Money Management

Credit cards can be beneficial. But keep reading to learn more about when using credit cards as a gig worker may be risky. [[{“value”:”

Nationally, credit card balances have hit more than $1.1 trillion. While that’s a huge number, what matters most is how credit card debt impacts individuals. As a gig worker, you may not be able to approach credit cards in the same way as traditional employees. In fact, here are some of the special challenges you could face.

Being overly optimistic may land you in high-interest debt

According to an article in Psychology Today, entrepreneurs like gig workers are more optimistic than those with traditional jobs. In fact, compared to people in salaried jobs, entrepreneurs tend to be over-optimistic about their chances of success. While optimism is undeniably beneficial in many ways, it can be a problem if it leads you into debt.

Let’s say your gig is seasonal, or you have periods where you’re without a job. That means you’re not earning money during that time. If you’re convinced the calls will start rolling in despite a lack of evidence, you may pull your credit card out too often and find yourself in a spiral of high-interest debt.

That’s not to say you ever want to lose your optimism. It just means that you need a repayment plan, regardless of how busy you are professionally. For example, if business is slow and you’re not sure when you’ll work next, decide how you’re going to pay the credit card off, preferably without incurring interest.

Do this instead: If you don’t plan to pay the card balance in full, decide if you truly need the purchase you were about to make. If you absolutely must make the purchase and your credit score is high enough, consider applying for a 0% interest rate credit card. Typically, a 0% interest rate card gives you a set period of time to repay the debt without getting hit by interest charges.

Available credit can offer a false sense of security

Consider what you would do if your car broke down or you ran into an unexpected medical bill. If you shrug off the concern because you know you can always use a credit card to pay, you may have a false sense of security.

These scenarios illustrate why:

Scenario No. 1: Your pet breaks its leg, and you’re hit with a $1,000 veterinary bill. You pay the bill using a credit card with a 17% APR and make a monthly payment to the credit card company of $50. By continuing to make a $50 per month payment, you pay the bill off in full in two years and pay an extra $187 in interest.Scenario No. 2: Knowing your work may be hit or miss, you build an emergency savings account. You pull money from the account to pay the veterinary bill. Instead of making monthly credit card payments or covering the cost of interest, you use that money to rebuild your emergency fund. This is the preferable scenario.

Do this instead: Take a little time to build an emergency fund before going all-in on gig work, if possible. Doing so will save you money and can prevent unnecessary stress.

Credit cards can make tracking difficult

If you use one credit card for all business-related expenses and another for personal purchases, you can easily track which is which at tax time. However, that’s not always how small business owners like you use credit cards. If you sort of shoot from the hip when it’s time to make a purchase and use the credit card with the highest available balance, it’s easy to mix expenses.

Let’s say you pick up T-shirts with the name of your business printed on them. During the same visit, you find baseball caps on sale that will be great for your softball team. You use the same credit card to pay for both items. While it’s possible you’ll remember which purchase was for the business and which was personal, you’ll still face the hassle of going through each purchase made throughout the year to sort it out. The IRS may accept the T-shirts as a legitimate business expense, but it won’t be as happy with the hats for your softball team.

Do this instead: If you’re going to use credit cards, use one card exclusively for business expenses.

Finally, if you’re a gig worker looking for the best credit card for your business, compare cards until you find one with the right features for you. As long as you use it wisely, it’s a handy tool to have in your pocket. Remember this one rule: Use the card, but don’t allow the card to use you.

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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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The cost of streaming content can really add up. Read on to see if you’re spending more than you should be. [[{“value”:”

We all have monthly bills that we really have no choice but to pay. I have to cover my mortgage every month to ensure I have a roof over my family’s head. And while I can shop for groceries carefully to limit my spending, I have to put food on the table.

But the five — yes, five — different streaming services I pay for are definitely not necessities. And at times, I’ve questioned whether I should be spending the money on so many streaming packages at the same time.

Recent data, however, confirms that I may not be such an outlier in terms of paying for streaming content. It turns out the typical American’s monthly spending is remarkably similar to mine.

What consumers are spending on streaming content

The average American spends $75 a month on in-home streaming and entertainment, according to a recent survey by Equitable. And I’ll come clean and say that’s comparable to what I spend, too. I’ll also be even more honest and admit that on top of my five streaming services, I also spend money each month on cable.

