Money Management

It’s a decision you might regret. 

If you’re someone who shops on Amazon pretty often, then you’re probably someone who also returns items to Amazon on occasion. And there’s nothing wrong with that.

One of the benefits of shopping on Amazon is scoring free returns on items that don’t work out for you. And you’ll generally have a number of options for making returns, from dropping off your package at a UPS store to taking it into your nearest Whole Foods location.

You also get choices when it comes to getting refunded for purchases you’re sending back to Amazon. You could ask for the money to go back on the credit card you used to make your purchase in the first place. Or, you could get a credit to use on Amazon, which will be issued in the form of an Amazon gift card.

You may be tempted to just take the credit if you shop on Amazon often. After all, you’re likely to use it at some point, and if you’ve already paid your credit card bill, you may not care about getting a refund there. But getting an Amazon credit for a return could end up being a pretty unwise idea.

The danger of asking for an Amazon gift card

For people who shop on Amazon regularly, getting an Amazon gift card might seem like virtually the same thing as getting a pile of cash. After all, that money will go toward something. It’s just a matter of what and when.

But the problem with an Amazon credit is that you may be tempted to use that money for fun purposes since it’s sitting there, when in reality, you should be reserving it for an essential purchase.

Let’s say you bought a $20 pair of jeans for your child on Amazon, only they didn’t fit. Returning them makes sense. But now you still need to find your child a pair of jeans. If you take a $20 Amazon credit and then spend it on books or accessories, you’ll have to take $20 out of your bank account to buy the jeans you need. So all told, you’ll end up spending more.

That’s why having your credit card refunded is really your better bet. And if you’ve already paid the bill with that Amazon charge, rest assured you’ll get a credit on your next statement that can offset other purchases.

A risk-free option for Prime members

Although it’s not just clothing that Amazon shoppers tend to return, apparel is a common thing to return due to issues with sizing and fit. And so if you’re an Amazon Prime member, it pays to check out the Try Before You Buy program, which gives you a seven-day period to try on things like clothing and shoes before committing to a purchase.

Let’s say you use this program to order jeans for your child and the fit isn’t right. All you need to do is send them back to Amazon, and you won’t be charged a dime. And that way, you won’t have to deal with getting a refund in the first place.

Not every clothing item is available through Try Before You Buy. But if an item you’re interested in is available for a free try-on, you might as well take advantage.

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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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Maurie Backman has positions in Amazon.com. The Motley Fool has positions in and recommends Amazon.com. The Motley Fool has a disclosure policy.

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If you make the right moves while shopping at Aldi, you can save even more. 

Due to rising food costs, many of us are looking for ways to save more money at the grocery store. If you’re feeling financial stress as you load up your kitchen cupboards and fridge, it may be time to try shopping at lower-priced retailers. Aldi is a grocery store known for its bargain buys. If you have a store in your area, you may want to try shopping here to spend less on food. Here are some tips to help maximize your savings while shopping at Aldi.

1. Shop in-store to get the lowest prices

You don’t need a membership to shop at Aldi. Many shoppers shop in-store for the best prices, but you can get Aldi goods by using grocery delivery services like Instacart. While this is convenient, you’ll pay more because products are priced higher through these services. It pays to shop in-store if you’re able to do so.

2. Review the sales flier

Aldi does an excellent job of advertising its sales for the week. Before you arrive at the store, it’s worthwhile to review the current sales flier so you can plan your shopping list accordingly. By purchasing sale items, you can better stay on budget. Aldi is known for its affordable prices, but you can score an even better deal when you take advantage of sales.

3. Compare product prices at nearby stores

Many everyday essentials found at Aldi are priced lower than at competitor stores. But not every find at Aldi is the best buy. Before loading up your cart at Aldi, you may want to research prices at other stores in your area to learn which products are best to purchase at Aldi. Don’t forget to pay attention to package sizes as you compare prices found elsewhere.

