Money Management

As a brand-new Costco member, I was eager to take my bulk-buying game to the next level. Read on to see how I did on my first trip to the warehouse club. [[{“value”:”

I’m probably not the typical Costco member. I share my home with three cats, and no other humans. I don’t have a ton of fridge and freezer space (and don’t want to absorb the credit card hit of buying a new appliance right now), so I can’t store bulk perishable food, like produce, meat, and frozen foods.

And I detest crowds, so my recent first trip to Costco was planned out like a triage mission. I deliberately visited on a weekday morning and arrived at opening time, so I could have as stress-free a shopping experience as possible. As it turned out, though, I had a great time — and I saved myself quite a bit of money by buying certain items at Costco instead of my local grocery store.

Let’s take a closer look at five of them.

1. Cotton swabs

Is there any more useful invention than the humble cotton swab? This is one product I refuse to buy generic — I will always spring for the extra cost for Q-Tips, because in my experience, the generic versions don’t have enough cotton on their ends to make them worthwhile.

I paid $9.49 for a three-pack of Q-Tips at Costco — the box came with 1,750 swabs, for a per-swab price of $0.005. At my local grocery store, I’d pay double per swab for Q-Tips — $0.01 each.

2. Vanilla extract

I love to bake from scratch, so I probably go through more vanilla extract than the average person. Plus, I just bought a house with an amazing kitchen, so I’m looking forward to churning out many baked goods over the long cold winter months.

I paid $9.99 for a whopping 16 fluid ounces of vanilla extract, for $0.62 per ounce. If I buy vanilla at the grocery store, I get it in much smaller quantities and for a much higher price. My grocery store has McCormick vanilla extract for $26.99 for a measly four ounces — $6.75 per ounce. Oof.

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3. Canned tuna

My cats are a fan of this next purchase — if they hear the can opener, they come running. And if you like to maintain a stocked pantry like I do, canned tuna is an item worth keeping on hand at all times.

I bought an eight-pack of Bumble Bee albacore tuna in water for $16.79 at Costco, or $2.10 per can. At my grocery store, a single can is selling for $2.79.

4. Sweetener packets

If you use artificial sweetener in your tea or coffee, the chances are good you have a preferred brand. My pick is Splenda, which comes in cheerful yellow packets — I always have some in my purse, in case a given coffee shop doesn’t stock it.

I was thrilled to buy a giant box of 1,000 Splenda packets at Costco for just $18.69 — or just under $0.02 apiece. At my grocery store, I’d pay $5.79 for 100 packets, or a cost of almost $0.06 each.

5. Toilet paper

One of the reasons I finally joined Costco was because I now have more storage space for bulk buys as a new homeowner. I now have a basement that is mostly empty, along with closets on both floors of my home. I visited Costco without a set shopping list in mind, other than toilet paper and perhaps some type of baked goods.

I paid $19.99 for 30 rolls of Kirkland Signature Bath Tissue, for a cost of $0.66 per roll. I always buy my grocery store’s brand of toilet paper, and I can get 12 rolls of that for $12.49, or $1.04 per roll.

How did the savings shake out?

I had to know a dollar figure for how much I saved by buying all these items at Costco instead of my grocery store. Here’s a unit price breakdown:

To buy these items in bulk quantities at Costco, I spent $74.95. If I wanted to buy the same quantities of them at my grocery store, I would spend $239.02. That’s a savings of $164.07.

But by buying these items in bulk at Costco, I not only saved myself $164. I also saved myself time running to the grocery store. Granted, my closest Costco store is an hour away, meaning I can’t just pop in whenever the urge strikes me. But I know I’ll be able to maximize my Costco membership by buying items like the ones above on my infrequent trips to the warehouse.

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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 has a disclosure policy.

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Money market funds recently reached an all-time high. But learn how keeping too much cash in your money market account can hurt your finances. [[{“value”:”

If you have a money market account, or are keeping extra cash in money market funds in your brokerage cash management account, you’re not alone. Money market funds recently reached a new all-time high of $6.46 trillion, according to Bloomberg. Money market accounts are slightly different from money market funds, but both invest in similar types of short-term assets and deliver similar yields on cash.

