Money Management

Buying is a personal decision. 

I feel as if I say this a lot, but homeownership is expensive and not right for everyone at every stage of life. Despite the societal reputation of renters as often young, irresponsible, and “not real adults,” renting a home is absolutely the better choice in a number of situations. If your career isn’t settled, you have little or no cash savings, or you have no clue how to handle home maintenance issues (sometimes “handling them” just means calling a plumber or electrician — then paying them), you shouldn’t buy a home.

I am currently 0 for 1 on successful homeownership, as I bought my last home when I was young, mostly broke, and still in a career that demanded relocation for advancement. That experience ended poorly. Now that I’m hoping to buy again in the near future, I’ve thought long and hard about why I want to own a home, and what it will mean for my life and my finances. If you’re considering buying a house, I urge you to do the same — and don’t rush to get a mortgage if any of the following is the reason why.

1. Someone is pressuring you into it

If you’re leaning toward buying because another person is pressuring you to, that’s not a great situation. First of all, buying and owning are personal, as are your finances. If someone (like a friend or family member) who doesn’t have a financial stake in you is telling you to buy a house, you should push back against that. Why is it up to them? It’s not their money or life!

You might be in the unenviable position of disagreeing about homeownership with a spouse or partner, however. If the person you share finances with wants to buy and you don’t, it doesn’t mean you need to give in. Your opinion (and money!) counts in this situation, as in all others. Have a calm discussion about why the other person wants to own a house so badly, and bring up your objections (the cost, the hassle, work concerns, etc). If you can’t come to a consensus, consider talking it out with a neutral third party, like a counselor. But don’t buy a house because someone is forcing you into it.

2. All your friends are buying homes

Sometimes you’ll fall victim to peer pressure — it’s just part of life. Unfortunately, buying a house because it seems like all your friends are, even though it isn’t right for you, is a very expensive potential mistake.

Take a step back and observe how your life and that of your friends who own homes differ. Maybe your friends earn more money than you do, or are more settled in their careers and therefore less likely to need to move soon. Maybe they’re expecting a baby and want more room to spread out. You definitely don’t need to keep up with the Joneses, especially when it comes to the most expensive purchase you’re ever likely to make.

3. You think it’s the only way to attain wealth

If I’ve heard it once, I’ve heard it a thousand times. “Renting is throwing money away.” “Homeownership is the key to wealth.” No. No, it’s not. Okay, yes, owning a home can be a great way to become wealthier over time, as you can build equity in an asset that often appreciates (but not always). You can also build wealth by investing the money you save as a renter. Yes, this will take more discipline than paying a mortgage every month. But in the end, you’ll have built wealth — and what’s better, you won’t have to sell a home to access it.

4. You believe it’s cheaper than renting

Boy, I know this feeling. You’re chatting with friends, and mention how much you pay in rent, and they laugh and say their monthly mortgage payment is far less than your monthly rent. It stings in the moment, for sure — but you’re not getting the whole story. Your rent payment isn’t the same as a mortgage payment, which is why in most cases banks don’t consider rent in deciding to give you a mortgage loan.

Plus, you didn’t make a down payment on your rental — you most likely paid a deposit of a month or two of rent. And if something breaks, it’s not generally going to be on you to fix it, that’s why you pay rent to the owner of the property: your landlord. And you won’t pay the property taxes, either (and these can climb over time). Research from The Ascent found that renting is cheaper than owning, despite rent payments often being higher than mortgage payments.

With all this in mind, I hope you’ve thought long and hard about your needs, wants, life, and finances if you’ve decided to buy a home. Buying for the wrong reasons can cost you in more ways than one.

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Not sure what to do with all your spare change? Here’s a fun idea. 

Do you have a lot of spare change piling up in your car, purse, or in random places around the house? If so, you’re not alone. Instead of ignoring your extra coins, you may want to put them to use. You may have a lot more extra money than you realize. If you’re looking for ways to use your spare change, here’s a fun idea you may want to try. It’s a win-win solution that can help boost your savings and give you a nice reward.

Collect your coins

Instead of allowing your change to collect in random spots, designate one place to keep it all. You can use an extra jar, a piggy bank, or another container you have at home. Whenever you come home with change after making a cash purchase or find a coin while cleaning up around the house, go ahead and add it to your change collection.

