Money Management

The period between submitting a mortgage application and actually getting the keys can be interminable. Read on for your to-do (and to-don’t) list. [[{“value”:”

Tom Petty was right — the waiting really is the hardest part. There are many steps to the process of becoming a homeowner, and easily the most boring is waiting for your mortgage to close.

You’ve put in the work of getting your finances into good shape, saving money, picking a real estate agent, house hunting, and making an offer — and now you’ve got to sit around and wait until the day you show up at an office and sign at least a tree’s worth of paperwork and get the keys to your new home.

While you’re waiting (and underwriters are doing their work), there are a few moves you should make — and one you absolutely shouldn’t. Keep reading to learn how to productively pass the time.

Three dos

Focus on these moves for success, and to use up some of that nervous energy you’ve got.

1. Declutter

If you’ve been living in your current place for a while, you’ve likely got drawers and closets full of junk you may not need in your new home. I’ve moved 35 times in my life, and in most cases, I didn’t really have the time to significantly declutter my life beforehand.

Now that I’m waiting to close on a house, I’m excited at the prospect of being able to move with only the items I need. I spent some time over the winter holidays cleaning out my closets and finding items to donate and throw away, and I plan to do more of this as I start packing to move, too. Do yourself a favor and don’t just shove everything into boxes without considering whether you’ll actually need everything in your new home. After all, less to move means saving time and perhaps money in the process.

2. Make a moving plan

Speaking of moving, now is a great time to strategize. Consider all your options for how to pull it off — if you’ve bought a home in another state, you likely won’t have much choice beyond loading a big truck or cargo moving container, but if it’s an in-town move, you could have the gift of time. Personally, I’m planning to move some of my more light, small, and fragile belongings in over a few weeks using my own vehicle, then hire movers with a truck to tackle getting the furniture and big stuff out of my second-floor apartment and into my new house.

Don’t forget to price out the cost of the move itself, including related supplies and services — movers, for example, and boxes, tape, bubble wrap, and perhaps a pet sitter or babysitter for the day of. (Moving is scary and confusing for pets and kids, so keep their comfort and safety in mind.) And pad your moving budget by $500 more than you think you’ll need — it’s always more expensive than you expect.

3. Keep saving

If you’re anything like me, you’ve gotten in the habit of chucking money into a savings account along the way to becoming a homeowner. This was a smart move — buying a house is expensive, and while a down payment and closing costs are likely to be the most expensive part of that process, your costs don’t stop there.

Once the house is in your name, you’ll be taking on the great unknown of maintenance and home repairs, on top of your mortgage payments, property taxes, homeowners insurance, and potentially other ongoing bills (like homeowners association fees, if they apply to you). So the period between application and closing is a great time to just keep plugging away at padding your savings account. An emergency fund is even more crucial when you’re a homeowner.

One big don’t

I’ll cut right to the chase here. Do not, under any circumstances, make any changes to your financial or credit situation. You might already have a list of, say, furniture items you want to buy for your new home (I know I do). But don’t proceed with those purchases before your loan has closed. Don’t open a new credit card to make the purchases, either. And definitely don’t change jobs if you can avoid it.

Your mortgage lender will be checking up on your financial situation ahead of closing, and if it sees that there’s been a change like that, you may lose out on the mortgage. You won’t be able to buy that house you’re dreaming about. Just cool your jets until after you’ve been through closing, signed your life away, and have the keys in hand. Then you can move forward with a big purchase, applying for a new 0% APR credit card to help you tackle unplanned repairs without interest costs, or other potential changes to your financial picture.

Waiting for a loan to close is a boring time — you might start to get antsy. Use that energy for good, and plan for your move, get rid of junk you no longer need, and keep padding your emergency fund. Leave the credit card application or big purchases for after closing.

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 

Car insurance costs are rising quickly. Read on to find out how new grads can lower their premiums. [[{“value”:”

Recent college graduates often move off of their parent’s car insurance policy and sign up for their own. However, with auto insurance rates up an average of 26% over the past year, finding an affordable policy can be tricky.

Thankfully, some car insurance companies are cheaper for recent college grads than others. Let’s take a look at 10 of the most affordable companies and a few of the most common factors that contribute to how much you pay for insurance.

Most affordable car insurance companies for graduates

Research conducted by The Zebra shows that many insurers offer reasonable insurance rates to recent college graduates. It’s worth mentioning that this list only includes information for college grads who get their own policy, not those who stay on their parents’ policy.