There are many good reasons to keep your cash in a money market account. These accounts are low-risk and highly liquid, and those offered by reputable banks come with FDIC insurance. And your cash might earn a higher APY than the best CDs or savings accounts — as of this writing, some of the best money market accounts were offering 4.80%-5.20% APY.

But there’s such a thing as holding too much cash. If you’re feeling too risk-averse, or making money moves based on short-term fear instead of long-term planning, your money market account balance might be holding you back.

Let’s look at a few warning signs of too much money in your money market account.

1. You already have a healthy emergency savings fund

A classic rule of thumb in personal finance is that you should have three to six months’ worth of expenses in an emergency fund. For many people, that might mean keeping $15,000 to $30,000 in cash — in a safe, liquid, easy to access savings account or money market account (not a CD).

But if you have already built up more than “enough” for your emergency savings fund, you might be missing out on better investment opportunities by keeping too much cash in a money market account. You might want to think about investing some of that extra cash in different assets, like diversified stock or bond ETFs, that have potential for higher growth.

Want to get inspired to turn your extra non-emergency cash into higher-growth investments? Check out our list of the best online brokers and trading platforms to help your money work harder.

2. You’re not maxing out your IRA

Another sign you’re holding too much cash is that you’re not taking advantage of a tax-deductible traditional IRA or making after-tax contributions to a Roth IRA. For 2024, people under age 50 can contribute up to $7,000 (combined) to a traditional IRA and Roth IRA.

The tax benefits you get from maxing out your IRA could be worth a lot more than the APY on your money market account. Here’s why.

Traditional IRA: Immediate tax deduction

If you put money into a traditional IRA, you can get a tax deduction for some or all of that amount based on your income. For example, if you’re in the 22% tax bracket and you put $7,000 into a traditional IRA, this will cut your tax bill by about $1,540. That’s better than the $350 you could earn with 5% APY on $7,000 in one year.

Roth IRA: Tax-free withdrawals in retirement

Not everyone can use a Roth IRA (those with a higher income face restrictions), and a Roth IRA won’t give you an upfront tax deduction for the money you put in. But if your income and filing status qualify you to put money into a Roth IRA, your money can grow tax-free and give you tax-free withdrawals in retirement.

Are you already maxing out your IRA accounts? If so, feel free to keep extra cash in a money market account. If not, you might want to move more cash from your money market account into a traditional IRA or Roth IRA (based on which type of account you qualify for, and which tax benefits you prefer).

3. You’re not investing appropriately for your long-term goals

If you find yourself hoarding too much cash in safe but relatively low-yield cash accounts like a money market account, take a step back. Ask yourself:

How does this cash fit into my overall financial plans? Am I saving enough money for retirement? Am I getting the full employer match for my 401(k)? Am I investing in a diversified mix of stocks, bonds, and other assets in a way that is appropriate for my time horizon?

Sometimes people hold too much cash because they’re afraid of short-term risks. They’re afraid of losing their job, so they want to have a bigger-than-necessary emergency fund. They’re afraid of losing money to short-term ups and downs in the stock market, so instead of buying stocks in an appropriate way as part of a long-term strategy, they leave their money in cash.

Keeping too much money in cash can cause you to end up “timing the market” in a self-defeating way — and gradually miss out on long-term returns to help build wealth.

Bottom line

If you already have an adequate emergency fund, if you’re not maxing out your tax-advantaged retirement savings accounts, you might want to move some cash from your money market account to investments. Holding too much cash might feel good in the short term, but it can undermine your ability to grow your money with long-term investments.

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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.
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You may be eager to refinance now that mortgage rates are dropping. But should you? Ask these questions to find out. [[{“value”:”

It wasn’t so long ago that mortgage rates were creeping up toward the 8% mark. Such was the case last November, in fact.

But thankfully, mortgage rates have been falling in recent months. And in September, they hit 6.09% — their lowest level since February of 2023.

In light of this, you may be thinking of refinancing your mortgage if you got one at a higher rate. And if so, you should know that shopping around is a great way to save money on a new loan. Click here for our list of the top mortgage refinance lenders to compare rates and loan offerings.

But before you refinance, you’ll want to ask yourself these key questions to make sure it’s the right choice for you.

