Money Management

Buying a house under these circumstances wouldn’t make sense. 

Over the course of my adult life, I’ve bought multiple houses. I really like real estate and becoming a homeowner was a huge priority for me. Once I made sure I had my financial ducks in a row, including a good credit score to enable me to qualify for an affordable mortgage loan, I bought a house as soon as I could.

Despite my love of buying houses, though, there is one situation when I absolutely would not purchase a home.

I wouldn’t buy under these circumstances

The one situation where I absolutely would not even consider buying a house is when I knew I wasn’t able to commit to staying in the property for at least two years.

There are a few big reasons for that. First and foremost, if I wasn’t going to stay put for at least that long, I would be really afraid of losing money on the transaction.

Now, I know homes typically increase in value over time. But it can sometimes take many years for the value of a property to go up. Unfortunately, there are tons of costs associated with both the purchase of a home and the sale of one. Between transfer taxes and real estate agent fees for sellers, and title insurance, and mortgage origination fees, and a long list of other required expenditures, the process of buying and selling can cost tens of thousands of dollars.

If I bought a property with the plan to move in a year or so, my assumption would be that any property appreciation would likely not provide me with enough to break even after paying all these fees, let alone make a profit. I don’t have any interest in having to take a big loss when selling a house, so I wouldn’t consider buying unless I knew that I would be there for long enough that the appreciation on the property would likely cover these costs (and hopefully even net me a little profit).

Holding a property for two years or more would also come with the benefit of being able to reduce or avoid taxes if I do make a profit. You can exempt up to $500,000 in profits from capital gains taxes as a married couple if you meet certain requirements like owning the house for at least two years and living in the house as a primary residence for at least two of the five years before the sale.

If I didn’t live in the home for that two year period, then I could get hit with capital gains tax and lose a good chunk of any money I happened to make.

Buying a house for the short term really doesn’t make sense

If you’re considering buying a house but don’t know where you want to live in two years, in most cases, you really shouldn’t move forward. There are, of course, exceptions to every rule. And sometimes you could end up making a lot of money on a quick home sale. But, this isn’t going to happen in most situations, so you should generally stick to purchasing a property only if you want to set down roots there for a while.

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Drop by in person for the best deals. 

We all know that warehouse stores can be great for your finances when used wisely. (In other words, not buying giant tubs of things you can’t use just for the lower per-ounce price.) And it’s the everyday items we go through quickly that tend to offer the best value.

Whenever we talk about bulk-bought essentials, Costco is sure to come up. As popular as it may be, though, Costco isn’t the only warehouse store around — nor, as it turns out, is it always the cheapest one, especially for online shoppers. No, that distinction actually goes to Sam’s Club.

However, there are some items that really are a better value at Costco than Sam’s Club — even ordered online. Here are some of the everyday essentials you can typically get for less at Costco.

1. Batteries

Although many things now use rechargeable lithium ion batteries, some of the things we use the most still run off of good old AAs. If you tend to run through batteries, consider picking them up at Costco. You’ll get a 48 pack of Kirkland batteries for about $5 cheaper than you’ll get the same 48-pack of Member’s Mark batteries at Sam’s Club.

2. Coconut oil

It may seem that coconut oil went from unknown quantity to everyday necessity nearly overnight. Now, you can find it everywhere — including both Sam’s Club and Costco. It’s the Kirkland brand organic coconut oil that will be the better bargain, however; you can pick it up for just $0.23 an ounce versus Sam’s Member’s Mark organic coconut oil at $0.25 an ounce.

3. Wine

Your favorite warehouse store may not be the first place you think of to pick up a nice merlot, but Sam’s and Costco both have a large selection of house-brand wines that are surprisingly well-regarded. Although prices vary depending on the type of wine you want, on the whole, Kirkland wines tend to be a bit cheaper than comparable Member’s Mark varieties.

4. Chicken stock

A staple in nearly every type of cuisine, folks who cook a lot can easily go through gallons of chicken stock or broth each year. In this head-to-head, we’re comparing Member’s Mark Organic Chicken Bone Broth with Kirkland Signature Organic Chicken Stock. While there are technical differences between stock and broth in general, these two products have remarkably similar ingredients lists — but not prices. The Kirkland stock will cost you 16% less.

5. Cheddar cheese

Everything is better with cheese (yes, even many desserts!). That doesn’t necessarily mean it needs to be expensive cheese, though. Your warehouse-brand cheese can be every bit as tasty as a pricier product at a much lower per-pound price. And between Sam’s Club and Costco, the latter is where you’ll get that better per-pound price. Kirkland Signature Sharp Cheddar is a full dollar less than Member’s Mark Sharp Cheddar when you buy 2-pound blocks.

6. Lysol spray

If there’s one thing we’ve all gone through by the barrel, it’s probably disinfectant spray. And with winter officially upon us — and the so-called triple-demic looming — we’ll likely need barrels more before the season is over. Top off your Lysol stock on your next Costco trip, where you’ll be able to buy a 3-pack of Lysol spray cans for $0.30 less than the same package at Sam’s Club.

Shop in store for better prices

When you compare the two big warehouse brands against each other online, Sam’s Club wins most of the time. The problem is that Costco upcharges for the majority of things you can buy online and get shipped to your door. (Its selection for store pickup is laughably small, too.)

So, if you really want to see what kind of savings you can get from Costco, the best thing to do is head into your local Costco location. Its in-warehouse prices can be several dollars cheaper on essentials than the same items cost on Costco.com.

Of course, if you prefer to have the option to shop online, perhaps a Sam’s Club membership is the better fit. Upgrade to a Plus membership and you’ll even get free shipping.

