Money Management

Is it worth the time and effort to find a new home insurer? 

Property owners need to have a homeowners insurance policy in place. A home is most people’s most valuable asset, and a homeowners policy protects it. The right policy also protects against liability and pays to replace possessions that are stolen or damaged by a covered loss. Lenders also require coverage, so even those who may not want it should have it.

Many people buy a homeowners insurance policy once and then stick with the same coverage for years — or even for the entire time they own their home. While this can sometimes make sense, it’s not always the best approach. In fact, it may be worth changing insurers this year. To help you decide, here are a few key questions.

Is the current policy the most affordable?

Home insurance premiums can cost hundreds or even thousands of dollars every year. But there can be a wide range in premium costs from one home insurer to the next.

Homeowners who do not shop around may miss out on the chance to get more affordable coverage from a different insurer. It’s actually a good idea to compare price quotes even just once per year to make sure that the best coverage is being purchased for the right price.

Getting home insurance quotes online is quick and simple, and every property owner should move forward with comparing costs at the start of each year. Those who find a cheaper home insurance option from a trusted and reliable insurance provider should switch policies in 2023 so they can spend less on protecting their home and other assets.

Are there better coverage options out there?

Different homeowners insurance companies offer different kinds of coverage. For example, some may offer better protections, like more reimbursement for additional living expenses if a home is destroyed by a covered loss and the homeowners need to move out temporarily.

Since new insurers come onto the market periodically and offer different products, it’s worth checking to see if there is better and more comprehensive coverage available for the same cost. By comparing what’s available each year, homeowners can make sure they always have the best plan for their needs.

Any homeowner who finds they can get better protection from a competitor to their current insurer should make a switch ASAP.

Does the current insurer offer good customer service?

While price matters when it comes to homeowners insurance, it is absolutely not the only issue. If something happens to a property, homeowners do not want to have to struggle to make a claim and get the compensation they need to rebuild their home and move on with their lives.

Unfortunately, some homeowners insurers are not as reliable as others. It’s a good idea for property owners to check the reputation of their insurer — especially if a lot of recent claims have been made due to disasters like a hurricane or flood. If their insurer has given policyholders a hard time, then they may want to switch before they end up needing to file a claim and end up facing struggles of their own.

It’s possible to check for complaints with the National Association of Insurance Commissioners, as well as the JD Power ratings for customer service, in order to find out about an insurer’s reputation.

The good news is, any homeowner who does decide to change coverage can usually do so quickly and easily over the internet, so there’s no excuse not to make a switch if there are better options out there.

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All of these need a place on your list. 

If you’re planning to go freelance in 2023, you’re in good company. A recent survey from Fiverr found that 73% of Americans plan to do freelance work this year in some capacity.

Going freelance could work to your benefit in many ways. It might open the door to a higher income, more flexibility, and the opportunity to do work that’s actually interesting and meaningful.

But if you’re going to go freelance this year, there are certain tax moves it pays to tackle. Be sure to add these three moves to your list.

1. Start automatically adding money to your savings account

One of the trickiest things about being a freelancer is not having money deducted from your wages like salaried workers do. Rather, it’s on you to pay taxes to the IRS as you go, and those are typically paid on a quarterly basis.

To avoid running into problems, it’s a good idea to set up an automatic transfer to your savings account every month. That way, money for those estimated tax payments will land there automatically, and you’ll be less likely to run into a situation where it’s time to pay the IRS a portion of your earnings and you don’t have the cash.

2. Establish a good system for keeping records

When you work in a freelance capacity, you’re allowed to deduct the different expenses you incur that make it possible to do your job. This means that if you travel to see clients, you can deduct your flights and hotel rooms. If you buy certain tools to do your work, you can write off their cost.

It’s important to develop a system for keeping track of your business-related purchases so you know what to write off when you file your taxes. And don’t just assume you can fall back on your credit card bills. You might need to back up your claims if the IRS decides to further scrutinize your tax return, so keeping original receipts on file is usually best.

In fact, one thing you may want to do is find a way to scan your receipts and records, and then store them electronically. Physical documents and receipts can get lost or fade, so an electronic record-keeping system is probably your best bet.

