Money Management

There’s such a thing as being too cheap. 

For some people, not spending money on certain things is a mark of pride. Many of us have something we cling to as a tried-and-true way to keep more money in our savings account. For example, I would almost always rather repair something I already own instead of just buying a new one. So I’ll mend a jacket or take a pair of shoes to be resoled. Saving money in this way makes sense, and isn’t endangering my money, my health, or my freedom.

These other frugal moves, on the other hand? If you can say “yes” to any of these, you are being more frugal than what is good for either your health or your wallet.

1. You’re eating leftovers that are past their prime

Possibly unpopular opinion: I love leftovers. I enjoy cooking, and if I make a really great meal and get to eat it again the next day, or a few months down the line (because I’ve frozen extra portions), it’s fantastic. The same goes for really great takeout. In fact, a great way to save money on takeout food is to order enough to have for multiple meals. There’s a fine line to walk here, however — leftovers definitely have an expiration date.

The Mayo Clinic notes that you generally have three to four days to consume refrigerated leftovers before bacterial growth makes them unsafe to eat. You’ll get longer out of your leftover food if you freeze it, but you still only have a few months before it will decline in quality. If you routinely take advantage of your local pizza place’s “2 for 1” deal and live off pizza leftovers for a week or two at a time, you should rethink that. Food poisoning is no joke, and if you get sick, you may require expensive medical care.

2. You’ve had the same mattress forever

Your health is really the most important thing in the world; after all, if you’re sick or injured, everything in life becomes more difficult. Sleep is an incredibly important activity — if you sleep an average of eight hours a night, that’s one-third of your life you’ll spend asleep. To that end, when’s the last time you replaced your mattress? Bob Vila reports that while the mattress industry recommends replacing your mattress every seven to 10 years, the lifespan of a mattress is more complicated to discern than that.

The main way to tell you need a new mattress is that you’re no longer getting restful sleep on it. You might also be experiencing issues with allergies (not to be gross, but your mattress absorbs bodily fluids like sweat, along with dead skin cells, and these attract dust mites). Visually, if your mattress is sagging, lumpy, or looking worn out, it’s time to replace it. And if the springs inside are making noise when you lie or sit on your bed, it’s time. Don’t keep a mattress past its prime; living in pain or without good sleep isn’t worth the money savings.

3. You skip regular auto maintenance

Skipping out on regular car maintenance activities, like oil changes and tire rotations, may not impact your health directly the way the previous two signs might, but it will certainly cost you more money than you’ll save. Owning a car can be very expensive, and if you’re already paying $702 a month for the privilege, you may be tempted to ignore the manufacturer’s guidelines for maintenance. This can be an expensive and dangerous game, however.

Your car’s oil is extremely important to its performance, as it lubricates engine components and collects particulate material that could otherwise harm your car. Keep up with oil changes and regular maintenance lest you find yourself dipping into your emergency savings to pay for a big car repair bill later.

4. You don’t have all the insurance you need

Going without insurance can result not just in having to spend more money later, but in some circumstances, it can even cost you your freedom. Not having health insurance is dangerous for your health and your wallet. If you get sick or have an accident, you’ll be facing astronomical medical bills.

If you have a mortgage, you’ll likely be required to have homeowners insurance to protect the mortgage company’s investment, and it’s a good idea to have a renters insurance policy if you don’t own your home. Your landlord’s homeowners policy will not cover your belongings in the event of a catastrophe like a fire or a flood.

Another potentially expensive part of owning a vehicle is auto insurance. Note that auto insurance is required in every state but New Hampshire, so driving without it is illegal. If you get busted driving without insurance, your penalty for a first offense could be a fine or license suspension. But if it’s a repeat offense, you could be jailed.

Driving without insurance is a terrible idea because you’ll be left without protection for your own vehicle and physical wellbeing in the event of an accident. You’ll also have full financial responsibility for injuries to others and repairs for their vehicles if you are involved in a crash. The money savings are just not worth the risk of driving uninsured.