4. Buy Aldi-branded products to get a better deal

You’ll see name-brand and Aldi-brand items throughout your local store. In many cases, Aldi’s branded items are less expensive than popular name-brand alternatives. If you’re trying to keep your grocery spending to a minimum, don’t be afraid to give these products a try.

5. Look for clearance finds

Don’t miss out on the chance to pay even less while cruising the aisles of your local Aldi store. Some items are discounted when they’re on clearance, so you can get an even better deal by shopping these finds. Aldi’s is already known for its low prices, but it can pay to take advantage of additional ways to save money like this.

6. Don’t forget to bring reusable bags

If you’re new to Aldi, you may not realize that the grocery retailer doesn’t provide free bags. Instead, you can bring reusable bags, or you can purchase bags at the checkout line. You can keep more money in your checking account by remembering to bring bags with you.

Try shopping at Aldi to save big on grocery costs

While higher food costs may be the norm now, that doesn’t mean you can’t find deals. We all need to buy groceries, but where we shop can make a big difference. If you have an Aldi in your community, you may find it easier to stay on budget by shopping here. Check out these personal finance resources if you’re looking for additional ways to save money.

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Residents of four states must be careful not to raise a red flag. 

We now know that fighting a global pandemic involves making split-second decisions. For example, the CARES Act was signed into law on March 27, 2020. By April 11 — only 15 days later — stimulus checks tied to the CARES Act began hitting bank accounts across the country.

Perhaps it’s natural that mistakes were made in an effort to help as many people as possible, as quickly as possible.

One frustrating oversight has to do with relief checks issued by states in 2022. While legislatures sought to help those who had already depleted their emergency funds, no one seemed quite sure whether payments would be treated as income and taxed on the federal level.

States where questions may arise

Now that we’re in the midst of tax season, the IRS has provided an answer. After weeks of suggesting that payment recipients delay filing returns, the IRS now says it will not tax most stimulus funds distributed by state governments.

You’ll notice that the IRS says that “most” taxpayers won’t owe taxes. Here’s where the situation is not quite as clear cut:

GeorgiaMassachusettsSouth CarolinaVirginia

Taxpayers in these states who opt to take the standard deduction are permitted to exclude state stimulus payments from their total income. It will be as though they never received a relief check.

However, 2022 relief payments in each state were identified as “refunds of state taxes paid.” And that’s where things get sticky.

Itemized deductions and red flags

Taxpayers who itemize their deductions may raise a red flag, triggering a second look from the IRS. Here’s why: Taxpayers who itemize their deductions are permitted to deduct up to $10,000 in state taxes from their federal income taxes. Let’s say someone claimed an $8,000 deduction to cover the state income taxes they paid in 2022.

Now, imagine that the same taxpayer received a $1,000 stimulus payment. That means the taxpayer’s net payment for state taxes was $7,000 rather than $8,000 — because the $1,000 sent by the state was considered a refund on state taxes paid.

If that taxpayer claims the full $8,000, it will appear to the IRS that they overclaimed $1,000. If they claim $7,000, their tax deduction is smaller, and they will pay slightly more in taxes.

States that have it easy

These 16 states issued checks as “disaster relief” or for the general welfare of state residents, and they are not taxable on the federal level.

CaliforniaColoradoConnecticutDelawareFloridaHawaiiIdahoIllinoisIndianaMaineNew JerseyNew MexicoNew YorkOregonPennsylvaniaRhode Island

What about Alaska?

For 41 years, Alaska residents have received an annual dividend payment from the state’s Permanent Fund. With each resident receiving $3,284 in 2022, the payout was one of the largest in Alaska’s history. Of each payment, $2,622 will be taxed at the federal level, as are all annual Permanent Fund checks.

However, the remaining $662 represents a one-time energy relief payment and will not be taxed.

Millions of Americans went into 2022 in need of assistance paying for rent and groceries. While relief checks may not have rolled out in the most organized manner, at least 20 states made an attempt to make life a little easier for residents.

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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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ESG investing: it’s not for everyone. 

