Money Management

Streaming service price hikes are becoming more common, impacting your budget. Read on for a few reasons to cancel a subscription (or two). [[{“value”:”

Streaming subscriptions offer a convenient way to enjoy entertainment at home and on the go. But these services come at a cost. While streaming services used to be very affordable, some of the most popular subscriptions now have a much higher price tag.

If you’re paying for apps like Hulu or Netflix, your checking account balance is likely feeling an impact. I’ll explain why you may want to consider ditching one or more streaming subscriptions.

Subscription costs continue to rise

Sadly, many streaming service providers have continued to announce subscription price increases over the last few years. If you’re feeling frustrated by this, you’re not alone.

Hulu is the latest company to announce higher prices. A few weeks ago, the streaming company updated the subscription rates listed on its website and sent out emails to current subscribers informing them that prices would rise Oct. 17, 2024.

Nearly every Hulu plan is impacted. To give you an idea of how much prices have climbed, let’s examine the price changes for the Hulu (no ads) plan since its introduction.

When the plan was first offered in 2015, subscribers were charged $11.99 a month. But that’s no longer the case today.

Let’s take a closer look at how the price has changed since 2015:

October 2021: $12.99October 2022: $14.99October 2023: $17.99October 2024: $18.99

As you can see, the subscription price has changed significantly in less than a decade. Other streaming services have also adjusted prices, requiring customers to pay more to watch. Subscribers should be aware of how their wallets are being impacted.

Canceling or downgrading your plans can help

If you’re sick of paying more for streaming content, it may be time to make a change. Canceling one or more of your plans could offer savings. Another option is to downgrade your plan to a cheaper subscription.

I recently looked at my own streaming spending and decided it was time to lower my entertainment costs. I pay for the following streaming services:

Hulu (no ads): $17.99 monthlySpotify Premium Family: $19.99 monthly

That’s $455.76 annually. The cost of Hulu (no ads) will increase to $18.99 in October, bringing my annual spending closer to $500. I felt ready to make a change.

I will keep my Spotify Premium Family plan, but I subscribed to the annual Hulu with ads plan for $79.99. Since I made this change right before the price increases, I locked in the current price instead of paying the upcoming $99.99 rate. No longer subscribing to the ad-free monthly plan and becoming an annual ad-supported subscriber will save me over $135.

This isn’t the only way I am combating rising prices. I also take advantage of the opportunity to earn credit card rewards on my streaming subscriptions.

Want to earn cash back when you pay your Netflix bill? Check out our list of the best cash back credit cards to discover how easy it is to earn cash rewards.

Take an assessment of how much you’re spending

Do you know how much money you’re spending on streaming subscriptions? Now is a good time to assess your spending.

If you need help determining which subscriptions you have or how much you’re paying, you can review your bank and credit card statements for recent charges. Tally up each subscription and its price so you can decide if you need to make any changes.

Another option is to use one of the best budgeting apps. These digital tools can help you review your recent purchases and set new spending limits so you can alter your habits.

Small changes can improve your financial health

Are you feeling stressed about rising streaming service costs? Every expense you pay adds up and impacts your wallet. Don’t be afraid to assess your spending and make subscription changes that allow you to make choices that are more in alignment with your financial goals.

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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.Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.

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If the Federal Reserve keeps cutting rates, it’s likely that mortgage interest rates will follow. See what that could mean to you. [[{“value”:”

The Federal Reserve recently cut its benchmark interest rate for the first time since March 2020, when an emergency cut was enacted at the onset of the COVID-19 pandemic. As anyone who has tried to buy a house, car, or pretty much anything else requiring financing can tell you, high interest rates make it much more expensive to borrow money.

So, with the Fed finally cutting interest rates, many would-be home buyers are optimistic that we’ll finally get some relief. While the days of 3% mortgage rates aren’t likely to return anytime soon, here’s a rundown of where mortgage affordability stands now and what could come next.

Are you in the market for a home? Check your rates with our top mortgage lenders right now.

Affording a home has become much easier

Before we go any further, it’s important to point out that buying a home for the first time has become far more affordable over the past year or so, even though home prices have not come down.

That’s because 30-year mortgage rates have fallen significantly from a high of 7.90% in late 2023 to 6.14%, according to the latest data from the Mortgage Bankers Association. Here’s what this means for would-be home buyers.

Let’s say that you want to purchase a $400,000 home with 20% down. You’ll need to obtain a $320,000 mortgage. At a 7.90% interest rate, you’d have a monthly principal and interest payment of $2,325, before taxes and insurance. However, with a 6.14% interest rate on a 30-year mortgage, your principal and interest payment would be $1,948 per month for the same home at the same price.

In other words, if you buy a $400,000 home today and receive the average interest rate, you’ll save $377 per month, $4,524 per year, and more than $135,000 in interest over the life of a 30-year mortgage. That difference in monthly payment can have a big impact on a family’s ability to afford a home.

Will mortgage rates continue to fall?

Unfortunately, there’s no way to predict future mortgage rates with accuracy. And it’s worth noting that a big reason mortgage rates have fallen so much in the past year is because of the anticipation of rate cuts.

