Money Management

We won’t be surprised if the answer is “no.” 

During the pandemic, rent costs plunged as landlords struggled to fill vacancies. But since 2021, rent prices have been climbing steadily. Not only have a lot more people needed to rent a home in the wake of the pandemic, but housing prices have been sky high since 2021. And since mortgage rates are so expensive these days, more would-be buyers have been pulling out of the real estate market and looking to rent for a while instead.

It’s not surprising, then, to learn that the median rent price across the U.S. was $2,305 as of the end of 2022, according to new data from HouseCanary, a national real estate brokerage. Here’s a more detailed breakdown of median rent prices by unit size:

Of course, median rents can vary tremendously from certain parts of the country to others. You’re apt to spend a lot more to rent an apartment in New York City, for example, than one in Omaha.

But given that rent prices are up across the board, it’s important to know how much rent you can afford. And there’s an easy formula you can use to make that determination.

Keep your rent costs to 30% of your income or less

To avoid a financial crunch, it’s a good idea to make sure your housing costs do not exceed 30% of your take-home pay. Now, if you’re a homeowner, that 30% shouldn’t just include your monthly mortgage payment. It should also account for your property taxes, homeowners insurance, and HOA fees, if you live somewhere that charges them.

Since renters don’t pay property taxes or HOA fees, and the cost of renters insurance tends to be considerably lower than the cost of homeowners insurance, when you’re a renter, you really only need to account for the cost of your rent itself when calculating that 30%. So if, for example, you bring home $4,000 a month in your paychecks, you should be good to spend up to $1,200 a month on rent.

There are exceptions to the rule

Keeping your rent to 30% of your income or less is a generally good bet. But in some expensive cities, you might need more wiggle room. You can feel free to allocate a higher percentage of your income to rent, however, if you’re not spending much or any money on transportation, which many large cities allow for.

Going back to New York City, well, it has a subway that runs all through the day and night. And your neighborhood might be really walkable. So all told, you might spend very little on transportation by living in New York City by virtue of not needing a car. In that case, spending, say, 40% of your pay on rent isn’t unreasonable.

Otherwise, do your best to stick to that 30% limit. It may be harder with rent costs being so high, but it could save you a world of financial stress.

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Using credit cards in your 20s can help you learn how to manage your money well. 

If you’re in your 20s, now is an excellent time to start making careful financial decisions. By learning how to manage your money early in life, you can set yourself up for success in adulthood. If you’re looking for advice on how to best use credit cards in young adulthood, you’re in the right place. These are the best credit card moves to make in your 20s.

1. Get a credit card to start building your credit

One of the best things you can do in your early 20s is to use credit cards. Some people in their 20s may steer away from credit cards because they’ve heard that they’re dangerous. But if you use credit cards with care, they can help you build credit.

It pays to start building your credit early. Having a good credit score may qualify you for other financial opportunities in the future, like low-interest loans. If you’re considering applying for a credit card, review our list of the best credit cards for young adults.

2. Pay your bills on time

It’s always a good idea to pay your bills on time. But it’s even more important to pay your credit card bills promptly. If you make late payments, your credit card issuer will charge you late fees. Extra fees like this can add up quickly.

Your payment history makes up 35% of your FICO® Score. For this reason, paying your bills on time matters greatly. Creditors can report unpaid payments to the credit bureaus once they’re at least 30 days past due. If you want to avoid negative marks on your credit report, pay your bills on time.

3. Keep your credit utilization low

If you plan to use credit cards, make sure you don’t use all of your available credit. For starters, the best practice is only to charge what you can afford. But your card issuer may give you a high credit limit or raise your limit as you show that you can manage your credit.

Your credit utilization ratio, or how much of your available credit you use, makes up 30% of your FICO® Score. Maintaining a low credit utilization can help you increase your credit score. Most experts recommend keeping your credit utilization below 30% for the best results.

Here’s an example: If you have $5,000 in available credit, you’ll want to use less than $1,500 of your available credit.

