Money Management

Paying to save money may seem counterintuitive. Read on to find out how to make a Costco membership immediately worth the expense. [[{“value”:”

Everyone’s looking for ways to save money these days, and one of the best ways to do this is by having a Costco membership. However, some consumers may be skeptical about spending $60 for a base Gold Star membership just for the privilege of shopping at the warehouse club.

So here are four ways you can earn back that $60 with just one trip to Costco — and one tip for stretching your dollars even further at Costco.

1. Buy your prescription medications through Costco

The average American spends $1,432 annually on prescription medication, but many people spend much more. That can put significant stress on anyone’s monthly budget.

Thankfully, Costco members don’t have to pay full price for many prescriptions. The company’s Costco Membership Prescription Program (CMPP) is free with any Costco membership and gives members discounts of 2% to 40% on medications across 19,000 participating pharmacies.

For some members, buying one or more of their monthly prescriptions at a 40% discount through CMPP could easily save them the cost of their Costco membership.

2. Get your tires installed at the Costco Tire Center

Many automotive shops charge around $100 to install four tires. Last year, Costco dropped its installation charge, which previously cost $20 per tire if you buy your tires at the store. You can now have four new tires installed at a Costco Tire Center for free.

Costco sells many popular name-brand tires, so it should be easy to find an option for your vehicle. And since many shops charge about $100 to put a set of tires on a vehicle, you’ll have no problem earning back the $60 membership fee.

3. Buy glasses from Costco Optical

Everyone in my immediate family needs some degree of corrective lenses, so I know how quickly the cost of glasses adds up. That’s why many people shop at Costco Optical, the company’s full optometry centers that are located in many of its store locations.

The average pair of glasses from most brick-and-mortar stores costs $343, but a basic pair of eyeglasses at Costco costs just about $121, according to Clark.com. This means you could potentially save $222 with just one trip to Costco Optical compared to buying your glasses at a retail location.

4. Buy groceries in bulk

Saving money by buying prescription medication, eyeglasses, and new tires is great, but you can help your budget on an ongoing basis by buying groceries regularly at Costco.

The average American spends about $475 per month on food, according to data collected by The Motley Fool Ascent. Some recent estimates show that buying groceries in bulk at Costco could save you up to 33% compared to shopping at regular grocery stores. That equals a potential savings of $157 monthly, or about $78 in just one trip if you buy groceries twice per month.

How to save even more at Costco

If you shop at Costco frequently, you may want to consider getting a Costco Executive membership to save even more. Executive members get 2% cash back on all purchases in Costco’s stores and through the company’s website. At the end of your annual membership period, Costco will send you a check for the cash rewards you’ve earned.

The Executive membership costs $120 annually, $60 more than the base Gold Star membership. But many people often earn that cost back. For example, if you spend $3,000 annually at Costco — equal to $250 per month — you’d earn 2% cash back on those purchases and get a check for $60 for that year, covering the cost of your membership upgrade. The Executive membership also gives you additional discounts on Costco services like its car-buying service and pet insurance.

With so many ways to save money using your Costco membership, you’ll likely find one that fits your budget. And with inflation still impacting everyone’s budgets, any extra savings can go a long way toward easing the rising cost of living.

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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.Chris Neiger 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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Going on a trip? Read on for some big credit card mistakes to steer clear of. [[{“value”:”

It’s common to take a credit card or two along with you when you travel. That way, you don’t have to worry about running out of cash or struggling to find an ATM. But if you’re going to use your credit cards while traveling, make certain to avoid these three big mistakes.

1. Not checking to see if there’s a foreign transaction fee

It’s not a given that your credit card will impose a foreign transaction fee. But some cards do. Always check the fine print before taking a credit card with you if you’re traveling abroad, because in some cases, you may be looking at paying more than necessary for your purchases.

Foreign transaction fees commonly amount to 1% to 3% of your purchase total. But let’s say you go to Europe for a week and spend $1,000 on food and entertainment. With a 3% fee, you’re looking at $30 extra.

If you have time between now and your next trip out of the country and none of your current credit cards are free from foreign transaction fees, consider applying for a new one. You may especially want to look at travel rewards credit cards, which often waive this fee and also tend to offer money-saving perks like discounts on in-flight purchases.

