Money Management

Some people shop at Costco once a month. Read on to see why a weekly Costco run may be a better bet for you. [[{“value”:”

Many people who join Costco visit the store every month to stock up on bulk food purchases and household necessities. But then there are people like me who visit Costco weekly. If you’re wondering whether you should do the same, here are a few signs that a weekly Costco trip is a good idea for you.

1. You’re constantly running out of fresh food from the regular supermarket

If I were to buy things like vegetables, fruit, and eggs from my local supermarket, I’d probably have to make a return trip every two days. My family tends to go through these items quickly. A dozen eggs, for example, might be just enough to cover a single breakfast if all five of us are having omelets.

Buying things like produce and eggs in bulk makes not just good financial sense for my household, but logistical sense — as in, it saves me from making multiple repeat trips a week. If you’re constantly running out of perishable items you buy from your regular grocery store, then it may be time to incorporate a weekly Costco run into your routine so you can load up on those items in bulk instead.

And yes, you could simply buy more of those items at the grocery store. But if you’re going to load up in bulk, then you might as well take advantage of Costco’s bulk prices.

2. You’re great at budgeting and managing your bills

The problem with hitting up Costco every week is that you might shell out more money at once than at a regular supermarket. For example, let’s say you start buying not just more of your food at Costco, but also, things like toilet paper. Even though you can typically save on a per-roll basis at Costco, if you normally buy four rolls a week at your grocery store and you’re now buying 24 rolls at a time (albeit not as often), you’ll need to make sure you can cover that higher cost.

If you’re someone who’s good at budgeting and managing your household’s finances, though, then this shouldn’t be a problem. But if you switch to weekly Costco trips, make sure to keep tabs on your spending, especially in the beginning as you adjust to that routine. You don’t want to end up with credit card bills you can’t pay off in full by the time they’re due.

3. You’re very good at saying no to impulse buys

If there’s one pitfall I tend to encounter during my Costco shopping, it’s impulse purchases. It can be hard to say no to some of Costco’s tempting deals. And it’s hard to overlook them when they’re right there in front of you all over the store.

To be clear, I’ve been known to make impulsive purchases at the supermarket, too. But in that case, I’ll maybe buy a carton of ice cream on a whim for $4. At Costco, I might buy a $24 fleece jacket or a $30 kitchen gadget, which is apt to have a much larger impact on my budget.

But if you’re someone who’s good at saying no to impulse buys, then shopping at Costco on a weekly basis might benefit you financially. If you’re not spending on extras, you can enjoy the savings the store has to offer.

Thankfully, I don’t make impulsive purchases at Costco every time I shop there. And I actually build a little money into my budget for Costco extras so that I’m OK to spend a modest sum each month on things that weren’t on my list originally. You may want to use a similar system if you’re going to increase your Costco trips — even if you’re usually good at saying no to unplanned purchases.

Shopping at Costco every week isn’t necessarily something you need to do. It may not even be beneficial to you. But if these signs apply to you, then a weekly Costco run may be good for your wallet — and your schedule.

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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.JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and JPMorgan Chase. The Motley Fool has a disclosure policy.

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There’s a reason it pays to open a CD right now. Read on to see why you shouldn’t procrastinate. [[{“value”:”

The decision to open a CD isn’t one to take lightly. You don’t have to put as much thought into making a deposit to your savings account, because you can withdraw money from savings at any time. But with a CD, there can be costly penalties for taking an early withdrawal. You need to make sure you’re comfortable with the amount of money you’re putting into a CD, and the length or term you’ve chosen.

That said, September 2024 happens to be a great time to open a CD. If you’ve been thinking about doing so, you may want to take action — specifically before the midpoint of the month. And there’s a big reason why.

Lock in that 5% CD while you can

The reason CD rates are up today is because the Federal Reserve’s benchmark interest rate is sitting at a 23-year high. The Fed began raising that benchmark interest rate, known as the federal funds rate, in 2022, to combat soaring inflation.

Since then, inflation has cooled. So following a series of rate hikes in 2022 and 2023, the Fed says it’s now ready to start lowering its benchmark rate. Once that happens, CD and savings account rates are likely to start falling. It pays to get ahead of that by opening a CD while rates are still at their strongest.

Why the rush to open a CD by the midpoint of the month? The Fed’s next opportunity to lower rates is at its Sept. 17-18 meeting.

Some banks have already reacted to the Fed’s anticipated rate cut by lowering their CD rates preemptively. But you might still be able to lock in a 5% CD if you act quickly enough.