4. Never carry a balance

If you can avoid it, never carry a credit card balance. Instead, pay your entire balance on or before the due date. You may be tempted only to pay the minimum payment amount, but doing this is not good practice. That’s because your credit card issuer will charge you interest when you carry a balance. As you accumulate interest charges, it can be too easy to fall into expensive credit card debt. Get into the habit of paying your entire balance every month to avoid falling into debt.

5. Hold on to your first credit card

The age of your credit history is another factor that makes up your credit score. Creditors want to see that you know how to manage your credit and that you’ve been doing it for a while. If you get a credit card in your 20s, hold on to that card so you can increase your credit history age.

If your first credit card has an annual fee and you can no longer afford to pay it, ask your credit card issuer to downgrade it to a no annual fee credit card. The account will stay open when you do this, and you can continue to increase the age of the account the longer you keep it open.

Don’t let credit cards scare you. Credit cards can be a valuable financial tool if you know what you’re getting into and make careful decisions. If you’re still unsure which credit card is best for you, check out our list of the best credit cards.

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Don’t assume coverage is off the table. 

Owning a pet can mean taking on a host of expenses, from food to medications to gear. So it’s important to have a nice amount of money in a savings account before bringing a pet into your life.

It’s also important to put a pet insurance policy in place once your adoption goes through. Without pet insurance, you could wind up on the hook for many costly bills that wreak havoc on your finances and drive you into debt.

But what if you’re adopting a pet with a pre-existing condition? If you’re bringing home an older animal, your chances of landing in that boat may be higher. But sometimes, even younger animals end up having pre-existing conditions. And if you know about these issues, you must disclose them when applying for pet insurance. Failure to do so could mean invalidating your policy.

Now, much of the time, pet insurance companies will not pay for treatment related to pre-existing conditions. But that doesn’t mean you can’t or shouldn’t buy insurance for your pet.

You can still get coverage

If your pet has a condition like diabetes and you put pet insurance in place, your policy may not cover the cost of diabetes treatment, or issues relating to your pet’s diabetes. But that doesn’t mean your pet insurance policy won’t cover treatments for other issues that arise.

That’s why it’s a good idea to get pet insurance even if you know there’s a specific condition your policy won’t pick up the tab for. You never know what other ailments might pop up down the line, so you’re better off having coverage for those issues than not.

Your insurance policy might cover pre-existing conditions that are curable

There are certain pre-existing conditions that pet insurance companies generally won’t pay for. According to Pet Assure, these typically include:

AllergiesArthritisCancerDiabetesEpilepsyHeart diseaseUrinary blockages

But that doesn’t mean your pet insurance company won’t cover a curable pre-existing condition. Let’s say your pet has kidney stones, but that issue has been treated. If it’s been a certain amount of time — say, a year or more — beyond your pet’s last kidney stone episode, then your insurance company might pay for a future occurrence of kidney stones. (This is just an example, and to be clear, it’s not meant to imply that kidney stones will automatically be covered if that issue has arisen in the past. It’s merely an example of a condition that could be considered curable.)

Know the rules

Pet insurance companies have a lot of wiggle room to make their own rules when it comes to pre-existing conditions. If you know that your pet has one, be sure to shop around carefully for insurance and read the fine print before signing up for a policy. Even if you can’t get coverage for something like diabetes treatment or surgery to treat arthritis, it could still pay to put a pet insurance policy in place in case your pet gets hurt or sick with another condition.

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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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Mortgage rates are expensive now. But will that change? 

There’s a reason so many prospective home buyers have pulled out of the real estate market over the past year. Not only have home prices remained elevated, but mortgage rates have been sky-high. That combination has put homeownership out of reach for a lot of people due to issues with affordability.

But some people have forged forward with a home purchase and mortgage loan despite higher borrowing rates and elevated housing prices. In a recent survey by Real Estate Witch, though, 81% of millennial home buyers say they wish they’d bought a home before rates increased.

The good news, however, is that when it comes to borrowing via a mortgage, you’re not necessarily stuck with the same interest rate forever. There’s always the option to refinance the loan once borrowing rates come down.