Over time, your coins will pile up. It can be fun to see how long it takes to fill up your container. If you have a partner or other family members, you can get them involved in the collection process to make a fun game out of it. My husband and I do this with an owl-shaped coin container.

Cash in your spare change

Once you have a sizable collection, it’ll be a good time to cash in your spare change. One option is to take your coins to your bank. Most banks allow customers to cash in coins, but many require you to roll them. You can buy coin wrappers or ask your bank if they provide them. Check with your bank first to see how they handle coin cashing to save yourself time.

Another option is to use a coin cashing machine like Coinstar. You can find these machines at grocery stores and other popular retailers. Keep in mind that these machines keep a percentage of your money as a service fee — so it will cost you money to use them. But if you value convenience and have many coins, you may not mind paying the fees.

No matter your method, take bets on how much money you’ve collected. You don’t have to do this, but it will make the experience more exciting. You may be surprised once you see the actual total. I’m almost always surprised and end up with more money than I initially thought.

Spend half, and save half

You get to decide what to do with the money. But you don’t have to save all of the extra money that you’ve accumulated. It’s okay to treat yourself. If you don’t want to put it all in the bank, you may want to spend half and save half. Put half of it in savings immediately, so you’re not tempted to spend it all. Doing this will boost your savings account balance.

Then, permit yourself to spend the other half on something special. Maybe it’s a movie night out with your partner, a cozy takeout meal at home, or a new clothing purchase you’ve wanted to make. Allowing yourself to spend half of it is an excellent way to reward yourself for continuing to prioritize your savings and personal finance goals.

Don’t miss out on the opportunity to earn interest

If you’re cashing in spare change, keep it in a high-yield savings account. You can earn interest on your savings contributions — which is free money. If you don’t yet have a savings account, review our list of the best high-yield savings accounts to find the right account for you. Saving money doesn’t have to be boring. There are ways to make the process fun and exciting.

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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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There’s a reason those fees exist in the first place. 

When I first got a Costco membership, I only used it on occasion. But now that I have a household of hungry kids to feed, I generally shop at Costco on a weekly basis. It’s my go-to source for everything from produce to dairy products to lunch items I send to school. And I also like to load up on things like paper towels, cleaning supplies, and laundry detergent at Costco, where I can snag a nice discount — and enjoy a lower credit card tab — by purchasing these items in bulk.

Meanwhile, I have an executive Costco membership, which costs $120 a year and gives me 2% cash back on my warehouse club purchases. A basic membership, however, costs $60.

But these numbers aren’t set in stone. In fact, Costco has not increased the cost of a membership since June of 2017. Since it commonly raises its membership fees every five and a half years or so, it’s fair to say that we’re due for an increase in 2023. And since Costco, like many retailers, has been feeling the strain of inflation, it wouldn’t be unreasonable for the warehouse club giant to try to recoup some of its costs in the form of higher membership fee revenue.

But while the idea of paying more for a Costco membership may not sit well with some people, I won’t be bothered at all if the cost goes up. And there are a couple of reasons why.

1. A price hike is unlikely to be substantial

In June of 2017, a basic Costco membership rose from $55 to $60, while the cost of an executive membership rose from $110 to $120. If Costco follows a similar pattern this year, those with a basic membership are looking at a $5 increase, while those with executive memberships are looking at paying $10 more.

I fall into the latter category. And I can say with honesty that based on what I spend on groceries in a year, another $10 is not going to make a difference. Not at all.

I do recognize that consumers who are very cash-strapped might feel differently. And I truly don’t want to be insensitive to that. But think about how often many of us spend $5 or $10 without even thinking about it. A single cup of coffee and a muffin you buy on a whim could cost you that much or more. So to me, it doesn’t make sense to get worked up about a $5 or $10 fee hike.

2. Those membership fees save me money

Costco uses its membership fees to offset its costs, thereby making it possible to offer such competitive prices. The amount of money I save at Costco on a yearly basis is well more than what my membership fee costs me. So even if that fee goes up a bit, I’m still going to come out ahead.

At a time when inflation is still soaring and paychecks aren’t going as far, nobody wants to see their bills increase. But if Costco does make the decision to raise the cost of a membership, chances are, the increase won’t be tremendous, and what you pay in the form of that increase, you’ll make up in savings.

Plus, Costco has not implemented a fee hike since mid-2017. How many of your other bills have held steady for that long? Chances are, none. So all told, raising fees in 2023 would not be unreasonable.