Here are 10 of the most affordable insurance companies for graduates:

It’s important to mention that if you’re not in the military, a veteran, or have a family member who’s part of the military, you won’t be able to sign up for USAA insurance. This means that for many recent college graduates, GEICO could be the cheapest car insurance option.

What factors contribute to your car insurance rates

Insurance companies use different underwriting processes to set policy rates, so there’s some variation in the rates you’re quoted from competing companies. But in general, insurance companies will consider some details about you, including:

Your driving recordHow often you driveWhere you liveYour ageYour genderWhat car you driveYour credit score

Some companies may consider other factors as well, but these are the most common, according to the Insurance Information Institute.

How to get the cheapest car insurance

Thankfully, there are moves you can make to lower your car insurance rates. Here are some of the most beneficial.

1. Comparison shop

If you’re buying an auto insurance policy for the first time, you may not know that shopping around is one of the best ways to find cheaper car insurance.

A recent Consumer Reports insurance analysis found that 55% of drivers stay with their car insurance company for six years or longer. However, the research showed that when people switch, they usually get a lower rate and are more satisfied with their new insurance company.

2. Bundle your insurance coverage

Bundling your car insurance with a renters insurance policy could save you up to 25% annually on your premiums. Most insurance providers offer a bundling option, making this choice an easy move for graduates looking for cheaper rates.

3. Increase your deductible

When you increase your deductible, you take on more financial responsibility if your car is in an accident. But covering some of these costs by tapping into your savings account could be worth it. Consumer Reports estimates that increasing your deductible from $500 to $1,000 could save you up to 25% on your insurance premiums.

Shopping around for car insurance may not be top of your priority list when you’ve just graduated college. But once you begin setting up your finances and creating a budget, spend a few minutes comparing car insurance quotes online — you’ll likely save money if you do.

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.Chris Neiger has no position in any of the stocks mentioned. The Motley Fool recommends Progressive. The Motley Fool has a disclosure policy.

“}]] Read More 

Dave Ramsey is wrong about CDs because they have plenty of benefits savings accounts don’t offer. Find out why the financial guru is misguided. [[{“value”:”

Finance guru Dave Ramsey has some pretty strong words when it comes to CD investing. Ramsey has referred to certificates of deposit as “nothing more than glorified savings accounts with slightly higher interest rates.”

Ramsey warned that you shouldn’t invest in CDs because average rates won’t keep pace with inflation and because they aren’t a good place to grow your money. He suggests investing in mutual funds instead.

The reality, though, is that CDs are much more than glorified savings accounts and Ramsey is dead wrong in saying they don’t have a place in your portfolio.

Here’s why Ramsey is so wrong about CDs

There are a couple big problems with Ramsey’s anti-CD position. First and foremost, CDs offer huge benefits that savings accounts don’t.

In general, CDs provide higher yields than savings accounts

While that’s not always the case, it’s true often enough that you’ll do better by opening a CD than just sticking your money in a savings account.

Ramsey even acknowledged this himself, but claims the rates aren’t high enough to matter. Over the long term, though, the higher returns can add up. And why would you want to accept a lower rate when you could get a higher one? Can you afford to just leave money on the table?

CDs lock in your rate

With a savings account, rates are variable and thus could go down at any time. CDs allow you to earn a guaranteed rate for the duration of the CD term.

This could be an especially valuable benefit right now, as the best CD rates top 5.00%. You can lock in this great rate on a risk-free investment and won’t be affected if the Federal Reserve lowers rates later this year.

If you put your money into savings, you might get a good rate right now. But if market conditions change, your rate will fall quickly and you won’t be able to go back in time to lock it in. With a CD, you’ll know upfront exactly how long you’ll get to keep today’s high rates.

CDs encourage you to keep your money invested

When you open a CD, you must leave your funds invested for the duration of the CD term, otherwise you’re penalized in the form of losing some of your earned interest. This is referred to as an early withdrawal penalty. Ramsey says this is a downside for CDs, and it can be if you invest funds you should have kept accessible (like your emergency fund).

It can also be a benefit, though. If you have money you want to keep invested for a few months or a few years for a specific goal, putting it into a CD could help give you the willpower not to touch it since you won’t want that penalty. It could save you from your temptation to spend the money on something else besides your goal.

CDs also can beat inflation — and can be a better choice than mutual funds in some situations

Ramsey is also wrong for a few other reasons. For one thing, he says CD rates aren’t high enough to keep pace with inflation. He points to average rates as an example. But there are plenty of CDs paying rates way above average and way above the current inflation rate.

The Ascent’s list of the best cd rates has over a dozen options with yields in the mid-4.00% to 5.00% range. Since inflation data in March showed prices were up 3.5% year over year, it’s easy to see that CDs are beating price increases right now.