But is that likely to happen in 2023? It’s hard to say. But it’s also possible that we will see a notable decrease in mortgage rates within the year.

Buyers could get some relief

As of this writing, the average 30-year fixed-rate mortgage rate is 6.13%, according to Freddie Mac. Seeing as how mortgage rates were above 7% at one point last year, 6.13% is certainly an improvement. But it’s also a far cry from the rates in the 3% range mortgage borrowers were looking at in early 2022.

However, there’s reason to believe that mortgage rates could come down quite a bit in 2023. For one thing, the pace of inflation has been slowing, which might lead the Federal Reserve to pump the brakes on the aggressive interest rate hikes it implemented in 2022. Those rate hikes tend to drive borrowing costs up across the board.

That said, mortgage rates often rise and fall independently of what the Fed is doing. And this year, lenders might come down on rates if buyer demand continues to wane.

Refinancing could be an option

If you signed a mortgage last year at a time when borrowing rates were high, a decline in rates could open the door to refinancing. And the savings there could be significant.

Now that said, there are closing costs associated with refinancing a mortgage — and those costs could be substantial. So as a general rule, it really only makes sense to refinance a mortgage if you can shave about 1% or more off your existing loan’s interest rate.

If you signed a mortgage at 6.75% last year, though, and rates drop to the mid-5% range this year, then a refinance could pay off. And a lower interest rate on your mortgage could result in much lower monthly housing payments.

Of course, we can’t say with certainty that mortgage rates will drop all that much in 2023, or even at all. Rates could even reverse course and start rising again, topping the 7% mark once more.

Homeowners who are stuck with higher mortgage rates should keep tabs on how rates are trending. That way, they can jump at the opportunity to refinance once it makes financial sense to do so.

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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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Make sure you have these snacks on hand. 

This year, 192.2 million adults plan on watching the big game, with 103.5 million planning to throw or attend a party. Americans are expected to spend $16.5 billion this weekend, with food and drink making up 80% of that. Snacks are an essential part of any party. Whether you’re hosting this weekend or just snuggling up on the couch, Sam’s Club is one of the best places to pick up some popular game-day snacks without draining your checking account.

1. Tyson Fully Cooked Bone-In Buffalo Style Hot Chicken Wings

Chicken wings are one of the most popular snacks for the big game. In fact, Americans are expected to eat a record-breaking 1.45 billion chicken wings this weekend. To put this in perspective, if you ate three wings per minute for 24 hours, it would take you 920 years to eat all those wings!

For $19.98, you can get 64 ounces of Tyson Fully Cooked Bone-In Buffalo Style Hot Chicken Wings. Sam’s also offers Tyson Rotisserie Oven Roasted Wings at $24.98. You can also choose Sam’s Club’s own private label Member’s Mark Oven Roasted Wings at $7.08 a pound. There are plenty of options to choose from.

2. Fruit and vegetable tray

Want to offer healthier alternatives? You can purchase a Member’s Mark Fresh Fruit Tray for $4.32 a pound, which serves 12 people and Member’s Mark Fresh-Cut Vegetable Tray with Hummus for $4.33 a pound. They are washed and ready to serve immediately.

3. Mixed nuts

You can’t go wrong with Member’s Mark Deluxe Mixed Nuts with Sea Salt. The 34 ounce jar costs $12.49 and includes almonds, pecans, hazelnuts, cashews, and pistachios. They also have plenty of other nuts if you prefer one variety over the others.

4. Chips and pretzels

Sam’s Club offers a wide variety of chips, such as Doritos Nacho Cheese Tortilla Chips at $3.98 per 19 ounce bag. You can also pick up a 35 ounce bag of Dot’s Homestyle Pretzels Original Seasoned for $10.98 and RITZ Original Crackers (61.65 ounces) for $8.98.

4. Mac and Cheese

A classic comfort food, Member’s Mark Mac ‘n Cheese is $3.48 per pound and made fresh daily in your local club. This might be a good and easy choice if you’re hosting a party that will include dinner.

