Money Management

Contact your lender ASAP. 

As grocery, insurance, and utility bills have gotten more expensive due to inflation, you might find yourself unable to comfortably afford your auto loan payments. This is a bad situation to be in, as missing payments can lead to credit score damage and even the loss of your car through repossession. Here’s how to get out of this situation and get back on track with your auto loan — and avoid tanking your finances.

Your lender can help

While it may be tempting to ignore the problem, the best way to handle an inability to cover your car bill is to face it head on. Your first step should be to get in touch with your lender, as you do have options here. Car payments have gotten more expensive overall, and chances are, your lender has heard similar tales of woe from other borrowers — so don’t be embarrassed.

Defer your payments

If this is just a temporary setback (say, you had an unexpected bill that you had to pay, thereby leaving you without money to cover the auto loan this month), your lender may be willing to let you defer a payment. Not every lender allows this, and you may have to write a hardship letter explaining why you need to skip a payment or two. You might also have to pay a small fee, and the missed payments will be added to your loan balance to be paid down the line — meaning you’ll earn interest on them, of course.

Refinance your loan

If you’re having a more serious and sustained cash flow problem, you’ll need to explore other options. Refinancing your loan could be a possibility; if you got stuck with a higher interest rate on your loan when you got the car and have taken steps to improve your credit, you might be able to swap your loan for one with a lower interest rate. You might also be able to stretch the length of your loan period, resulting in lower payments that you can more easily afford.

Get rid of the car

If you cannot afford to pay for the car at all, though, the best course of action will be to give it up. This could mean trading it in for something less expensive, selling it outright (and hoping you get enough to pay it off), or letting the lender take it back.

While there is no difference for your finances whether you voluntarily surrender the car or your lender employs a repossessor to take it back, one of these is arguably far more traumatic than the other. Your lender will sell the car to recoup its costs, and if money is still owed after the sale, you’ll have to pay it or risk having it turned over to a collections agency. You definitely don’t want to deal with the resulting damage to your credit.

Be careful with your auto loan

I hope you never find yourself in this situation, and luckily, there are a few steps you can take to ensure it doesn’t happen to you.

Consider your total financial picture if you’re buying a car: Many of us require a car to live our daily lives, but it’s not an insignificant expense to purchase, insure, and maintain one. So make sure you consider your entire budget and potential range of expenses before signing on the dotted line for a car loan.Keeping a well-running paid-off car is a good move: If you can maintain a car after you’ve paid it off, it’s a win for your finances. Older cars may be cheaper to insure, too.Build up an emergency fund: Having an emergency fund with several months’ worth of expenses ready to go is a solid money move no matter what. If you can manage to save one up and keep it available in a high-yield savings account or money market account, you’ll sleep better at night and perhaps avoid a scramble to pay bills should you have an unexpected expense.

If you’re encountering financial difficulties and your car loan is at stake, don’t delay. Get in touch with your lender and see what you can do to solve the problem.

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The world won’t stop, even if we hit a recession. 

It feels like we’ve been living under the storm clouds of a potential recession for months, impacting the way we work, save, and plan our careers. The trouble is that nobody knows whether — or when — those clouds will break. It’s tempting to hunker down and wait for the storm to pass, especially if you’re worried about even keeping your job.

But when it comes to getting a promotion, don’t let recession warnings hold you back. For starters, we may not even hit a recession, and even if we do, the world won’t just stop. Plus, many of the moves you’d make to get a promotion are similar to those you’d make to protect your career against a recession.

Here are four steps to take.

1. Look for ways to stand out

There are a few ways to boost your profile at work. If your company has a hybrid work model, make sure you’re in the office as much as possible. There’s a big disconnect between managers’ and employees’ perceptions of productivity when working from home — managers think people get less done when they’re not in the office, and staff think the opposite. If you’re looking to snag a promotion, that can work in your favor. It’s much easier to be visible and show what you’re capable of if you’re there in person, especially if other people are not.

Working models aside, look for problems the company faces and how you might contribute to the solutions. If the company is streamlining operations in preparation for a potential recession, perhaps you have ideas about how things could work more efficiently. Are there ways you can add value for customers and improve retention? Or maybe you can see new revenue streams that might work well in a recession. You might even talk to your boss about what challenges the company faces so you can be proactive in solving them.

2. Learn new skills

Whether it’s soft skills like communication or hard skills like improving your technical knowledge, your willingness to learn new things shows you have leadership material. Moreover, that extra training can help you come up with new ideas and improve your performance at work. Think about what skills will help you move upward in your career, and how you might best acquire them.

