Money Management

It depends on when you file your return. 

Taxes are due this year on April 18. If you haven’t yet gotten started on gathering your tax documents, then you may find yourself running up against that deadline. But if you’ve already sorted out your various tax forms, and you have all of the financial information you need to file your taxes, then you may be ready to submit your return well ahead of the April 18 deadline.

If you’re due a refund from the IRS, you may be extra motivated to get your taxes filed early this year. The sooner you submit your return, the sooner that money can hit your bank account.

But what if you owe the IRS money for underpaying your taxes in 2022? In that case, you may be inclined to file your tax return at the last minute so as to not have to part with that money earlier than necessary.

One thing you should know, however, is that you don’t have to pay your tax bill in conjunction with filing your tax return. So if you’re submitting your taxes early this year and owe money, you really don’t have to pay the IRS until April 18.

You should pay on time, but you don’t need to pay early

If you owe the IRS money and are filing your tax return on April 18, then yes, you should pay your tax bill that same day. If you don’t, you’ll start to accrue interest and penalties on the sum you owe, thereby adding to your costs.

But let’s say you manage to get your taxes done by March 15 because you want that task crossed off your mental to-do list. In that case, you do not have to pay the IRS what you owe on March 15. Instead, you can send a check closer to the filing deadline, or arrange for an electronic withdrawal from your bank account to go out closer to April 18, or on April 18.

Now, if you only owe the IRS a small amount of money, and it’s not a burdensome sum, then you may just decide you’ll pay what you owe even if it’s ahead of the deadline. But let’s say you owe the IRS $500 and money is very tight — so tight you’re barely managing to pay your bills on time. In that case, you should probably wait until April 18 to pay that $500, as parting with that sum sooner could mean landing in debt temporarily or enduring some type of hardship.

It pays to work on your taxes early

Many people expect to get a refund from the IRS only to learn that they actually owe the agency money instead. That sort of situation could constitute a financial shock, especially if money isn’t abundant.

That’s why it really pays to get working on your taxes well ahead of the filing deadline. If you realize you owe the IRS $500 on April 14 and taxes are due on April 18, that’s not a lot of time to scramble to come up with that cash. But if you complete your return on March 14, you have more than a month to come up with a game plan. And that could help you avoid interest and penalties when you have a balance due.

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You could — but you may not want to. 

Attending college is hardly an inexpensive prospect these days. The average cost of annual tuition and fees at a private university is $39,723 for the 2022-2023 academic year, according to U.S. News & World Report. For a public out-of-state school and in-state school, these figures drop to $22,953 and $10,423, respectively. But that’s still a lot of money to shell out.

What makes saving for college particularly tricky is that unless you start doing so before even having kids, you only get a limited window to sock money away. For retirement savings purposes, you might have a good 40 years to build yourself a nest egg, assuming you start to save for your senior years in your 20s and retire in your 60s. But many students start college at age 18, which gives you a shorter time frame for building up a college fund for your kids.

Now, if you’re eager to help your children fund their education, you may be thinking of keeping that money in a regular savings account. But doing so could mean falling short of your goals.

Why a regular savings account may not cut it

These days, you might snag a 4% interest rate on your savings by keeping your money in the bank. But there was a point in time not so long ago when you could barely eke out 1% on your savings by keeping it in the bank. And you need your money to grow at a faster pace than that to build up a nice college fund.

That’s why you’re generally better off investing your college savings — or at least some of it — rather than keeping it all in cash. If you invest your money, you might generate twice the return that savings accounts are paying today — or eight times the return they were paying just a few years ago.

Where to invest your college savings

You have different options when it comes to housing the money you’re saving for college. One is to open a brokerage account and invest there. But in doing so, you won’t reap any tax benefits. And when you take withdrawals to pay for college expenses, you’ll be subject to capital gains taxes. That’s why you may want to opt for a Roth IRA or a 529 plan instead.

Roth IRAs allow you to take penalty-free withdrawals at any age to pay for higher education. Plus, withdrawals and investment gains are tax-free.

To be clear, though, if you’re going to save for college in a Roth IRA, you should open a separate account for that purpose. You shouldn’t dip into your own Roth IRA meant for your retirement to pay for your kids’ college.

