Money Management

Are you a landlord? Do you have a Costco membership? Find out why you should here. [[{“value”:”

Owning a rental house is far from a passive income source, but it can be a fulfilling way to pass the time, gain equity, and cash flow at some point. For many small-time landlords who own just a few units, Costco is a must-visit destination. You can find all kinds of supplies that you will need to maintain your homes at great prices that will help your budget go a lot further.

Without further hesitation, I present to you my top Costco picks for landlords.

1. Franklin 7000+ Stud Finder

Price: $33.99

Every landlord needs a stud finder so they hit studs and miss electrical cabling when doing DIY on their units. But more importantly, they need a chance to run the device across their bodies, declare they’ve “found one,” and pass the tradition on to their children.

There’s not much else to say here — stud finders for the win, and Costco stud finders for the winner.

2. Appliances

Price: $349 and up

As a landlord, your tenant is likely going to expect a few things from you, such as appliances. Whether you need a refrigerator, a stove, a dishwasher, or an over-the-range microwave, Costco has you covered.

Basic refrigerators start at $579 for an 18-cubic-foot top freezer refrigerator in white, or $599 for one in stainless steel. These will fit in most apartments or homes with very little worry (my house is impossible to get things into and mine fit just fine).

In addition, smooth top ranges start at $679, dishwashers start at $529, and over-the-range microwaves that include vents come in at $349.

3. Moen Flo Smart Water Monitor & Shutoff with 2 Smart Leak Detectors

Price: $529.99

There are some smart tools that are kind of useless for landlords, and better for homeowners, but this one is almost the polar opposite. Although homeowners can certainly benefit from knowing there’s a water leak, they’re also far more likely to notice the symptoms on their own. A landlord can only rely on their renters, who may be hesitant to report issues because they don’t want repair technicians coming into their homes.

Well, a smart water monitor solves that conundrum by constantly monitoring water pressure and reporting when anything isn’t right. It attaches directly to your plumbing, allowing the water to flow through it as it constantly checks the water pressure. When the water pressure drops, it knows right away, and so do you.

It might not necessarily be able to tell you where the issue is, but it will tell you there is one before your property suffers substantial water damage.

4. Gutter guards

Price: $39.99 and up

Water is the enemy of structures big and small, and one of the weak points of any rented home is the gutter system. Many renters don’t even know they need to maintain the gutters, and if you have a multifamily property, you may be the one on the hook for the cleaning regardless. Either way, making it easier to keep the water flowing is the name of the game.

Costco offers a couple of different styles of gutter guards that can be used with most gutter systems. You can choose from stainless steel numbers that can also help protect against wildfires, if your area is prone to them (no smoldering embers in the gutters is a good start) or aluminum clip-in guards that are better for ice and snow.

Gutter guards start at $39.99 for 24-foot lengths, they’re simple to install, and can literally prevent years and years of headaches if they’re checked and flushed once in a while.

5. Little Giant MegaLite+ 18 ft. Reach Ladder with Leg Levelers

Price: $189.99

There’s always that one weird space that’s hard to get to with a regular ladder, or you find yourself with one ladder that’s too short for the job, and the other is still at home in the garage. It happens every stinking time. That’s why you need one of these multi-position ladders.

Instead of hoping you can get there with eight feet of ladder, a multi-position ladder allows you to change the height of the ladder to a maximum of 18 feet of reach. You can also make one leg longer than the other for work over stairs, or use the leg levelers for work on uneven ground (like when you install those gutter guards).

Multi-position ladders are the stuff of legends, and this one is rated to hold 300 pounds — just don’t stand on the top step.

Thinking about becoming a landlord? Consider Costco

It might seem like a reach, but seriously, Costco has a lot of what you need for being a landlord. From tools to help you make repairs, monitors to keep you aware of problems as they happen, and even cleaning supplies to get your unit ready for the next tenant, there’s a ton Costco can offer you. The discounts can be substantial, which also helps to lower your operating costs without compromising the quality and long-term value of your property.

Top credit cards to use at Costco (and everywhere else!)

If you’re shopping with a debit card, you could be missing out on hundreds or even thousands of dollars each year. These versatile credit cards offer huge rewards everywhere, including Costco, and are rated the best cards of 2024 by our experts because they offer hefty sign-up bonuses and outstanding cash rewards. Plus, you’ll save on credit card interest because all of these recommendations include a competitive 0% interest period.

Click here to read our expert recommendations for free!

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.Kristi Waterworth has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Knowing your mortgage interest rate before you even start shopping for mortgages can give you a leg up. Read on to learn how your score affects them. [[{“value”:”

Getting a mortgage can be a nerve-wracking experience, especially when you find out that your credit score might determine the actual rate you pay. And while a 720 is considered a good score, the scoring system goes up to 850, which raises the question: “what will my mortgage rate actually be?”

