Money Management

You’ll want to consider these issues if you’re waiting for more stimulus relief. 

The majority of Americans strongly support the federal government authorizing a fourth stimulus check, but is this likely to happen any time soon?

There are three factors that will profoundly affect whether lawmakers in Washington, D.C. will provide another direct payment into the bank account of taxpayers and dependents nationwide. Here’s what they are.

1. Whether Democrats and Republicans can find a bipartisan way forward on stimulus funds for parents

Republicans are not on board for another direct payment issued to most eligible adults. They did not support the third stimulus check, which was included in the American Rescue Plan Act, and they would almost assuredly not be in favor of an additional payment now when economic conditions and pandemic-related issues have only improved since the American Rescue Plan Act was signed into law shortly after President Joe Biden took office.

However, a number of influential Republicans are in favor of an expanded Child Tax Credit — and this has been a key priority for Democrats as well.

Although there is disagreement about how such a tax credit should be structured, it’s possible lawmakers from both sides of the aisle will come together to find compromise now that control of Congress is split. If so, parents at least could see more financial help even if childless adults don’t.

2. Whether Republicans will retain control of the House of Representatives

Republicans currently have control of the House of Representatives by a narrow margin. There are 222 Republicans and 213 Democrats.

While there will not be another national election for two years, retirements, deaths, or other departures in the House of Representatives potentially could result in control of the house flipping prior to 2024 (although this isn’t necessarily a likely outcome).

Republicans are also facing internal disagreements, including conflict over naming the House Majority Leader. If some of the more liberal Republicans decide to cross the aisle and vote with the Democrats on key issues, it’s possible this could result in the Biden administration being able to provide additional stimulus money if they were to focus on this as a priority.

3. Whether economic or pandemic conditions worsen or improve

Finally, the last key factor is external and it relates to whether the economy gets worse or the pandemic gets worse.

COVID-19 has not been eradicated and is not likely to be. The virus continues evolving. If a more lethal or vaccine-resistant strain were to begin spreading and more lockdowns had to happen, more stimulus money would likely come.

There’s also a strong possibility the country could enter into a recession in 2023 — in which case, stimulus checks are one tool that could be on the table as checks have been issued during past downturns.

It remains to be seen what happens with all three of these key factors, but they are likely to be determinative as to whether another stimulus check comes in 2023.

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Time in the kitchen is far more enjoyable if you actually want to be there. 

I’ve always said that I loathe cooking, but I’m beginning to wonder if that’s quite true. I enjoy baking and I’m occasionally game to try a new savory recipe. I think what I dislike is having to be in the kitchen. I want to walk in there when I’m so moved, and not because I feel compelled to.

Finally hit a wall

Early evening is the time of day I feel most sluggish. Unfortunately, it’s right around dinner time. It’s tough to finish work, then feel inspired to whip up something delicious (or even edible). I’m not sure why it took so long, but earlier this year we decided to order meals from a nearby business that creates frozen, ready-to-heat dinners. The meal service cost us around $125 per week.

For a while, I loved it. The ingredients were fresh and the food was better than anything I would normally make. After a while, though, the meal rotation became monotonous. I started thinking that maybe I could do the same thing the business was doing, but at a lower price.

Now, I may be the anti-Betty Crocker, but I enjoy looking through cookbooks (weird dichotomy, right?). I pulled out my old, dusty cookbooks and started flipping through pages, stopping only when a recipe caught my eye.

One sensible decision

Because I’m not suddenly going to have the energy to run a marathon around dinner time, I decided to meal prep on weekends. With no set time I’m expected to be in the kitchen, I’m free to prep when the mood strikes.

The decision to organize and build meals on weekends has saved us money in two ways.

Fewer meals out

Prior to the ready-made meal experiment, we’d gotten into the habit of either picking up dinner from a nearby restaurant or saying hello to the GrubHub delivery person several times a week. I justified it by calling it our “one luxury,” which I’m sure is not true. In any case, we spent an average of $35 three times a week on take-out. That’s $105 per week, $420 per month, and more than $5,000 a year.

