What Should I Consider Before Getting an Auto Loan?

Q: I’m ready to finance the purchase of a new car. What do I need to know before finalizing my auto loan?

A: Financing a new car is a big decision that will impact your monthly budget for the entire term of the loan. That’s why it’s important to weigh all relevant factors carefully before making your decision. 

Here are five questions to ask before taking out an auto loan.

1. What is the actual cost of this car? 

In many dealerships, the sticker price on a car and the one you end up paying can be vastly different. In some lots, you can negotiate with the salesperson to get them to lower the price. Meanwhile, in other lots, you may find out at the last minute that you need to pay extra fees that will bring the price up significantly. Before you sign on an auto loan, make sure you know how much you’re actually paying for your new wheels.

2. Is this the lowest interest rate I can get from any lender without extending the term?

The interest rate on your loan determines how high your monthly payment will be and how much you’ll be paying overall for the privilege of financing your car. The range of rates you’ll be offered will depend on the lender, the market rates at the time and your credit score and credit history. Be sure to shop around and check out what different lenders can offer you before making your decision.

3. What will my monthly payment be with this loan? 

Your monthly payment will be determined by the loan amount, the annual percentage rate on the loan and the loan term. It’s best to use these details to run the numbers on a potential loan to be sure you can afford the monthly payments (there are hundreds of monthly payment calculators throughout the internet). Defaulting on an auto loan can mean risking the repossession of your vehicle and a massive dent in your future credibility. You’ll also be better prepared to incorporate this new payment into your monthly budget if you have a number to work with before finalizing the loan.

4. Are there any available incentives that can bring down the cost of this loan?

Before closing on a loan, ask the lender about any available incentives that can help you save on the cost of the car. Here are two incentives you may be able to access:

  • The cash rebate. This incentive allows borrowers to apply a dollar amount to the price of a vehicle, effectively bringing down the price. The borrower receives the discounted amount in a cash rebate when the loan is finalized. These rebates are typically offered regionally or under specific circumstances, such as to repeat buyers of a certain brand, buyers who have left a competing brand, recent graduates or members of the military. 
  • Dealer cash. This incentive is similar to the cash rebate, but it’s offered by the dealer instead of the automaker. Dealers may offer these incentives near the end of the month, quarter or model year, as they scramble to reach a quota set by the automaker. The dealer will be compensated for reaching this quota and is consequently open to bringing down the price for the buyer. However, you’ll only know about this incentive if you ask.

5. Do I really need an extended warranty?

Dealers can be overly eager to sell extended warranties to new car owners, but these may not be in the buyer’s best interest. If you’re purchasing a new car, it likely comes with a factory warranty covering the vehicle up to 100,000 miles, making an extended warranty an unnecessary expense. If you’re buying a used car, have it thoroughly inspected by a mechanic and get a detailed vehicle report on AutoCheck.com or Carfax.com to see if you need the extra protection that an extended warranty provides.  

Your Turn: Which factors do you consider before finalizing an auto loan? Tell us about it in the comments. 

6 Ways to Boost Your Credit Score

An excellent credit score is the ultimate goal of the financially responsible consumer. Those three magic digits tell a story of accountability, good financial sense, and the ability to spend mindfully. A great credit score also unlocks doors for large, affordable loans; employment opportunities, and more.

Its significance notwithstanding, achieving and maintaining an excellent credit score is easier said than done. There is no quick and easy way to dramatically boost your score over a short amount of time, but you can take steps to increase your credit score gradually. Below, we’ve listed six ways you can start amping up your credit score today.

1. Pay your bills on time

Your payment history is the single most important factor in determining your score. A missed credit card payment can significantly impact your score and it can take months to recover the loss. Set a reminder a few days before your bill is due to ensure you never miss a payment.

2. Reduce your credit utilization ratio

Another crucial factor in your score, your credit utilization ratio refers to the amount of available credit you use. It’s best to keep your utilization under 30%, or even 10% if you can swing it. This means, if you have $50,000 of available credit, try to keep your usage below $15,000 at most and, ideally, below $5,000.

It can also be a good idea to accept offers of increased credit or to request an increase on your own, which can instantly bring down your credit utilization ratio. However, only go this route if you know you are not at risk of overspending as soon as you have more credit at your disposal.

3. Use your cards

Taking a pair of scissors to credit cards can seem like the perfect way to increase your credit score, but you need to use your cards to keep your score high. A great way to make sure you use your cards on occasion but don’t overspend is to charge fixed expenses, like monthly subscriptions, to your card. Just be sure to pay the balance in full before the credit card bill is due.

