Money Management

Just because a pay boost isn’t coming your way doesn’t mean all is lost. 

It’s hardly a secret that living costs have been up this year. That’s forced a lot of people to dip into their savings accounts to cover their added expenses. Worse yet, some workers have even racked up credit card debt this year to cope with rising costs, and that’s with having a full-time job.

Now the good news is that many companies are planning to move forward with fairly generous raises for 2023, partly in response to high levels of inflation. In fact, U.S. employers plan to boost salaries by 4.6% on average in 2023, which is up from 4.2% this year, according to data from Willis Towers Watson.

But what if your employer isn’t giving out raises this year? Maybe money has gotten tight because your company has been forced to bear the brunt of higher costs (remember, inflation has impacted companies, too). Or maybe your employer wants to conserve funds in case a recession hits in 2023, which is something many financial experts have been warning about.

Not getting a raise could be really problematic at a time when living costs are so high. But if you don’t have a raise coming your way in 2023, here are some options worth exploring.

1. Get a second job

Even though there’s talk of an impending recession, the gig economy is in great shape right now. And that means that getting a side hustle may be perfectly feasible.

The extra money you earn could easily take the place of a bump up in pay. In fact, you may find that your side hustle changes your financial situation in a very big way by not only making it easier to pay your bills, but also by making it possible to build up savings so you have a nice cushion.

2. Find a new job

Your company may not be willing to increase your pay. But that doesn’t mean another company won’t offer you a higher wage than what you’re earning right now. Again, despite recession warnings, the U.S. jobs market is still strong. And so you may have a fairly easy time finding a job that pays more generously than your current employer.

3. Sell unwanted holiday gifts

It’s not uncommon to get gifts you don’t want during the holiday season. If you’re sitting on gadgets, apparel, or even gift cards that aren’t of good use for you, then it pays to unload them for cash. Even if you’ve received gifts you do want, it could still pay to consider selling them if you need to compensate for an absent raise and getting a side hustle or new job isn’t so feasible for you right now.

At a time like this, having your wages remain stagnant could be really detrimental to your finances. So if that’s the boat you’re in, do what you can to boost your income so you’re able to keep up with your expenses without having to cut back to an extreme degree, all the while avoiding costly debt.

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.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.

 Read More 

It’s a good time to not have to take out a loan. 

Most people who purchase a home can’t just pay for it in cash. Rather, they need to finance their home purchases with a mortgage loan. And while buying a car in cash is a lot more feasible due to the lower price point, the reality is that many people don’t have enough money in their savings accounts to cover a $400 expense, let alone hand over $40,000 for a vehicle. As such, it’s pretty common to finance a vehicle purchase.

But a large number of consumers are now having second thoughts about purchasing homes and cars. In fact, 44% specifically say they’re delaying major purchases like homes and vehicles, according to the latest BMO Real Financial Progress Index. And if you have the option to put off a big purchase, it pays to consider doing so.

It’s a really bad time to be borrowing money

If you need a car to get to work or just plain function and your current one is no longer drivable, then delaying a vehicle purchase won’t work. Similarly, if your landlord isn’t renewing your lease and you can’t find an affordable rental anywhere close to where you want to be, then pursuing a home purchase may be your only option.

But if you’re in a position where you don’t need to buy a car right away, or you’re in a stable housing situation that isn’t making you miserable, then putting off a vehicle or home purchase could work to your benefit. And the reason largely boils down to the cost of borrowing.

The Federal Reserve has been aggressively hiking up interest rates in an effort to slow the pace of inflation. By making it more expensive to borrow, the hope is that consumers will start to cut back on spending enough to bridge the gap between supply and demand that’s causing inflation levels to spike.

But because borrowing rates are so high across the board, signing a mortgage or auto loan is going to mean paying more money than you normally would. And that’s not a good thing given that both home and car prices are up due to limited supply.

Not only might a mortgage or auto loan be more expensive than usual, but you might have to compromise on the home or vehicle you end up with due to issues with supply. Now it’s one thing to resign yourself to a rental house you aren’t thrilled with for a year because there aren’t many homes available in your neighborhood. But it’s another thing to commit to buying a home that doesn’t really check off all the right boxes.

Similarly, if you’re buying a car, you may end up driving it for 10 years or longer. And so that’s not the sort of purchase you’ll want to compromise on.

Think carefully about big purchases

From a borrowing and inventory perspective, it’s a bad time to buy a home or car. But also, for months, experts have been warning about a potential recession in 2023. And if that comes to be, you may not want a massive loan hanging over your head.

All told, it’s definitely not the ideal time to be making a vehicle or home purchase. If you can manage to wait, you’re probably better off doing so.

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 

Negative equity is a problem for a large number of 2022 buyers. Don’t let it be a problem for you. 

Home buyers faced a big challenge going into 2022. Low inventory meant that home prices were apt to be elevated on a national scale. And sure enough, many buyers paid more for a home this year than they would’ve had to pay in the past.

But higher home prices can make it difficult to come up with a sizable down payment. Many buyers took advantage of loan programs that make it possible to purchase a home with little or even no money down, like FHA loans and VA loans.

The problem, though, is that many people in that position are now already underwater on their mortgages. And that’s a fate prospective buyers should make every effort to avoid.

A really big problem

Being underwater on your mortgage means your home loan balance is greater than your home’s market value. Or, to put it another way, if you need to sell your home and get out, your home wouldn’t command a high enough price to pay off your mortgage in full.

Many people grew familiar with the term “underwater” during the 2008 housing crisis. Back then, mortgage lenders weren’t as strict as they are today, so a lot of people who couldn’t afford to purchase homes did so anyway, fell behind on their payments, and then couldn’t sell their homes for a high enough price to make their lenders whole.

