Money Management

You don’t want to let that money go to waste. 

While an Amazon Prime membership won’t necessarily break the bank, it’s also not a negligible cost. Right now, a membership costs $14.99 a month if you pay on a monthly basis, or $139 a year if you pay on a yearly basis.

If you’ve been a Prime member for a while, you may be used to seeing those charges on your credit card. But chances are, between your car payments, mortgage loan, and grocery bills, you have a lot of expenses. So you probably don’t want to land in a situation where you’re paying for a service that’s not offering you great value. And if these signs apply to you, it means you’re not taking full advantage of your Amazon Prime membership — and you may want to think about canceling it.

1. You’re taking a chance on clothing instead of trying before buying

Clothing is one of the trickiest things to buy online, namely because you don’t always know how something is going to fit until you actually try it on. Amazon’s Try Before You Buy program, however, eliminates the financial risk associated with online clothing purchases.

As a Prime member, you’re eligible to order items for a seven-day trial period. If you don’t like the items you receive, or they don’t fit well, you can simply send them back without having to pay for them.

If you’ve been shopping for clothing at other online retailers — and potentially getting stuck with shipping charges or restocking fees — then you may want to rethink that practice. After all, why get stuck paying for poorly fitting items when Amazon takes that risk out of the equation?

2. You’re paying for streaming services before checking out Prime Instant Video

As an Amazon Prime member, you get access to loads of streaming content, from movies to TV, at no added cost. So if you’re paying for other streaming services, you may be throwing your money away. And if you’re convinced you’ve seen everything worth watching on Prime Instant Video, and you’re going to continue paying for those other services, then it may be time to think about canceling your Prime membership.

3. You’re still running to the store for small purchases

When you need something right away and can’t wait a couple of days for it to arrive at your door, then you may have no choice but to hit the store on the way to or from work. But the great thing about Amazon Prime is that you get access to free two-day shipping on orders of any amount. This means that if your child needs a $3 box of crayons by the end of the week, you can order it on Amazon and avoid having to run to the store.

In fact, one benefit of joining Prime is avoiding trips to the store for small purchases — and not having to spend money on gas. But if you find that you generally end up running out every time you need to make a purchase, then there may not be much of a point of hanging onto your Prime membership.

It’s easy to justify the cost of Amazon Prime if you’re getting a lot of use from it. But if these signs apply to you, then you may want to either start better taking advantage of your membership or otherwise consider canceling it. If it’s not something that serves you well, there’s no need to spend your money on 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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Maurie Backman has positions in Amazon.com. The Motley Fool has positions in and recommends Amazon.com. The Motley Fool has a disclosure policy.

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Depending on where you live, it’s possible to save a chunk of cash by building instead of buying an existing home.  

Potential home buyers will be interested to know that it’s now cheaper to build a home in 18 states than it is to buy an existing one. An analysis conducted by StorageCafe, an online platform providing storage unit listings across the country, found that building from scratch can pay off in some parts of the country.

Details of the analysis

Before diving in, it’s important to note how StorageCafe came up with its numbers.Building costs were calculated as being the price of land, plus the median cost of a contract with builders. Another 10% was added in for additional costs, like permits, surveys, and fees for attorneys and real estate agents.Land costs are based on prices as of October 2022.Median contract prices for building are based on 2021 data, then adjusted for inflation at a rate of 8%.Existing home prices are based on October 2022 listings.The study included 46 states, as there was not sufficient data available for Alaska, North Dakota, Rhode Island, or Vermont. Washington D.C. and Puerto Rico were not considered.

Findings

The analysis found that building makes the most sense in areas of the country where home prices remain red hot. How much a buyer can save varies by state.

Reality

The StorageCafe findings are an excellent reminder for buyers. It’s always a good idea to check current prices on both new and existing homes in an area. Of course, that’s only if they can afford to wait for a new home to be built. On average, it takes nearly eight months to build a home from permits to completion.

There’s also the issue of supply and demand. If home builders are inundated with jobs, prices may not drop low enough to justify building. On the other hand, if home builders are hungry for new work, the price point could make an eight-month wait worth the effort.

Where buying an existing home is still the cheapest option

Here’s a sample of states in which home buyers are still better off taking out a mortgage for an existing home.

Remember, these are state averages and may not be representative of more or less expensive corners of the state.

Buying a home is a huge commitment. Once you’ve found a mortgage lender you like and know how much you plan to spend, take your time and figure out whether you’re better off buying a home that’s brand new or older.

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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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That’s not a good thing at all. 