Professional certifications can help show your current employer — or a prospective one — where your capabilities lie. There are many free or paid courses available online, as well as in-person learning opportunities. That said, formal learning isn’t the only way. You might also sign up for industry newsletters and participate in your professional networks.

3. Be positive

The last few years have been tough, and it’s easy to get bogged down in negativity. But that won’t help your promotion prospects, especially if there may be more hard times ahead. Build strong relationships with your colleagues and try to stay upbeat about the future.

Within my business, I can think of several occasions when I’ve promoted people who are easy to work with rather than more qualified candidates. It’s much easier to train someone to do new things than it is to change someone’s attitude. If you’re having trouble being positive, take some time to think about what’s pulling you down. Perhaps you’re not in the right role, or there’s something else going on that you can address.

4. Talk to your boss

With so much uncertainty in the workplace, a direct conversation with your boss about what the company needs and what you’re hoping for can make a huge difference. Stress your commitment to the business and ask how you can contribute more. It’s good to be honest about your ambitions, but at the same time, try to keep the focus on how you can help the company get through any tough times ahead.

The question of pay is complicated, particularly if your company is laying people off. Research what other people in similar positions earn and be ready to show what you’re worth. From there, it’s a judgment call. Promotions usually come with a pay raise, and more money in your bank account would almost certainly be useful. But if the business is struggling, the cash might not be there.

Try to strike a balance between getting paid what you think you deserve and pushing for something the company can’t afford. You might focus on the promotion first and set a date to revisit the salary conversation. It’s about being assertive, yet understanding.

Bottom line

If you’re worried about what might happen to your job in a recession, try to build up an emergency fund that will cover at least three to six months of living costs. Having that money in a savings account will cushion you against the unexpected, and may give you the confidence to focus on your career, no matter what the economy is doing.

It’s true that business may not continue as normal if a recession strikes. But most businesses will move forward. If you can find ways to help yours weather the storm, a recession could actually mean more opportunities for promotion.

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Keep these points in mind if you’re stressed about taxes or feel ill-equipped to file yours. 

Dealing with taxes is a task many of us would be happy to avoid. But the reality is that many people are required to file a tax return (you can potentially get out of it if your income is really low), so it’s important to tackle your taxes in a timely and efficient manner.

But in a recent Insuranks survey, 22% of millennials and Gen Zers said they don’t know how to file taxes. If you’re part of that group, here are some important things you should know.

1. The filing deadline is April 18

This year, taxes are due on April 18. They’re normally due on April 15, but because the 15th falls on a weekend and the following Monday is a Washington, D.C. holiday, the tax-filing deadline is moved to Tuesday the 18th.

Now, it’s never a good idea to leave your taxes to the last minute. But you should also know that if you get your taxes done early this year and find out that you owe the IRS money, you won’t have to pay your tax bill until April 18.

Also, if you don’t have the money sitting in your bank account to pay your tax bill in full, the IRS will generally allow you to pay it off in installments over time. Or, in some cases, charging a tax bill on a credit card could work in a pinch (though that’s generally not the most ideal or cost-effective option).

2. You may be eligible to file your taxes for free

If you earn $73,000 or less, you may be eligible to file your taxes at no cost. You can use the IRS Free File tool to get guided tax prep help. However, you’ll need a bunch of tax documents to get started, so make sure you have records of your wages from your employer and of any earnings you took in on the side in 2022.

3. Filing electronically is preferable to filing on paper

Paper tax returns are still a thing, but filing electronically could be a much better choice for you. For one thing, using tax-filing software will make you less likely to fall victim to incorrect math. Also, using software might result in a much faster refund, since the IRS typically processes electronically filed returns more quickly than it does paper ones.

4. A tax professional could be worth paying for — even if your situation isn’t so complicated

If you’re clueless about installing appliances, then you should probably hire a contractor to do the work, right? Well, the same goes for taxes. If you don’t feel equipped to tackle your upcoming return solo, get help. There’s no shame in hiring a tax professional, even if your situation isn’t particularly complex.

And who knows? You may find that the fee you pay for tax help pales in comparison to the savings your tax preparer helps you eke out.

It’s okay to feel like you’re in the dark about taxes. Luckily, there are plenty of resources at your disposal to get through this year’s tax season. And if you still don’t feel comfortable doing your taxes yourself, don’t hesitate to outsource that task to someone who knows what they’re doing.

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Whether it’s lower pay or more expensive undergarments, women just can’t seem to catch a break. 

There are certain expenses we all pay for that can easily be described as essential. Food is one of them, as are mortgage and rent payments. And it’s pretty fair to say that underwear falls into the category of, “This is something everyone must have.” As such, it’s a bit disheartening to learn that when it comes to underwear tariffs, women are getting the short end of the stick.

