Money Management

It’s an idea that just doesn’t seem to be panning out. 

In the wake of the pandemic, the demand for vacation properties has risen. In 2020, vacation home sales rose by 16% on an annual basis. And given that so many people are continuing to work remotely, it’s likely that vacation homes will remain popular among those who are able to afford them.

What’s funny, though, is that my husband and I had buying a vacation home on our radar well before the pandemic. We’ve been stashing money in a separate savings account for that purpose for about five years now.

But at this point, it may be time for us to find a different use for that cash. That’s because we’ve largely given up on buying a vacation home despite wanting one.

A purchase that doesn’t make a lot of financial sense

There’s a specific area my husband and I visit every year. It’s about five hours away from our home and offers amenities like awesome hiking trails and great food.

When we realized this was an area we’d be making an annual trip to, we got serious about saving for a vacation home there. That’s because rentals in the area can be pricey. Also, because summer is the most popular time to visit, you really have to be vigilant about booking lodging ahead of time to avoid being closed out. And that can make things a little stressful, because we sometimes like to book trips on a whim.

Our logic in buying a vacation home was to have a place to stay in that area whenever we wanted. And we figured we could try to rent out that property from time to time to help cover the mortgage costs.

But then the housing market exploded. And over the past two and a half years, the cost of a modest home in that area rose by well over $100,000. Between that and higher mortgage rates, a vacation home is no longer as affordable to us as it once might’ve been.

Of course, home prices and mortgage rates might come down in time. But we’ve also realized that buying a vacation home that’s five hours away doesn’t necessarily make sense.

As much as we can say that we’ll make the effort to get there, carving out 10 hours of driving in a single weekend isn’t easy. And so chances are, we wouldn’t be able to use that home all that often.

Plus, the idea of a string of free weekends is really a joke in our world. We can blame our kids’ activity schedules for that. Between sports, Cub and Girl Scouts, and birthday parties galore, it’s rare for us to be able to get away for a random weekend during the school year. And summers can be hectic, too.

So all told, we don’t see the point in spending so much money on a vacation home we’ll rarely get to use. We’re better off spending a fraction of that on a nice rental the one or two weekends a year we manage to get back to our favorite spot.

We’re giving up, but we’re not rushing to spend our money

At this point, our vacation home fund has grown nicely. But we plan to leave that money alone for the time being just in case we change our minds.

A vacation home might seem more appealing to us once the housing market calms down, which is apt to happen eventually. And if our schedule calms down as well, maybe that purchase will make sense in time. That’s why we’re technically keeping our options open, even though we’re pretty sure a vacation home isn’t really in the cards for us.

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Should you add these to your warehouse club shopping list? 

Planning ahead before going shopping at Costco and Sam’s Club can save your sanity, and save you from big credit card bills. The warehouse clubs both offer a huge selection of products, making it easy to drain your bank account by filling carts full of stuff you may — or may not — really need.

If you want to be a smart warehouse club shopper and benefit from the bargain prices they offer without wasting money, it’s worth thinking about what you should and shouldn’t buy in bulk there.

Finance expert Dave Ramsey has some suggestions about items worth purchasing at Costco or Sam’s. Here’s what they are, along with some advice on whether you should follow his tips.

Ramsey said to add these items to your Costco shopping list

Ramsey explained that “you can usually count on some items to be a better bargain when you buy them in bulk,” and provided a list of nine items that it generally makes sense to purchase from Sam’s or Costco in large quantities. These items include:

ToiletriesElectronic toothbrush heads, dental floss, and other dental care itemsToilet paper, paper towels, and other paper productsBatteriesGumCerealCanned goodsRiceDry beans

Even with these items, though, he warns you shouldn’t buy too much just to avoid having to go back to the store. Instead, he advises making sure you only buy what you will actually use before it goes bad.

Should you listen to Ramsey?

Ramsey’s list of items that it makes sense to buy in bulk is a good starting point. Many of these are items that won’t go bad for a long time, which helps you to avoid one of the biggest risks of warehouse club shopping. When you purchase perishable items in large quantities, chances are very good that you will find yourself throwing some of the items out because you just won’t be able to use them in time.

You do still need to think about the quantities you’re purchasing and compare that to how often you use the item. Even shelf-stable items like gum, canned goods, and beans go bad eventually, although it takes a little longer for that to happen. If you use a can or two of beans a year and buy a 10-pack, you are probably going to find yourself tossing some of those cans out before they are used up.

It’s also worth comparing prices to make sure you really are getting the best deals on the things you’re buying. Sometimes drug stores can actually offer really great prices on toiletries and dental care items — especially if you can combine store coupons and manufacturer coupons — so don’t assume that Sam’s or Costco has the cheapest price in all situations.

Ultimately, though, Ramsey’s suggestions are worth considering and it’s even more important to think about the rationale behind them. Ramsey believes you shouldn’t buy bulk items that won’t keep, and on this issue, it’s pretty hard to argue with that common-sense advice.

