Money Management

It can, to some extent. But there are rules you’ll need to follow. 

Many people sock money away in an IRA account year after year so they’re able to retire with a nice nest egg. If you started funding your IRA in your early 20s and you’re now, say, in your 40s, you may have a nice sum of cash to your name. And if you want to make sure your loved ones are protected financially in your absence, you may also be thinking about buying life insurance if you don’t have a policy already.

But do you need one? Let’s say you’re thinking of purchasing a life insurance policy worth $500,000, but you have a $500,000 balance in your IRA. Will an inherited IRA suffice for your loved ones? Or do you need life insurance as well?

Your survivors could get more money with life insurance

The rules of inherited IRAs can be very complicated. So can the rules of life insurance payouts. But generally speaking, if you put life insurance in place and pass away, your beneficiaries will be entitled to a payout that’s free of taxes. That may not be the case with an inherited IRA.

If you have your money in a traditional IRA and your beneficiaries inherit it upon your passing, they’ll generally be subject to taxes on that money. So, let’s say you want to leave your loved ones with $500,000 upon your death. If you buy a life insurance policy with that death benefit, your loved ones should actually walk away with $500,000 if you pass away while your coverage is still in place. With a $500,000 IRA, they might only end up with, say, $370,000 after taxes are accounted for.

Now the rules are different with a Roth IRA. Roth IRAs don’t give you a tax break on contributions like traditional IRAs do. But one benefit of Roth IRAs is that you get to enjoy tax-free withdrawals in retirement.

If you don’t make it to retirement, but rather, pass away before that milestone arrives and leave your Roth IRA to your loved ones, they should be entitled to that money tax-free. But falling back on a traditional IRA instead of life insurance could leave your beneficiaries with less money upon your passing.

Make the right call

It’s easy to see why you might think a giant IRA balance can take the place of life insurance. But remember, the two have totally separate purposes.

The point of an IRA is to serve as an income source for you during retirement. The point of life insurance is to protect your loved ones if you pass away at a time when you’re still providing them with financial support. It’s better to keep those two concepts separate — and buy life insurance even if you’re doing a great job of consistently funding your IRA.

Remember, too, that if you pass away and leave your loved ones with a large IRA to inherit as well as a generous life insurance payout, you’ll only be giving them that much more protection. So if you can swing the cost of a life insurance policy, it pays to get one.

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City living isn’t for everyone. 

I grew up in Brooklyn and spent my first few years of young adulthood living in Manhattan, where well over $1,000 a month in rent bought you an apartment the size of a shoebox. At the time, I was living alone and could manage the smaller space. And I worked a demanding job I needed to be close to, so paying a small fortune for a Manhattan apartment made sense.

But once I got married, I was quick to ditch the city (and that job) and move in with my husband in suburbia. It was definitely an adjustment, especially since, like many people raised in cities, I didn’t even know how to drive when I first moved out here. But at this point, I wouldn’t move back to Manhattan, or any other city for that matter, unless you paid me a whopping sum of money.

The one thing I don’t like about the suburbs is that it’s virtually impossible to rent a decent-sized standalone home. Because of this, we have to own our house instead of rent, and to me, that’s a bad thing.

I actually prefer renting because when you own a home, you’re dealing with way more than just a mortgage payment. You’re also dealing with property taxes that can climb over time, maintenance, and repairs that can pop up when you least expect them.

But at this point, I’ve made my peace with owning a home. And I can easily say that I prefer the suburbs for these key reasons.

1. I like having space

Living in a studio apartment was okay for a while. But now that I know what it’s like to live in a larger house, I can’t imagine returning to an apartment — especially not with kids in the mix. Rest assured that I love my offspring with all of my heart. But I also love being able to shift them down to the basement when I’m tired of them making noise.

2. I appreciate having my own backyard

When you live in a city, it’s rare to have your own private outdoor space. But I love being outdoors, even if it’s just sitting on my deck to do some work or read a book. Plus, I have a dog, and while I walk him regularly, letting him off-leash in our fenced-in yard is a great way for him to get his energy out.

3. I don’t have to wait in line to cross the street

In cities like Manhattan, it can get so crowded that you miss the light crossing the street because there are too many people in front of you. Here, that doesn’t happen. Granted, in most of my neighborhood, there aren’t traffic lights — or walkers, for that matter. Almost everyone drives everywhere. I don’t, though, which means I tend to get the sidewalks to myself.