3. Get yourself a great accountant

Going freelance could add several layers of complexity to your tax situation. That’s not a reason not to do it — but it is a reason to get yourself a seasoned accountant.

To be clear, you don’t just need an accountant for tax-filing purposes. You should also consult with an accountant so they can help you learn which deductions you can take, strategize on ways to lower your tax bill, and calculate the estimated quarterly payments you’re supposed to be handing over to the IRS every three months.

You may find that becoming a freelance worker is a rewarding experience on more levels than one. But if you’re going this route, be sure to set yourself up to not get hurt from a tax perspective.

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Don’t raid your savings to pay your credit cards without reading this. 

Credit card debt can be one of the most difficult kinds of debt to dig out of. There are low minimum payment requirements on your credit cards, so you’ll make slow progress unless you pay more than the minimum. And the interest rate on credit cards tends to be very high, so most of your payments will go towards covering interest costs.

If you’re currently in the process of dealing with your credit card debt and you have money in a savings account, you may be tempted to raid that account to repay what you owe. Before you do, though, it’s worth considering two rules that finance expert Dave Ramsey suggests you must follow if you’re going to use savings to pay credit card bills.

Here’s what they are — along with some tips on whether you should follow his advice.

Ramsey’s two rules for repaying credit card debt with savings

According to Dave Ramsey, you should only use your savings to pay credit card debt off under two specific conditions.

“One is that you cut up the credit cards, close the accounts, and never use those things again,” he suggested. “The second is that you don’t wipe out your savings in the process. Leave something in there, so you’re covered in the event of an emergency. Then, rebuild your savings as fast as possible once the debt is out of your way.”

In other words, Ramsey doesn’t want you to repay your credit card debt with savings if you’re just going to get back into credit card debt again once you’ve done that. Otherwise, you’d end up in a worse situation because you wouldn’t remain debt free, and you’d no longer have a savings cushion to fall back on.

Ramsey is also concerned about the prospect of wiping out your savings because having no buffer in your accounts to cover surprise costs could mean you just end up right back in debt if you do face unexpected expenses.

Should you follow Ramsey’s advice?

Ramsey is absolutely correct that you should not empty out your savings account to pay back credit card debt. Emergency and surprise expenses are inevitable for everyone. Whether you face an unexpected job loss, a medical issue, car trouble, a broken appliance, or even just a surprise childcare expense you didn’t plan to have, there will likely come a time over the course of each year when you get hit with a bill you weren’t planning on.

If you have nothing in savings to cover that, you could be forced to charge the purchase on your cards again — or, worse, get a payday loan if you have an expense you need to pay cash for. This can discourage you from making progress on your debt and leave you trapped in a cycle where you always owe.

As far as cutting up your credit cards, though — that’s the wrong approach for most people. Credit cards are not the issue. Carrying a balance is. So if you can commit to living on a budget and not charging more on your cards than you can pay off after you’ve become debt free, then there’s no reason to give up your cards for good.

So, you can follow the spirit of Ramsey’s advice and make sure you don’t use your savings to pay off credit cards unless you’re sure you won’t end up back in the hole again. But you don’t necessarily have to say goodbye to your cards permanently before using your savings to pay them off.

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Americans plan to spend billions of dollars on Valentine’s Day expenses in 2023. 

It’s already February, which means Valentine’s Day is quickly approaching. Many couples like to celebrate the holiday together. A recent study by the National Retail Federation examines how Americans plan to celebrate the occasion this year and how much they plan to spend on holiday expenses. Find out how much the average American plans to spend on Valentine’s Day in 2023. The answer may surprise you.

Americans plan to spend $26 billion this Valentine’s Day

The National Retail Federation and Prosper Insights and Analytics have been tracking consumer Valentine’s Day spending since 2004. The most recent study found that Americans are expected to spend $25.9 billion this year, which is up from 2022’s $23.9 billion.

The same study also found that 52% of American consumers plan to celebrate Valentine’s Day and will spend an average of $192.80 in 2023. This figure has also increased, up from $175.41 in 2022. How much do you plan to spend?

