It’s crunch time for holiday shopping! Hopefully you scored some great deals over Black Friday and Cyber Monday—but if not, don’t despair. Even though those big shopping days are in the rearview mirror, December can be a great time to shop, particularly for tools, games, electronics, and cozy clothes for the cold weather.
Tools and Hardware
For the DIY person on your list, tools and hardware are hot items to purchase this month.
Acme Tools: Save $20 on Milwaukee tool orders over $100 with code MILW2017. Expires 12/5.
ToolsChest.com: Get 10% off orders over $50 with code KITSALE. Expires 12/13.
If you are still in need of some holiday cheer around the house, December is the best time to stock up on (artificial) Christmas trees, wreaths, paper products, and ornaments. Discounts will deepen as the month progresses.
Target: Save $25 on holiday decorations of $75 or more, while supplies last.
Christmas Tree Shops: Get $10 off any purchase of $50 or more with code WELCOME1173, through 12/6.
Gym memberships, workout DVDs, fitness equipment, and leftover holiday gift sets are all more favorably priced in January. Last January, sports retailers like Dick’s, 24 Hour Fitness, and Footlocker had sales and there were also deals from beauty retailers like Bath & Body Works, e.l.f., Ulta, and Soap.com.
Ever since the first “white sale” in 1878, January has been a great month to buy bedding and linens. Many stores, like West Elm, Pottery Barn, and J.C. Penney, slash prices on sheets and bedding to make way for new spring merchandise.
While jewelry can make the perfect holiday gift, we don’t often see deep discounts in this category until after Valentine’s Day. Mother’s Day is also a good time for jewelry sales.
The first Model-T cost as little as $825 in 1908, which is about $18,000 adjusted for inflation. Today, the average car buyer can expect to leave a dealership with a new car for around $35,428. That was the average transaction price for a new vehicle in October — an all-time high — according to auto comparison website Edmunds.com.
The average new-vehicle transaction rose 2 percent from October 2016 and 12 percent over the past five years. The average down payment on a new car also hit a new record: $3,966, which is up $374 from last year and $454 from five years ago.
Why are prices up?
The increase is due in part to a rise in the number of features that come standard with a new car these days, like automatic emergency braking and backup cameras, says Ronald Montoya, senior consumer advice editor for Edmunds. In addition, consumers are moving away from lower-cost, smaller sedans, climbing into higher-priced, larger SUVs and trucks.
Montoya says the general decline in overall gas prices since 2008 is partly responsible for the shift in consumer preferences. Plus, many shoppers favor a higher driving position and having more storage space.
Before we get to how you can find savings on a new car despite the higher price tags, let’s talk about a savings strategy that can backfire.
Looking beyond your monthly payment
Many are opting for longer auto loans to cope with rising car prices, says Matt DeLorenzo, managing editor for kbb.com, the website for vehicle research publisher Kelley Blue Book. Recently, the Consumer Financial Protection Bureau (CFPB) found that 42 percent of auto loans made in the last year were for six-year terms or longer, up from 26 percent in 2009.
Taking out a longer auto loan to pay a lower monthly price isn’t an ideal hack, DeLorenzo tells MagnifyMoney. While a longer term keeps your monthly payments lower, you end up paying more in interest over the life of the loan than you would with a shorter-term product. That makes your new car even pricier, so avoid taking out a longer loan to squeeze an expensive vehicle into your budget..
The CFPB found that six-year auto loans cost more in interest over time, are used by consumers with lower credit scores to finance larger amounts, and have higher rates of default. Here’s a good rule of thumb to keep in mind when you’re reviewing financing options: If you are unable to afford financing an auto purchase over four years, perhaps it’s out of your price range.
DeLorenzo says going with a longer loan is one of two actions people are taking in response to higher prices. The other: leasing.
It is true that leasing a vehicle saves you money on monthly payments in the short run, but there’s more to this financial story. Indeed, if you drive a lot of miles, leasing may be a bad idea. You may be hit with extra mileage and wear-and-tear charges at the end of your lease.
How to save on a new car
So prices are at record highs. The experts we talked to say there are still ways you can save when buying a new vehicle in this market.
Try a compact vehicle
If you’re shopping for a car in 2017, you’re likely looking at a crossover, midsize vehicle or truck. Those larger vehicles are in demand right now, and, according to Edmunds, the shift to the larger vehicles has driven interest rates and prices up. However, automakers are struggling to move less-popular 2017 models like compact sedans off dealership lots.
DeLorenzo, the KBB editor, recommends purchasing a less-in-demand sedan or crossover vehicle to find savings.
Many new compact cars may be sold for up to $10,000 less than a larger SUV or truck by the same manufacturer, he says. By choosing a sedan or other compact vehicle, you trade size for better fuel economy and a more affordable car.
And because dealers are having a hard time selling these models, you might see better discounts, more incentives and improved lease deals on more traditional sedans and family cars, according to DeLorenzo.
Pair a lower down payment with GAP insurance
Common savings advice for car shoppers includes making a down payment of at least 20 percent of the vehicle’s transaction price. This tactic is intended to save you money right away, as a new car loses about 20 percent of its value in its first year of ownership, according to Montoya.
People are putting down closer to 12 percent of the vehicle’s value at signing because it’s tough to save up 20 percent since vehicle prices have gotten more expensive, Montoya tells MagnifyMoney. He says most people tend to go with making a down payment that results in a monthly payment they are comfortable with.
But, since a new vehicle loses about a fifth of its value in its first year of ownership, “if you put down payment of 12 percent, you are already in the red,” Montoya adds. He says you may want to look at GAP insurance if you put down less than 20 percent.
Services like GAP — Guaranteed Auto Protection — insurance and new car replacement insurance will cover the difference between what the vehicle is worth and what is owed on the loan in the event of total loss or accident.
Ask your insurance company if it offers new car replacement insurance or GAP insurance. If your insurance doesn’t offer new car replacement or the monthly cost of the insurance is outside of your budget, Montoya says to consider getting GAP insurance from the dealership.
Adding GAP insurance may tack on another monthly transportation cost, but it can save you from possibly owing thousands on an upside down auto loan in the event you have an accident and lose your vehicle.