1. Do I plan to stay in my home for many more years?

Refinancing a mortgage could lead to a lower interest rate on your home loan — and lower monthly payments. But there’s a cost to refinancing — or, more accurately, numerous costs, from application fees to recording fees to all sorts of things in between.

All told, closing costs on a refinance could easily end up totaling 2% to 5% of your loan amount. For a $200,000 mortgage balance, that’s $4,000 to $10,000. So it’s important to make sure you plan to stay in your home long enough to recoup those fees and then reap some financial benefit afterward.

Say you’re charged $5,000 to refinance your mortgage, but your new loan results in monthly payments that are $200 lower than what you’re paying now. That means it’ll take you 25 months of lower payments just to break even on your $5,000 outlay.

If you expect to move in two years, refinancing won’t make sense. You’ll actually lose money in that case. But if you expect to be in your home another 10 years, it’s a different story. In that case, after 25 months, you’re saving money every single month you stay put.

2. Is my credit score in good shape?

The higher your credit score, the more likely you are to qualify for a great refinance rate. So before you apply for a new mortgage, check your credit score.

If it’s in the mid-700s or higher, you’re in great shape to not only get approved for a refinance, but snag a competitive rate along with it. If your score is in the lower 700s, you’re still in good shape, but a slight boost could leave you paying less interest on your new loan.

And if your credit score is below a 700, you may want to work on giving it a more substantial lift before you apply for a new mortgage. You can boost your credit score by being on time with debt payments and reducing credit card balances.

Checking your credit report for errors is also important. A mistake that leads lenders to believe you’re a risky borrower — like a delinquent debt you never actually racked up — is something you’ll want to correct.

3. Can I afford to wait for rates to come down even more?

Mortgage rates are more competitive today than they were for much of the year. But in the coming months, borrowing rates across a variety of loan products, mortgages included, are expected to fall as the Fed continues to lower its benchmark interest rate.

Last month, the Fed made its first rate cut in years, and it’s likely to be the first cut of many. If you can afford your current mortgage payments, you may want to wait until later in 2024 or early 2025 to refinance. That could result in an even lower interest rate on your new loan.

However, if you’re struggling to make your mortgage payments today and can potentially lower the interest rate on your home loan by about 1% or more based on current rates, then refinancing immediately may be your best option. You don’t want to risk falling behind on mortgage payments and damaging your credit in the process. Plus, in an extreme situation, falling behind on mortgage payments could put you at risk of foreclosure.

It’s natural to get excited about refinancing given where mortgage rates are at today compared to roughly this time last year. But before you apply for a new home loan, run through these questions to make sure that’s a move that makes financial sense.

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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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CDs have undeniable perks — but for most savers, a high-yield savings account is the preferable option. Here’s why. [[{“value”:”

The Federal Reserve has finally decided to take the U.S. economy into a cycle of rate cuts. On Sept. 18, it elected to cut its benchmark interest rate by a whopping half percentage point, and many consumer interest rates tend to move along with the federal funds rate.

This is especially true of rates on accounts like savings, CDs, and money market accounts. You might have already noticed rates falling on these, and wondered whether you should rush to lock up your savings in a CD (which has a fixed rate, as opposed to the variable rates of savings accounts). For most people, the answer is no.

Here’s why a humble high-yield savings account (HYSA) is typically the better option for your cash.

Savings accounts are accessible

The first reason to opt for a savings account over a CD is their approachability and accessibility. Click here to open one of the best high-yield savings accounts for as little as $0 — and start earning interest on your savings.

CDs, on the other hand, often have a higher minimum opening deposit — some of the best CDs require you to deposit $500 or as much as $2,500 or more to open the account. This can be a problem if you’re new to CDs or to saving money in general, especially if the best rate you can find for a given CD term is with a bank that has a high deposit requirement you can’t meet.

Savings accounts keep your cash liquid

Savings accounts are also an excellent place to keep your emergency fund and other money you’ll need sooner rather than later. You might be limited in how many withdrawals you can make in any given month, thanks to old rules under Regulation D, but even if you can’t withdraw more often than six or 10 times a month, that’s not likely to be a problem most months. But if your emergency fund is in a CD, you’ll have to pay an early withdrawal penalty to access it.

