Money Management

Your best bet is to steer clear of these. 

When you need to borrow money, there are different options you can look at. You can always charge up a balance on your credit cards and pay it off over time, but doing so might cost you a lot of money in interest. You can also borrow against the equity you have in your home. But if you’re a renter, that’s not an option for you.

That’s why many consumers find themselves turning to personal loans when a need to borrow money arises. A personal loan lets you borrow for any purpose. It can be to take a vacation, fix up your car, or renovate your house. And the upside of taking out a personal loan is that you might snag a more competitive interest rate than what a credit card will charge you.

But while personal loans may be convenient, flexible, and relatively affordable, it’s important to be careful when taking one out. Here are some traps you’ll want to avoid if you want to borrow via a personal loan.

1. Getting stuck with a high interest rate

While a personal loan might cost you less in interest than another borrowing product, you’ll be paying interest nonetheless. And right now, you might get stuck with a higher personal loan rate than you’d like due to today’s borrowing environment.

The Federal Reserve has been on a mission to cool inflation, and to do so, it’s been implementing aggressive interest rate hikes. That’s made it more expensive to borrow money in different ways. But it also means that if you apply for a personal loan this month, or in the near future, you might get stuck with an interest rate you aren’t happy with.

2. Taking on loan payments when a recession might hit

For months, financial experts have been cautioning consumers to gear up for an economic recession in 2023. Now we can’t say with certainty that economic conditions are going to decline in the new year. But it is a possibility.

If you take out a personal loan now, and then you lose your job in 2023 during a recession, you might struggle to keep up with your monthly payments. That could cause extensive damage to your credit score, making it very difficult to borrow the next time you need to.

3. Applying for a loan when your credit score just dropped

Personal loans are unsecured, which means they aren’t tied to a specific asset (whereas if you take out a mortgage and fall behind on your payments, your lender can eventually force the sale of your home to get repaid). That’s why it’s important to have a strong credit score when applying for a personal loan. The higher that number, the lower your interest rate is likely to be.

But a lot of people have fallen behind on bills this year due to inflation and the struggle to keep up with higher living costs. If that’s happened to you, and your credit score has dropped, then applying for a personal loan could mean getting stuck paying a lot of interest — and having a hard time keeping up with your monthly payments.

A personal loan could end up being a smart borrowing choice for you at some point in time — maybe even today. But do be aware of these potential traps and the ways they can hurt you financially.

The Ascent’s best personal loans for 2022

Our team of independent experts pored over the fine print to find the select personal loans that offer competitive rates and low fees. Get started by reviewing The Ascent’s best personal loans for 2022.

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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It’s a simple move that could bail you out of a financial jam. 

Will a recession strike in 2023? That’s a big question a lot of people want answers to. And without a crystal ball, the best answer anyone can really give right now is “we’ll just have to wait and see.”

Why are so many experts so concerned about an economic decline? The Federal Reserve has been aggressively raising interest rates in the hopes of slowing the pace of inflation. The logic is that if borrowing gets too expensive for consumers, they’ll start to spend less. Once that happens, it should narrow the gap between supply and demand that caused the rampant inflation we’ve all been dealing with for well over a year.

But if consumer spending declines to an extreme degree in the coming months, it could spur a recession. And that could bring about a period of widespread unemployment.

If that’s a concern of yours, it’s understandable. The idea of losing your job can be scary, especially if you don’t have a whole lot of savings to tap in that sort of scenario.

But if that’s the case, there’s one easy move you can make today to put yourself in a better position to get through a recession. And it’s a move worth making before economic conditions take a turn for the worse.

Make sure you’re getting the best return on your money

The Federal Reserve’s interest rate hikes have made borrowing more expensive across the board. But one positive thing that’s come out of those rate hikes is that banks are finally paying higher interest rates on savings accounts and certificates of deposit.

If you’re worried your savings won’t hold up well in a recession, do yourself a favor and see what interest rate your bank is currently paying. And then compare that rate to what other banks are offering up. If your bank’s interest rate falls short, then it pays to move your money over to a bank that’s paying more generously. The more interest you’re able to earn on your money, the longer your savings are likely to last.

Look to online banks for higher interest rates

If you’re doing your banking at a physical bank but are eager to snag a higher interest rate on your savings, then it could pay to switch over to an online bank. Online banks don’t tend to have the same amount of overhead as brick and mortar establishments. As such, they’re commonly able to pass that cost savings on to banking customers in the form of more generous interest rates.

We don’t know whether the economy is going to worsen in 2023 or not. And there’s nothing wrong with taking an optimistic view and hoping that things won’t deteriorate. At the same time, it’s important to prepare for a recession in case economic conditions worsen drastically. And the higher an interest rate you’re able to get on your savings, the more financial protection you’ll buy yourself, especially if you end up having to tap your cash reserves in the event of a layoff.

