Money Management

I’ll never get a travel credit card without it. 

There are lots of great travel credit cards that offer many benefits, including trip interruption protection, rental car insurance, and more. But, my absolute favorite feature of any credit card is airline lounge access.

Airline lounge access is a must-have for me, and there are three big reasons why I absolutely love this cardmember perk.

1. We don’t have to worry about finding a spot at crowded gates

My family and I travel a lot, and it’s a bit of a process when we go places because we bring along two children and a dog. Before we had a card with lounge access, we would have a difficult time finding a spot where we could all sit together unbothered at crowded airports.

Dealing with separating the kids or having people step over the dog made the entire flying experience a really stressful one. But that’s no longer an issue now that we have lounge access. We’ve always been able to find a comfortable, relatively private section of airline lounges where we can sit in comfort as a group. This removes virtually all of the stress of waiting to board our plane.

2. We don’t have to buy meals at the airport for our family

Most of the time when we fly, we end up eating at the airport. After arriving a few hours before your flight and then spending a few hours on the plane, it’s inevitable that you’re going to be hungry.

The problem is, airport food is expensive and usually not very healthy. But lounge access eliminated this issue for us. We’re Admirals Club members thanks to our credit card, and the Admirals Clubs offer a great selection of food, including breakfasts and dinners, complimentary drinks, cheese, crackers, fruit, and desserts.

Since we can eat a full meal at the Admirals Club lounge, we end up saving a lot of money. In fact, the savings on meals for the four of us more than covers the annual fee we have to pay for the card that provides us with the lounge access. The food is also a little bit healthier and higher quality compared with fast food, so I feel better about my kids eating it.

3. Flight delays are a lot more pleasant

The last major benefit of lounge access is that flight delays are a whole lot more pleasant. Flying has been difficult for most people in recent months as many airlines have had problems with flight delays and cancellations. We’ve been delayed on several of our trips, but it’s not a crisis for us because we have a comfortable lounge to relax in with food and wifi.

Thanks to these benefits, lounge access has become undeniably the best credit card perk I take advantage of. I won’t ever have a travel card again that doesn’t offer this perk, and I’m more than happy to pay my card’s annual fee in order to enjoy it.

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It’s a trap you don’t want to fall into. 

If you’re looking to sign a mortgage today, you’re sort of in a good news/bad news situation. The good news is that mortgage rates are not as high as they were back in the fall of 2022, when they surpassed 7%. The bad news, though, is that mortgage rates are still above 6%, and they’re the highest they’ve been in over a decade. Given that home prices are also elevated, you might run into serious issues with affordability if you purchase a home today.

Now, you might tell yourself that even though buying a home today is a stretch, you can make it work. After all, mortgage rates are apt to come down eventually. And once they do, you can refinance your mortgage, lower its interest rate, and shrink those monthly payments.

It’s a good plan in theory. But it may not work out so well in practice.

You may be waiting a while to refinance

Generally speaking, refinancing really only makes sense when you can lower the interest rate on your mortgage by about 1% or more. The reason for this is that refinancing isn’t free. Rather, you pay closing costs to refinance a mortgage, and those can constitute a large outlay. So you’ll need to make sure you’re reaping enough interest-related savings to make those closing costs worth paying.

Meanwhile, mortgage rates have dropped considerably since peaking in late 2022. But if you’re looking at signing a mortgage today, you should know that rates might decline at a slower pace in the coming months than they did between late 2022 and now. And so you may not have a great opportunity to refinance your mortgage for quite some time.

That’s why taking on a mortgage you can’t easily afford isn’t a great bet. If you tell yourself you’ll dip into your savings for a while until you’re able to refinance your mortgage and lower your monthly payments, you might end up doing that for a long time, to the point where your cash reserves are totally depleted. And then you might be seriously out of luck if something breaks in your home or you lose your job and need those savings to fall back on.

Make sure you can truly afford your home

As a general rule, your housing costs, which include your mortgage payment, property taxes, and homeowners insurance premiums, should not exceed 30% of your take-home pay. If, based on today’s mortgage rates, you can’t keep your monthly housing costs to 30% of your income or less, then you should really hold off on buying, or otherwise look to buy in an area where homes are less expensive.

You might think you can swing a higher mortgage payment for a few months and then refinance to give yourself relief. But if an opportunity to refinance doesn’t come around for a long time, then you could end up wrecking your finances irreparably, not to mention put yourself at risk of losing the home you stretched your home-buying budget to be able to buy.

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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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Waiting could mean having to pay a lot more interest. 

It’s hardly a secret that inflation has been raging for well over a year now, putting a massive burden on consumers. And in January, inflation unfortunately did not slow down by any means, at least on a monthly basis.

Last month, the cost of consumer goods rose 0.5% compared to the month of December. And on an annual basis, inflation was up 6.4% in January. That’s a lower reading than what we were seeing in mid-2022, but a high reading nonetheless.