You don’t have to spend a lot of money. If you’re feeling added financial strain this year due to rising living costs, please know that you’re not alone. There are plenty of ways to celebrate Valentine’s Day without ignoring your personal finance goals. Don’t be afraid to get creative.

Four ways to celebrate love when you have a limited budget

Don’t let budget limitations get you down. You can have fun celebrating Valentine’s Day with friends, family, or your partner without going broke. Here are a few affordable ways to observe the holiday without draining your checking account.

Have fun at home: You don’t have to go out for Valentine’s Day. Plan a fun adventure at home with your favorite person. You can watch movies, cook a meal together, work on a puzzle, play board games, make ice cream sundaes, or whatever your hearts’ desire. It’s the thought that counts.Make a game out of it: Set a budget and go shopping together to load up on date night finds. Let’s imagine you have a $30 budget. You can take a trip to Target to shop and surprise each other. Split up, stroll the aisles, and pick out $15 worth of items each. It’ll make for an exciting adventure and a memorable Valentine’s Day.Look for dining and drink deals: If you want to go out this year, keep an eye out for dining and drink discounts in your community. You may be able to take advantage of Valentine’s Day dining specials to keep your spending to a minimum. Another option is to plan a date night happy hour evening with your sweetie.Exchange handmade gifts. If you’re looking for a frugal yet thoughtful way to celebrate Valentine’s Day, you may want to exchange handmade gifts with your love. This is an excellent way to honor your relationship creatively and makes for a meaningful gift.

Don’t feel pressure to overspend

Valentine’s Day is just over a week away, but that doesn’t mean you should ignore your budget. Whether you plan to go out with friends or enjoy a date with your partner, don’t feel pressure to spend more than you can afford. It’s never a good idea to go into credit card debt buying gifts. Instead, keep your finances top of mind and have fun coming up with budget-friendly ideas.

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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.Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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The SECURE Act 2.0 is making retirement plans more manageable for millions of Americans. 

The SECURE Act 2.0, which passed into law in December 2022, made some serious changes to how the average worker saves for retirement. However, some provisions of the bill will help the non-traditional worker, such as the part-time employee or frequent job hopper, make the most of their retirement savings.

Loosened eligibility requirements

Just because your employer offers a 401(k) doesn’t always mean you can sign up for it on your first day. Employers are legally allowed to keep certain employees out of their retirement plan thanks to eligibility requirements. But for part-time workers, those requirements just got a little bit easier to satisfy.

Prior to 2019, employers had a lot of flexibility when it came to admitting employees into their retirement plans. The original SECURE Act, passed in December of that year, made enrolling in an employer’s plan more straightforward. The law stated that employers offering a 401(k) plan must allow employees to join the plan if they worked for the company for one year, working at least 1,000 hours, or three years, working at least 500 hours each year.

The SECURE Act 2.0, however, made the eligibility requirements even looser for part-time employees. The new law reduces years of service for part-time employees from three to two. And for those wondering, employers may offer more liberal eligibility requirements, but cannot be more restrictive than outlined in the new law.

Simple, standard rollovers

When you leave a job, you are legally allowed to take part or all of your 401(k) balance with you. But in practice, rolling over an old 401(k) into a new plan or IRA account can be both tricky and tedious. The SECURE Act 2.0 will make that process easier.

Ask anyone who has rolled over an old retirement account — it can be a difficult task. Between finding and submitting the correct paperwork to the sending firm, notifying the receiving firm, and possibly juggling a 20% tax withholding, things can get out of hand. That may be part of the reason why an estimated $1.35 trillion is in lost or forgotten 401(k)s.

Luckily, the new law includes a provision to simplify rollovers. Section 324 of the legislation directs the Treasury Secretary to simplify and standardize the rollover process by creating form templates that can be sent to both the sending and receiving institutions. These templates must be released by Jan. 1, 2025.

Retirement plan lost and found

There are an estimated 25 million abandoned 401(k) accounts in America today. That should come as no surprise to those who have had a previous employer change their company name, relocate, be acquired, or go out of business. Simply put, losing a 401(k) or pension plan is easier than you might think.

