Money Management

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What happenedThe average transaction price of new vehicles in the United States reached a record high of $49,507 in Dec. 2022, according to data released Wednesday by Kelley Blue Book, a Cox Automotive company. That’s a 1.9% ($927) increase over the average in November and a 4.9% ($2,297) year-over-year increase.Inventory has increased from historic lows earlier in 2022, but prices are still high. “The transaction data from December clearly indicates overall prices showed no signs of coming down as we headed into year-end,” said Rebecca Rydzewski, research manager of economic and industry insights for Cox Automotive, in a press release.Average prices vary depending on the type of vehicle, and not all categories had price increases. Kelley Blue Book’s research found that:Average non-luxury vehicle prices reached a record high of $45,578. That’s a 2.3% ($994) increase over the average in November and a 5.8% ($2,506) year-over-year increase.Average luxury vehicle prices dipped to $66,660. That’s a 0.3% ($216) decrease from the average in November and a 2.8% ($1,796) year-over-year decrease.Average electric vehicle prices decreased to $61,448. That’s a 5.5% ($3,594) decrease from the average in November and a 0.6% ($397) year-over-year decrease.So whatIt has been difficult for consumers to find vehicles at affordable prices. Both new and used car prices increased significantly in 2022. Due to high demand and low supply, many car buyers have even had to pay above sticker price. For over a year, the average transaction price of new vehicles has been higher than the manufacturer’s suggested retail price (MSRP).If you’ve been car shopping or are planning to do so soon, this is discouraging news. And unfortunately, prices aren’t the only car costs that are going up. Car insurance rates are also rising, and interest rate hikes have made auto loans more expensive.Now whatIt’s best to hold off on buying a car right now, considering how high prices and loan interest rates are. If you have a reliable car, you may want to stick with it until the wheels fall off — or at least until you don’t need to pay above MSRP to get a new one. From a personal finance perspective, that’s the soundest decision.However, that’s clearly not an option for everyone. If you need to buy a car, here are a few ways to save money:Don’t buy more car than you need. Average prices are much lower for compact ($26,282) and mid-size ($31,609) cars, so these can lower your car ownership costs quite a bit.Consider buying a used car. Average used car prices have declined from their previous record highs and are expected to continue dropping. While there may not be many amazing deals yet, you could still spend a lot less this way.Rate shop if you need a loan. The best auto loans often have lower rates than what you’d get elsewhere.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.The Motley Fool has a disclosure policy. 

What happened

The average transaction price of new vehicles in the United States reached a record high of $49,507 in Dec. 2022, according to data released Wednesday by Kelley Blue Book, a Cox Automotive company. That’s a 1.9% ($927) increase over the average in November and a 4.9% ($2,297) year-over-year increase.

Inventory has increased from historic lows earlier in 2022, but prices are still high. “The transaction data from December clearly indicates overall prices showed no signs of coming down as we headed into year-end,” said Rebecca Rydzewski, research manager of economic and industry insights for Cox Automotive, in a press release.

Average prices vary depending on the type of vehicle, and not all categories had price increases. Kelley Blue Book’s research found that:

Average non-luxury vehicle prices reached a record high of $45,578. That’s a 2.3% ($994) increase over the average in November and a 5.8% ($2,506) year-over-year increase.Average luxury vehicle prices dipped to $66,660. That’s a 0.3% ($216) decrease from the average in November and a 2.8% ($1,796) year-over-year decrease.Average electric vehicle prices decreased to $61,448. That’s a 5.5% ($3,594) decrease from the average in November and a 0.6% ($397) year-over-year decrease.

So what

It has been difficult for consumers to find vehicles at affordable prices. Both new and used car prices increased significantly in 2022. Due to high demand and low supply, many car buyers have even had to pay above sticker price. For over a year, the average transaction price of new vehicles has been higher than the manufacturer’s suggested retail price (MSRP).

If you’ve been car shopping or are planning to do so soon, this is discouraging news. And unfortunately, prices aren’t the only car costs that are going up. Car insurance rates are also rising, and interest rate hikes have made auto loans more expensive.

Now what

It’s best to hold off on buying a car right now, considering how high prices and loan interest rates are. If you have a reliable car, you may want to stick with it until the wheels fall off — or at least until you don’t need to pay above MSRP to get a new one. From a personal finance perspective, that’s the soundest decision.

However, that’s clearly not an option for everyone. If you need to buy a car, here are a few ways to save money:

Don’t buy more car than you need. Average prices are much lower for compact ($26,282) and mid-size ($31,609) cars, so these can lower your car ownership costs quite a bit.Consider buying a used car. Average used car prices have declined from their previous record highs and are expected to continue dropping. While there may not be many amazing deals yet, you could still spend a lot less this way.Rate shop if you need a loan. The best auto loans often have lower rates than what you’d get elsewhere.