2. Not informing your credit card issuer that you’ll be traveling

The fact that credit card companies are constantly on the lookout for fraud is a good thing. But you may run into some issues if you travel abroad or to another part of the country and you don’t loop your credit card issuer in.

In that case, your card might get flagged for fraud and you may find that you’re unable to use it. And while you can generally call your issuer to confirm that your charges are legitimate, thereby releasing that freeze, that hinges on you being able to place a call.

If you’re abroad, you may not have an international calling plan. And if you’re in a remote part of the U.S., you may not have reception. That could be a problem if you’re trying to fill up your car on a country road, it’s rejected at the only gas station within 80 miles, and you don’t have cash.

3. Not keeping track of your credit card spending

When you’re traveling, it’s easy enough to spend more freely because you’re in the midst of a whole new set of experiences. But don’t let that spending get out of hand. If you don’t track your purchases while traveling, you could end up with a costly pile of debt on your hands.

Let’s say you’ve only budgeted for $1,000 worth of spending while on vacation outside of lodging and airfare, and your total purchases reach $1,600. That’s a $600 balance you might have to pay off over six months. But on a credit card charging 20% interest, that’ll mean paying an extra $35. That’s money you could be putting toward a future trip instead.

A credit card can be an asset on your vacation. But do your best to avoid these mistakes, so you don’t pay extra or end up having to deal with the hassle of having your credit card denied.

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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.
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No one wants to pay more than they have to for everyday goods and services. Here are five common expenses you can negotiate. [[{“value”:”

We tend to think of bills as a fixed dollar amount we have no choice but to pay. But that’s not always true. Companies need to keep their client base happy to remain in business, and many are willing to negotiate your bills if you just ask. Here are five types of bills you might be able to reduce.

1. Cable bill

Yes, I know, fewer and fewer people have cable these days. But if you’re still hanging onto yours, you might be able to get a lower rate by calling and requesting one or threatening to cancel your account. Cable companies are losing customers left and right to streaming services, so most are willing to be flexible to keep their existing client base, especially if you sound like you’re willing to cancel your service if the price isn’t lowered.

2. Cellphone bill

Your cellphone provider may also be willing to offer you more favorable terms on your plan if you threaten to leave them for a competitor. However, this may not be a feasible option for you if you live in an area where one provider dominates the market.

3. Credit card bill

It’s technically possible to negotiate with a credit card company to forgive some of your debt. But to do this, you typically have to stop making payments for an extended period of time, which ruins your credit. That should be a method of last resort.

Instead, you could try negotiating your interest rate. This won’t reduce how much you currently owe, but it can prevent your balance from swelling further. This might make it a little easier for you to pay it off.

4. Bank fees

Checking and savings accounts can sometimes charge fees for things like having a low minimum balance or having an inactive account. It might be possible to waive these fees simply by calling the bank and requesting that it removes them from your account.

5. Tax bill

The IRS allows you to negotiate your tax debt through what’s called an offer in compromise. This is where you tell the government what you can afford to pay toward your tax bill. It will weigh your offer, considering your income and assets. If it approves, you’re off the hook for the remainder of what you owe. But if not, you’ll have to make a lump-sum payment or set up a payment plan.

How to successfully negotiate your bills

To give yourself the best chance of reducing your bills, it’s best to prepare before you reach out. Gather any data you’ll need to make your argument. If you plan to claim that you deserve a lower rate because you’ve been a loyal customer for so long, be specific about how long you’ve had the account. If you’re thinking about switching to a different provider, have that provider’s prices at the ready so you can share them with your current company.

Then, call the company to request the lower price. It’s best to do this over the phone as opposed to via email or live chat because you’ll be able to speak to a live person to plead your case. Remember to always be polite when making these calls. The representative on the other end will be more likely to help you this way.

Finally, just because a company can reduce your bill doesn’t mean it will. If it refuses, you’ll need a backup plan. Maybe you really do switch to a different provider. Or maybe you scale back your plan to a more affordable option. Know where you’ll go from there so you can come up with a new strategy for reducing your costs.