Getting your cash out of an online HYSA will likely involve an extra step (namely, sending money to a linked account you can withdraw from), but it doesn’t need to be an onerous one.

I wanted the option to access my savings via a debit card and ATM withdrawals, so I opened a checking account with the same online bank. Now I can withdraw from savings just by signing into my account on the bank’s website or mobile app and transferring it from savings to checking.

CDs are better for these circumstances

So why bother with CDs at all then? Should you just forget they exist? Definitely not! CDs can be part of your financial picture, but they are best suited to specific circumstances.

Let’s say you’ve got $10,000 you intend to use as a car down payment a year from now. One year is not enough time to make investing that $10,000 in the stock market a good idea — there’s too much risk of loss in stocks over the short term.

But you could put your $10,000 into a 1-year CD now and lock in a rate of, say, 4%. You’ll earn more than $400 on your money, and if you open your CD with an FDIC-insured bank, you won’t be at risk of losing it to bank failure.

Retirees should consider CDs, too, because they can help keep inflation from eroding the value of cash. If you’re hoping to generate regular income (from interest payouts) and ensure shorter-term savings have a locked-in interest rate, CDs can be a great tool to achieve that.

Stick with savings

Yes, rates on savings accounts are now falling — my own high-yield savings account just dropped to 4.00% from 4.20%. It’s a bummer. But I’m still hanging onto that account. It’s where I keep my emergency fund, tax payments, and money for short-term goals, like travel.

If you don’t have a high-yield savings account yet, you definitely should. Even after the federal funds rate falls further, a HYSA will still be worth 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.

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Been waiting to list your home? Read on to see why October may be the perfect time. [[{“value”:”

When mortgage rates fell to record lows in 2020 and 2021, many buyers rushed to purchase homes. And many existing borrowers were quick to refinance their home loans. But because rates climbed substantially in 2022 and remained high in 2023 and 2024, buyer demand decreased. And so did housing inventory.

In August, there was a 4.2-month supply of available homes on the real estate market, according to the National Association of Realtors. That’s not as low a level as what buyers faced earlier on in the year. But it’s also still well below the six-month supply that’s often needed to meet buyer demand in full.

Of course, the reason housing inventory has been sluggish is simple. Homeowners don’t want to sell when doing so means giving up the record-low mortgage rates they’re sitting on.

But now that mortgage rates are starting to fall, it’s a good time to sell your home. And you may want to get moving in October specifically.

Why October could be the sweet spot for home sellers

The less competition you have when you list your home, the higher an offer you’re likely to get. At the same time, you also want to sell at a time when mortgage rates aren’t such a turnoff for buyers. And October fits the bill in both regards.

As mentioned above, there’s still a shortage of available homes on the market. If you list your home today, your property may only be one of several for sale in your area.

At the same time, mortgage rates have fallen over the last several weeks. And they’re now at roughly their lowest level since February of 2023. This means that buyers may be motivated to sign mortgages. And it means that buyers may be drawn to your property because they don’t have many other choices. All told, that’s a win for you.

Plus, if you’re looking to sell your home, it means you’re likely buying a replacement home. While you may not be able to lock in as low a mortgage rate today as you perhaps did in 2020 or 2021, you’re still likely to get a lower rate than you could at the start of 2024.

Plus, if you shop around for a mortgage, you might score a great deal. Check out this list of our favorite mortgage lenders to save big on a home loan.

Set yourself up for success

October may be the perfect time to sell a home because there’s not a ton of competition and there’s just enough interest from buyers due to falling mortgage rates. But it’s important to set your home up for success.

First, do a walkthrough and make a list of items that need to be repaired. If your budget is limited, focus on fixing components that are broken rather than making improvements.

Next, work on your home’s curb appeal. The fall colors might turn your otherwise ordinary street into a leaf peeper’s paradise, so use that to your advantage by keeping your lawn maintained and your bushes properly trimmed. You may also want to invest in some fall plants, like mums, which are easy to care for (just water them every other day) and inexpensive to buy (you can typically find potted ones for $30 or less).

Finally, declutter, and then declutter some more. The neater your home looks, the more interested buyers are likely to be.

