Money Management

There are steps you can take to protect yourself. 

This week, the Consumer Financial Protection Bureau (CFPB) took action against TitleMax for taking advantage of military families and other consumers. The CFPB found that TitleMax violated federal consumer financial law by pushing consumers to take out unlawful title loans and steering them into loan extensions that violated their rights. The company has been ordered to pay a $10 million penalty, refund affected customers up to $5 million, and end the practices in question.

TitleMax is a repeat offender

The CFPB revealed that TitleMax had been illegally taking advantage of military families by providing them with prohibited title loans at shockingly high rates, in some cases charging nearly three times over the 36% annual interest rate cap under the Military Lending Act. The CFPB also found that TitleMax tried to conceal these practices from law enforcement, going so far as to change borrowers’ personal details in order to hide the fact those affected were part of the armed forces.

In addition, it appears that TitleMax had made illicit attempts to increase loan payments via unlawful fees. TitleMax also charged thousands of customers for an insurance product that was essentially worthless. Despite claiming that the fees were necessary to protect against potential losses, these auto loans lacked any coverage whatsoever — and in some cases, weren’t even eligible for it. This isn’t the first time that TitleMax has been under an order.

The CFPB found the company was pushing 30-day loan payments and misleading customers about how much it would cost to renew their loans multiple times. TitleMax was also found engaging in high-pressure debt collection tactics. In response to earlier predatory practices, the CFPB ordered TitleMax to cease such activities immediately and pay a $9 million penalty for its violations in September 2016.

What can consumers do to avoid falling victim to a predatory company?

Shop around and compare interest rates

Before committing to any auto loan, it is important to shop around and compare different lenders’ interest rates. This is especially true if you are looking for an auto title loan, as these tend to have higher interest rates than other types of loans. Make sure that you read the fine print of any loan agreement before signing; this will help ensure that you are aware of all fees associated with the loan, as well as its terms and conditions.

Ask questions

It is always beneficial for potential borrowers to ask questions about the terms of their loan. If there are any aspects of your agreement that seem unclear or confusing, be sure to bring them up with your lender so that everything is crystal clear before signing the contract. Don’t feel pressured to sign and if you do, don’t be afraid to step away.

Military members can access free military legal assistance with their local legal office on base or post. Additionally, ask about the lender’s policies regarding late payments or repayment plans; this could save you a lot of money in the long run if something unexpected happens and you are unable to make a payment.

Know what to expect

It is also important for borrowers to know what they should expect when taking out a loan by doing their research ahead of time. Be sure to read up on industry standards for interest rates and repayment terms, so you can spot any red flags or signs of predatory lending practices before agreeing to anything. Knowing what an appropriate offer looks like will help you avoid getting taken advantage of by unscrupulous lenders like TitleMax.

Keep an eye out for predatory behavior

Finally, it is essential for borrowers to keep an eye out for predatory behavior from their lenders. A few warning signs include things like:

Hidden fees or chargesAggressive debt collection practicesOffers that seem too good to be true

If you notice any of these signs while shopping around for a loan, it might be best to steer clear and look elsewhere instead!

Taking out a loan can be intimidating, but it doesn’t have to be if you do your research beforehand and keep an eye out for predatory behavior from lenders. By comparing different options, asking tough questions, and getting a professional review of your lending agreement before signing, you’ll have all the tools necessary to protect yourself from financial scams and other forms of exploitation.

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It pays to get your taxes done well ahead of the filing deadline. 

Tax returns are due on April 18 this year, so even if you haven’t yet gotten started on yours, there’s still time to complete your return well ahead of that deadline. And if you ask financial guru Dave Ramsey, there are six good reasons to file taxes on the early side.

1. You can avoid processing delays

Last year, the IRS had a huge backlog of tax returns to process that left millions of taxpayers waiting for their refunds to hit their bank accounts. The sooner you file your tax refund this year, the sooner you can expect your refund to arrive. And given the way inflation is surging, not having to wait on the money you’re entitled to could be a very good thing.