With that in mind, here’s what we know so far.

First, the Fed is widely expected to continue to lower interest rates for at least the next couple of years. According to the economic projections of the policymakers themselves, the median expectation is for an additional half percentage point of rate cuts this year, another full percentage point next year, and yet another half percentage point in 2026.

While this would leave benchmark rates significantly higher than they were prior to 2022, it’s fair to say that if the Fed’s rate cuts proceed as expected, mortgage rates are likely to trend downward as well.

As one example, Fannie Mae predicts the average 30-year mortgage rate will fall to 5.7% by the end of 2025. The Mortgage Bankers Association sees a similar path, with a 2025 year-end estimate of 5.8%.

The bottom line

Of course, keep in mind that these are just estimates and projections, and nobody knows for sure what’s going to happen. After all, when mortgage rates were hovering around 3% at the start of 2022, how many experts do you think predicted we’d see rates more than double by the end of that year?

With that in mind, if the latest rate-cutting expectations turn into reality, it’s likely that getting a mortgage will be even cheaper in 2025. However, that doesn’t say anything about home prices, which have more to do with supply-and-demand dynamics than with the Fed’s rate cuts.

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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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Credit scores are useful, but they only tell you so much about your finances. Find out what other numbers to check regularly if you want to build wealth. [[{“value”:”

There’s no question that having an excellent credit score can make life easier. You might get a better mortgage rate, qualify for an excellent rewards credit card, or even rent an apartment more easily. It’s easy to become obsessed with what feels like a magic number, especially if you have a budgeting app or credit card that tracks your score for free.

All the same, your credit score doesn’t really tell you how you’re doing financially. Sure, it shows how well you can handle debt. But you could be living paycheck to paycheck with limited savings, terrified about your lack of retirement funds, and still have a great credit score.

Here are three better ways to track your financial health.

1. Your emergency fund balance

How much money do you have in savings to cover you when life throws you a curveball? If the answer is not a lot, you’re not alone. A recent Empower survey showed that around 4 in 10 Americans couldn’t afford an emergency expense of $400. The difficulty is that you don’t have anything to protect you if you lose your job or have to pay, say, a big medical bill.

What to aim for

Many financial advisers suggest you set aside three to six months’ worth of living expenses. The exact amount depends on your situation. If you’re the main breadwinner with several people who rely on your income, you may want a bigger safety net than someone who lives alone and has several sources of income.

Some top high-yield savings accounts pay rates that are nine- or 10-times the national average. Those high APYs can help you reach your savings goals. For example, you can earn 5.11% APY with the Western Alliance Bank High-Yield Savings Premier account. Click here to learn more and open an account today.

Look over your essential expenses such as housing, bills, food, and transportation. If they come to around $5,000 a month, you’d need to aim for $15,000 to $30,000 in your emergency fund. If that feels like an impossible target, start with something lower. You don’t have to get there overnight — transfer a small amount into your savings every month and watch it grow.

2. Your net worth

Your net worth is a snapshot of your financial situation right now. It’s a great way to track how you’re doing financially. It’s essentially your assets (what you own) minus your liabilities (what you owe). It shows you whether you are building wealth, which is a good indicator of things like your readiness for retirement.

To calculate your net worth:

Add up the value of your assets. That includes cash in your savings and checking accounts, your investments, and the value of your house.Add up the amount you owe. That includes your mortgage, loans, and credit card balance.Subtract your liabilities from your assets. That will give you your net worth.

Your net worth is not a static number, and what matters is how it changes over time. Aim to calculate your net worth every year, to help you set goals, measure your progress, and make financial decisions.

What to aim for

The median net worth in the U.S. is $192,700, per Fool.com research. But your ideal net worth depends on your situation, income, age, and more. Compare your net worth with median figures for people in your age group to see where you stand.

Use the medians below to set yourself a target. Factor in what your net worth is now and how you plan to improve it in the coming years and decades.

3. DTI ratio

Your debt-to-income ratio is how much of your income goes toward debt payments. It shows whether you are carrying a manageable amount of debt.

To calculate your DTI ratio:

Add up how much you spend on debt each month. That includes your mortgage, loans, and credit card payments.Divide your total debt costs by your gross income. That’s your income before taxes and other deductions.Multiply by 100. This will give you a percentage.

What to aim for

A low DTI means your debt is manageable and you’ll have more cash to invest or spend on other bills. If you want to take out a mortgage or borrow money, the lower your DTI, the better. If you have a high DTI, it is time to prioritize debt repayments urgently. If you’re able to increase your income via a new job, extra hours, or a side hustle, so much the better.

These are Wells Fargo’s broad DTI guidelines:

Bottom line

When you get caught up in the day-to-day pressures of managing money, you can lose the big picture. Tracking your emergency savings, net worth, and DTI can help you keep focus. Not only that, but those numbers are more useful than a credit score because they will help you build wealth over time.

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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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You don’t want to have too little or too much savings. Here’s how to strike a good balance. [[{“value”:”

Many of us take the money we have in the bank for granted. But as of 2022, a good 37% of Americans could not afford an unplanned $400 expense, according to the Federal Reserve. So if you’re in a position where you’re wondering if you have too much money in savings, that’s a pretty good place to be.