4. Work to pay down outstanding debt

If any of your cards are carrying a balance from month to month, showing that you are working to get rid of this debt can do wonders for your credit score. Maximize your monthly payment by trimming an expense category in your budget and channeling that extra money toward your credit card bill. Don’t be afraid to reach out to your credit card company to ask for a lower interest rate as you work to pay off debt. Finally, consider consolidating credit card debt with a personal loan from Advantage One Credit Union, which will help you get rid of your credit card debts and leave you with one low-interest payment to make each month.

5. Look for errors on your bill and credit history

A fraudulent charge on your credit card can bring down your score without your knowledge. That’s why it’s important to check your statements each month and to look for charges you don’t remember making. If you see anything suspicious, contact the credit card issuer immediately to dispute the charge. It’s also a good idea to get your free credit report once a year from annualcreditreport.com for a more comprehensive look at your credit usage and signs of possible fraud. 

6. Become an authorized user on another cardholder’s account

If you’re new to the world of credit, and you’re looking to thicken your credit file to build your score, becoming an authorized user on another cardholder’s account can be a great way to get results quickly. Team up with someone who has excellent credit and never misses a payment. Your partner’s responsibility will reflect well on you and help build your credit history and boost your score. 

Credit scores are a crucial component of financial wellness, but achieving and maintaining a high score can be challenging. Use the tips outlined above to start boosting your score today. 

Your Turn: Have you taken steps to boost your credit score? Tell us about it in the comments. 

How do I Raise my Kids to be Financially Independent Adults?

Q: How do I raise my kids to become financially independent adults?

A: It’s commendable to try raising your kids today with an eye toward their future. Teaching your children how to be financially independent will help smooth the transition into adulthood. It will also give them the tools they need to achieve and maintain financial wellness throughout their life.

Here are some tips for raising kids to grow into financially independent adults. 

Start with basic budgeting

Successful budgeting is the foundation of every financially independent household. You can introduce your children to the concept of earning money and spending it mindfully when they’re still young, and then build upon that knowledge as they grow older. Preteens can watch you work on an actual budget, and teens can even assist you in creating a budget for a large expense, such as a family vacation. 

Another way to bring this lesson home is by showing kids how to budget their own money. Help them create columns for “income” and “expenses,” listing their allowance, occasional gift money and income from any jobs they may have in the income column, and the ways they’d like to use their money in the expense column. Show them how to divide their money across their expenses in a reasonable fashion and talk to them about setting aside money for the future. 

Finally, you can allow your older kids to make some spending decisions on their own, provided they don’t later complain about the choices they made. For example, you can give your preteen a specific amount of money to spend on a fall wardrobe, and then let them choose to spend more on a jacket and less on a pair of sneakers, or vice versa. They may make some mistakes, but you’ll be teaching them a lesson they’ll carry with them throughout life. 

Split the costs of “must-have” items

If your kids are like most, they’ll likely be asking you for all sorts of trending items they claim they absolutely need; from a pair of designer jeans all the in-kids are wearing, to the latest fad toy they insist their entire class already has. As a parent, you may be inclined to bend and give them what they want more often than you’d like. Or maybe you play hardball by refusing most of these requests. Neither approach is likely to leave both you and your child feeling happy with your choices. 

A great way to compromise on just how often to say yes to kids, and to teach them a fantastic financial lesson at the same time, is to have your child pay half the cost of expensive trending items. They’ll quickly realize that what seems like a “must-have” really isn’t when you’re the one footing half the bill. Or, they may go ahead with the purchase and either come to regret it as they learn this lesson later or enjoy the gratification that comes from paying your way toward an important goal. 

Teach them about credit cards

To a child, a credit card is a magical piece of plastic that makes everything possible. If your child observes you using a credit card or debit card often, you owe it to them to teach them what’s behind that little card. Show them your credit card bill when it arrives in the mail and talk about how you need to pay for all those expenses you swiped during the month, plus the interest you may incur. Teach them about debit cards, too, explaining how money is withdrawn from your checking account when you swipe the card. It’s also a good idea to give older kids a quick rundown on credit scores, how they work and why they’re so important. 

Open a checking account for your child 

Experience is the best teacher, and giving your child their own checking account can be an excellent way to teach them how they manage their own money. You can open a youth account, or a regular checking account under both your names, at Advantage One Credit Union to help your child learn all about money. They’ll make their own deposits (with your help), check on their balance, and may even enjoy a debit card to use as appropriate, so long as they have enough funds in their account to cover the purchases. This first account opened and managed under your watch will help them transition easily into truly handling their own money as financially independent adults. 

