Money Management

The quick answer? It really depends on how often you use it. 

The idea of having items delivered to your door is nothing new. People have been doing it by shopping with Amazon for years.

But during the early days of the pandemic, a lot of people got into the habit of using services like Instacart for grocery delivery. Of course, back then, people were intent on staying out of stores for fear of getting sick. These days, the typical consumer might feel more comfortable with the idea of shopping in person. But even so, services like Instacart offer their share of value.

For one thing, you may be the sort of person who just plain doesn’t like leaving the house or being in crowded places. If that’s the case, Instacart can spare you the hassle of having to shop in a busy supermarket.

Plus, you might work a demanding job and have little time left over to do your grocery shopping. Using Instacart could free up hours in your week and give you one fewer task to worry about.

Of course, Instacart isn’t free. You’ll pay a higher price for the items you want than what your local store will charge you, and you’ll also be subject to delivery fees that can add up. But if you sign up for an Instacart+ membership, those fees will be waived for orders above $35. And so you may want to consider getting a membership.

How Instacart+ works

With Instacart+, you get unlimited no-fee deliveries for orders over $35. The service costs $99 if you put an annual membership on your credit card upfront. If you don’t want to do that, you can pay $9.99 a month instead.

On its website, Instacart says you can save $7 per order on average with Instacart+. So if you’re paying the annual membership fee of $99, or $8.25 a month when you break it down, you’re practically making your money back right there. And you’re easily making it back on your second order. To put it another way, even if you only place two Instacart+ orders a month, the service will likely pay for itself.

Is Instacart+ right for you?

Maybe you don’t have a car (either because you live in a big city or you simply don’t want to deal with auto loan payments and car insurance), and so you tend to fall back on grocery delivery a lot. Or maybe you’re self-employed and have so many requests for your services you have to turn clients down. In either scenario, it’s pretty easy to justify the cost of an Instacart+ membership and the use of Instacart to begin with.

Not having a car can be a pretty big barrier to shopping for groceries efficiently. Remember, Instacart offers you the option to load up on bulk items from stores like Costco. Without a vehicle, transporting bulk items just isn’t doable.

Plus, if you’re self-employed and make $80 an hour doing what you do, it’s easy to justify spending $8.25 a month on Instacart+ if it saves you several hours of grocery shopping a month. Granted, even with Instacart+, you’ll face a markup on the items you buy compared to the price you’ll pay at the store. But let’s say the average Instacart+ order you put in costs you $20 extra due to that markup. Even so, if your hourly rate is high enough, paying for delivery is an easy call.

All told, an Instacart+ membership could be a great deal for you. And if you’re not sure, sign up for the free two-week trial the company is offering and check it out before committing to paying the full $99 a year.

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Every mistake can be a learning experience. 

Being able to learn from past mistakes is truly the silver lining to making them in the first place. This is especially the case when it comes to money management, and I’m willing to bet that everyone has at least one major regret regarding their finances. For me, that is definitely buying my first house, which unfortunately ended in a short sale. (While this was less destructive to my credit than a foreclosure would have been, it still involved a pretty significant credit score hit that stayed with me for seven years).

Hindsight is always 20/20, and more than a decade later, I can look back on the smaller mistakes that led to this big one and resolve to do better when I buy a home again. Here’s what they are.

1. Falling for the myth that ‘renting is throwing money away’

This was the first step that led to me buying my first home. I moved around a lot as a kid, going from rental house to rental house, in multiple states and finally all in the same town. It seemed to me as if our family truly was throwing our money away, while I visited friends from school whose parents owned their homes. In some cases, my friends got to live in the same house for their entire childhood. When I got encouragement and financial help from my family, it seemed like a great idea to sign on for a mortgage — after all, I was tired of moving and tired of “throwing money away.”

Renting shouldn’t be viewed that way, though. You’re paying for a roof over your head, and that’s worthwhile. And owning a home isn’t the only way to grow wealth. You could conceivably invest the money you save by renting and still come out ahead. Since my misadventure with homeownership, I’ve rented in a few more locations, and I’ve been happy to make that rent payment every month. That’s because I know that each time I move again, I’m not faced with the expensive and possibly difficult prospect of selling a house.