On the downside, GAP insurance coverage may vary from insurer to insurer, so be sure to ask what the insurance can apply to. Some policies, for example, may cover collisions but not flooding or theft.
Look out for incentives
A little research can go a long way when you’re car shopping. Keep an eye out for extra savings in the form of incentives from both the dealer and the manufacturer.
Both Montoya and DeLorenzo recommend checking the manufacturer’s website or comparison websites like KelleyBlueBook.com or Edmunds.com for savings before you set foot on a dealer’s lot.
There may be special incentives you qualify for based on your status as a veteran, student or ride-share driver. You may also find a loyalty incentive, reserved for those who already own a car by the same manufacturer, or a conquest incentive, offered to customers willing to trade in a competing brand.
Be sure to enter your ZIP code to find incentives most relevant to you at local dealerships, and to search based on the exact model you’re looking for.
Even if you think you’ve found all you could dig up, you may discover additional savings if you ask the salesperson about any deals or promotional offers the dealer may be running when you come in. Wait until you’re at the negotiating table to bring the deal up, advises DeLorenzo.
“Keep that in your back pocket,” he says. “If they don’t offer them to you. then bring them up.”
Get preapproved for financing
You don’t have to leave the financing to the dealer, and you shouldn’t if you want to ensure you’re getting a good deal. Get preapproved for financing before you show up at a dealership. That way, if the dealership offers you financing at a higher interest rate, you can counter the offer or, at the very least, have a benchmark for offer comparisons. Naturally, you should aim to finance your new vehicle at the lowest interest rate possible.
The first step to saving money on anything is shopping around. Compare prices of the vehicle you want across multiple dealers.
“A lot of people tend to go to the dealership that’s closest to them and they don’t shop around,” says Montoya. He recommends going to at least three different dealerships. “You’ll see three different offers and you’ll get a better idea as far as price,” he says.
Websites like Kelley Blue Book, TrueCar and Edmunds make it fast and simple to compare prices of new and used vehicles online. Use the sites to compare sticker prices before you head out to the dealership. Beyond the physical vehicle, take the time to compare what you can expect to pay for must-haves like auto insurance and vehicle maintenance, as they can fluctuate depending on the vehicle you choose.
Time your purchase just right
Simply walking onto the a dealer’s lot at the right time of the year can save you a chunk of cash. Montoya says the holiday season is a good time to shop for a new vehicle; dealers are looking to clear out their inventory of the outgoing year’s models to make room for new vehicles.
“Look at vehicles on the outgoing year,” says Montoya. “They will have more discounts and there is more incentive for dealers to sell those models.”
You also want to pay attention to when the vehicle came out. The longer a car is out, the more likely it is to have more discounts than newer models, adds Montoya. He recommends going back a model year to save money if you don’t mind getting a used car instead of a new one.
Conventional wisdom says it’s smart to save up for unexpected expenses, like covering the basics after a job loss or settling medical bills after an emergency treatment. But because the costs of medical care can be so unpredictable — and often so wildly expensive — should you even try to save up for them and tap your rainy day reserve when they occur?
Yes and no.
Financial planners say you should set aside money for medical expenses — expected or unexpected — so if anything happens, you will at least have a cushion. But it’s not a good idea to drain your emergency fund on hospital bills so large that your emergency fund won’t cover all of it.
“If you were to drain all your emergency fund on that medical bill, let’s say a car breaks down,” says Juan Guevara, a certified financial planner based in Colorado. “Then the only resource at that point is getting into debt.”
In fact, if you can come up with other strategies to pay down those medical expenses, it may be wiser to preserve your emergency fund as much as possible. Here’s what you can do when are surprised by a big medical bill:
Ask for a payment plan
First, you should reach out to the hospital or doctor. Many medical institutions actually provide low-interest or even no-interest payment plans for patients who cannot pay bills — particularly big hospital bills — in full.
“Anyone whom you owe money to is a good place to start with: Is there some kind of financing they could provide?” says Catherine Hawley, a certified financial planner in California.
“There’s not one kind of ubiquitous standard, but it’s definitely something to look into.”
But you have to ask; this isn’t something hospitals are advertising.
Guevara says his family got a medical bill for more than $11,000 a few years ago after his wife had an emergency surgery. The couple called the hospital, asking if they could work out a payment plan, and the hospital agreed to a one- or two-year plan with no interest after an initial $4,000 payment.
“If there’s no interest, why not to spread it out a little bit more?” Guevara asks. He chose to pay off the hospital costs over two years.
It’s also possible to negotiate a lower bill with hospitals and doctors.
Guevara says some of his friends who didn’t have health insurance coverage have successfully done this. They explained their predicament while showing the willingness to pay in cash, and the hospital not only reduced the amount they needed to pay, it also provided payment plans.
“For a hospital, it’s better to collect something than collecting nothing,” Guevara says.
It’s OK to tap your emergency fund — just don’t wipe it out
When a huge, unexpected medical bill arrives, your emergency fund may not come close to covering it. Still, financial advisers suggest you save some money for such emergencies and tap part of your rainy-day fund when needed.
“You are making things a little bit easier for yourself,” Guevara says. “If you start treating a lot of things as not-unexpected, when it actually happens, you already have some money there.”
To come up with the $4,000 to cover part of his wife’s surgery costs, Guevara had to take $1,000 out of the family emergency fund, in addition to using funds from their Health Savings Account (HSA).
Guevara suggests that, as a rule of thumb, no more than half of your emergency fund should be applied to expensive health care costs.
For those who feel reluctant to touch their rainy-day cash for medical emergencies, Hawley recommends you learn what your out-of-pocket maximum is — the most you have to pay for health care services in a plan year — and include that amount in your fund. After you hit your out-of-pocket max, your insurance company covers your health care costs for the rest of the year.
If you anticipate a lot of medical bills in the coming year or have a personal or family history of medical problems, you might want to set aside separate money so you can preserve your emergency fund as much as possible, Hawley advises.
Take advantage of an HSA
People with a high-deductible health plan (HDHP) are eligible for a tax-advantaged Health Savings Account. Pros highly recommend that those who have an HSA use it not just as a medical fund for unexpected emergencies, but also as a long-term retirement savings account.
The money you put into an HSA is tax-deductible. The balance grows tax-free and rolls over each year. Withdrawals from your HSA for qualified medical expenses are not taxed.
