Money Management

As a new college grad, your auto insurance likely costs more than you want to spend. Read on to learn how to cut costs effectively. [[{“value”:”

Congratulations, recent grad! You’ve turned the tassel, grabbed your diploma, and are now stepping into the world of adult responsibilities. One of those tasks is managing your expenses; a big one for many is auto insurance. While the average person pays about $2,543 annually for full coverage, recent college grads can face higher rates. Navigating this can be tricky, especially if you’re trying to stretch every dollar. But don’t worry; we’re here to help you make sure you never overpay for auto insurance again.

Understand what you’re buying

First things first: understanding what auto insurance is and why you need it. Auto insurance is not just a legal requirement in most states; it’s a crucial financial safety net. It protects you against financial loss in case of accidents, theft, or damage to your vehicle. The main components include liability coverage (if you’re responsible for harm to others), collision coverage, and comprehensive coverage (which covers theft and non-collision damage).

Shop around

The golden rule for not overpaying is to shop around. Prices for the same coverage can vary dramatically from one company to another. Use online comparison tools to get a range of quotes. Don’t just look at the big-name companies; smaller regional insurers can sometimes offer lower rates.

Adjust your coverage wisely

As a recent grad, you might not need the same level of coverage as someone with a more established financial portfolio. Consider the value of your car. If you’re driving an older model that’s not worth much, you might skip collision and comprehensive coverage. It wouldn’t make financial sense to pay more in insurance each year than the car is worth. However, never skimp on liability coverage; this protects you from potentially devastating claims if you cause an accident.

Increase your deductible

Raising your deductible — the amount you pay out of pocket before your insurance kicks in — can significantly lower your premiums. If you’re comfortable with having a $1,000 deductible instead of $500, you could save on your monthly payments. Just make sure you have enough cash in a savings account to cover the deductible in case of an accident.

Look for discounts

Insurers offer a slew of discounts, and you might be surprised at what qualifies you for a lower rate. Here are a few common ones:

Good student discount: Maintaining a certain GPA can often snag you a discount.Multi-policy discounts: Bundling your auto insurance with renters or life insurance might lower overall costs.Safe driving discounts: Some insurers offer discounts if you use an app or device that monitors your driving habits and deems you a safe driver.Alumni associations: Check if your college or university has a partnership with an insurance provider.

Maintain a good credit score

Many people don’t realize that their credit score can influence their auto insurance rates. Insurers consider a good credit score as an indicator of financial responsibility and lower risk. Make sure to pay your bills on time, keep your credit card balances low, and check your credit reports regularly for any errors.

Review and update regularly

Your insurance needs will change over time. Make it a habit to review your policy at least once a year or after any major life event, like a move or a new job. Maybe you’re driving less because you work remotely now, or you’ve moved to a safer neighborhood — both could potentially lower your premiums.

Consider usage-based insurance

If you’re not a frequent driver, consider usage-based insurance (UBI). This type of insurance bases your rates on how much and how well you drive. The less you drive, the less you pay. It’s a great option for city dwellers who mainly leave their cars parked and use public transportation.

Navigating auto insurance isn’t the most thrilling aspect of adulting, but it’s crucial for protecting your finances. By understanding your needs, shopping around, and taking advantage of discounts and the right coverage, you can ensure you never overpay for auto insurance again. Remember, the cheapest policy isn’t always the best. Aim for value — adequate coverage at a competitive rate. Stay savvy, and drive safely!

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

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.

“}]] Read More 

Costco’s tire center may be a little cheaper, but Sam’s Club offers a few more perks. Learn more about warehouse club tire savings here. [[{“value”:”

Both Costco and Sam’s Club offer tires for sale in their warehouse clubs. But which store is the better one for this purchase? This head-to-head guide will help you make a choice about where to go the next time you need new tires for your vehicle.

Costco vs. Sam’s Club: Tire pricing

Both Costco and Sam’s Club have competitive prices on tires. And both regularly offer discounts when you buy a set of four. However, Costco’s prices tend to run a little cheaper than Sam’s Club — which is better for your budget.

