Money Management

Americans are spending more money on housing than in the past. Here’s how you can lower your housing costs. [[{“value”:”

Of the various monthly bills Americans face, housing is easily the largest. Recent research amassed by The Motley Fool Ascent found that as of 2023, Americans spent an average of $2,120 per month on housing, or $25,436 per year. That’s a 5% increase from 2022.

If you’re having a hard time sticking to a budget because housing eats up such a large chunk of your income, then it may be time to look at ways to lower that expense. Here are some options, depending on whether you own a home or rent.

If you own a home

If you own a home, picking up and moving to a less expensive place isn’t exactly easy. But you may be able to make your current home more affordable.

First, see if refinancing your mortgage makes sense for your situation. If you signed your loan back in 2020 or 2021, when mortgage rates were at record lows, then there may not be any savings opportunities right now (or, frankly, in your lifetime, because sub-3% mortgages may be a thing of the past).

But if you signed your mortgage in 2023, for example, then perhaps you’re locked into a rate that’s well above 7%. Even though mortgage rates are up slightly this October compared to September, the average 30-year loan rate as of Oct. 10 was 6.32%.

If you locked in a mortgage last year at 7.4%, then a rate of 6.32% is a big improvement, so it pays to see what refinance offers you qualify for. Click here for a list of the best mortgage lenders to reach out to.

Another option worth considering is seeing if you can make money from your home. If you have a finished basement you’re not using, you may be able to rent it out (but first check with your local zoning authority to make sure that’s legal).

You may also be able to rent out your home on a short-term basis — for example, if you’re going home for the holidays for 10 days and live in an area near tourist attractions. Someone may be willing to rent your home for that period, which puts extra cash in your pocket. And platforms like Airbnb and Vrbo make finding a short-term renter a snap.

If you rent a home

If you’re a renter and are having trouble keeping up with your housing payments, you may be able to move once your lease comes up for renewal. But if the cost of a move will outweigh your monthly savings on rent, or if you’re already in a pretty cheap rental given your area, then getting a roommate could be a good bet. A roommate gives you someone to not only split rent with, but share in the cost of utilities.

Another option? Try negotiating with your landlord if you’re a tenant with a strong track record of paying on time.

One thing landlords do not enjoy is having to fill vacancies. Rentals that sit empty cost landlords money. If you’ve been in your home for a couple of years and have paid on time every month, call your landlord and ask if there’s any wiggle room.

Say you’re paying $1,500 a month in rent for a one-bedroom apartment, and you really need to shave $100 off of your monthly costs. You could point out to your landlord that if your unit sits vacant for even a single month, your landlord is out $1,500. If they’re willing to let you pay $1,400 a month, they’re only losing $1,200 — but gaining the benefit of keeping a reliable tenant.

It’s not so shocking that housing expenses rose from 2022 to 2023. After all, expenses in general tend to increase from one year to the next. But if you’re having a hard time managing your bills given what you spend on housing, then it pays to find ways to lower that expense.

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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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A former bankruptcy attorney shows you the steps to negotiate your debts and regain control of your financial future. Keep reading to see how. [[{“value”:”

I spent many years as a bankruptcy attorney. It was a satisfying profession because my clients had gotten in over their heads for one reason or another (lost a job, illness, or something else) and my job was to help them get out of debt and breathe a little easier. Sometimes that meant helping them get a debt consolidation loan or file for bankruptcy, and occasionally, it meant negotiating with their creditors.

Today we are going to drill down on that last one more deeply.

The good news is that if you have substantial debt, yes, it is quite possible to negotiate with your creditors and get them to accept less than what you owe. Here is my guide on how to do so effectively and settle for less.

1. Understand your financial situation

Before reaching out to your creditors, it is important that you have a solid and thorough understanding of your financial situation. A vague idea that you have problems won’t suffice. Instead, gather all relevant documents, including:

Account statements: Know exactly how much you owe each creditor.Income and expenses: Create a budget to see what you can realistically afford to pay.Credit report: Check for inaccuracies that might affect your negotiations.

Having this information will empower you during the negotiation process.

2. Prepare your strategy

When approaching creditors, preparation is key.