Talk openly about what they can expect in terms of support for the future

When your child is mature enough to talk about their college years and beyond, it’s time to have a conversation about their transition into financially independent adulthood. The more you communicate about your plans now, the less room you’ll leave for misunderstandings and upset feelings in the future. 

Be open and specific about how much financial support you plan to offer while they attend college, immediately after they graduate and further into the future. Ask about their plans as well, paying attention to when they anticipate being financially independent and whether you believe they are being realistic in their planning. 

When speaking to your young-adult child about the future, it’s a good idea to bring up the topic of career paths and earning potential as well. You can help your child determine a basic budget for the lifestyle they plan to lead, and then assist them in narrowing down their career choices to just options that can support their future desired lifestyle. Talk to your child about student loans too, and explain how crippling debt can be. 

It’s a scary world when you must step up to manage your money on your own, but it’s also a world filled with wonderful opportunities. Use the tips outlined above to help raise your child to be a financially independent adult. 

Your Turn: Do you have additional tips for raising financially independent adults? Share them with us in the comments.

Step-by-Step Guide for Buying a Motorcycle

If you’re ready to purchase your first motorcycle, you’re likely thrilled — and more than a little overwhelmed. There are so many factors to consider and dozens of choices you’ll need to make before you pull the clutch. It can all get confusing, fast!

No worries; Advantage One Credit Union is here to help. We’ve compiled a step-by-step guide for buying a motorcycle, complete with useful tips to help you make a purchase you’ll enjoy for years to come. 

Secure financing

A motorcycle can run you anywhere from $2,000 to $16,000, and it’s always best to have the financial details of a large purchase squared away before entering the market so you’ll avoid disappointment later. You can save up for your bike, charge it to a low-interest credit card or take out an unsecured loan from Advantage One Credit Union, where you’ll enjoy affordable interest rates and payback terms to fit your budget. 

Brush up on your motorcycle safety

Before you shop for a bike, it’s a good idea to complete a Motorcycle Safety Foundation (MSF) course. The course is similar to driver’s training and will help ensure you can ride your bike with increased safety. Depending on your state, you may need to obtain a special motorcycle license as well. 

Procure insurance

In some states, motorcycle insurance is required by law, but even if your state does not mandate it, consider purchasing coverage anyway. Insurance will protect you from liability for property damage or personal injuries caused through your vehicle, help cover medical bills in case of an accident, and cover theft and damage to your bike as well. As is the case with auto insurance, you’ll have the freedom to choose how much coverage you’d like to purchase, with more robust coverage directly increasing the cost of your policy. 

Choose between a new and used bike

You’ve got the important stuff taken care of and you’re itching to try out bikes, but before you do, decide if you’re going to purchase a new or used motorcycle. Let’s take a quick look at the pros and cons of each option. 

A used motorcycle can cost thousands less than a new bike and won’t depreciate nearly as much, but finding a used motorcycle in decent condition can be challenging. If you decide to go this route, stay away from bikes that show signs of excessive wear, have mileage exceeding 20,000 miles, and/or have difficulty starting up, running or stopping. It’s also a good idea to get a VIN (Vehicle Identification Number) to check on your potential new bike, have it professionally inspected, and take it for a spin before finalizing the deal. 

A new bike will be blessedly free of mechanical breakdowns in the near future and will look nice and shiny. Of course, you’ll pay for these privileges, so be sure to run the numbers before setting your heart on a particular motorcycle. It’s also important to note that, while you might save on repairs and maintenance, insurance on a new bike will likely be a lot more expensive than coverage for a used one.

Choose a motorcycle type

You’re ready to choose your type of ride. Here are the most popular choices:

  • Sport bikes- equipped with a leaning design that makes them ideal for riding at high speeds, these bikes also have higher foot-pegs and handlebars that are more out of reach than most other bikes. A sport bike can be a good choice for thrill-seekers, but an uncomfortable option for riders planning to take long trips on their bikes. Insurance can also be expensive. 
  • Standard bikes-an upright riding posture and lack of accessories make these a great all-purpose motorcycle. Perfect for beginners and the budget-conscious, but not the best choice for off-road and long-distance riders. 
  • Cruisers-the Harley Davidson standard, cruisers offer a relaxed riding position, comfortable suspension and a V-twin engine. They also tend to be heavy, making them difficult for new or small riders to handle, but an excellent choice for tall riders and those seeking a stylish ride. 
  • Touring bikes-built for long rides, these motorcycles are fully loaded with extra features, including fairings that block the wind, saddlebags to accommodate luggage and large fuel tanks for long trips. A touring bike can be ideal for riders who take lots of road trips, but they can be an expensive choice for city riders. 
  • Dual sport bikes-lightweight and built with high-travel suspension and aggressive tires, these bikes are a great choice for off-road riding. Their tall seat height makes them difficult for short riders to handle.