Although we can’t tell you exactly what your mortgage rate will be, we can give you some idea how your credit score will affect your rate and other things related to your mortgage payment, like your private mortgage insurance premium.

How credit scores affect mortgage loans

I was a Realtor for a decade, and I worked with all kinds of borrowers, from first timers to chronic investors, and nearly everyone is worried about what their mortgage payment will look like.

The truth is that your credit score may affect your rate — but it might not, depending on the mortgage type you’re getting. Mortgages like the very popular FHA mortgage loan program only require that you have a credit score good enough to qualify. There’s no additional pricing baked in based on your credit score.

Since FHA is a government-backed mortgage, like VA and USDA loans, the risk of the lender being left holding an empty bag should the borrower default is excessively low, meaning that risk-based pricing doesn’t figure into the equation. All these borrowers are equal in risk as far as anybody is concerned.

However, for conventional loans purchased by Fannie Mae and Freddie Mac, penalty pricing does come into play, both for the loan itself and for any mortgage insurance associated with it.

Loan level price adjustments and conventional loans

I’m sorry if you came here looking for just a number and not an explanation as to how the number came about, but you got me as your writer, and here we are, on this educational road trip together.

When you borrow money from a mortgage lender using a conventional loan product, you’re not ever borrowing directly from Fannie Mae or Freddie Mac — instead, you’re borrowing from the lender. Its goal is to sell your loan to these institutions that purchase loans meeting specific criteria.

Because it’s a riskier situation for the banks, they’re pricing you based on your risk, rather than knowing beyond a shadow of a doubt that the government will have your back if you default. This is where loan level price adjustments (LLPA) come in.

With a score of 720, on a 30-year fixed-rate mortgage, loans destined for Fannie and Freddie may add from 0% to 1.25% to the base mortgage rate on the day you lock your loan offer in. It’s based on how much your loan-to-value ratio is — but it’s not straightforward.

Before we go further, your loan-to-value (LTV) ratio is a comparison of the amount you’ve borrowed to how much your home is actually worth. So, for example, if you borrow $300,000 to buy a $350,000 house, your LTV is 85.71%.

The highest LLPAs go to LTVs between 75% and 85%, and while it’s not stated as such, this has to be due to this group representing more lending risk, since lenders tend to assign higher rates to borrowers they construe as having higher risk. The 80% to 85% band has the highest LLPA across all credit scores.

If you have an LTV below 60%, well, expect to have a loan at the base mortgage rate if your score is above 640, but LTVs either below 75% or above 90% have smaller LLPAs than the danger band between LTVs of 75% to 90%.

Another way your credit score can affect mortgage pricing: PMI

While your mortgage interest rate is important, so are the other expenses that will be part of your final mortgage payment. It’s fairly well-known that your homeowners insurance can be influenced by your credit score, but maybe less well understood that your mortgage insurance can, too.

If you’re borrowing a conventional mortgage with less than a 20% down payment, expect to pay private mortgage insurance as part of your payment. Unlike with the mortgage insurance premium for FHA loans, the PMI with conventional loans uses risk-based pricing that heavily considers your credit score.

One of the biggest providers of PMI to lenders, Mortgage Guaranty Insurance Corporation, MGIC, publishes its rate charts online, making it easy to take a stab at what your PMI costs may be.

With a 720 score, and a 30-year fixed rate mortgage, you can expect your premium for most conventional loan programs to start at 0.23% and go up to 0.87% yearly. That is to say, you’ll pay 0.23% to 0.87% of your outstanding loan balance yearly, divided into 12 payments, for the recommended coverage based on your loan’s LTV. The more you pay your mortgage down, the better the rate will get until you reach 80%, when you’ll no longer be required to carry PMI.

Your credit score doesn’t have to affect your mortgage rate

Although I’ve demonstrated how your credit score can affect your mortgage rate, it certainly doesn’t have to, if you choose to go with a government-insured mortgage rather than a conventional loan. If you’re shopping for loans, it’s always smart to price both an FHA loan and a conventional loan, because as you can see, the interest rate on the conventional mortgage can vary widely depending on your circumstances. Sometimes FHA really is the better deal.

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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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Plan for a stress-free retirement by tackling key debts now. Read on to learn which debts to pay off first. [[{“value”:”

Retirement is supposed to be the golden age of kicking back with a lemonade (or something stronger) on the porch, not dodging calls from debt collectors, or crying into your monthly budget. But adults between the ages of 65 and 74 have an average debt of $134,950.

So, here’s a not-so-top-secret list of debts to knock out before you hang up your work boots to truly enjoy your hard-earned freedom without financial worries crashing the party.

Essential debts to eliminate

Focus on these debts first and foremost.