First, you need to be able to show each individual creditor that you really are underwater and that paying off all of your debts would be impossible. Given that, you are nevertheless looking to negotiate in good faith, with the proviso that you would need the creditor to settle for less than you owe.

Second, you will need a lump sum of money ready to pay off the debts. If, for example, credit card X agrees to take half of what you owe, the company will require that you pay that amount within, say, 30 days. In my experience, credit card companies will not settle and take a long-term payment plan. They will want payment soon, or immediately.

So you need some money set aside for this strategy to work. Consider applying for a hardship loan if you don’t have the cash on hand.

3. Initiate the negotiation

Once you are ready, it is time to reach out to each creditor. Here is how to do it effectively:

Find the right person: You’ll need to speak with the appropriate representative within the company to negotiate, which could be someone in the legal department.Be professional and respectful: Approach the conversation with a positive attitude. This can make a significant difference in how the representative responds.Explain your situation and make an offer: Explain your situation and tell them you are looking to settle. Do not be afraid to ask for a significant reduction. Having done many of these negotiations, I am telling you that it is common for creditors to settle for far less than the full amount owed.

4. Play the bankruptcy card

The single strongest piece of leverage you have in your negotiation is the threat of bankruptcy. Tell them, “I would much rather pay you something than file for Chapter 7 bankruptcy. To avoid that however, I can only afford to pay you 25% (or whatever) of what I owe you.” Note: almost a half a million people filed bankruptcy this past year.

In a Chapter 7 bankruptcy, all unsecured debts are completely wiped out. Most creditors would get nothing in that case. Suddenly your 25% offer does not look so ridiculous. You may not settle for 25%, it might be 50%. That is not uncommon.

Just remember, it is the legitimate threat of a Chapter 7 bankruptcy that will get their attention.

5. Get it in writing

If you settle for less than you owe, get the settlement amount in writing. Send a follow-up letter or email summarizing the discussion and any agreements made. It is crucial to document everything for your records, so consider sending a letter via certified mail for proof of delivery.

Negotiating your debts down is not only possible, it can be a powerful way to regain control of your finances. If it works, great! And if not, bankruptcy sounds worse than it is. You can recover from it within a year or two and have good credit again.

How? Yes, a bankruptcy stays on your credit report for 10 years — but within a year or two, you can start to qualify for credit cards and auto loans again. Pay those back in a timely manner, and the bankruptcy becomes less important to potential lenders as the years pass.

Good luck!

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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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Did you know there are a few easy strategies you can use to find the best deals at Costco? See how to start every month as a Costco member. [[{“value”:”

Costco membership prices recently went up, so it’s more important than ever to make sure you get enough value out of your Costco membership. Fortunately, Costco makes it easy to find great deals and take advantage of special offers every month.

If you’re a Costco member, let’s look at a few easy steps you should take every month to maximize your Costco membership — even if you never set foot in a warehouse.

1. Search Costco.com for limited time monthly deals

Your local Costco warehouse is not the only place to find great prices. Start each month as a Costco member by checking out Costco.com and searching for limited-time monthly deals. Each month, Costco highlights special deals (which are searchable on its website) with manufacturer’s savings and other big discounts.

Start with “Deals”

Near the top banner of the Costco website home page, click “Deals.”When the search results come up, find a product that displays a tag for “October Savings” (or whatever the current month is)Click the “October Savings” tag.This will take you to a new search list of all the limited time “this month only” special deals at Costco.

Enter a special search keyword

Go to Costco.com.In the search field, enter “October savings” (or whatever the current month is).This special keyword will bring up the current month’s best deals at Costco.

Doing this can help you find online-only deals, items available at your local warehouse, or both. Some of the manufacturer’s savings can help you save hundreds of dollars per item, on top of the already low Costco prices.

Want to take your Costco savings even farther? The best Costco credit cards help you earn an extra 2% to 3% (or more) of cash back on your Costco purchases. Click here to learn more and see our curated list of credit cards that deliver big rewards at Costco.

2. Check out new arrivals with “What’s New”

Another easy way to find great monthly deals at Costco is to go to the website and (at the very top of the home page) click “What’s New.” This will take you to a special list of new items.