Not only is continuing inflation bad news for consumers due to affordability issues, but it could also end up being bad news from a borrowing perspective. And so if you’ve been thinking about taking out a personal loan, you may want to get moving sooner rather than later.

Aggressive interest rate hikes could be on the way

The Federal Reserve has been trying to bring down inflation since early 2022. To that end, it’s implemented several aggressive interest rate hikes.

The goal there is specifically to make consumer borrowing more expensive. If it becomes too costly for consumers to borrow, whether in the form of a personal loan, a home equity loan, or carrying a credit card balance, they’re apt to start cutting back on spending. And that’s what the Fed wants.

Rampant inflation is generally the result of a disconnect between supply and demand. If the demand for consumer goods declines due to higher borrowing rates, supply should get a chance to catch up. And that could allow inflation levels to drop — and give cash-strapped consumers some much-needed relief.

Meanwhile, January’s 0.5% rise in inflation compared to December could be enough to spur another aggressive interest rate hike on the part of the Federal Reserve. The Fed is next scheduled to meet in late March. And it won’t be surprising if that meeting results in a larger rate hike — so you may want to apply for your personal loan before that happens.

To be clear, the Federal Reserve is not responsible for setting personal loan rates. Those are set by individual lenders. But when the Fed raises its benchmark interest rate, the cost of consumer borrowing tends to increase, too. So it’s best to get ahead of that if you’re looking to take out a personal loan — or any sort of loan for that matter.

It pays to shop around

Applying for a personal loan sooner rather than later could help you save some money by virtue of locking in a lower interest rate on the sum you end up borrowing. But it’s also important to shop around for a personal loan and compare the rates and fees different lenders are looking to charge you.

Even though a personal loan can be an affordable means of borrowing (especially compared to a credit card), it’s still essential to do your research and try to eke out as much savings as possible. This especially holds true these days, since borrowing costs are already higher on the heels of last year’s Federal Reserve rate hikes.

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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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If you’re thinking about proposing, you need to read this advice. 

If you’re thinking about proposing to your significant other, you want to be smart about what ring you purchase (if any). After all, most people spend a lot of cash on their engagement ring, and you don’t want to make the wrong choices when it comes to this big financial decision.

To help you out, finance guru Dave Ramsey has some advice on smart engagement ring shopping. In fact, he’s offered five tips to think about. The big question is, should you follow them?

1. Set the right budget

Ramsey’s first big piece of advice is to spend around a month’s salary on a ring — or two months’ at most. This is a bit more conservative than many experts suggest as a traditional “rule of thumb” is to spend three months salary.

While looking at the ring cost in terms of your salary might seem to make sense on the surface, this is kind of a silly way to set a budget for this type of purchase. If you find a ring you both love that costs less than a month’s worth of your salary, would you really want to spend more? Or if a special ring is important to you and your future spouse and you can budget to spend more, there’s not necessarily anything wrong with that if you don’t compromise other financial goals.

There’s also a really wide range of salaries. If you’re a high earner making $20,000 a month, does it really make sense to spend that much on a ring?

Ultimately, rather than looking at how much the ring costs relative to what you earn, consider what you can work into your budget and how much a ring costs that your (hopeful) future spouse will love.

2. Pay cash for the ring

Ramsey also recommends paying cash for your engagement ring. “Pay as much as you’ve budgeted for in cash,” Ramsey said. “Never go into debt to buy your girl the perfect ring. That means you should never buy a ring with a credit card, a bank loan or financing.”

While Ramsey is right that financing an engagement ring and paying interest on it doesn’t make sense, you don’t necessarily need to buy your ring with cash. While Ramsey says some jewelers will negotiate based on a cash deal, there’s no real reason why they’d be more open to negotiate if you have cash than if you pay with a credit card. You may as well charge your purchase and get the points for it as long as you can pay off the ring in full when the bill comes due.

3. Explore all your buying options

Ramsey suggests looking into all different options for purchasing a ring including online jewelers, traditional jewelers, pawn shops, trunk and gem shoes, and even big box stores. “Don’t knock Costco or Sam’s Club when you’re looking for jewelry — including engagement rings,” the Ramsey Solutions blog reads.

This is great advice, as you never know where you’ll come across the perfect ring for your beloved. Just be sure you’re working with a trusted, reputable place — especially if you look into a pawn shop or online seller.

4. Ask for a discount

While Ramsey acknowledges that chain jewelry stores often don’t discount their prices, he said it never hurts to ask to pay less. This is also advice that’s well worth following. There is often room for negotiation especially with independent jewelers. And you may be surprised to find that you can save a little if you try.

5. Be willing to compromise on diamond quality

Finally, Ramsey says you can often get a great ring for less if you’re willing to compromise a bit on the quality of the diamond. If you want a larger stone, for example, then you may be able to afford one if the color or clarity isn’t quite as good.

This is a helpful tip too, since not everyone can afford a diamond that’s perfect in every way. Ultimately, you should decide what’s most important about the look of the ring and make sure you prioritize what matters most to your partner while staying within a budget that’s comfortable 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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