At the same time, you don’t want to overfund your savings account, because doing so could mean missing out on better returns elsewhere. It’s important to try to strike the right balance.

The best way to use a savings account

A savings account is a good place to park some cash for near-term purchases. And you should also make it your emergency fund’s home.

To figure out if you’ve overfunded your savings account, you’ll need to decide how much money you want on hand for unplanned expenses. The general rule of thumb is to keep enough cash around to cover at least three full months of essential bills. Beyond that, there’s wiggle room.

Depending on your comfort level and the type of job and expenses you have, you may decide that you need a six-month emergency fund. Or, you may even want more protection than that, which is totally fine.

Of course, if you’re going to maintain a larger emergency fund, you should try to earn the highest return on it possible. Click here to see our list of the best high-yield savings accounts.

But if you have money in a savings account beyond what you need for an emergency fund and near-term expenses or goals, then it’s a good idea to try to find the rest of your cash a new home.

You can do more with your money by investing it

Sometimes, it’s worth giving up a larger return on your money for peace of mind. You should never invest your emergency fund because if it loses value, you may not be able to cover whatever expense you’re facing.

But for money that’s not earmarked for emergencies, investing is the way to go. That’s because the stock market is likely to deliver a much higher return on your money over time than a savings account will.

Right now, savings accounts are paying around 4% to 4.5%, but these rates aren’t the norm. And they’re likely to fall as the Federal Reserve continues to lower its benchmark interest rate.

But the S&P 500’s average annual return over the past 50 years is 10%. So if you invest extra money in a similar index fund for several years or decades, there’s a good chance your portfolio will do similarly. For example, if you invest $5,000 today at a yearly 10% return, in 25 years, you’ll be looking at over $54,000.

Now, you may be thinking, “OK, sounds good, but how on earth do I find the right stocks to pick?” But don’t worry if you don’t know much about investing. Most brokerage accounts make it easy to load up on investments like S&P 500 ETFs (exchange-traded funds), which basically allow you to put your money into the broad stock market without having to be an expert.

Check out our list of the best online brokerage accounts so you can start putting your extra money to work.

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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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Opening a credit card isn’t a decision to take lightly. Learn about the warning signs that it’s not a good time to apply for a new card. [[{“value”:”

With the kinds of benefits that top credit cards offer, it’s always tempting to add a new one to your wallet. Maybe you have your eye on a card with a big sign-up bonus, high cash back rates on your biggest expenses, or luxurious travel benefits.

But there are situations where opening a credit card could cost you. If any of the following are true, then it’s not a good time to get a new card.

1. You’re already in credit card debt

Credit card debt is extremely expensive. The average interest rate on credit cards that are assessed interest is 22.76%, according to the Federal Reserve. To put that into perspective, a $10,000 balance would cost you $2,276 per year at that interest rate.

If you’re in credit card debt, you should prioritize paying it off. Opening a new credit card doesn’t help you with that. In fact, doing so could hold you back. You’ll have more spending power, since your new card will have its own credit line. That could lead to spending more and getting deeper into debt.

Now, there’s one exception to this rule. It could make sense to open a balance transfer card. This type of card is designed for paying down debt with a 0% intro APR on balance transfers. You can transfer over your existing credit card debt, and then pay it down interest-free during your new card’s 0% intro APR period.

Ready to pay down credit card debt faster and save on interest? Check out our list of the best balance transfer cards to find the right card for you.

2. You’re going to apply for a loan soon

Planning to apply for a mortgage, auto loan, or personal loan? Hold off on any credit card applications until after you’ve done that and gotten approved for the loan you want.

Any time you apply for a loan, you want your credit score to be as high as possible. Even a small decrease in your credit score could mean paying a higher interest rate. And on large loans, a slightly higher interest rate could still cost you tens or even hundreds of thousands of dollars.

When you apply for a credit card, it causes your credit score to drop by a small amount. To avoid this, don’t apply for any credit cards for at least six months (and ideally 12 months) before a loan application.

3. You’ve missed credit card payments on your current cards

Missing bill payments is never good, and there are a few ways that missing credit card payments affects you financially. You could be charged a late fee. Card issuers will normally waive your first late fee if you ask, but this is only a one-time courtesy.

If you’re late by 30 days or more, the card issuer can report it on your credit history. A single late payment on your credit history could decrease your credit score by over 100 points.

Lots of people have forgotten to make a credit card payment, so it’s not something to beat yourself up about. But you should address this issue before applying for any new credit cards. After all, a new card means you’ll have another monthly payment to make.

The easiest way to never miss a credit card payment is to set up autopay. As long as there’s enough money in your bank account, your credit card will always be paid on time. If you want to make your payments yourself, you could set up a monthly reminder in your calendar app of choice.

Knowing when to wait on a credit card application

Credit cards can help you or hurt you financially. By applying for new cards at the right time, you’re more likely to benefit from them. If you’re in credit card debt or have been missing payments, focus on fixing that first before getting a new card. And if you have a loan application on the horizon, wait until it’s done to submit any new credit card applications.

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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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