Money Management

Cheaper insurance would surely be great news for vehicle owners. 

For some people, owning a vehicle is a luxury. For others, it’s a must.

No matter which camp you fall into, you may have noticed that new car prices have soared over the past few years, largely due to a lack of supply. And when you pay more for a car, you don’t necessarily just take on a higher monthly auto loan payment. You might spend more on car insurance, too.

Auto insurance companies take different factors into account when setting premium rates. These include factors related to you as a driver and factors related to your vehicle.

If you’re an experienced driver with a clean record, that could result in lower premiums than someone who’s a newer driver, or someone with multiple moving violations on their record. Similarly, if you buy a more expensive car, it stands to reason that the cost of auto insurance will be higher for you than for someone who buys a car costing $15,000 less. The logic is that the more expensive a car is, the more an insurance company will have to pay out to replace it if it gets destroyed.

But recent data seems to indicate that car prices are starting to come down, and that they’ll continue to do so in the near future. And that could lead to a nice amount of savings on auto insurance.

Are new car prices dropping?

According to Edmunds, the average transaction price (ATP) for a new vehicle hit a record high of $47,681 in November 2022. However, for the first time in months, ATP came in below MSRP, which was $47,696 in November.

Meanwhile, Kelley Blue Book reports that the average new car buyer paid $49,388 for a vehicle in January. That’s a 0.6% drop from December.

Now clearly, we’re not talking about massive dips in car prices. The good news, though, is that in the course of 2023, prices are expected to decline by roughly 10% for used cars and by 2.5% to 5% for new cars, according to JPMorgan. So all told, new vehicle owners may be in for some relief, especially if that 5% projection winds up being closer to the mark. And once car prices come down, auto insurance rates could follow suit.

How to save money on auto insurance

Spending less on a vehicle could result in lower auto insurance premiums, which means you get to reap savings in multiple regards. But there are other steps you can take to keep your costs to a minimum.

For one thing, shop around with different auto insurers and compare rates. Secondly, consider committing to a higher auto insurance deductible.

It’s usually the case that the higher your deductible, the less you’ll be spending on premiums. And while you’re taking on the risk of having to pay more each time you need to file a claim, you don’t know for sure that you will, in fact, have to file a claim against your insurance. But you do know that you have to pay your premiums, so you might as well keep those low.

Finally, do your best to practice safe driving habits and take a defensive driving course if your record has some black marks on it. That could help you save on insurance costs, no matter what type of car you buy.

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It’s not just about avoiding added costs. 

These days, making a 20% down payment on a home is no easy feat. That’s because the median home sale price in January was $359,000, as per the National Association of Realtors. To put down 20%, you’re talking about saving up almost $72,000 — and that assumes you’re not looking at a more expensive home.

When you’re taking out a conventional mortgage loan, it’s a good idea to aim for 20% to avoid having your home cost you more money. When you don’t put 20% down at closing, you’re hit with private mortgage insurance (PMI), which is meant to protect your lender, not you.

PMI often gets tacked onto your monthly housing payments so you’re spending more. But that’s not the only reason to be aiming for a 20% down payment today.

Buying a home when prices are elevated

Buying a home when prices are up doesn’t just mean paying more. It also means that there’s a good chance the value of your home will drop in the near term.

If homes in your area normally sell for $300,000 but have been consistently selling for $360,000 due to current housing market conditions (such as limited inventory), then buying at that higher price point means you’re taking a bit of a risk. Chances are, in the coming years, the value of your home will start to creep back down toward the $300,000 mark.

That’s not a problem if you’re not looking to sell your home, or you’re not having trouble keeping up with your mortgage payments. But if you start to run into financial difficulties, you’ll want the option to sell your home at a price that allows you to pay off your mortgage. And if you don’t make a 20% down payment, that may not happen. Rather, you could wind up underwater on your mortgage.

When you’re underwater on a mortgage, it means your current home value isn’t enough to pay off your lender in full. That can be bad when you need to get out of a housing situation fairly quickly. But a 20% down payment makes it less likely that you’ll wind up underwater.