4. Things aren’t quite as expensive

The suburb I live in is far from cheap. But still, there’s a world of a difference between what I pay for things like groceries and takeout here and what I’d be paying in Manhattan. Plus, out here I have Costco. Enough said.

5. It’s actually quiet at night

Perhaps my least favorite part of living in Manhattan was being kept awake at night by the sound of people yelling in the street or the subway rolling by at 2:00 in the morning. Out here, the only thing you tend to hear at night is crickets. And while those can be annoying, you learn to tune them out.

Many people love the excitement and convenience of city life. But it’s just not for me. And even though I do miss being a renter, my current setup makes a lot more sense for me than an apartment the size of my living room.

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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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Taking these steps will increase the chances of getting your car in good shape. 

Car theft is a growing problem, with over 930,000 vehicles stolen in the United States last year. If you become one of those victims, it can be a devastating experience. But there are steps you can take to make sure your car gets returned and minimize the damage done to your finances and credit. Here are five steps you should take if your car gets stolen.

1. Notify the police immediately

The first thing you should do if your car is stolen is call the police immediately and file a report. This will help them locate your vehicle faster, as well as provide valuable evidence for any insurance claim or criminal proceedings that may follow. Be sure to provide the police with all relevant information about the vehicle, such as make, model, VIN number, license plate number, and so on.

2. Contact your insurance company

Once you’ve notified the police about the theft of your car, contact your car insurance company as soon as possible to start an insurance claim process. Depending on your policy coverage and type of theft (theft by force or unauthorized use), it may cover some or all of the costs associated with replacing or recovering your car.

3. Contact your lender, lienholder, or lessor

If you are still paying off your car loan or leasing the vehicle, contact your lienholder, lender, or lessor as soon as possible to let them know what has happened. If you are financing your car purchase, ask what steps you will need to take, since any insurance payouts will go to the lender. To expedite the claims process, link your insurance company with the lender.

4. Contact the DMV

Contact and file a report with your state’s department of motor vehicles (DMV). This is different from filing a police report. The DMV can update its records accordingly and mark your plates as missing or stolen. It can also cancel your registration so you can avoid charges related to renewals or upcoming required safety checks.

5. Change your lock system

If you are lucky enough to get your car recovered, it’s important to change out any lock systems that were installed prior to its theft. Update your car with keyless entry systems, change the door locks, or add security devices like steering wheel locks. Investing in these extra precautions will help protect against future thefts!

Car theft is a serious problem that affects close to a million people each year. It’s important to be prepared before anything happens. Make sure you have good auto insurance coverage and take extra precautions such as installing additional security features on your vehicle. However, if something does happen — such as having your vehicle stolen — it’s essential to act quickly by following these five steps. This will increase the chances of recovery while minimizing any negative financial repercussions.

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Tax breaks can help you purchase an EV. 

Want to purchase an electric vehicle? Now may be the right time. The federal government is offering a federal tax credit up to $7,500 for purchasing an electric vehicle that meets certain qualifications. In addition to this incentive, many states offer others, such as income tax credits, rebates, reduced sales taxes, and much more.

On top of that, local cities, counties, and utility companies offer incentives such as reduced licensing or charging station fees, utility bill credits, or lower rates when charging your EV. How much you qualify for will depend on where you live and the type of car you purchase, as well as other factors (like your income level). Here are states with the biggest EV tax breaks.

Connecticut: Up to $9,500

Connecticut’s Hydrogen and Electric Automobile Purchase Rebate Program (CHEAPR) offers rebates ranging from $750 to $9,500. Rebates are available in the following amounts:

Plug-in hybrid electric vehicles (PHEVs): $750Light-duty electric vehicles (EVs): $2,250Fuel cell electric vehicles (FCEVs): $4,500

CHEAPR offers an additional rebate, Rebate Plus, for those who qualify as low income.

Plug-in hybrid electric vehicles (PHEVs): $1,500 (New); $1,125 (Used)Light-duty electric vehicles (EVs): $2,000 (New); $3,000 (Used)Fuel cell electric vehicles (FCEVs): $2,500 (New); $7,500 (Used)

Colorado: Up to $8,000

Colorado offers a state tax credit that ranges from $2,000 to $8,000 for a new EV purchase and $1,500 to $5,000 for a new EV lease. The amount depends on the type of electric vehicle. Like the federal credit, you can assign the state tax credit so you get the discount upfront when you purchase or lease the EV.