The above illustrations of frugality taken too far are just a few of many extreme examples. If you’re skimping on costs and the returns you’re reaping are not worth the money you’re saving, I’d urge you to rethink those moves. Saving money is great, but not at the cost of your health and happiness.

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Do what you can to minimize the chances of falling victim to package theft.  

With the increased popularity of online shopping, many Americans are getting packages delivered to their home regularly. Unfortunately, there is a risk of package theft. A recent survey found that a third of Americans know someone who has had a package stolen this year. Find out how to prevent package theft, so you don’t throw your hard-earned money away.

14% of Americans have fallen victim to package theft

Have you ever had a package stolen from your property? It’s not uncommon. A C+R research study found that 14% of Americans have fallen victim to package theft in 2022. The majority of those impacted had two or more packages stolen. The study also found that 34% of Americans know someone who had a package stolen this year.

It turns out the average value of a stolen package is $112.30. That’s a lot of money! When you shop online, you should feel confident knowing that your package will reach your hands without being taken.

The last thing you should feel stressed about is potentially losing money because your online order didn’t make it safely inside your home. Having a package stolen can be stressful, but it can also negatively impact your personal finance situation.

Five tips to protect yourself against package thieves

You should consider the possibility of package theft, especially if you get packages delivered to your home regularly. Here are some tips that may help you better protect yourself:

Don’t let your packages pile up: Stay on top of your deliveries so you don’t have a collection of boxes piling up at your doorstep. Multiple packages may look welcoming to porch thieves. Take advantage of shopping and delivery alerts to better time out when your orders will arrive so you can scoop up your boxes promptly. Get your packages delivered elsewhere: If package theft is common in your area, you may consider getting some of your packages delivered elsewhere. Options include having expensive items delivered to your workplace, a family or close friend’s home, or alternative delivery locations like Amazon Hub Lockers. Some retailers also let you order online and pick up in store. Require a signature: If you have the option to, you may want to require a signature at delivery. This is an excellent move to make if you have electronics or other expensive items being shipped to your home. Remember, you’ll need to sign for the package, so plan around your schedule. Install a doorbell camera: A doorbell camera alerts you when someone is at your door but may also deter theft. These devices are noticeable. If a thief walks onto your property and sees they’re being recorded, they may choose to leave. If a package is stolen and you have it on video, you can show the recording to the police. Leave delivery instructions: Some online retailers let you leave delivery instructions. If you have another area on your property that is less accessible to the public, like a side porch, you may want to leave a note instructing delivery drivers to leave packages there.

Whether you use credit cards or funds from your bank account to shop online, you likely spend a lot of money on online orders throughout the year. If you get packages shipped to your home, ensure that you don’t lose out on money because of theft. Implementing the tips above may help you minimize the odds of porch theft. It doesn’t hurt to take steps to protect yourself.

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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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon.com. The Motley Fool has a disclosure policy.

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Your finances will look different when you’re a freelancer. 

Being a freelancer is much different from being an employee of a company. You have more control over your workload and schedule and may have unlimited income potential. When you work a traditional job, you don’t have as much say regarding your day-to-day affairs or how much money you make. If you’re considering stepping into a freelance role this year, ensure that you set yourself up for financial success. Here are a few money tips for brand-new freelancers.

1. Have an emergency fund

Before jumping into freelance life, having extra savings stashed in an emergency fund is a good idea. Building a successful freelance business takes time and effort, and you want to make sure you have plenty of money to continue paying your bills. It may take time to reach your income goals, especially if you’re working in a new field or using new skills.

Many people start freelancing without a plentiful savings account balance. That can be a recipe for disaster. The last thing you want to do is struggle with credit card debt because money is too tight to cover your living expenses. An emergency fund can help you get through difficult financial hurdles that may come your way.

2. Keep track of your earnings from the start

As soon as you begin freelancing, get into the habit of keeping a careful record of your earnings. You’ll need to report all freelance income when you file your taxes. Keeping track of your income from the start will make it easier to handle your tax affairs in April. You can use accounting software or compile your earnings in a simple spreadsheet. Knowing how much money you’re bringing in can also help you set and adjust your financial goals throughout the year.