The annual maximum HSA contribution in 2018 is $3,450 for an individual and $6,900 for a family. If you are at age 55, you can contribute an additional $1,000 annually.
“For very high medical bills, it’s not going to be the only answer, but it could be a nice piece of the puzzle,” Hawley says.
When a surprising hospital bill arrives, instead of paying for it in cash, Guevara suggests you take the money out of savings account and deposit it into your HSA first. Paying the medical bill with an HSA helps you save money, because then you can deduct that contribution on your income tax return.
An FSA (Flexible Spending Account) can be similarly helpful, though it can be tricky to decide how much to put in such an account: FSA funds must be used by the end of the year.
Enlist help from family and friends
Before resorting to credit cards or other types of loans, look for ways to pay bills without having to take on interest-bearing debt. You may not like the idea of asking for help, but a loan from a family member or friend may be your most affordable option.
“You gotta push yourself out of your comfort zone and ask for people to help you,” says Dan Andrews, a financial planner based in Colorado. “And put yourself in their position like, ‘If i was the loved one of the person that comes to me for help, I would want to help them.’”
What to do if after you dip into your fund
Replenish your fund after withdrawals so you’re prepared for future unexpected costs.
A drastic lifestyle change may also be needed so that you could redirect more of your money to pay down the medical debt. If you “don’t need a car as much as they used to, sell that, or maybe find other ways to increase your earnings,” Andrews says.
Americans appear to be back to their pre-recession savings habits. The personal savings rate in the U.S. dropped to 3.1 percent in September 2017, according to the Commerce Department — the lowest level since the Great Recession took hold.
Meanwhile, Americans are spending more (household debt is at a 10-year high) and consumer confidence has risen to its highest level in almost 17 years, according to data released Tuesday through The Conference Board, a global, independent business membership and research association.
Household debt is on the rise again. Total household debt increased to $12.84 trillion in the second quarter of 2017, up $114 billion, or 0.9 percent, from the same quarter last year, the Federal Reserve Bank of New York reported in August. This was a new high since the third quarter of 2008, the peak of the mortgage crisis. People may feel they can get access to funds by borrowing when it is needed, rather than holding money in savings, said Andrew Opdyke, economist at the First Trust Advisors.
But incomes are up and we’re spending more. While personal income rose 0.4 percent in September, consumer spending surged 1 percent, the fastest pace since 2009, Commerce reported.
Hurricanes don’t come cheap. The Commerce Department Bureau of Economic Analysis (BEA) said August and September estimates of personal income and spending reflected the effects of Hurricanes Harvey and Irma. Millions were displaced by the hurricanes, and experts say the spending jump was driven by a hurricane-induced uptick in auto sales and increases in gas and household utility prices.
It’s not exactly news that Americans aren’t the greatest savers. The Federal Reserve reported that in 2016, 44 percent of Americans could not come up with $400 in cash to cover emergencies.
But should we worried that we’re saving less and spending more than we have in a decade?
Economists say that as the economy is humming along, consumers are feeling more confident that they can spend and borrow more without putting themselves in financial distress. It’s no coincidence that Americans saved the most in the same year (2012) that consumer confidence was comparatively low.
Brian Wesbury, chief economist at First Trust Advisors, writes that rising debt levels aren’t so alarming when you factor in overall income growth. Household incomes grew by 3.2 percent between 2015 and 2016, according to the Census Bureau.
“Yes, consumer debts are at a record high in raw dollar terms, but so are consumer assets,” wrote Brian Wesbury, chief economist at First Trust Advisors. “Comparing the two, debts are the lowest relative to assets since 2000 (and that’s back during the internet bubble when asset values were artificially high.”
How to calculate your personal savings rate
Take your total monthly income from all sources (salary, retirement account, etc.), less taxes and money spent on everyday expenses, including debt payments.
Next, divide your monthly savings amount by your total income. Then multiply by 100 to get your personal saving rate.
There’s no magic savings rate to aim for. A good rule of thumb is to save 10 percent of each paycheck for retirement, and establish an emergency fund covering at least three to six months’ worth of basic living expenses.
Evidence suggests that many Americans are just getting by, shouldering record levels of student loan debt while grappling with rising fixed costs. The Consumer Financial Protection Bureau in September reported that 43 percent of American adults struggled to make ends meet in 2016.
But savings is key to achieving financial security. The CFPB study found that adults with savings and financial cushions had a higher level of financial well-being than those who didn’t have a safety net to fall back on.
7 strategies to boost your savings:
Automate. Many employers can set up automatic deposits of your income into multiple checking or savings accounts. You can have a portion of your paycheck automatically transferred into a savings account so that you will be less inclined to touch that money. It makes easier for you to resist the temptations to spend.
Make retirement a priority. If you are not able to set aside 10 percent of your income, you should try to contribute enough to capture the full company match for your 401(k), if your employer offers one.
Track your spending. You will be surprised by the amount of money you spend on groceries or Starbucks once you actually track the money coming in and out. The more you know about your finances, the better off you’ll be. A simple app to track spending patterns is a good place to start engaging in day-to-day money management and establish a habit of saving and budgeting.
Get rid of high-interest debts. Debts are anti-assets. It makes more sense to pay off high-interest debt, such as credit card debt, than to save. Here are four tips to help you pay down debts.
Avoid lifestyle inflation. Lifestyle inflation means people spend more as their incomes increase. It is one of the ultimate budget-killers.
Don’t keep up with the Joneses. Forget them. The key to being satisfied with the state of your finances and your life is focusing on your needs and goals rather than comparing with your friends and co-workers
Find ways to help break your negative spending habits. Here is a simple $20 rule that can help break your credit card addiction. We’ve also written about other strategies to break bad money habits here.
With Black Friday and Cyber Monday just a few weeks away, you may have instituted a shopping moratorium until then. The post-Thanksgiving sales will be undoubtedly great, but sales are going to pop up throughout November, particularly for large appliances, video gaming, and apparel.
Take a look at some of this year’s best November deals.
1. Large Appliances
Appliances often go on sale in September and October when new models are released. However, according to data from deal site Slickdeals, some of the best appliance sales of 2016 were actually in November—at stores like Sears and Lowe’s. This year, impressive promotions will make a comeback.
