Money Management

Want to pay off your mortgage years sooner and save tens of thousands of dollars in interest? Keep reading for a move to try. [[{“value”:”

Mortgage rates remain at elevated levels, and the amount of interest you pay on a 30-year mortgage can literally be more than you’re paying for the house.

One way to potentially save money on your mortgage over the long run is to make payments biweekly instead of monthly. In this article, I’ll discuss why paying biweekly could save you money, the pros and cons of doing so, and whether it might be a good idea for you.

Biweekly mortgage payments and why it could be a smart move

Here’s how it works. Instead of making your mortgage payment each month, you make half of your mortgage payment every two weeks. In other words, instead of paying $2,000 on the first of every month, you could simply pay $1,000 every other week.

Here’s why it works. There are 52 weeks in a year. If you make biweekly payments, you will have paid half of your mortgage payment a total of 26 times throughout the year. This means that you’ll have made 13 mortgage payments in a year, instead of the usual 12. The extra payment will be applied to the principal, in its entirety.

Example of biweekly mortgage payments

Let’s look at an example to illustrate this. We’ll say that you just bought a home for $500,000. You put 20% down and financed the rest with a 30-year fixed-rate mortgage for $400,000 with an interest rate of 6.5%. This makes your monthly payment $2,528 for the principal and interest. For simplicity, we’ll ignore taxes and insurance, although these would typically be added to your payment.

If you simply made your monthly payments as scheduled, you would make payments for 30 years, and would pay a total of $510,178 in interest.

Now, let’s say that instead of sending your bank $2,528 per month, you send $1,264 every two weeks. By doing this, the following two things will happen:

Your mortgage will be paid off in just over 24 years, so you’ll own your home free and clear nearly six years sooner.Your total interest will be $388,861, saving you more than $120,000 in finance charges.

Drawbacks of a biweekly payment plan

To be sure, if you receive biweekly paychecks already, a biweekly payment plan could make good financial sense for you. But it’s important to emphasize that you aren’t saving thousands of dollars in interest and cutting your repayment time by years by simply paying the same amount of money. You’re paying more.

In short, before you enroll in a biweekly mortgage payment plan, be sure that you can afford the additional payments. It could certainly work out favorably in the long run, but it’s important that your budget can absorb an extra full mortgage payment each year.

It’s also worth noting that if your mortgage interest rate is low, you might be better off simply making your regular monthly payments. Think of it this way — why would you pay extra towards your mortgage that has a 3% interest rate when you could simply put that money in a high-yield savings account and get a 5% APY?

It’s also worth noting that under no circumstances should you pay anyone to set up a biweekly mortgage payment plan for you. You might see solicitation letters in your mailbox offering to set up a biweekly mortgage repayment plan on your behalf, but the reality is that many mortgage lenders allow you to set this up quickly on their online portals. Even if yours doesn’t, you can manually pay every two weeks. You can also set up an automatic bill pay from your checking account.

Is paying biweekly right for you?

Like most financial decisions, there’s no perfect answer. If your goal is to get your home paid off quicker without much noticeable pain in the near term, paying biweekly could be right for you. Just be sure the extra payments won’t hurt your budget, and that paying off your mortgage quickly makes good financial 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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Drowning in child care expenses? Read on for some ways to potentially save big. [[{“value”:”

When you have kids, you certainly know to budget for things like infant care supplies, extra food, and healthcare. But one expense that tends to catch parents off guard is child care. And if you’re currently struggling to cover the cost of child care, there may be steps you can take to whittle it down. Here are a few tips worth employing.

1. Ask for a second (or third) child discount

In 2023, the average cost of a week of infant daycare was $321 for a single child, according to Care.com. And while it was slightly lower for a toddler at $293, that’s still a pretty whopping sum.

But one thing you may be able to do is negotiate with your daycare provider if you have more than one child enrolled on a full-time basis. Even if your daycare center already offers a sibling discount, there’s no saying you can’t try to score a better one. So if the current offer is 5% off of the cost of your second child’s care, you can try negotiating so you get 5% off of both kids’ care if you have two enrolled.