These savings accounts are FDIC insured and could earn you more than 17x your bank

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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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COVID-19 testing can get expensive, but there are ways to reduce the costs. 

In pre-COVID days, getting a cough, cold, or flu might involve staying at home for a few days and taking some medicine. Now, for many people, it also can involve an at-home COVID-19 test. Not only can this help reduce the risk of infecting others, it can empower people to seek treatment if needed.

But the cost of testing can add up, particularly if you need to test your whole family. Over-the-counter at-home tests cost around $10 each at Walgreens and prices are similar in other pharmacies. With the number of bugs that have been doing the rounds in recent months, a $10 test for each person can become prohibitively expensive for some families.

That’s one of the reasons White House says it will once again mail out free at-home COVID-19 tests. According to last week’s announcement, the first tests began shipping Dec. 19. The move is part of a slew of wider measures that aim to handle an increase in COVID cases this winter.

How to get your free at-home test

Each U.S. household can apply for one set of free at-home tests online at COVIDTests.gov. Here’s what you need to know:

Each pack contains four tests.Only one pack is available per household. To apply, enter your name and shipping address or call 1-800-232-0233.

Don’t wait until you have symptoms to apply for the testing kits. There are only a limited number of tests available, so the sooner you apply, the more likely you are to receive one.

The government’s “COVID-⁠19 Winter Preparedness Plan” also involves distributing free tests to a range of locations. These include community health centers, schools, and long-term care facilities. Authorities will also deliver tests to food banks so that they can be handed out to those in need.

Your health insurance may also pay for at-home tests

Four free at-home tests is a help, but if you have a family, they may not go very far. Your health insurance provider may also pay for over-the-counter tests. Whether your employer provides your health insurance or you’re covered by a personal plan or Medicare, you are entitled to up to eight at-home tests every month.

You can either pick the tests up at an in-network pharmacy or buy them yourself and submit a claim. If you opt for the latter, make sure you keep the receipts. It’s worth checking with your health insurer first to understand what their specific requirements are.

The federal government is also setting up additional “Test to Treat” sites, where people can get tested for free and also get prescriptions for COVID treatments. There’s also a move to set up more vaccination sites throughout the country.

Bottom line

Given the extent to which the cost-of-living increases have put pressure on many Americans’ bank accounts, those free tests could free up cash for other essentials. If you’ve been having trouble paying your bills, make sure to apply online to receive free tests. It’s also worth finding out what your health insurer will cover and how you can qualify.

The specter of COVID-19 is still hanging over parts of our lives, even if a lot of things have returned to normal. Not only are we now suffering the economic aftereffects, the onset of winter and the holiday season means case numbers are starting to rise again. For some, being able to get your hands on free tests this winter may be the difference between getting tested or not.

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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.Emma Newbery 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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Take a deep breath and really consider a major purchase. 

Homeownership is very popular in the United States, and nearly two-thirds of Americans own their homes. Unfortunately, it isn’t as easy to buy as that number might suggest. The last few years have presented challenges for people who dream of a home of their own.

With the onset of the COVID-19 pandemic in early 2020, many people living in dense urban areas took the opportunity to buy homes in quieter parts of the country, and they got to take advantage of a period of lower mortgage rates as well. This also resulted in extreme competition in the housing market, with some buyers resorting to all-cash offers and not even viewing homes in person before making those offers. Higher prices followed, and just to add insult to injury, we’ve been watching mortgage rates climb in 2022.

Per Freddie Mac, we started off the year with 30-year fixed-rate mortgages averaging 3.22% during the first week of January. As of this writing, the average rate for that same mortgage is 6.58%.

With an initial mortgage rate that low, it’s perhaps no surprise that I started 2022 with an itch to buy a home. I’ve been renting most of my adult life, other than a 26-month period where I lived in the home I shouldn’t have bought. My original plan was to buy again in 2023, but I changed my mind. Here’s why.

I got a money reality check

2022 was a year of big financial changes for me, and one of the first ones I made was beginning to meet regularly with a financial planner. You can seek money advice from all kinds of sources, and I think talking about money with everyone in your life can be a smart move. But there’s really no substitute for a neutral third party who has no personal stake in your finances and is just there to crunch numbers and offer solid advice.

At the start of 2022, I was also looking for a side hustle to be able to start saving up a down payment. I was also in debt and hadn’t connected the dots that paying off debt would in turn free up more of my income (as well as any additional money I could bring in) for a house. Plus, it would improve my credit score, making it easier to get approved for the best mortgage rate available. I have no one else’s income or credit to rely on, and will be buying a home solo. After a frank discussion with my financial planner, I resigned myself to renting until 2024. This brought on a brief period of depression about my status as a renter, but I made some changes that helped.