2. You can minimize your personal stress load

Many of us have different reasons to be stressed, whether it’s work-related deadlines, problems at home, or social pressures. The last thing you need is the stress of not having your taxes done weighing you down. If you file your tax return early, you’ll cross that task off your list — and take a load off yourself mentally.

3. You might have a lot of money coming your way

Ramsey says that early tax-filers average larger refunds. In fact, he points to IRS data that shows that taxpayers who file their returns by late February get around $400 more back on average than filers who wait.

Now, to be fair, the amount of your refund will hinge on your total tax picture — not your filing date. But if you are eligible for a larger refund, you might as well get that money as quickly as you can.

4. You can protect yourself from identity theft

If a criminal gets a hold of your Social Security number, they could use that information to file a tax return on your behalf and steal your refund by diverting it to a bank account they have control over. But the IRS is set up to only accept one tax return per Social Security number.

If you file yours first, any fraudulent return that comes in later is going to be flagged as a duplicate. But if a criminal files before you do, you’ll be the one who has to deal with the hassle of proving that your return is the legitimate one.

5. You’ll have time to formulate a game plan if you owe the IRS money

Many people anticipate a tax refund when filing taxes. But what if you’re in the opposite boat and you end up owing the IRS money?

You may not have the cash just sitting around in your savings account to hand over. So the sooner you get your tax return done, the sooner you’ll be able to come up with a plan to pay the IRS what you owe.

6. You might get more of your accountant’s attention

Accountants and tax professionals tend to be very busy during the tax season — especially during the latter part of it. If you file your taxes early, it might help ensure that the person you work with gives your return their full attention rather than landing in a situation where they’re just rushing through the job.

In an ideal world, you’d get your tax preparer’s full attention no matter when you start the process. But realistically, you’re likely to get more of it when you give them ample time to prepare your return.

Clearly, there’s lots to be gained by filing your taxes early. So if you haven’t gotten started, get moving now. There are still many weeks to go before the April 18 filing deadline, and prioritizing your taxes in the coming days could really end up benefiting you financially.

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Parents of teen drivers need to read this advice. 

Parents of teen drivers have a lot to worry about. In addition to the likely terrifying thought that their baby will be behind the wheel, they also have to figure out how to cover the cost of teen car insurance.

Paying for auto insurance for teen drivers doesn’t come cheap, since insurance companies view young people as high-risk motorists to insure. But, finance expert Dave Ramsey has some tips parents may wish to consider following in order to help keep costs down when getting a policy in place for their kids.

Ramsey’s suggestions for saving on coverage

Ramsey recommends taking the following steps to help cut the cost of getting insurance for a teen:

Have kids complete a driver’s education course: “Carriers offer discounts for taking driver’s ed or any other public safe-driving course that’s offered by the state,” Ramsey said. These courses can both reduce insurance premiums and help kids learn how to make safer choices on the road. Take advantage of good student discounts: Ramsey explained that most insurers offer these discounts for kids with at least a B average. Parents may want to make driving privileges conditional on earning this discount, both to save money and encourage their kids to hit the books. Buy older used cars: Ramsey said this will result in premiums that are about 13% lower than the cost of insuring a new car. It’s often best to avoid buying a brand new vehicle for teens too, since they are likely to be more prone to minor fender benders as they’re learning. Consider a device that tracks driving. Ramsey said many insurers offer discounts if drivers are willing to plug in a device that tracks their mileage and driving behaviors. Kids may also be more careful if they have this device installed and it can give parents peace of mind to see how their kids are actually driving.

Ramsey also suggests shopping around for the most affordable coverage with an independent insurance agent and making sure to choose a policy based not just on price alone but also based on coverage needs.

“Let’s face facts — at some point, your teen may be in a fender bender,” Ramsey said. “If that happens, you’re going to want to have the right insurance in place. That means having the right amount of liability insurance and other coverages to protect your teen. Plus, you’ll want an advocate fighting for your best interest throughout the claims process.”