ApplianceConnection.com: Sliding scale discounts based on the amount spent, starting at $20 off purchases over $1199.99, through 11/2.
GE Appliance: Up to 27% off certain dishwasher collections and up to 45% off washers through 11/6.
Forum Home Appliances: Up to 43% off current best-selling products through 11/30.
Best Buy: Free delivery on major appliance orders of $399 or more through 12/30.
If someone on your list needs a tablet—even if that someone is you—you may be thinking Black Friday and Cyber Monday, but there could be some surprise sales before then. To get the best price, set deal alerts on various deal sites for the item you’re looking for. Once a deal is available, you’ll be notified.
Best Buy: Up to $100 off certain Galaxy tablets and up to $15 off select tablet cases.
HP:$10 off purchases of $60 or more with code GREET17 through 11/2.
Apparel deals are plentiful this November. We’ll see sales all month long, and they’ll ramp up around Cyber Monday, with deeper discounts and fewer restrictions. Like last year, there will be discounts from many popular stores like Nordstrom and Macy’s.
Miracle Body: 50% off all orders—though there are some restrictions—with code MB50 through 11/2.
Necessary Clothing:20% off any order with code FB20 through 11/4.
Macy’s: 25% off your next order when you sign up for an account on the Macy’s app through 11/11.
Nordstrom: Up to 30% off any Nordstrom gift card at Raise.com.
Gap: Up to 75% off purchases during the Great Big Fall Sale through 11/6.
Kohl’s:15% off your next order of $100 or more with code CATCH15OFF.
Kate Spade: 15% off your next purchase through 11/5.
If you’re in the market for a TV, wait until Black Friday or Cyber Monday—the prices are traditionally the lowest then. Typically, retailers won’t post specific sales until very close to Black Friday, but if last year is any indication, there will be spectacular discounts. And you may even find 4K TVs for the price of 1080p TVs.
Best Buy: Up to 45% off select smart TVs and other TVs through 11/5.
Vizio: Up to $500 off at the Fall Big Screen Sale while supplies last.
Now is a great time to stock up on video games, consoles, and accessories. Last year, the Nintendo 3DS Super Mario Edition was available at Toys“R”Us for only $100, and at Target, the 500GB Xbox One S Battlefield 1 Bundle was just $250 and came with a $40 Target gift card. In games, Walmart offered the Guitar Hero Live bundle for only $25. We anticipate similar deals this year, especially closer to Black Friday and Cyber Monday.
Gamestop: 16% off pre-owned games with code CAG16.
Gamesdeal:44% off Mafia 3 for the PC with code GD4off.
Keep an Eye Out for Apple Deals
In late September, Apple introduced the iPhone 8 and iPhone 8 Plus. And while Apple is not known for its deals, there may be sales on the 8 after the new X comes out early this month. We also expect to see deals on the Apple Watch Series 2, with the impending introduction of Series 3.
What Not to Buy in November
The savings in this category are at their highest in December and January, due to the impending shipment of new models in February.
If you can hold off until next month, do. Stores like Hobby Lobby, Kmart, and Macy’s will be anxious to clear space and the discounts will get better and better throughout December, peaking right after the holidays.
Ah, October. The kids are finally getting settled into their school routines and weekends are devoted to leaf peeping and apple picking. If your busy schedule allows time for some shopping, October is also a great time to replace those ratty gym shoes, book your holiday travel, refresh your cookware in advance of all those holiday parties you’ll be throwing, and, of course, purchase Halloween costumes for the family.
According to the deal experts at Slickdeals.net, here are the four categories you should focus on—plus a few known deals to help you get the most for your money.
If you’ve worn your sneakers into the ground, or if someone on your holiday list is in need of a pair, now is the time to start looking. According to Slickdeals.net, retailers like Puma, Macy’s, Nike, and Adidas had footwear for 30% off in 2016, on average.
Kohl’s: 20% off select items already on sale with code WHATADEAL from 10/2 to 10/4.
Under Armour: 10% off for students, military personnel, and first responders through 12/31.
FitFlop: 20% off men’s styles plus free shipping through 10/4.
Puma: Up to 50% off women’s sale items, plus free shipping.
If you’re contemplating a trip home for the holidays, start looking at prices now. Last year saw sales on travel from Southwest ($44 one-way), WOW Air ($99 one-way to Iceland and $99 one-way to Europe), and JetBlue (30% off). Royal Caribbean also offered buy two, get two free deals for select cruises in November and December.
Avis: Up to 25% off car rentals with promo code S951601, and a free car upgrade with promo code UUGA037.
Expedia: 10% off select hotels when you join Expedia+, plus up to 40% off select trips through 1/31/2019.
AccorHotels: 30% off and a free breakfast for bookings made on AccorHotels.com for bookings 10/16 through 10/20.
3. Cookware and Small Appliances
Whether you’re gearing up for your annual holiday hosting or your cookware is looking worn, you’ll find solid deals this month. Last year, Slickdeals saw deep discounts on brands like OXO, Lodge, Crock-Pot, and Pyrex and deals from retailers like Target and Bloomingdale’s.
Bloomingdale’s: 20% off almost all small electrics, gadgets, and cookware at Bloomingdales.com during the Friends & Family Sale through 10/9. Look for promo code FRIENDS as you shop online.
Best Buy: 20% off select small appliances with promo code SAVEONSMALLSNOW.
With Halloween around the corner, now is a good time to grab this year’s costumes. The longer you can wait before the big day, however, the lower the prices will be at stores like Buy Costumes and Kohl’s—but the pickings will get slimmer the closer you get to Halloween. If you like to think ahead, shop the clearance sales in early November to get your costume for next year.
Halloween Express: 20% off by providing your email.
Spirit Halloween: $5 off $30 purchases, $10 off $50, and $25 off $100 with code LEAVES15 through 10/6.
Halloween Mall: 25% off select costumes and accessories through 10/7.
Halloween City: $10 to $24 off select costumes through 11/5.
If you’re an “Apple person,” you’re probably eager to get your hands on the iPhone 8, but you should wait to buy if you’re looking for savings: Black Friday and Cyber Monday offer better chances to get a deal. With the iPhone X coming out in November, that could mean even more favorable pricing on the 8 next month.
