Money Management

With all these IRA benefits, is this the right account for you? 

If you’re investing for retirement, you have lots of options to get tax breaks for doing so. You can contribute to a 401(k) if your employer offers one. You also have the option of contributing to various retirement plans you open at a brokerage firm of your choosing.

IRAs, or individual retirement accounts, are the types of plans you can choose from if you’re investing for your own retirement rather than signing up for a 401(k). And personal finance guru Dave Ramsey has identified four big reasons why IRAs are a great account to use to save for the future.

Here’s why Dave Ramsey loves IRAs

Ramsey explained that he “loves” IRAs for four key reasons. Here’s what they are:

Tax benefits: Ramsey explained that both of the two most common types of IRAs — traditional and Roth IRAs — come with generous tax benefits. “With a traditional IRA, you get a tax break now. With a Roth IRA, you get a tax break later. Either way, you win,” Ramsey said.More flexibility: According to Ramsey, a wider choice of investing options is another key IRA benefit. While workplace 401(k) plans let you invest in only pre-selected assets (usually funds), you can invest in almost anything with an IRA opened at a brokerage firm.The account isn’t tied to your job: Workplace plans must be maintained with your employer’s chosen 401(k) administrator. If you leave your job, you may want to roll the account over to a different tax-advantaged account. Your IRA, on the other hand, has no connection to your job at all — the account is yours alone to do what you want with.Ease of use: Ramsey describes IRAs as “accessible and easy to set up.” There aren’t too many restrictions on who can contribute (other than income limits) or too many hoops to jump through in order to open your account.

Each of these four benefits have prompted Ramsey to recommend taking advantage of an IRA — and, for most people, particularly a Roth IRA — when selecting a plan to save for retirement.

Should you invest in an IRA?

With the tax breaks available for IRA investing, the flexibility to choose between a traditional and Roth account, and the other benefits Ramsey outlines, there’s no reason not to put money into an IRA if you qualify to make tax-advantaged contributions.

You should, however, invest in a 401(k) first if your employer offers one and provides matching contributions. Those contributions are free money, and passing it up wouldn’t make sense. In fact, Ramsey smartly advises maxing out your 401(k) match first before IRA investing.

Once you have put in the money needed to get the maximum matching contribution your employer provides, following Ramsey’s suggestion and making the rest of your retirement contributions in an IRA is just smart.

Of course, if you happen to have money left after contributing as much as possible to your IRA, the rest can go into a 401(k) which has higher contribution limits.

By following these steps, you can make the most of the different retirement accounts available to you. This should help you build the security you deserve in your later years.

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There are plenty of other exciting things you can do when you want to go out. 

Restaurants and bars are usually the default option for going out. If you want to spend time with friends or family, you can always grab a bite or a few cocktails.

This can definitely be fun, but it can also take a big bite out of your budget, especially if you do it several times per month. And let’s be honest, it starts to feel repetitive when you’re always doing the same thing. To freshen it up, here are 10 other activities that are just as fun and more affordable.

1. Go hiking

Most people spend lots of time indoors, so an outdoor activity like hiking is a great change of pace. You get fresh air, it’s relaxing to be around nature, and hiking is a good form of exercise. It’s also a flexible choice of activity. You could hike alone or with a large group of people, and you can do it for as much or as little time as you want. Best of all, it’s free, so there’s nothing better from a personal finance perspective.

2. Host a game night

There’s no good reason why kids should get to have all the fun. Adult game nights are a blast, and there are tons of board games to choose from. You could go with a classic like Parcheesi or Monopoly (if you have several hours to spare), or something newer that you found on BoardGameGeek.

3. Check out a museum or art gallery

Museums are popular tourist attractions, but you don’t need to wait until you’re on vacation to visit one. There could be some amazing art or history museums in your area. Art galleries are another option, as even smaller cities may have interesting exhibitions to check out.

Tickets usually aren’t too expensive, and there are often discounts for locals, students, and senior citizens. In addition, some credit cards can get you free tickets to certain museums. For example, Bank of America has a program offering free museum access to more than 225 institutions.

