Money Management

Costco can be a great place to save money, but shopping there isn’t right for everyone. Here are a few signs you should steer clear of the warehouse club. [[{“value”:”

Costco is a popular warehouse club because shopping there allows many people to keep more money in their bank accounts by taking advantage of the deals on offer. But, joining Costco and shopping there regularly is not for everyone. While it can be a boon for the personal finances of some households, it could be a detriment to others if not used correctly.

You should watch for these three big signs that you shouldn’t shop at Costco. If you spot any of them, it may be a better idea not to sign up for a membership to the popular warehouse club.

1. You regularly save a ton of money on household items using manufacturer coupons

You can get inexpensive items from grocery stores and drug stores if you combine manufacturer coupons and store coupons. Unfortunately, this technique does not work at Costco.

The problem is, Costco does not accept manufacturer coupons. While it offers its own deals, you can’t combine them and stack coupons and sales as you would be able to do at other stores you might shop at. You may actually end up with bigger credit card bills if you start shopping at Costco since you’ll lose the chance to put your coupon-shopping skills to use.

2. You don’t have much storage room at home

Costco, like most warehouse clubs, offers good deals because you can buy items in bulk. You typically can’t just buy a roll or two of paper towels or a small box of cereal — you need to purchase a jumbo size.

And if you don’t happen to have room for 12 individually wrapped paper towel rolls in your home, along with many other large products you’d have to buy to make your membership worth it, then shopping at Costco doesn’t make any sense.

3. You prefer to buy mostly off-brand items

Costco offers its own store-brand products, which are sold under the Kirkland Signature name. However, there are only around 350 Kirkland-brand products on Costco store shelves. That isn’t very many, especially when you consider that Walmart offers more than 29,000 products under its Great Value label.

The rest of Costco’s deals come from smaller markups on name-brand items. But, those name-brand items, even at a discount, may be more expensive than generics from other companies. Walmart’s Great Value Honey Nut O’s Oat Breakfast Cereal, for example, comes in at $0.153 per ounce, while Costco’s Cheerios are $0.25 per ounce.

If you’re a fan of store brand or generic items, you would be better off shopping at other stores that offer better selection rather than shopping at Costco and spending more to get name-brand products you don’t really want or need.

If you spot any of these three signs, you should most likely pass on a Costco membership. Shopping there probably wouldn’t provide you with enough savings to justify the $60 annual starting membership price. Instead of wasting money on a membership fee, you can keep going with your current system of buying generic, using coupons, or only buying the number of items you can comfortably (and neatly) store in your home.

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

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You can finance a short-term rental property, but it can be harder than buying a home to live in. Here’s what you need to know. [[{“value”:”

It’s easier than ever to own and even manage a vacation rental property, thanks to platforms like Airbnb and Vrbo. Owning a vacation rental can be a great way to maximize the income potential of real estate, and it could be a great way to own property in an area you’ve always wanted to have a home in without having to bear the full cost on your own.

However, getting a mortgage for a vacation rental can be a little more difficult than obtaining a mortgage for a home you plan to live in. While it’s certainly possible to finance a short-term rental property, there are a few things you need to know.

What kind of mortgage can you use to buy an Airbnb?

The short answer is that you can obtain an investment property mortgage to buy a short-term rental property. Conventional mortgages are available for the purchase of investment properties, and there are numerous other options. Most major mortgage lenders offer investment property loans, and in many cases, these can be used for short-term rentals.

However, there are a few things you should know before you start shopping around for a loan:

Investment property mortgages typically require at least a 20% down payment.Investment property mortgages often have higher interest rates than comparable primary residence mortgages. Expect to see rates about 0.50%-0.75% higher than the current market rates.Some mortgage lenders may be hesitant to lend on short-term rental properties. Their cash flow isn’t as stable as long-term rentals, and they are more vulnerable to economic conditions.You might not be able to use the anticipated income from the property to qualify for the loan. When applying for an investment property loan for an Airbnb rental, your income must justify the new mortgage, in addition to any existing mortgage(s) you have.

Having said all of that, if you find a property that would make an excellent Airbnb and you want to buy it, you can use the same type of investment property mortgage that is typically used for long-term rental properties. Just be aware of these potential drawbacks.

