Money Management

The consequences could be pretty severe. 

Many Americans are used to getting a tax refund every year. And in 2022, the average tax refund issued came to $3,121.

But not everyone who files a tax return gets a refund. You may end up owing the IRS money for different reasons, such as being self-employed and not having paid enough estimated taxes, or having made a lot of money in a taxable brokerage account.

Now if you’re able to pay your IRS bill on the spot, great. Doing so will help you avoid interest and penalties on the sum you owe.

But many people don’t have money just sitting around in a savings account they can use to pay the IRS when a surprise bill arrives. And if that’s the boat you’re in, you may be inclined to ignore the problem of owing money on your taxes and hope it goes away. That, however, is a move that’s highly unlikely to work out well for you.

Don’t ignore a tax bill

When you don’t pay your taxes, you accrue interest and penalties on the sum you owe. But that’s not all.

Not getting paid doesn’t tend to sit well with the IRS. So after a while, the agency is apt to reach out to you asking for its money.

You’ll usually get several notices in the mail from the IRS asking you to pay your tax bill, or reach out to get on a payment plan if you don’t have the cash to cover your tax bill in full. If you ignore those letters, the IRS will eventually send you a notice letting you know that your wages are about to be garnished. And if you ignore that notice, you can expect the IRS to start coming after your paycheck.

Now this doesn’t mean that the IRS will take all of your money. The agency recognizes that you need money to live on. But can the IRS garnish a significant portion of your wages until you’ve made good on your tax bill? Absolutely. And that’s not a situation you want to end up in.

Don’t let things escalate

Reaching the point of having your wages garnished makes little sense when the IRS is actually pretty flexible about getting paid back. If you have a tax bill you can’t cover in full, reach out and get onto an installment plan. That way, you can pay off your tax debt over time.

In that scenario, you’ll continue to accrue interest and penalties on the sum you owe. But if you’re compliant and stick to your agreement, the IRS won’t attempt to go after your wages.

You can also consider charging your IRS bill on a credit card and simply paying that balance off over time. Granted, this isn’t necessarily the best move, since it could mean getting charged a fee for using a credit card plus having to pay an exorbitant amount of interest on your balance itself. But if you have a 0% interest rate on your card for a pretty generous period of time, it’s an option you can look at.

Either way, you’ll need to come up with a game plan for paying the IRS the taxes you owe. If you don’t, the consequences could be quite severe.

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The cost of dining out and ordering in can really add up. 

I happen to really enjoy cooking. And I’m actually pretty decent at it. The reason I don’t do it more often boils down to time, or a lack thereof.

Not only do I have kids and a household to maintain, but I also work full time — and often beyond full time, meaning more than 40 hours a week. Between that and some volunteer work I do, there are weeks when I simply don’t have time to spend hours in the kitchen whipping up meals. And those are the weeks when I fall back on takeout, despite the higher credit card tab it leads to.

But a friend of mine almost never cooks. And the reason doesn’t have to do with a lack of time. Rather, it’s a lack of desire.

Dining out can be a major expense

My friend claims she’s a terrible cook. I wouldn’t know, because I’ve never sampled anything that comes out of her kitchen. But it’s not just that she doesn’t like to cook. She also feels that because it’s just her and her husband, it’s more cost-effective to dine at restaurants and order in than to cook for themselves.

Last year, I challenged that line of thinking and asked her to tally up her spending on restaurants and takeout. We then compared that cost to the cost of padding her existing grocery spending by $200 a week (keeping in mind that she and her husband commonly eat breakfast and lunch at home and make it themselves). All told, we found that even if cooking were to cost her an extra $200 in groceries, she’d save about $5,000 a year compared to the cost of dining out and ordering takeout as frequently as she does.

That was an eye-opener, to say the least. And this year, one of my friend’s New Year’s resolutions is to try to get on board with cooking a bit more.

If you tend to avoid cooking because you don’t like to or don’t know how, the reality is that it could save you a lot of money. So here are some options to consider.

1. Sign up for a meal kit service

Meal kits are often more expensive than buying groceries at the supermarket. But they can be a source of savings compared to dining out and ordering in. And they make the process of cooking simple, since you get all of the ingredients you need delivered to your door with easy-to-follow recipes.

2. Stick to very simple recipes

You don’t have to go from not cooking at all to whipping up complicated three-course meals in your kitchen. Instead, keep things simple. Stick to basic recipes like chicken and rice or pasta and vegetables until you get more comfortable experimenting with different ingredients and techniques.

3. Make it a family affair

There’s no rule stating that you have to suffer alone in the kitchen while cooking meals. If cooking really isn’t in your wheelhouse, enlist the help of your family members to help you get better at it. Cook meals jointly with your spouse, and if your kids are old enough, have them help.

Never cooking at all could really cost you a lot of money. Although I don’t see my friend becoming a regular cook, I do think she’s going to try to do better in that regard this year. And if you’re tired of spending a fortune on restaurants and takeout, it pays to do what you can to get on board with cooking.