Once you’ve chosen your ride type, research models from popular brands, including Yamaha, Harley Davidson, Suzuki, Kawasaki, Honda and Triumph. Be sure to check out ratings and reviews from current owners. Once you’ve narrowed down your choice, you’re ready to visit dealerships and private sellers.

Important features to consider

A motorcycle’s seat, handlebars and foot-pegs are not adjustable, so it’s important to choose one that fits comfortably. Take a seat on any bike you are considering. See how it feels, and make sure you can easily reach the handlebars and pedals. If possible, go for a ride around town to get a real feel for it. 

You’ll also want to consider the weight of your bike since a heavier bike can be difficult to maneuver. 

Finally, if you’re a new rider, don’t go overboard on power. It’s best to start with a bike that has a 500cc engine and then trade- in for something more powerful later on, if necessary. 

Choose your bike and finalize your purchase

You’re ready to buy your bike! Be sure to choose carefully and do lots of research so you’ll enjoy your motorcycle for many happy miles. 

Your Turn: Have you recently purchased a motorcycle? Share your tips and advice with us in the comments. 

Get the Hell Out of Debt

Title: Get the Hell Out of Debt: The Proven 3-Phase Method That Will Radically Shift Your Relationship to Money

Author: Erin Skye Kelly

Paperback: 320 pages

Publisher: Post Hill Press

Publishing date: July 20, 2021

Who is this book for? 

  • Anyone who is fed up with living in debt. 
  • People seeking to get rid of credit card debt without paying a fortune in interest.
  • Readers who want to improve their money management and find most personal finance books boring.

What’s inside this book?

  • An honest, incisive and often humorous guide for paying off debt.
  • An outline for the three phases of getting rid of debt.
  • The two most important tools of money management.
  • Kelly’s own journey toward a debt-free life.

3 lessons you’ll learn from this book: 

  1. How to pay off a large amount of consumer debt.
  2. How to create and maintain wealth. 
  3. How to change your money mindset so you’ll stay debt-free.

5 questions this book will answer for you: 

  1. Why do people tell me to consolidate and refinance my way out of debt when this advice only takes me deeper into debt?
  2. Is it possible to kick my debt for good?
  3. What practical steps do I need to take to get rid of my debt?
  4. Is financial stress an inevitable part of life?
  5. How can I find true financial freedom?

What people are saying about this book: 

  • “Erin has a brilliant way of explaining, step-by-step, how to radically shift your finances for the better.”  — Peter Mallouk
  • “Erin understands that wealth is about so much more than money. It is about creating, living, and leaving a legacy of love and happiness.”  — W. Brett Wilson
  • “With a welcomed irreverence and absolutely no judgment, Erin shows us all of the nuanced, messy, and dysfunctional ways we stumble and fall into debt. But then! Then she shows us how to get up and stand tall before we kick, claw, and fight our way out of it. It’s you against your debt. Read this book if you’re ready for your gloves to come off.”  — Jesse Mecham

Your Turn: What did you think of Get the Hell Out of Debt? Share your opinion in the comments. 

Why You Need to Be Financially Fit

Individual Americans spend hundreds of dollars a year and at least as many hours on keeping themselves physically fit but too many people neglect their financial health. Just like physical health, being financially fit is crucial to your well-being, your future and your quality of life. 

Here’s why being financially fit is so important and how you can overcome common barriers to achieving financial wellness. 

Financial wellness: a ripple effect 

Being financially fit is about more than just having enough money in your account to cover your expenses and put away something for tomorrow. Managing money responsibly will affect many aspects of your life:

  • Marriage. According to a recent study by AARP, financial problems are the second leading cause for divorce in the country. Money brings resentment and arguments into a marriage. In a study reviewing over 740 instances of marital conflict between 100 couples, money was found to be the most common topic couples argued about.  
  • Mental health. Money stress can severely affect your mental health, causing depression, restlessness, anxiety and more.  
  • Physical health. Stressing over finances can also directly impact your physical health, leading to recurring symptoms like headaches, fatigue, upset stomach, insomnia, high blood pressure and an increased risk of heart disease and stroke.
  • Work life. Being bogged down by money worries can make it difficult to focus while at work, which can bring down productivity levels and hamper career growth. In addition, prospective employers tend to review the financial wellness of new hires as part of their background checks; high rates of debt and a poor credit score can cost an employee a new job. 
  • Parenting. Managing money irresponsibly can mean not having sufficient funds to pay for a child’s education, private lessons, medical needs and more. 