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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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Making a higher down payment could make your mortgage more affordable on an ongoing basis. Read on to learn more. [[{“value”:”

Home prices are expensive these days, so for some people, coming up with a sufficient down payment is a huge challenge. But if you’re signing a conventional mortgage, it’s a good idea to try to make a 20% down payment on your home. Doing so will help you avoid private mortgage insurance, a costly expense that’s typically tacked onto your monthly mortgage payments with down payments under 20%.

But what if you’re sitting on extra cash and have the ability to put down 30% of your home’s purchase price? In that case, you may want to go ahead and put down the extra money as long as it leaves you with a solid emergency fund left over. Making a 30% down payment could make your ongoing mortgage payments much easier to fit into your budget.

The upside of putting down more

As a general rule, your housing costs, including your mortgage, property taxes, homeowners association fees (if applicable), and homeowners insurance, should not exceed 30% of your take-home pay. If you go beyond that threshold, you could put yourself at risk of falling behind on bills (housing-related or otherwise) and racking up costly debt to stay afloat, like that of the credit card variety.

Making a 30% down payment on your home could help you better stick to that 30% limit. It could also make it so you’re able to just plain more comfortably afford your home in general.

As of this writing, Freddie Mac puts the average 30-year mortgage rate at 6.82%. So let’s say you decide to buy a $400,000 home and put down 20%, or $80,000. That leaves you with a $320,000 mortgage. At 6.82%, your monthly payment for principal and interest will be $2,090.

But let’s say you have enough money in the bank to make a 30% down payment, leaving you to put down $120,000 and borrow $280,000. At that same interest rate, your monthly principal and interest payment will be $1,828. That means you’re spending $262 less per month, or $3,144 less per year. That gives you more flexibility to cover other expenses.

Also, let’s say that property taxes and insurance on your home cost $550 a month combined. If we add that to $2,090, we get $2,640. If your take-home pay comes to $8,000, it’ll leave you spending 33% of your income on housing, which is a notch above where you’d ideally want to be. But if we add $1,828 to $550, it’s $2,378. That puts you just under the 30% mark for a monthly take-home pay of $8,000. You can run the numbers for your situation using a mortgage calculator.

There’s total interest savings to consider, too

Not only might making a 30% down payment on your home give you more flexibility month to month, but it could save you money on mortgage interest all in. In the above example, a 30% down payment instead of 20% saves you about $54,000 on interest throughout the life of your loan. This assumes you keep the same loan at the same rate and never refinance.

Of course, you may not want to put down much more than 30% as a down payment, because then you’re tying up a lot of cash in your home. But if you can afford to put down 30% while still having enough money for an emergency fund that can cover at least three months of living expenses, then it could be something to consider, especially if you like to have wiggle room in your budget.

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This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, 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.

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Shopping at Costco can help you slash your grocery budget. Read on to find out five items that can help you save instantly. [[{“value”:”

It’s no secret that Costco can help you make the most of your monthly budget. My family shops at the warehouse store once per month to stock up on must-have items at discounted prices.

If you want to reduce your monthly spending, here are five affordable items that many Americans can save on at Costco.

1. Seasonal allergy medicine

At this time of year, plumes of pollen can be seen in the air where I live. I fight against this pollen onslaught by stocking up on off-brand allergy medicine at Costco. A five-pack of Kirkland nasal spray costs just $21.99, compared to a three-pack at CVS that costs $45.99. With more than 26% of Americans affected by seasonal allergies, shopping for over-the-counter relief at Costco could save many shoppers a lot of money.

2. Trash bags

Trash bags are one of those things you don’t want to run out of. Buying them in bulk from Costco ensures that won’t happen, while also giving you a good deal. A 200-pack of Kirkland 13-gallon trash bags costs just $19.99. A similar box of trash bags costs $27.54 on Amazon. That means Costco bags cost just $0.10 per bag versus $0.14 at Amazon.

3. Gas

Costco offers top-tier gasoline at discounted prices. In some cases, Costco gas can be up to $0.30 cheaper per gallon than the national average, saving you money every time you fill up.

I compared my local Costco gas price to the nearest gas station to my home and found Costco’s gas was $0.16 cheaper per gallon. You can find the cost of a gallon of Costco gas near you on the company’s website.