The table below shows the cost of a set of four Michelin tires for a couple different vehicles from each store, as of April 30, 2024. These prices are just for the tires, not including tax or installation. As you can see, Costco’s price is a bit better than what Sam’s Club has on offer.

Costco vs. Sam’s Club: Tire service

Costco and Sam’s Club will both install your tires as well as allow you to order them. And both offer some perks when you do.

Costco provides:

Free installation with a tire purchaseA 5-year road hazard warranty for Costco members applicable only to the failed tires. This protects against tread, wear damage, and tire failureFree tire balancingInflation checksNitrogen tire installation, which retains tire pressure better over time compared with compressed airFlat repairsNew rubber valve stems

Sam’s Club offers:

Premium tire installation for $20 per tire for the premium package (including for duallies and motor homes)Road hazard protection, which expands the workmanship and materials warranty and provides protection for tire failure on a pro-rata basis.Lifetime tire balance, rotation, and free flat repairUp to four years of emergency roadside assistance as long as you remain an active Sam’s Club member. This can include towing, flat tire assistance, fuel lockout services, jump starts, and winching or extraction.New valve stems when the new tires are mountedA tire pressure monitoring system resetWaste tire disposal

As you can see, having tires installed at Sam’s Club means getting roadside assistance, while Costco’s tire service doesn’t offer this as a perk. Costco does offer roadside assistance, but only to Executive members who have purchased auto insurance through Costco’s partnership with Connect. And Sam’s Club doesn’t limit its road hazard warranty to five years; it can stay in effect as long as you’re a Sam’s Club member.

However, Sam’s does charge for its premium tire installation service — and Costco doesn’t. And since Sam’s tires are already a little more expensive in many situations, you’re paying more for this added protection. It may be worth it, but not if you already have roadside assistance through another source, like your auto insurance policy or AAA.

Ultimately, you may decide to just get your tires at whichever club you happen to have a membership with. But if you’re deciding between Costco and Sam’s Club and you know a tire purchase is in your near future, Costco has a slight edge over Sam’s for those who don’t need roadside assistance. For that reason, it may be your better bet.

Top credit card 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.Christy Bieber 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.

“}]] Read More 

CDs can create a great combination of maximum interest and predictable income. Here’s how to make them work for you. [[{“value”:”

If you’re a retiree (or plan to be a retiree) who relies on their investments for income, there are a few things you need. For one, you need to protect your nest egg, which is why CDs can be particularly appealing compared with investments like dividend stocks.

However, it’s also important to have consistent income as well as financial flexibility. Short-term CDs pay the highest rates right now and maximize your access to your money, but there’s no way to know what rate you’ll get after the CD matures. And long-term CDs can give you consistent income for several years, but you’ll pay a hefty penalty if you have to withdraw your money early.

What is a CD ladder?

The short definition is that a CD ladder involves dividing your money into equal amounts and using it to open several CDs with various maturity terms. As each CD matures, you roll the money into a new, long-term CD.

We’ll look at an example in the next section, but using this strategy has three key benefits:

You’ll always have some money in a CD that matures within a year. This allows you the flexibility to use some of the money if you need it, and if interest rates rise, will give you the ability to take advantage.You’ll have income that is more predictable than simply buying a 1-year CD, which is where you’d find the highest CD rates as of this writing. Sure, you can find a 1-year CD with an APY of more than 5.00%, but there’s no guarantee that CD rates will be anything close to that when it matures in a year.In most cases (just not right now), 5-year CDs have significantly higher yields than 1-year CDs. A CD ladder will let you take advantage of long-term interest rates.

Example of a CD ladder

As a hypothetical example, let’s say that you have $100,000 to invest in CDs. You might choose to create a CD ladder as follows:

$20,000 in a 1-year CD$20,000 in a 2-year CD$20,000 in a 3-year CD$20,000 in a 4-year CD$20,000 in a 5-year CD

The basic idea is that when the 1-year CD matures, you’ll use the money to open a new 5-year CD. Each year, one-fifth of your money will mature, and you’ll open a new 5-year CD with it. Eventually, you’ll have a portfolio composed of 5-year CDs with various lengths of time remaining to maturity.

You don’t necessarily need to open these CDs at the same bank. Some of our favorite banks don’t offer every CD term, and the best rate on a certain CD maturity might be at a specific bank.