Though October may not traditionally be the most popular month to sell or buy a home, now’s a great time to put a property on the market. But as mortgage rates continue to fall, you may find that more and more homeowners are interested in selling. If you list your home now, you can get in before there’s too much competition — and before you risk getting stuck with a lower selling price than you’re hoping for.

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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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I never thought I’d be a finance writer, but life is funny sometimes. Read on for my favorite hard-won knowledge and start managing your money better today. [[{“value”:”

I love my job. I’m a freelance finance writer and editor, and since I started doing this, I’ve learned about making a budget, using different financial accounts, and ways to save money in my everyday life. Here are the top three tips I’ve gleaned over the last few years — I bet they can help you, too.

1. Online banks have great features

It’s 2024, and banking has gone digital. What does this mean for you? With a few exceptions (which I’ll discuss below), you no longer have to opt for a bank that has branches in your neighborhood — you can choose one that exists fully on the internet and enjoy a wide range of perks and benefits.

Online banks don’t have branches you can visit — this is the biggest difference between them and traditional banks. But branches are expensive, so you’ll often be charged monthly maintenance fees and earn a piddly APY on your savings with a branch-based bank. An online bank can afford to pay higher APYs and charge minimal fees.

I earn 4.00% APY on my savings with an online bank and you can too! Click here to view our favorite high-yield savings accounts and choose the right one for you.

With an online bank, you’ll also enjoy a modern mobile app (where you can deposit checks, move money around, and maybe even use savings buckets). And customer service might not be in-person, but it could be available 24/7. Oh, and online banks aren’t any less “safe” than your neighborhood bank — they fall under the purview of the FDIC too.

OK, so when shouldn’t you opt for an online bank?

Cash is king — for you, anyway

If you deal in cash often, especially if you make cash deposits, an online bank will present problems for you. Many don’t accept cash deposits. The workaround is depositing your cash in another bank, and then transferring it to the online bank. This is more trouble than you might want to go to, especially if you’ll need to do it often.

You like face-to-face help

The other reason not to choose an online bank is in-person customer service, which isn’t offered by online banks. If it’s really important that you have the option to speak to a human face to face if you have a question about your account, you should opt for a branch-based bank instead. I still recommend evaluating savings rates and other features to find the best one for you, though.

2. Investing doesn’t have to be complicated

I’m pretty new to the world of investing, and one reason I held back for so long (besides not having excess cash to invest; more on that below) was that it seemed difficult to understand. I didn’t like the idea of sending hard-earned money off to a stock broker and not really knowing where it was, what I was investing in, and whether I was likely to lose all of it.

Good news — investing can be easy. The best stock brokers make it simple and cheap to open an account and get started.

And if the prospect of picking stocks makes you quake in fear, you can opt to invest in exchange-traded funds (ETFs) instead. These track the performance of a particular stock index, like the S&P 500. And since the S&P 500 has had annualized returns of almost 10% over the last 50 years, if you can invest for the long term (ideally at least five to 10 years), you’re likely to come out ahead.

3. It’s never too late to get a fresh start with money

This last piece of advice is particularly personal for me. I spent the entirety of my adult life earning a low salary in jobs that required a graduate degree, struggling with debt, and living paycheck to paycheck.

But changing careers and then starting as a freelancer here at The Ascent was my turning point. I was able to:

Pay off debt (and boost my credit score by 100 points in the process)Save money for emergencies and buy a home again (a goal I achieved earlier this year)As of two months ago, finally start investing for retirement

And I’m not a kid just out of college, either; I had more than a decade working in nonprofit museums and changed careers after reaching an executive-level position. I turned 40 this year, and the culture at large would have you believe that 40 is too old to make these kinds of changes to your life. Not so — it’s never too late to improve your circumstances and learn how to manage your money.

While I wish I’d been able to achieve more financial stability in my 20s and 30s, it’s still worth doing now. If you’d asked 35-year-old me whether she’d ever own a home again or have a retirement account or emergency fund, she’d have laughed and said no. But 40-year-old me has those things.

What I’ve learned so far as a finance writer has made me happier and more secure in how I manage my own money — and given me the confidence to help others. I’m interested to see what the next few years bring.

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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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