But here’s the thing. All of the streaming services I pay for give me good value.

There are five of us in my household, and while I can’t remember the last time I turned on Disney+, my kids watch it all the time. I also don’t tend to watch Hulu, but my husband does, so it’s worth keeping. And while I do pay for ESPN+ somewhat grudgingly, since certain games are exclusive to that service and I’d have to miss them without a subscription, bundling ESPN+ with Disney+ and Hulu saves me some money.

In fact, the way I see it, spending $75 a month on streaming content is the equivalent of spending $2.50 per day. And in the absence of at-home entertainment, you might spend a lot more than $2.50 to keep busy for a few hours. So my philosophy is that if you’re using your streaming services, then you’re not overpaying — even if your personal spending total is more than $75.

Similarly, if you only have a single streaming service and pay just $15 a month for it, it may be that you’re wasting your money if you can’t remember the last time you watched it. So don’t assume that you’re not overpaying just because you only have one or two subscriptions.

Do a spending audit every few months to avoid wasting money

If you’re living paycheck to paycheck with no money in your savings account whatsoever, then it may be time to cancel one or even all of your streaming services until your financial situation improves. But if you’re doing fine financially and you’re enjoying your streaming content, then why not keep paying for it? You might spend a lot less than you would by having to pay for entertainment outside the home.

That said, one thing I try to do is audit my personal spending every three to four months to make sure the recurring expenses I’m paying for are still giving me value. Some time ago, I canceled HBO Max after realizing I was hardly ever watching it. And while I’ve since replaced it with something else, at least I’m not wasting money on a subscription I don’t use.

I suggest combing through your expenses — not just your streaming services, but everything you pay for on a monthly basis — once a quarter or so to make sure you’re not wasting money. But otherwise, if you’re spending money on streaming content you actually watch, don’t feel bad about it — even if you’re juggling multiple subscriptions like I am.

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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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Driving a minivan can be more expensive than you bargained for. Read on so you’re not caught off guard. [[{“value”:”

Back in 2014, I was pretty much forced to buy a minivan when I found out I was having twins. I knew my toddler wouldn’t be out of a car seat for a while, and there was no way I could cram two infant car seats on top of his into a single row of seats.

Trading in my sedan for a minivan dealt a pretty harsh blow to my wallet, since my old car was paid off and the minivan purchase required me to take out an auto loan. But adding a car payment to my monthly bills wasn’t the only extra expense I incurred. If you’re going from a regular car to a minivan, here are some costs to gear up for.

1. Higher auto insurance rates

A minivan purchase costs $6,489 more than a sedan purchase on average, according to The Zebra. And the more money your car costs, the more you’re likely to pay for auto insurance.

When I bought my minivan, my auto insurance premiums increased by hundreds of dollars that first year. And this was despite the fact that my minivan included more built-in safety features than my sedan offered.

Then again, having extra safety features doesn’t automatically translate to lower car insurance costs. Those fancy lane departure warning systems and backup cameras cost money to install, thereby adding to the value of your vehicle. So actually, despite being billed as features that may lower your likelihood of automobile damage, they can add to your insurance costs due to being features that are expensive to repair or replace.

2. Higher gas costs

Minivans are larger cars. And because of this, they tend to be less fuel-efficient than a regular car.

I can say from personal experience that my minivan basically guzzles gas. And while it does a little bit better on highways, I typically only get somewhere in the ballpark of 20 to 24 miles per gallon at maximum efficiency.

As such, since getting a minivan, my gas costs have increased. And while I do my best to save money on gas by filling up at Costco, which is the cheapest option in my town, it’s still a big ongoing expense.

3. Higher maintenance costs

My minivan doesn’t have a ton of high-end features. In spite of this, I’ve found that it costs about 20% more to do regular maintenance on my minivan than my old car. It also, for many years, cost more money to maintain my minivan than it did for my husband’s old hybrid car.

Of course, one thing you should know is that many auto shops are well-equipped to perform maintenance on a minivan, so don’t feel compelled to use your dealership’s services for tasks like oil changes. Unless your dealership throws in free maintenance as an incentive at the time of your purchase, a regular mechanic might leave you spending a lot less.