A recent search for “What’s New,” based on my local warehouse in West Des Moines, Iowa, showed a wide range of new products, including:

iRobot Roomba robot vacuum and mopPiretti 303 Midnight Series Cuvio golf putterOaklyn canopy bedBarrington 10-player poker table with LED lightsKirkland Signature pet sofa

3. Go for an online Costco Treasure Hunt

Another way to get inspired with new Costco deals is to do an online Treasure Hunt. You don’t have to go to the Costco warehouse to do a Treasure Hunt (although sometimes it’s fun to wander the aisles). Instead, go to Costco.com and click “Treasure Hunt.”

This simple online Costco Treasure Hunt search, as of Oct. 8, 2024, brought up a surprising array of great deals, including:

Dyson Cyclone V10 Animal + Cordless Vacuum Cleaner ($399.99 price includes $100 of manufacturer’s savings valid through Oct. 20, 2024)Southwest Airlines $500 eGift Card (for only $449.99)Kenneth Cole Men’s Overcoat ($79.99)Kettler Tournament Indoor Foosball Table ($699.99)

4. Get last-minute savings “While Supplies Last”

Sometimes the best way to save big money at Costco is to buy items that are going out of stock. Costco sometimes has special deals on items that are tagged with “while supplies last.” To find these deals, go to Costco.com and:

Click the link at the top of the home screen for “While Supplies Last” orEnter the keyword: “whilesupplieslast” into the search bar.

It’s worth checking every month to see if you can find some great deals this way. But be aware that sometimes Costco’s “while supplies last” sales are a mixed bag; some of the products listed here don’t have the highest customer ratings.

5. Check Costco Next for partner brands

Costco’s website isn’t the only place to check for monthly savings. Some of the best online Costco deals come from a place that a lot of members might not know about: Costco Next. This is a special portal of Costco partner brands, where you can buy products directly from Costco partners with members-only pricing.

You can access the Costco Next portal from Costco.com or directly at costconext.com. Costco Next products come from premium brands and include everything from cookware to skincare, from luggage to bicycles, from luxury tents to faucets and sinks. Checking Costco Next once a month is a great way to keep an eye out for any surprising deals or get inspired for new products for your home.

Bottom line

Having a Costco membership is like belonging to a special club that helps you get great deals and curated discounts. But because Costco is constantly introducing new products and moving inventory off its shelves, it’s a good idea to check in once a month and see what new Costco deals are available now.

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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 positions in and recommends Costco Wholesale. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.

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Declaring bankruptcy isn’t your only option. Read on to explore a few other choices that may provide better outcomes for your financial situation. [[{“value”:”

For many years, I was a bankruptcy lawyer. As opposed to when I practiced litigation (suing people and defending lawsuits), bankruptcy was a dream practice. Nice people — respectable, responsible people — would come in to see me and they would be worried, distraught, overwhelmed.

No one really wanted to be there, they hadn’t planned on filing bankruptcy, they had always kept a budget, but typically, something had happened that was a tipping point. Maybe the husband lost a job, or the wife fell ill, or some other major life event occurred such that they could not pay their bills as they normally had and preferred to do.

Bankruptcy was a dream practice because usually I was able to solve their financial woes, and I had plenty of clients — almost half a million people filed last year. A Chapter 7 bankruptcy (or BK, as we call it) would eliminate most or all of their debts and they would get a clean slate. No litigation client ever wrote me a thank-you note, but plenty of my bankruptcy clients did.

That said, bankruptcy is not for everyone. There are times when it is not the right solution. It might be that:

You don’t want to give up your home equity. There is a limit to the amount of equity you can have and still file BK. Usually it is around $50K; it varies by state. If you had $100K in equity, a BK would not be a viable solution because the bankruptcy trustee would sell your home and use the equity amount above your state limit to pay off your creditors (you would keep the difference).You don’t want to ruin your credit. A bankruptcy will stay on your credit report for a decade.

If you find yourself in debt and you would rather not or cannot file BK, do you have options? Indeed you do. Here are three that I used with various clients.