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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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It’s certainly possible. 

Anyone looking to buy a home in 2023 is apt to face some challenges. First of all, real estate inventory is very low, which means it may be difficult to find a suitable home within a certain budget.

And speaking of budgets, staying within one is difficult given that home prices are still elevated. So are mortgage rates.

Thankfully, though, interest rates on a mortgage loan aren’t as high as they were back in the fall of 2022. Back then, the average 30-year mortgage rate was over 7%. As of this writing, it’s closer to 6%.

But given the way rates have trended in recent years, paying 6% on a mortgage still means paying a lot. So if you’re a prospective home buyer, you may be eager to see mortgage rates drop back down to 5%. The question is: Are 5% mortgage rates possible in 2023?

Rates could continue to fall

Even though the Federal Reserve isn’t done raising interest rates as part of its quest to cool inflation, those rate hikes don’t tend to have the same influence on mortgage rates as they do on other consumer borrowing rates. As such, there’s a good chance we’ll see mortgage rates continue to slowly but steadily decline in 2023, even if it gets more expensive to borrow in other ways.

Without a crystal ball, we can’t say with certainty that mortgage rates will fall to 5% this year. But there’s a good chance we’ll be there by the end of 2023. Whether that’s enough to solve the current affordability crisis for buyers, however, is a different story.

In 2021, when home prices were elevated, buyers at least got to benefit from mortgages in the 3% range to compensate. Unless home values come down a bit in the course of 2023, many buyers might still find themselves priced out of the market even if it does get less expensive to borrow.

How to snag the lowest interest rate on a mortgage

No matter how mortgage rates are generally trending, there are steps you can take as a borrower to snag a better deal on a home loan. For one thing, make sure your credit score is solid, and work on giving it a boost if it could use some work. If you’re able to get your credit score up to the high 700s or 800s, you’re likely to enjoy some interest-related savings on a loan of any kind, including a mortgage.

Next, shop around with different lenders. Each one ultimately sets its own interest rate, and comparing offers could help you land a better deal.

Finally, if your budget allows for it, consider signing a 15-year mortgage. You’ll score a lower interest rate by virtue of paying your home off sooner.

Of course, you may run into issues with being able to afford the larger monthly payments that come with a 15-year mortgage. But if you’re able to swing them, signing a shorter-term mortgage is a great way to keep your loan’s interest rate down.

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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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I’m a big Costco fan, but I may want to start paying Sam’s Club a visit. 

As someone who shops at Costco on a weekly basis, I can tell you firsthand that I’m downright in love with the store. From different cheese varieties to cases of snacks to pounds upon pounds of produce, Costco is my go-to spot for so many of the items my family and I eat regularly. And given Costco’s low prices, I can say with confidence that shopping there results in a lower credit card tab than buying food at a regular supermarket.

But even though I’m a huge fan of Costco, lately, I’ve been thinking about getting a membership to Sam’s Club. Here’s why.

Added variety

Costco is loaded with products, from paper goods to toys to electronics. But I feel like their selection of fresh food and produce has been a little hit or miss for me lately.

Now this may be an issue that’s limited to my local Costco — it’s hard to know. In 2021, I could definitely chalk up some shortages to supply chain issues. But these days, it’s hard to explain why there are some weeks when I can’t get strawberries, broccoli, or another staple grocery item at Costco.

Thankfully, this isn’t a huge problem. But I do wonder if I might get more consistency at Sam’s Club.

Also, while Costco has a nice food selection, I figure that if I branch out to Sam’s Club, I might discover more products that my family enjoys eating. My daughter in particular happens to be a picky eater, so I’m constantly trying to entice her with different foods. If Sam’s Club ends up offering a nice selection, it may be worth a trip there instead of Costco some weeks.

The price isn’t such a barrier

A basic Sam’s Club membership costs $50 a year. Now I’m not in the habit of withdrawing $50 from my checking account and throwing it away. But I also think $50 isn’t such a huge risk or investment to try out Sam’s Club for 12 months.

The way I see it, if I find that I’m not really getting much out of my Sam’s Club membership, I won’t renew it. But for $50, I’m willing to take the chance.

A move I’m still contemplating

I’m still on the fence about whether I’ll join Sam’s Club this year. And to be clear, if I do so, it will be in addition to Costco, not instead of. There’s no way I’m giving up my Costco membership given the benefits it offers me. Rather, Sam’s Club would be an add-on.

The big question I really have to ask myself is how often I’ll get there. I don’t have a lot of free time in my schedule, and my nearest Sam’s Club warehouse isn’t as close to my home as Costco is. So that may end up being the deciding factor for me.

But all told, I am curious to see what the variety at Sam’s Club looks like. And for a $50 investment, I might just take the plunge. That said, I might also wait for Sam’s Club to run a promotion that makes its membership cheaper. If I’m willing to take the chance for $50, a lower price point will be all the more enticing.

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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.Maurie Backman 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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