Does Your Income Make You Upper Class, Middle Class, or Lower Class? (2024)

Could CD Yields Hit 7% in 2024?

The interest rates you can get from deposit accounts at banks have soared over the past two years. It wasn't too long ago where a 2% APY on a "high-yield" savings account or CD was considered a great find. But as of this writing, it's not difficult to find CDs with 5% or greater yields, thanks to the recent inflationary environment that has led to rapid increases in benchmark interest rates.This raises the question -- how high could CD rates go? Could we see 7% CD yields before the end of 2024? While nobody has a crystal ball that can predict the future direction of interest rates, here's what we know and what you can expect going forward.Where CD yields stand todayBefore we get into a discussion of where CD interest rates could go, here's a bit about where things stand right now. As you might expect, the best CD yields can be found at online banks (for the most part), and here's what you can get as of Dec. 11, 2023:Our top-ranked 1-year CDs have yields ranging from 4.25% to 5.61%, with most in the low-5% range.Our top 18-month CDs have yields as high as 5.6%.2-year CDs with yields as high as 5.5% can be found.Most of our top online banks have 5-year CDs with yields in the 4% ballpark.Be sure to check our best CD rates page for the latest offers from our top-ranked banks.Using the high end of the 1-year and 18-month ranges as a guideline, this means that CD yields would need to increase by about 140 basis points (1.4%) from current levels to produce 7% CD yields.It's worth noting that historically, the longer your CD's maturity length, the higher the APY you could expect to get. But the opposite is generally true right now. I don't want to turn this discussion into an economics lesson, but the general idea is that when short-term CDs pay more than longer-term ones, it indicates that interest rates are expected to decline going forward (you may have heard the term "inverted yield curve" on the financial news, and this is a form of one).Interest rate projections for 2024With that last point in mind, let's take a look at what experts think interest rates are going to do in 2024.The short version is that most experts expect rates to fall. But there is little agreement when it comes to the magnitude of a potential decline.The latest version of the Federal Reserve's economic projections (by the people who actually make policy decisions) calls for a single 0.25% rate cut, compared with current levels, in 2024. However, it's worth noting that this is from the September Fed meeting, and the inflation data since then has generally been better than expected.On the other hand, according to the CME FedWatch Tool, the futures markets are pricing in a median of five quarter-point rate cuts by the end of next year (a total of 1.25%). Some experts think even more cuts will be needed.However, one common theme among all of the predictions I could find from notable experts is that nobody thinks the benchmark federal funds rate will be higher at the end of 2024 than it is today.The bottom lineOne important thing to know is that while CD yields tend to move in the same direction as benchmark interest rates, they aren't usually directly tied to them. In other words, if the Federal Reserve cuts the federal funds rate by one percentage point in 2024, there's no guarantee that CD yields will decline by the same amount -- or at all.Having said that, virtually every expert is predicting that interest rates will go down in 2024, not up. But that doesn't mean the unexpected won't happen. At the start of 2022, when mortgage rates were around 3%, few people would have predicted that they'd more than double over the course of the year. If inflation unexpectedly spikes, for example, it could cause policymakers to raise rates, which would likely move CD yields higher.However, given the information we have now, it is looking more likely that CD yields could fall in 2024, so it could be a smart idea to take advantage of high-yield CDs in the near term. But again, there's no guarantee rates won't rise.

3 Reasons I Don't Shop at Dollar Stores

Does it feel as if everything is so much more expensive than it used to be? Well, you're not imagining it. We're still coping with higher inflation than usual (thankfully lower than it was during summer 2022, at least). As of the last Consumer Price Index Summary report, inflation was holding steady at 3.2% between October 2022 and October 2023. So if you're hoping to spend less money on your everyday purchases (and who among us isn't?), shopping at dollar stores seems like the natural choice.Dollar stores are everywhere -- Statista reports that there were over 37,000 of them in the U.S. last year. Plus, shopping at dollar stores comes with some perks -- for example, they can be a great place to buy low-cost gift wrap and greeting cards (why spend more for something that will be thrown out in short order?).If dollar store shopping works well for you and your personal finances, I absolutely get it, and think you should keep saving money in any way you can. But my own issues with dollar stores supersede my desire to save money. Here's why I avoid dollar stores.1. I have concerns about product safetyChances are good that you've been impacted by a product recall at least once in your life -- manufacturers and sellers implement these to get potentially unsafe products out of the hands of consumers. Earlier this year, Family Dollar undertook a recall of almost 300 drugs and other medical products that had been stored improperly and then sold at stores in almost two dozen states.The fact that so many different products, from toothpastes to allergy medicines to painkillers, were affected is extremely concerning and points to bigger issues with how dollar stores handle their supply lines and distribution. (Some of this relates to staffing problems; see below for more on that.) Dollar stores certainly aren't the only retailers who occasionally have to recall products for safety issues, but it's definitely a reason I would never buy medication or similar items from a dollar store.2. I don't like the way they operateDollar stores have a nasty habit of moving into rural areas of our country and undercutting local small businesses with their seemingly lower prices on essential items. In some places, they can even push out grocery stores, making dollar stores the only place to buy grocery items. And since the number and types of items sold are limited (particularly the selection of fresh produce, assuming it's available at all) at dollar stores, this can be extremely limiting for consumers.Going beyond the impact on local businesses and the food supply, dollar stores have also gotten in trouble with the federal government for not providing a safe working environment for staff members. As recently covered by Last Week Tonight with John Oliver (as well as other outlets), dollar stores can be severely understaffed, terribly disorganized, and even beset by rats and violent criminals. I've lived and worked in small rural towns, and the residents there deserve better. In some places, locals are fighting back -- NPR reported that 50 communities in the U.S. have put limits on new dollar stores opening in their area.3. I'd rather spend more upfront for items that lastWhile paying less for an item you buy is a more straightforward way to find savings, dollar stores don't always sell the highest quality of a given item. I'm fortunate that I am able to put a bigger charge on my credit card for a purchase and in exchange, have it last for longer. Batteries, tools, and toys are all examples of items best avoided from dollar stores because they just aren't as well made or long lasting as items you might pay more for from brands you've heard of.I can buy an eight pack of AAA batteries from Dollar Tree for $1.25. But if those batteries end up leaking, or even just not lasting very long, I'll use them up more quickly than I would if I sprung for Duracells from Amazon. There are other ways for me to save on higher-quality items, such as waiting for holiday sales or buying in bulk, rather than buying them at dollar stores.Personal finances are just that -- personal. So just because dollar store shopping isn't a fit for me doesn't mean it isn't for you. I do recommend taking the time to compare prices using product sizes, however, as this is one way you might be fooled into thinking dollar store prices are lower. That way, you'll be able to tell in real numbers whether you're saving money.