2. Living paycheck to paycheck as a renter

At the time when I bought my first house, I was living paycheck to paycheck after several years of scraping by as a college and then graduate student. Since I was already living up to my means, there was no way I was financially prepared to be a homeowner. I didn’t dig deep into the numbers or truly comprehend what components went into a mortgage payment. All I knew was that the monthly payment on my home would be just a couple hundred dollars more than my rent had been, and it looked as if I could maybe afford that.

Just two years later, I was laid off from my job and was immediately unable to afford those payments. I had no emergency fund or any real savings of any kind. It was a huge mistake to buy under such circumstances.

3. Not understanding the actual costs of owning

In addition to not actually realizing how a mortgage payment differs from rent, I also had no idea how much additional money it costs to be a homeowner. I was extremely lucky that nothing went wrong with my house in the time I lived there. I had been told by the home inspector that the roof would need to be replaced in the next few years, but it didn’t come to pass while I lived under it. I would have needed to immediately go into debt to pay for any repairs the home might have needed. Now that I’m older (and wiser, I’m hoping), I will make it a point to create a homeownership budget and have savings dedicated to any repairs or maintenance a house might need.

Growing older gives us the chance to put into practice the lessons we learn from our mistakes. Now that I can look back on that first home purchase (and try not to cringe too hard), I know what not to do next time.

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Sometimes good tools go bad. 

As someone who is somewhat, let’s call it “memory challenged,” one of my absolute favorite personal finance tools is autopay. Pretty much anything with a due date is set to automatically pay itself each month so I don’t have to worry about late fees when something slips my mind.

And yes, autopay works for most bills. Utility companies, cellphone providers, credit card issuers — everyone is more than happy to let you set-and-forget your monthly bills.

No matter how much I love autopay now, however, there was a long time in my life when I didn’t dare use it. Not because it wouldn’t have been useful — it definitely would have been — but because I couldn’t guarantee the money would actually be there when they went to take it.

The autopay dilemma

The major downside to autopay is the same thing that makes it useful: Payments are made automatically each month without any interference from you.

If you’re in a position where you can always keep a buffer of $1,000 or more in your checking account, this is great. You never have to worry about which bill might autopay this week, because you always have the money to cover any automatic withdrawals.

On the other hand, if you’re living paycheck to paycheck (like nearly two-thirds of U.S. consumers) autopay can be a nightmare. That’s because autopay is going to try to withdraw that money every month — whether it’s there to be withdrawn or not. Or, perhaps worse, autopay may end up withdrawing your last few dollars, right when you need them most.

This can be especially painful if you’ve forgotten about the autopay (which isn’t uncommon; after all, I set up autopay because I was afraid of forgetting my due dates in the first place!). In this case, you may make a purchase (or three) around the same time the autopay hits your account, causing you to overdraft.

The only thing worse than an overdraft fee? Multiple overdraft fees.

Lesson learned: Never set up autopay unless you’re certain you can keep enough money in your account to cover the charges, plus whatever other purchases you may need to make.

Other ways to remember due dates

Autopay is undeniably a great tool. But it’s hardly the only way you can work to prevent missed due dates. Here are a few suggestions:

Text or email reminders from your issuer or provider: Many companies will let you opt-in to text message and email bill reminders. If the company has an app, you may also be able to set up push notifications on your phone.Digital calendar reminders: Modern smartphones are chock full of great productivity tools. Your calendar app should let you set up tasks and reminders. You can even have them automatically recur every month on the same day, or at a regular interval. The same thing can be done in your Microsoft or Google calendars.Physical calendar: Some folks simply do better when things are physically in front of them. An old-school paper calendar with your due dates circled in red marker, placed somewhere handy where you’ll see it every day, could help you stay on track.Sticky notes: My go-to method for analog reminders is the tried-and-true sticky note. Even while using autopay these days, I still keep important dates tacked to my computer monitor so they’re never out of sight or out of mind.

You can use any of these methods — or something else entirely. It doesn’t matter if it’s a common trick or entirely unconventional, as long as it works 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.Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Brittney Myers has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Microsoft. The Motley Fool has a disclosure policy.

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You shouldn’t hesitate to check your credit report when you feel it’s necessary. 

You’ll often hear that it’s a good idea to check your credit report a few times a year. The reason? Your credit report is a snapshot of your credit history. It lists your open credit accounts and loans, and it shows how much of your available credit you’re using at once and how many delinquent debts, if any, you have.