What are the leading causes of money stress? 

According to a survey by Credit Wise®, 73% of Americans rank money issues as the number one stressor in their lives. Here are the top causes for financial stress: 

  • High-interest debt
  • Insufficient savings
  • Medical bills
  • Living paycheck to paycheck
  • Lack of retirement planning

Stressing over money is never fun. Stressing over money, when any of the above applies to you, takes on its own form of angst by adding a level of long-term anxiety. It takes time, sometimes years, to undo the damage of any of these stressors but it can be done!

Barriers to financial wellness and how to overcome them

We’re convinced: being financially fit is super-important. But what happens now? Why are 80% of Americans in debt?  Why do only 39% of Americans have enough saved up to get them through a $1,000 emergency? 

Unfortunately, while many people may understand that financial fitness is crucial to their wellbeing, there are several barriers that make it difficult to follow through on their convictions. 

First, many lack the basic financial knowledge necessary to responsibly manage their money. Second, many people mistakenly believe that budgeting, saving and being more mindful of how they manage their money are too time-consuming and tedious. Finally, some people may have fallen so deeply into debt, they’ve begun believing they will never be capable of ever pulling themselves out. 

Here are some simple steps you can take today to help you achieve and maintain financial wellness:

  • Get educated. There is no shortage of financial literacy available to the interested consumer, from financial literacy blogs to personal finance books, podcasts, online classes and so much more. Learning how money works, the power of a long-term investment and how much you’re really paying each time you swipe that high-interest credit card can help you make better choices. 
  • Have the money talk with your partner. Whether you’ve only been sharing expenses for half a year or you’ve been married more than a decade, it’s important to be on the same financial page as your partner. Talk openly and honestly, being careful not to be judgmental in any way, and discuss your individual and shared long-term and short-term money goals. Then come up with a plan for how you intend to reach them together. 
  • Pay all bills on time. If you can’t take aggressive steps toward paying down debt just yet, be sure to make the minimum payment on each credit card bill each month. 
  • Create a budget. Giving every dollar a destination makes it easier to spend mindfully and cut down on extraneous expenses. 
  • Start saving. There’s no such thing as a sum of money that’s too small to put into savings. Every dollar counts, and once you get the ball rolling, you’ll be motivated to pack on the savings until they really grow. 

You give your abs a great workout each day now it’s time to get those money muscles into shape! Follow the tips outlined above to stay financially fit at all times

Your Turn: What are your best tips for maintaining financial wellness? Tell us about it in the comments. 

7 Tips for a Budget-Friendly Road Trip

With many indoor attractions still closed or operating only at a limited capacity, there’s never been a better time to pack up the car, RV or camper van and set out on the road trip of a lifetime. However, without careful planning, a road trip can get pricey, especially with soaring gas prices and the rising costs of food. For this reason, we’ve put together seven solid tips for a budget-friendly road trip. This should help you hit the road in style without breaking your budget.

1. Save on food costs 

Food can quickly turn into the biggest expense of your trip unless you plan ahead. And no, this doesn’t mean dining only on canned baked beans or instant soups for the duration of your trip. Here’s how to save on food costs during your road trip: 

  • Stock up on staples while at home. Shop your local stores for basics before setting out. Once you’re on the road, you won’t have as many choices for food shopping, which may stimulate overspending. 
  • Get your “kitchen” into gear. Unless you’re road-tripping in an RV or camper van that comes with a fully equipped kitchen, you’ll need to gear up for basic food prep on your trip. A good knife, cutting board and small cooking appliances, like a portable grill, panini maker and plug-in burner, can be great starting points. 
  • Plan a mix of meal types. You likely want to eat some meals out during your trip, but overdoing the dining out will quickly kill your budget. Instead, mix it up, alternating between home-cooked meals, dining out on fine cuisine and tasting local street foods. 
  • Only eat out at places you don’t have at home. For further savings, save the dining out for delicacies that are unique to your current location. Think fresh seafood on the Oregon coast, authentic Korean food in K-Town of Los Angeles or Cajun food in New Orleans.