As someone who spends a portion of each day thinking about investments and my husband’s eventual retirement, I’m shocked that I let it happen. I’d much rather put that money into an investment account that helps secure our future.

Whether it was a meal service or take-out, we were burning through hundreds of dollars a month that could be put to better use.

I happened to ask my husband today if he can remember the last time we ordered out. He thinks we’ve had food delivered once or twice in the past month. That means prepping meals we can both enjoy has saved us approximately $350 in the past month alone.

Even after factoring the cost of groceries (I buy frequently-used items in bulk), we’re saving roughly $150 per month on dinners.

Leftovers

I’ve always been fascinated by people who eat leftovers. I know it’s the responsible thing to do but it’s tough to inspire yourself to reheat a meal you thought was horrible the first time around. Since I’m spending more time tracking down recipes that inspire me, I find that we’re enjoying tastier meals.

Like ordering from a restaurant, I can’t remember the last time I ended up tossing leftovers. As it turns out, some things really are more delicious the next day.

According to Earth.com, the average family wastes nearly one-third of the food they buy, or 250 pounds of wasted food each year. Because there are just the two of us, we spend about $600 on groceries each month. If it’s true that we were throwing out one-third (which I believe), that means we were burning an extra $180 each month.

For us, meal prep is a win. We’re saving money, eating better, and I’m complaining less.

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Should you listen to Ramsey’s advice on getting a pre-approval? 

If you’re considering moving forward with purchasing a home, it’s important to complete some steps early on in the process. Finance expert Dave Ramsey highlighted some of the things you should do, including getting pre-approved for a home loan.

Here’s why Ramsey thinks the pre-approval process is essential if you want to buy a property of your own.

Ramsey says getting pre-approved can help you in this important way

Pre-approval is the process of working with a mortgage lender before you actually make an offer and are ready to buy a property. During the pre-approval process, your potential lender checks your credit and other financial credentials, lets you know how much you can likely borrow, and lets you know what rate you’d be offered.

Although this process doesn’t guarantee you a loan, it’s essentially a conditional approval and if all goes well with the house and nothing changes with your finances, you’ll be able to get the loan the lender pre-approved you for.

It can take time to go through the pre-approval process, but Ramsey thinks it is worth doing because, “Getting pre-approved for your loan before you buy will be helpful when you’re ready to make an offer on a home you love.”

Is Ramsey right?

Ramsey is absolutely correct that it is very important to get pre-approved for a home loan before making an offer.

The majority of home sellers are not going to take your offer seriously if you do not include proof of mortgage pre-approval. That’s because when sellers accept an offer, they have to change the status of their house from “active” on the market to “pending.” This deters others from looking at the property, and when a house goes back from pending to active, it can make future potential buyers wary of moving forward.

Home sellers don’t want to take the chance of changing the status of their home to pending and losing time when other buyers might want the house unless they’re pretty sure you can afford the property and move forward with the transaction. Pre-approval maximizes the chances you’ll be able to actually close the deal — and sellers want to see that.

The fact that a pre-approval gives you a better chance of getting your offer accepted is undoubtedly the most important reason to complete this step for that reason — although, there’s also another benefit in that pre-approval can help you see what a bank will allow you to borrow.

Ramsey did suggest getting pre-approved for a 15-year mortgage, though — and for most people, a 30-year loan is going to be a better option due to the fact it comes with lower monthly payments and more flexibility that allows you to accomplish other important goals with your money.

Still, whatever loan you are interested in, you should absolutely take care of the pre-approval process both to put a seller’s mind at ease and to help you avoid wasting time looking at properties that cost more than you’d potentially be approved to borrow.

If you have your pre-approval in hand, you’ll know exactly which homes are within your budget so you can focus your search and you can make the strongest offer possible to maximize your chances of being able to buy the property of your dreams.

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You don’t want to keep too much money in your checking account. 

Having lots of money in your checking account could seem like a good thing, but there are actually some downsides to this. Most checking accounts don’t pay much interest, so you’ll be missing out on money you could be earning. There’s also the risk of having money in your account stolen if someone gets their hands on your debit card.

