method.

For now, Apple Pay Later loans are available to select users. However, loans will be made available to all eligible users later. If you need help affording a purchase without using a credit card, an Apple Pay Later could work well for you. But make sure you’re able to commit to the installment plan so you successfully pay your debt off within the six week timeline.

More tips to manage your spending with BNPL

With more BNPL loan options available, it can be tempting to use these services. While these loans offer convenience, you should be aware of the dangers of BNPL. These tips may help you avoid taking on too many loans, which could negatively impact your personal finances:

Set and follow a budget. You want to make sure that you’re able to afford any loans you take on. It’s a good idea to set and follow a budget so you’re not overspending beyond your means. Budgeting apps make it easier to track your spending.Pay attention to payment timelines and interest rates. Many BNPL providers offer 0% interest loans. It’s important that you make timely payments and pay your debt off before interest is charged. Otherwise, you may be required to pay additional fees.Set up automatic payments. If you’re forgetful, it’s a good idea to enable automatic payments. When you do this, your payments will be made on time for you so you can avoid falling behind on payments and incurring late fees.

Apple Pay Later is another financial tool that may help consumers finance purchases. But make sure that you consider your budget and understand the terms and conditions of a BNPL loan to avoid extra fees and financial worry. If you’re careful and can afford the payments, these loans can be a good financial tool.

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

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