Can You Fund Really Big Purchases With a Personal Loan?

Wouldn’t it be great if we all had a crystal ball that told us what the interest rate environment would do? We could figure out the best time to get a mortgage or the best time to buy a car. And of course, we would know exactly when to put all of our money into certificates of deposit (CDs) to maximize our yield.Unfortunately, that isn’t the case. Nobody knows what interest rates are going to do in the future — not even the people in charge of setting benchmark interest rates. However, we can use the latest economic projections to consider the most likely scenario and what else could happen instead. So here’s what we know (and don’t know) about what CD yields will do in 2024.Where do CD yields come from?The short explanation is that CD rates are a combination of three main factors:The current interest rate environmentThe bank or financial institution that offers themThe maturity termIn other words, when benchmark interest rates rise, CD rates generally tend to rise along with them. However, the rates paid by CDs can vary dramatically between banks.For example, as I write this, our top 12-month CDs have APYs ranging from 4.25% to 5.65%. The same is true for CDs of other maturity lengths as well. But because the Federal Reserve has raised benchmark interest rates so aggressively in the past couple of years, this range is significantly higher than it was.When it comes to different maturity lengths, it’s a little tricky to explain, but the general idea is that shorter-term CDs tend to track benchmark interest rates rather closely. The current federal funds rate (the most important interest rate the Fed controls) is set to a range of 5.25% to 5.5%, and this is certainly aligned with most of the top 1-year CDs we track.With longer maturities, there are a lot of economic factors at work, but the simple explanation is that CD yields are a combination of the current interest rate environment and expectations for future interest rate movements. In most environments, longer-maturity CDs tend to have higher yields, since banks typically pay a premium if customers agree to leave their money on deposit for a longer time. But as of Oct. 2023, the range of 5-year CD yields on our top CD list is 3% to 4.85%, with the average yield significantly lower than the average 1-year CD.This makes sense. According to the latest projections from the policymakers at the Federal Reserve, the benchmark federal funds rate is expected to fall to 4.6% by the end of 2024 and to 3.4% by the end of 2025.What will CD rates do in 2024?There’s no way to predict with accuracy what CD rates will do next year. Even the Federal Reserve’s own projections can be very wrong. In fact, the Fed’s projections in Sept. 2021 called for a federal funds rate of just 1% at the end of 2023.Having said that, the latest projections call for one further quarter-point rate hike by the end of 2023, which would likely push CD yields slightly higher to start 2024. And if the Fed’s projection of a 4.6% federal funds rate proves to be accurate, we could expect 1-year CD rates to gravitate towards that level, with other maturity terms drifting generally lower as well.However, it’s tough to overemphasize that we don’t know what is going to happen. If inflation proves far more difficult to control than the Fed expects, it’s entirely possible that several more interest rate hikes will be needed and CD yields will be much higher at the end of 2024. On the other hand, there’s the possibility of a recession coming and the need for the Fed to aggressively cut rates if the economy takes a worse downward turn than expected.The bottom line is that CD rates are higher right now than they’ve been in a long time, and the best course of action is to put your money in CDs that make sense for you now — not to leave your cash on the sidelines in anticipation of rates rising even further.However, one smart strategy could be to create a CD ladder, which gives you the best of both worlds. If rates end up rising in 2024, you’ll end up with some money to take advantage. And if rates fall, most of your money will be locked in at today’s rates.

