Money Management

They have their reasons, and they’re valid ones. 

Buying a home in 2022 was no easy feat. Not only was real estate inventory limited, but mortgage rates rose sharply last year compared to where they sat in 2021. In fact, by the end of 2022, borrowers were looking at mortgage rates that were twice as high as what they would’ve paid a year prior.

In spite of that, many people did manage to purchase a home in 2022. But according to a new report by Hippo, 78% of those who did wound up having regrets. Here are some of the reasons why.

1. Too much of an expense

For 49% of respondents, homeownership has been more expensive than they expected it to be. Most home buyers know to anticipate expenses like mortgage payments, homeowners insurance, and property taxes. But many don’t realize how expensive it can be to maintain a home.

As a general rule, maintenance can cost anywhere from 1% to 4% of a home’s value. So if you’re buying a $400,000 home, budget at least $4,000 a year for upkeep. And if that home is older, you may want to budget closer to $12,000 to $16,000 a year.

2. Too many unexpected issues

Unexpected issues have left 47% of respondents regretting their decision to make a home purchase. The reality is that even if you hire an experienced home inspector before closing on a home purchase, you could still get stuck with hidden issues. That’s why it’s so important to go into homeownership with a solid emergency fund. That way, sudden repairs don’t have to cause the same level of financial stress.

3. Too much work

Home maintenance isn’t just expensive. It can also be time-consuming. And so 47% of respondents point to it as the reason they regret buying their homes.

It’s important to be realistic about property maintenance. And if you know your schedule doesn’t have much wiggle room, you’ll need to pad your maintenance budget to allow yourself the option to outsource a lot of your home’s upkeep.

4. Too many compromises

The housing market has lacked inventory in a serious way these past few years. That’s forced many buyers to settle for a home that may not have checked off all the right boxes.

A good 46% of respondents who regret homeownership say they compromised on things they really wanted for their home. To avoid similar regrets, order your wishlist by priority when you’re in the process of searching for a home. If there are 12 items on your list, and item No. 1 is the most important, don’t budge on it. But if you can’t get items 11 and 12, that’s a different story.

The last thing you want to do is buy a home only to lament your decision afterward. By budgeting for maintenance from both a financial and time-related perspective, boosting your emergency fund, and knowing what not to settle for, you can avoid landing in the same position as the 78% of people who wish they wouldn’t have purchased a home in 2022.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

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.

 Read More 

As you work on your savings goals, it’s okay to start small. 

Many people have plans to set aside more money in their savings accounts, but they continue to put off their goals. You’re not alone if you’re delaying saving because money is tight. But keep in mind that even a small amount of savings can make a big difference and help you prepare for future expenses that come your way. Find out how much money you’ll save if you commit to stashing away $25 weekly for the next year.

Every dollar saved makes a difference

Life is more expensive now thanks to rampant inflation, and if your paycheck is already stretched thin, it may feel like saving money is impossible. Many people assume that they don’t have enough extra money to save. If you continue to put off your savings goals year after year, it’ll be harder to handle emergency expenses that arise.

Not everyone can commit to hefty savings goals — and that’s okay. But it’s essential to start somewhere. If you can save even a few dollars a week, it’s better than not saving at all. While it will take time to reach your savings goals, you’ll be well on your way to getting there.

The importance of an emergency fund

An emergency fund is a valuable financial tool. Unfortunately, many Americans don’t have one. You never know when an unexpected vet bill, car repair, or home maintenance task will come your way. When you have an emergency fund, handling these situations is less stressful.

Ideally, having at least a few months’ worth of your everyday expenses saved in an emergency fund is best. But even a small emergency fund can help you when unexpected expenses arise. Don’t be afraid to start with a small goal as you work to build your fund.

If you struggle to save regularly, it can be beneficial to automate the process. You can set up automatic transfers from your checking account to your savings account. Some people like to save weekly, while others prefer a bi-weekly or monthly savings schedule. Do what works best for you. Doing this will override any potential forgetfulness and you’ll save yourself some time.

Here’s how much $25 in weekly savings will add up

So, you want to start saving but don’t have much extra money? If you can afford to allocate $25 of your weekly budget toward savings, your savings account balance will add up faster than you think. If you commit to setting aside $25 each week for an entire year, you’ll have $1,300 in the bank. That’s a lot of money and much better than having $0 saved.

If you stash your extra cash in a savings account, you’ll also earn interest. Right now, many banks are offering competitive interest rates. 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 your needs.

Don’t give up on your financial goals

As everyday living costs rise, many of us are feeling added stress. But it’s important to stay committed to your personal finance goals. If you have resolutions to save more this year, start with a small goal and make it a reality. Even $10, $20, or $25 a week saved is impressive.

These savings accounts are FDIC insured and could earn you more than 13x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you more than 13x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023.

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.

 Read More 

You may have to wait a bit longer to get your money. 