1. Negotiations and debt settlement

One way out is to negotiate with your creditors. This approach involves working directly with the people and companies to whom you owe money to reduce the amount. The goal is to offer a lump-sum payment that is less than the total balance, and in exchange, the creditor agrees to forgive the remaining debt.

The key to doing this successfully is three-fold:

First, you need some money. I would suggest at least half of your total debt, but sometimes even 25% would work. This is the pool you will use (or your lawyer will use) to negotiate with. You may need to use home equity, or a special type of personal loan called a hardship loan to create this fund.Second, the other side needs to agree to take less than what you owe.And third, you need some leverage, a reason for the creditor to say yes.

The best leverage you can have is a legitimate threat of filing bankruptcy, because, with all unsecured debts, creditors get zero on the dollar. So the strategy is to call them up and say something like:

“We are in over our heads financially and would like to settle our debt with you. I can pay $0.10 on the dollar (it’s a good idea to start low), if that doesn’t work, we will very likely have to file Chapter 7 bankruptcy.”

Then you negotiate. The reason you need upfront money is that if the creditor agrees, they will want to be paid in full for the new, agreed-upon amount. If you can settle for $0.25 on the dollar, it’s a home run. But even settling for 50% is amazing.

2. Debt consolidation

Here, you have two options.

You can consolidate debt with the assistance of a nonprofit credit counseling agency, or a company that does the same thing. Here, you would combine all of your different debts into one manageable payment and the debt relief agency you are working with would work with all of your creditors to take the payment they arrange. Often, in exchange for the guarantee of the payment, interest rates are reduced.

The downside? While debt consolidation can simplify your payments, it does not reduce the amount you owe. That is why this is usually not a great solution.

Second, you can simply take out a debt consolidation loan and do this yourself. Click here to see our picks for the best consolidation loans.

3. Do nothing

This “solution” always surprised my clients, but it is the best course sometimes. If you are what we would have called “an empty pocket,” meaning you have no real assets nor savings, then it usually does not behoove your creditors to come after you, sue you, or harass you because it would only take up time and not get them anything in return.

Once creditors realize you are an empty pocket, they will likely just leave you alone. Yes, your credit will take a big hit as they write-off the debt, but then again, your credit already probably has taken a hit if this is your situation. After a while, without the harassment and paying off the debt, you will be able to get back on your feet and recover financially and get your credit score back up.

So the good news is, yes, you have options. Some are better than others, but hey, it sure beats not sleeping at night, right?

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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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Higher credit scores can come with life-changing perks. Read on to learn how raising your score can boost your finances. [[{“value”:”

Between managing everyday spending, paying off debt, and planning for the future, raising your credit score may not be very high on your list of priorities. You may even be wondering if it’s worth the hassle, as it can take months or even years to attain a high score, depending on your current score.

But if you want to qualify for the best credit cards and access top-tier financial tools, your credit score matters. Here’s what you need to know.

A high credit score future-proofs your finances

Credit scores typically range from 300 up to 850. The average FICO® Score is 715, while the average VantageScore is 702. A “good” FICO® Score starts at 670, and that figure is 661 for VantageScores.

So most Americans are already in good shape here. At this level, creditors and lenders tend to see you as a creditworthy individual.

In general, the higher your score, the better the rate you’ll get on car, home, and personal loans. You’ll also qualify for credit cards with better sign-up bonuses and balance transfer offers.

Looking for a way to start building your credit from scratch? Explore our guide to the top credit-building credit cards.

Even if you don’t need access to credit right now, taking the time to build a high score can be invaluable in the future. After all, you never know when you’ll need access to cash to get by in hard times. Plus, it can put you in a better position when you’re ready to take bigger steps, such as buying a home.

There are also times when a high credit score can be useful, even if you aren’t borrowing money. For example, if you’re a renter, you should note that most landlords will look for a score of at least 650 to qualify. But in a competitive rental market, such as Los Angeles or New York City, a higher score can be what you need to stand out and land your next place to live.

How credit scores work

Most of the top lenders use a FICO® Score to determine if you qualify for a loan. So tracking that score is a great way to start out on your credit score journey. For context, here’s how FICO calculates scores:

Payment history: 35%Amounts owed: 30%Length of credit history: 15%New credit: 10%Credit mix: 10%

How to raise your credit score

It’s important to understand that raising your score doesn’t have to be about attaining a perfect 850 score. Rather, it’s about getting your finances in shape. With that in mind, here are a few methods you can use to raise your FICO® Score.