Since as early as the 1960s, a growing body of investors have sought to align their portfolios with their moral compasses through socially responsible investing. Now commonly referred to as ESG investing, the practice blossomed into a $17 trillion industry by 2020. However, recent criticism from the political right has led many Americans to question the integrity of these funds. What is ESG investing and is it putting your savings at risk?

What is ESG investing?

ESG, or environmental, social, and governance, investing is just one of the many ways that investors decide which stocks and bonds to buy. While some investors seek only to maximize their return, ESG investors might also consider a company’s social responsibility before buying its shares. Some common measures of ESG-friendly companies include climate change policy, equitable treatment of community shareholders, and diversity of leadership.

Consider that every single investor evaluates the same stocks and bonds based on different criteria. A young investor with plenty of time in the market might accept a higher risk in exchange for a potentially higher return. A retired investor may prefer to buy a low-volatility, high-dividend stock in exchange for predictable cash flows. ESG investors are ordinary investors like the rest of us — they just happen to place a lot of value in a company’s social responsibility initiatives. In a free market, those investors have just as much right to buy shares of socially conscious companies as your grandmother has a right to buy Verizon stock.

The rise of multi-billion dollar ESG funds in the last few decades is an extension of those same free market principles. When millions of investors with billions of dollars want to buy socially conscious stocks, large investment companies are incentivized to create funds that buy those companies. Think about the funds that buy exclusively in one industry or global region, such as airline funds or emerging market funds. ESG funds exist because of the same principle, just different criteria. And companies that offer large ESG funds, like BlackRock, aren’t especially socially conscious or progressive, they’re simply filling a need in the market.

The anti-ESG movement

Prior to last summer, the term “ESG investing” wasn’t in the average American’s vocabulary. However, that quickly changed once right wing media pundits began picking up the term and lambasting it for what they referred to as its progressive values.

Now, House Republicans on the House Financial Services Committee have taken up the call. The Committee recently created the ESG Working Group, tasked to “combat the threat to our capital markets posed by those on the far-left pushing environmental, social, and governance (ESG) proposals.” The nine-member body will be led by Representative Bill Huizenga (R-MI).

Meanwhile, some on Wall Street have launched anti-ESG funds. A fund launched in August, and heavily promoted by right wing personalities, seeks to counter the climate conscious nature of ESG funds with a fund holding almost exclusively oil and gas stocks. This and other funds are highly conservative, both in their pitches to shareholders and in their underlying holdings.

Are you invested in ESG?

The fear of millions of Americans is that their hard-earned savings are being put to use in a way that runs counter to their values — but there is little need to worry. If you have to ask whether you’re invested in ESG funds, you are almost certainly not.

How your self-directed accounts, such as IRAs or brokerage accounts, are invested is entirely up to you. And if you’re worried that an ESG fund has somehow snuck into your 401(k), don’t be. Only 3% of employers offer ESG funds in their 401(k), and even if your company does, you are required by law to have at least two other investment options. Currently, less than one-tenth of one percent of all 401(k) funds are invested in ESG funds.

Are ESG investors getting the best return on their investment? Probably not, at least from a monetary standpoint. Are ESG funds ruining America’s financial markets? No, ESG funds are a product of those free markets. Are millions of Americans being forced to invest in “woke” companies? Absolutely not. The bottom line is this: if you don’t want ESG funds in your portfolio, don’t buy them.

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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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If you’ve ever struggled to stick to your budget, you should read this Dave Ramsey advice. 

Budgeting isn’t most people’s favorite part of money management. But, it’s a necessary part if you want to make the best use of your money. Creating a budget not only helps you avoid credit card debt and save enough money for a secure future, but it also enables you to enjoy your money more since you can spend guilt free as long as you budget for it.

Unfortunately, making a budget is only the first step in taking control of your spending. You also need to stick to it. And that’s where things fall apart for many people. The good news is, Dave Ramsey has shared a secret for keeping on track that could make a huge difference in whether you actually stay within your spending limits.

Here’s what Ramsey says to do to stick to your budget

Ramsey said there’s one “secret to staying on top of your budget.” And, the good news is, it’s something everyone can easily do: Tracking spending.