It’s important to check your credit report every few months to make sure it’s accurate. If your credit report shows you as being delinquent on a mortgage loan payment when that never actually happened, correcting that mistake could lead to a boosted credit score.

Meanwhile, according to a recent survey by Capital One, 27% of respondents said they thought checking their credit reports would result in damage to their scores. But that’s not true at all.

You won’t be dinged for pulling your own credit

Any time you apply for a new credit card or loan, the lender is going to pull your credit report to see how much risk it’s taking on by loaning you money or extending a line of credit. When that happens, it counts as a hard inquiry. And that could bring your credit score down.

That said, a single hard inquiry will generally only lower your credit score by about five to 10 points. So if you’re applying for a personal loan and your lender pulls your credit report, your score of 770 might drop to 760 or 765.

That’s not a huge deal, since there’s not a big difference between these numbers in terms of creditworthiness. Or, to put it another way, you’re likely to be offered the same interest rate on a loan whether your score is a 760 versus a 765 versus a 770.

Where you could get into trouble is having multiple hard inquiries on your credit report within a short period of time. A single five- or 10-point drop isn’t so bad, but if you have three hard inquiries in short order, your score could drop around 30 points, which isn’t ideal.

But rest assured that when you access your own credit report to give it a look, it doesn’t count as a hard inquiry. So you should feel free to review your credit report when you need to, such as when you’re gearing up to apply for a large loan or are worried about fraud.

How often should you check your credit report?

Normally, you can get one free copy of your credit report from each reporting bureau a year. Since there are three reporting bureaus — Experian, Equifax, and TransUnion — this means that checking your credit report every four months is a good bet.

With that said, credit reports are currently available for free on a weekly basis through the end of 2023. So you could check yours more frequently this year without having to pay if you so choose.

But usually, checking your credit report every four months is reasonable. That should give you a solid snapshot of your borrowing picture.

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

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Being a landlord may be a great way to bring in extra income, but it is not without its challenges.  

An estimated 10.6 million Americans own rental properties. On average, landlords own three properties, often modestly-priced homes. While renting property out is a good way to create a steady income stream, being a landlord is not for the faint of heart.

Here are some of the challenges landlords face year in and year out.

1. Complying with state and local laws

Landlords are business owners. As such, they must adhere to all laws and business practices laid out by the powers that be in their jurisdiction. For example:

Landlords must choose tenants regardless of race, ethnicity, religion, sexual orientation, or disability. Landlords must keep the property safe. If a tenant is hurt due to a landlord’s negligence, the responsibility falls to the landlord. Landlords must provide basic amenities. That means the landlord is responsible for repairs when the water heater goes out or the dishwasher breaks.

2. The risk of bad tenants

While most renters are dependable, it’s only natural that a landlord might get stuck with one who fails to pay rent or damages the property — no matter how well they were initially screened.

Running a credit report and checking with former landlords is essential. However, they can only tell a landlord how well a prospective renter has handled their business in the past. Things can change. For example, that adorable newborn baby they moved in with may grow into a surprisingly destructive four-year-old. The long-term job that ensured they could pay the bills can disappear. A marriage could fall apart, leaving the remaining partner too little in their bank account to cover rent.

As part of their business plan, a landlord must factor in times when the property may sit empty.

3. The complicated business of eviction

Some landlords will never find themselves evicting a tenant for non-payment. Those who do, though, face an unpleasant process. Eviction can be difficult and costly. A single eviction can cost the landlord thousands of dollars and hours of frustration.

4. Maintenance and upkeep

The best landlords are those who budget for every eventuality. In addition to spending about 1% of the home’s value on maintenance issues each year, landlords must also plan ahead. That means budgeting for new appliances, a new roof, and unexpected repairs, like a sinking patio that needs to be mud jacked.

5. Endless decisions

According to Flex Services, half of all landlords manage their own properties. The other half pays a property management company between 8% to 12% of the monthly rental amount, or a flat monthly fee, to manage the day-to-day operations for them.

Let’s say the monthly rent on a home is $1,500. That means a landlord would pay their management company between $120 and $180 or a flat monthly fee for their services. Whether tenants are living in the home or it sits vacant, these fees are due. These fees are on top of any other out-of-pocket expenses a landlord faces, including a mortgage payment, landlord insurance, and upkeep.

Whether they’ve hired a management company or not, the landlord must decide everything from whether the house should be painted to whether it’s wise to allow long-term tenants to adopt a puppy.