2. Camp out instead of sleeping in hotels

Sleeping under the stars whenever possible will add another layer of awesome to your trip. Check out recreation.gov, where you can book accomodations at 3,600 facilities and 103,000 individual sites across the country. Lots of camping spots will run just $20 a night.

3. Find free attractions

Who says you need to pay for your fun or it doesn’t count? Most tourist hotspots will have a wide selection of free activities and sights to see at no cost, like the Smithsonian in Washington, D.C. and city street art in Pittsburgh, PA. Check out local websites or ask around on the street to find the best-kept secrets at each location. 

4. Map out your route for greater savings

Instead of blowing money on gas, create a detailed schedule of all your stops before setting out, choosing the most efficient and inexpensive route. Look up local attractions in the areas you plan to stop at to book reservations in advance when possible. In many places, you can save a tidy bundle of cash just by pre-booking. Also, keep in mind that many attractions still require reservations as a COVID-19 precaution, so be sure to plan accordingly. 

5. Download GasBuddy

With gas prices hitting $4 a gallon in some parts of the country, your car’s tank can take a huge chunk out of your road trip budget. Download the Gas Buddy app before hitting the road to find the stations selling the cheapest gas throughout your journey. You can save hundreds of dollars on gas costs by leveraging this game-changing app.

6. Check in on a Sunday

For those nights when you must have a hot shower and comfortable bed, you’ll likely be checking into a hotel. If you can swing it, check in on a Sunday. According to a study conducted by the travel app Kayak, hotel reservations are at their lowest rates on Sundays. 

7. Explore more and drive less

Hit the brakes and get out of the car! Spend some time covering miles on foot by hiking through local trails or even backpacking through city streets. You’ll enjoy an enriching experience and save on gas costs at the same time. 

Your Turn: Do you have more tips for budget-friendly road trips? Share them with us in the comments. 

Should I Sell My House Now?

Q: Is 2021 a good time to sell my home?

A: While it appears to be a seller’s market, and the perfect time to put your home up for sale, there are many variables to consider before going forward. Below, we’ve outlined important points to know about today’s market so you can make an informed decision about selling your home in 2021. 

Is it a seller’s market now?

According to Realtor.com, the current supply of homes on the market is at an all-time low, the likes of which hasn’t been seen in more than two decades. This can be attributed to the federal moratorium on foreclosures, as well as the months-long halt on new construction.

At the same time, demand for homes is up, as many millennials are entering their peak homebuying years, mortgage rates hit record lows and more people are working from home than ever before. In fact, in 2020, more homes were sold than in any year since 2006, according to data from the National Association of Realtors.

Naturally, when demand exceeds supply, prices will go up. Let’s take a look at some of the current trends driving this market, as shared by Realtor.com and Redfin.com:

  • Home sales are up by 44% from a year ago. 
  • The median home price for all listings increased by 12.2% over last year for the week ending June 19, 2021.
  • The national median home price for all housing types in May 2021 was $380,000.
  • Homes are on the market for 33 fewer days than last year. 
  • In May 2021, the average home sold in just 16 days.
  • 54% of homes sold in May 2021, sold above their list price

Clearly, it is a seller’s market.

Will the market conditions last throughout 2021?

Most experts are doubtful that the current seller’s market will remain through the rest of the year. They cite several reasons for their prediction. 

First, while demand for homes is currently strong, the rising prices of homes across the country are driving many buyers out of the market, thereby slowly decreasing demand. At the same time, more sellers are putting their homes up for sale to take advantage of favorable market conditions, increasing supply. Also, with the federal moratorium on foreclosures and evictions ending on July 31, more homes are expected to enter the market. Finally, mortgage rates have already started to climb upward: according to Bankrate’s most recent survey of the nation’s largest mortgage lenders. As of June 27, the average 30-year fixed mortgage rate is 3.10%, up two basis points from the previous week. All of these factors combine for a likely market cooldown over the next few months, with demand for new homes decreasing as supply increases, until the two are a lot closer than they are now. 

If you do want to sell your home this year, it’s best to act as soon as possible to take advantage of favorable market conditions. 

Why might it be a bad idea to sell my home now?

Under certain conditions, it may not be in your best interest to sell your home now. 

First, a real estate market that favors sellers works both ways: You will be on the wrong side of the aisle when buying a new home. If you are upsizing, you will likely need to pay a lot more for your new home than you would when the market settles down. With moving costs, home repairs and improvements you may need to make when putting your home on the market, and the realtor’s commission, you can end up losing money from the sale, even with the higher price you may get for your old home. 