“When you buy something, when you pay a bill, when you spend money at all … you need to put those expenses in your budget. That way you’ll know exactly how much you have left to spend.”

Ramsey says you should track all of your transactions throughout the entire month, rather than waiting until the end of the month to add up what you spent on each category. By doing that, you can adjust course during the month if you’re starting to go over. By contrast, if you wait until the end of the month and discover you’ve gone over your budget, it will already be too late.

Here’s why Ramsey’s absolutely right

Ramsey is absolutely spot on when he suggests that “tracking your transactions is one of the single most important ways you’ll keep up with that monthly budget.”

There are actually a few reasons why that’s the case. As Ramsey points out, tracking spending as you do it allows you to keep tabs on exactly how much of your budgeted money you’ve spent on a particular category. If you see you’ve budgeted $800 for groceries for the month and have spent $450 in the first week, you know you’re likely to go over and need to make some big changes before you get stuck putting groceries on credit cards that you can’t afford to pay back.

Aside from being able to see where you are with regard to your budgeted funds for different categories, tracking spending can also help in another way. The very fact of knowing you have to record each purchase can make you think more carefully about whether you really want to go through with buying something — especially if doing so would end up putting you over your budgeted allowance.

Ramsey recommends using an app to track your purchases, but you can also do this process manually by just writing down each transaction and adding them up or putting them into a spreadsheet. The important thing is to find a system that works for you that lets you see in real time if you need to tweak your spending to stick to your budget — and that forces you to pause for a second to see if buying something is really what you want to do.

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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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Don’t buy a new car without reading this first. 

Most car buyers are eager to drive their newly-purchased vehicle off the lot. But, before you’re allowed to hit the road, you are going to have to fulfill a specific requirement.

This requirement is in place no matter what dealer you buy from and regardless of whether you pay cash, finance your car with a vehicle loan, or pay with funds from a personal loan. You need to be prepared for it before you go car shopping or head to the dealer to pick up that shiny new car.

Be prepared for this requirement when buying a new vehicle

Before driving a car off of the lot, every car dealer is going to require proof of insurance.

See, state laws require drivers to have a certain minimum amount of insurance coverage. The exact types of required auto insurance will vary by state.

Generally, though, drivers are required to have liability coverage which pays if they cause an accident that injures others or damages their property. Personal injury protection (PIP) is also mandated in “no-fault” states which require drivers to cover minor injuries through their own insurance no matter who caused a crash.

Since these types of insurance are legally mandated, dealers do not let car buyers drive off without them. In cases where vehicles are leased or financed, gap insurance may also be required. This is a policy that pays the difference between what the insurance pays if a car is stolen or totaled and the amount due on the loan. It’s usually mandatory for financed or leased cars, because cars are often worth less than what the driver paid for them — and insurers only pay fair market value.

Shop for insurance before heading to the dealer

Since auto insurance is required by car dealers before a driver can take a vehicle home, motorists need to be prepared before they go pick up a car.

If a driver doesn’t have insurance in place, they could be left trying to get in touch with an insurance company at the dealership. This usually means they’ll default to their existing auto insurer to buy a policy for their new car, or they’ll go with an insurer the dealer advises them to contact.

This insurer may not provide the best or most affordable coverage though. So a driver who scrambles to buy a policy just to be able to drive a new car off the lot could end up with costly insurance that doesn’t offer all of the desired protections.

To avoid this, motorists should shop around for coverage before they go to a car dealer. It’s possible to get insurance quotes for any vehicle by inputting the model number and details, so drivers can find out what different insurers will charge them for different vehicles they are interested in.

After shopping around, motorists will know exactly what insurer to reach out to when they buy a vehicle. And any driver who doesn’t pick up their car the same day they bought it (such as if they special order one) can usually get the details from the dealer in advance and buy a policy before even going to the dealership. This can save time, as well as the stress of having to call an insurer from the dealer and sign up for a policy right away just to leave the car lot.

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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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