4. Visit a cafe

For those of us who love coffees, teas, and all things caffeinated, a cafe is a much cheaper alternative to dinner or drinks. At a typical cafe, you can get a beverage and a pastry for no more than $10 to $15. It’s the kind of thing you can do once or twice a week without a big hit to your wallet.

5. Join a book club

Reading is a solitary activity, and there’s nothing wrong with that. But it can be nice to chat with others in a book club about what you’re reading. You could start one yourself, if you have friends or family who like to read. Or, head over to your local library. A trip to the library is another great way to spend some time, and you’ll likely find book clubs there. It’s one of the many perks of a library membership.

6. See a play

You don’t need to live in New York City or Los Angeles to go to the theater. Most large and midsize cities have a theater scene, and even small towns may have a local art group that puts on shows. Tickets for big shows can be pricey, but there are plenty of smaller theater companies with budget-friendly plays. In my experience, those smaller shows can be just as good or better than what’s playing on Broadway.

7. Explore a new neighborhood

Another touristy activity that you can also do near home is exploring a new neighborhood on foot. Walk around and you might find some cool stores, a nice park, or unique local attractions.

8. Play pickup sports

Sports are perfect for getting some physical activity and having fun in the process. Many cities have sports fields that are open to the public, where adults can play basketball, soccer, or football, to name a few examples. It’s easy to get a pickup game going when there are other people there, or you could look for adult sports leagues in your area.

9. Try an escape room

I’m a big fan of escape rooms. If you haven’t tried one before, you and your friends are locked in a room where you need to find clues and solve puzzles to escape. The best part is that you can find escape rooms with all sorts of different storylines themes, such as haunted houses, spaceships, and jailbreaks.

These normally cost around $25 to $40 per player. They’re not the cheapest activity, but you’ll still likely end up paying less than you would going out to a nice restaurant or bar.

10. Learn a new skill

Think about whether there are any skills you would love to learn, if only you’d have the time. Maybe you’d like to learn a new language, take up indoor rock climbing, or try out salsa dancing. Odds are you can start taking classes, either in person or online, for a fun and rewarding experience.

There are lots of exciting activities to try when you feel like doing something different than going to a restaurant or bar. Once you’ve picked out a few that are of interest, you can give them a try and potentially make them part of your routine.

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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.Bank of America is an advertising partner of The Ascent, a Motley Fool company. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America. The Motley Fool has a disclosure policy.

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Don’t buy a home without reading Orman’s warning first. 

If you’re thinking about buying a home, you probably are not very happy with today’s mortgage rates. Although the rates aren’t excessively high by historical standards, they are much higher than they were just a short time ago. This means you’ll pay more financing charges and have a larger monthly payment to contend with if you borrow for a property now.

In light of the fact that mortgage rates are up, Suze Orman explains that more people are considering ARMS — but she thinks this may be a very bad idea for most buyers.

Here’s what Orman had to say, and why she warns that taking out an adjustable-rate mortgage could be a decision you’ll end up regretting.

Here’s why Orman believes ARMs are dangerous

Orman explained in a podcast episode that high rates drive an increased interest in ARMs (or adjustable-rate mortgages) for a simple reason. “The initial rate on an ARM will always be lower than the current rate for a fixed-rate mortgage,” Orman said.

When you take out an adjustable-rate mortgage, the rate is locked in for a period of time, then begins to fluctuate. It’s tied to a financial index and your rate, monthly payment, and total borrowing costs can all go up if the index shows rising rates.

Since banks are more protected with ARMs since consumers pay more if rates rise, they offer a lower initial starting interest rate.

The issue is, these loans may seem more affordable at the beginning, but you’ll go into buying a home with a lot of uncertainty. You can’t predict exactly when rates will change or how high they’ll go, so you take the chance of your mortgage becoming a lot more expensive.

And Orman warns this can be a dangerous risk and urges buyers to be “very careful in making your mortgage choice.”

Home buyers need to listen to Orman on this issue

Orman is exactly right that ARMs are high-risk loans, and it’s a good idea to be cautious about them. ARM rates can and do go up. You don’t want to end up not being able to afford your home because your rate has risen so much.

Orman suggests a number of questions you should get answers to before taking out an ARM, including asking how much your rate can go up with each adjustment and over time. She also recommends considering what you’ll do if you can’t refinance before your loan rates start rising.