And Ramsey’s recommendation that you opt for a mutual fund instead of a CD doesn’t make sense for everyone. You don’t want to put your money into mutual funds if you have an investing timeline shorter than five years. The risk is too great that you’ll time your investment poorly, suffer losses in a market crash, and have to sell before you can make them up.

CDs can have a place in your portfolio

If you have money you want to leave invested for three months to five years and you won’t need to touch it for that time, a CD could be the perfect spot for it right now.

You can benefit from competitive yields and a guaranteed rate that won’t go down if the Fed lowers rates later in the year as many experts predict.

So don’t listen to Dave Ramsey about CDs. Instead, check out these great CD options to grow your money:

Best 6-month CDsBest 1-year CDsBest 2-year CDsBest 3-year CDSBest 4-year CDsBest 5-year CDs

Or open one of the dozens of other certificates of deposit available from countless banks and issuers today. Just make sure the institution you choose is FDIC insured so your funds are protected. You won’t regret it.

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 

You need your emergency fund to cover a period of unemployment. Read on to see why you may need to increase your savings. [[{“value”:”

We all know that life has a way of dropping surprise expenses in people’s laps. You might go to start your car in the morning only to find that, well, it won’t start. Or, you might wake up to a frigid house in the middle of winter — and a $2,000 bill to repair your heating system.

You also never know when you might fall victim to a layoff. A situation like that could really upend your finances in a serious way.

It’s for reasons like these that it’s important to have money in your savings account at all times. Your emergency fund should ideally hold enough money to cover three months of essential bills at a minimum.

Perhaps you calculated how much to save for emergencies several years back and completed it shortly thereafter. If so, you’ve probably been benefiting from the peace of mind that comes with knowing you’re well-stocked on savings. But if it’s been a few years since you built your emergency fund, your savings might now need a boost.

Does your emergency fund account for inflation?

The reason your emergency fund should have enough cash to cover at least three months of essential bills is that it might take you that long to find work after becoming unemployed. With adequate emergency savings, you should be able to pay your bills without having to immediately resort to credit card debt.

But in recent years, inflation has surged. And even though it’s cooled a bit over the past 12 months, in March, living costs were up 3.5% on an annual basis, as measured by that month’s Consumer Price Index. Because of this, if you built your emergency fund years ago, you may not actually have enough money to still cover three months of bills.

Let’s say you finished your emergency fund two years ago, and back then, your rent was $1,650 a month. If it’s now $1,850 a month, your numbers are off.

Similarly, it may be that you used to spend $400 a month on groceries. If you’re now spending $450, that leaves you short on funds in that category.

That’s why it’s a good idea to go through your essential bills line by line, add them up, and see what savings you need to cover them for at least three months. Then, compare that total to the amount of money in your emergency fund. If you’re not quite where you need to be, you’ll know to start diverting more cash into your savings.

You may not have such a big shortfall

At this point, you may be ready to cry or scream thinking you did such a great job of building your emergency fund and now it turns out it wasn’t enough. But before you go into panic mode, remember one thing.

Banks have been paying pretty generously following the Federal Reserve’s string of 2022 and 2023 interest rate hikes. So while your emergency fund might still be a little short, it may not be that short when you factor in the interest income you’ve been collecting.

All told, your emergency fund should be set up to get you through a period of unemployment. If your bills have gone up since you completed your emergency fund, give it a look and try to boost your cash reserves in case a situation arises where you actually need to tap them.

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 

There are pros and cons to tipping with cash vs. a card. Find out the difference in how you pay. [[{“value”:”

While I’m not a big fan of tipping culture in general, I have to acknowledge the reality around me, so I always try to tip fairly when I’m out. But one conversation I’ve had with a few folks over the years isn’t so much about how much to tip as to what method to give that tip.

Specifically, is it better to tip with your credit card as part of your bill, or should you use cash to tip?

I’ll be honest, I’m a little torn on this one. As a rewards maximalist, I want to use my rewards credit cards for everything. But as a service industry veteran, I know that cash is still king. So I tend to give folks both sides of the equation and let them make their own decision.

And that’s what we’re doing here. Let’s take a look at what happens when you tip with a credit card.

The tip gets paid out as part of the paycheck

When you tip in cash, that cash typically goes home with the staff that same day. However, when you tip on your credit card, that transaction has to get processed through all the banks the same way any credit card transaction does.

As a result, this generally means that tips from credit and debit cards get paid out on payday as a line item on the paycheck. So, if the employees get paychecks every two weeks, it could be that long before they see your tip in their bank account.