Light-duty EV: $2,000 for purchase; $1,500 for leaseLight-duty electric truck: $2,800 for purchase; $1,750 for leaseMedium-duty electric truck: $4,000 for purchase; $2,500 for leaseHeavy-duty electric truck: $8,000 for purchase; $5,000 for lease

Oregon: Up to $7,500

Oregon has two different programs. The Clean Vehicle Rebate Program provides rebates that range from $1,500 to $2,500. Rebates are available in the following amounts:

New EVs and FCEVs with a battery capacity greater than 10 kilowatt-hours (kWh): $2,500.EVs and FCEVs with a battery capacity of less than 10 kWh: $1,500.Electric motorcycles: $750.

Oregon’s Charge Ahead Rebate Program offers low- and medium-income Oregon residents an additional rebate of up to $5,000 for a total of up to $7,500 in rebates.

California: Up to $4,500

California’s Clean Vehicle Rebate Project (CVRP) offers rebates ranging from $750 to $4,500 for the purchase or lease of qualified vehicles. These rebates are available on a first-come, first-served basis to California residents.

Light-duty electric vehicles (EVs): $2,000Fuel cell electric vehicles (FCEVs): $4,500Plug-in hybrid electric vehicles (PHEVs): $1,000Zero-emission motorcycles: $750

Rhode Island: Up to $4,500

The Driving Rhode Island to Vehicle Electrification (DRIVE EV) rebate program offers rebates ranging from $750 to $2,500. Rebates are available in the following amounts:

ZEV (new all-electric vehicles and hydrogen fuel cell electric vehicles): $2,500ZEV (pre-owned vehicle): $1,500PHEV (new): $1,500PHEV (pre-owned): $750

Those who qualify for low-income can receive an additional rebate of $2,000.

Illinois: Up to $4,000

Illinois’ Environmental Protection Agency (IEPA) offers a $4,000 rebate that is reduced over time. Rebates are available in the following amounts:

Purchase or lease from July 1, 2022 to June 30, 2026: $4,000Purchase or lease from July 1, 2026 to June 30, 2027: $2,000Beginning July 1, 2028: $1,500

Pennsylvania: Up to $3,000

Pennsylvania’s Department of Environmental Protection (DEP) AFV Program offers rebates ranging from $500 to $2,000. Rebates are available in the following amounts:

EV (new or pre-owned): $2,000PHEV (new or pre-owned): $1,500CNG, Propane, and Electric Motorcycle (new or pre-owned): $500

Those who qualify as low income can receive an additional rebate of $1,000.

Maryland: Up to $3,000

Beginning July 1, 2023, Maryland residents who have purchased a qualified EV or FCEV can apply for an excise tax credit of up to $3,000. The tax credit is limited to one vehicle per individual and it is first come, first served.

Massachusetts: Up to $2,500

The Massachusetts Department of Energy Resources’ MOR-EV program (Massachusetts Offers Rebates for Electric Vehicles) offers rebates ranging from $1,500 to $2,500. Rebates are available in the following amounts:

All-electric and fuel cell electric vehicles: $2,500Plug-in hybrid electric vehicles: $1,500

New York: Up to $2,000

New York offers rebates of up to $2,000 for the purchase or lease of a new eligible EV.

All in all, the availability of tax incentives can make purchasing an electric vehicle much more affordable than it would otherwise be. Before taking out a car loan, make sure you do your research to maximize all the incentives you may qualify for. With the combination of the federal credits, state credits or rebates, and additional incentives from your local municipality or utility company, you can significantly reduce the cost of purchasing or leasing an electric vehicle.

When researching the available incentives and credits, you may not live in a state that qualifies for a credit or rebate, but there may be plenty of other incentives. For example, Tucson City offers a rebate of up to $500 for the installation of a Level 2 EV charging station. There are dozens more like it across the country. It is also important to note when certain incentives expire and conditions such as income limits or a cap on the cost of the EV. Some incentives are first come, first served so it pays to take advantage before they expire.

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You may want to take a similar approach. 

The practice of swiping a credit card, racking up a balance, and paying it off over time has been in place for a really long time. But these days, consumers have more options for financing purchases thanks to the introduction of “buy now, pay later” plans, or BNPL plans.