Let’s say you put down $72,000 on a $360,000 home, leaving you with a $288,000 mortgage. Let’s also say the value of your home drops to $300,000 in three years. In that case, if you need to get out, you’re okay — you can sell your home for more than what you owe your lender.

But let’s say you only make a 10% down payment, leaving you with a $324,000 mortgage. If your home is only worth $300,000, and you haven’t chipped away at that much mortgage principal (which is generally the case when you’re only three years into your repayment period), then you might get stuck in a really tough spot if a sudden need to sell arises.

Don’t skimp on a down payment

Putting less than 20% down on a home can be a risky move in general. But it can be especially problematic if you’re buying in a market where home prices are elevated. Since that’s the case today, you may want to hold off on a home purchase if you don’t have the funds to put down 20%.

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Travelers who don’t follow reporting rules risk having their money confiscated. 

Most people don’t travel with more than $10,000 in cash all too often, but there are exceptions. You might need a large amount of money on your trip and figure the convenient option is to take it with you. Or, if you’ve been working internationally, you may want to bring back the money you’ve saved to the United States. Whatever the reason, if you’re traveling with this much money, here’s what you should know first.

You need to declare it when traveling internationally

It’s legal to travel with more than $10,000 in the United States and abroad. You have the right to travel with as much money as you want.

However, during international travel, you need to report currency and monetary instruments in excess of $10,000. When entering or departing the United States with this much money, you’re required to file FinCen Form 105 with the U.S. Customs and Border Protection. You can file this form in advance online or while traveling by asking a CBP officer for a paper copy.

Many other countries have similar reporting requirements. For example, the European Union requires you to make a cash declaration if you’re carrying 10,000 euros or more, or its cash equivalent. Make sure to review the laws for any country you’re planning to visit.

There are some important details to remember here. The ones below apply to entering and departing the United States with over $10,000, but other countries may have similar rules:

It’s the combined value of all your currency and monetary instruments that matters. For example, if you have $7,000 and 5,000 euros, you would need to report that, because that’s over $10,000 in value. The same is true if you have $5,000 and a $6,000 money order.Members of a family residing in one household must declare if the members are collectively carrying over $10,000. If you and your wife are each carrying $6,000, you’d need to report that.Pocket change matters if you’re close to the limit. Let’s say you have exactly $10,000 in your carryon. That’s not more than $10,000, so you wouldn’t need to report it — unless you also have any other money on you, like $5 in your wallet.

If you don’t report it, your money could be confiscated

Federal law on importing and exporting money is strict. If you break the law, whether knowingly or unknowingly, your money could be confiscated and forfeited. Even if the source of that money is completely legal, it may still be extremely difficult to get back.

The reason why is the controversial subject of civil forfeiture. Civil forfeiture allows law enforcement to seize and keep any money or property they suspect is involved in illegal activity. The owner doesn’t need to be convicted of a crime or even arrested for law enforcement to do this.

But does this actually happen to people while traveling? Absolutely. From 2000 to 2016, U.S. law enforcement conducted over 30,000 seizures and took over $2 billion, according to the Institute for Justice. The most common reason for seizures was traveling internationally with more than $10,000 and failing to report it.

You can hire a lawyer and fight to get your money back. But lawyers aren’t cheap, and fighting civil forfeiture is often a lengthy battle.

There are always risks to traveling with large amounts of cash

The most common scenario where traveling with over $10,000 could get you into trouble is if you don’t declare it during international travel. That isn’t the only risk, though.

While it’s technically legal to travel domestically with this kind of money, it can arouse suspicion from law enforcement. And to reiterate, if law enforcement suspects your money is tied to illegal activity, they can seize it. People have had this happen to them, even while flying domestically within the United States.

Carrying lots of cash is also very risky from a personal finance perspective. Unfortunately, robberies can happen at any time. Even if it’s unlikely, all it takes is one worst-case scenario, and you’ll lose a significant amount of money.

