Do you recall a time where a credit card offer arrived in the mail and blank checks were attached? These are called convenience checks which can be attached with your current credit card or a new company.

These blank checks are linked   directly to a current credit card's line of credit or when you are establishing an account with a new issuer. They function like a personal check but draw money from your available credit instead of your bank account.You can use them for various purposes, such as paying bills, transferring balances from other debts, or getting a cash advance by writing the check to yourself.However, convenience checks are generally an expensive way to borrow. They are typically treated as a cash advance by the issuer, which usually means two major drawbacks:

1. They can come with a higher interest rate: The interest rate (APR) applied is often significantly higher than your standard purchase rate.
    
2. They can have immediate interest accrual: Unlike standard credit card purchases, interest usually begins accruing immediately from the moment the check clears.

So the question is: should these cards be used? The only scenario that this is useful is if you will pay a lower interest than what you are in the debt that is being transferred. On top of that, a transaction fee usually 3% to 5% of the check amount) is typically charged.

For example, if you use a check for $1,000, you’d pay $1,030 to $1,050. The plan is to reduce the current interest you are paying with other cards so the goal is to find cards with promotions of 0% or a low introductory APR for a set period. In this case, they are functioning as a Balance Transfer Check. Lastly, be sure that the new inerest rate after the introductory period expires, is the same or lower than what you pay now.

The bottom line is that having credit cards that accumulate interest is not condoned; however, if you make use of these cards, create a plan to aggressively pay off your debt as this is toxic to your financial future. The silver lining is that these companies are throwing you a bone due to a low interest rate for a period of time so take advantage and stop kicking the can down the road. 
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Buy Now Pay Later Services or BNPL have grown immensely in popularity over the recent years and the appeal is obvious with their convenient alternative to the traditional credit  card. So let’s review the main pros and cons.BNPL services offer several benefits that make them appealing to many shoppers.

They provide easy approval, often requiring only soft credit checks—or none at all—so they’re accessible to people with limited or lower credit scores. Many BNPL plans commonly offer fixed payments over a short period, usually 4–6 weeks, without interest making it easier with scheduling.

So this sounds great, right? On the other hand, while BNPL services offer convenience, they also come with several drawbacks. The most glaring is that shoppers overspend and take on more debt than they realize which leads to missing payments that can lead to late fees or penalties. When this occurs some BNPL services may report late payments to credit bureaus or require hard credit checks for longer-term financing.

Another common trap is that users juggle multiple BNPL loans from different providers, making it harder to track overall debt. Additionally, BNPL services don’t always offer the same consumer protections as credit cards, especially when it comes to returns, disputes, or fraud.

Finally, longer-term B NPL loans can carry interest rates similar to or even higher than traditional credit cards. So the question becomes, should people utilize BNPL plans? The ultimate answer is “no.” If you are using these services, this means that you cannot manage your expenses effectively as they have similar behavior to credit cards.

The bottom line is that you need to review your budget and create a path where BNPL plans are removed from your vocabulary. Every dollar spent on borrowing, is less dollars that could be used to invest in yourself. This behavior needs to be considered as toxic.

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A home warranty can be a useful  financial tool for homeowners, especially when major appliances or home systems unexpectedly break down. (This is where the Rainy Day Fund comes into play that we’ve previously covered in previous topics) The cost of these plans averages from $600 to $900 per year, depending on the level of coverage and provider and service calls typically range from $75 to $150 per appointment.

When this occurs the provider has a network of repair technicians to set up appointments. So, this sounds great, right?Maybe, maybe not. First and foremost is to understand what is detailed in the coverage plan. Coverage caps may apply per repair or per year, with typical policy limits ranging from about $2,000 to $6,500 per item, meaning that if a repair exceeds the maximum payout, the homeowner must cover the remaining balance.

Another aspect to the equation is properly maintaining appliances and equipment so that the provider does not cite pre-existing conditions or improper maintenance, which can lead to denied claims.The truth is that modern appliances may last 8–12 years whereas decades ago 20–25 years was common.

So are you better off with a home warranty? It depends, home warranties are not a one-stop shop as there is not a plan that provides silver bullet and you’d need to have multiple policies to manage all of the potential claims that may arise. If you have many older appliances, a home warranty may be better as individual warranties often come with short-term coverage.