Meanwhile, a 529 plan is a savings plan specifically designed for education costs. The benefits are similar to those offered by Roth IRAs — tax-free investment gains and withdrawals. The only problem with 529 plans is that you’ll be penalized on the gains portion of your account if you take a withdrawal for non-education purposes.

So, let’s say you wind up in the enviable position of having saved $200,000 for your kids’ college expenses, but because they’ve chosen less expensive schools and gotten scholarships, your total college costs only come to $100,000. Now, let’s say that of your remaining $100,000 in your 529 plan, $50,000 of that represents investment gains. That means you could face a 10% penalty on that $50,000 if you use the money for purposes other than education.

Make sure your money gets to grow

College costs seem to be going nowhere but up, so you need to invest your money in a manner that can keep up. It’s easy to see why you may be inclined to stick to a regular savings account for your college fund. But investing that money, whether in a brokerage account, Roth IRA, or 529 plan, is really a much more efficient way to go.

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Asking these questions could help you avoid overspending. 

Costco is a really easy place to overspend. The warehouse club provides discounted prices on bulk items, so many people join with the goal of keeping more money in their bank accounts by spending less on groceries and other necessities.

But, between delicious-looking Kirkland brand food products, seasonal items, electronics, toys, and more, it’s really easy to find yourself reaching for the credit cards to fill up your shopping cart with a whole bunch of unplanned purchases.

If you don’t want to spend more money at Costco than you should, finance expert Dave Ramsey has recommended asking yourself five questions before making a purchase. But, is Ramsey right about the things you should ask?

Here are the questions Ramsey suggests asking

The five questions Ramsey recommends asking yourself are designed to help you avoid getting “too carried away” when you’re shopping at Costco. They include the following queries:

Will the item spoil before you can consume it completely?Do you have enough storage space to keep it — especially if it is a freezer or pantry item?How much does the item cost per unit or per ounce?Is it really necessary to purchase such a large quantity of that particular item?Is there room in your budget for it?

Ramsey also recommended considering your family size, and factoring in the added costs of the warehouse club membership plus gas to drive to get you there if Costco isn’t located close to you. But, these five questions mentioned above are the keys to avoiding unnecessary items that you could end up just tossing in the trash or that could lead you into debt.

Is Ramsey right?

Ramsey is absolutely right with the questions that he suggests you ask yourself.

You do not want to buy anything that isn’t in your budget. After all, if you can’t afford it — even if it seems like a good deal — then it won’t end up being a bargain when you have to pay interest charges on the items you bought.

It’s also not a good deal to purchase a large quantity of an item that you won’t be able to use up before it goes bad or that you won’t have room to store. You won’t save money if you have to throw a good portion of the purchase away because of spoilage. And you could find yourself facing unnecessary stress — and perhaps even added costs to buy an additional freezer — if you don’t have the room to keep whatever it was you bought.

As for cost per unit, this question can help you make sure you’re actually getting the best deal at Costco versus other places you buy it as sometimes there are better bargains to be found elsewhere.

By asking yourself these five questions recommended by Ramsey, you can be sure every Costco purchase you make actually deserves a place in your cart. You can make the most of your money and ensure your membership values out for you since it will help you save more and spend less — instead of the reverse happening if you get a little too excited walking the Costco aisles and make purchases that don’t make sense for you.

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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.Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Dating is harder when you have baggage, and that includes financial baggage. 

Money usually isn’t the first thing that comes up when dating, but it’s definitely important. While most people don’t care if a potential partner is filthy rich, financial issues can be a turnoff. And some are worrisome enough for daters to immediately call it a night.

In a recent survey, Western & Southern Financial Group asked Americans about their biggest dating dealbreakers. Credit card debt came in second, right after personal loans, with 28.6% of Americans calling it a dealbreaker. This was also a top dealbreaker for both sexes, with 27.5% of men and 30.3% of women saying they wouldn’t date someone with credit card debt.

If you have credit card debt, there’s no need to beat yourself up over it. Lots of people are in the same boat. However, this type of debt holds you back financially. The best thing you can do for yourself is work hard to pay it off. You’ll save money in the long run, and it may even help your love life. Here’s how to do it.