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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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It’s a big question on a lot of people’s minds. 

Will a recession hit in 2023 and drive countless Americans out of a job? That’s certainly the scenario many economists warned us about often during the latter half of 2022.

In fact, a lot of people made the (wise) decision to boost their savings account balances in 2022 to gear up for a potential economic downturn in 2023. But just how likely is a recession within the next 12 months?

Well, the truth is that we just don’t know. Right now, economic conditions aren’t particularly indicative of a recession. But if certain factors change over the next few months, the likelihood of a recession could increase.

A near-term downturn is unlikely

Is it possible that a recession will hit in 2023? Absolutely. But the likelihood of a first quarter recession is pretty low.

Right now, unemployment levels are almost the lowest they’ve been in 20 years, and consumer spending has yet to decline in a meaningful way. In fact, retail sales increased substantially during the last two months of 2022 compared to the same time the previous year. And while part of that was due to inflation, the fact of the matter is that consumers clearly still have money to spend. And as long as that continues, we should be able to stave off a recession.

Aggressive interest rate hikes could send the economy into a tailspin

Although we’re starting 2023 with lower inflation levels than we saw during the midpoint of 2022, living costs are still way up across the board. And that means the Federal Reserve is unlikely to back down on its interest rate hikes.

The purpose of rate hikes is to encourage a pullback in consumer spending. If it costs more to borrow money, whether in the form of an auto loan, personal loan, or credit card balance, consumers may be less motivated to pump money into the economy. And that could narrow the gap between supply and demand that caused inflation to get so out of hand in 2022.

The concern, however, is that rising interest rates will fuel a major decline in consumer spending. That could be enough to drive the economy into recession territory.

It pays to be prepared

At this point, a near-term recession is pretty unlikely. But that isn’t to say that economic conditions won’t worsen during the latter part of the year. And so it’s a good idea to prepare for that possibility by doing what you can to boost your savings.

If you have enough money in the bank to cover three months of bills, aim for four months’ worth. If you can cover four months’ worth, aim for five.

The more cash reserves you have, the better equipped you’ll be to pay your bills if economic conditions sour and your job is yanked out from under you. And remember, if a recession doesn’t end up hitting in 2023, the worst thing that’ll happen is that you’ll have even more money in savings to use as you need. That’s hardly an unfavorable spot to land in.

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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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Insurance and investments don’t mix. 

For years, financial advisor Suze Orman has gotten questions from listeners about whole life insurance. Many of them have wanted to know specifically about using whole life insurance as an investment. This idea is usually prompted by a life insurance agent or financial advisor.

Orman’s answer is always the same — no, no, no. She even says, “Whenever someone tries to sell you a life insurance policy with some story that it is a fantastic way to invest, you are to shut down that conversation and never work with that person again.” It may sound extreme, but she’s right on the money here.

Why Suze Orman doesn’t recommend investing in whole life insurance

Before getting into why whole life insurance is a poor investment, let’s go over how this “investment” works. Whole life insurance is, first and foremost, a life insurance policy that pays out upon your death. Unlike term life insurance, which lasts for a set amount of time, whole life is permanent.

The insurance company invests a portion of your premiums, giving your policy a cash value. After you’ve put in enough money, you can access it through withdrawals and loans. When you die, these withdrawals and any outstanding loans are subtracted from the death benefit.

On the surface, it might seem like a reasonable deal. But according to Orman, there are a few things the people pushing these policies don’t tell you:

The annual fees for your insurance policy’s portfolio will be much higher than what you’d pay in a low-cost mutual fund or exchange-traded fund (ETF).There will be a hefty cash surrender fee if you want to cash out your plan early.The real reason life insurance agents and financial advisors push these plans is because they get huge commissions.

It’s also worth mentioning that whole life insurance policies tend to have very conservative investment portfolios. Since the insurer manages your portfolio, you can’t decide how to invest your money.

Lots of people prefer a hands-off investing approach, so this isn’t all bad. However, you could likely get a much better return with a mutual fund or ETF that isn’t as conservative.

What you should do instead

As Orman puts it, “investments are investments, insurance is insurance.” It’s much better for you financially if you keep the two separate.

For your investments, you have several options. If your employer offers a 401(k) plan, this is a good, tax-advantaged way to save for retirement, especially if your employer will match your contributions up to a certain amount. There are also two types of individual retirement accounts (IRAs) you can open through online stock brokers:

With traditional IRAs, your contributions are tax deductible, and you pay income taxes on withdrawals.With Roth IRAs, contributions aren’t tax deductible, but withdrawals are tax-free.