Black Friday and Cyber Monday are the best days to buy electronics, so if you can hold off on purchasing laptops, TVs, smart watches, tablets, and Amazon devices, you should.
In 2012, Heather Vernillo, then 33, learned she had kidney cancer. The Tampa-area nurse had emergency surgery days later. While her health insurance covered 100 percent of her care, the experience left her unable to work for 15 weeks. This translated to more than four months of missed income, plus a $1,100 monthly bill for COBRA, which kept her health coverage intact during her involuntary hiatus.
Vernillo’s emergency fund turned out to be her saving grace through an ordeal that cost her roughly $7,000.
“The situation pretty much wiped out my savings, but it was worth every penny,” she told MagnifyMoney.
Vernillo is no millionaire. As a nurse, her annual income fluctuated between $95,000 and $50,000 before her diagnosis. (She took a pay cut when she moved from New Jersey to Florida in 2012.) Nonetheless, she says her approach to building her rainy day fund was simple: She set up automatic monthly withdrawals from her checking account to her emergency fund, treating it like any other line item on her budget. It took about two years to build up a fund sufficient enough to cover the expenses she incurred during her medical crisis.
Now, she is focused on rebuilding her fund. This wasn’t always financially easy, she admits, but after her health scare, it was a top priority.
“I’ve been able to partially replenish [my savings] and currently have about two months’ worth of expenses tucked away, just in case,” she says.
Choosing your best worst option
When people don’t have cash on hand for emergencies, they’re more likely to turn to alternative borrowing methods that could wind up costing them much more down the road. (Hello, payday loans.) Sometimes, it can feel like a painful choice from an array of bad options.
If you’ve exhausted all your best options for cash — you’ve emptied your bank account and asked friends and family for loans — then it’s time to look at your next best alternative. And at this point, it’s about choosing the option that will cost you less in the long run.
If you’re overwhelmed with medical bills, for example, ask the doctor or hospital to put you on a payment plan. Or consider a personal loan or a low-interest credit card — whichever option carries the lowest APR. Check out our ranking of the 10 best options for cash when you need it fast.
“If you don’t have any other options, then using a credit card or personal loan to pay for an emergency is better than defaulting on a bill, which can negatively impact your credit score,” Natalie Colley, a financial analyst with Francis Financial, tells MagnifyMoney. “You’ll pay more in the long run with interest, and ultimately you’re setting yourself up for financial instability and getting caught in a debt cycle.”
The key is to use these methods as a last resort and create a plan to pay down the debt as soon as possible.
Thanks to consistent monthly contributions, Marvin Fontanilla, a 35-year-old marketing professional in San Jose, had $8,000 tucked away in his emergency fund. It was enough to cover three months’ worth of expenses, and it came in handy back in August, when the battery on his hybrid car called it quits. A replacement cost $2,200, and an additional $622 for a rental car to use during the repair.
“It didn’t make a huge dent in our savings because my fiancee and I live way below our means,” Fontanilla says. “We’ve actually already replenished it by taking money we normally use to make aggressive student loan payments and redirecting it back into our savings account.”
While we certainly can’t anticipate every financial emergency that lies ahead, he adds that the death of his car battery didn’t come completely out of the blue; he knew when he bought a hybrid that the battery would likely have to be replaced once he hit 200,000 miles, so the expense was already in the back of his mind.
How much should you save?
Just as there’s no way Vernillo could have predicted her cancer, it’s impossible for any of us to really know what financial twists and turns are in our future.
“We can plan until we’re blue in the face for what lies ahead financially, but no matter how great our planning is, emergencies happen,” says Colley.
She tells her clients to live by a basic rule of thumb for savings: Save for at least three to six months’ worth of expenses.
“That’s a large number, and it’s going to take years to get there, but the important thing is to establish the habit of putting money aside every month and having it automatically transferred from your checking account to your savings account,” she says.
How much you contribute each month depends on a number of factors, not the least of which are income and expenses. After accounting for fixed bills and variable expenses like food and entertainment, what’s left should be divvied up between your financial goals. If your emergency fund is at zero, Colley suggests starting small and focusing solely on the first $1,000; a safe cushion in case of a minor setback.
Once you hit that milestone, you can begin redirecting some money toward other financial goals (like paying off high-interest debt, dialing up your retirement contributions or saving for a down payment on a home) while continuing to build your emergency fund. Everyone’s goals are different, but the main takeaway here is that it isn’t an either/or situation. Rather, it’s all about saving for multiple goals at once.
Where to stash your savings
Where you keep your emergency fund matters. Colley likes the idea of keeping it at a bank that’s separate from a regular checking account. (Out of sight, out of mind.) She recommends going with an online, high-yield account, like Capital One 360, Ally or Synchrony. While a traditional savings account at your local bank will likely only pay 0.01 percent, these online accounts dole out 1.20 percent with no minimum balance requirement.
Another plus is that it typically takes three days to transfer money into your checking account, which reduces the likelihood of impulsive withdrawals. The idea is to build an emergency fund that’s liquid, but not so liquid that you’ll be tempted to dip into it when the mood strikes.
For smaller pop-up expenses that leave you needing cash on the spot — a flat tire or overdraft protection, for example — Colley says it’s not a bad idea to keep a few hundred dollars in a traditional savings account that can be tapped immediately.
“Having a fully funded emergency savings doesn’t happen overnight, and it also shouldn’t be your one and only focus,” Colley says. “If you do that, all your other goals will come to a grinding halt while you build your savings account.”
Certificates of deposit (CDs) are a great way to safely store your savings at a financial institution, as they offer a guaranteed rate of return, and CD rates tend to be higher than those on traditional savings accounts. Maybe you’ve even heard that credit union CD rates offer higher returns—but is that really the case?
On average, yes. As of September 2017, the average one-year credit union CD had a 0.63% annual percentage yield (APY), compared to the 0.51% APY average among one-year bank CDs. (You may also want to view our picks for the overall best CD rates.)
Using data from DepositAccounts.com, another LendingTree company, we identified the top one-year credit union CD rates, as of Dec. 6, 2017. We then eliminated any credit union with a health rating lower than a B and identified the top three offerings in three categories: restricted, no cost, and best banking app. If there was a tie by APY, we went with the product with the lower minimum deposit. Here are the best one-year credit union CD rates.
