Money Management

Groceries have gotten expensive, but that doesn’t mean you can’t trim your costs. 

If it seems like your credit card bills are going nowhere but up and that higher food costs are to blame, well, you’d be correct. Between December 2021 and December 2022, the cost of food rose 11.8%, according to the U.S. Bureau of Labor Statistics. And even if you’re someone who doesn’t tend to buy fancy ingredients, you might still be looking at substantially higher bills.

The good news, though, is that there are steps you can take to trim your supermarket spending — even at a time when inflation is making the cost of feeding a family so burdensome. Here are some tips to employ.

1. Buy in bulk — but only when that makes sense

If you have a membership to a warehouse club store like Costco, it pays to put it to good use and buy groceries in bulk. Doing so could help you spend less on food. And the less you spend, the more you can add to your savings account.

In fact, you don’t even need a Costco membership to take advantage of bulk buying. Your regular supermarket might offer certain items in bulk, and scooping them up could leave you spending less.

That said, you need to be careful when buying in bulk. A good bet is to stick to products that meet these criteria:

You eat them oftenThey have a long shelf lifeYou have a place to keep them

Otherwise, you might end up throwing food away — and wasting money instead of saving it.

2. Stick to a list

Putting together a grocery list and sticking to it could help you keep your food-related spending down. For one thing, if you’re only hitting specific aisles to check items off your list, as opposed to roaming around the store, you may be less tempted by impulse purchases. And also, if your list is based on meals you have planned, you may be less likely to end up losing money to food waste.

3. Shop at the right stores

Sometimes, saving money on groceries can boil down to choosing the right supermarket. You might have a favorite chain that’s conveniently located to your home. But if you’re willing to drive a few minutes out of your way, you might come across a discount grocer like Aldi, where you could end up spending considerably less on household staples.

Another option to consider? Dollar stores. They’re not the type of store to go to when you’re looking for produce or perishable items, but for pantry staples like pasta and rice, they could be a good bet.

That said, always check out the sales at your go-to supermarket before heading to a discount store or grocer. If a box of pasta normally costs $1.25 at your favorite grocery store but there’s a sale this week that brings pasta boxes down to $0.79 apiece, that could be your least expensive bet.

Food costs may be way up. But with the right strategy, you can enjoy your fair share of savings.

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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 positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Home prices may have dropped, but that doesn’t mean housing has become affordable. 

There’s a reason so many buyers struggled to make a home purchase in 2022. Not only were home values still sky-high, but mortgage rates rose sharply last year, adding another complication on the affordability front.

These days, mortgage rates are still high, though they’ve come down a bit compared to where they sat during the latter part of 2022. And home values have come down, too. Data firm Black Knight reports that home values have fallen 5.3% since June. And based on that information alone, you may be thinking it’s time to go out and buy a home.

But while home prices may be down compared to June, they’re far from affordable. And between that and today’s mortgage rates, you may find that purchasing a home isn’t so feasible just yet.

Home prices are still up

U.S. home prices may be down 5.3% since June, but they’re still up 5% from a year ago. Meanwhile, mortgage rates are considerably higher now than they were back in February 2022.

In February 2022, mortgage borrowers in search of a 30-year fixed loan were looking at an average interest rate in the mid-3% range. Nowadays, that same loan product is still averaging above 6%. So all told, it wouldn’t exactly be accurate to call today’s homes affordable.

Low inventory could be an issue, too

As of late December 2022, there was only a 2.9-month supply of homes for sale on the market, according to the National Association of Realtors. It can normally take up to a six-month supply of homes for there to be enough inventory to meet buyer demand.

If you seek to buy a home right now, you might struggle not only due to higher prices and mortgage rates, but also due to a lack of choices. And while it’s not a bad thing to be willing to compromise on certain home features, when you’re talking about the place you might be living in for the next five, 10, or 20 years, there’s only so much compromising you should be willing to do.

It’s one thing to buy a home with an outdated kitchen that you can fix up down the line. But if you have a large family and you buy a 1,200-square-foot home on a tiny lot, you won’t be able to turn it into the 2,000 square feet of space you actually need.