Also, with the demand for new homes currently outpacing supply, you’ll have slim pickings when searching for a new home. You may need to settle for a home that doesn’t meet your wants, or even your needs, simply due to the lack of a better choice. 

However, if you are downsizing or moving to an area that is not as in-demand as your current neighborhood, this can be a great time to get top dollar for your home and walk away with a nice profit. Before you put your home on the market, though, it’s a good idea to do some research to ensure you can find and easily afford a new place to live. 

It’s a seller’s market right now, but that doesn’t mean you should rush to put your house on the market. Research the current market conditions carefully and read the points outlined above so you can make an informed and responsible decision. 

Your Turn: Have you decided to sell your home in 2021? Tell us about your decision in the comments. 

Q&A: Why Are Prices So High Now?

Q: I’m trying to heal financially as life returns to pre-pandemic norms, but the rising cost of many commodities, like groceries and gasoline, is making a financial rebound a challenge. Why are prices skyrocketing right now?

A: The jump in prices of many goods is proving to be a formidable challenge to millions of Americans who are attempting to recover from the pandemic. There are several compounding factors triggering the rise in prices across multiple industries, and the upward trend is likely to continue for a while. Here’s what you need to know about the sky-high prices dominating the post-pandemic economy.

How much more do groceries cost compared to a year ago?

A trip to the grocery in 2021 doesn’t come cheap. According to new data from NielsenIQ, all 52 tracked food categories are more expensive now than they were a year ago. The cost of fresh meat, for example, jumped by 8.6% from May 2020 to May 2021, while processed meats are up by 9.2% and the cost of eggs has seen a nationwide increase of 8.2%.

What is causing the increase in grocery prices?

A confluence of factors is causing grocery prices to rise.

For one, the pandemic has caused a shortage in many materials due to a prolonged disruption in the labor force and supply chain, which has increased demand, and the prices of these goods, to rise. Grocery items, in particular, also saw a surge in demand due to the many Americans cooking at home while on lockdown during the pandemic. Many industries are still suffering from these shortages and don’t expect to recover for a while. In fact, the Bloomberg Commodity Spot Index, which tracks 23 raw materials, is at the highest level it’s been in nearly a decade.

Second, there is a shortage in the labor market now, which can likely be attributed to the inflated and extended pandemic unemployment insurance, which made many laborers reluctant to return to work. Employers are forced to offer more pay for attracting workers, and they pass this extra cost on to consumers.

Finally, the increase in prices can be linked to the rise in transportation costs as gas prices continue to rise, which we’ll explore more in a moment. Again, this increased expense is passed on to the shopper through higher prices on consumer goods.

Why are gas prices so high?

It’s sticker shock at the gas pump these days, with prices as high as $4 per gallon in some parts of the country.

There are many factors contributing to the rise and fall in gas prices, of which the fluctuating price of crude oil is most prominent. According to the U.S. Energy Information Administration (EIA), approximately 60% of the money we pay for a gallon of gas goes to cover the costs of the crude oil that went into making it. Another 25% pays for the costs of refining, distributing and marketing the gas, while the rest pays for federal taxes, and state taxes in some states as well.

Crude oil prices, in turn, rise and fall in direct correlation of multiple factors. Most recently, here’s what’s causing the price of crude oil to peak:

  • Basic rules of supply and demand. The last few months saw a loosening of COVID-19 restrictions around the globe. This led to an increase in the demand for gas, and in turn, for crude oil. In contrast, at the height of the pandemic, demand for crude oil fell sharply — and so did its price tag.
  • The presidential election. Crude oil prices have spiked by an average of $0.75 per gallon since Nov. 3, 2020. The oil markets evidently see the current administration as one that will inhibit U.S. oil production, which leads to a tightening on the global oil market. Traders responded by driving up the price of crude oil.
    Seasonal market changes. The price of crude oil tends to rise and fall with the seasons, where prices generally rise in the spring and summer months as more motorists hit the road, thereby increasing demand. The changeover to summer gasoline blends also leads to a jump in gas prices at this time of year
  • Change in the value of the dollar. Oil is priced in U.S. dollars within the world market. When the dollar is strong, relative to other currencies, crude oil is cheaper for Americans and more expensive for the global market. When the dollar is weak, as it is now, oil becomes more expensive for Americans.
  • Strong discipline among the OPEC+ nations. When the nations which are part of OPEC+ stick to their agreement to cut back on oil production, prices increase.

What can I, as a consumer, do about the rising cost of goods?