Checking accounts are great for money management, like receiving your paycheck and paying bills. But for large balances, there are several better options to consider.

1. High-yield savings accounts

High-yield savings accounts offer much higher interest rates than the national average. It’s normally online banks that have this type of account, and they’re able to pay more interest because they aren’t spending money on operating physical branches. Most of these accounts also don’t have any monthly maintenance fees to worry about.

The other benefits of a high-yield savings account are that your money is secure and you can access it at any time. There’s no way your balance can lose value, and just about all these banks are covered by FDIC insurance. You can also make withdrawals whenever you want without penalty.

2. Retirement accounts

If you’d like to use your extra money to build wealth, retirement accounts are an excellent choice. You can deposit that money into a traditional individual retirement account (IRA) or a Roth IRA, and then choose investments for it, such as mutual funds. Both of these retirement accounts help you save on taxes, but in different ways:

Traditional IRAs allow you to deduct contributions from your taxes. You only pay taxes when you make withdrawals.Roth IRAs allow you to make tax-free withdrawals. Contributions aren’t tax-deductible.

Since these are retirement plans, you can start withdrawing money from them at age 59 1/2. Any sooner, and you’ll incur an early withdrawal penalty. Roth IRAs allow you to withdraw your contributions penalty free, though.

There are also annual IRA contribution limits. The limit in 2023 is $6,500 in total contributions if you’re under 50 and $7,500 if you’re 50 or older. You can split that up however you’d like between the two types of IRAs. For example, if you want an even split, you could put $3,250 in a traditional IRA and another $3,250 in a Roth IRA.

3. Individual brokerage accounts

Another way to invest money and build wealth is by opening an individual brokerage account. With any of the top stock brokers, you’ll have a wide variety of investment options to choose from, including:

StocksBondsMutual fundsExchange-traded funds (ETFs)

You don’t get the tax savings of an IRA or a Roth IRA this way, but you can withdraw money at any age without penalties. There’s also no limit to how much you can contribute to an individual brokerage account.

4. Certificates of deposit (CDs)

Certificates of deposit (CDs) pay a fixed interest rate over a set term length. Terms generally range from six months to five years, and CD rates are higher if you commit to a longer term.

Like savings accounts, CDs are a good choice if you want a safe place to earn interest on your money. There’s no risk of losing the money you deposit. The difference is that you can’t take out your money until the CD reaches the maturity date, which is the end of its term. If you need to make a withdrawal before then, there’s an early withdrawal penalty taken from the interest you’ve earned.

5. Treasury bonds, notes, and bills

Treasury bonds, notes, and bills are debt obligations backed by the U.S. Treasury Department. The U.S. government issues these to fund projects. When you buy them, you’re essentially loaning the government money and getting paid interest periodically in return. Here’s the difference between bonds, bills, and notes:

Treasury bonds have terms of 20 to 30 years.Treasury notes have terms of two to 10 years.Treasury bills have terms of four to 52 weeks.

If you want to invest with hardly any risk of losing money, Treasury bonds are a decent choice right now. That also applies to Treasury notes and bills. You can earn a reasonable interest rate, and since your investment is backed by the U.S. government, it’s highly unlikely there will be any payment issues.

All of the options above offer much greater returns than you’d get with a checking account. There is some risk involved if you invest your money, but you can minimize this by choosing good long-term investments, like the S&P 500. Keep money to pay your bills in your checking account, but for the rest of your cash, go with a more lucrative option.

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Add these to your January shopping list. 

If you shop at Trader Joe’s on a regular basis, you may come to fall in love with certain products — only to have them disappear off the shelves weeks later. It’s important to jump on new products as the opportunity arises. With that in mind, here are three fabulous Trader Joe’s finds to put on your shopping list for the month of January.

1. Stir Fried Garlicky Cabbage

Many people are in the habit of making New Year’s resolutions, and a common one is to do more cooking at home and eat healthier meals. Trader Joe’s Stir Fried Garlicky Cabbage can help you check off both boxes.

For just $3.49, you’ll get an easy dish to whip up that you can use as a side or as a base for an entree. If you add a protein like chicken or tofu to make cabbage bowls, you can set yourself up with leftovers that are easy to pack up and bring into work for lunch.