Given the risks involved, and the reporting requirements when traveling internationally, it’s better not to travel with over $10,000 or anywhere near it. It’s much safer to just bring along a good travel credit card and use that for your travel spending. If you need cash in the local currency, you can likely get it at an ATM with your debit card. Or you can wire money to yourself from your bank account. Try to avoid carrying too much cash, and you’ll save yourself a lot of stress.

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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.Lyle Daly 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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The president wants to start providing stimulus money to parents again — but will it happen? 

President Joe Biden recently unveiled a proposed new budget calling for $6.8 trillion in government spending. The budget included many provisions that would directly impact the finances of millions of Americans.

One of those provisions would restore a type of stimulus relief that was first offered in the American Rescue Plan Act. That was the COVID-19 relief bill Biden signed into law in March 2021, shortly after taking office.

Here’s the type of stimulus relief the president has urged Congress to restart with his budget proposal.

Biden wants to bring this stimulus money back

The American Rescue Plan Act is best known for the provisions of the bill that resulted in most Americans receiving a $1,400 deposit into their bank accounts. But it also provided a more targeted form of financial help in addition to this stimulus check. Specifically, it offered extra money to parents.

The American Rescue Plan Act expanded an existing Child Tax Credit and altered the way it was delivered. Before the Act, the Child Tax Credit provided up to $2,000 per child, only $1,400 of which was refundable (which means you couldn’t get the entire $2,000 unless you owed at least $2,000 in taxes). You also had to wait until you filed your taxes to get any of the money.

The expanded Child Tax Credit authorized by the stimulus bill increased the credit so it provided $3,600 per child under age 6, and $3,000 for kids ages 6 to 17. It also arranged for funds to be delivered on a monthly basis, at a rate of $250 or $300 per month for the last six months of the year. That way, parents would get help throughout the year as needed instead of having to wait until tax time.

This expansion was only in effect for 2021. But, in Biden’s budget proposal, he would reinstate this expanded credit for an additional three years. This, along with a proposal to make the credit fully refundable, would result in an extra $400 billion in money going out to parents.

Will the president be able to restore this stimulus payment?

Although Biden has made clear he wants more stimulus money going to parents, his budget is only a proposal. And it’s not likely that the Republican House of Representatives will accept his suggestions for how to handle taxes and spending in the coming years.

Still, while there are many aspects of the budget that Republicans are likely to reject outright, some lawmakers on the right have also voiced support for an expanded Child Tax Credit. So it is possible there could be a compromise that does give parents some extra help. It will be important to watch the budget negotiations over the coming weeks to find out if this could turn into a reality.

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Health insurance by any other name is still a pain in the you-know-what. 

From reducing our stress levels to providing companionship that stems the tide of loneliness, pets provide us with countless benefits. But those benefits aren’t free. It costs money to care for a pet even under the best circumstances.

And it gets much more expensive when those circumstances are less than ideal.

That’s why one of the most important things you can do as a pet parent is to get pet insurance for your furry family.

As with human health insurance, however, the provider you choose can have a big impact on the quality of your coverage. Here are a few things to consider when selecting a pet insurance provider.

1. Age restrictions

Like humans, many animals develop more health issues as they age. The good news: Many pet insurance providers won’t drop your pet simply because they’ve gotten older. So, as long as your pet is already insured, you should be able to keep your coverage. That’s why it’s recommended to get a pet insurance policy while your pets are young. If your pet is already past their prime, you may have to be a bit more selective about which providers you can use.

2. Breed restrictions

If a pet insurance company refuses to cover certain breeds, you have to ask yourself why. Often, it’s because it doesn’t want to be on the hook for covering breed-specific health issues. For example, certain large dog breeds are prone to hip dysplasia, which can be expensive to treat. If the pet insurance company doesn’t provide coverage for these conditions, you may want to look elsewhere.

3. No routine care coverage

This one isn’t necessarily a dealbreaker, but it’s worth considering when shopping for a pet insurance provider. Many of the more affordable plans will likely be emergency-only coverage. This means you’ll be responsible for covering the cost of all of the routine veterinary care, including check-ups, vaccines, and flea treatments. If your pet insurance plan doesn’t cover this care, you’ll need to make sure you budget for it.