It’s hardly a secret that car prices have been sky-high since the start of the pandemic. And not surprisingly, many consumers are on the hook for monthly car payments totaling $1,000 or more.

And it’s not just higher vehicle prices that are driving up auto loan balances. The Federal Reserve has been raising interest rates in an effort to slow the pace of inflation. As a result, it’s gotten more expensive to borrow money in just about every capacity, whether it’s a car loan, a personal loan, or a home equity loan.

But a new report from Bloomberg reveals that because auto loan balances are so high these days, more and more vehicle owners now owe more on their cars than what those vehicles are actually worth. And that’s a really big problem.

An issue that could come to a head

Many people are familiar with being underwater on a mortgage loan — a scenario that arises when a home loan balance exceeds the value of that home. The same can hold true for car owners, in that it’s possible to owe more on an auto loan than what a car is worth.

This especially tends to happen when auto loans are paid off over a lengthy period of time, and when interest rates are high. That’s because borrowers accumulate interest on top of their principal, resulting in higher balances.

Meanwhile, according to Bloomberg, some dealers are noting an uptick in people wanting to trade in vehicles that are worth $10,000 less than their loan balances. And that’s a problem.

When you’re not underwater on your auto loan, and you start to struggle to keep up with your payments, you can sell your car and walk away clean. You can’t do that if the sale of your car won’t pay off your loan balance.

Be careful when financing a new car

If you need a car and have to finance it, be very careful in the process. You don’t want to end up in a situation where the value of your car is less than what you owe on an auto loan.

The average interest rate on auto loans for new cars rose to 6.9% in January, according to Edmunds. That’s up from 4.3% a year earlier.

If you have the ability to wait on buying a car, that could be a wise choice given how expensive auto loan rates are right now. But if you can’t delay that purchase long enough for both car prices and borrowing rates to come down, then at the very least, do your best to give your credit score a boost prior to filling out a loan application.

The stronger your credit score, the more likely you are to snag a competitive rate on a car loan — “competitive” being a relative term, of course. But a lower score could leave you paying a higher interest rate, and struggling with your monthly payments.

Also, if possible, aim to take out a car loan you can pay off in three years or less. Many people these days are taking out seven-year auto loans, but dragging your debt out for that long could mean spending a lot of money on interest in the course of paying off your 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 a disclosure policy.

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Don’t stress yourself out when there are solutions available. 

At this point, many people are deep in the throes of preparing their tax returns. And many are also starting to panic. If you’re in that boat, try to take some deep breaths — and do your best to regroup using these tips.

1. Know that you can always ask for more time to file your return

Taxes are due this year on April 18. But Mark Steber, Chief Tax Information Officer at Jackson Hewitt, likes to remind taxpayers that it’s possible to get an automatic six-month extension if you don’t think your taxes will be done by mid-April. All you need to do is submit Form 4868 to the IRS, and your personal filing deadline will be pushed to mid-October.

Best of all, you don’t need a creative excuse to request an extension. You just need to get the form in by April 18.

If you’re going to get a tax extension, though, understand what it really means. As Steber cautions, “Understand it’s not an extension of time to pay. It’s only an extension to send in your paperwork.”

So, let’s say you’re pretty convinced you’re going to owe the IRS money from 2022. In that case, your best bet is to try to estimate that tax bill and arrange to transfer those funds out of your checking account, or send the IRS a check, by April 18.

When you’re late paying a tax bill, you start to accrue interest and penalties on your balance right away. Paying the IRS something by the tax deadline is a good way to minimize them.

2. Look at last year’s tax return to see if you’re missing documentation

Between mortgage interest statements, 1099s, and W-2s, it’s easy to get overwhelmed by the mountain of paperwork needed to get your taxes done. And you may start to worry that you don’t have all the right information at your disposal.

A good way to get perspective is to take a look at your tax return from last year. That might clue you in as to which documents, if any, are missing.

Also, you may want to create a tax checklist document based on this year’s paperwork that you use in future years. That could spare you a similar bout of panic in the future.

3. Get help from a professional if you’re not sure you’re doing things right

If your tax situation is relatively simple, then you may be able to file a return by yourself. But if you’re going to go this route, it’s important to do so in a calm, organized manner.

“The thing you don’t want to do is panic and hurry and rush and get it done, only to make a critical error,” insists Steber. So if you’re feeling overwhelmed and worried, it may be worth it to hire a tax professional for the peace of mind alone.

Plus, a professional might be able to identify tax breaks you didn’t know existed or were available to you. The result? A higher refund or lower tax bill.

We’re at the point in the tax-filing season where lots of people are getting concerned and worried. But do your best to stay calm as you attempt to get the job done.

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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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