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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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Here’s what to expect in the coming month. 

If you’ve been trying to buy a home and haven’t had success so far, you’re in good company. The real estate market was brutal in 2022 between higher home prices and soaring mortgage rates.

But will things change in 2023? It’s possible. In fact, whether you’re looking to buy a home or sell one, it’s important to keep tabs on the housing market. And here are a few things to anticipate for the month of February.

1. Mortgage rates will remain high, but there may be relief

Mortgage rates dipped nicely in January, hovering in the lower 6% range. Seeing as how they were above 7% in late 2022, that makes a big difference. And we could see rates dip a bit more in February as mortgage lenders make adjustments to account for waning buyer demand.

Does this mean we’ll be looking at sub-6% mortgage rates in February? It’s hard to say. But we could easily see rates fall to just around 6% if recent trends uphold.

2. Housing inventory will remain low

As of late December, there was a mere 2.9-month supply of available homes for sale, reports the National Association of Realtors (NAR). That represents a nice uptick from December of 2021, when there was only a 1.7-month supply.

Still, it generally takes a good four- to six-month supply of homes for sale to meet buyer demand in full. This means that you might struggle to find an affordable home in February, and one that checks off the right boxes for you.

It’s also worth noting that the winter months tend to be a slower time for listings in general. So we really shouldn’t expect a large uptick in inventory during February. That could change, however, once spring arrives. Spring is typically when we see a substantial increase in home listings, although the spring boom hasn’t happened in several years.

3. Homes will still be expensive

The median existing home sale price in December was $366,900, as per the NAR. That represents a 2.3% increase from a year prior, when the median existing home sale price sat at $358,800.

Now it’s worth noting that existing home sales have been slowing down. In fact, the NAR reports that existing home sales came to 5.03 million units in 2022, which represents a 17.8% decrease from 2021.

But a decrease in existing home sales doesn’t just mean that fewer people wanted to buy. It could also be that there were fewer homes available to buy.

All told, home prices are likely to remain elevated in February. That said, sellers may not get away with commanding the same prices they might’ve in February of 2022.

Even though mortgage rates had already started to climb by February of 2022, they weren’t nearly as high back then as they are today, even with a recent dip. So all told, buyer demand is likely to be lower this February, which is something sellers should account for.

February has the potential to be a very interesting month for home buyers and sellers alike. No matter which category you fall into, keep paying attention to real estate market trends, as they might inform your housing decisions in a very big way.

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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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The season of giving might be over, but scammers never take a rest. 

December is the most popular month for charitable donations, but you can give all year round. It can be a great way to support worthy causes in your community and it can earn you a tax break as well. But before you hand over any cash, it’s important to make sure you’re dealing with a legitimate organization. Otherwise, you might just be flushing money down the toilet.

Here are seven signs that the generous charity courting your wallet is really just a scammer trying to line their own pockets.

1. Your donation isn’t tax-deductible

Legitimate charities are tax-exempt organizations, and contributions you make to them can earn you a tax deduction. But if the organization you’re speaking to says that you can’t get a tax break or if they’re vague about whether you will or you won’t, that could be a sign that it’s not what it claims to be.

The IRS maintains a Tax Exempt Organization Search tool that you can use to verify the legitimacy of any charity. If you don’t find an entry for them here, that’s a strong sign that they don’t deserve your money.

2. The contact information doesn’t match what you find online

Some scammers choose to impersonate members of well-known charities that they’re not actually affiliated with at all. They might reach out via phone, email, or by mail and provide you with instructions on where to send your donation.

It’s always a good idea to double-check this information against the charity’s actual website. Don’t use any websites that the person provided you with in case they’re fake. Use a trusted search engine and research the charity. Then, compare the information you received against the information on its website.

3. They want your personal information

There’s no reason a legitimate charity would need to inquire about your bank account number, your Social Security number, or other private information. If someone asks you to give out this information, you should definitely be suspicious. They may be trying to steal your identity.

Instead, try to get as much information from the scammer as possible, including their name (or whatever they say their name is), their phone number, and any information about where they wanted the money sent. Then, file a complaint with the Federal Communications Commission (FCC). If you believe the person behind the scam is operating in your area, reach out to your local law enforcement as well.

4. They’re really pushy

Scammers don’t want to give you time to think or do research into their fake charity, so they might try to push you to donate money immediately. They might highlight the importance of their supposed cause or try to make you feel bad for being suspicious of them. But go with your gut.