Alternatives to investment property loans

Because of the higher perceived risks involved, investment property loans can be prohibitively expensive or not available at all.

In some cases, you can use a “second home” loan to finance an investment property. Not only is it generally easier to qualify for second home financing than an investment property mortgage, but second home loans tend to also have more flexible down payment requirements and usually have interest rates closer to those of primary residence mortgages.

Different mortgage lenders have different definitions of a second home. You typically need to spend a certain number of days at the property each year, and there might be a cap on the number of days you can rent. Also, a second home typically needs to be a certain distance away from your primary residence. But if you qualify, a second home loan can be a solid alternative.

Another potential alternative is to “house hack” — that is, buy a multi-unit property and live in one unit while renting out the others. For example, FHA loans can be used to buy homes with two to four housing units with down payments as low as 3.5% in most cases. So, if you see a four-unit property listed for $750,000, this means you could potentially buy it with $26,250 down and have not one, but three units to turn into vacation rentals, as long as you’re planning to live in the property yourself.

Finally, the best way to buy an Airbnb could be with cash. I completely understand that not everyone has enough cash sitting around to buy a rental property, but it’s possible to use a home equity loan or HELOC to utilize the equity you already have in your home. Not only can this be easier than trying to finance the new property directly, but it effectively makes you a “cash buyer,” which can help your offers carry more weight when shopping.

The bottom line on Airbnb financing

It’s entirely possible to get a mortgage to finance an Airbnb, but depending on the situation, your best choice might not be a traditional investment property loan. The best bet is to figure out what financing options apply to the home you’d like to buy, and then shop around for the best lender and loan terms.

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If your kids have left home, it may be a great time to buy a new home. Here are a few key perks of purchasing a property of your own as an empty nester. [[{“value”:”

Many people decide to buy a house when they are starting a family or embarking upon their new adult life. But what if you’re an empty nester? You’re in a completely different place than your younger home-buying peers, but that doesn’t mean that jumping onto the property ladder isn’t just as exciting or as beneficial to your finances.

In fact, here are a few huge perks of purchasing a home as an empty nester that you may not have realized, but that just may convince you to call a real estate agent.

1. You can look for aging-in-place features

Many people who are in homes they bought a long time ago want to stay put as they get older, but can’t necessarily do so because their house isn’t set up for it.

In fact, a third of all adults surveyed by AARP indicated they would need to make modifications to their current home if they developed physical limitations. This includes 79% who would need to change their bathrooms to install grab bars or add no-step showers. And 71% said there were inside and outside accessibility issues with their current properties.

If you’re an empty nester and are getting older already when you move forward with getting a mortgage and buying a place, you can look for a property you can stay in even if health issues arise. Rather than searching for a home with a big playroom or a large backyard for the kids, you can focus on finding a home with wide doorways a wheelchair could fit through and no steps leading up to the front door.

This gives you the opportunity to maximize the chances you’ll be able to stay in your house for as long as possible — which is what most people would prefer.

2. You can opt for a smaller home

If you don’t have children who need bedrooms and room to play, you can look for a smaller house when you’re buying as an empty nester. This has a few big benefits.

One advantage is you may have a wider selection of homes available in different geographic areas. For example, if you want to live within a walkable city center, it may be easier to buy a small house for an empty nester than a big family home.

Smaller homes also often cost less, so you can have lower mortgage payments. The utilities won’t cost as much in your smaller space, and your property taxes may be lower as well. So, the house may end up being much more affordable than one you might have bought earlier.

3. You can lock in your housing costs for retirement

Finally, when you buy a house and get a fixed-rate mortgage, your housing costs should not change much going forward. While you may see slight increases in property taxes and insurance over time, those changes typically won’t be dramatic — and your mortgage payment isn’t ever going to change (unless you refinance your loan to lower it).

This means you won’t have to worry about a landlord raising your rent, which could cause you struggles after you retire and end up on a fixed income.

If you’re an empty nester and thinking about making a home purchase, these benefits may just convince you that it’s a good choice. Just be sure you’re financially ready, which means you should have a down payment and you should be able to buy with a mortgage that keeps your housing costs below 30% of your income.

