Money Management

Put all of these items on your to-do list so you can rest easy in your home. 

Homeowners insurance is an unavoidable expense you have to account for when you own a home. Without homeowners insurance, you might get stuck with catastrophic bills in the event of property damage.

But your homeowners insurance policy isn’t something you should simply put in place and then forget about. There are certain moves it pays to make every so often when it comes to homeowners insurance, and the start of the year is a good time to dive in. Here are three essential items to put on your list for early 2023.

1. Check to make sure you have adequate coverage

Your homeowners insurance policy should be able to do more than just pay for damage from incidents like floods and weather events. It should also be set up to pay out enough money to rebuild your home completely in the event of its complete destruction.

That’s why now’s a good time to make sure your homeowners insurance coverage is sufficient. Home values have risen a lot over the past few years, and the cost of construction has risen as well. You’ll want to make sure your coverage will make it possible to rebuild your home if you need to.

2. Inform your insurance company of any changes that could impact your rates

You might make changes to your home that impact your homeowners insurance policy — for better and worse. Let’s say you decide to install a home security system. That might result in a rate reduction — but your insurer won’t know about it if you don’t loop them in.

Similarly, maybe you remodeled your home last year to make it more comfortable. That could result in an increase in your homeowners insurance premium rates, because based on those improvements, it might cost more to replace your home should that need arise.

Oh, and if you adopted a pet, that’s the sort of thing you’ll want to mention, too, as it could impact your premium costs. All told, it’s a good idea to think about changes to your home that occurred over the past year and let your homeowners insurance company know what’s up.

3. Do some rate shopping to see if there’s a better deal

Just because you’ve been with the same homeowners insurance company for several years doesn’t mean you’re getting the best rates out there. There may be another company that is willing to offer the same level of coverage at a lower cost.

It never hurts to shop around for rates and see what’s out there. And while you’re at it, see if bundling your auto insurance and homeowners policies will make a difference in what you’re paying (assuming you haven’t bundled them already).

Homeowners insurance can be a big expense, but it is worth paying. Aim to check these key items off your list before we get too deep into 2023. You never know when they might result in saving money, and that’s something you really don’t want to wait on.

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If you’re worried about rising prices impacting your retirement, you need to read this. 

Thanks to supply chain issues and other factors, prices have gone up dramatically recently due to record-high inflation. The Federal Reserve has also raised interest rates in an effort to curb those price increases. That has made mortgages and variable-rate debts like credit cards much more expensive.

Unfortunately, inflation can be especially bad news for retirees who typically live on a fixed income and rely on savings to help support them. Seniors typically need to be invested conservatively to avoid taking on too much risk, and they may also have a lot of money in savings accounts. That means they may lose ground during periods of high inflation because their returns don’t keep up with rising prices.

Whether you are currently retired or are planning to leave work in the future and are concerned about the impact of rising prices, there are things you can do to try to ensure your financial security even during tough times.

How current retirees can avoid running out of money

If you are currently retired and worried you’re at risk of running out of money due to rising prices, there are a few things you should do ASAP.

Make sure you are maintaining a safe withdrawal rate. You don’t want to take too much money out of your investment accounts because this can reduce future returns and increase the risk of you running out of money. Consider using the IRS-required minimum distribution tables to help you set a safe withdrawal rate.Consider downsizing. If you can reduce your housing costs by moving to a smaller, cheaper place, this can give you a lot more wiggle room.Look into relocating. If you’re really worried about running out of money, look into moving to a city with a cheaper cost of living. While drastic, this could save you a lot of heartache if it allows you to preserve your funds.Rework your budget. You may need to substitute cheaper products for pricier ones, such as by switching to more plant-based meals.Shop for Medicare coverage carefully. There are different options for getting insurance. Since healthcare is a huge monthly cost for many seniors, it’s important to pick a plan that keeps your out-of-pocket spending to a minimum.

How future retirees can avoid running out of money

Future retirees should also take steps to make sure they don’t have to worry about running out of money.

Assume you’ll have to retire early. Don’t count on being able to work until 70, as you may be forced out of the workforce ahead of schedule. Be sure your savings goals are set so you’ll be OK if you have to retire at 62.Save more than you think you’ll need. It’s better to choose to make sacrifices now rather than being forced into them in your 80s. So consider working a little extra or making some big spending cuts to bulk up your savings.Invest wisely. Be sure you’re exposed to an appropriate level of risk in your brokerage account throughout your career so you can maximize your potential returns while limiting losses.

