Are you losing money due to any of these missteps? Vadym Pastukh / Shutterstock.com
Amazon is one of the biggest retailers in the world. When it comes to shopping on Amazon, many people look for cost efficiency and convenience. However, you might be making some common mistakes when you shop at the giant online retailer. If you want to avoid losing out, avoid these errors.
Some expenses have skyrocketed by as much as 254% over the past year. Zoriana Zaitseva / Shutterstock.com
One of the biggest financial stories of 2022 was inflation The annual inflation rate was 7.1% as of November, according to the latest Consumer Price Index (CPI), which is one of the federal government’s gauges of inflation. But inflation hit some items more than others — shooting as high as 254% for specific purchases. Let’s take a look at some of the wildest price hikes of 2022.
Did any of these make your list?
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If you’ve ever failed at a New Year’s resolution, you’re definitely not alone. I mean, let’s be real — how many times did you really use the gym membership you signed up for this past January?
But while New Year’s resolutions aren’t always easy to keep, they’re worth making nonetheless. This especially applies to financial matters.
Unfortunately, 2022 was a tough year for a lot of people. Living costs were up in a very big way, and a lot of people experienced personal setbacks because of that, such as having to hit pause on retirement plan contributions and racking up credit card debt.
If you’re eager to see your financial picture improve in 2023, then it pays to take certain steps to make that happen. In fact, you may want to copy the most popular financial resolutions cited in a recent Fidelity study, which are as follows.
Whether you’re talking about a regular savings account, a 401(k), or an IRA, it’s a good thing to try to sock away more money in 2023 — especially if you fell behind in 2022. Fidelity reports that 39% of people list saving more money as a top resolution.
But if you’re serious about tackling that goal, don’t just leave things to chance. Instead, put your savings on autopilot.
If you’re loading to pump more money into your savings account, arrange for an automatic transfer so that some of your earnings leave your checking account and land right in your savings before you can touch them. You can arrange for the same setup with many IRA accounts, too. And if you have a 401(k) through your employer, pretty much the only way to fund your plan is through payroll deductions, so that should make the process seamless as well.
For 32% of people, paying off debt is a big goal for 2023. But it pays to tackle that task efficiently. So first, see what types of debt you have. Something like a credit card balance should pretty much always take priority over a personal loan or auto loan, since credit cards are notorious for charging loads of interest.
Also, see if your debt is worth consolidating. If you’re carrying balances on three or four different cards, it could pay to consolidate via a balance transfer or personal loan. Doing so might lower the interest rate on your debt, all the while leaving you with one monthly payment to manage, rather than many.
A good 28% of Americans want to shrink their spending in 2023. If you’re serious about doing the same, first, get your household on board. You’ll need to have everyone working together to achieve that particular goal.
Next, slash expenses in your budget that aren’t doing much to enhance your quality of life. If you can take or leave a given streaming service or subscription, hit the cancel button.
Finally, take impulse buys off the table by making shopping lists before you hit the store and leaving your credit cards at home. You’ll lose out on earning rewards, but you might gain a lot in the form of freeing up money for other important purposes.
All of these resolutions are worth striving for in 2023. And remember, even if you’ve struggled to keep up with these types of pledges before, you never know what the new year will bring, so it’s worth giving these goals a shot.
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If your debt is already a year old, it’s time to start tackling it.
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At this point, a lot of people are enjoying the 2022 holiday season and are doing their best not to rack up credit card debt in the course of celebrating it. But data from C+R Research reveals that 10% of consumers had lingering debt from the 2021 holiday season before this year’s holidays even rolled around.
Carrying debt for a year or longer could be very detrimental to your finances, though. That’s because credit card interest can compound on a daily basis, so that for each day longer you carry a balance, it costs you even more.
If you’re carrying leftover credit card debt from 2021, or have accrued your share in 2022, it’s important that you try to work your way out of that hole as quickly as you can. Here’s how.
Debt consolidation may not just make your debt easier to manage; it could also make it less expensive to pay off.
Let’s say you do a balance transfer. Many balance transfer credit cards give you a 0% introductory rate for a limited period of time on the balances you move over, so you get a break from accumulating interest as you work to pay your debt off.
You can also look at consolidating debt via a personal loan. You’ll pay some amount of interest, but that rate may be substantially lower than what your current credit cards are charging you.
You’ll need to free up money consistently if your hope is to get rid of your debt. And a budget can help make that possible.
Once you start following a budget, you may gain a better understanding of what your bills look like and where your money goes every month. And that could, in turn, help you free up more money you can use to pay off your debt.
Budgeting might help you better manage your money. But if you’re already down to bare bones expenses and can’t seem to find much spare cash month after month, then boosting your income could be your ticket to a quicker debt payoff. The good news is that the gig economy is nice and healthy, so you may find that it’s fairly easy to go out and get yourself a side hustle.
Note that you will have to be careful, because the income you make from that gig will be taxable (this holds true even if you’re paid in cash). So you can’t just take all of your extra money and throw it at your debt. But once you’ve calculated what portion you owe the IRS, you can use the rest of your earnings for debt payoff purposes.
The fact that some consumers had leftover debt from 2021 at the start of this year’s holiday season isn’t at all surprising. But you should know that lingering debt is not a good thing. So if you can avoid that situation by eliminating your debt quickly, you’ll be much better off for it.