If you’re in a good financial place to buy, then you can take advantage of these big benefits of making your home purchase as an empty nester.

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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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401(k)s have high contribution limits and may earn an employer match from the money you put in. Keep reading to learn why IRAs are worth considering anyway. [[{“value”:”

Employer-sponsored retirement plans like 401(k)s can be a pretty sweet deal. Your contributions are made automatically from your paychecks, meaning you don’t have to remember to make them on your own. The contribution limit is quite high — for 2024, you can put $23,000 into one (and an additional $7,500 in catch-up contributions if you’re 50 or over).

And best of all, many employers offer matching contributions to a certain point — perhaps 3%, for example. So if you put 3% of your salary in, your employer will put another 3% in, resulting in 6% of your annual salary in total retirement account contributions for you.

With all these great perks available with 401(k)s, why would anyone ever opt for an IRA instead (or in addition)? Let’s explore the benefits of IRAs and see how they can be better than a 401(k) in some respects.

Not everyone has access to a 401(k)

As great as employer-sponsored retirement plans are, not every American worker can participate in one. I worked for a series of tiny nonprofits in my old career, and wasn’t offered retirement plan access in most of those jobs (and didn’t make enough money to spare any of my paycheck to contribute anyway, but that’s a different story).

If you’re self-employed, you don’t have an employer to administer a 401(k) or match your contributions either. So for people without the option to sign on for a 401(k), an IRA with a brokerage firm is your chance to save for retirement in a tax-advantaged manner. And you even get special IRA options.

You can pick your own IRA broker — and save money

So many brokerage firms offer IRAs — you get your choice, since you open the account yourself (rather than having an employer do it for you). And since different brokers offer different fee structures, perks, and access to other financial account options you might want, it’s worth taking the time to pick the right one for you.

Since you get to pick your own broker, you can target those with lower investment fees. Unfortunately, you’re likely to pay more fees with a 401(k), since you’ll owe money for administrative costs, and some investment types (like actively managed funds) also have fees. Fees eat into your retirement cash, so getting to avoid more of them is a compelling reason to consider an IRA.

You can save on taxes now — or later

IRAs come in two major flavors: traditional and Roth. Traditional accounts offer a tax break in the year you contribute to them, since the money lowers your taxable income — if you earn $60,000 this year and contribute $6,000 to a traditional IRA, your taxable income will be $54,000 for this year. Consequently, your $6,000 in contributions will eventually be taxed when you make withdrawals in retirement, at whatever your tax bracket is by then.

But if your income is under a certain limit (for single tax filers in 2024, it’s $146,000), you might consider a Roth IRA. The contribution limits across traditional and Roth IRAs are the same ($7,000 if you’re under 50, and an additional $1,000 if you’re 50 or over), but Roth IRAs are funded with post-tax dollars. In exchange for giving up a tax break now, you’ll get one in retirement — your money grows tax free in a Roth IRA. If you expect to be in a higher tax bracket at that point in your life, a Roth IRA can be a good idea.

IRAs offer a greater variety of investments

401(k) plans aren’t known for offering a lot of different investment choices. You can’t buy individual stocks through a 401(k), nor can you invest in newer and perhaps more exciting assets like cryptocurrency. Target-date funds are a common option; these are pegged to a projected retirement year and the assets in them shift over time to become less risky as the year approaches.

But IRAs offer a whole rainbow of investment options — stocks, bonds, ETFs, crypto, and beyond. It all depends on what the brokerage offers, so be sure to check that out when you’re exploring your IRA options.

Ultimately, if you’ve got the option to save for retirement with an employer-sponsored 401(k) plan, it’s worth considering because of the higher contribution limit. And if you are eligible for an employer match to some of the money you put in, don’t miss that — it’s basically free money. In this case, you might consider contributing enough to get that match, and perhaps opening an IRA alongside it so you get more freedom with your investments.

It’s your retirement, so save and invest for it in the way that makes the most sense for 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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Many small business owners might find that they are making good money, but running out of time. See how to “buy more time” in 2024. [[{“value”:”

Is your small business making good money? The U.S. economy is strong, and American consumer sentiment hit a three-year high in March 2024. A recent survey from American Express found that 85% of small business owners are satisfied with the success of their businesses.