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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.Brittney Myers 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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Don’t fall into these traps. 

Life insurance is something you really shouldn’t skimp on. The policy you buy should be designed to protect your loved ones financially in the event of your passing.

But there’s also such a thing as buying too much life insurance. And if these signs apply to you, it means you may be at risk of overpaying — and taking on costlier premiums than necessary for no good reason.

1. You’re replacing way more than 10 to 20 times your income

There’s no single formula to follow when it comes to deciding how much life insurance to buy. Some experts will tell you to buy enough coverage to replace your salary 10 times over, while others will say that 20 times your salary is a more appropriate target, especially if you’re buying a policy with a 20- or 30-year term. But if you’re aiming to replace, say, 40 times your salary, you’re probably going overboard.

It’s one thing to want to leave your loved ones with a nice sum of money in your absence. But if you buy too much life insurance, you might struggle to keep up with your premiums. And at that point, you’ll risk having your policy lapse if you can’t make those payments.

2. You don’t have a lot of debt to pay off

In addition to replacing a certain number of years of income, your life insurance payout should also include money to cover outstanding debts you share jointly with another person, like a mortgage loan. But if you don’t have a lot of debt to pay off — or any debt, for that matter — then you may not need to pad your coverage so much.

So, let’s say you earn $100,000 a year and want enough coverage to replace 10 times your salary plus the balance on your $400,000 mortgage. That means you’re looking at a $1.4 million death benefit. But if you only have a $100,000 mortgage, a $1.1 million policy may be just fine.

3. You’re looking at premiums you can’t afford from the start

Life insurance is something you shouldn’t have to struggle to pay for. If that’s the case, perhaps you’re purchasing too much coverage.

Going back to our example, let’s say you earn $100,000 a year and want to replace 20 times your annual salary plus have enough money left over to pay off a $400,000 mortgage. It’s not necessarily unreasonable to buy a $2.4 million policy. But if you can’t afford the premiums that come with it, it’s a sign that you’ll need to scale back and secure less coverage — at least for now.

Life insurance is an essential thing to have, but it shouldn’t impede your ability to pay your bills and work toward other financial goals, like saving for retirement and putting your kids through college. If that’s the case, then it may be time to reexamine the amount of coverage you’re buying — and go with a lower number.

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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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Don’t let the sting of failure hold back your true potential. 

My alarm went off — the first day of 2023 has come and gone. Fear of missing out on fresh New Year’s resolutions hits harder than a holiday parade float. Fortunately, it’s not too late to invest in a wealthier future.

Financial resolutions are top of mind. Over half of Americans (53%) with financial New Year’s resolutions want to pay off debt. One-third want to save for a life milestone, such as a wedding. My big 2023 resolution is to build a three-month emergency fund.

One of the best ways to achieve these goals is to create sticky money-stacking habits.

Atomic Habits by James Clear is a NY Times bestseller, thanks to its straightforward, practical, habit-building advice. Whether you’re paying off debt or constructing a stable stock portfolio, you can apply the lessons within to your financial goals.

Here are three top lessons from Atomic Habits that will grow your wealth.

1. Start small

Atomic Habits asks readers to start small. Often, it’s not significant, gut-wrenching lifestyle changes that impact lives five years from now. It’s the slow, sonorous stacking of harmonic habits that crescendo to a melody worth hearing: a habit formed, a goal surpassed.

The power of small, recurring investment compounds. For example, say you invest $25 per month and earn 10% per year, which is approximately the average stock market return over the last 50 years. By year 20, you’d have invested $6,000 and earned a chunky $12,901 in interest.

Financial gurus like Dave Ramsey advocate for starting small when paying off debts. His debt snowball method is a simple, effective strategy for paying off multiple debts. By paying off loans one by one, starting with the smallest, you can build motivation to continue making payments.

I’m starting small by only contributing money from my side hustle to my emergency fund. That way, I don’t burn myself out by over-contributing and staring down an empty bank balance.

2. Focus on progress, not perfection

Atomic Habits suggests readers focus on progress, not perfection. According to James Clear, “The most practical way to get what you want is to become the type of person who can get it.” He asks habit-builders to consider whether failure to reach perfection matters as much as sustained effort.

Observe the wisdom of progress versus perfection via the stock market. Over a year, the return on stock market investments only beats cash returns 60% of the time. Risky. But ride out investments over 25 years, and stock market returns exceed cash returns 98% of the time.

My emergency fund has fluctuated a lot in the past year. I’ve had to spend thousands of dollars paying off unexpected debt. Even though it sometimes feels like I’m going backwards, the most important thing right now is to focus on making payments — that’s how I’ll achieve my goal.

3. Create an environment that supports your goals

Atomic Habits claims that willpower isn’t enough to maintain habits. Creating an environment that supports your goals is key to sticking with them for longer than a day or two.

For example, hanging out with friends who constantly dine out makes the resolution “cut down on dining out expenses” difficult. To create a supportive environment, you could request that, once a month, everyone cooks together. That way, eating in more often becomes easy and automatic.

Start small, focus on progress, and create supportive environments. Here are three more examples of how you might apply these lessons to growing wealth:

Invest 1% of paychecks in long-term wealth. (Start small)Use a budgeting app to track how much debt you’ve paid. (Focus on progress)Unsubscribe from shopping sites to reduce impulse spending triggers. (Create a supportive environment)

James Clear gives excellent advice when it comes to building habits. My favorite bit is this: just start. Navigate away from the article and give yourself space to digest a simple game plan. Saving is hard. I’ve already run into roadblocks, but the goal isn’t perfection — it’s progress.

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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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