1. Credit card debt

Credit card debt is notoriously sneaky, piling up with high interest rates (according to the Federal Reserve, the average rate is at a whopping 21.59% APR) that can quickly become overwhelming. This type of debt can devour your savings faster than you can say “retirement,” making it a top priority to pay off. Without the burden of these high rates, you’ll not only save money but also significantly reduce financial stress.

2. Car loans

Car loans are another strain on your retirement budget. As you move into a phase of life where you might not need a car as much or you’re looking to cut down on expenses, having a car payment can be more of a burden than a benefit. Paying off your car loan frees up cash in your monthly budget and removes a fixed expense, allowing more flexibility in your retirement spending.

3. Personal loans

Types of personal loans can vary widely, from loans for emergency expenses to funds for big life events. Regardless of the reason you borrowed, personal loans often come with higher interest rates and are not tied to any asset that appreciates in value, making them a smart debt to clear out before retirement. Without these payments, your financial picture in retirement becomes much clearer and easier to manage.

Other debts: To pay or not to pay?

These debts might be a toss-up.

1. Mortgage

The decision to pay off your mortgage before retirement isn’t cut and dried. While being mortgage free can significantly reduce your monthly expenses and provide peace of mind, it might not always be the best financial move, depending on your situation.

If your mortgage has a low interest rate (rates have ranged from 3.98% to 6.80% from 2013-2023) and your investments are yielding higher returns, it might make sense to keep the mortgage and let your money work harder elsewhere. If you’ve been investing in the S&P 500 alone for a decade already, you could expect to gain about 10% back on your investment.

2. Medical

Medical debts can be tricky because they directly relate to your health. Entering retirement with outstanding medical bills can increase stress and financial strain, especially as healthcare needs typically increase with age. If possible, prioritize settling these debts so you can focus on enjoying retirement without looming past healthcare costs.

How to evaluate debts

Deciding which debts to pay off before you retire requires a thoughtful approach. Here are key factors to consider when evaluating your debts.

1. Interest rate analysis

Start with the interest rates. High-interest debts, like those on credit cards or certain payday loans, continuously drain your finances. Evaluating the interest costs over time reveals these debts are often more expensive than they’re worth. Prioritize high-interest debts for repayment to minimize financial bleed.

2. Tax implications

Some debts offer tax breaks that can influence your decision. For example, mortgage interest is deductible on your federal tax returns, which may make it financially sensible to maintain this debt if the tax benefits outweigh the costs of early repayment. Analyze these benefits carefully against the savings from paying off the debt.

3. Emotional and psychological impact

Consider the emotional weight of your debts. Some debts may cause significant stress or anxiety, which their repayment could alleviate. This factor varies from person to person, but is crucial in determining how to manage your debts.

4. Impact on retirement cash flows

Assess how each debt affects your cash flow during retirement. Monthly debt payments can significantly impact your fixed retirement income. Evaluate if eliminating certain debts could free up funds for a more comfortable lifestyle.

5. Longevity of the debt

Consider the remaining term of the debt. If only a few years are left on a mortgage with a manageable and low interest rate, continuing the payments might be more sensible. Conversely, long-term loans with high interest rates or substantial monthly payments might be better to pay off.

6. Opportunity cost

What could you do with the money if it wasn’t used to pay off debt? If the money used for early debt repayment could yield a higher return if invested, it might be worth keeping the debt, especially if its interest rate is lower than the expected return on your investments.

By analyzing these factors, you can better decide which debts to clear before retirement, balancing economic efficiency with personal satisfaction and strategic financial planning. This approach helps ensure a financially optimized and stress-free retirement.

Navigating which debts to pay off before retiring can feel overwhelming, but the principle is straightforward: eliminate high-interest and non-asset-backed debts first. For other debts, weigh the financial against the psychological benefits.

The ultimate goal is to transition into retirement with minimal financial obligations, giving you the freedom to enjoy your golden years without the weight of debt. Remember, retirement should be about relaxation and enjoyment, not about financial burdens.

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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 bank with a branch in your neighborhood is the best fit for your cash, right? Maybe not. Learn about the advantages of online banks here. [[{“value”:”

Gone are the days where we had to choose a bank based on branch location. In this digital world, you can pick a bank that exists fully online, with no branches whatsoever.

Let’s take a closer look at online banks and the advantages they offer for savings accounts, checking accounts, and more.

Online banks have some pretty sweet perks

If you’ve never considered thinking outside your neighborhood’s banks, here are a few great features of online banks.

Higher APYs

First and foremost, I have to mention the higher interest rates you’ll find on deposit accounts offered by online banks. This is due to the lower overhead costs incurred by online banks — they don’t have branches to maintain.

At a local bank (or even a branch of a big national bank), the best you’ll often do for a savings account is just 0.01%. If you have $10,000 in your savings account, that’ll earn you just $1 in a year.