Once you’ve chosen a retirement plan, make sure to pick how you want your money invested, as well. Retirement accounts offer a variety of investment funds, and IRAs also let you pick stocks.

As far as life insurance goes, term life insurance is generally the better option. Premiums are much cheaper, and most people don’t need life insurance to cover them their entire life. Pick a term life policy that will last for as long as your family will be relying on your income, and you’re good to go.

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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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Image source: Getty Images
What happenedSmartRx announced two prescription and healthcare savings services now available to the public. The SmartRx Discount Card can help consumers save up to 80% on prescription drug costs for many commonly prescribed medications. This service is free to use and works similarly to competitor services like GoodRx, Carecard, and SingleCare.The company also has a health savings membership called SmartRx+, priced at $19 per month. This service provides savings for non-prescription health expenses. Examples include rebates for doctor and dental visits, telehealth care, annual vaccines, prescription glasses and contacts, and pet medication costs.So whatThe SmartRx Discount Card is accepted at 60,000+ pharmacies nationwide. Users can receive their discount card by text or email and present it at the pharmacy during the checkout process to receive discounts, if available.For consumers looking to save on healthcare costs beyond prescriptions, a paid SmartRx+ membership is available. While usually priced at $19/month, a 7-day trial is available for $3. Users can get a $15 cash back bonus rebate on their first prescription purchase.The following membership rebates apply:$30/year for vaccines$50/month for doctor/dental visits$125/year for prescription glasses and contacts$25/month for pet medications$20/month for telemedicine visits$18/month for Rx delivery feesThe company’s Jan. 12 press release further discussed the benefits of SmartRx+. “There are other health care costs beyond prescriptions, including co-pays and pet medications, which may be significant burdens to some. Our approach helps ease these burdens in a simple and effective way,” SmartRx CEO and founder Vipin Porwal noted in the company’s Jan. 12 press release.Now whatMost Americans agree that U.S. healthcare costs are too high. Our research at The Ascent shows the average U.S. household spends $454 per month on healthcare expenses. These costs keep some Americans from seeking the care they need. Because of the financial burden, Americans may go without necessary medications or skip important medical appointments due to personal finance concerns.These new offerings by SmartRx give consumers additional options and new ways to reduce their healthcare spending costs. With the increasing costs of everyday goods and services, many Americans are on a tight budget, and discount services like this may help them keep more money in their pockets without ignoring their healthcare needs.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.The Motley Fool has a disclosure policy. 

What happened

SmartRx announced two prescription and healthcare savings services now available to the public. The SmartRx Discount Card can help consumers save up to 80% on prescription drug costs for many commonly prescribed medications. This service is free to use and works similarly to competitor services like GoodRx, Carecard, and SingleCare.

The company also has a health savings membership called SmartRx+, priced at $19 per month. This service provides savings for non-prescription health expenses. Examples include rebates for doctor and dental visits, telehealth care, annual vaccines, prescription glasses and contacts, and pet medication costs.

So what

The SmartRx Discount Card is accepted at 60,000+ pharmacies nationwide. Users can receive their discount card by text or email and present it at the pharmacy during the checkout process to receive discounts, if available.

For consumers looking to save on healthcare costs beyond prescriptions, a paid SmartRx+ membership is available. While usually priced at $19/month, a 7-day trial is available for $3. Users can get a $15 cash back bonus rebate on their first prescription purchase.

The following membership rebates apply:

$30/year for vaccines$50/month for doctor/dental visits$125/year for prescription glasses and contacts$25/month for pet medications$20/month for telemedicine visits$18/month for Rx delivery fees

The company’s Jan. 12 press release further discussed the benefits of SmartRx+. “There are other health care costs beyond prescriptions, including co-pays and pet medications, which may be significant burdens to some. Our approach helps ease these burdens in a simple and effective way,” SmartRx CEO and founder Vipin Porwal noted in the company’s Jan. 12 press release.

Now what

Most Americans agree that U.S. healthcare costs are too high. Our research at The Ascent shows the average U.S. household spends $454 per month on healthcare expenses. These costs keep some Americans from seeking the care they need. Because of the financial burden, Americans may go without necessary medications or skip important medical appointments due to personal finance concerns.

These new offerings by SmartRx give consumers additional options and new ways to reduce their healthcare spending costs. With the increasing costs of everyday goods and services, many Americans are on a tight budget, and discount services like this may help them keep more money in their pockets without ignoring their healthcare needs.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If 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 review

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