4. No pre-existing condition coverage

In another parallel with human health insurance, some pet insurance providers have restrictions when it comes to pre-existing conditions. So, folks with pets who have been diagnosed with chronic conditions may have a harder time finding quality coverage. Make sure to look into a potential provider’s rules about pre-existing conditions when comparing your options.

5. Bad reviews/reputation

Although you’ll have a hard time finding any company that has nothing but glowing reviews — there’s always someone who’s unhappy about something — avoid pet insurance providers with excessive negative reviews. They may be prone to rejecting claims or nickel-and-diming customers.

One way to find a quality company is to ask around in your vet’s office. Your veterinarian, their staff, and even other pet parents may be able to give you a recommendation for a reliable pet insurance provider.

Don’t forget the emergency fund

One last thing to keep in mind when shopping for pet insurance is that even if you have a great insurance plan, you’ll still want to have a dedicated pet emergency fund. You see, most pet insurance works on a pay now, claim later basis.

In other words, when your pet needs medical care covered by your pet insurance, you’ll still need to pay for the services out of pocket. Then, you file a claim with your insurance provider to get your money back.

Plopping a potentially four-figure bill on your credit cards may seem like an easy solution. But it can take weeks to get reimbursed. This potentially leaves you paying high interest rates on a credit card balance that could be in the thousands.

While there’s no hard-and-fast rule on how much you should set aside for your pet emergency fund, one veterinarian hosted by personal finance guru Suze Orman says to aim for around $2,500. That should cover the basics at an emergency pet hospital (because these things never happen during business hours).

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With home prices experiencing their biggest drop since 2008, is now the time to buy? 

According to a recent report from Redfin, home values dropped 4.9% in the second half of 2022, making the $2.3 trillion drop the biggest since 2008. Now that prices have decreased, what does this mean for potential buyers and homeowners? Let’s take a deeper dive into this data.

What does this mean for potential buyers?

The good news is that any drop in value means that homes may become more affordable. A price drop can provide home buyers with more buying power, meaning they can purchase more house for their money than they normally would be able to do at higher home prices.

The bad news? The drop in value is due to a decrease in home buyer demand, primarily because of rising mortgage rates. The average 30-year fixed mortgage rate was 6.36% in December 2022. While not as high as the 7.08% in November 2022, it is over double the rate from the beginning of the year.

This rate increase means the monthly mortgage payment for a $500,000 home is $1,000 more than it was at the start of 2022. So even though prices have gone down, monthly mortgage costs have not, making a home purchase still unaffordable for many first-time buyers.

What does this mean for homeowners?

Even with this drop in value, the total value of the U.S. homes is still $13 trillion higher than it was in February 2020, right before the COVID-19 pandemic hit. The total value of U.S. homes at the end of 2022 was $45.3 trillion, down 4.9% from a record high of $47.7 trillion in June of 2022. While this is the largest drop in percentage terms since 2008, the total value of U.S. homes was up 6.5% year over year in December 2022 and close to 30% higher than before the pandemic.

If you’re looking to sell your home soon, it might be worth doing some research into both current and past market trends so that you can get the most out of your sale price. The value of certain areas have fallen more than others. The Bay Area saw the greatest decrease compared to other metropolitan areas, with San Francisco falling 6.7%, Oakland, 4.5%, and San Jose 3.2%. New York and Seattle also saw slight declines.

Pricey coastal tech hubs have fallen more in value than other markets, especially the suburbs. As the most expensive markets in the country, they had more room to fall, saw a greater number of people move from the area, and were hard hit by the recent tech layoffs. This steep decline in prices is good news for sellers as buyers are being lured back. Unfortunately for buyers, high interest rates may offset any potential price decreases. It is important to understand the other expenses of homeownership and research all your options so you can make an informed decision.

Buying a home is a big decision, but it doesn’t have to be a stressful one. After you educate yourself on the home-buying process, get your finances in order and get pre-approved for a mortgage, so you know how much house you can afford. The housing market is always changing, and prices may continue to be volatile in the future. Doing your research and getting prepared will help you move on a home purchase when the right opportunity presents itself.

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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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