2. See if your daycare center has a referral program

Some daycare providers offer referral programs that can put cash in your pocket (or, more accurately, result in discounted care) for sending other families their way. It pays to see if the center you use has such a program in place.

And if not, suggest one. Even if you only get $100 off of your costs per family you refer who signs up, that’s still something.

3. See if you can work from home to reduce your child care hours

If you have an infant or toddler at home, you need someone to watch over them while you do your job, even if you’re able to do it at home. But if your current work arrangement has you showing up to an office five days a week, try asking your employer to let you work from home on at least a partial basis.

Some daycare centers have a standard daytime rate that covers certain working hours, but parents with a longer commute might have to pay for extended care. So let’s say your office is an hour away and your daycare center’s “regular” hours are 8:00 a.m. to 6:00 p.m. If you need care from 7:00 a.m. to 7:00 p.m., it may be available at an extra cost. If you can work from home a few days a week, it might spare you from bearing that added cost every day.

4. Look into a nanny share with nearby families

If your job is demanding and has you working longer hours, a daycare center may not cut it for you. Rather, you may need to hire a nanny to look after your child. But at an average weekly cost of $766 in 2023 for a single infant per Care.com, the cost there can be downright prohibitive.

That’s why it could pay to try to set up a nanny share. How this usually works is you find at least one other family in close proximity (say, down the block or on another floor in your apartment building) whose care needs are similar to yours. You then make a schedule where you switch off having a nanny come to one of your homes and watch both of your children at the same time.

Now, a nanny might charge more for watching two children rather than one. But let’s say the weekly cost for a single child is $750 and the cost for two children is $900. Even so, you’re looking at spending $450 a week, which is less of a blow to your bank account than $750.

Paying for child care is not easy. But these tips might allow you to save money to some degree, thereby easing the burden.

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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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Your credit score is one of the main factors in the interest rate lenders charge you. Check out a helpful move you can use to give your score a boost. [[{“value”:”

When you apply for a loan, your credit score is extremely important. The lender will check it before deciding whether to approve your application. And if it does, it will use your credit score to set your loan’s interest rate.

This makes a huge difference in how much you pay. Let’s say you’re getting a 60-month auto loan for $30,000. If your score is 720 or higher, you could qualify for a rate of 7.5%, according to recent data from MyFICO. If your score is 650, you could get a rate of 12.7%. That will cost you $4,576 more in total interest.

It’s a good reason to get your credit score as high as possible before applying for any loans, including personal loans, mortgages, and auto loans. Luckily, there’s a trick you can use to raise your credit score in as little as one month.

Lower your credit utilization, raise your credit score

There are several factors that impact your credit score. One of the most important is your credit utilization ratio. This is your credit card balances divided by your credit limits. It gets updated every month when your card issuers report the balances and limits on your credit cards.

For example, you have a balance of $8,000 and a credit limit of $10,000. Your credit utilization is 80% ($8,000 divided by $10,000).

That would be a problem. People who have large balances on their credit cards are considered to be a higher risk. A high credit utilization will negatively affect your credit score. As a general rule, it’s best to use less than 30% of your credit.

How much of an impact this has varies. Colleagues of mine who have gone above 50% credit utilization have seen their scores drop by 25 to 32 points. That’s more than enough to take you down one or two credit score ranges, leading to a much higher interest rate on a loan.

You can use credit utilization to your benefit, though. Because it gets reported every month, it’s one of the fastest ways to raise your credit score. By lowering your credit utilization, you could raise your credit score by 25 points or more.

The best ways to reduce credit utilization

If you’re in credit card debt, you may have high credit utilization. You can check this using any free credit score service online. These will tell you your current credit utilization. If you don’t have a credit score service you use yet, check out The Ascent’s guide to how to get your credit score.

If your credit utilization is a problem, the most effective solution is to pay down your card balances. Use any extra savings you have. You’ll save on interest by paying off your debt more quickly. And when you apply for your loan with better credit, you’ll likely get a lower interest rate.

Easier said than done — I get it. If you could just pay down your credit card debt, you would’ve already done that. But there are a few other options that could do the trick.

Ask your card issuers for a credit limit increase

Lowering your balances isn’t the only way to lower your credit utilization. You can also try to raise your credit limits. If your balances stay the same and your credit limits increase, then your utilization will decrease.