Unfortunately, as a private consumer, there’s not much you can do to bring down the costs of common goods. However, there are steps you can take to help you manage these costs in a financially responsible manner.

First, you’ll likely need to make some changes to your monthly budget to accommodate the higher costs of groceries and gas. Shuffle your spending categories by trimming discretionary expenses until you have enough money to cover the costs of food and transportation.

Next, incorporate cost-saving techniques you may not have needed to use until now to help you manage these increased expenses. Think couponing, shopping the seasons and the sales, buying items you always use in bulk, and cutting back on pricey grocery items you can do without. To save on gas costs, consider walking to work or to do your errands, carpooling when possible, or using public transportation more often.

Rising prices might be hard on the wallet, but with some proactive steps, you can still stay on top of your finances and help bring your financial health back to pre-pandemic norms.

Your Turn: How are you budgeting for the rise in the cost of groceries and gas? Share your tips with us in the comments.

Post-Pandemic Money Moves

Re-acclimating to normal life as pandemic restrictions are lifted and businesses reopen across the country will mean more than just getting used to wearing real pants again and working without your cat on your lap. You’ll also need to consider your finances. How has your overall money management changed during the pandemic? Have you dipped into your savings? Have you been letting your retirement accounts slide? Or, maybe you’ve been waiting for the chance to hit your favorite retailers again, and you can’t wait to splurge after a 15-month financial fast.

As you prepare to leap back into normal life, proceed with caution. Be sure to consider your full financial picture as well as long-term and short-term goals.

Here are some forward-thinking money moves to make as you adjust to post-pandemic life.

Review and adjust your budget

Pandemic times required their own budget, as people cut down on costs like dining out and updating work wardrobes, but spent more on things like at-home entertainment. Others may have had to adjust their spending to fit a changed income level or to help them coast during a stint of unemployment. The pandemic may have also shifted something in some people’s mental list of needs and wants, as they found they can live with a lot less than they’d believed.

As you adjust to post-pandemic life, take some time out to review and tweak your monthly budget. Be sure to incorporate any changes in income, as well as a readjustment to pre-pandemic spending or changed priorities. You may need to review and adjust your budget, and maybe even your spending behaviors, every few months until you find a working balance.

Rebuild your savings

If you are one of the many Americans who were forced to dip into savings, or even to empty them completely, during the pandemic, create a plan to get your savings back on track. Tighten up your spending in one area until you’ve built up an emergency fund that can keep you going for 3-6 months without an income, or use a windfall, such as a work bonus or tax refund, to get the bulk of your emergency fund in place.

Once your emergency fund is up and running again, continue to practice basic saving habits, such as setting aside 20% of your monthly income for savings, or whichever approach you prefer. If the pandemic taught us anything, it’s that it’s always best to be prepared, because you never know what can happen.

Rethink your long-term and short-term financial goals

The pandemic has prompted many people to reevaluate their goals. Retiring before you hit 50 or spending a month in Europe next summer may not be as important to you as you’d originally believed; or it may be even more important now. Similarly, you may realize your family has outgrown its living space and that moving to a new home is your number one financial priority. Or maybe you’ve decided you can live without a second car.

Take some time to rethink your long-term and short-term financial goals and adjust your savings and budget accordingly.

As you move through this step, be sure to consider any long-term goals you may have put on hold during the pandemic. Have you stalled your contributions to your retirement accounts or toward your child’s college tuition fund? Have you been making only the minimum payments on your credit cards? If any of these apply to you, be sure to revert your savings and debt payments back to pre-pandemic levels as soon as you can.

Spend with caution

It’s perfectly fine to enjoy a shopping spree in celebration of a return to pre-pandemic norms, but it’s best to spend with caution.

First, prepare to encounter inflated prices wherever you go. Gas prices have jumped recently, and costs of many consumer goods have spiked as well. If you planned to purchase a big-ticket item like a new car or tickets for a cruise, consider waiting it out a bit until prices cool off.

Also, you may be eager to make up for lost time, but no amount of nights out on the town will bring back the months you spent at home. Similarly, overbuying for this fashion season won’t bring back the seasons you spent at home in a hoodie and sweatpants. To avoid irrational overspending, set up a budget before you hit the shops and only spend what you’ve planned.

The restaurants and movie theaters are open for business again, and mask mandates are dropping all over the country. As life returns to pre-pandemic norms, be sure to consider the state of your finances and to make responsible, forward-thinking money moves like those listed here.

Your Turn: What post-pandemic money moves will you be making now? Tell us about it in the comments.