4. Coffee beans

I buy a lot of coffee beans, and I’m always looking for a good deal. Even though I shop at Costco, I was still surprised to see how much cheaper the beans are at the discount store. A 40-ounce bag of Kirkland Signature whole beans is just $12.99, while a comparable name-brand bag at Walmart costs $28.49.

5. Sparkling water

My family drinks a lot of sparkling water, and we stock up on it every time we make a Costco run. A current promotion on Costco’s website shows a 24-pack of LaCroix water costs $9.29 (regularly $11.49), compared to $23.52 at Walmart. With that considerable price difference, I feel much better feeding my sparkling water habit without busting my monthly grocery budget.

One easy way to save additional cash at Costco

If you do a lot of grocery shopping at Costco, you may want to consider getting the Executive membership. While it costs $120 per year, compared to $60 for the base Gold Star membership, you’ll get 2% cash back on all your Costco purchases (including online).

If you spend $3,000 or more at Costco annually, the 2% cash back will cover the cost of upgrading your membership. In addition to earning cash back, you’ll get extra discounts and perks on some Costco Services. For example, if you sign up for home and auto insurance through Costco and have an Executive membership, you’ll get free roadside assistance and home lockout assistance.

Whether you choose an Executive or Gold Star membership at Costco, most shoppers can save about 33% on their grocery bill by shopping at Costco rather than a conventional grocery store. With the high cost of groceries these days, those savings are worth getting excited about.

Alert: our top-rated cash back card 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 lengthy 0% intro APR period, 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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, and Walmart. The Motley Fool has a disclosure policy.

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Don’t assume that paying off your home ahead of retirement is the right move. Learn why this decision should hinge on what your mortgage is costing you. [[{“value”:”

Many people worry about retirement from a financial standpoint. After all, it’s hard to go from living off of a steady paycheck to living off of savings.

Meanwhile, the conventional advice given to older homeowners with mortgages is that it’s best to have those loans paid off ahead of retirement. The logic is that many people see their income shrink once retirement kicks off. So it’s best to shed as many debts ahead of that period as possible.

But while “pay off your home ahead of retirement” may have been the classic advice for many years, it’s not necessarily great advice today.

It’s a matter of what your mortgage rate looks like

The average mortgage rate as of this writing is 6.82% for a 30-year loan, says Freddie Mac. But in 2020 and 2021, mortgage lenders were practically giving loans away in the wake of a pandemic-fueled economic crisis.

Back then, borrowers with good credit could snag a 30-year mortgage at or under 3%. And not surprisingly, many homeowners took advantage of the opportunity to refinance their mortgages while rates were down.

As such, a lot of older homeowners today are no doubt sitting on super low mortgage rates. And if you’re in that boat, then you actually probably shouldn’t try to pay off your home before retirement begins.

Let’s say you owe $50,000 on your mortgage and have that money in savings. You may decide to raid your cash reserves and get rid of your mortgage before your paycheck from work goes away. But if you’re paying, say, 3% on your mortgage, that hardly makes sense at a time when high-yield savings accounts are paying APYs of 4.00% and higher.

Furthermore, if you can afford your mortgage payments as a retiree, then it’s actually best not to tie up extra cash in your home. You never know when a need for money might arise, whether it’s to cover a medical bill or fix your car. If you pay off your mortgage, you’ll have that much less liquid cash available when these things come up.

Also, if you can afford your monthly mortgage payments as a retiree because of your low interest rate, you can invest the money you’d otherwise use to pay your balance off. So let’s say you invest $50,000 instead of paying off your loan balance. Even if you were to generate a relatively conservative 6% return on that money, in five years, you’d grow your $50,000 to almost $67,000. Why not do that if your mortgage isn’t a burden?

You don’t always have to follow class advice

Sometimes, classic advice becomes so ingrained in us that it’s hard to think outside the box. But in the context of mortgages, paying off your home before retirement may not make financial sense if your loan’s interest rate is low and you can earn more money in a risk-free savings account.

Of course, you might argue that not having housing payments in retirement will bring you peace of mind. And there’s certainly value in that.

But hanging onto a bunch of your cash instead of pumping it into your mortgage might do the same. So consider the pros and cons of both approaches before making your decision.

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This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, 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.

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