Should you listen to Ramsey’s advice?

Ramsey is absolutely spot-on with most of his advice here. Parents will get better premiums if their kids get driver’s education, earn good grades, and drive an older used vehicle. And those who are comfortable with any privacy-related issues can indeed find less expensive coverage if they allow insurers to track driving behavior (assuming the device actually shows them behaving safely).

Ramsey is also smart to advise shopping around, although parents can do this by themselves or work with an independent agent to help them, depending on their personal preference. The important thing is to remember that coverage needs change once a teen is on the policy, so parents can’t assume their current insurer is the best one without first seeing what else is out there.

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They want out, but that’s not close to happening. 

In December 2022, the median home sale price was $366,900, according to the National Association of Realtors. And that’s a number a lot of people simply can’t afford. That’s why it’s so common for first-time home buyers to turn to starter homes instead.

A starter home is basically a smaller home — one that might be less updated than some of the other homes you’ll see on the market. Usually, buying a starter home means taking on a smaller mortgage. It can also mean spending less time and money on things like maintenance, since you have less space.

A lot of people who purchase starter homes go in with the intent to stay a few years, build up some home equity and savings, and then upsize when they’re able to. But if you go this route, you may not end up getting to upgrade to a larger home. Just ask two friends of mine who have been in their starter home for six years — and don’t see how they’re ever going to get out of it.

When your plans go awry

My friends Mark and Jenna bought a starter home after having their second child. Prior to that, they were renting a townhouse, and since they were taking on the expense of another child, they wanted to be conservative and keep their housing costs low. Jenna was also taking a year off of work for parental leave, so they were losing her income for a period of time.

Mark and Jenna figured on being in their home for three or four years before upgrading to a larger one. And they’ve been doing their best to save for a larger home since buying their starter home.

But the reason they feel trapped in their current home doesn’t just boil down to today’s higher home prices and mortgage rates. Rather, it stems from the fact they’ve had to pump so much money into their starter home that they’ve barely been able to boost their savings.

Over the past few years, Mark and Jenna have needed to replace their hot water heater, air conditioner, and fence. They’ve also had to do masonry work to correct problems with their sidewalk they didn’t even realize was their responsibility when they bought their home.

And those are just the big projects. They’ve also spent money through the years switching out flooring and carpet (their old floors were in really bad condition, and one carpet even had a funky odor to it), and doing small upgrades, like getting a more efficient washer and dryer — something anyone with young kids needs.

All told, they’ve spent so much money fixing up and maintaining their starter home that they’re in no better a position to buy a larger home now than they were six years ago. And while they could look in a less expensive neighborhood, their kids are enrolled in the local school system and they don’t want to pull them out. So they’re effectively stuck.

Don’t assume you can upgrade

Thankfully, Mark and Jenna’s situation isn’t all bad. They have a three-bedroom home, which is enough bedrooms for their family size (though they’d love an office or play room). And while they don’t have a lot of storage space, they’ve learned to deal with it.

The takeaway here is that if you’re going to buy a starter home, don’t assume you’ll be able to upgrade on your timetable. You may end up in that home longer than expected, so make sure it’s one you can see yourself being happy in should it wind up becoming your forever home.

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It may not have the same appeal. 

It’s easy to see why the idea of buying a timeshare can be so appealing at first. After all, you’re buying access to a vacation home you can use every year. That means you won’t have to worry about not being able to book a hotel and getting shut out.

But in time, you may realize that your timeshare just isn’t working out. Maybe the ongoing maintenance fees you’re forced to pay are annoyingly high. Or maybe your vacation habits have changed, and whereas you used to love the timeshare that gave you easy access to theme parks, now that your children are older, you’d rather travel elsewhere.

A good 85% of timeshare buyers end up regretting their purchases, according to a University of Central Florida study. So if you’re looking to sell your timeshare, you’re in good company. But you might also struggle to find a buyer for a few good reasons.

