Money Management

For many people, a Sam’s Club membership is more than worth it. But read on for some pitfalls you might encounter as a Sam’s Club shopper. [[{“value”:”

A Sam’s Club membership costs $50 a year, or $110 for a Plus membership that gives you 2% cash back on purchases. For many people, those fees are more than worth paying.

But you might fall into certain traps when you join Sam’s Club. Here are a few drawbacks of shopping there you should know about.

1. You may have a harder time budgeting

The $50 or $110 membership fee you pay to join Sam’s Club could more than make up for itself in the form of savings on everyday purchases. But to reap those savings and give your savings account a boost, you generally have to buy those items in bulk. And that could make budgeting a lot harder.

Say your household commonly uses two rolls of toilet paper per week, and your local supermarket charges $1.29 per roll. At Sam’s Club, the current price for 45 rolls of Member’s Mark toilet paper is $22.98 online. That has you paying $0.51 per roll, which is clearly a lot less.

But if you only need two rolls per week, then you only have to shell out $2.58 per week. If you want to buy the bulk supply from Sam’s club, you have to spend almost 10 times that in a single purchase. If there isn’t room in your budget for that larger outlay, you could end up with a credit card bill you can’t pay off in full — and interest charges that eat away at your savings.

Of course, one thing that might help you work larger Sam’s Club purchases into your budget is using the right tools to manage your money. Click here for a list of the best budgeting apps. But otherwise, be careful with those larger Sam’s Club purchases, even if you’re getting a great price.

2. You may end up wasting food

You can save money on groceries at Sam’s Club by buying them in bulk. But when you buy perishables in bulk, you risk having items spoil on you before you finish them. And that’s not saving money — it’s wasting money.

You can reduce food waste by limiting bulk purchases to items your family eats almost daily. If you all drink milk every day, then yes, buy the gallon. And if you eat eggs most days of the week, then it could pay to buy the bulk pack. But if you only tend to eat strawberries once or twice a week, don’t buy a bulk haul from Sam’s Club, even if the price looks good.

For items you only eat on occasion, you may be better off paying more per ounce at a regular supermarket, but paying less all in. And if you swipe the right credit card at a regular supermarket, you can save even more in the form of cash back. Click here for a list of the best credit cards for grocery purchases.

3. You may end up making impulse purchases at the store

Sam’s Club is no ordinary store. You’ll find everything from housewares to electronics to apparel on the shelves. But this could lead to serious overspending. If you’re on a tight budget where shelling out the money for bulk purchases leaves you unable to pay your credit card bills in full, then impulse buys could wreak major havoc on your finances.

If you can’t trust yourself to avoid impulse purchases at Sam’s Club, you may want to stick to a regular grocery store. You could also try making a shopping list each time you go to Sam’s Club and staying out of aisles that don’t contain a list item. But whether you’re able to hold to that pledge is up to you.

Be honest with yourself. It’s not worth it to save $10 or $15 a week on groceries if you’re going to come out with $30 in impulse purchases you don’t need.

Although Sam’s Club offers great prices and other benefits, as a member, you risk falling into these traps. And while you can work around them using the tips above, you may ultimately need to ask yourself whether it’s worth it to continue shopping at Sam’s Club, or whether you’re better off canceling your membership.

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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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Wondering how the Fed’s rate cuts are going to affect your wallet? Look no further than your mortgage for the biggest answers. Read on to learn more. [[{“value”:”

The Federal Reserve Board meets yet again on Nov. 6-7, 2024, and with that meeting, another cut to the federal funds rate is expected. Although mortgage rates are not directly impacted by the federal funds rate, they do tend to reflect the movement of this metric. With the federal funds rate on the decline, it’s reasonable to expect that mortgage rates will drop going into 2025 and may continue to drop throughout the year.

But what does this mean for you? And most importantly, how will 2025’s updated 30-year mortgage rates affect your wallet? There are a couple ways these changes can make a big dent.

If you already bought your home

If you bought your home already, it might seem as if there’s nothing a change in rates will do for you, but that really depends on when you bought your home. If you bought prior to spring 2022, you probably don’t need or want to make a move, since your interest rate is likely in the 5% range, or perhaps even below that.

However, if you bought more recently, especially after fall 2022, your rate is almost certainly in the 6% or higher range. Summer 2023 buyers are in the worst situation of all, likely in the 7% or higher range on their mortgage. If you’re in any of these groups, the lower interest rates that have already started to appear and that will be more prevalent in 2025 could save you a ton of money.

You’ll have to refinance your mortgage to take advantage of lower rates, but we’ve already made a list of refinance lenders for you to check out here. A refinance, especially early in your mortgage, can not only save you money every month, but also on the amount of interest you pay in the long term.