I made my rental more of a home

In my old career, moving from rental to rental (and often state to state) became a way of life. It’s exhausting to pack up and move as frequently as I have (current record: three times in less than one year). Being comfortable at home is vital to my health and happiness, but at the beginning of 2022, I was having issues getting there in my current rental. My financial planner encouraged me to make affordable changes to the space to make it somewhere I wouldn’t mind living for longer than originally planned.

I turned a spare bedroom into my home office, which cost me several hundred dollars in paint and furnishings, but it’s been a major win for my work productivity and therefore my bank account. I also made other strategic changes to improve life at home overall, and since my rent isn’t expensive, I can be content staying here and saving money until 2024 — and hoping the housing market cools off.

I spent 2022 watching the market

Working as a personal finance writer and editor means that I am submerged in all the latest money news, and that includes the roller coaster of a housing market we’ve seen this year. The average home price stood at $379,100 in October 2022, and while home prices are much lower than that where I live (an inexpensive small city), buying a home is still likely to be the biggest purchase I’ll ever make. Plus I’ve got to figure in taxes, homeowners insurance, and all the other costs of homeownership.

By the end of 2023, I should have an easier time assessing how 2024 will look, and by then I will only be a few months away from formally starting my search by getting pre-approved for a mortgage and finding the right real estate agent. By waiting longer, I’m giving myself the best chance to save money for a down payment, continue to increase my income, and otherwise prepare for a big purchase. I’ve already decided that if mortgage rates haven’t improved much by early 2024, I’ll consider getting an adjustable-rate mortgage — going into it with eyes wide open and a plan to refinance to a fixed-rate mortgage when I can.

While I’m disappointed not to be buying a home next year, I am happy to be approaching the process in a measured and careful way, especially because I didn’t last time. And I definitely feel very fortunate to have a safe and affordable rental for now. Becoming a homeowner isn’t something anyone should ever take lightly, because it’s a huge commitment with a major impact on your finances.

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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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These Amazon deals are too good to pass up! 

If you’re looking for the perfect gift to give your favorite man this holiday season, look no further than Amazon. There are tons of great gifts available on Amazon that won’t break the bank. Here are some of our top picks for men’s gifts under $50.

For the tech lover

If you know someone who is always looking for the latest tech gadgets, then consider picking up the Mregb Solar Power Bank 42800mAH Portable Charger. This powerful little device can charge an iPhone 14 Pro over 11 times before needing to be recharged itself! This power bank is waterproof, drop-proof, dust-proof, and temperature resistant making it perfect for the outdoors and harsh environments. At just $29.98, this is an amazing bargain for any tech lover in your life.

Here are some other great tech deals from Amazon you don’t want to miss.

Sony EXTRA BASS Wireless Bluetooth Portable Lightweight Compact Travel Speaker: $48 (20% off)Tile Sticker (2022) Small Bluetooth Tracker: $19.60 (35% off)Amazon is also offering discounts from 33% to 63% off on its Echo and Fire TV devices

For the fitness enthusiast

If you know someone who loves working out, why not get them something that will help them reach their fitness goals? Consider getting them a pair of wireless earbuds like the Hoseili Bluetooth 5.0 Wireless Earphones. Not only are these earbuds lightweight and comfortable but they also offer great sound quality and offer up to four hours of battery life per charge. At just $17.98, they’re currently 64% off and are an affordable way to show your support for any fitness enthusiast in your life.

Here are some other great fitness deals from Amazon you don’t want to miss.

Fitbit Aria Air Bluetooth Digital Body Weight and BMI Smart Scale: $39.95 (20% off)Amazfit Band 7 Fitness & Health Tracker: $44.99 (10% off)COMFIER Mini Massage Gun, Deep Tissue Muscle Massager: $44.77 (25% off)

For the home chef

Does your man love cooking? Get him something he’ll really appreciate with this Porterhouse Razor-Sharp Steak Knife Set. This set includes eight 4.5-inch serrated blades made of high carbon stainless steel. And at just $49, it is 73% off the normal price!

Here are some other great home chef deals from Amazon you don’t want to miss.

Umite Chef Kitchen Cooking Utensils Set, 33 pcs: $27.04 (37% off)ROYAL CRAFT WOOD Wood Cutting Board Set: $14.61 (30% off)SENSARTE Nonstick Frying Pan Skillet, Swiss Granite Coating Omelette Pan: $17.99 40% off)

Shopping for men’s gifts doesn’t have to be expensive or difficult — there are plenty of great options available on Amazon for under $50 that any man would love. Whether it’s something practical like wireless earbuds or tech gadgets or something more fun like cookware sets, you’re sure to find something special that won’t break your budget. So go ahead and start shopping smart today — you’ll be sure to find something awesome.

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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.John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Amazon.com. The Motley Fool has a disclosure policy.

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