And if they’re going it alone without a management company, a landlord must be on call 24/7.

Leasing property is often referred to as “passive” income, but that’s not quite true. Being a landlord requires people skills, keen business acumen, and a dose of optimism that everything will work out as intended.

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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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We humans are an emotional bunch.  

We’re bombarded on all sides by the temptation to spend money on things we don’t need. Whether it’s buying another pair of tennis shoes or a tube of mascara, if we don’t need it, we’re needlessly draining our bank accounts.

However, labeling a habit as “bad” only serves to make us feel guilty and does nothing to address the real issue. Sometimes, it helps to figure out why we do certain things. Once we understand the genesis of our behavior, we can come up with constructive ways to take control.

Rather than dive right into tips, it may help to get a better sense of why we blow money at all. Here are five potential reasons.

1. Insecurity

Have you ever been invited to a special event but felt nervous about going? You look through your closet, and despite having racks of clothing you once liked enough to buy, you’re convinced that you have nothing to wear. If you buy a new outfit, you’re pretty sure you’ll feel more confident.

2. Sadness

There’s a temporary high that comes on the heels of making a purchase. Whether we bought a new car or a houseplant, spending money temporarily lifts our spirits. The problem is that research shows that we each have a “happiness set point.” Once the temporary high wears off, we go right back to how we felt before we pulled out our debit cards.

While later research on the subject found there are steps we can take to increase our happiness set point, needlessly spending money is not one of them.

3. Jealousy

We all wanted to fit in back in high school, and there was always that small group of people who seemed to have it all. At the time, it’s possible that we purchased a particular pair of shoes or brand of jeans because we wanted to be more like them.

Later, watching a close friend enjoy a new car or hearing a relative brag about their new dream house was enough to get our wheels turning.

When we’re envious of what others have and believe that jealousy will disappear when we own the same thing, we’re walking straight into a debt trap.

4. Stress

Stress is uncomfortable, and robs us of peace. It is during heightened periods of stress that we’re most likely to look for an escape hatch. Sometimes, spending money is a way to distract ourselves from the discomfort we’re experiencing.

5. The Diderot Effect

There’s an interesting theory of over-consumption based on the 18th-century French philosopher Denis Diderot. The Diderot Effect posits that buying new possessions often creates a spiral of consumption. The more we buy, the more we feel as though we need to buy. As a result, we end up buying things we never used to need to feel happy.

While there are many other potential causes for overspending, identifying our triggers helps us recognize why we’re so compelled to spend. And it may be that we each have several triggers.

Escaping the hamster wheel

We’re each capable of taking control of spending, but it will likely occur in increments and with practice. A 2021 peer-reviewed research article, published by the Public Library of Science (PLOS), offers these tips for taking control:

Don’t leave home without a shopping list. And then, stick to the list, no matter what catches your eye.Set a budget for each shopping trip. Once that money is gone, it’s time to go home. Pay with cash instead of cards. If pulling out a credit card is not an option, it’s easy to stick with your budget. Paying with cash also involves pre-planning because you’ll need to go by a bank or ATM to get the money. Keep cash in large denominations. It hurts a little more to break a $100 bill than a $5 bill. Set up specific savings goals. It’s easier to keep cash in your pocket when you remember you’re saving for a special weekend get-away or new sofa. Use savings accounts that make early withdrawals expensive. For example, you may put the funds you’re saving for short-term goals in a certificate of deposit (CD), and money you’re saving for retirement in an individual retirement account (IRA). Track weekly saving deposits. There’s nothing quite like watching your nest egg grow to encourage you to stay on track. Don’t fall for financing options. If you wait until you have cash to buy something, it gives you more time to consider whether you really need it. Consider why you’re tempted to make the purchase. Is it to make yourself feel better about something? Spending feels much less necessary once you identify your motivation. Anticipate regret over purchases. Imagine how you’re going to feel a few days after buying that thing you thought you needed. Will you find that it ultimately did not bring you joy? Will you regret not putting your money to better use?

Interesting side note: Researchers found that the only self-control strategy that resulted in an increase in spending was using coupons. It’s possible that it led to people buying things they could live without simply because they were getting them at a discount.

Overspending is not a moral failure, but it can be habitual. Once you’ve discovered the satisfaction of making your money work for you, you may wonder why you were ever tempted to buy anything you didn’t need.

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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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Dana George has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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