If you plan to buy a home in 2025

Planning to jump into the market in 2025 as a buyer? First-time buyers, especially, are going to continue to be in a hard place. Although it seems as if the median sales price of homes has kind of topped out, there’s still a huge issue of shortages of both the types of real estate people actually want to buy, and of listings overall, with Redfin reporting just three months of housing inventory in September 2024. (It usually takes closer to a four- to six-month supply to better balance the housing market.)

As such, you’ll really have to hustle to find a house that works well for you. The good news is that if home values remain more or less steady, you’re going to save a bunch of money every month over if you bought in 2024. How much, you ask?

Well, if you’re looking at a home for $425,000 and have a 5% down payment, your interest rate in May 2024, for example, might have been around 7.25%. The average rate for a 30-year fixed-rate mortgage is already down to 6.5% right now, but experts expect further cuts to the federal funds rate, which should help push that down even more. Let’s say it gets to 5.5% in 2025. The difference in the principal and interest portion of your monthly payment vs. a year earlier would be about $462 per month, or $5,542 per year.

Bookmark this page to compare mortgage interest rates from some of our favorite lenders.

2025’s mortgage rates promise more money in your pocket

Rates have been more or less historically average for the last couple of years, but with the Federal Reserve poised to make at least one more cut to the federal funds rate in 2024 and more in 2025, it’s very likely that 2025 will have much better mortgage rates than we’ve seen in a while.

This means that if you’re ready to buy, you should definitely get on it in 2025, and if you’ve already bought, it’s time to do the math and see if you will make out by refinancing your current mortgage loan into a lower priced mortgage. Depending on how long you plan to stay in your home, you may see substantial savings.

You can get ready now for your future mortgage by:

Reducing debt to improve your debt-to-income ratioContinuing to save for your down paymentLooking into down payment assistance for first-time home buyersMaking your payments on time to maintain your credit scoreNot applying for new credit lines to minimize hard inquiries on your credit report

Although none of us can see the future and we can only rely on forecasts for where interest rates may go, a solid shake of the ol’ Magic 8-Ball says that “signs point to yes” when it comes to a serious rate reduction in 2025 from previous highs.

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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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Mortgage rates have come down quite a bit, but this could be just the beginning. Check out how much you could save by waiting. [[{“value”:”

It’s far more expensive to buy a home now than it was just a few years ago. The average 30-year mortgage rate at the beginning of 2022 was about 3%, and it wasn’t unheard of to find a rate in the mid-2% range if you had strong credit.

And not only have mortgage rates more than doubled since that time, but home prices have risen sharply. Over the past five years, home prices have risen by a staggering 52%, including a gain of 18% over the past three years alone.

However, there could be some good news on the way. If you’ve been waiting on the sidelines to buy a home, it could get significantly more affordable if you hold off until 2025.

I’m not talking about home prices. In fact, the latest forecast from Zillow predicts that home values will rise by 0.9% over the next 12 months.

However, the Federal Reserve is widely expected to continue cutting its benchmark interest rate through at least 2025, and this could result in far lower mortgage rates than are available today. And even if home prices rise a little, you might be surprised at how much of a difference a lower mortgage rate can make.

It’s all about mortgage rates

Let’s look at a quick example to illustrate how much of a difference a lower mortgage rate could make. We’ll say that you’re shopping for a home with a $500,000 budget and are planning to make a 20% ($100,000) down payment.

If you were to get a rate of about 6.5% today, this would give you a monthly principal and interest payment of $3,290. This is significantly better than you probably would have been able to get a year ago, when the average 30-year mortgage rate peaked at nearly 8%.

However, most experts believe rates will fall in 2025. Fannie Mae recently predicted that the average 30-year mortgage rate will fall to 5.7% by the fourth quarter of next year, and the Mortgage Bankers Association has a similar forecast of 5.8%.

Splitting the difference, let’s say that in late 2025 you get a mortgage rate of 5.75%. In the above example, this would give you monthly principal and interest payments of $3,094. Comparing the two scenarios, this would save you:

$196 in interest per month$2,352 in interest per year$70,560 in interest over the 30-year loan term

So if interest rates behave as expected over the next year (and that’s a big if), waiting to buy a home can save you a lot of money.

If you’re in the market for a home, check out our updated list of the best mortgage lenders right now.

Two big caveats

With all of the above in mind, there are a few things that are important to emphasize. For one thing, mortgage rate predictions are just that — predictions. Nobody knows for sure what will happen, and there is absolutely no guarantee that you’ll be able to get a lower mortgage rate in 2025 than you can now.

Plus, if you buy a home now, you aren’t exactly locked into the same interest rate for the entire term of your mortgage. If rates fall, you can always work with one of the best refinance lenders and save on a new mortgage.

To be sure, refinancing isn’t free and you’ll end up paying some fees to do it. But the point is that if you find your dream home and can afford the monthly payments with the current rates, you don’t necessarily need to pass on it simply because you’re waiting for mortgage rates to come down.

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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.Matt Frankel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Zillow Group. The Motley Fool has a disclosure policy.

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