Figure out what caused your credit card debt

There’s always a reason why people end up in credit card debt. To get out of credit card debt, and avoid it in the future, you’ll need to fix the underlying cause. Think back on why you started carrying balances on your credit cards and what you can do differently going forward.

For example, many people get into debt because they overspend. They make purchases that they can’t afford on credit and plan to pay them off later. If you were overspending, start by setting firm monthly spending limits to follow. Make sure to track your spending so you don’t go over these limits. A budgeting app can help you stay on top of this.

Another common cause of credit card debt is a big, unexpected expense. Maybe a home appliance broke down and required a costly repair, or you had some surprise medical expenses. In this case, after you pay off your credit card debt, focus on saving money for an emergency fund. That way, you can cover these types of expenses without going into debt.

Tighten up your spending

The more money you can put toward your credit cards, the faster you can pay them off. Go over your financial statements for the last few months to see how you’re spending money and where you can cut back.

You don’t need to cut everything to the bone here. Getting rid of every last streaming service and going on a beans-and-rice diet are extreme steps that probably aren’t necessary. Just look for reasonable changes that will free up extra money you can put toward your credit cards. Here are a few ideas:

Stop going out to eat and ordering food deliveries. Make meals at home for the time being.Find low-cost alternatives to expensive activities. For example, instead of expensive exercise classes, work out in a nearby park or go on a hike.Cancel subscription services you aren’t using often. If you have three streaming services, trim it down to one, at least until you’re out of debt.

Commit to a monthly payment amount

One of the reasons people have credit card debt for so long is because they take an “I’ll pay what I can” approach. They make their minimum payments, and then they might pay a little extra, if they have money left over. What usually happens is that they overspend and don’t pay nearly as much on their credit cards as they could.

This is why you need to commit to an amount you’ll pay on your credit cards each month. Compare your income to your expenses and come up with an amount that works for you. If it’s $500, schedule $500 in automatic payments every month.

Pick a debt payment plan

Once you know how much you’ll pay toward your credit cards, you need a payment plan. Fortunately, there are several good options to choose from.

If you have a solid credit score, you could start by consolidating your debt. With debt consolidation, you open another credit account and use it to pay off all your credit cards. You’ll then have just one monthly payment to make, and you could get a lower interest rate this way, as well. There are two popular ways to consolidate debt:

Balance transfer credit cards: You transfer your credit card balances over to a balance transfer card. These cards normally offer a 0% APR on balance transfers for an introductory period, which can last 12 months or longer. That means you don’t pay any interest during that intro period.Debt consolidation loans: You pay off all your credit cards with a personal loan. Loans usually have lower interest rates than credit cards. They also have fixed payment amounts and terms, so they provide a structure you can follow to repay your debt.

If your credit score isn’t high enough for either of these options, your best options are either a debt avalanche or debt snowball plan. These plans are great for paying off multiple credit cards. Here’s how they work:

Debt avalanche: This plan focuses on cards with higher interest rates first to save you the most money. Make minimum payments on all your credit cards, and put all leftover money on the card with the highest interest rate.Debt snowball: This plan focuses on cards with lower balances first to pay off accounts quickly and keep you motivated. Make minimum payments on all your credit cards, and put all leftover money on the card with the lowest balance.

At first, credit card debt can seem like this giant, insurmountable obstacle. Once you have a good plan and you’re paying as much as you can toward your debt, you’ll start seeing fast progress.

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

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It’s a practice you may want to rethink. 

If you have money you don’t need to put into your savings account for emergencies or near-term goals, then it pays to put it to work by investing it. And once you open your brokerage account, you may be inclined to check up on your portfolio often to see how it’s doing.

Checking your portfolio balance too frequently isn’t advisable. That’s because the stock market can fluctuate from day to day, which means your brokerage account balance could tumble one day and recover the next. And so it’s not worth putting yourself through the disappointment of seeing those dips when often, they’re only temporary.

But as much as it’s not a great idea to check up on your brokerage account daily, it’s definitely not a good idea to trade on a daily basis. Doing so could cause you to lose money in the stock market rather than grow wealth.