3. Aim high when setting your rates

As a new freelancer, knowing how to price your work can be difficult. You may feel tempted to set lower rates as you grow your business, but you don’t want to set yourself up for failure. If you set your rates too low, you may regret the work that you take on and suffer from burnout because you have to work more to make enough money. Instead, aim high from the start. Remember that your work carries value, and you deserve to live a comfortable life.

4. Prepare for inconsistencies in income

One of the main differences that can take time to adjust to as a freelancer is inconsistencies in income. You typically get paid the same amount when you work a traditional job. You also usually get paid on a regular schedule. With this kind of job situation, it’s easier to budget.

Unfortunately, it’s not uncommon for freelance income to fluctuate. There may be periods when you have a hefty workload and a lot of money coming in, but then there may also be times when work is slower and your payments are less, or more sporadic. You can plan for these times.

To prepare for income inconsistencies, it’s best to set aside extra money throughout the year. When you’re busy and have more money, don’t be afraid to stash some of it in a high-yield savings account. It’ll be there if you need it to cover bills during slower work periods, and you can earn interest. Current rates are competitive, so your earnings can quickly accrue interest.

5. Make quarterly estimated tax payments

Tax time looks different for freelance workers. Employees have their taxes deducted from their paychecks — so there is little to worry about beyond filing an annual tax return. As a freelancer, you’re responsible for setting aside enough money to cover your taxes, and you also need to make the payments yourself. If you don’t, Uncle Sam will eventually come looking for you.

You’ll need to file an annual tax return, but you should also make quarterly tax payments. By making estimated tax payments throughout the year, you can avoid paying penalties. You may want to mark the due dates on your calendar, so you don’t forget to plan accordingly. Many freelancers set aside tax money regularly to avoid falling behind. If you need help filing your tax return, take a look at the best self-employment tax software.

Freelancing can be a win for your life and your wallet

The freelance lifestyle is becoming more popular, and for a good reason. You can get paid to work while being in charge of your schedule, workload, and income potential. Once you become your boss, you may have little desire to return to a traditional job setup. Trust me, I know.

Before making the switch to freelance, consider how your finances will change. The above tips will help you make the right money moves, so you set yourself up for success as you navigate your journey. For additional money management tips, check out our personal finance resources.

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Sometimes, the best course of action is inaction. 

If you’ve been following the stock market, you may be aware that things are generally not looking great these days. And if you’re invested in any S&P 500 companies or ETFs (exchange-traded funds), then chances are, your portfolio has lost value compared to what it looked like a year ago.

The S&P 500 is a market index that consists of the 500 largest publicly traded companies. When people say things like “The stock market had a bad day,” what they often mean is that the S&P 500 lost value.

Now, as a matter of context, the S&P 500 is, as of this writing, down almost 17% from a year ago. That means that if you had a $100,000 brokerage account balance at the start of 2022 and your assets are all in S&P 500 ETFs (funds that aim to track and match the performance of the S&P 500 itself), your portfolio might now only be worth $83,000.

But there’s even worse news. In a recent podcast, financial guru Suze Orman warned that the S&P 500 could fall even more. And it’s important to know how to react to that possibility.

When doing nothing is your best bet

If you’re heavily invested in the S&P 500 and it loses further value, you may be inclined to sell off your assets in a panic. But that’s a really bad move.

A better bet? Do absolutely nothing.

Although the S&P 500 has had a rough go these past 12 months, and it could be in for another rocky 12 months, historically, the index has rewarded investors who have stuck with it for a long time. So rather than dump your stocks or ETFs out of fear if the index’s value declines even more, instead, pledge to keep your cool and stay invested.

It could take a while for the S&P 500 to regain the value it’s shed over the past 12 months. But in a couple of years from now, it might not only be recovered, but in a place where it’s gained value. And that’s really what you need to focus on.

The most effective way to make money as an investor is to load up on quality assets and hold them for many years. If you stick with your portfolio for several decades, you’re more likely to make money than lose money. So if you commit to doing nothing when stock values fall, you can spare yourself losses and set yourself up to profit nicely in the long run.