By: Natasha Etzel |
Updated
Oct. 17, 2023 – First published on Oct. 17, 2023

Dental care is considered to be separate from other healthcare needs in the United States. If you have health insurance, it’s likely that dental care coverage is not included. Instead, dental insurance is an additional expense — and without it, treatment can be expensive. There were times when I paid for traditional dental insurance, but I’ve found another option that works better for my needs and budget. For the last five years, I’ve been going to a dental practice that promotes its own savings plan. Find out why this solution is ideal for my wallet. Dental care is expensive in the United States Many Americans go without dental insurance. Sadly, those without coverage tend to delay taking care of dental issues due to the fear of the cost. Without insurance, a bill for one dental procedure, like a root canal, could quickly drain anyone’s checking account. Those who do have insurance may find that their coverage has limitations. There may be an annual coverage cap and some services (such as composite fillings) may not be covered. If dental care doesn’t cover an entire procedure, the patient is left to pay for the rest of the cost. As someone who has undergone several dental procedures, dental insurance wasn’t always the most useful. I’ve had several cavities filled or replaced in adulthood. Even when I had dental insurance, the composite fillings I needed weren’t covered. So I was left to pay $100 or more per filling. These additional costs have changed how I approach paying for dental care. Look for savings plans offered by local dental offices When I returned to the United States after living abroad for a couple of years, I began the quest to find a new dentist. I have some dental anxieties, so I spent a lot of time looking at reviews. My top priority was finding a dental practice that would make me feel at ease. But I also considered the cost. At the time, I was paying for my own healthcare coverage as a freelancer and had to decide if purchasing dental insurance made sense. I ultimately decided to skip paying for dental coverage because I hadn’t gotten much value out of it in years past. Instead, I chose a dental office that offers a savings plan. It functions like a yearly membership and each patient pays a set fee for coverage. For individual coverage, I pay my dental office $250 per year. I get a cleaning and exam every six months, annual X-rays, fluoride treatments every six months, and one free emergency exam visit per year. Additional dental care services, like getting a cavity filled, are an extra expense. But as I mentioned earlier, composite fillings weren’t covered when I had dental insurance in the past, so I’m used to paying for this service when it’s needed. With my membership, I get a 20% discount on all additional dental procedures.I pay $250 every winter when it’s time to renew my membership. That works out to be less than $21 per month for proper dental care. I set aside money throughout the year to pay for this membership so I’m prepared to reimburse myself after swiping my credit card. But I also set aside additional money in case I ever find myself needing to cover a more expensive dental procedure in the future. You, too, can prepare for future expenses by regularly contributing money to a high-yield savings account. Consider alternative solutions to make dental care affordable Ignoring healthcare concerns, including dental issues, is never a good idea. With how expensive treatment can be, it’s understandable why many people delay care. However, ignored health issues can quickly worsen and become a more severe and costly fix. If you’re worried about dental or other medical care costs, you’re not alone. Exploring alternative solutions to make dental and healthcare more affordable can be beneficial. Going to a dentist that offers an annual savings plan is one option. But that’s not all. Many dental schools offer discounted services to patients so students can get real-world practice. Most dental schools have licensed dentists overseeing the care. If you have a dental school in your area, this could make staying on top of routine dental care needs less expensive. For additional ways to save money, check out our personal finance resources. 

By: Maurie Backman |
Updated
Oct. 20, 2023 – First published on Oct. 18, 2023

Many people shop at Costco regularly and marvel at the savings involved. Costco shopping can leave you with more cash to add to your savings account. But have you ever wondered what it would be like to work at a Costco warehouse club store?On the one hand, working at Costco could mean spending a lot of the day on your feet. But if you’re someone who just doesn’t do well with a desk job, and you like the idea of getting to interact with people, then it could pay to see if your local Costco is hiring.Before you take that step, though, you may be curious as to what sort of wage you might be looking at as a Costco employee. And the answer might surprise you — in a good way.A far from shabby hourly rateDuring Costco’s most recent earnings call, CFO Richard Galanti was asked to talk about employee wages. And the details he revealed actually paint a pretty positive picture. Galanti said that 90% of Costco’s employees are paid hourly. And the average hourly wage for Costco employees is close to $26. So for someone working 40 hours a week and 52 weeks a year, that’s an annual income of about $54,000.Granted, at that income level, you’re not necessarily rolling in dough and signing a $500,000 mortgage loan. But in some parts of the country, it’s possible to more than get by on an annual income of $54,000, especially if you’re single. Also, Costco warehouse positions may not require the same amount of schooling as a corporate job paying more. It’s common for corporate positions to want a college degree or some sort of college. If you skipped that step, you may find that you’re able to earn more at Costco than at a competing retailer, or a comparable job that doesn’t require a degree.Costco employees get other nice benefits as wellNot only is Costco’s hourly wage fairly generous, but in addition, Costco employees are eligible for what Galanti described as a “very rich healthcare plan.” Plus, Costco employees are entitled to a 401(k) plan contribution on the company’s part. And that free money for retirement is available “irrespective of what an employee contributes to his or her 401(k),” Galanti said.It’s also worth noting that Costco contributes anywhere from 3% to 9% of employee wages to a 401(k) based on years of service. And while a 3% match is fairly standard, a 9% match is notably generous. Should you apply to work at Costco?If you’re earning a lot less than $26 an hour and aren’t happy with your workplace benefits package (if it even exists), then it could pay to look into applying at Costco. Even if you’ve been working in a corporate environment, if you’re feeling burned out at this point, taking a few months to work at a place like Costco could provide the refresh you need to pursue a different long-term job down the line. Of course, if you are offered a job at Costco, you’ll want to pay attention to the fine print. Just because the average hourly wage is around $26 doesn’t mean that’s what you’ll be getting, especially if you don’t have much experience.And it’s a good idea to compare wages and benefits across retailers you want to work for to see which pays the most and offers the best perks. But if the idea of working at Costco appeals to you, then it’s certainly worth looking into.