But put that $10,000 in a high-yield savings account earning 4.5% APY (10 times the national average), and if you can hang onto that rate for a full year, you’ll come out $460 richer — just for leaving the money in the account.

However, the 4% and 5% rates we’re seeing on high-yield savings accounts right now are outside the norm and are due to a higher federal funds rate that is likely to start declining soon. That said, you can still expect a higher rate than 0.01% from an online bank savings account — even at a rate of 1% or 2%, your $10,000 will earn you $100 or $200 in a year.

Fewer (or no) fees

Another major perk of online-only banks is the lack of fees. My savings account with a big national bank charges a monthly maintenance fee if my balance drops below a certain threshold. But my online bank has very few fees — no maintenance fees, no overdraft fees, and no excessive transactions fees.

Granted, for a brick-and-mortar bank, you may be able to meet certain requirements (like having paychecks directly deposited) to avoid a monthly fee. But wouldn’t it be nice not to have to worry about this at all?

Better customer service hours

How does 24/7 customer service access sound to you? Of course, with an online bank, that won’t be in-person customer service, but you’ll likely be able to speak to a human via phone or online chat anytime. My online bank even has a neat tool on its website that shows you the expected wait time if you call for help.

Savings tools

Want to take advantage of tools like savings buckets, round-ups, and charts that show you your progress over time? Online banks are ahead of the curve for saving smarter, not harder.

Savings buckets are my favorite online bank feature — they let you separate money in a single savings account into multiple sub-accounts, making it easier to save for different goals simultaneously.

Are online banks safe?

You might be wondering how safe online banks are — a lot of people find the notion of a bank branch they can stroll into during open hours very reassuring. But rest easy; as long as you’re opting for a reputable and FDIC-insured online bank, your cash will be safe in one (up to $250,000 per depositor, per FDIC-insured bank, per ownership category).

Read reviews of any bank you’re considering from personal finance authorities (like us here at The Ascent), as well as regular consumers. This’ll give you a sense of any potential issues with a given bank.

How do you know if an online bank isn’t right for you?

As much as it pains me to say, online banks might not be right for everyone. If you’re not comfortable with new technology, you might struggle to manage your money in an online account. And if face-to-face customer service is important to you, a local bank might just be the way to go. Finally, if you get paid in cash, an online bank may not be the right fit since you likely won’t be able to directly deposit cash into an online bank account.

In this case, I recommend looking around to see which bank or credit union will give you the best deal on fees and interest. Just because you’ve been with the same bank for years doesn’t mean you must remain there if there’s a better offer on the table.

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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 no-buy year can help you reduce spending and save money. Read on to learn more about it and how to pull it off. [[{“value”:”

TikTok trends can run the gamut from silly to straight-up bizarre. But given that household debt has only increased over the last 20 years (it reached $17.8 trillion, as of the second quarter of 2024, per data from the Federal Reserve Bank of New York), one recent trend may present a welcome practice for your wallet.

It’s called a no-buy year, and it can reduce impulse spending, increase awareness of your budget and finances, and help you save money. Here’s what you need to know about no-buy years, and how to do them the right way.

What is a no-buy year?

A no-buy year is a trend circulating on TikTok and YouTube where people are avoiding unnecessary purchases for a full year. It’s meant to address excessive and impulse spending. So it can result in saving money along the way, assuming you stick to the plan.

Despite the name, it’s generally understood that there are going to be exceptions here. After all, you do need to spend money on necessities, like rent, utilities, and groceries.

Four tips to have a successful no-buy year

There are a few key steps that you should take to set yourself up for a successful no-buy year.

1. Review your impulse spending habits

Before you start a no-buy year, it’s important to understand what you tend to spend money on, outside of necessities, especially if those tend to be impulse purchases. This way, you’ll have an idea of how much money you can save, which can help drive motivation as you embark on a no-buy year, and what your weaknesses are.

2. Set your own rules

Creating your own personal goals and rules for what you want to get out of a no-buy year is essential, and these should be realistic. For example, you may have entertainment expenses, like a streaming subscription, that you’re not willing to forego for a year. Or you may set a budget for things like birthday gifts. You may also choose to adjust your timeline, instead opting for a no-buy month or quarter, depending on your circumstances.

3. Regularly review your progress

A year is a long time to focus on your spending habits, and it’s likely that you may stray from your own rules from time to time. Reviewing your progress on a regular basis, such as every month, can help you course correct when needed as well as recognize your accomplishments.

4. Have a plan for the money you save

Having a goal to save money by reducing impulse spending is great. But you need to know what you want to do with that cash once you begin a no-buy year, too. This means having a plan for where that cash is going, such as paying off debt. You might also plan to deposit money into a high-yield savings account.

Impulse spending can be a difficult habit to tackle. But with intentional planning, you can change the way that you approach spending and save money in the process.

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Click here to read our full review for free and apply in just 2 minutes.

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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