Rather than opting for an ARM — and the lower initial payments that come with it — Orman also suggested cutting housing costs in other ways besides taking out a risky loan. Her tips include opting for a smaller home or buying in a neighborhood that’s a little further away and thus a little cheaper.

“Reducing the amount you need to borrow is the best way to combat rising mortgage costs,” she said. And this indeed is a better choice than getting an ARM. If you buy a smaller or cheaper home you can afford even with a fixed-rate loan, you’ll have a lot more peace of mind that your payment will remain affordable going forward.

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Could Costco allow you to make your cocktails for less? 

Alcohol can be downright expensive these days, and if inflation has you wishing you had more money in your bank account to pay for the cocktails that you enjoy, then you may be interested in seeing what kinds of drink ingredients Costco has to offer at a good price.

Many Costco warehouse clubs sell alcohol, and it can often be a great bargain. Read on, as Reddit users have identified some of the top liquor types to put on your credit card the next time you’re shopping at your local Costco market.

1. Kirkland Canadian Whiskey

Kirkland’s Signature Blended Canadian Whisky is made in Canada and aged in charred white oak barrels for a period of six years.

The drink’s slightly sweet flavor and its unique coffee and cinnamon undertones has made it a top favorite among Reddit users. In fact, one poster commented that the Kirkland brand was “comparable to a Crown Royale at 1/2 the cost,” and others chimed in offering their approval as well.

2. Kirkland Speyside Scotch

Kirkland rotates its collection of Speyside Scotches, including offering some that have been aged for different periods of time. Still, multiple Reddit users have raved about all of the different Speyside Scotch products, with one user saying, “The Speyside single malts I’ve tried so far have been great.”

Since the selection does change, you may want to heed the same posters advice and stock up on any particular type of Scotch that you really enjoy drinking before it’s replaced by a similar product that may vary in taste and in its aging process.

3. Kirkland Anejo Tequila

Kirkland Anejo Tequila has been praised on Reddit both for its affordable price and its excellent taste. One Redditor described it as a “quality tequila,” and another said buying a case of it was a “solid value.”

4. Master Distillers Single Barrel or Bottled in Bond Bourbons

Costco doesn’t always have bourbons in stock, so this can be something of a hit or miss. But, as one Redditor explained, “they’re made by Barton’s and are a fraction of what you’d pay for Barton’s.”

Despite the low price point, Costco Bourbons have a devoted fan base that praises the rich taste they offer. “The Master Distillers Single Barrel bourbon is the best $20 you’ll ever spend,” one poster claimed.

5. Kirkland Pinot Grigio

If you aren’t a hard liquor fan but you enjoy your wine, Kirkland Pinot Grigio may be for you. The wine has been described as being “delicious,” as well as a great deal at just $5.99 for a bottle. Wine aficionados may appreciate its floral aroma, as well as the tropical fruit notes detectable in each sip and the crisp, tart finish as a finale.

With so many favorable ratings for each of these favored Costco alcoholic beverages, it may be hard to pick which one(s) deserve a place in your cart. One liquor you may want to steer clear of, though, is Costco’s spiced rum. It doesn’t seem to have many fans (and that’s putting it mildly, as a poster described it as “the worst thing in the store”).

Just be sure you stick to your liquor budget, so these good deals on delicious drinks don’t cause you to spend more than you should.

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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.Christy Bieber 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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A lot of people sure love it — including one personal finance guru. 

Costco is one of those stores where you really don’t know what you’re missing until you start shopping there. And you can’t start shopping there until you start paying for a membership.

The cost of a basic Costco membership right now is $60. An upgraded executive membership will cost you double, but you’ll also get 2% cash back on all Costco purchases you make, kind of like how you might get 2% cash back on a credit card. So if you shop at Costco frequently, an executive membership could make a lot of sense.

Now, if you’re new to Costco, you’ll probably want to start with a basic membership and see how it goes. And if you’ve been feeling iffy about joining Costco, I would absolutely encourage you to spring for a membership, especially if you have a warehouse club store close to your home.

My family routinely saves a large amount of money by shopping at Costco. But don’t just take my word for it. Financial guru Ramit Sethi is a big fan of Costco, too. He even went so far as to tweet about how it’s an amazing business. And here’s why that’s true.