The rule of thumb is that you should create a spreadsheet to capture the items that you own, the age of them, the warranty expiration and then factor in the cost of the warranty and its coverage. If you choose a warranty plan, the safest path is to factor the yearly cost into your monthly rainy day fund to pay for the deductibles assessing for coverage limits and your yearly policy cost. If this is the path that you take it is imperative to research extensively before making a decision.  

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Seeing that 75% of Americans live paycheck-paycheck and can’t afford to retire at 65 years of age, this means that they cannot afford their homes. With this statement you may think that is not right! People stay in their homes without missing payments throughout their lives.

This may be true; however, when you look at it holistically, a different viewpoint emerges. So let’s discuss.

According to the AP average price of a home is $414,000. With this scenario, Nerd Wallet says the average payment is 9%. So this comes to $37,260 leaving a mortgage of $376,470.
Closing costs average between 2-5% and by taking that 2% the mortgage comes to $384,000; and using an average interest rate of 7%, the payment comes to $2,874.

Okay that’s doable; however, we have also need to factor in averages for: 

-Taxes at $3,200 or $271 per month
-PMI at 1% of the mortgage amount is $,3,840 / 12 = $320 per month
-Homeowners Insurance estimated at $2,400 / 12 = $200 per month 

Total Payment Scenario is: $37,260 down payment plus $3,665 each month

So can you handle that? 

Keep in mind that this is a starter home which will no doubt need improvements before long or upfront. So this brings us to the rules that you must follow: 

1) If you do not have an emergency fund (3-6 months of a stipend),

2) A rainy day fund (to pay for unforeseen maintenance)

3) No credit card interest

4) You need to invest 10-15% of your gross income for retirement

If you cannot meet this criteria, then this means that you cannot afford the home. 

Eventually, you will run into a situation where you’ll need additional money that you don’t have which leads to additional borrowing, leading you down a rabbit hole.

Now for the last thing . . . if you are already a homeowner and you don’t meet this criteria, consider making a change so that you can plan effectively your future.

When it comes to your retirement, it’s not timing the market, it’s time in the market.

The bottom line with homebuying is to be patient especially in times of high interest rates as the wrong decision can lead to several years of maintaining debt. 

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It’s no secret that medical bills are among the most significant expenses we face in our lifetimes. While we often can’t control the cost, there are several ways to soften the financial impact.Let’s perform a diagnosis—and a treatment plan:

1. Verify Insurance Processing:
   When you receive a medical bill, confirm that your insurance claim has been fully processed. It’s common to receive a bill before insurance adjustments are applied. Ensuring the claim is complete helps you avoid overpaying and requesting reimbursement later.
   
   
2. Consider Cash Payments:
   If you’re uninsured, have a high-deductible plan, or your insurance doesn’t cover a service, paying cash can be a smart financial move. Many providers offer discounted cash rates for labs, imaging, and outpatient procedures. Always ask about available discounts.
   
   
3. Consider Medical Credit Cards:
   If cash flow is an issue, a medical credit card may be an option. However, choose this option if you can commit to paying off the balance within the promotional 0% interest period. Otherwise, you’ll owe the full accrued interest, which can be substantial.
   
   
4. Compare Provider’s  Costs:
   If you need surgery or a procedure, ask whether your doctor operates at multiple locations as these costs can vary widely. Contact each billing department, request billing codes, and compare prices. By doing this, I reduced a $10,000 bill to $1,000—and after insurance, I paid just $300.
   
   
5. Save on Prescriptions:
   For daily medications, request a bulk supply—such as a 90-day prescription instead of a 30-day refill—to save money. In my case, this approach reduced costs by about 40%. Also, explore discounted programs like GoodRx, and consider generic options when appropriate.

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For most owners, when they purchase their homes, the monthly mortgage payment is a fixed amount for 30-years and sometimes 15, people still become accustomed to a standard payment each month.

On top of the mortgage payment is an escrow account established by the lender to manage payments typically for property taxes, homeowners insurance, and, in some cases, private mortgage insurance (PMI). 

So each month these expenses are wrapped up as the total monthly payment and the lender pays them on the homeowner’s behalf. However, when people sign on the dotted line, they are not informed that this payment may change on a yearly basis; and this is due to the yearly escrow analysis. This is one of those hidden budget tips that no one tells you about. 