Plus, even if you’re willing to take on certain home renovations if it means getting to buy a place of your own sooner, remember that between higher home prices and mortgage rates, you may not have enough room in your home-buying budget to fix up your home for quite some time. And just as mortgage rates have gotten expensive, so too have personal loan and home equity loan rates. So renovating your home to meet your needs may not be as easy as you’d expect.

All told, it’s still a difficult time to be buying a home, despite a notable dip in prices. This isn’t to say you won’t have success if you decide to move forward with a home purchase. But don’t be surprised if you run into issues with affordability or a lack of inventory.

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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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Can bank employee bonuses be a sign of things to come? 

Banking bonuses, or the amount of money paid out to top executives and employees in the banking industry, can range from hundreds of thousands of dollars to even millions of dollars for high-performing bankers. Annual bonuses rise and shrink based on the economy, and with bonuses expected to drop by 50%, 2022 was not a good year for banks. As banks struggle to remain profitable in the face of the COVID-19 pandemic, here’s what it can mean for you.

Why have bonuses declined?

Banking bonuses are an indicator of how banks are performing financially. For Wall Street, these bonuses are offered in addition to regular salaries and wages and can be several times the base pay. When bonus pools increase, it indicates that banks are doing well and are able to pay out more money to their employees in recognition of their accomplishments. Conversely, when bonus pools decrease, it usually indicates that the bank is struggling financially and is unable to provide its employees with additional compensation beyond their salaries or wages.

With interest rates skyrocketing, investment banking revenue has dropped by more than 50% from the previous year. Mergers and acquisitions, companies going public, bank loans, and other banking activity has decreased significantly. As reported by the New York Times, Instacart pulled its plans to go public in 2022 as its valuation was slashed from $40 billion to $24 billion. With rising inflation, the war in Ukraine, and fears of a looming recession, Wall Street has taken a more conservative approach this past year.

What does it mean for average consumers?

For average consumers, banking bonuses may not seem like a big deal; however, they can still have an impact on everyday life. First, if a bank’s bonus pool decreases significantly due to economic struggles, this could indicate tough times may be ahead. Second, higher interest rates make it more difficult for people looking to purchase homes or cars or start businesses, as lending options become limited or more expensive.

Lastly, this can be problematic for both the bank itself and its customers since it could mean less money available for offering personal loans or other bank services. Banks have had to reduce employee bonuses or decrease other spending in order to preserve cash reserves, making it harder for them to expand their operations or offer new products or services. This may limit what customers can access and can impact the overall health of the banking system.

All in all, banking bonuses may be an indicator in determining the financial health of a bank as well as the economy in general. Even though it may not seem like much at first glance, understanding how banking bonuses work can help us get a better idea of what’s going on behind the scenes at large Wall Street banks as well as local banks. This may mean that financial stability of banks may also be at risk and could lead to decreased availability or reduced access to banking services for the average consumer.

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Having nothing more to do than move in is a beautiful thing. 

After two years of a scorching-hot housing market, a correction may be around the corner. There’s been a decline in total home sales due primarily to rising interest rates. And while list prices continue to climb, many sellers have been forced to drop their prices.

According to Wendi Boudreau, a Realtor with Keller Williams in Simi Valley, California, there is one type of house that continues to sell: turnkey homes.

What’s a turnkey home?

A turnkey home is move-in ready. It requires no major repairs or improvements and may only need a fresh coat of paint if the buyers prefer another color. In other words, once they have the keys, a home buyer can move in and begin living without making any upgrades.

For buyers, who are already strapped by mortgage rates that have doubled over the last year, a turnkey home saves money and prevents headaches. Buyers appear willing to pay top dollar for the privilege of moving into a home they don’t have to fuss over any time soon.

If you’re selling your home and are concerned you might have to drop the price, there are things you can do to make it move-in ready.

Who’s looking for a turnkey home?

According to HomeLight, buyers are willing to pay a premium for a turnkey home. While that may seem counterintuitive in an already-expensive market, there are a number of reasons buyers would prefer to purchase a move-in-ready property.

Buyers on a budget: Some buyers would rather pay more upfront than worry about replacing the electrical system or repairing wood rot after move-in day.Buyers who lack confidence: Say a buyer walks into your home and sees that it’s perfectly decorated. There’s not a thing out of place, and they can immediately imagine living there. If they don’t have confidence in their own ability to make tasteful upgrades, they’ll likely be willing to pay more for your property.Real estate investors: A busy real estate investor may like the idea of buying your home as is. That way, no time (or money) is spent getting the property up to snuff, and they can immediately allow tenants to move in and get the cash flow started.