By following these tips, you can help ensure you have a secure retirement even as prices have gone up.

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These 10 cities are most likely to weather a housing crisis. 

After home prices hit record highs last year, high mortgage rates have slowed down the housing market considerably. According to Redfin, home sales will fall to the lowest level since 2011. Redfin predicts that there will be 4.3 million homes sold in 2023, a 16% decline from 2022 and a 30% drop from 2021. Home prices will also fall, posting the first year-over-year decline in a decade. But not all housing markets will see a decline, the Redfin report also lists the markets that will likely hold up the best in 2023.

Most stable housing markets in 2023

Cities in the Midwest and certain East Coast metros are expected to be the most stable. The prices in these markets didn’t go up as much during the housing market frenzy post-COVID. According to Redfin’s data, demand and competition in these markets are similar to the beginning of 2022.

Housing markets set for the biggest declines

The markets that will most likely see the sharpest decreases in housing prices are the cities with the biggest increases in the past couple of years. Cities such as Austin, Boise, and Phoenix were pandemic migration hotspots and there is a lot of room for prices to drop. During the housing market frenzy post-COVID, home prices went up the most on the West Coast and East Coast. These areas were prime destinations during the initial phase of the pandemic.

In Malibu, California, home prices surged by 82% and bidding wars in Los Angeles hit a record high at 40.5% from the first quarter of 2021 to 2022. The East Coast also saw record gains, with the average home price of the Hamptons in New York increasing by 25% and the number of homes available falling by 24%, hitting a record low.

Purchasing a home is probably the most expensive purchase most people will ever make in their lives. In addition to understanding the total expenses of homeownership, knowing which markets are the most stable can be helpful before taking the plunge.

Make sure you take into account insurance, property taxes, and maintenance fees before you pull the trigger on buying a home. For home buyers looking to enter the real estate market, buying a home should be based on your personal financial situation. Do your research to find one in an area suited for you. While in the short term, prices will be impacted by interest rates and possible recessions, buying the right house may be a great investment over the long haul.

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Some workers are better suited to that remote life than others. 

The rise of remote work has been one of the major effects of the COVID-19 pandemic. A Gallup poll found that 3 in 10 American workers were fully remote as of June 2022, and both hybrid and fully remote arrangements are expected to grow in number, despite some companies’ increasing desperation that employees be physically present in an office. I’m firmly on the side of remote work, due in part to my experiences in a former career that was entirely location-dependent and resulted in me moving nearly 5,000 miles in service of it.

Remote work arrangements aren’t possible for everyone, though. This could be due to the work itself (such as my old career — try running a history museum while working from home), but it could also be due to your personality, work style, or even technical skillset. Here’s what to focus on improving if you’re eager to never set foot in a cubicle-filled, fluorescent-lit office ever again.

1. Time management

This first one is major, as while it’s likely you’ll still have a supervisor in some form (even as a freelance writer, I am not an island unto myself), they will not be standing over you, watching you work. You will likely have regular Zoom meetings and possibly an instant messaging system (like Slack) so you can check in, but ultimately, getting your work done in a timely fashion will be up to you.

Some people find it difficult to balance working from home (or anywhere other than a set office) with distractions, like chores that need to be completed or pets who beg for attention when you’re on a deadline. If you struggle with this, see if you can create a set work area at home (or rent a spot in a co-working space), like an office with a door you can close, to minimize potential time sucks that wouldn’t be present if you worked in an office.

2. Communication skills

When you work in an office, there are often endless opportunities to talk to your colleagues about the work at hand. You might run into your co-lead on a project in the breakroom, and be able to have an impromptu meeting about the assigned tasks. When you work remotely, you have to be able to communicate effectively despite not encountering colleagues around the office. This can mean reaching out to schedule a Zoom meeting or sending emails or Slack messages — and following up as necessary. The same goes for if you’re encountering problems with your work and need to speak to your supervisor. If you’re a shrinking violet when it comes to speaking up, remote work may not be a fit for you — or you may have to actively work harder at it.

3. IT troubleshooting

There’s often a sharp technology divide by age in the workplace. I remember being the on-site computer tech for my much-older boss in one of my museum jobs, and it was very easy for me to help her as she was in the office next to mine. If you’re flying solo at home, you will not have on-site IT folks to help you troubleshoot your computer, modem, or router.