The problem with daily trading

To succeed as an investor, patience is key. And that’s why you’ll often hear that a good investing strategy is one that focuses on accumulating quality assets, diversifying your holdings, and then holding your stocks for many years. But if you trade daily in your brokerage account, you might thwart your efforts without even realizing it.

As just mentioned, the stock market can be quite fickle. It can rise and fall on a whim, sometimes without a discernible reason. And if you react to every single stock market swing, you could easily set yourself up to lose money — or lose out on making money.

Let’s say you make a point to trade in your brokerage account daily, and you notice that the value of a given stock you own has dropped quite a bit overnight. You may be inclined to sell it to cut your losses. But doing so means guaranteeing yourself a loss. Holding onto that stock could mean seeing its value not only recover, but rise.

Along these lines, let’s say a stock of yours sees its share price rise sharply overnight. You may be inclined to jump on the opportunity to sell it at a profit. But doing so could mean limiting your total profit, because it may be the case that in a few years from now, that stock is worth way more than what you’re selling it for now.

That’s why trading in your brokerage account daily just isn’t a great approach. You might choose to make trades some days, and that’s fine. But in general, your investing strategy should involve holding your stocks for years, if not decades. And that means riding out those days when your portfolio value declines, and resisting the urge to cash out your gains when it does well.

Set limits for yourself

If you’re the type who can’t seem to stop peeking into your brokerage account, set some ground rules. Tell yourself you can check on your investments once a week, but not more. And then, try to push that out to once every two weeks or once a month.

If there are stocks you know you want to buy consistently — say, scoop up shares every four weeks — then chances are, your brokerage account will allow you to set that up to happen automatically. And that way, you won’t be tempted to have a look when you’re not supposed to — and make rash decisions that hurt you financially.

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Companies might grow their talent — but not in the way you think. 

If you read up on the labor market, you may be inclined to think it’s in pretty good shape. Not only is unemployment down to pre-pandemic levels, but it’s also, on a national scale, the lowest it’s been in 54 years.

But while the job market might seem healthy, it’s hard to overlook certain warning signs. These include a notable string of layoffs early on in the year (largely out of the tech sector) and the fact that the Federal Reserve is not done raising interest rates to combat inflation.

As interest rates go up, borrowing is apt to get more expensive for consumers, whether in the form of auto loans or credit card balances. And that could fuel a large pullback in spending that leads to an economic recession.

As such, companies might choose to slow down on traditional hiring in 2023. And they may opt for something called quiet hiring instead.

What is quiet hiring?

Quiet hiring is the idea of a company acquiring new skills without actually hiring new employees. In some cases, it can mean turning to contractors to fill specific needs. In other cases, it can mean pushing existing employees to take on new roles and develop new essential skills.

Quiet hiring can be a money saver for employers. After all, if companies are able to get away with limiting their headcount, they can save not only on salaries, but also, on the benefits they commonly offer.

But often, the purpose of quiet hiring is to address actual needs within a company without having to spend a fortune. So companies that engage in quiet hiring might need more headcount in theory — they just don’t want to pay for it in practice.

Also, quiet hiring can often involve shifting workers from one role to another to address pressing needs. But this can be a mixed bag. Often, it leaves employees having to pull more weight — without extra pay.

What to do if your company starts quiet hiring

Quiet hiring can put a burden on existing employees. But it can also set the stage for career growth. So if you’re encouraged to expand your current skill set or move into a different role within your company, don’t necessarily take that as a bad thing.

That said, you don’t want to end up in a situation where your company is taking advantage of you. If your workload increases substantially, to the point where you’re working longer hours for no extra pay, speak up.

While your employer may not want to bear the cost of hiring someone new for your department, your company may be willing to raise your pay a bit as a thank you and acknowledgement of the added work you’re doing. And getting a raise could make it easier to boost your savings account balance and pay your bills at a time when living costs are soaring.

It also pays to take advantage if your employer is willing to pay for you to further your job skills. If you can get a professional license or certification covered, go for it. That will only leave you with more options if you decide in the future to part ways with your current employer and pursue other opportunities.

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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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