The average U.S. tariff rate on women’s undergarments is 15%, whereas for men, it’s just 11.5%. That means women are being charged a tax that’s 35% higher than what men have to absorb, according to Ed Gresser, the current director of Trade and Global Markets at the Progressive Policy Institute, as reported by CNN.

Going low-end may not help

Any time the price of a given commodity gets expensive, consumers could always opt to purchase a lower-cost alternative. For example, if you’re tired of racking up a massive credit card tab in the course of buying your favorite breakfast cereals, you could always switch to the store brand and save yourself a little money.

But that tactic may not work in the context of women’s underwear. The reason? Tariffs on undergarments are regressive, which means that lower-cost materials tend to be taxed more than higher-end ones.

The tariff rate for silk underwear, for example, is 2.1% for women. For cotton underwear, it’s 7.6%. So even if you’re willing to downgrade your underwear to boring old cotton, it may not make much of a financial difference.

Yet another way women lose out

In 2021, women only earned an estimated $0.82 for every dollar that men earned, according to the U.S. Government Accountability Office. And in some sectors, that pay gap was even wider.

Of course, disparity in pay has long been a problem for women. And so the fact that they have to pay more for a basic expense like underwear only makes an already frustrating financial situation even worse.

If your underwear purchases are busting your budget, well, don’t stop making them. After all, it’s underwear. It’s a good thing to have. And unless you’re a fan of doing laundry multiple times a week, it’s something you probably need a pretty robust supply of.

But that doesn’t mean you can’t cut back on spending in other areas if you’re struggling financially in general — a lot of people are doing so these days, thanks to inflation. You can buy store brand soap instead of the fancy brands, and go the do-it-yourself route when possible to save money on tasks you might normally outsource, like home maintenance. You can also dump some non-essential bills like streaming services if they just don’t fit into your budget right now.

It’s not easy to function and thrive in a society where men not only earn more than women, but get to spend less money on underwear. But women can take steps to overcome these factors so they’re not forced to struggle financially in the process.

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The option you choose might hinge on your ultimate goal. 

Some people like to travel somewhere new every year. But maybe there’s a specific area you enjoy visiting year after year, and you’ve reached the point where you don’t want to have to search for lodging every time you’re ready to roll into town. If so, you may be torn between a vacation home and a timeshare. But which option is best for you?

The pros and cons of a vacation home

When you buy a vacation home, well, you’re buying a home. That could mean signing a large mortgage loan and having expensive monthly payments to grapple with.

Plus, when you own a home, you don’t just have to cover your mortgage. You also have to pay for homeowners insurance, property taxes, maintenance, and repairs. And unlike a timeshare, where you pay a yearly maintenance fee to cover things like upkeep and repairs, when you own a vacation home, those expenses are all on you.

That said, if you buy a vacation home, you may be able to treat it as an investment. That property could gain value over time, and since it’s yours, you’ll have the option to sell it at a profit.

What’s more, you may decide to rent out your vacation home when you’re not using it for extra income. Unless that home is part of an HOA with strict rules barring that, it’s an option you’ll have every right to exercise.

The pros and cons of a timeshare

A timeshare may not constitute the same financial commitment as owning a vacation home. Yes, you’ll have to put down some money. But since you’re only buying the rights to use a property for a week or two out of the year, you’re most likely not talking about anywhere close to the down payment you might have to put on a vacation home.

Also, Dave Ramsey says that in 2021, timeshare maintenance fees came to $1,120 a year. Now, that’s not a small amount of money. But your costs could be considerably higher than that if you have a vacation home you’re tasked with maintaining yourself.

On the other hand, when you buy a timeshare, you don’t own a piece of property. So a timeshare really cannot constitute an investment — it’s only an expense.

Plus, while it’s often possible to turn a vacation home into an income property, with a timeshare, you’re unlikely to make money. To do so, you’d need to rent out your timeshare at a high enough price to cover your costs and come out ahead. And some companies don’t even let you rent out your timeshare.

What’s the right choice for you?

Whether you opt for a vacation home versus a timeshare should ultimately hinge on your goals and the financial commitment you’re looking to make. If you’re eager for an investment opportunity, then a timeshare won’t fit the bill, whereas a vacation home might. But if you’re looking for a way to guarantee yourself a place to stay in your favorite vacation spot, then a timeshare might be a more cost-effective option than sinking tons of money into a vacation home.

Either choice, though, is a big decision and a huge financial undertaking. So you’ll need to really make sure it’s the route you want to take.

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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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