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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.
Don’t forget to add these costs when buying a new car.
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Purchasing a car is a big decision, and it can be hard to know what to consider when making such a large financial commitment. Many people focus on the purchase price of the car itself but forget to factor in all the other costs that come with owning a vehicle, such as auto insurance, maintenance, and taxes. Knowing your “all-in” number before you buy a new car can help you budget properly and not end up buying something you can’t afford.
One often-overlooked cost when purchasing a new car is auto insurance premiums. When you change cars or add another vehicle to your policy, it is important to update your insurance policy so it reflects the correct information. This will ensure that you are getting the best coverage for your situation and paying the right amount for it. Typically, car insurance on a new car is more expensive since it’s often more valuable than an older car.
In addition, the type of car you buy, as well as the price of the car, will determine your auto insurance premiums. More expensive cars cost more to insure because the cost to repair or replace them is higher. Before you buy a new car, make sure you factor in an updated premium into your all-in budget figure.
This means you need to speak with your insurer and get an estimate of what they would charge if you switched cars or added another vehicle to your policy. You should also shop around for the best rates and compare different insurers. You may find additional savings that can be used towards your car purchase.
You also need to consider routine maintenance costs for any car that you buy. These expenses can add up quickly, so make sure you are aware of them and take them into account when setting your budget. To get an estimate of your maintenance costs, you can start with the car’s user manual. The manual will have the manufacturer’s recommended service at certain mileage intervals. The car dealer will also be able to give you an estimate of your annual maintenance costs. Websites like Kelley Blue Book and Edmunds also have calculators that you can use.
Additionally, depending on where you live and what kind of vehicle you’re purchasing, there may be additional taxes associated with purchasing a new car or truck. For example, the sales tax in California is 9.5% in certain areas. So a $40,000 vehicle will actually cost $43,800 when tax is added. There are also other fees, such as the vehicle registration fee, documentation fee, dealer fees, and more that can be added to the final cost of the car. These are costs that need to be figured into your all-in number before driving off the lot with your new car.
Knowing your all-in number before buying a new car is essential if you want to make sure that adding this expense won’t put too much strain on your budget each month. Make sure to factor updated auto insurance premiums as well as maintenance costs, taxes, and other fees into this number so that it reflects reality and not just the purchase price of the vehicle itself. Doing this research ahead of time will give you peace of mind when you go out shopping for your next vehicle.
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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.
Sadly, we don’t all get visited by the magical interest rate fairy.
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The macroeconomics behind all of the recent interest rate hikes can be quite interesting. But not for the average consumer worried more about their personal finances than the inner workings of the Federal Reserve.
For many folks, the interest rate increases have two main results — one bad, one good:
The Bad: Loan and credit card interest rates go up. This means mortgages get more expensive, credit card debt gets more expensive… basically, any kind of debt gets more expensive.
The Good: Bank account interest rates go up. This means you earn more interest on the money in your savings accounts. Rates on interest-bearing checking accounts may even go up.
Unfortunately, the rate at which these two results occur varies a lot. Debt interest rates tend to go up more or less immediately. But the rate on your savings account could take months to go up — if it goes up at all.
The sad fact is that you can’t just assume your bank will increase interest rates on your savings account automatically. Some banks won’t bother to raise interest rates on their savings products no matter how high the Fed pushes rates. Even if they do raise rates, they may not go as high as their competitors.
That’s why Credit Karma CEO Ken Lin says we all need to be aware of where our accounts stand.
“I think this is an opportunity for most consumers to really be more cognizant, more thoughtful around their finances,” he said, “because we assume when rates are going up, that the money in our savings accounts is going up, and that’s generally not the case. You really need to push your bank to offer you that higher yield, or even open a new account elsewhere.”
So, why do some banks raise rates while others do diddly-squat? It’s because they simply don’t need to.
While it’s certainly true that banks can make money off of deposit accounts, that money often pales in comparison to the money they make with things like loans and investments. Deposits are important, because that’s often where the capital for these loans comes from. But if a bank has plenty of capital, they don’t need more deposits.
The interest you earn on your savings account is paid for by those other, higher-profit enterprises. When banks want more deposits, they raise rates. If they don’t need those extra deposits, they reduce rates — or, in this case, fail to increase them with the market.
Taking the time to compare your rates with those of similar bank accounts from other banks can really pay off. It’s not uncommon for savings accounts with big banks to have rates well below market average — and that average is already less than 0.2%. In contrast, some banks are offering rates 10 and 20 times higher than average.
Yes, moving your accounts to a new bank is a lot of hassle. You need to make transfers, close accounts — which often requires an in-person trip to a branch — update your direct deposits… the list goes on.
But what if moving banks increases your interest earnings by 2%, 3%, or more? Depending on the size of your deposits, that could mean hundreds in extra interest income.
And don’t discount the potential for bonuses. Many banks offer cash bonuses for opening a new account (and jumping through a few, often minor, hoops). These bonuses can be worth a few hundred bucks in and of themselves.
Even if you don’t move banks, you should at least have all the facts. Follow Lin’s advice and do a little digging into your bank’s interest rates. You may get a pleasant surprise — or you may get the motivation you need to jump ship to a better opportunity.
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