How to create a turnkey home

Even if your home isn’t move-in ready today, there are steps you can take to make it shine. Doing so does not have to be a hassle or drain your bank account.

Your first step is to determine your potential return on investment. Quoting property management company Seabreeze, Clever Real Estate says that turnkey homes can sell for 5% to 25% more than surrounding properties in need of TLC. For the sake of this illustration, let’s assume that a turnkey home in your neighborhood sells for 10% more than the competition.

What buyers are looking for

This list should give you a sense of the types of features buyers consider turnkey:

Spotless interiorFreshly painted, neutral-colored wallsGleaming hardwood floors and/or clean, freshly vacuumed carpetPlenty of storage space, including closets and cabinetsNewer model kitchen appliancesA recent home inspectionGreat curb appeal: no weeds in sight; and plants, bushes, and trees are groomed

Make a list

Let’s say you’ve walked through each room and determined your home checks all the boxes but a few. You make a list of anything that won’t be viewed as move-in ready. Here’s what you come up with:

Daughter’s bedroom is painted lime green and full to the brim with furniture and toysLiving room and dining room can use a fresh coat of paintBasement is dusty and disorganizedCabinets throughout the home are clutteredBedroom closets are overflowing with clothes and personal itemsDishwasher is on its last leg and sounds like a small jet as it starts upHardwood floors in common areas of the house are scratched and dentedWindows are dirtyBushes need to be trimmed around the house and fresh annuals should be planted

Add up expenses

Now that you know what it will take to make your home turnkey ready, add up the total estimated cost. For example:

Estimated cost to have three rooms professionally painted (based on 550 square feet of wall space at $5 per square foot): $2,750Cleaning and decluttering of all rooms, closets, and cabinets: $0 if you do it yourselfCarpet in bedrooms and family room professionally cleaned: $600Hardwood floors professional refinished in kitchen, living room, and hallway: $5,000New dishwasher installed: $1,000Professional window cleaner: $200Trimming the bushes and planting annuals: $200 if you do it yourself

All together, you see that it will cost around $9,750 to make your house stand out as move-in ready.

Determine return on investment (ROI)

Once you know about what you’ll be spending, compare that to how much more you’re likely to receive for a turnkey home. Again, we’ll assume that your home sells for 10% more than neighboring homes requiring TLC.

If other homes in your area are selling for around $385,800 (the expected median home price in 2023), that means that you’re likely to receive an offer of $424,380, or $38,580 more than homes that aren’t move-in ready.

Once you subtract the amount you spent to get the house ready, you’re left with an extra $28,830 to put into another home or invest for the future.

Of course, if the amount it will cost to make your home move-in ready is higher than what you’re likely to get for the house, the decision is easy. In that case, you may just want to do a thorough decluttering and deep cleaning and call it good.

At the end of the day, your goal is to make your home attractive enough to inspire a potential buyer to take a mortgage out on it.

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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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Loyalty program terms can change. 

Restaurant loyalty programs offer an excellent way to earn freebies and discounts. If you’re already spending money regularly at your favorite restaurants, joining their rewards programs is worthwhile. But it’s essential to put the rewards that you earn to use. Find out why letting your restaurant loyalty rewards sit unused could be a mistake that costs you.

Loyalty programs are a win for your wallet

Loyalty programs incentivize consumers to spend money regularly. Many brands promote these programs, including airlines, hotels, restaurants, and coffee chains. You’re missing out if you’re not putting these programs to use. Even if it takes a while to accumulate enough points, earning a free reward is like being handed free money. Since these programs are free to join, you don’t want to forget about them.

Use your rewards as soon as you earn them

One important thing to remember is that rewards programs can change any time. It’s not uncommon for brands to devalue points as they raise redemption rates for certain free items.

That’s what happened at Chipotle. When the fast-casual eatery first introduced the Chipotle Rewards program, you only needed to earn 1,250 points to get a free burrito or burrito bowl. That’s no longer the case. The program has undergone multiple changes, and you’ll now need 1,625 points to earn a free burrito or burrito bowl. That’s a noticeable difference!