5. Drinks

Sam’s Club offers a large variety of drinks, including sodas, alcoholic beverages, and more. Right now you can get a 36 pack of 12 ounce cans of Diet Pepsi for $15.78 and a La Croix Sparkling Water Variety 24-Pack for $9.48.

These are just a few of the large game day selection Sam’s Club offers. You’ll also find a variety of dips, steaks, pizzas, wraps, and sandwiches. Not only is shopping there a great way to stay within your budget, but you can make sure the food you offer is the life of the party. Using the right cash back credit card can earn you even more rewards on your spending. Sam’s Club is a fan favorite because of its great prices and wide variety of items, so check it out if you’re preparing to throw a party!

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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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Love may not cost a thing, but Valentine’s Day sure is expensive. 

There are a lot of things dividing the U.S. public. Politics, religion, Marvel movies. Even holidays aren’t exempt from the staunch divide.

Take Valentine’s Day. Only about half — 52% — of consumers celebrate the day ostensibly devoted to love. (Perhaps because it’s realistically more devoted to the consumption of love-themed decor and expensive gifts.) Though, in fairness, of those not specifically celebrating, more than a quarter still intend to mark the occasion in some way.

Of course, half is still plenty from a personal finance point of view. That’s because consumers are still expected to spend nearly $26 billion (yes, billion, with a “B”) on their chocolates and sparkly bits, according to a study by the National Retail Federation.

$192.80 a pop adds up quickly

When you break down the numbers, it’s easy to see how it can add up to such a large number. Individually, consumers expect to spend an average of $192.80 each. The only holidays that top Valentine’s Day spending are Christmas and Mother’s Day.

So, where’s all the cash headed? Approximately 57% of participants plan to gift some sort of candy, giving small chocolate shops what’s likely their busiest time of the year. Somewhat surprisingly, greeting cards are the second most popular gift, proving that Hallmark is still holding its own in the middle of the digital revolution.

The expected flowers and jewelry are also in the top five gifts, with more than a third of people picking up a bouquet, and roughly a fifth of folks gifting the glam. Restaurants will get their fair share, however, as nearly a third of people plan on a romantic evening out.

How to stretch your V-day budget

For the millions of folks already on a tight budget this year, the idea of forking over nearly $200 on overpriced candy or flowers that die in a week may seem extreme. (Heck, that can seem extreme even if you’re not on a tight budget!)

If you’re looking to share your love without draining your savings account, try some of these tips:

Craft your own gift: While all the traditional gifts are nice enough, nothing truly shows you care like taking the time to make something yourself. This has the added benefit of usually being much less expensive, too.

Do it together: A box of chocolates is a nice gift, but it could be even better if you make it together. Consider taking a candy-making class as a couple. Or, if you’re feeling brave, buy all the supplies and spend the evening with a few helpful online tutorials (and a bottle of wine).

Think outside the restaurant: A sit-down dinner at a fancy restaurant is as classic as it gets — but that “market rate” meal is always going to be pricey, especially when you tack on the V-day premium. Instead, look for more affordable — but no less romantic — alternatives, such as packing a lunch and having a picnic.

Skip the card and write a letter: If you haven’t purchased a card in a while, you could get a bit of sticker shock. A fancy pop-up card can easily run you nearly $15, and even a basic Hallmark will set you back $3 to $5. Instead, invest that money in a nice stationary set and write your loved one a love letter. As a plus, you’ll likely have plenty of stationary left over for next year!

Make use of credit card rewards: Your trusty rewards cards can come in handy in a few ways. For one thing, you can use your existing rewards instead of dipping into your bank account. Cash in your cash back to cover your meal, or redeem some extra points for a romantic weekend away at a fancy hotel. And, of course, don’t forget to maximize your rewards on anything else you purchase, such as using a restaurant rewards card at dinner.

The commercials make it seem like only a grand evening — with an equally grand price tag — will adequately show your loved one how much you care. But remember: Commercials are designed to sell you things. You don’t need a $2,000 ring or even a $200 bouquet to express your affection. To paraphrase the song, real love doesn’t cost a thing.

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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.Brittney Myers has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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