Two important caveats

First, CDs typically renew automatically unless you act. And they renew into the same term length at the bank’s current CD rate. So, when your 2-year CD matures, it will renew into a new 2-year CD, and that’s not what you want with a CD ladder. Upon maturity, you’ll need to manually let the bank know that you intend to not renew and then open a new 5-year CD with the money.

Second, not all banks allow CD owners to withdraw the interest as it is paid to the account. If you plan to rely on your CDs for income to cover living expenses, be sure you’ll be allowed to access your interest income during the term.

A CD ladder can be part of a smart retirement income strategy

To be perfectly clear, I’m not saying that retirees should use all of their nest egg to create a CD ladder. It’s important to have a balanced portfolio, even in retirement. One common rule of thumb is that by subtracting your age from 110, you can determine the percentage of your portfolio that should be in stocks (or stock-based mutual funds and ETFs in your IRA), with the rest in fixed income investments like bonds or CDs.

In other words, if you’re 70, this implies a portfolio of about 40% stocks and 60% fixed income. But the best move is to speak with a financial planner to determine the ideal mix for you.

Having said that, creating a CD ladder can be a great way to put some of your fixed income allocation to work in a way that combines financial flexibility and maximum long-term consistent income.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

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.

“}]] Read More 

No one is immune to money management errors. Read on and learn how to avoid some common ones. [[{“value”:”

I’ve yet to come across someone who’s completely avoided making mistakes with their money. But while you can’t eliminate them entirely, it’s worth taking the time to consider some common missteps we all tend to make, and how to avoid them.

Here are five money mistakes Americans frequently make and some suggestions for how to get back on the right track.

1. Not building emergency savings

About half of Americans have less than $500 in their savings account. Not having enough emergency savings can add to financial stress when unexpected expenses creep up.

A depleted emergency fund typically leads to credit card charges when the inevitable emergency occurs. That’s not great for most people’s budgets, considering the average American household has $7,951 in credit card debt.

How to avoid it: Open a high-yield savings account — many pay 5% or higher right now — and automate your savings. Even arranging to have $25 or $50 per month sent into the account can go a long way toward covering the next emergency.

2. Putting off retirement planning

For many years, I completely avoided thinking about retirement savings. Putting money aside for retirement was what rich people do, or so I thought. But then I started seeing how quickly I could build retirement savings with an employee-sponsored 401(k), and my perspective changed.

I’ve been in tight financial situations, so I understand that the idea of saving for retirement when bills are due now isn’t always an option. But if you have access to a 401(k) plan through your job, putting just a little money into it can add up quickly.

For example, if you invest $100 per month in a 401(k) or individual retirement account (IRA), and earn the stock market’s annual historical rate of return of 10%, it will give you $68,730 in 20 years.

How to avoid it: Sign up for your employer’s 401(k) plan, especially if they match your contributions. If a 401(k) isn’t available, consider opening a brokerage account and buying a low-cost index fund that tracks the S&P 500.

3. Not having a will

I’m guilty of not having a will, so this one’s a reminder for me, too. The main reason to have a will is so that your property and assets go to whomever you want when you die. Without one, the laws in your state could dictate what happens.

It’s also a good idea to consider how your estate — no matter how big or small — will affect your loved ones if you don’t have a will. By being specific about your property and assets, you may be able to help family and friends avoid unnecessary conflict.

How to avoid it: Completing a will online is relatively inexpensive these days. LegalZoom charges just $199 for a basic will.

4. Not having the correct tax withholdings

In my first salaried job, I worried about getting my tax withholdings right. Knowing how much to withhold and what might affect your tax liabilities can be challenging, and I didn’t know where to start.

In general, it’s wise to revisit your tax withholdings whenever you experience a major life event. For example, if you’ve recently divorced, lost a job, or had a child, you may want to reevaluate how much taxes you’re having withheld.

How to avoid it: The IRS has a convenient tax withholding estimator. You can enter your income, deductions, and potential tax credits and receive an estimate of how much tax should be withheld from your paycheck.

5. Ignoring your credit score

Your credit score indicates to lenders how likely you are to repay loans on time. It’s not a perfect system, but it’s one of the best ways to gauge your creditworthiness.

