Money Management

At least I can learn from my blunders. 

Some people sign up for a Costco membership and use it a few times a year. But shopping at Costco is something my family does on a weekly basis.

I’ve done my share of comparison shopping, and there’s no question about it — buying groceries and household essentials at Costco results in a much lower credit card tab for me compared to buying those same items at supermarkets and big-box stores, even when they’re on sale. And it’s not just food and paper towels I load up on at Costco. I’ve also purchased my share of affordable apparel (for myself and my kids), kitchen supplies, and even electronics.

That said, my personal Costco record isn’t exactly spotless. There are certain Costco purchases I’ve made in the past that have wound up being a waste of money. Here are three I’m not proud of.

1. Overspending on pain relievers

Many of us need to pop some ibuprofen from time to time. And as someone who gets her share of allergy attacks, lack-of-sleep headaches, and runner’s pains, I’m no stranger to needing to fall back on pain relief medication. But I may have gone overboard by purchasing a bulk supply of both ibuprofen and acetaminophen from Costco.

These pills, as you might imagine, come with an expiration date. And to be fair, when I bought them, that date was over a year out. At the same time, I wound up buying roughly 500 doses of pain relief medication, which is a lot for me and my husband combined to consume in the course of 15 months. Going forward, we’re probably better off waiting for these medications to go on sale at our local supermarket or pharmacy and buying the biggest bottle available.

2. Taking a chance on crackers

Having kids often means that things like crackers are a staple item in your household, since kids tend to be perpetually snacky. But a while back, I sampled some tasty whole grain crackers at Costco and decided my children would love them. They didn’t. And so I basically wound up throwing half of the package away because I was the only one eating them, and once the package was opened, the freshness factor deteriorated pretty quickly.

3. Buying a massive tub of sour cream

Sour cream isn’t something I use often, but occasionally, I’ll bake with it. I once decided to purchase a massive tub of Costco sour cream because I had a specific recipe in mind I needed it for and figured maybe other uses would pop up that month. They didn’t. And so I threw most of it out. It would’ve been far more beneficial, financially speaking, to just buy a normal-sized container of sour cream on sale at my local grocery store.

Lessons learned

We all make mistakes — at Costco and in life. But since falling victim to these blunders, I’ve made a point to shop at Costco more carefully. That means not going overboard on items I don’t use regularly and not buying snack foods in bulk that have yet to receive my kids’ stamp of approval.

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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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It’s not you, it’s them. 

Higher mortgage rates have been wreaking havoc on borrowers for about a year now. Rates began rising sharply in early 2022 and continued on that path the entire year.

But it’s not just borrowers who are feeling the strain. Ever since the Federal Reserve began aggressively raising its benchmark interest rate in 2022 in an effort to cool inflation, financial institutions like Wells Fargo have felt the impact too. And with borrowing rates now up across the board across a range of loan products (not just mortgages), a lot of lenders are starting to struggle, especially as demand begins to wane.

That’s just one reason Wells Fargo has announced its decision to step back from the housing market. Going forward, instead of offering mortgages to as many applicants as possible, the financial giant will instead focus its efforts on mortgages for existing bank and wealth management customers. It also intends to focus on borrowers in minority communities.

Not the best news for consumers

The fact that Wells Fargo is pulling out of the general mortgage market isn’t the best news for consumers. One thing mortgage borrowers have going for them during periods of both high and low home loan demand is competition.

Simply put, the more mortgage lenders there are out there, the more options borrowers have to shop around for competitive rates and closing costs. But when big names like Wells Fargo pull out of the mortgage lending arena, it limits consumers’ choices.

Following the 2008 housing crisis, a number of big-name lenders took a similar approach to what Wells Fargo is doing now. And so while mortgage borrowers still have a nice array of choices, if more financial institutions follow Wells Fargo’s lead, that lender pool could dwindle. As a result, consumers could, down the line, get stuck with higher borrowing costs due to a lack of choices.

Snagging an affordable mortgage today

Right now, mortgages are far from affordable. Quite the contrary — borrowers are looking at more than twice the rates they likely would’ve locked in a year ago.

That said, consumers with strong credit are more likely to wind up on the receiving end of more attractive rate offers. So those whose credit scores need work would be wise to try to boost those numbers before shopping around for a mortgage.

It takes a minimum credit score of 620 to qualify for a conventional mortgage. But many lenders insist on a higher number, which they have the right to do. And consumers with scores in the upper 700s or above are most likely to snag the lowest mortgage rates available.

Of course, at a time when it’s become so difficult to keep up with living expenses and credit card debt, many consumers may be seeing their credit scores drop instead of rise. But a recent credit score drop should, if anything, be an indication that now’s not a great time to be buying a home. After all, if big names like Wells Fargo don’t even want to be in the mortgage lending business anymore, that certainly says something about today’s market and borrowing environment.

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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.Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Should this convince you to buy a home? 