Best CD rates for credit unions with no cost to join
The thing about credit unions is that they’re not usually just open to anyone. You usually need to meet some membership criteria in order to get in and get access to all of their really nice products. These credit unions, however, will let you in for free regardless of your personal details. (Note: Only two credit unions met our criteria for this list.)
Unify Financial Credit Union – 1-Year Share Certificate, 1.00% APY, min. deposit $1,000
Unify FCU offers the highest interest rates on CDs (which it calls share certificates) of any credit union with no cost to join. The interest rate on their 12-month CD, for example, is 1.00%, compared to the national average of 0.64% in August. You would earn $8.50 on a $1,000 deposit. If you withdraw your money early, however, you’ll face a penalty of 90 days’ worth of interest.
NASA Federal Credit Union – 1-Year Share Certificate, 0.55% APY, min. deposit $1,000
If the rigid inflexibility of CDs makes you leery, NASA FCU might be your best bet. They have a lot of flexible certificates, such as add-on certificates that let you start with as little as $250, and bump-rate certificates that let you opt for a one-time interest rate increase if rates go up. You can even take out a loan from your certificate should you need the cash before it’s matured. You can join NASA FCU with a complimentary membership to the National Space Society.
If you do need to make an early withdrawal, you will face a penalty of 180 days’ worth of interest.
Best credit union CD rates with restricted memberships or membership fees
Each of these credit unions have restricted membership criteria, but don’t let that scare you away. If you don’t meet their membership criteria, it’s possible to make a small donation to their charity of choice in order to become eligible for membership. Furthermore, these credit union CD rates offer some of the highest-returning share certificates out of any category.
Membership to USAlliance Financial is open to anyone who lives, works or worships in certain counties of Massachusetts, the city of West Haven, Conn., and a few districts in New York. However, if you don’t qualify by location, you can qualify by giving USAlliance authorization to make you a member of various organizations, including the American Consumer Council, if you aren’t already a member of these organizations. Keep in mind that these organizations may request fees.
Once you’re a member of USAlliance Financial, you can open a 12-month CD with a minimum of $500. Their early withdrawal penalty equals 180 days’ worth of interest earned on the amount you withdraw.
CapEd Credit Union – 12 Month CD, 1.70% APY, min. deposit $500
CapEd Credit Union supports teachers in the state of Idaho, but they don’t just serve teachers. Those who are willing to support education with a one-time $20 donation to the Idaho CapEd Foundation can become members of the credit union. Also, if you live in the state of Idaho and work for, volunteer with, or are retired from the industry of education, you are qualified for membership.
After becoming a member of CapEd Credit Union, you may open a 12 month CD with a minimum deposit of $500. Just make sure that you can afford to keep your money in the CD for one year because the early withdrawal penalty is 90 days’ worth of interest.
PenFed Credit Union – 1-Year Money Market Certificate, 1.61% APY, min. deposit $1,000
PenFed tops this list with an APY of 1.61%. With a minimum deposit of $1,000, you could earn $16.10 in one year. Interest is compounded daily and posts to accounts monthly. However, be aware of the steep early withdrawal penalty. If you withdraw funds before the year is up, you may forfeit all interest accrued up to that point.
Air Force Federal Credit Union – 1-Year Certificate, 1.56% APY, min. deposit $1,000
Members and family members of the military, civilian contractors, and certain employees are eligible to join the Air Force FCU, along with anyone willing to join the Airman Heritage Foundation ($25 annual membership fee).
This credit union comes in first place overall for highest interest rates for 12-month CDs. You can earn $15.60 by depositing a minimum of $1,000 in a 12-month CD, with an APY of 1.56%. You can also use your CD as collateral to earn a lower interest rate on a loan, and membership comes with a host of discounts for parks and businesses in the San Antonio, Texas area. Watch out for the early withdrawal penalties, however, worth half of whatever you would have earned between when you withdrew the funds and when it would have matured.
With a small deposit of $500, you can earn an APY of 1.55% on a 12-month CD. If you decide to withdraw funds early, you’ll face a penalty of 90 days’ interest or all interest earned, depending on which is less.
Best CD rates for credit unions with the best mobile apps
By their very nature, CDs aren’t something that require constant attention, poking, and prodding. It’s a set-it-and-forget-it kind of a deal, so you won’t need any spiffy banking apps to use CDs.
But, if you’d like to switch all of your banking to the same institution that holds your CDs, it might be a wise idea to consider one of these credit unions if you’re a digital junkie. Most credit unions lag behind their bank compatriots in terms of mobile banking apps, but these credit unions offer top-notch mobile apps, according to MagnifyMoney’s 2016 mobile banking app analysis.
Wright-Patt Credit Union – 1-Year Certificate, 1.74% APY, min. deposit $500
Unlike many credit unions, you can’t just make a simple donation to join Wright-Patt CU if you fail to meet their membership criteria. You need to live in certain areas of Ohio, be associated with Wright-Patterson Air Force Base, or be an employee of their select employer group, among other options.
You can earn $8.70 on a 12-month CD with just a relatively small $500 deposit. Early withdrawal penalties vary depending on the original term of your CD, however they’ll be anywhere between 5-12 months’ worth of dividends.
Delta Community Credit Union – 1-Year Certificate, 1.50% APY, min. deposit $1,000
There are many ways to join Delta Community CU, such as living in certain parts of Georgia, being a member of one of their select employers, or being a member of one of their partner organizations. Interestingly, citizens of many countries like Argentina, France, and Peru are also eligible to join.
Delta Community CU used to be the lowest-earning credit union on our list, but recently increased the APY on this product from 0.75% to 1.50%. The early withdrawal penalty is 90 days’ worth of interest on a 12-month CD.
Eastman Credit Union – 1-Year Investment Certificate, 1.25% APY, min. deposit $1,000
Eastman Credit Union also has pretty restrictive membership requirements. You’ll have to be an employee (or a family member of an employee) of one of their select employers, or live in certain parts of Tennessee, Texas, or Virginia.