You don’t need to check your credit score constantly, but you should have a general idea of your credit score at any given time. Staying informed is worth the effort — the higher your score, the more likely you are to get better interest rates when you borrow, which saves you money. Plus you could save on insurance costs and even have an easier time renting an apartment.

How to avoid it: Many banks and credit card companies will show you your credit score for free. If it’s lower than you want, there are proven ways to increase your score. Start with paying your bills on time, which accounts for 35% of your score. Then dive into your credit report to look for errors — if you find mistakes and have the credit bureau remove them, you could see a bump in your credit score.

Remember, we all make financial mistakes. The important thing to remember is to figure out which ones you might be making right now and how you can correct them. Whether it’s getting started with creating a will or opening up a savings account, we can all make progress toward our financial goals with a few simple steps.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

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.

“}]] Read More 

Planning to book airline tickets with American Airlines? Make sure you don’t overpay. Here are several ways to save money on American Airlines flights. [[{“value”:”

Traveling is fun, but airfare costs can add up quickly if you’re visiting a destination that requires you to fly. Before booking airfare, see if you can make strategic moves to keep more money in the bank. When flying with American Airlines, there are many opportunities to save on airfare costs. I’ll share a few ways to save $100 or more when buying American Airlines airfare.

Save $80 with a basic economy ticket

Booking a basic economy seat is one way to save money when flying with American Airlines. This is the most affordable fare type that the airline offers. But keep in mind that this ticket type has restrictions. For example, you can’t make changes to your flight.

You will also be unable to select your seat for free when booking your ticket; instead, you will be assigned a ticket after check-in or will have to pay to pre-select a seat unless you have elite status. But if you have a limited vacation budget and don’t mind the above restrictions, you can score a good deal on tickets for your next trip.

We reviewed prices for flights from Atlanta to Denver in October 2024, to get a feel for how much money one could save by choosing basic economy over American’s regular economy fare, main cabin. Based on our research, we could save $80 on a round-trip ticket flying basic economy. We’d pay $353.70 for basic economy or $433.70 for the main cabin.

That’s a significant price difference, so before booking tickets for your next trip, review prices for basic economy tickets to see if you can save money on flight costs. But keep in mind that the exact savings may vary by route and travel date.

Use miles to save $400 or more when booking award flights

Another way to save money is to use your earned miles. You can redeem your American Airlines AAdvantage miles for award flights. If you have enough miles for a redemption, you’ll only be responsible for paying taxes and fees, which could make your next trip very affordable.

You can earn miles through the American Airlines AAdvantage frequent flyer program, which is free to join. You can also earn miles with an American Airlines credit card. You’ll accumulate miles when you swipe your credit card for eligible purchases.

We took the same round-trip flights mentioned above and checked to see how many miles you would need to book a main-cabin ticket using cash vs. miles. When making an award flight redemption, you’d need 39,500 miles and $11.20 to cover the taxes and fees. Otherwise, you’d pay $433.70 for tickets without miles. That’s a savings of $422.50 when booking with miles.

Fly on more affordable dates to save $125

Another way to save money on American Airlines flights is to fly on a more affordable date. Some dates and times are less pricey due to lack of demand. This tip works best for travelers with flexible schedules.

An easy way to find the best travel dates is to use a free tool like Google Flights. You can search for your preferred airline and use the price and date graphs to find the cheapest dates. We looked at flight options for alternate October dates using the same departure and arrival cities as above. The savings were substantial.

Google Flights helped us find round-trip basic-economy tickets for $228.70. Another option was to book a cheaper main-cabin round-trip ticket for $308.70. That’s a savings of $125 for either ticket type when choosing tickets that depart and arrive on different dates. As you can see, it pays to be flexible. If you can change up your travel dates, it may save you money.

Look for ways to save when booking airfare

Don’t assume that the price you see for airfare is the most affordable option. Researching whether you can get a better deal is worth your time. Choosing a cheaper fare type, redeeming miles, or booking flights on more affordable dates are a few ways to save when flying with American Airlines. Every dollar you save adds up and impacts your personal finances.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

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.Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.

“}]] Read More