Sign up for autopay. Keeping up with your various bills is an excellent way to increase your score. Setting up automatic payments can ensure that human error doesn’t negatively impact you.Pay down revolving debt. This is often the hardest part of raising your score, but it’s a vital part of accomplishing your goal. Tools like balance transfer cards and personal loans can be helpful here.Ask for credit limit increases. If you already have credit cards open, increasing your limits can help decrease your credit utilization ratio, boosting your score.Keep old accounts open. It can be tempting to cancel old credit cards, especially if you’ve had a history of accumulating credit card debt. But that can hurt your credit score by lowering the average age of your credit, so if possible, keep old accounts open and charge a small expense every few months to avoid having them canceled.

Taking steps to improve your score may seem relatively insignificant if you don’t need access to credit right now. But regardless of your current situation, credit scores are vital to your financial health and can help you borrow money at a lower interest rate in the future. So it’s well worth making the effort to boost your credit score.

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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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Buying groceries at Aldi has its benefits. But read on to see how you can truly maximize your grocery savings. [[{“value”:”

There’s a reason so many people love doing their food shopping at Aldi. Aldi is known for its low prices, and shopping there regularly could help you lower your household’s grocery budget.

But if you truly want to maximize your Aldi savings, you need the right strategies. Here are some worth employing so you can spend even less money and have a better shopping experience.

1. Use the right credit cards

Aldi accepts most major credit cards at its registers. But when it comes to grocery rewards, not all credit cards are created equal.

Some credit cards offer extra cash back on supermarket purchases, and those are the ones you should be tapping or swiping when you check out at Aldi. Click here for a list of the best credit cards for grocery rewards.

2. Go in expecting not to recognize any of the brands

If you’re new to Aldi, you may get thrown for a loop when you realize you don’t recognize most of the brands the store carries. But the whole reason Aldi is able to offer such incredible savings on groceries is that it largely stocks its shelves with little-known brands, as opposed to national brands that are far more recognizable.

Don’t assume those unknown brands are poor in quality, though. You may find that the peanut butter or spaghetti sauce you bring home tastes just as good as the brands you’re used to, only it’s cheaper because there wasn’t fancy packaging or money spent on marking.

3. Have a backup plan in case you can’t complete your shopping list

One pitfall of shopping at Aldi is that the store’s inventory can be inconsistent. If you’re a regular shopper, this is something you’re probably familiar with. But as a newbie, it can be annoying.

For a more pleasant experience, have realistic expectations, and assume off the bat that you may only be able to complete about 75% to 80% of your shopping list. From there, you’ll need a backup plan, whether it’s a quick trip to another supermarket in town or an online grocery order.

4. Avoid the Aisle of Shame if you’re on a budget

There’s a reason the Aldi Finds aisle is often dubbed the Aldi Aisle of Shame. That aisle is loaded with seasonal specials, from cooking tools to home decor items, at affordable prices.

But because that aisle tends to be loaded with non-grocery items, it can be a serious budget-buster. If your goal in shopping at Aldi is to save money, you may want to do yourself a favor and avoid that aisle altogether.

And if you know that’s not possible, incorporate an item or two from that aisle into your budget. You may, for example, in the course of setting your grocery spending limit for the week, add $10 for purchases from the Aldi Finds aisle if that’s a splurge you want to prioritize.

5. Do your shopping on Wednesday morning

If your goal is to save money on groceries, then you may want to try to do your Aldi shopping on Wednesday mornings. Eat This, Not That! reports that Aldi’s prices commonly drop between Tuesday nights and Wednesday mornings, since that aligns with Aldi’s advertising cycle.

However, markdowns can pop up at any time. So don’t stress if shopping at Aldi on Wednesday mornings just doesn’t work for you.

A few tweaks to your Aldi shopping could improve your store experience in a very big way. Use these tricks to make the most of Aldi — and enjoy the financial benefits of shopping there.

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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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