Eastman CU is another one of the rare credit unions that allow you to withdraw your dividends penalty-free before the maturity date, although again, doing so will lower your total returns. Currently, you can earn an interest rate of 1.25% on a 12-month CD. With a minimum deposit of $1,000, that translates into earnings of $12.50 after one year. If you withdraw your money before the CD matures, you’ll owe a penalty fee of anywhere between seven days’ worth of dividend earnings or all of your dividend earnings.
Banks are more likely to call their products certificates of deposit, while credit unions often refer to them as share certificates. Aside from the name, the biggest difference between the two is that credit unions have higher average annual percentage yields (APYs), as of September 2017. That’s good news: It means more money back in your pocket when the CD matures (i.e., reaches the end of its term and is available for withdrawal).
There really is no difference in safety between depositing money in a CD with a credit union versus a bank, as long as they participate in either the National Credit Union Administration (NCUA) for credit unions, or the Federal Deposit Insurance Corporation (FDIC) for banks.
According to Neal Frankle, a Los Angeles-based Certified Financial Planner with Wealth Pilgrim, deposits of up to $250,000 per financial institution are “backed by the full faith and credit of United States Government, so it’s pretty solid.”
For the most part, choosing a CD at a bank or a credit union boils down to your preference as a consumer: Do you want to be a bank customer or a member of a credit union? Here’s a primer on the differences.
The biggest advantage of credit union CDs over bank CDs is that you can likely earn more interest. But with both products, the longer the CD term, the more interest you will earn. And with a CD laddering strategy, you can have the best of both worlds: frequent access to your money, yet you can still keep it locked away in high-interest, long-term CDs.
Beyond that, the disadvantages of opening a credit union CD are the same as if you’re opening a CD with a bank. You can’t access that money without paying an early withdrawal penalty until the CD matures. While CDs do offer some of the highest rates for any financial product you’re likely to come across at a bank or credit union, they still don’t really earn great interest. If you’re investing for the long-term (like retirement savings), your money is better invested in the riskier (but higher-earning) stock or bond market.
Everyone who goes grocery shopping knows that buying food weekly can become fairly expensive—especially when you add in how much money we waste on food. Luckily, there are many foods that’ll last for years and save you money in the long run if you buy them in bulk and store them properly.
It’s hard to find a food that’s more versatile than rice: you can eat it on its own, with vegetables or beans, in soup, with meat, in sushi, and so much more. You can even use it to help save your electronics from water damage. Plus, rice is super cheap and often comes in bulk. Even better, white rice can last more than 30 years if stored properly—in the pantry, in the fridge, or in the freezer—so don’t throw it out unless it has spoiled through improper storage. (Brown rice has a higher oil content, so it’ll actually spoil after six months, unfortunately.)
Scientists have found perfectly preserved honey in the Egyptian pyramids—even at over three thousand years old, that honey is still edible and safe to eat. Honey’s high acidity and lack of water help it last indefinitely. It may crystallize over time, but don’t worry; it is still safe to eat. You can warm it up to soften and de-crystallize it for easier consumption. Honey can be used as a sweetener, in salad dressings, in desserts, as a home remedy, and even for facials.
If you love breakfast foods and baking, buy bulk portions of oats to store in your pantry. Rolled and instant oats can last several years when kept in airtight containers—some estimate that oats can be safely eaten for 30 years if stored properly! Keep oats on hand and make your own flour, granola bars, or cereal whenever you want.
4. Hot Sauce
From eggs to salads to pizza, anything can benefit from some added spice. Whether you’re a Tabasco or Tapatío fan, your favorite hot sauce can last for three to five years thanks to its high vinegar content and the capsaicin found in chili peppers. Just make sure you follow proper storage directions, and keep in mind that the taste will change as time passes. The sauce may even get hotter as the peppers age! Buy a large bottle on sale and keep it for years—or until you run out.
5. Dried Beans
You can find a great source of protein in beans, especially if you’re vegetarian or vegan. Flavored and canned beans will last you a while, but dried beans can last for up to 30 years. They do begin to lose their moisture after a few years, so cooking times may vary depending on how long you have been storing them. If you love black beans in homemade burritos or homemade barbecue chili, keep bags of dried beans in your pantry—they’re super affordable and go with pretty much anything.
Contrary to popular belief, quinoa is a seed not a grain, so it actually keeps two to three years past the expiration date. Though it lasts several years, you do need to keep quinoa in a cool, dry area or it could grow mold—and you should never eat quinoa that has grown mold. Quinoa is super filling and can be used in tons of dishes in place of less-healthy carbs. Make soups, salads, or protein bowls with this superfood.
7. Pure Vanilla Extract
Imitation vanilla extract will last you a while if you’re in a pinch (about two to four years), but we highly recommend finding a big bottle of pure vanilla extract. The high alcohol content of the extract makes it stay good indefinitely—just keep it away from heat and light and keep the cap tightly closed when not in use—so it’ll always be ready to use when you’re baking or cooking.
8. Soy Sauce
If you’re a fan of Asian food, don’t throw out your open bottles of soy sauce. Due to the large amounts of sodium, soy sauce can last over three years when stored properly. It keeps its flavor and freshness better when stored in the refrigerator, but it is safe to keep in the pantry as well. Save money on takeout by making your own stir-fry, Chinese chicken salad, or noodle dishes with your long-lasting soy sauce.
9. Apple Cider Vinegar
Due to its high acidity, apple cider vinegar can last for up to five years when stored in a cool, dry place (in the pantry or in the fridge) with the lid tightly closed. If you see a dark, cloudy substance in the bottom of your bottle, don’t worry—that’s just the “mother,” formed by naturally occurring pectin. The mother is actually the most nutritious part of the cider, so feel free to consume it! Add apple cider vinegar to soups and salad dressings for an acidic finish.
10. Dried Ramen
It might seem obvious, but dried ramen noodles will last for many years in your pantry, though the taste is best if consumed within a few years. The noodles are extremely dehydrated, so they don’t usually spoil. Use this cheap staple to make soup or cold noodle bowls.
11. Pure Maple Syrup
Unopened, pure maple syrup will last indefinitely if stored in the freezer (it won’t freeze solid) and up to several years if kept in the refrigerator. Syrup lacks water and is relatively acidic, which contributes to its long shelf life—though it can develop mold, in which case you should not consume it.