A legitimate charity doesn’t need you to donate to them on a specific day. They should be happy to answer any questions you have about their mission and provide materials to you as needed.

5. They’re specific about the payment forms they’ll accept

Scammers usually like to be paid via wire transfer, gift card, or possibly cryptocurrency. It’s much more difficult for you to recover funds you’ve given away this way, which increases the likelihood that the scammer gets off totally free.

No legitimate charity will insist that you pay this way, and they should be happy to accept cash, checks, or credit cards. If the person you’re speaking to doesn’t want to accept these forms of payments, move on and find another charity.

6. They’re vague about what the charity does

Anyone soliciting charitable donations should be pretty well versed in the charity’s mission and how the organization will use that money. If the person you’re speaking to can’t provide you with a good understanding of how it’ll use your funds, that should make you a little suspicious.

Don’t be afraid to ask questions about anything you’re unclear on. And if you get a sense that the person isn’t being truthful with you, don’t give them any of your money.

7. They make a lot of spelling mistakes

Anyone can make an occasional typo, and this in and of itself doesn’t prove that a charity is a fake. But real organizations generally take the time to ensure that their documents, especially those that will be disseminated to the public, are as polished as possible.

Scammers, on the other hand, don’t always pay attention to these small details. So if the materials they give you look less than professional, it’s at least worth doing some digging to see what else you can find out about the company.

None of this is intended to make you suspicious of charities. But I think we’d all like to know that the money we give to good causes is actually going to those causes and not to someone else’s bank account. So it doesn’t hurt to take your time and review the above information, especially when you’re considering giving to a charity you’ve never heard of before.

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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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In some cases, it may be. 

Healthcare can be a huge expense, no matter your age. And while it’s a good idea to pad your savings account so you can cover medical bills, there are ways to save for healthcare in a tax-advantaged manner.

One option is to open a flexible spending account (FSA). An FSA lets you set aside money for healthcare using pre-tax dollars. Put $1,000 into an FSA, and that’s $1,000 of income the IRS won’t tax you on.

FSAs also require you to spend down your plan balance each year or risk losing that money. The good news, though, is that you can use the money in your FSA for a host of expenses, from copays for prescriptions to doctor’s office visits.

But while FSAs are a great option for healthcare savings, there’s an even more flexible account you might be eligible to contribute to — a health savings account (HSA). To participate in an HSA, you need to be enrolled in a high-deductible health insurance plan. But from there, you can use the money in an HSA just like an FSA — or leave that money alone and let it grow.

One benefit of HSAs is that you don’t have to spend down your balance year after year. Rather, in addition to tax-free contributions, you can invest money in your HSA you aren’t using right away and watch it grow tax free.

Now one thing you should know is that you can’t have an HSA and an FSA at the same time. But there’s one exception, and it’s if your employer offers what’s called a limited purpose FSA. These accounts can be used alongside HSAs. But does it pay to open one?

How a limited purpose FSA works

A limited purpose FSA allows you to set aside pre-tax dollars to pay for very specific healthcare expenses — namely, vision and dental expenses. You can also use a limited purpose FSA to pay for regular medical expenses once your health insurance deductible has been met.

But remember, if you’re opening a limited purpose FSA to use in conjunction with an HSA, it means you’re enrolled in a health insurance plan with a pretty high deductible. And so you may not end up meeting your entire deductible within a year. As such, with a limited purpose FSA, you may really be limited to just vision and dental expenses. And so before you contribute to one of these accounts, you’ll want to consider your costs carefully.

If you have dental insurance, it may be that your cleanings and routine or preventive care are covered 100% by your insurance. And so in that case, you may not have any out-of-pocket costs for dental care.

Similarly, if you don’t wear glasses, you may not be able to use your limited purpose FSA for vision expenses. And even if you do wear glasses, if you’re happy with yours and your prescription doesn’t change, you may not need new ones, which means you may not have any vision expenses to use your limited purpose FSA for.

Be careful with a limited purpose FSA

All told, limited purpose FSAs give you more options for reaping tax savings in the course of setting money aside for healthcare. But these accounts really do live up to their name in that they limit you a lot.

Before you open one, make sure you’re likely to need to use up your balance within a single plan year. It’s not worth chasing tax savings if it puts you at risk of losing money.

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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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