Meanwhile, an estimated 270,000 homeowners who purchased a home in 2022 are already underwater on their mortgages, reports data firm Black Knight. That represents roughly 8% of home purchases financed with a mortgage this year.

Not surprisingly, borrowers with FHA and VA loans are those most likely to be underwater on their mortgages already. FHA loans make it possible to purchase a home with 3.5% down. And VA loans don’t require a down payment at all, though they’re available to a more limited pool of borrowers — military members, veterans, and their spouses.

Should recent homeowners be worried?

Home prices peaked in June this year, so those who purchased a home around then may now be looking at lower property values than they were at the time their mortgages were signed. That’s not necessarily problematic for those who took out a conventional mortgage and made a 20% down payment, because homeowners in that boat still have a long way to go before they’re looking at negative equity.

Rather, it’s buyers who didn’t put a lot of money down at closing who need to be more concerned. If their financial situations change, these buyers might struggle to get out of their current housing situations.

New buyers should proceed with caution

It can be tempting to take out a mortgage with just a minimum down payment. But the danger in doing so is starting off with very little equity so that if home prices fall soon after, the risk of ending up underwater on a mortgage arises.

READ MORE: Mortgage Calculator

In today’s market, coming up with a 20% down payment can be tricky given how expensive homes have gotten. But if you’re a prospective buyer, you should at least make an effort to put 10% down to avoid winding up in a bad situation.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

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 

Follow these tips, and maybe consider using your credit card instead. 

In some ways, debit cards are extremely convenient. They generally come free with your checking account (and sometimes with savings accounts and money market accounts, as well), and you don’t have to apply for one like you do for a credit card. They’re tied directly to your bank account, and while you do have to be mindful of not overdrafting the account (spending more than what you have in it), you don’t have the same possible temptation to overspend as you might with a credit card.

Unfortunately, debit cards lack the same level of fraud protection that you’d get with a credit card, so it pays to be extremely careful about using them in certain situations. Read on for some tips to help you keep your money safe when you use your debit card.

1. Choose ATMs (and gas pumps) carefully

One of the things you can do with a debit card that isn’t recommended for a credit card is take out cash at an ATM. When you do this with a credit card, it’s called a cash advance, and it results in a fee and immediate interest charges. In short, this is a move to avoid unless you have absolutely no other option. Your debit card, on the other hand, is the perfect way to take cash out. Just be careful about which ATM you choose to use.

Some scammers will install a card skimmer in the card reader part of an ATM (or sometimes in gas pump payment machines). These devices “skim,” or capture, the data on your card as well as your PIN, if you entered it. Then these nefarious types can use that data to drain your bank account.

How do you avoid this fate? It’s preferable to use the ATM at your bank, as it will be monitored well by staff there, and may even be inside the building, cutting down on the chances that it’s been tampered with. Free-standing ATMs inside random businesses are riskier (and besides, you might also be charged fees if you use an out-of-network ATM).

If you decide to pay at the gas pump using your debit card, choose a pump that is visible to the staff inside the on-site store, to cut down on the chances that it’s been messed with. And look carefully at the card readers for ATMs and gas pumps. If the mechanism is loose or damaged, or anything looks fishy, don’t use it.

2. Protect your PIN

Your PIN (personal identification number) is the key to unlock the money in the accounts linked to your debit card. As such, it’s extremely important to keep that number safe. When you’re entering it, shield the keypad with your hand, wallet, or purse. If you have multiple accounts, it’s a good idea to have different PINs. And don’t ever write it down to keep with you, especially not on the card itself!

3. Use your debit card as “credit”

On the subject of your PIN, if you have the option to use your debit card as “credit” instead, you won’t have to enter it for a purchase, and may be asked to sign a receipt instead. This option sends your payment through the merchant’s credit processor, often Visa or Mastercard. This usually results in extra fees for the merchant, and it means the payment is processed offline, with the money leaving your account in a few days, instead of instantly when you pay via the debit process.

Note that selecting “credit” doesn’t turn your debit card into a credit card — it’s just a different way of processing the payment. But it means you won’t have to enter your PIN and will instead sign a credit card slip (or an electronic screen), cutting down on the odds that your PIN is exposed.

4. Sign up for alerts from your bank

Knowledge is power, and to that end, a good way to avoid debit card fraud is to sign up to receive text or email alerts from your bank. You can opt in to receive notifications when there’s suspicious activity on your account, which could be an indicator that someone has stolen your card information.

5. Consider using a credit card instead

Finally, the surest way to avoid debit card fraud is to not use your debit card, and instead keep it in a safe place rather than carrying it around in your wallet. Credit cards can be dangerous in their own way (such as by enabling you to rack up debt you can’t afford), but they also offer much stronger fraud protections than debit cards, and can give you flexibility to make bigger purchases. And of course, they can help you build credit and earn cash back and rewards on spending you would have done anyway. Consider saving your debit card for taking cash out, and using a credit card for purchases.

It’s a scary world out there, but following the tips above can help you keep your debit card — and your money — safe from the threat of fraud and theft.

Top credit card wipes out interest until 2024

If you have credit card debt, transferring it to this top balance transfer card secures you a 0% intro APR for up to 21 months! Plus, you’ll pay no annual fee. Those are just a few reasons why our experts rate this card as a top pick to help get control of your debt. Read our full review for free and apply in just 2 minutes.

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 positions in and recommends Mastercard and Visa. The Motley Fool has a disclosure policy.

 Read More