Credit card companies don’t mind if you ask for a higher credit limit. If you’ve always paid on time, there’s a good chance that they’ll approve your request. You can ask over the phone by calling the number on the back of your card. Many card issuers also let you request a higher credit limit in your online account.

Let’s say you have $6,000 in balances and $10,000 in credit limits across your credit cards. You ask all your card issuers for higher limits and manage to get $15,000 in credit. That would take your utilization from 60% down to 40%.

Pay your credit card bill more often

Your credit utilization is a monthly snapshot. It’s based on your card’s balance and credit limit on the day it was reported by your card issuer. So if that happens on the 25th, and you made a big purchase on the 20th, your utilization may be higher for that reason.

It can help to make more frequent credit card payments. Some people pay their credit cards twice a month for this reason. When you pay more often, it keeps your balance from getting too high.

You could also contact your card issuer and ask when it reports your credit utilization. When you know the exact date, you can make sure to get your balance as low as possible before then each month.

A smart way to save on a loan

Many of the factors that affect your credit score are time-related. For example, the only way to have a good payment history is to build a long track record of on-time payments. Your credit history is based on how long you’ve been using credit.

Your credit utilization is different in that it changes every month. So if you want to get a loan soon, try to reduce your credit utilization. It could be the fast track to a higher score and a lower interest rate.

Our picks for the best personal loans

Our team of independent experts pored over the fine print to find the select personal loans that offer competitive rates and low fees. Get started by reviewing our picks for the best personal loans.

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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Traveling abroad can be expensive, but there are ways to make it more affordable. Here are a few easy ways I save on international trips. [[{“value”:”

Traveling abroad is an amazing experience. Some of my favorite memories are international trips I’ve taken. But these also tend to be much more expensive than shorter journeys. While prices can vary quite a bit, NextVacay reports that the average cost of an international trip is $2,300.

I love to travel, and I’ve been living abroad for more than five years now. During that time, I’ve learned plenty of easy ways to save money. Here are my best tips on how to travel abroad for less.

1. Get cheap phone service with an eSIM or a local SIM card

You’ll need phone service, or at least mobile data, while you’re abroad. If you buy this through your U.S. carrier, you probably won’t get the best deal. AT&T charges $10 a day for an international day pass. Verizon charges the same amount, except in Canada and Mexico, where it charges $5 a day.

It’s usually much cheaper to get local wireless service. There are two ways to do this:

Buy an eSIM. If your phone supports eSIMs (many Android and iPhone devices do), this is a convenient option. You can buy an eSIM for the country you’re visiting through a service like Airalo.Buy a SIM card at your destination. Some airports have stores where you can buy a local SIM card upon arrival. If you don’t find one, you could visit a phone store to buy a SIM card and a prepaid data plan.

I’d recommend checking out eSIMs first, so you’ll have mobile data right when you arrive. I recently used Airalo and was impressed with how fast and easy it was. In France, I was able to get 30 days of data with a 3 GB limit for $10. I just downloaded the app, chose a plan, and installed the eSIM on my phone.

2. Buy meals and snacks at grocery stores

I realize that nobody takes a vacation to go grocery shopping. Personally, I like having some food and drink options wherever I’m staying. It’s fun to go out to restaurants and explore a country’s typical cuisine. But after a long day of activities, sometimes I don’t feel like going out and sitting through a meal service.

That’s when it’s helpful to have quick meal options in the fridge. It’s also great for your travel budget. A meal at a restaurant can cost $25 to $50 per person in many parts of the world. If you’re doing that twice a day, it adds up. You could swap out one of those with a sandwich, poke bowl, or anything else that catches your eye at a local market.

3. Use travel rewards to cover the biggest travel costs

Airfare and accommodations are normally two of the most expensive parts of traveling abroad. They’re a lot less expensive if you pay for them using points instead of cash.

Now, I’m a huge fan of travel credit cards. Because I like them so much, I’ve gone pretty deep when it comes to learning about them and using them. I’ll use air travel cards to pay for my flights. And I’ll use hotel credit cards for hotel points and free night certificates.