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These companies want to help you celebrate your special day. 

Whether you’re wild about celebrating your birthday each year or sort of wish it would hurry up and pass, dozens of companies want to acknowledge the day you were born. Here are some of the places where you can score free stuff and avoid touching your monthly budget.

Food

You may want to loosen your belt a bit because these restaurants and shops want to help you celebrate with food. Here’s a small sample of businesses offering edible birthday treats:

Who doesn’t love Baskin Robbins? Once you’re a member of its Birthday Club you’ll receive one free scoop of ice cream in celebration of your big day.Not to be outdone, Ben & Jerry’s also offers a free scoop of ice cream on your birthday. Their only requirement is that you sign up for their loyalty program.If you’re into Mongolian Barbeque, you’ll be glad to know that the restaurant offers a free meal to customers celebrating their birthdays. But first, you’ll need to sign up for Club Mongo.Black Angus offers a free birthday steak dinner as a reminder of how special you are. Here’s the only catch: This offer is available after your first year as a Prime Club member.If starting your day with Denny’s breakfast sounds good, the restaurant offers a free Original Grand Slam breakfast to anyone celebrating their birthday. But first, sign up for Denny’s Rewards program.Let Edible Arrangements know it’s your birthday, and you’ll receive a free assortment. You’re eligible once you sign up for the Edible Arrangements Birthday Club.IHOP also offers a free meal to members of the MYHOP rewards program on their birthday.Finish your birthday meal at The Melting Pot by enjoying free chocolate fondue. Sound good? It’s as easy as joining Club Fondue.

Entertainment

If you weren’t planning to go out and celebrate, you may change your mind after seeing who’s offering gifts and possible discounts.

Take in a movie at an AMC Theater on your birthday, and you’ll score a free popcorn. Take advantage of this offer by joining AMC Stubs.Dave & Busters help you have even more fun by offering $10 in free game play. It begins by signing up for Dave & Busters reward program.Into Medieval Times? You can score free BOGO admission on your birthday. To get started, you’ll need to sign up for Medieval Times email.

Retailers

Why not take advantage of offers made by the places you shop (or stop by) regularly and leave a little more money in your bank account?

Snag a free $5 gift certificate from Ace Hardware on your birthday. To take advantage of the offer, sign up for Ace Rewards. It’s not a fortune, but does leave a little extra cash in your bank account.Get a free movie or game rental from Redbox. It all begins with signing up for Redbox Perks.Stop in for a free gift from Sephora on your birthday. It’s easy if you’re a Beauty Insider member.You’ll score a $10 coupon to use your birthday month from The Body Shop by signing up for their Loyalty Club.

It’s important to note that you don’t have to take advantage of all offers on your actual birth date. Most give you a window of time to come by for your birthday gift.

Don’t be shy about taking advantage of any offer that appeals to you. You deserve the recognition.

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Image source: Getty Images
What happenedWalmart says it will raise minimum wages for its store workers starting March 2. According to a staff memo, the retail giant will increase its average hourly wage to more than $17.50. The company, which is one of the biggest employers in America, is also introducing several other staff benefits.So whatThe move, which means Walmart’s starting hourly wages will increase from $12-$18 to $14-$19, comes at a time when many people are worried about their jobs. In recent months, there have been dramatic layoffs in the tech and banking sectors and some analysts fear other industries could follow suit.In part, however, Walmart’s decision to introduce substantial wage increases could be viewed as a positive economic signal. “It suggests that Walmart doesn’t think the economy will suffer a recession anytime soon, or that if it does, it will be a short-lived and modest downturn,” Mark Zandi, the chief economist at Moody’s Analytics told the New York Times.It is also a reflection of the challenges of retaining employees, particularly as Walmart’s hourly rates are still slightly behind competitors like Costco. Now whatThe jury’s still out on whether or not the U.S. will enter a recession this year. Some senior figures in banking have been warning of impending economic doom for some time. Others still think it is avoidable. Either way, there’s no harm in padding your emergency fund and paying down debt just in case. That said, it isn’t easy to save and build financial security if you’re earning $17.50 an hour, particularly given the amount living costs have increased. Assuming a 40 hour work week and 52 weeks per year, it translates to a yearly salary of $36,400 and around $3,000 a month before tax. Depending on where you live, a large chunk of that will go on housing. Median monthly rents crossed the $2,000 threshold for the first time last year, though they are starting to fall again. The more you can reduce your housing costs — say, by sharing living space or even moving to a lower cost area — the more money you’ll have in your bank account for other essentials.Here are some other ways you can stretch a $36,400 paycheck:See if you’re eligible for government assistance: Depending on the size of your household, you may qualify for federal help with both housing and food benefits. Go to Benefits.gov to find out what help may be available.Make a budget: Break down what you spend each month in different areas and use that to plan out how much you’ll need to pay for your essential costs. If you spend more than you earn, use your budget to identify areas where you might cut back.Try to save, even if it’s only a small amount: If you can save a small percentage of your monthly budget, over time you’ll be able to build up a small cushion. Having some cash in a savings account can help cover unexpected expenses, such as car repairs or a job loss.Alert: highest cash back card we’ve seen now has 0% intro APR until 2024If you’re using the wrong credit or debit card, it could be costing you serious money. Our expert loves this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee. In fact, this card is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes. Read our free reviewWe’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.Emma Newbery has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Walmart. The Motley Fool has a disclosure policy. 