If you let your restaurant loyalty rewards sit unused in your account, you risk losing out. You can maximize the value you get from these programs by redeeming your points or rewards soon after earning them. If not, you may be disappointed later when you discover that your points are worth less than they were previously.

Rewards program changes are common and to be expected

Several companies have made recent updates or announced upcoming changes to their rewards programs, including Dunkin’ Donuts, Chipotle, and Starbucks. As you might imagine, many customers are not happy about this news. That’s because everyday costs are rising due to inflation, and we’re spending more than we used to for the same goods and services.

The U.S. Bureau of Labor Statistics Consumer Price Index: 2022 in review notes that consumer prices for all items rose 6.5% from December 2021 to 2022. Price changes, including increased menu prices, impact your checking account balance.

It’s not shocking that customers would be upset about program changes that require them to earn more points to redeem a free drink or food item. After all, they’re likely already spending more money every time they check out at their favorite restaurant or coffee shop.

Put your rewards to use before they lose value

Do yourself a favor and review your restaurant loyalty program accounts to ensure you’re not letting your points sit unused. It’s also worthwhile to keep updated on potential program changes, so you know what to expect. If you’re spending money at your favorite restaurants, you may want to pay with a rewards credit card to boost the rewards or cash back that you earn.

Are you looking for additional ways to save money and keep your spending on track? Check out our personal finance resources for more guidance.

Companies regularly make changes to these programs and they may make the program less valuable by making it more expensive to redeem for freebies… using up your points is best

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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. Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Starbucks. The Motley Fool recommends Discover Financial Services and recommends the following options: short April 2023 $100 calls on Starbucks. The Motley Fool has a disclosure policy.

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He makes a good point. 

The U.S. tax code has long been the subject of criticism. For years, many advocates have argued that wealthy taxpayers and large corporations get away with avoiding taxes while hard-working average Americans — those with little money in their savings accounts — get stuck forking over a large share of their income to the IRS.

If you think the U.S. tax system is unfair, guess what? Our president agrees with you. And in his recent State of the Union address, he pledged to tackle that issue to ensure that the wealthy pay their share and that moderate earners aren’t unduly burdened.

A system that’s clearly loaded with flaws

When the president of the United States says the country’s tax system has problems, that carries a lot of weight. And that’s precisely the message President Biden shared with the public during his Feb. 7 State of the Union address.

During his speech, Biden said point blank, “I think a lot of you at home agree with me that our present tax system is simply unfair.”

He then went on to point out that in 2020, 55 of the biggest U.S. companies made $40 billion in profits and paid $0 in federal income taxes. He then said, “Now, because of the law I signed, billion-dollar companies have to pay a minimum of 15%. Just 15%. That’s less than a nurse pays.”

The U.S. tax system works on a marginal basis, so workers’ highest dollars of earnings are taxed at a higher rate than their lowest dollars of earnings. But even so, there are numerous loopholes that allow companies and the wealthy to avoid taxes or shrink their tax bills substantially. And Biden clearly isn’t a fan. As such, he plans to keep pushing for tax reform, and also, for tax audits on wealthy taxpayers who may not be following the law.

Should Americans worry about higher taxes?

The average taxpayer does not have to worry about an uptick in taxes owed if Biden has his way. In fact, the president clearly stated, “Under my plan, nobody earning less than $400,000 a year will pay an additional penny in taxes. Nobody. Not one penny.”

That said, Biden does want to impose a billionaire minimum tax because, as he puts it, “No billionaire should pay a lower tax rate than a school teacher or a firefighter.”

Biden also pointed out that he signed a law designed to crack down on wealthy tax-filers who may be cheating the system. The IRS, statistically speaking, audits only a small percentage of tax returns due to a lack of funding and manpower. But the IRS received about $80 billion in funding as part of the recent Inflation Reduction Act, and part of that money is meant to support increased audit activity.

Now, this doesn’t mean the average taxpayer has to worry about getting audited. But the hope is that wealthy taxpayers who may have bent the rules in the past will stop doing so for fear of getting caught.

All told, the U.S. tax code is far from perfect. But the fact that Biden is taking steps to make it more equitable is a very positive 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.The Motley Fool has a disclosure policy.

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