12. Baking Soda
One of the most versatile ingredients you can buy in bulk is baking soda. While not super exciting, this extremely cheap ingredient is perfect for making homemade toothpaste, freshening up your fridge, leavening anything you bake, washing your counters, and removing stains from your clothes. Stock up on baking soda and don’t throw it away because it will last you multiple years without going bad. You can test your baking soda to determine whether it’s still good: just add a few drops of vinegar to your baking soda and see if it bubbles.
Whether you’re a cash-strapped college student or just a conscious spender, every little bit helps. Buy these ingredients in bulk and enjoy them for years.
As with all food, check to make sure these ingredients haven’t spoiled before you eat them, and never eat food that has not been stored properly.
Saving money is a noble goal. It can even become addictive, like a game. But if you’re not careful, your savings strategies might lead you to spend more money in the long run.
These seven stories will help remind you to always keep your long-term savings goal in mind. That way you aren’t blindsided by short-term “savings.”
Who hasn’t been enamored with the “Extreme Couponing” TV show, where people get carloads of groceries for free? They make coupons seem like the equivalent of cash dollars — but the only way you can use those dollars is to spend money first. This sets up a snag where overzealous consumers can easily be tricked into spending more money than they otherwise would have in the quest of using the Holy Coupon and their “savings.”
Kendal Perez, a savings expert with Coupon Sherpa, has some tips: “Coupons, Groupons, and vouchers of any kind that save you money on products, services, or experiences you wouldn’t otherwise be interested in are ones you should stay away from. Instead of clipping ‘interesting’ coupons from the Sunday circular or browsing Groupon when you’re bored, look for coupons on items you already intend to buy.”
Trying to save too much money
Joseph Hogue, a chartered financial analyst and personal finance blogger, was in a familiar trap in his first professional job: He hated it and wanted to leave. So he tried saving up all of his cash so he could retire early.
“I fell into the financial equivalent of yo-yo dieting,” he says. He would take on as much work as possible before becoming burned out and blowing all of his hard-earned money in a spending spree.
He learned the hard way that it’s not enough just to make and save a ton of money. You also need to pace yourself, set realistic goals, and reward yourself along the way. Hogue’s advice? “Find something outside of work you enjoy doing to make all the effort and saving worthwhile.”
Growing your own vegetables
Growing your own vegetables doesn’t seem like it would cost much money. Just throw some seeds in the ground and add water, right? Wrong.
Once you factor in everything you need to grow a garden — tools, soil amendments, fences, plants, hoses, etc. — costs can quickly spiral out of control. Still, you have to be careful about cutting corners. Joshua Crum, a personal finance blogger, found this out firsthand when he forgot to include wild-animal-proof fencing in his calculations. “I spent around $100 and tons of work on a garden. Wild animals came and ate everything I planted.”
If gardening is your thing, see if you can reduce your expenses by buying used equipment instead of new. Also consider planting cost-effective vegetables for the maximum return for your buck.
Not reading the fine print on a purchase
There are a ton of ways to save money if you keep your eyes open. Receipt-scanning apps, rebates, sales, coupons, store loyalty cards — it’s a long list. The catch is that you have to carefully read the fine print so you can meet the requirements. Before you make a purchase with the intent of getting a rebate or some other discount, make sure you understand the terms and will actually benefit from the deal.
Mindy Jensen, community manager at BiggerPockets, recently found this out. She bought a ream of paper, expecting to use a rebate to have another free ream of paper shipped to her house. “I didn’t read the fine print, and the return was in the form of a store credit. I almost never shop there, so it was kind of a waste.”
In another incident she bought a bottle of alcohol specifically for a $5 rebate. “I have gotten in the habit of saying ‘No, thank you’ to receipts at the store, to save paper and the environment.” When she got home, she was stunned: “Guess what you need in order to get the rebate? A receipt. Of course, I felt like an idiot for not getting the receipt; having a proof that you purchased the product is a basic tenet to getting a rebate.”
Skimping on insurance
No one likes paying their monthly insurance premium — until it comes time to make a claim.
According to Neil Richardson from the auto insurance comparison site The Zebra, getting just the minimum liability protection for your state “is simply too little financial protection to cover a number of common car insurance claims scenarios. People end up with huge bills because they wanted to save a few dollars off their premium.”
MagnifyMoney recommends checking what insurance options are available with your insurance broker. Ask yourself: Would you be able to fully cover the cost of any unfortunate events outside of the minimum coverage? If not, you might need to reconsider your insurance coverage.
Skipping doctor visits
Going to the doctor is about as fun as stubbing your toe, not to mention being expensive. It’s pretty tempting to save some money by diagnosing yourself over the internet. Sometimes this works out, but it can have costly consequences if it doesn’t.
Abigail Perry, a personal finance blogger, once felt a urinary tract infection coming on but decided to treat it herself. It quickly turned into lower back pain, which was her signal that it was becoming more serious. She eventually ended up spending $75 to go to the emergency room, when a visit to her regular doctor would have had a $0 copay.
Perry’s advice is to “just go to the doctor. And if you can’t get an appointment there, find an urgent care clinic [rather than going to the emergency room, if possible]. Just be sure to bring a good book and a charge cord.”
Buying in bulk
Smart shoppers know that the best way to save money is by looking at the per-unit price of each food item. This often means buying food in bulk. Even smarter shoppers know to take into account an item’s shelf life, so they can plan to use it before it goes bad.
But there’s more to it than that, like making sure you actually need what you’re buying. For example, Lisa Torres, a retired high school teacher, buys several boxes of Popsicles at a time when they go on sale during the hot New Hampshire summers. Buying Popsicles in bulk seems like a logical choice, because she’s going through a lot of them and they’ll keep for months. But Torres also likes buying fresh fruit in the summer, when some of her favorites are in season. When her family has both options as a snack, they tend to choose the Popsicles.
“The healthy fruit in the fridge goes bad because we are eating Popsicles instead of fruit,” she says. “And next week I have to buy more Popsicles.” Torres says she’s still working on making better buying decisions so she doesn’t waste food or money.
When buying in bulk, it’s always best to stop and think about whether you’ll be able to use all of the product, as well as if you have any alternatives at home. By keeping tabs on what you have at home and taking a minute to think before every purchase, you can successfully navigate these common savings pitfalls.