What happened

Walmart says it will raise minimum wages for its store workers starting March 2. According to a staff memo, the retail giant will increase its average hourly wage to more than $17.50. The company, which is one of the biggest employers in America, is also introducing several other staff benefits.

So what

The move, which means Walmart’s starting hourly wages will increase from $12-$18 to $14-$19, comes at a time when many people are worried about their jobs. In recent months, there have been dramatic layoffs in the tech and banking sectors and some analysts fear other industries could follow suit.

In part, however, Walmart’s decision to introduce substantial wage increases could be viewed as a positive economic signal. “It suggests that Walmart doesn’t think the economy will suffer a recession anytime soon, or that if it does, it will be a short-lived and modest downturn,” Mark Zandi, the chief economist at Moody’s Analytics told the New York Times.

It is also a reflection of the challenges of retaining employees, particularly as Walmart’s hourly rates are still slightly behind competitors like Costco.

Now what

The jury’s still out on whether or not the U.S. will enter a recession this year. Some senior figures in banking have been warning of impending economic doom for some time. Others still think it is avoidable. Either way, there’s no harm in padding your emergency fund and paying down debt just in case.

That said, it isn’t easy to save and build financial security if you’re earning $17.50 an hour, particularly given the amount living costs have increased. Assuming a 40 hour work week and 52 weeks per year, it translates to a yearly salary of $36,400 and around $3,000 a month before tax.

Depending on where you live, a large chunk of that will go on housing. Median monthly rents crossed the $2,000 threshold for the first time last year, though they are starting to fall again. The more you can reduce your housing costs — say, by sharing living space or even moving to a lower cost area — the more money you’ll have in your bank account for other essentials.

Here are some other ways you can stretch a $36,400 paycheck:

See if you’re eligible for government assistance: Depending on the size of your household, you may qualify for federal help with both housing and food benefits. Go to Benefits.gov to find out what help may be available.Make a budget: Break down what you spend each month in different areas and use that to plan out how much you’ll need to pay for your essential costs. If you spend more than you earn, use your budget to identify areas where you might cut back.Try to save, even if it’s only a small amount: If you can save a small percentage of your monthly budget, over time you’ll be able to build up a small cushion. Having some cash in a savings account can help cover unexpected expenses, such as car repairs or a job loss.

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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.Emma Newbery has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Walmart. The Motley Fool has a disclosure policy.

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There are steps you can take to spend less. 

Many consumers struggled to pay their bills in 2022. We can thank inflation for that. But while it’s possible to cut back in certain areas when living costs start to soar, there are certain expense categories that are really difficult to slash.

Grocery spending is one of them. We all need to eat. And you may have certain dietary needs in your household that force you to spend extra on certain products.

But if food costs are busting your budget and forcing you to rack up debt on your credit cards just to stay afloat, you’re not alone. As of December 2022, food costs were up 10.4% on an annual basis, according to the Bureau of Labor Statistics. And that’s a massive jump.

Still, there are steps you can take to save money on grocery bills this year. Here are some to try to work into your routine.

1. Buy in bulk when that makes sense

If there are certain products you consume regularly in your household, then buying them in bulk could be a huge money-saver. But to be clear, you don’t want to engage in bulk buying when you’re trying out a product for the first time, or you’re buying something with a very limited shelf life.

Say your family goes through certain cereals all the time. That’s the sort of product you’re pretty safe to buy in bulk, because it’s an established staple in your household and it has a pretty decent shelf life (though it would be nice if cereal makers could team up with the Ziplock folks to make open boxes last longer). And so in that case, buying in bulk could be a nice source of savings with little risk.

Best of all, you don’t have to be a member of a warehouse club like Costco to enjoy bulk specials. Look around your regular supermarket, and you’re likely to find a host of items in larger quantities.

2. Plan out your meals ahead of time

The simple act of meal planning could help you spend less at the grocery store. Rather than wing it in terms of cooking, spend time thinking about your meals for the upcoming week, and figure out what ingredients you need to purchase.

But for the sake of savings and efficiency, don’t make those decisions solo — even if you’re the resident cook in your household. There’s no sense, for example, in making a massive pot of vegetable stew if your picky kids are going to reject it and beg for chicken nuggets instead.

3. Always take inventory before you shop

Buying two heads of lettuce when you already have two sitting at the back of your fridge is a good way to land in a position where you’re throwing money away. Before you shop for food — especially perishable items — spend a few minutes taking inventory. It could spare you from spending money on things you don’t need right away.

Food costs may be way up. But that doesn’t mean you can’t find ways to spend less — without having to skimp on the items you like to feed your family with.

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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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