The tip gets reported as income to the IRS

Another side effect of the tip being part of the paycheck is that it gets reported to the IRS as income. In other words, the tipped income becomes part of the worker’s W-2.

Some folks who are frequently paid in cash may not report all of those cash tips as part of their income at tax time. This can reduce their taxable income and save them some money on taxes.

Considering that many service industry employees are already struggling financially — folks in the service industry are more likely to be considered “working poor” than people in other major industries — I can see both sides of the argument for and against this type of behavior. I leave you to make your own judgments here.

The tip bills as part of the dining charge

So far, we’ve talked about the differences for the workers. Well, there’s a difference for you as the tipper, too. Essentially, if you tip in cash, you don’t earn any purchase rewards on the tip. But when you tip on your credit card, the tip gets bundled in with the bill, so it will earn the same rewards as your food did.

If you have a dining rewards card, this means you’ll earn the same bonus rewards for the tip as the meal. In the case of particularly expensive meals — and, thus, particularly large tips (I hope) — this can really add up to a lot of extra cash back or points.

Any tip in a storm

At the end of the day, as long as you’re tipping appropriately for the level of service, it doesn’t really matter what payment method you use. Most of us are simply happy when we can pay our bills.

That said, if you don’t mind missing out on a few rewards points and happen to have cash at hand…well, your serving staff would probably appreciate that just a little bit more.

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 

Get the best auto insurance by setting priorities and comparing quotes. Find out what discounts college grads can get. [[{“value”:”

Bad news for recent college grads: According to the U.S. Bureau of Labor Statistics, the cost of car insurance has increased by 22% on average over the last 12 months. What once cost $200 per month is now $244. A big increase, especially for young buyers.

Young drivers pay the most. The typical 18-year-old pays twice as much as the typical 35-year-old — rate comparisons are brutal (look at your peril). But college grads have some tools they can use to keep prices affordable without sacrificing good insurance.

How to choose the best auto insurance

If you’re a recent college grad, you shop for auto insurance like anyone else. Start by checking how much insurance you need. Then, call insurance companies for quotes. Finally, compare prices and features, balancing affordability with a high-quality claims experience.

When you’re a recent college grad, you’re likely to be under 30. Your rates are probably higher than the national average, and you may be graduating with debt as a result of your education. You probably want to start with the most affordable auto insurance companies and go from there.

When I first shopped for auto insurance, I did so online. It’s fast and convenient. You can pull online quotes from many insurers, including the big ones that frequent our TV commercials. But not all insurers offer online quotes — you may need to call to ask about coverage.

What you need when pulling quotes

When asking for quotes, you’ll need the following on hand:

License plate numberCar detailsDriver’s license info

You’ll also want a general idea of what you’re looking for. Not sure where to start? Chances are you need liability insurance, plus enough coverage to cover the most likely bad scenarios.

Drivers need liability insurance

Most states require drivers to have liability insurance. Liability insurance covers damage to the other driver and property when you’re found to be responsible for an accident.

Liability insurance minimums vary by state. Most ask for $25,000 in bodily injury per person, $50,000 in bodily injury per accident, and $10,000 in property damage liability per crash.

You’ll probably want more than liability insurance coverage, the bare minimum. In that case, drivers can add comprehensive or collision coverage to your policy.

Optional: comprehensive or collision coverage

Comprehensive and collision coverage are add-ons, typically optional. Comprehensive insurance covers you if someone steals or vandalizes your car, among other perils. Collision coverage prevents you from paying for property damage, including damage to your vehicle.

There’s more to insurance than that. In short, neither collision nor comprehensive coverage will cover everything, even if you buy both. Prioritize the situations you’re most likely to find yourself in. Poor drivers in your area? Get collision. Lots of theft? Buy comprehensive. I’m simplifying, but you get the gist. You can even buy more minor add-ons, like gap coverage.

Once you’ve got a general idea of what type of car insurance you want, you can contact insurers for specific quotes. College grads should look out for a few discounts.

Discounts for college grads

Many insurers let you bundle drivers (multi-car) or insurance types (multi-policy) for discounts in the 5%-10% range. If you live with parents or sibling drivers, it’s worth checking if you can bundle your insurance together. You could easily save over $100 per year.

College grads may qualify for low mileage discounts and safe driving discounts. You can snag multiple discounts, stacking your savings.

There’s more to the best car insurance than low prices, but college grads have priorities, and that’s typically affordability. Your car insurer should offer the basics: prices that fit your budget, coverage for what you want most, and a simple way to file claims.

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