It’s all about value

The reason so many people love Costco boils down to the savings and customer service the warehouse club giant is known for. Not only does Costco make a point to offer competitive prices, but it also goes above and beyond to ensure that customers are satisfied with the items they’ve purchased. And if not, Costco has a very generous refund policy.

Costco is so committed to offering savings that if it can’t do so, it simply won’t put a given item on its shelves. Sethi quoted Jim Sinegal, Costco co-founder and former CEO, in his tweet as having said, “We have to be able to show a savings on everything we sell. If we can’t show a savings we won’t carry it.”

That’s a pretty solid approach to offering value. Many retailers would have no qualms about stocking an item that’s overpriced and making a profit on it. But it’s clear that Costco doesn’t want to work that way.

In fact, if you’re an avid Costco shopper and have ever noticed that some of the products you used to buy there are no longer in stock, a rise in cost could be the reason why. Costco may have pulled those items to avoid a scenario where you’re not getting great value for your money.

A wise financial move

When I first joined Costco, I was skeptical about the savings involved. But now that I’ve been a member for more than a decade, I can say with certainty that shopping at Costco helps me feed my family and maintain my home for less money.

If you’re on the fence about joining Costco, it could pay to spring for a membership, especially at a time when food costs are up so significantly due to inflation. You’re likely to find that your membership more than pays for itself, and that shopping at Costco helps you stretch your income during these economically trying times.

Even if you’re not having a hard time financially, everyone enjoys saving money. And Costco’s core business model is designed to help you do plenty of that.

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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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Unsolicited mail is one of life’s little annoyances. 

If you’re anything like me, your mailbox regularly overflows with mail you didn’t ask for and don’t want. And it’s likely that a large percentage of that mail is pre-approvals for credit cards, other financing, and insurance offers. Why do American consumers receive so much junk mail of this type? Simply put, it’s because consumer lenders and insurance companies get names and addresses of ordinary people who meet certain criteria (such as a minimum credit score) from the credit reporting bureaus. This makes it possible for these companies to market directly to us, and fills up those mailboxes (and trash cans).

Junk mail, junk mail everywhere

Having a mailbox full of these offers isn’t an ideal situation for a couple of reasons. First of all, pre-approved credit card offers can leave you vulnerable to fraud if thieves get their hands on them, send them back, and intercept/use credit cards in your name. So let this also serve as a wake-up call to check your mail frequently, and shred those offers!

Second, it may not be the wisest move to pick your newest credit card via an offer mailed to you. While sometimes a mailed pre-approval is the way you’ll find out about a card that could be a good fit for you, it’s better to do some research and choose a new card based on your spending habits or rewards that are most useful to you. For example, I recently added a new credit card to my wallet, and I found out about it and its benefits by searching online for cards that offered the best cash back for spending I actually do.

The good news is, there’s a way to get your name and address off these mailing lists.

Opt out of that junk mail

Ready for an emptier mailbox? Head over to OptOutPrescreen.com and follow these steps:

Scroll down and click “Click Here to Opt-In or Opt-Out.”You’ll be presented with the choice to opt-in for “firm offers of credit or insurance.” If you aren’t receiving offers and want to, you can do that here — after all, you might like knowing ahead of time which cards you are pre-approved for.You can either opt-out for five years, which is just an online form, or you can opt-out permanently, which includes an extra step. The online form will ask for your name, address, phone number, and Social Security number. This is so your identity can be verified, and your SSN will be encrypted.I elected to opt-out permanently, so I also had to print out a Permanent Opt-Out Election Form and mail it in. For the cost of a stamp, an envelope, and a little time, you can have an emptier mailbox for good.

I went through this process a few months ago, and I’m happy to report that I am not receiving unsolicited offers anymore. I am still getting mail from lenders I already do business with, though, but that’s not a surprise. And do note that opting out from offers via the credit bureaus will not stop all junk mail you receive; the process has nothing to do with local businesses, charities, or political candidates who clog your mailbox. I know of no way to opt out of those, unfortunately.

If you’ve got some time and are willing to sacrifice a stamp and an envelope, I highly recommend hopping over to OptOutPrescreen and getting more space in your mailbox for the mail you want to receive.

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