There’s a bit of a learning curve with this type of card, but you don’t need to study them in-depth to save money. If you want to give them a try, check out The Ascent’s guide to the best travel credit cards. Find a card you like, use it for all your regular spending, and you’ll earn rewards you can use to cover travel expenses.

4. Do a mix of more expensive and budget-friendly activities

Most places have activities at every price range. I like to do a bit of everything. It’s nice to have variety, and it’s also nice not spending $100 or more everywhere you go. And activities that don’t cost much can still be a blast. I’ve had a great time spending the day at the beach, reading at cafes, and exploring neighborhoods.

Try making a list of activities you might like to do. Then, narrow it down based on what works for your budget and the amount of time you have. For example, maybe you’ve found a few Michelin restaurants where you’re going. A long, luxurious dinner is a nice treat, but would you want to do it every night? Probably not, so you could pick one of those restaurants, and schedule more budget-friendly activities the next day.

You don’t need to go over your budget or into debt to travel abroad. If you plan ahead, save up for it, and know how to cut costs, you can have the time of your life at a price you can afford.

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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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Life insurance is designed to protect the people who depend on you after you’re gone. Here, we look at how much coverage you need at age 60. [[{“value”:”

When you’re 30 years old, it’s tough to imagine what it will be like to be 60. Once you’re 60, you realize just how much more living you have to do. However, you’re also aware that you don’t have as many years ahead of you as you have behind you. With that sobering thought, we dig into how much life insurance a 60-year-old should still carry.

A formula — of sorts

One way of calculating how much life insurance you need is based on the value of future earnings. One simple way people estimate how much insurance they’ll need to cover future earnings is like this:

Age 18 to 40: 30 times your incomeAge 41 to 50: 20 times your incomeAge 51 to 60: 15 times your incomeAge 61 to 65: 10 times your income

For example, if you’re a 60-year-old earning $100,000, this rule indicates you need $1.5 million in life insurance coverage. But whether you actually need that much depends on several factors.

The size of your nest egg

If you’ve always invested, you may have millions of dollars sitting in an IRA account, money that will pass to your beneficiaries when you die. If, after considering the financial obligations they will face following your death, you determine that there’s enough invested to help them remain comfortable, you may be able to get away with a much smaller life insurance payout.

DIME formula

The DIME formula is a simple way to determine how much life insurance coverage you need. It involves four factors: Debt, income, mortgage, and education. Here’s how it works:

Debt: Add up all your current debt (except your mortgage). This includes personal loans, credit cards, and car payments. Once you’ve totaled that amount, add an additional $7,000 to $9,000 to cover final expenses.Income: In this column, write down how much you earn a year and how many years your beneficiaries will likely need that money. For example, if you have two children still in college, think about how long it will be for them to finish school and get out on their own. Multiply that number of years by your current income. Let’s say you earn $50,000 annually and expect both kids to be out on their own in five years. That means you need a policy worth $250,000.Mortgage payments: Take a look at your last mortgage statement to find the payoff amount. If you have a home equity line of credit (HELOC) or other lien against your home, add that amount. Since you undoubtedly want your beneficiary to have the option of staying in the home when you’re gone, you know that you need a life insurance policy worth at least that amount.Education: If you still have a teenager at home, plan for between $100,000 and $150,000 to cover their higher education expenses.

Once you’re done taking these four factors into account, add them up. Adjust that number by subtracting any current life insurance, savings accounts, or investments you already have.

Act now

The earlier you purchase life insurance, the less you’ll pay. There are a couple of reasons for this:

The longer you wait, the more likely you are to encounter health issues — problems that could cause the cost of a policy to soar.In addition, the older you are when applying for life insurance, the more a policy will cost.

Life insurance is an important factor to keep in mind as you plan for your financial future. Having it won’t benefit you monetarily, but just knowing that the people you love are taken care of can offer peace of mind. And peace of mind is priceless.

Our picks for best life insurance companies

Life insurance is essential if you have people depending on you. We’ve combed through the options and developed a best-in-class list for life insurance coverage. This guide will help you find the best life insurance companies and the right type of policy for your needs. Read our free review today.

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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