Lots of competition

The fact that so many timeshare buyers regret owning one means that you might face stiff competition when you go to sell yours. And the more competition there is, the harder a sale becomes.

A challenging number to land on

When you’re buying a home to live in, you can compare its value to those that have recently sold. But landing on the right price for a timeshare can be difficult for you as a buyer — and it can be just as challenging for a seller to determine if they’re getting a reasonable price or not.

There are different factors that go into determining value for a timeshare, like how popular the area is and how many similar properties are available. But all told, you might end up guessing at a sale price. And your buyer might try to talk you down from it, knowing full well that the reason you’re selling is that you obviously want out.

Plus, when you own a timeshare, you’re on the hook for ongoing maintenance fees. That could be a turnoff for buyers — especially if they’re on the higher side.

It’s not a need

Another reason selling a timeshare might prove difficult? A timeshare is a luxury purchase. It’s not a purchase that will fulfill a need, like putting a full-time roof over your head.

Buyers may be willing to stretch their budgets in the course of signing a mortgage loan for a home they’ll live in year-round. But it’s less likely that buyers will be willing to strain themselves financially for a home they can only use a few weeks a year for vacation purposes. As such, when you sell a timeshare, you’ll generally be looking at a more limited pool of buyers, which could make things difficult for you.

Selling a timeshare may not be easy, but ultimately, it can be done. That said, you may want to find yourself a real estate agent with experience in selling timeshares. An agent with the right expertise can help you price your timeshare accordingly and navigate the challenges you might face.

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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.
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They’re important ones to run through. 

It happens to the best of us. You’re taking a few minutes to do some scrolling on social media when a friend posts a link to a GoFundMe campaign. Before you know it, you’re reading someone’s unfortunate story and are digging out your credit card to make a modest donation.

Many people prefer to donate to GoFundMe campaigns than to registered charities, even though the latter can result in savings on taxes. The reason? They figure that with a GoFundMe, a beneficiary is getting to use that money directly, whereas with a charity, it can be hard to know how much money is being spent to pay directors’ salaries.

The problem with GoFundMe campaigns, though, is that you might run into a lot of them as you’re going about your day. It’s estimated that a donation is made every second to a GoFundMe campaign. And while it would be nice to donate to every single one, in reality, that’s probably not possible. As such, if you’re looking for a way to support good causes without depleting your savings, here are three questions to ask yourself before donating money to a GoFundMe.

1. Do I have any sort of connection to the beneficiary?

Sometimes, people randomly share GoFundMe campaigns on their social media pages. But if you run into a situation where your old college roommate’s brother has been in an accident and they’re raising funds to help with his recovery, well, that’s the sort of campaign that should maybe take priority.

Also, it can be hard to vet a GoFundMe campaign and make sure it’s legitimate. But if it’s being run by someone you know, or someone you have a connection with, that becomes easier.

2. Do I have extra wiggle room in my budget this month?

You may want to contribute to Molly’s fundraiser to get her dog surgery, Bobby’s Eagle Scout project to clean up a park, and Leo’s recovery from a debilitating disease. These are all worthy causes. But before you contribute to any of them, you need to ask yourself how you’re doing financially.

If you’re paying your bills just fine and have the wiggle room to donate money, then by all means, do so. But if money has gotten tight and you’re already at risk of falling behind on your own bills, then you may need to pass on donating until your financial situation improves.

3. Is there another way I can help other than donating money?

Maybe you’re inspired to donate money to the victims of a house fire in your town who lost everything. But if you’re low on funds, there may be another way to help. You could send a message asking the campaign organizer if the family needs clothing and household items, and then donate items you no longer need.

In some cases, the best way to help really is to send money. But it never hurts to explore alternatives if money is tight for you.

GoFundMe campaigns are everywhere, and many are heart-wrenching stories. But it’s a good idea to tackle these questions before making a donation — even if you’re moved to contribute each and every time.

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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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