If you’re on the fence about buying a house, there are a lot of advantages of homeownership that are worth considering.

You may have more choice as far as what type of home to live in and where you live when you are a homeowner rather than a renter. You have more control over what you do with the house as well. And you don’t have to worry about being evicted or priced out if a landlord decides to sell the building, raise rent, or simply move other tenants in.

Aside from these benefits, there’s also another really compelling reason to become a homeowner.

This could be a major advantage of homeownership

One huge reason for becoming a homeowner rather than continuing to rent is that you stand a good chance of ending up richer if you own your own place.

Investor and finance expert Graham Stephan recently sent out a tweet addressing the disparity in wealth between homeowners and renters. “Homeowners in the U.S. had a median net worth of $255,000, while renters had a net worth of just $6,300,” Stephan’s tweet read. “That’s a difference of 40x!”

As Stephan explained, this discrepancy is “staggering.” But it also makes sense for a few reasons.

First and foremost, people who are more financially stable are more inclined to purchase a home. Buying a house requires qualifying for a mortgage, which usually means having reasonable credit and making a down payment. People who are able to accomplish these tasks likely also have disposable income they can use for other things like saving for the future.

Second, homeownership itself also helps people grow their net worth. When you own a home, the monthly payments don’t just go into a landlord’s pocket without you acquiring anything other than a place to live for the time being. With each payment you make, you own a larger percentage of your home.

Your mortgage payments are, in a sense, forced savings because you acquire equity in the valuable asset that is your property. By the time your mortgage is paid off, you should have a house worth hundreds of thousands of dollars — or even millions of dollars. Renters, on the other hand, will just pay rent forever and not end up owning anything.

Third, your home value may also go up over time, as land and property prices generally appreciate. So your house will make you money by increasing in value even as you live in it. Your house will likely end up making up a huge portion of your net worth — especially if it ends up being worth hundreds of thousands of dollars more than you paid for it.

Homeownership still isn’t the right choice for everyone, though

The fact homeownership can help you build wealth is undoubtedly a compelling reason to buy a property. But on the other hand, if you are not financially ready, homeownership can destroy your wealth. That’s because if you can’t afford your monthly payments, you could end up getting foreclosed on and losing your property, which would also severely damage your credit.

So, while you may want to aspire toward property ownership someday, you should make sure you’ve got the money for a down payment, the financial credentials to qualify for an affordable mortgage loan, and a stable income that will allow you to make payments for decades to come. If you can do these things, becoming a homeowner could be the right path to ending up with a higher net worth.

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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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Anyone considering buying life insurance should read this to find out about its many benefits. 

Most people purchase life insurance because they want to make sure a death benefit is available to provide for their loved ones in case of their untimely death. But life insurance can also have some other perks beyond the death benefit. It’s worth considering whether to take advantage of these other benefits.

Here are some little-known perks of life insurance many people may not be aware of but should think about when buying coverage.

1. Coverage for terminal illnesses

Many life insurance policies offer living benefits as a standard option with term and whole life coverage. It’s also possible to purchase these benefits as an add-on.

Living benefits allow the policyholder to receive some of the death benefit while still alive after being diagnosed with a terminal illness. This can provide policyholder’s with an important source of income to help cover medical bills and other costs that can arise when facing a serious illness.

Although the details can vary from policy to policy, it’s common for living benefits to become available to a policyholder whose life expectancy is around a year or less. Since many people with a terminal illness can no longer work but still need money to cover their costs, this perk of life insurance can be invaluable. Typically, however, it results in a reduction of the death benefit that will be paid out, so it’s a good idea to understand how claiming it will impact the money loved ones receive after a death.

2. Add-on disability coverage

Many life insurance premiums offer disability riders that will enable the policyholder to receive some of their money in the event they become disabled. This rider usually comes at an added cost, but can be more convenient and less expensive than buying a standalone disability benefits policy.

Life insurers call their disability benefits riders by different names. Sometimes, they are referred to as chronic illness riders or as critical illness riders. They usually begin offering funds to the policyholder in the event of a diagnosis of invasive cancer, heart attack, stroke, or similar serious medical condition. Again, depending on policy terms, this can affect the death benefit.

3. Long-term care coverage

Long-term care riders are also available with many life insurance policies as well. Again, these can come at an added cost, but may be able to be added to a life insurance policy more easily (and for less expense) than purchasing a separate long-term care policy.

Since long-term care is expensive, and seniors 65 and over face as much as a 70% chance of requiring some type of long-term care over the course of their lives, a life insurance long-term care rider could be a very important source of financial protection.

In many cases, using the long-term care coverage does reduce the death benefit that is paid out, just as with the other types of perks on this list. As always, it’s important to understand the specifics of how this rider works and make sure that a sufficient amount of money is still available to surviving loved ones after passing away.

Each of these three perks of life insurance can offer valuable additional coverage to policyholders that many people may not be aware of. When buying life insurance, it’s worth considering whether these added protections could be important in case things go wrong.

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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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