This week in your wallet: summer travel flights
Plus taxable surprises, rising mortgage rates and your latest millionaires on the sidelines.
This week in your wallet: summer travel flights
Hope everyone had a great Presidents Day weekend. Maybe it’s all the mattress sales that got me thinking about rest and relaxation (if you’ve ever wondered what’s up with all that, we break it down for you here) or maybe he saw our new HerMoney book – How To Money – on a must-read list for the summer, but I started planning my first vacation in years. What I found is that the prices are up – up. For starters, rental car prices are up 27% from the same time last year, and hotel bookings are back to where they were in 2019, with weekend room rates”higher than they’ve ever beenthanks at least in part to the wedding boom of 2022. There is a surprising silver lining, however – even with 50% more passengers expected to fly this year than last, airfares are down 18% from compared to 2019, according to Airlines for America, which represents seven major airlines. My advice? Grab some friends, take the cheapest flight you can find, and check out short-term rentals on Airbnb or Vrbo with multiple bedrooms, then do the math. A HerMoney staff member discovered this week that while a nice hotel room in London will set you back around $300 a night, a three-bedroom apartment in the same area (with great reviews) will only cost you $600. . Divide that into three and you cut your accommodation costs by a third compared to what you would pay for a hotel. Let us know if you see any amazing travel deals on the horizon this summer, and we’ll do a roundup of the best buys.
Other costs to watch out for…
Hotels aren’t the only costs skyrocketing these days. Mortgage rates are also expected to rise before the end of the year. So what does this mean for those of us who want a home? First, the bad news: Rising mortgage rates won’t necessarily be a deterrent to other buyers, so if you were hoping that a rate hike would lead to less competition, think again. But, as Ron Lieber wrote in The New York Times this week, there’s no need to rush – it’s actually a terrible time to be a buyer. (Professional investors are still buying homes, with all-cash offers that most buyers, especially first-timers, simply can’t match.) So if fierce competition has left you shut out of the real estate market, take this moment to breathe and keep saving. Typically, when lenders are looking for their ideal client, it’s someone who spends no more than 35% of their income on housing. So if you were already going to push those limits before the market went white, keep accumulating your funds for this time yet to figure out where the real estate sky is clearing to reveal the perfect property for you.
Of course, health care.
There is an incredibly touching story about the devastating emotional and financial impact of caregiving in this week’s Wall Street Journal – I already heard about it from my friend Amy Goyer, AARP family and care expert. Amy spends her days understanding and advising on the challenges of elder care facing our country’s approximately 53 million family caregivers – but the situation in our country is so dire, so utterly impossible to navigate at times, that she ended up bankrupt due to her parents’ childcare costs. I have always been struck by Amy’s strength in sharing her story and how she candidly discusses how the unexpected costs of daily caregiving can be life changing. Unfortunately, his story is not uncommon. According to AARP, caregivers spend an average of 26% of their personal income on caregiving expenses, and 12% end up taking out a loan to make ends meet. If you are experiencing financial hardship due to your caregiving responsibilities, know that you are not alone. AARP has a resource guide for caregivers which offers a breakdown of assistance and services by state — and don’t forget that your financial planner can be one of your best resources for all things budgeting and estate planning. Also, if it’s not too late, you can help your parents be strategic about when they claim Social Security and what their movements are for Medicare/Medigap need to be, in order to earn (and save) the most.
We all know our wages are taxable, so what’s in our end-of-year bonus that always makes us want to take it all, for free and clearly? There’s just something about this check that looks more like a gift for our hard work, sort of… but did you know that any large (non-monetary) gift from your employer can also be taxable? Yesep. We’re talking about that new set of golf clubs or that fancy handbag you received for a job well done. You may owe taxes on this. You will also owe taxes (at least federal) on unemployment benefits, some scholarships, and bitcoin profits, which would be taxed at your capital gains rate… If any of them surprise you (some l ‘were for me), check out this full list of 11 surprising things that are taxable from Sandra Block to Kiplinger, at some point before April 15.
Millionaires next door…
Finally, if the warnings of a recession now more than 50% imminent Are you worried about the overall health of the economy and everyone, I have some good news to share this week. In its quarterly retirement analysis, Fidelity Investments just reported that the number of millionaires who own IRAs, Thrift savings plans and 401(k)s has reached an all-time high. The number of 401(k) millionaires in Q4 2021 jumped 32% to 442,000, while the number of IRA millionaires increased 30%, to 376,100. Michelle Singletary highlights, “They didn’t take the risk of speculating in cryptocurrency with its insane volatility, or building a business which they then sold to a billionaire… Many never earned six-figure salaries. They have been investing for nearly three decades, taking every dollar offered by their employers in matching contributions to the pension plan.” In other words, slow and steady really wins the race. (And if you’re curious about how to get started with an IRA Where 401(k), We have what you need.)
Have a good week,