It could pay to turn off the news

If you own shares of individual companies within the S&P 500, then it’s important to keep tabs on news related to them and track their performance. But if you own shares of S&P 500 ETFs, you don’t have to concern yourself with daily, weekly, or even monthly fluctuations.

In fact, a good bet may be to ignore stock market news and wait out this rough patch. Doing so might help you avoid needless stress — and also, help you avoid making rash decisions that hurt you financially in the long run.

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Social media has no shortage of people who want to separate you from your money. 

Social media makes it easy for people to connect, and that has its pros and cons, to put it lightly. One of the dark sides of social media is how shady characters use it to make money. There are questionable business ventures, pump-and-dump investment schemes, and a whole lot of other money pits.

If you’re unfamiliar with these schemes and how they operate, it’s easy to get sucked into poor personal finance decisions. After all, the people that run them know exactly what to say. To know what to look out for, here are the most common financial scams you’ll see on social media.

1. MLMs

Multilevel marketing (MLM) is a business model where you sign up to sell a company’s products directly to consumers and earn commissions on sales. You can also recruit other people to do the same thing. Anyone who signs up under you is your downline, and you get a commission from their sales, as well.

People involved with MLMs often use social media to find potential recruits. Their pitches typically involve claims of how you can start making money on social media, become your own boss, and take control of your financial future. Examples of popular MLM companies include:

AmwayAvonHerbalifePrimericaMary Kay

The problem is that for all the talk about how great these supposed business opportunities are, hardly anyone makes money. Seriously. The FTC researched it and concluded that “less than 1% of MLM participants profit.”

If you ever get an MLM pitch and want to be sure you’re not missing out, search online for the name of the company and the words “income disclosure.” What you’ll find is that the only ones who make anywhere near a full-time salary are the top 0.5% to 1%. Take Amway, for example. The average income was $766 in 2021, before expenses, like the $76 annual registration fee.

2. Fake gurus

Spend enough time on social media or YouTube, and you’re probably going to run into ads by fake gurus. The star of the video displays some obvious signs of wealth, like a flashy car or a luxury apartment. They go on a spiel about how they used to be completely broke, but now they’re super successful and want to teach you how to live your dream life. There are also a lot of talking points they all seem to parrot, such as:

9-to-5 jobs are for losers.College is a waste of time (and you can bet they’re going to mention Steve Jobs and Bill Gates to prove this theory).You can be a billionaire. In fact, anyone can! Never mind that the people saying this in their videos aren’t billionaires themselves.

The whole point is to get you to click a link and work your way down their sales funnel. It may start with an e-book, then an overpriced course, and then private mentoring sessions costing $10,000 or more. They’ll make it seem like this is an investment in yourself to convince you to max out your credit cards and drain your bank account.

Although there are fake gurus in multiple industries, most of them gravitate towards the “how to make money” niche. They’ll whip up courses with information you could’ve gotten for free about topics like selling on Amazon, dropshipping, real estate investing, or forex trading, to give a few examples. But make no mistake about it — what they’re really selling is a dream.

After all, if someone has such a great way to make money, wouldn’t they just do that instead of hocking courses. The truth is that these fake gurus aren’t successful because of real estate investing, or day trading, or dropshipping. Their real business is the get-rich-quick schemes they sell.

3. Investment scams

For as long as people have been investing money, there have been investment scams. These come in many forms, but they all lure in victims with promises of big returns. One well-known example is the Ponzi scheme, where the scammer uses money from new investors to pay older investors (after taking a healthy chunk of it). Eventually, there’s not enough money coming in to pay everyone.

Another investment scam that happens all the time on social media is the pump and dump. Here’s how it works:

A friend, acquaintance, or a total stranger posts about an incredible investment opportunity in a small company. They don’t mention that they own a large portion of the company already.People buy the stock the scammer recommended, pumping up the price.The scammer dumps (sells) all their shares at the now higher price, making a tidy sum.The stock price plummets because of the sale, leaving those recent investors high and dry.