BNPL plans let you put a down payment on a purchase and then pay the rest off over a short period of time — usually 12 weeks or less. The benefit of using BNPL plans is that if you stick to your payment schedule, you won’t rack up interest or fees on your purchases.

That’s not the case when you carry a balance forward on a credit card. Let’s say you charge up $2,000 in expenses and can only make a $1,000 payment by the time your bill comes due. Once you start to carry that $1,000 forward, you’ll immediately start accumulating interest on it. And even if you pay off that remaining $1,000 the following month, it will still end up costing you extra.

But while it’s easy to see why consumers might like BNPL plans, I’m really not a fan of them. In fact, there’s really only one situation where I could see myself signing up for one.

An option best reserved for emergencies

I’ve always subscribed to the philosophy that if you can’t afford to pay for a given purchase in full and it isn’t essential, then you shouldn’t buy it. It’s that simple.

Years ago, when I was fresh out of college, some friends went on an amazing trip they financed by charging it on credit cards. I really, really wanted to join them, but I didn’t have the money. And I knew that if I charged my travel expenses, I’d end up paying them off for a long time, racking up a bunch of interest, and potentially damaging my credit score (too much credit card debt can do that, even if you’re making your minimum payments on time every month). So instead, I stayed home, and they dealt with the aftermath of credit card debt for months on end.

It’s for this reason that I’m not a big fan of BNPL plans. In my mind, they push consumers to buy things they can’t afford. But at the end of the day, when you owe money on a BNPL plan, you’re taking on debt. And if you fail to keep up with that debt, it could have serious negative repercussions.

That’s why the only scenario in which I’d use a BNPL plan is if I had to pay for something in a pinch and couldn’t afford it. For example, let’s say my fridge were to go kaput and I couldn’t swing the cost of a new one outright. A fridge is something everyone needs, and it’s the sort of purchase you can’t put off. So in that case, if I didn’t have money in my savings account, I’d consider financing a fridge purchase with a BNPL plan.

But I wouldn’t use one of these plans to finance the purchase of a new TV or clothing. And neither should you.

Don’t get in over your head

BNPL plans might seem like a great deal — until you start to have difficulty keeping up with the payments. So the next time you’re tempted by one of these plans, ask yourself if the item you’re looking to finance is essential. If it isn’t, you’re better off saving up the money and then moving forward with that purchase.

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Get ready to pack your bags. 

If you’re someone who’s caught the travel bug, you’re no doubt in good company. There’s something liberating about getting out, exploring new places, and making memories in different corners of the country and world.

Meanwhile, the summer tends to be a popular time to travel. The weather is warm, school’s not in session, and things may be slower than usual on the work front, thereby making the idea of getting away less stressful.

But if you’re eager to travel more this summer, the time to prepare for that is now. Here are some moves to make this winter that could make it much easier to pull off your dream vacation.

1. Boost your savings

Travel costs money — there’s no getting around that. And if you’re planning to hit some well-known destinations, you may find that you end up paying a premium for airfare and lodging during the summer months.

That’s why now’s a good time to start socking money away for upcoming trips. Figure out how much your travel will cost and break that down by week. That’s the amount you should aim to stick in your savings account so you can explore as you please without having to worry about landing in debt.

2. Apply for the right credit card

If you’ll be traveling a lot this summer, then it pays to arm yourself with tools that can save you money. And that’s why now’s a good time to sign up for a travel rewards credit card. These cards tend to come with money-saving benefits like free checked baggage on flights and discounts on in-flight purchases.

Also, some travel rewards credit cards come with sign-up bonuses that let you rack up a pile of air miles for meeting a certain spending threshold. That’s a good way to offset the cost of your upcoming trips.

3. Book your trips in advance

Waiting until the last minute to book your summer vacations could mean spending more money than necessary. Rather than do that, start researching flight and lodging options ahead of time so you can compare your choices. In fact, you may want to make your actual reservations during the winter, especially when it comes to lodging.

Many hotels have fairly flexible cancellation policies. If you book a hotel stay now and change your mind in three months, you may not lose any money. But if you wait too long to book, you’ll risk getting stuck with a higher price — or having your hotel of choice sell out.

If you’re going to be booking a private rental on a site like Airbnb, you’ll need to be a little more careful, as cancellation policies can vary a lot from one host to the next. But even so, you may find that you have plenty of options for canceling ahead of time if need be.

Summertime travel can be a wonderful thing. Make these moves in the coming months so you can set yourself up to have a blast.

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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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