Make sure a CD is right for you

While September is a great time to open a CD, you also want to make sure you’re not making a mistake by committing to one. Ask yourself these questions:

Will opening a CD still leave me with an adequate emergency fund? You want enough cash on hand to cover at least three full months of essential bills.Do I have large expenses on the horizon? If you’ve been putting off a home or car repair, you may want to hang onto more of your cash and wait on a CD, even if it means missing out on today’s rates.Am I saving for a goal that’s more than five years away? If so, you should skip the CD and invest your money instead. You’re likely to earn a much higher return in an investment portfolio over time than with CDs.

But if you’re confident that a CD is right for you, shop around for rates in the next few days and take that leap. And if not, don’t sweat it. While the days of 5% CDs may be numbered, it’s not as though CD rates are going to go from where they are today to 2% overnight.

There’s a good chance CD rates will still be appealing well into 2025. Don’t feel bad if September isn’t the right time to commit to a CD. You’re better off waiting a few months if necessary than rushing into a decision you ultimately regret.

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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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Housing prices are way up, and so is mortgage debt. How much is considered average today? Read on to find out. [[{“value”:”

For most American homeowners with mortgages, the mortgage term can sure feel like forever. With home purchase prices at $412,300 for the second quarter of 2024, it’s easy to assume that the average mortgage balance is quite high, but you may be surprised at the number.

Knowing how you compare to other homeowners can help you make big financial decisions, including whether to downsize or spend a little bit more to buy your dream home. Of course, all of this is also heavily influenced by mortgage rates, as well.

What’s the average American mortgage balance?

Let’s get right to it, shall we? According to Experian’s reporting, the average American carried $244,498 in mortgage debt as of Q3 2023 (this is the most recent data). It’s up quite a lot from pre-pandemic balances, which were $199,990 in Q3 2018 and $204,315 in Q3 2019.

This makes sense because the cost of housing shot up dramatically during and after the pandemic. Most people have to borrow some of their housing costs, so with that goes higher mortgage balances.

Those with the highest balances in 2023 were millennials, at $299,869, and those with the lowest were the silent generation, at just $142,644.

Mortgage debt managed

Having mortgage debt is not the worst thing in the world. It’s generally considered a positive type of debt, both for the credit boost it gives and for the value it provides. Unlike credit cards, for example, the debt from a mortgage is generally on an asset that’s increasing in value and provides a hedge against housing cost inflation.

However, it can also be difficult to really do what you want with your life if you’re juggling a large debt burden, positive or not. Managing that mortgage debt and making it more friendly to your lifestyle is the key here. You have a couple of options.

Refinancing

Refinancing can be a tricky decision to make when you’re trying to manage your mortgage debt. On one hand, you’ve got a shiny new loan with a lower payment (you did get a lower payment, right?), but on the other, you could end up paying more in interest by refinancing at the wrong time or under the wrong circumstances.

In general, you’ll do best if you refinance early in your mortgage, since you pay most of the interest in the first decade. For example, if you borrow $300,000 at 6.5% interest on a 30-year fixed rate mortgage, you’ll pay a total of $382,633 in interest — just over half of which, $196,869 — is paid in the first decade.

So, the longer you wait for a lower rate, the less likely that a refinance makes sense, since you’re taking much bigger monthly bites out of your principal by year 10 and are paying much less interest.

Making extra payments

If instead of making your payment smaller, you want to make your term shorter, you can talk to a mortgage lender about refinancing into a shorter-term mortgage — or you can just do it yourself.

Most of the time, mortgages don’t have a prepayment penalty, so you can make as many extra principal payments as you want in a year, and that’ll help reduce the length of your mortgage without you having to spend extra for a refinance or reset your interest clock.

It’s pretty incredible what just one extra mortgage payment a year can do to a 30-year fixed-rate mortgage. If we use the example above, your $300K loan at 6.5% has a principal and interest payment of $1,896. If you make 13 payments of $1,896 yearly, you’ll save yourself $90,545 in interest over 30 years, and cut your payoff term down to 289 months, or just a little bit over 24 years.

If you make two extra payments a year, $3,792, you’ll shorten your term to 242 months, or just over 20 years. You’ll also save $144,278 in interest.

It’s OK if you can’t always make an extra payment, or if you can only pay a little extra every month. Even paying an extra $100 a month with each of your mortgage payments will cut four years off your repayment time and save you $60,994 in interest.

Your mortgage balance and you

Although it’s nice to know where you are in comparison to other Americans when it comes to mortgage debt, the truth is that your life is your own, and sometimes you need the house you need. It could be in a more expensive place than the average home, or possibly you need a bigger house for a multi-generational family or a home-based business.

Whatever your mortgage balance is, don’t focus so much on the number — instead, consider how it fits into your long-term financial plans.

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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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