So what may change? 

Over the course of a year, property taxes and insurance premiums may fluctuate. For the most part taxes will continue to rise as the world becomes less predictable with the environment.
 
With natural disasters becoming more common, oftentimes homeowner’s insurance rates will increase in geographical areas where there weren't unfortunate events. 

The other common increase occurs in the first year of home ownership. Taxes are based on the assessed value of a home; however, these values are often suppressed meaning they are not accurately updated each year. Hence, in the first year of ownership, the assessed value can increase to be accurately reflected and this can generate a large spike in the overall tax amount. 

In addition, local governments may also increase your bill as property values rise each year or there may be cases where a millage is added to improve parks, libraries, community centers and the like. 

So what happens annually?

The lender will review any changes and compare them with the initial cost estimates. If there is an increase, the lender will adjust the monthly escrow payment to cover the new amounts spread over the course of the year. In the event of a surplus of $50 or so, the lender is typically required to refund the excess amount. 

So how do I prepare? 

For the most part there is nothing that you can do. Know that if you filed an insurance  claim, or major disasters occurred  across the country or you bought a new home, or if your municipality has approved a special assessment, your taxes will most likely rise.

This is why it is important to have available disposable income to account for the increases in your budget.

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In the prior personal finance tip #97 which was how to save on the little things, we mentioned how to be awarded with Amazon digital credits for delaying delivery and we mentioned buying a monthly car wash plan. 

We also covered the value of buying long term products and services rather than single use items which occur multiple times. Lastly, we covered the value of buying products on the basis of consumption needs. 

Employing this mindset with all of your spending will watch your dollars add up. So we’d like to propose a challenge to you. Can you save $100 a month? 

For most people, the answer is yes and with that comes the ability to invest this money in    yourself. You could do this via tax deferred retirement accounts such as 401(k)s, Roth 401(k)s, Roth IRAs, traditional IRAs and 403(b)s and 457 plans. 

The other option is to have an individual brokerage account where you can buy fractional shares of stock in well-known companies. For example, your $100 monthly contribution may buy $5 worth of Apple, Nvidia, Microsoft, Tesla and so on. 

Many companies offer this including TB Bank, Charles Schwab, Stash and Fidelity where you can also invest money any way that you choose. All you need to do is set up a monthly withdrawal.

Now for simplicity, let’s create a scenario of compound interest: you decide to invest your $100 each month into an S&P 500 fund. A well-known ticker is Vanguard’s VOO. After their expense ratio, it has yielded an annualized return of approximately 9.5% for the last 30 years. 

If you invest that $100 per month at that 9.5% interest, you’d have $181K in 30 years and $980K in 48 years - and this is where compound interest takes over. From years 31 through 48 this account would grow an astounding $699K. 

To take this further:

For $200 a month: after 30 years, you’d have $362K and reach $1M in year 41
For $300 a month: after 30 years, you’d have $543K and reach $1M in year 37
For $400 a month: after 30 years, you’d have $724K and reach $1M in year 34

So needless to say this is awesome; and all you have to do is make some minor adjustments throughout your budget. 

My advice is that you do not want to look back many years from now and say if I just would have eaten out one time less per month, or cut back on streaming subscriptions, bottled water or overspent during the holidays, I could have had all this money. 

So take this heart and pass the word because anyone can be a millionaire.

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When it comes to budgeting, people think about the monthly expenses for items such as the mortgage/rent, car payment, grocery bill, subscriptions and so on. 

On the flip side there are costs that fall into the general spending category where the items are not fixed amounts. The way to manage this is to look at the repetitive activities throughout the year and decide if you can get more out of what you’ve purchased. 

In my case, I think about buying opportunities that I am given or I put thought into the new items that I will purchase. Let’s review a few of them.

The easiest one for me is with my orders on Amazon. I'm often offered digital credits if my packages are delivered in 2-7 days rather than the next day. I usually get a few dollars per order and I use that for renting movies, buying books, music or apps. This really comes into play during the year-end holidays.

Another one is the car wash. My wife washes her vehicle 3-4 times each month at $10. So we  purchased an unlimited monthly plan at $25 saving us $15 and that comes to a savings of $180 each year. 