By: Maurie Backman |
Updated
Oct. 20, 2023 – First published on Oct. 19, 2023

Many people look to Costco to save money on expenses like groceries, cleaning supplies, and paper products. But if you’re someone who wears glasses, then it could pay to make Costco your go-to source for eye exams and new lenses and frames. Here are some of the less-obvious benefits of using Costco Optical.1. Costco Optical accepts most major vision insurance plansYou’ll often hear that it’s a good idea to buy your glasses at Costco or get your eyes checked there if you don’t have insurance, because you might get to spare more cash for your savings account compared to going elsewhere. But you might spend even less with insurance, since Costco Optical participates with major carriers that include Avesis, VBA, and VSP.Of course, it’s always a good idea to call your insurer and check your coverage before getting your eyes examined through Costco and buying glasses there. Perhaps you can spend even less on a new pair of glasses by going to a preferred provider, so do that research ahead of time.2. You can save big by purchasing multiple pairs of glassesIt’s a good idea to have a spare pair of glasses, since you never know when yours might break or get horribly scratched up. When you buy multiple pairs of glasses for the same prescription, you’ll automatically get $30 off additional pairs at Costco Optical.At this point of the year, you may have an FSA balance you’re trying to spend down. Buying a couple of pairs of glasses at Costco could be your ticket to using up your balance but not going over it. 3. You can try on glasses without leaving the houseBuying glasses online can be tricky, since it’s hard to know what a given frame will look like on your face. Costco has solved that by introducing a virtual try-on. You simply take a video of your face, and from there, you can see what different styles will look like on you so you can order your glasses online if you don’t want to travel to a store.4. Adjustments to glasses are always free — even for glasses not purchased at CostcoYou may reach a point where you need your eyeglasses adjusted, either because they’re loosened or they didn’t really fit right in the first place. Costco Optical will adjust your glasses for free — whether you bought them at Costco or at another store. If you’re thinking of taking advantage of Costco Optical’s new virtual try-on, the limitation there is not being able to see how your new glasses will feel on your face. So if you find a pair that looks great but doesn’t feel so great, just head in to Costco at your convenience for an adjustment.5. You can get an eye exam even if you’re not a memberFor many people, a Costco membership makes sense. But if it doesn’t pay for you, worry not — you can still get your eyes examined at a nearby Costco and walk away with a prescription. However, only members can buy glasses.When people think of Costco, the chain’s optical center and services aren’t necessarily the first things that come to mind. But it could pay to make Costco Optical your new source of glasses and vision exams for these benefits alone.

By: Maurie Backman |
Updated
Oct. 23, 2023 – First published on Oct. 22, 2023

When most of us think of shopping at Costco, we tend to picture bulk cases of our kids’ favorite snacks and massive quantities of paper towels. In fact, a lot of people join Costco for the express purpose of being able to save money on things like groceries and household essentials. But while Costco certainly offers its fair share of bargains, not every item you’ll find at the store or on Costco.com is inexpensive. Here are three pricier items that Costco sells that may be more than worth the money they cost.1. The LG 86″ Class — UR8000 Series — 4K UHD LED LCD TVAn 86-inch TV is clearly a big investment. And at a price tag of $949.99 online (note that prices may be cheaper in stores), you’re clearly not spending a small amount of money. But this LG TV features a clear, crisp picture that’s ideal for sports, movies, or gaming. It’s also compatible with Alexa, Apple AirPlay 2, and Google Assistant. Plus, when you buy electronics at Costco, you get not only free tech support, but a second-year warranty included. You also get 90 days to return this TV if you buy it, but decide it’s not right for you.Of course, as is the case with any expensive purchase you’re looking to make, you’ll want to make sure you can afford to pay for this TV outright before buying it. If you charge it on a credit card that you don’t pay off for a year or more, you’ll rack up interest that will make an already pricey item cost even more.2. The Kirkland Signature Stainless Steel 6 Burner Gas GrillIf you have a grill that’s seen better days, then it could be time for an upgrade. And that’s where this Kirkland model comes in.It features a stainless steel cooking area and 737 square inches of total cooking surface so you can sear your way to the perfect burger, fish, or steak. And while the $899.99 online price does not include assembly, delivery is included. Plus, you can arrange for assembly through Costco when you go to checkout.It’s worth noting that since we’re past the peak grilling season, some retailers may have excess inventory they’re looking to get rid of. So before you buy this grill from Costco, you may want to shop around and see if there’s a better price elsewhere. But you should also know that Costco stands behind its products. So if you run into any issues with your new grill, you can rest assured that Costco will aim to make things right. 3. The De’Longhi Magnifica Evo Automatic Espresso & Coffee Machine with Manual FrotherAt an online price of $699.99, this coffee maker is far from cheap. It’s also not your average coffee maker. Rather, this device lets you make everything from regular old coffee to espresso to iced beverages — all from the comfort of your kitchen. It also features removable parts for easy cleaning and a traditional milk frother, so your beverages are comparable to what you might find at your local Starbucks.Now, $699.99 is a lot of money to spend on a kitchen gadget. But think about the amount of money you spend on store-bought coffee. If you normally buy a fancy caffeinated beverage outside the home for $5, it’ll take 140 home-brewed coffees to break even on your $699.99 purchase. But if you buy a fancy coffee from a store three times a week, you’ll break even in less than a year, and from there, you can put all the money you’re not spending on coffee into your savings account. Some of Costco’s inventory is pretty high-end, and these items are certainly not cheap. But if they fill a want or need for you and you can afford them, then they may be worth the higher price point.