2. Organic Roasted Red Pepper and Almond Pesto Sauce

Tired of making the same old pasta at home? Then you may be desperate for a sauce upgrade. And no one will judge you at all for cheating and buying sauce in a jar if you’re perpetually pressed for time and can’t devote many hours in the kitchen each week to cook.

In fact, Trader Joe’s Organic Roasted Red Pepper and Almond Pesto Sauce is a great way to mix things up. It’s rich and a little bit tangy, and it’s loaded with delicious herbs. Stir it into pasta and some vegetables, and you’ll have yourself an easy entree. Best of all, you’ll get an almost 10-ounce jar for just $3.99. You might spend far more than that to buy ingredients for homemade sauce when you factor in the cost of different herbs and spices.

3. Four Cheese Ravioli

If you have kids, then pasta is probably a staple dish in your household. And if you’re tired of serving your children instant macaroni and cheese with sauce that’s so orange it should almost be illegal, you can swap in this ravioli instead.

For $2.99 a box, it’s an expensive way to feed your kids without feeling guilty about serving them something that looks too unnatural for comfort. And if you’re a pasta fan, why not buy some extra boxes for yourself, too? That way, you’ll have an easy go-to meal to fall back on during those weeks when work has you clocking in extra hours.

Shopping at Trader Joe’s often means getting to load up on excellent products without racking up an annoyingly high credit card tab in the process. If you’ll be hitting Trader Joe’s this month to stock up on your usual essentials, carve out room in your grocery budget for these delicious finds. And if you end up enjoying them, you may want to make a repeat trip in January — just in case these items only end up being around for a limited period of time.

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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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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They could be a good addition to your portfolio. 

Building an investment portfolio is really a work in progress. And when you’re first starting out as an investor, the idea can seem daunting.

When you put money into stocks, you’re not guaranteed they’ll gain value over time. But that’s obviously the hope — otherwise, what would be the point of investing?

But in some cases, you can make money on your stock holdings even if their value isn’t increasing. That’s because some stocks have a practice of paying dividends. And if you’re looking to add stocks to your brokerage account, you may want to focus on dividend stocks.

In fact, in a recent podcast episode, financial guru Suze Orman spoke about how she’s a fan of dividend stocks. And you may find that owning them offers you some nice benefits.

It’s good to get paid

Companies that pay dividends to shareholders aren’t required to do so. But stocks with a long history of paying dividends tend to uphold that practice, and some even increase their dividend payments over time. So it’s not a bad idea to add some dividend stocks to your portfolio, especially if you like the idea of getting extra money in your brokerage account on a regular basis.

In fact, dividend stocks are a great asset to own during periods when the stock market is down on a whole. Let’s say your portfolio was worth $2,000 at the start of 2022, only thanks to general market volatility, your balance is now $1,500. Granted, that’s nothing to panic over, because stock values could easily come back up in time. But wouldn’t it be nice to have a way to offset that $500 loss?

If you own dividend stocks, you might receive payments into your brokerage account on a quarterly basis. And those can help offset losses you might otherwise be seeing.

How to manage your dividends

When you receive dividends, there’s always the option to cash them out, take the money, and run. But a better bet, if you don’t need the cash, is to reinvest your dividends. That could help your portfolio gain a lot of value over time. In fact, many brokerage accounts let you set up an automatic dividend reinvestment program so you don’t even have to think about what to do with that money when it comes in.

Be careful with dividend stocks

There’s lots to be gained by owning dividend stocks. In fact, Orman urges people who have lost money in the stock market this year not to worry as much if they’re enjoying a steady stream of income from dividends.

That said, when choosing stocks to invest in, you don’t only want to look at dividends. You’ll also want to make sure you’re investing in companies that are financially sound. It’s easy to get caught up in the lure of a generous dividend, but don’t let that lead you to sink money into companies that don’t have a lot of long-term growth potential.

Ideally, you should be putting money into businesses whose stock value is likely to increase over time. And if you happen to get paid along the way, even better.

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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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