Lower-income households tend to struggle financially in general. But 2022 was no doubt a particularly brutal year for lower earners. That’s because inflation surged from the start of the year through the end of it, forcing many people to rack up costly credit card debt just to stay afloat.

Making matters worse, the Child Tax Credit did not get a boost in 2022. In 2021, the Child Tax Credit’s maximum value increased, and the credit became fully refundable. This meant that if a filer who was eligible for the credit owed the IRS no money, they could still claim the full value of the credit.

But still, there’s a specific tax credit that lower-income files are commonly entitled to — the

Earned Income Tax Credit (EITC) — that was very much available in 2022. What makes the EITC so valuable is that it’s fully refundable, so even if you don’t owe the IRS a dime, you can still receive its full value.

But if you’re claiming the EITC and filing your tax return in January, you should know that you won’t get your tax refund right away. Here’s why.

It’s all about preventing fraud

Because the EITC is fully refundable, it’s been associated with higher levels of fraud. As such, the Protecting Americans from Tax Hikes (PATH) Act made changes to tax laws that now require the IRS to hold refunds associated with the EITC through mid-February.

Now normally, if you file a tax return electronically and it’s free of errors, you can expect your tax refund to hit your bank account within 21 days. So if you file your taxes in late January, you might have your money by mid-February — but not if the EITC is claimed on your return. Instead, you may not get your refund until late February if you’re claiming that credit.

And to be clear, the IRS is required to hold up your entire refund if you’re claiming the EITC on your tax return. It can’t just withhold the portion of your refund that’s associated with that particular credit.

Is the EITC even worth claiming?

Absolutely. You may not appreciate having your tax refund held up. But the EITC is an extremely lucrative tax credit, so chances are, it’s worth delaying your refund to get that money.

The amount of money the EITC will pay you will hinge on your household size. But for the 2022 tax year, the EITC is worth up to:

$560 for filers with no qualifying children$3,733 for filers with one qualifying child$6,164 for filers with two qualifying children$6,935 for filers with three or more qualifying children

So, let’s say you qualify for the maximum $6,935, but you’re forced to wait an extra two or three weeks to get your tax refund. Having to sit tight may not be ideal, but are you really willing to pass up almost $7,000? Probably not.

While many people are desperate to get their tax refunds this year in light of rampant inflation, you should know that if you file your taxes in the next few weeks and claim the EITC, your refund will be held up. But having that information could make the delay easier to manage.

Our picks for best tax software

Our independent analysts pored over the perks and user reviews for the most popular tax provider services to land on the best-in-class picks to file your taxes. Get started by reviewing our list of the best tax software.

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.

 Read More 

The quick answer? Probably. 

Buying a home is something you want to do under the right conditions. After all, you’re taking on a very large purchase that you could end up paying off for the next 30 years.

And also, that purchase is one that will impact your day-to-day quality of life. So it’s important to buy at a time when you can snag a home that’s affordable to you, and one that meets your needs.

These days, however, checking off those boxes is easier said than done. In fact, 76% of consumers say it’s a bad time to buy a home, according to the most recent Fannie Mae Home Purchase Sentiment Index. And on a year-over-year basis, the index is down 13.2 points, which means that a year ago, fewer consumers thought it was a bad time to buy.

So are today’s consumers right about homeownership? For the most part, yes. But that doesn’t mean all buyers need to put their plans on hold.

Why most buyers should probably wait

Right now, there are three factors working against prospective home buyers:

Limited inventoryElevated home pricesExpensive mortgage rates

The housing market still lacks inventory in a big way, and that ties into higher home prices. And whenever you have a situation where there’s not enough supply to meet demand, prices tend to rise. So these days, buyers are looking at paying more for a home than they would have a few years ago.

But limited inventory doesn’t just mean higher prices. It could also mean not being able to find the right home, which is just as much of a problem.

And then there’s mortgage rates, which rose sharply in 2022 and are still sitting at some of the highest levels we’ve seen in 20 years. The combination of higher borrowing rates and home prices is leaving many buyers in a position where homeownership just isn’t affordable, which makes now a bad time to be looking to purchase a place to live.

There are exceptions to the rule

While it’s generally not a good time to be a home buyer, that doesn’t mean you need to pull out of the market and put your plans on pause. Maybe you’re in a great place financially — you have a lot of cash savings, great credit, and a high enough salary to support a larger mortgage payment. And maybe there’s a decent amount of inventory in your preferred neighborhood, so you’re seeing homes that meet your needs.

If that’s the case, and you’re ready to make an offer on a home, go for it. But if you’re not feeling good about a home purchase right now due to any of the factors above, it probably pays to wait.

At some point, housing inventory is apt to increase, home prices are likely to cool, and mortgage loans should become more affordable. It may not happen in 2023, but if you’re willing to be patient, you might end up with your dream home at a price that doesn’t stress you out or put an undue strain on your budget.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

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.

 Read More