Recently, pump-and-dump cryptocurrency scams have gotten popular. These are even easier for scammers, because anyone can create a cryptocurrency and start pumping it. They were especially prevalent during the crypto bull market in 2020 and 2021, but they’re still happening today.

No one deserves to lose their money to a scammer. Unfortunately, financial scams are all over social media, so be very skeptical of anything that sounds too good to be true. For example, earning five figures per month from your home, with no experience or skills required, just isn’t going to happen.

If you’re ever unsure about a supposed financial opportunity, research it. Search for it online, and try adding the keyword “scam,” as well. If it’s a scam, you’ll likely find plenty of stories from past victims. Most importantly, always err on the side of caution.

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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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon.com. The Motley Fool has a disclosure policy.

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Did you know that your credit card company left you some wiggle room? 

Credit cards are a safe and extremely convenient way to pay for your everyday expenses (and earn cash back and rewards along the way), but they are not without potential pitfalls. It’s extremely easy to get into credit card debt, for example, thanks to their ease of use, acceptance nearly everywhere, and the fact they are most often unsecured lines of credit, and so are not tied to a specific asset you own (such as the way a mortgage loan is secured by the home you bought with it). So it’s important to be careful with credit cards and make every effort to pay off your balance monthly, before it’s due.

Your credit card issuer may be providing you some help in this regard. Many credit cards come with what’s known as a grace period. How does it work, and how can your grace period help you save money? Keep reading to find out.

How does a grace period work?

A grace period is the time between when your card issuer posts your credit card statement (or mails it to you, if you’re receiving paper statements) and when your payment is actually due. If your credit card offers a grace period (and not all of them do, but many of the best credit cards you’ll find have this feature), it will be at least 21 days, and could be as long as 25 days.

In effect, this means that as long as you pay off your entire balance during the grace period, you won’t pay any interest on your credit card purchases. Given that credit card interest rates hit an average of 19.04% APR in November 2022, this is good news indeed.

How can your grace period save you money?

In addition to saving you money on monthly interest charges (if you pay off your balance in full every month), you can also use your credit card’s grace period as a longer interest-free loan period with a little timing, and stretch out paying for a purchase while again, saving on interest.

If your credit card’s monthly statement closing date is the 17th of every month, and you make a large purchase on, say, Jan. 18, which would be the start of the next statement period, it will show up on the statement you get after Feb. 17. Then you’d have your grace period (let’s say that’s 21 days) after that. That’s a period of about seven weeks to pay off your large purchase without interest being assessed. If you get paid every other week, that’ll give you at least three paychecks to cover your purchase from.

Of course, you’re going to want to be careful you’re not spending so much on a credit card that you can’t afford to pay the balance off during that time. And you can’t always predict when you’ll need to spend a chunk of money on a necessary expense. You’ll want to be mindful of your credit limit too, especially as your credit balances will be reported to the credit reporting agencies monthly. If you’ve got a high balance on a card but plan to pay it off before your grace period is up, the reporting agencies that determine your credit score won’t know that, and having a higher credit utilization ratio could negatively impact your score.

How do you find out what your grace period is?

Grace periods vary by credit card issuer, but you can find yours by looking for the Schumer box in your credit card’s terms and conditions. This part of the table won’t be labeled as “grace period,” but will likely say something like: “How to avoid paying interest on purchases.” If your credit card doesn’t have a grace period, the table will have a section labeled “Paying interest” and will note that you are charged interest on purchases as they are posted to your account.

Grace periods give you flexibility

Credit cards can be a double-edged sword for your finances. On the one hand, they make it easier and safer (credit cards have excellent fraud protections) to pay for purchases. But on the other, it’s scary how easy it can be to get stuck in credit debt, carrying a balance forward month after month and watching the interest pile up. Using your grace period as an extra bit of wiggle room to ensure you can pay your balance off before you owe interest can help your finances if you do it right. If you’re new to using credit cards, be sure to check out everything new credit card users should know.

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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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