Section 303 of the SECURE Act 2.0, however, directs the Department of Labor to build a searchable database for lost retirement plans. This database will serve as another tool which workers can use to get ahold of their old plan’s administrator. The provision gives a hard deadline of December 2024 for the DOL to create this lost and found database.

Non-traditional workers were not left out by the SECURE Act 2.0. Part-time workers will enjoy more flexibility to enter an employer’s retirement plan. Meanwhile, job hoppers will have an easier time tracking down and consolidating old accounts.

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Amazon Fresh deliveries could soon cost as much as $9.95. 

The Supplemental Nutrition Assistance Program (SNAP) is a federal program designed to help lower-income households keep healthy food on the table, and it’s gone through a number of changes over the years. One of which is the dramatic growth in online SNAP services. According to the USDA, over 3 million SNAP households shopped online in May 2022, significantly more than the 35,000 in March 2020.

For example, participants can use their SNAP money to order through Amazon Fresh without needing a Prime membership. Following a 2019 pilot, last year Amazon rolled the scheme out throughout the country. Now residents of all states apart from Alaska can use their EBT cards to pay for Amazon Fresh groceries.

The new Amazon Fresh delivery fee structure

One issue with SNAP online shopping is that SNAP funds can’t be used to pay delivery charges, whether that’s with Amazon Fresh or other stores. This can eat into the money people need for other essentials such as rent and utility bills. As a result, online services with free delivery or low qualification thresholds are much more useful for SNAP households.

Up until now, that wasn’t too much of a problem with the Amazon Fresh service because you only had to spend $35 to get free deliveries. Unfortunately, the service will soon charge hefty delivery fees on orders less than $150. Avoiding the $14.99 monthly Amazon Prime fee for SNAP recipients doesn’t help much if they have to pay almost $10 for small orders.

From Feb. 28, the new Amazon Fresh delivery fees will be:

Orders under $50: $9.95Orders of $50 to $100: $6.95Orders of $100 to $150: $3.95Orders over $150: Free

It’s difficult for many SNAP households to spend $150 in one go, especially those with just one or two people. According to the USDA, the maximum SNAP benefit for a one-person household is $281, so it would use more than half their monthly food budget to meet the $150 free delivery threshold. The new charges will present additional challenges for SNAP recipients who are elderly or disabled and rely heavily on delivery services.

How SNAP recipients can manage the changes to Amazon Fresh

It’s frustrating when a service that has helped you save money introduces new fees. More so since Amazon’s new charges come at a time when more Americans are taking on debt or using credit cards to pay for essentials like food.

The good news is that you don’t have to use Amazon Fresh. Even if you don’t want to go to the store, there are a number of other online grocery stores that take SNAP payments. The USDA says more than 150 chains now offer online shopping to SNAP participants. Look for SNAP approved online retailers that operate in your state. You never know, you might find better bargains than Amazon Fresh as well as lower delivery costs.

Another option? Consider shopping in person — it isn’t as convenient, but you can often find different deals in store than you’ll get online. Plus, your money will go further if you can find double-up food programs operating in your area. There are a couple of projects that let you get two for the price of one on your fruit and vegetables when you pay with your EBT card at participating farmers markets and stores.

If you want to carry on using Amazon, look for products labeled “SNAP EBT Eligible” in the Amazon grocery store. In addition to Amazon Fresh, SNAP eligible groceries are available with Whole Foods and Amazon Groceries. There’s a fee of $9.99 on all Whole Foods deliveries, but orders of $25 or more in the Amazon Grocery store still qualify for free delivery. You’ll need to add your SNAP EBT card to your Amazon account and enter your EBT pin when you pay.

Bottom line

The new Amazon Fresh delivery charges could make a significant dent in many peoples’ bank accounts, whether or not they are SNAP recipients. A $9.95 fee on a purchase of $50 or less could equate to 20% or more of the total shop, and the $150 threshold for free delivery is out of many people’s reach. The good news is that there are a number of other online retailers that now take SNAP EBT payments, and some of them may even be cheaper than Amazon Fresh.

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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. Emma Newbery 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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