For me, driving a minivan isn’t really a choice. I need a larger car to accommodate my family (not just the kids, but our 70-something-pound dog, too). At this point, I’m used to the added expenses that come with owning it. But you don’t want those to throw off your budget early on, so make sure to plan for these extra costs if a minivan purchase is in your future.

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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.Maurie Backman 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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International travel can cost you a lot of money if you’re not careful. Read on for one writer’s new favorite tip to save on cellphone service. [[{“value”:”

Traveling outside the U.S. gives you the chance to explore the wider world, try new foods, and attempt to decipher unfamiliar accents. But it also comes with the distinct possibility of spending a ton of money for the privilege.

I recently found a new way to stay connected on an international trip, and using it saved me $80. Read on for the details — and stay to the end for a few more easy ways to save small amounts of money that could add up fast.

It’s important to stay connected — without overspending

Being a geriatric millennial is wild — I didn’t get a cellphone until my senior year of high school (and no smartphone until I was 25!), but I couldn’t imagine my life without one now. So it goes without saying that I’d need data service on a recent trip across the pond to Northern England. My cellphone service provider is Verizon Wireless, and I’ve always been pleased with the coverage map in the U.S. — plus my unlimited data plan gives me service in Canada for no extra cost.

Traveling in Europe is a different story, however. My Verizon option was to use TravelPass at a cost of $10 per day. Since I would need service for nine days, I was looking at $90 extra tacked onto my cellphone bill for the month. Since I didn’t want to spring for this, I looked for another way to stay connected when I was off wifi.

My colleague Lyle Daly here at The Ascent had written about eSIMs and specifically, Airalo, in one of his excellent travel tips articles. Since I own a fairly modern iPhone with eSIM capabilities, I did some digging. And I ended up purchasing an eSIM with 3 GB of data (valid for 30 days) from Airalo. My cost? Just $10 — a savings of $80 over what my TravelPass tab would’ve been.

Small savings on vacation can add up

As a veteran budget traveler, I’ve found ways to save money on trip costs both large and small. For bigger savings, I’ve taken far more road trip vacations than ones requiring me to fly to a destination. But somehow, it’s the little ways to save that feel the most satisfying. Here are a few I rely on.

Book a vacation rental instead of a hotel

I have long been a fan of vacation rentals for trips more than one or two nights long. I find them more comfortable than hotel rooms, and if I’m traveling with a companion, it’s nice to have more space to spread out. But opting for Airbnb or another private rental can be a money saver, too — especially in regard to your vacation food budget. I love to cook at home, and it’s not a hardship to plan to cook simple meals while I’m traveling, too.

Booking a rental with a kitchen means you can shop at a local grocery store for cheaper meal options than you’d find from any restaurant. On my Hawaiian vacation earlier this year (not a cheap place to visit), I saved hundreds of dollars by committing to eating two meals in the condo I rented most days, and going out for either lunch or dinner.

Use public transportation or walk when feasible

I’m an American who’s lived in rural or suburban areas for my entire life, which means I’m used to substandard public transportation. I love visiting places with great train and bus service because using it saves me money over renting a car or hailing an Uber.

For that matter, if you’re physically able and it’s safe to walk to tourist destinations you want to visit on your trip, consider it. You get the exercise, the money savings, and a unique perspective on the place you’re visiting — one you’d never experience if you were speeding along the road in a car.

Bring a credit card with no foreign transaction fees

If you like to travel outside the United States, this last tip is an absolute must. Foreign transaction fees usually amount to 3% of every purchase you make in a currency other than USD, and if you’re not careful about the credit cards you take on vacation, they can make your trip more expensive.

And sure, 3% doesn’t sound like a lot, but it can add up. If you spend $1,000 while you’re visiting another country, that could come with an extra $30 charge. And I don’t know about you, but I’d rather spend that $30 on a cheap lunch in an English pub than send it to my credit card issuer. Luckily, the best travel rewards credit cards come without this fee.

It pays to look for ways to save on your travels, even small ones — after all, if you save $50, $100, $150, or more on one trip, that’s more money available for your next one.

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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 Uber Technologies. The Motley Fool has a disclosure policy.

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