It will help if you know your way around the technology you’ll be using, and can easily reach out for additional help if the problem is beyond your skills. I was recently having frequent internet outages (yes, it was as infuriating as it sounds), and ended up having to get my internet service provider out to my home to fix the problem — twice. This was more legwork than I would have needed to do if I worked in an office with IT staff to help me.

4. Initiative

Finally, if you’re not physically present in an office, it can be much harder to make your voice heard and considered in terms of ideas and ways to make your company run better or make more money. Try not to be the person who sits silent in the Zoom meeting, because engagement is more important than ever as a remote worker. In some cases, working remotely might harm your career for this very reason — but only if you let it. I promise you that it is still possible to become a person others think of and rely on at work, even if you’re remote. It just takes some initiative and sometimes being the person who makes the first move.

I love being a remote worker, and I encourage anyone in a field that supports it to give it a try, if they want to. Finding the work style that makes you the happiest and most productive is a great way to invest in yourself, both as a human and as a professional. Plus, you can save money on commuting and buying an office wardrobe. With the above skills in hand (or a plan to work on them), you can succeed at remote work.

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Price hikes are starting to ease off, and some living costs may even go down this year. 

It’s fair to say that 2022 was the year of sticker shock, shrinkflation, and a bunch of other words that described the impact of sky-high living costs. So far in 2023, it looks as if inflation is slowing — though it’s still far from normal levels. Plus, as anyone who’s bought eggs recently will tell you, price changes don’t impact everything equally. December data from the Bureau of Labor Statistics showed that the price of food was up over 10% on the previous year, where used cars and trucks fell by almost 9%. Here’s a look at a few items that may go down in price in 2023.

1. Real estate

After some extraordinary years for the housing market, 2023 might be the year that prices start to fall. I say “might” as there’s still a shortage of available homes and nothing is guaranteed. National Association of Realtors (NAR) Chief Economist Lawrence Yun said, “Markets in roughly half of the country are likely to offer potential buyers discounted prices compared to last year.”

According to the NAR, December’s median home price of $366,900 was up 2.3% on the previous year. It’s the longest-ever streak of year-on-year increases, with 130 months of price rises. However, given that the low mortgage rates that partially fuelled the boom are behind us, many researchers think home prices may come down in 2023.

2. Rental costs

There’s good news for renters, many of whom have struggled to cover recent rent hikes. Housing economist Tom Lawler thinks it would not be unreasonable to expect an “actual decline” in rental prices. Lawler, who spent over 20 years working for Fannie Mae, thinks that not only will rent growth slow, but that costs could actually come down.

He points to the combination of the crazy increase in rental costs we’ve seen, coupled with a likely increase in the number of rental units on the market. For him, both factors point to a decline in rental costs. Per Business Insider, rental costs are already starting to fall in some parts of the country. Construction of new rentals continues, which could lead to excess supply and cause prices to fall.

3. New and used cars

There’s a common thread to this article: Costs that increased dramatically during the pandemic are starting to come back to Earth. That includes the car market bubble — for both new and used cars. JPMorgan predicts that prices for new cars could fall between 2.5% and 5% in 2023, while used cars could drop between 10% and 20%.

The thinking is that some of the factors, such as shortage of chips and supply chain issues, will improve. One note of caution, though: Rising interest rates mean auto loans are getting more expensive. The sticker price of a car should fall, but this could be offset by higher auto loan costs.

4. Gas

If you’re a motorist, don’t hope for miracles at the pump this year. Gas prices will likely fall a little, but given how high they’d gotten, that decline will only ease the pressure on your wallet so much. Patrick De Haan, head of petroleum analysis at GasBuddy, warned, “2023 is not going to be a cakewalk for motorists.”

According to GasBuddy’s 2023 Fuel Outlook, the average cost of gas could fall $0.50 from last year, but at $3.49 a gallon, it’s still going to eat into our budgets. The study predicted the average American would spend $2,471 next year on gas, down $277 from 2022. We’ve seen improvements in refinery capacity, but Russia’s invasion of Ukraine is still a significant factor.

Bottom line

There could be light at the end of the tunnel price-wise for consumers this year. Unfortunately, there’s still a lot of economic uncertainty, and it looks as if the cost of some essentials — such as groceries — could continue to increase. Plus, if we do enter a recession, as many economists predict, it may be harder to maintain your income.

That means 2023 is still a year where you might want to keep your spending under control and ensure you’ve got enough emergency savings to handle the unexpected. Having three to six months’ worth (or more) of living expenses socked away in a savings account could cushion you against further inflation, job loss, or other financial crises.

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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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