If your small business is generating healthy profits, and you’re trying to decide how to invest the extra cash in your bank account, there’s one big thing that you should consider buying more of: time.

When people make more money, their time becomes more valuable. You might notice this if your small business is thriving and keeping you busy. And time is the one thing that we can never get more of. All of us only have 24 hours in a day, and time is fleeting.

Small business owners should consider these ideas to “buy time” in 2024.

1. Automate business processes with software

Are you still doing bookkeeping with spreadsheets, or using manual processes to handle your marketing? Especially if your small business is growing and thriving, you need to take advantage of the great small business software to save time and take items off your to-do list.

Ask yourself:

What is the value of your time on a per-hour basis? (Take your annual income divided by 2,000 hours, to do some back-of-the-envelope math. For example, if you earn $100,000 per year, your time is worth about $50 per hour.)How much money would you save by spending five fewer hours per month on non-essential tasks?How much does a monthly subscription cost for accounting software? (It’s probably less than the dollar value of five hours of your time per month.)

Automating your business helps your company grow and thrive, without the inefficiencies and frictions of manual processes. It’s often worth signing up for small business software just on the value of your time-savings alone, even aside from the extra value, cost savings, and revenue that these tools can help you gain.

2. Delegate non-strategic business tasks

Small business owners sometimes struggle to “let go” of various aspects of their business; if you built the business yourself, you understandably have pride of ownership and you like to make sure that things get done right. But as your business grows, it’s ever more important to find ways to delegate. Train and develop your employees to handle higher-level responsibilities, or hire independent contractors to help you with the workload.

By delegating and outsourcing tasks, you are buying time and clearing your calendar so you can focus on the higher-value projects and high-impact decisions that are most essential for your attention. Buying time with delegating can also free up your day to spend more time on strategic thinking and planning. Try to spend more time toward working “on” your business, not “in” your business.

3. Get help at home

When you’re working long hours at your business it’s hard to find time to mow the lawn, clean the gutters, and do home improvement projects. So hire someone else to do it. Buy more time by offloading your domestic chores, whether it’s painting a bedroom, fixing the front porch, installing a ceiling fan, or even doing laundry.

Unless you’re handy and you love working with tools and home improvement is energizing and restorative for you, most small business owners are likely going to be better off by paying someone else to take those chores off your to-do list. Don’t feel bad about paying someone else to do your chores and home repairs; spend that extra time making more money.

This is a fundamental economic concept called “division of labor.” By doing more of what you do best (running your business), you can generate more profits to pay other people to do what they do best. Value your time, and create opportunities (and side hustles) for others.

4. Pay someone else to cook

In the past few years, Americans have been spending more money on restaurants, takeout, and food delivery. The Motley Fool Ascent’s research found that spending on “food away from home” has increased by 20% since 2021, and now makes up about 4% of total income.

Even though dining out is typically more expensive than buying groceries and cooking at home, most Americans seem to find that the tradeoff is worth it. Especially for time-starved small business owners, paying someone else to cook your dinner can free up precious time to spend on your business, your family and friends, and other aspects of life.

Along with the usual restaurants, takeout, and food delivery apps, small business owners might want to consider a meal subscription service. I personally subscribe to Factor, which ships freshly cooked, refrigerated, microwaveable meals directly to your home. The meals are delicious and are chef-crafted and dietitian-designed, so you get good nutrition from a wide range of flavors and cuisines. No shopping or cooking required!

5. Invest in your health and wellness

Small business owners sometimes get so busy with financial wellness that they neglect their physical wellness. Join a gym, buy a new bike, try a new sport, sign up for a fitness class, or hire a personal trainer. Investing in your health can help you “buy time” for a (hopefully) longer, healthier lifespan.

Bottom line

If you’re a successful small business owner, part of the joy of building a thriving business is that it gives you options to not just make more money, but “buy more time.” As well as paying attention to your bookkeeping and bank statements, try to free up your schedule so you can focus on the activities that will enrich your business — and your life.

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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.American Express is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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