One item that comes up periodically is bowling. We like to sprinkle this throughout the year, especially during the winter and with that comes renting shoes for my wife at $4 a pop. Now over the course of two years, it was more cost effective to purchase a permanent pair and over time that $4 stays in her pocket each time we hit the lanes.

Here is an usual one regarding consumption. I bought a large bag of zip ties to help stake my plants and shrubs in the garden. They are a single use item; however, I insert flange in backwards so that it doesn’t lock, meaning that I can reuse them several times. 

Let’s do more: during my travels, in some cities, such as New York, using a taxi rather than an Uber or Lyft is less expensive by a wide margin. 

Okay, let’s wrap this up. When you incorporate this type of mindset with your purchases, the savings are small per transaction; however this money adds up over time. The beauty is that you save money without changing what you use or purchase. In addition, less consumption of items helps the environment.

According to Bloomberg, auto insurance rates in the US have increased by 37% since January 2020, and as of December 2024, the trend shows no signs of slowing down.This is understandably concerning.

When you factor in car payments, fuel, and maintenance along with insurance, auto expenses can easily become one of the largest budget categories.

Several factors contribute to this rise, with two major ones being the complexity of modern vehicle technology, including sensors, and the escalating cost of parts. Additionally, the average cost for a collision claim has reached $6,000.

For example, my own car’s bumper was tapped at just 5 miles per hour, and the repair bill exceeded $8,000.So, what can drivers do?

There are several strategies that may help reduce your insurance rates.If you're considering purchasing a new car, research the makes and models with higher insurance premiums, as costs vary significantly between vehicles.

Raising your deductibles can also lower your premiums, and you can reduce add-on coverage, such as rental car benefits while your vehicle is in the shop. Driving less reduces your risk of accidents, which in turn can lower your insurance costs.

Be sure to ask about available discounts, and if applicable, bundle your car and home insurance. In some states, completing a defensive driving course can also result in a premium reduction.

Accidents and violations typically remain on your record for 3-5 years, so if this applies to you, exercising patience may help in the long run.Many companies factor in credit scores when determining premiums.

While some claim they use a model based on credit behavior rather than an actual score, many people remain skeptical of this disti  nction.This ties back to the importance of maintaining a strong credit score, which we covered in episode #40.

In conclusion, while you can't control the overall cost of automobiles, you do have several options to help manage your insurance expenses.

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In times of high interest rate environments, most people will not refinance due to the cost. With that being said, circumstances arise to warrant this, such as divorce, marriage or a job relocation.
For the most part, people wait for the federal reserve to cut rates so that borrowing money is more palatable. For example, at the time of this recording, the average interest rate for a 30-year mortgage is 7%.

So when the rates begin to drop later this year, people will rush in to refinance.
For example, a 7% interest rate for a $300,000 mortgage generates a monthly payment of $1,995. If we go to 6%, the payment is $1,798 and at 5% it is $1,610. 

So this is why refinancing makes sense; however, this comes with a caveat. When crunching numbers, the cost is between 2-6% of the mortgage amount depending on items including loan size, the type of loan and credit score.  

For our $300,000 loan at a 3% cost, this would be $9,000 bringing the total to $309,000 and this is where caveat #1 comes in: it takes approximately 7 years to pay off the cost for refinancing; however, when stretching out payments for a new 30-year cycle with a reduced interest rate, the new monthly payment is lower than the original monthly payment and people are attracted to that eye candy. 

Now in truth, a 1%+ interest rate deduction is almost always a good move if the cost is right. What you have to watch for is refinancing again when rates continue to decline. 

For example, if you refinance from 7% to 6% and then say at 5.25% and 4.25%, you may run into paying more money with the cost to refinance and accumulated interest. 

As we said a moment ago, a $300,000 mortgage costs between 2-6% or $6,000 to $18,000. If you refinance three times, that ranges from $18,000 to $54,000; and this where the second caveat comes in. 

All that money you spent to have a lower monthly payment adds up and even though your monthly payment is lower, each time you refinance, a new 30-year mortgage cycle begins. What you are doing is stretching out more cost and interest over a longer period of time.   

To sum things up, refinancing makes sense when you actually save money over a long period of time meaning you are not refinancing for the sake of refinancing and not multiple times. It is understandable that pinpointing the correct time to refinance can be challenging; however, if the market trend is moving downward, it tends to stay that way for several months and this can aid in determining when to make your move. 
 
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