3 Reasons to Cancel Your Costco Membership in 2024

If you're a member of Costco, you're in good company. As of September 2023, the warehouse club giant had an impressive 127.9 million cardholders and 71 million member households.You may be well aware that a Costco membership has the potential to result in a lot of money for your savings account. But if these things apply to you, you may not want to keep your Costco membership in the new year.1. You really haven't been using itIf you spend a lot of money on grocery purchases at Costco, then it can be pretty easy to justify the cost of a membership. But if you only visited Costco a handful of times this year, then it may be that you're not saving enough money to make that membership worth paying for.Be realistic about how often you're likely to use your membership in 2024. If you only tend to visit Costco a couple of times a year, it could be worth seeing if you could just tag along with a family member or friend when you need to go rather than pay for a membership yourself.2. You're downsizingOne of the benefits of having a Costco membership is getting to reap savings by buying household essentials in bulk. But if you're making plans to downsize your living space in the new year, then having a Costco membership might stop making sense.Buying things like cleaning supplies and paper towels in bulk really only works if you have a place to store them. You don't want to end up having to house your supplies in the middle of your dining room because you no longer have the storage space to keep them tucked away.Also, sometimes, a smaller living space means a smaller kitchen -- and a smaller fridge to go along with it. That could make it harder to buy large quantities of perishable food.3. You're moving someplace where there's no Costco nearbyCostco has an impressive 600 warehouse club locations across 47 U.S. states and Puerto Rico. But if you're moving in 2024 and your new home won't be located anywhere close to a Costco store, then it could make sense to cancel your membership.Let's say a typical Costco trip saves you $20 compared to what you'd spend at a regular supermarket. If you move far away from a Costco location, you might spend that $20 in gas back and forth just to get there. Plus, you're spending lots of time on the road.Now, you could decide to keep your Costco membership for online shopping purposes. That's not necessarily a poor choice. But do know that Costco prices tend to be higher online than in stores. And sometimes, there's a considerable price difference. So you'll need to decide whether you're willing to still spend that money if it means saving less.You may have loved having a Costco membership until now. But if these factors apply to you, then you may be better off canceling your Costco membership in the new year rather than continuing to pay.

My Brother Won a Car on The Price Is Right. Here's What It Cost Him

When my brother got tickets to be in the audience of The Price Is Right, he figured it would simply be an entertaining way to spend a day off. He didn't imagine his name would actually be called during the show's opening round.But lo and behold, my brother was one of the first four contestants asked to come on down and participate in the iconic show that has you guessing at prices of various consumer goods. And as luck would have it, my brother was able to out-bid his competitors and move on for a chance at a new car -- a car he won through savvy guessing, but also, a nice amount of luck.My brother was ecstatic to have won such an awesome and valuable prize. But that prize wound up being a bit of a mixed bag.Taking the money and runningMy brother won a Hyundai Elantra with an estimated value of $25,415. He was happy to have won the car, but there was a problem -- he already had a vehicle and didn't need a second one. And he certainly didn't want to have to bear the cost of auto insurance for a vehicle to largely just sit in his driveway.Thankfully, my brother was able to work something out with the dealership. Instead of keeping the Elantra, he was able to use the roughly $25,000 credit he got to buy a used car from them and then sell it back for $21,000, which he took as cash. This route was worth it for him because sales tax and registration for a new Elantra would've been about $4,000. And now, my brother has a pile of cash he can add to his savings account instead of a car he doesn't actually need.Gearing up for a giant tax billMy brother won two prizes on The Price Is Right -- a grill package worth about $1,400 and the Hyundai Elantra. All told, it's more than $26,000 in winnings.But now, my brother is going to be looking at a pretty hefty tax bill on his prizes. And it doesn't matter that he took cash for the car. He's looking at paying that tax either way.The exact amount will hinge on his total tax situation. What'll probably happen is that my brother will receive a tax form from the game show summarizing the value of his winnings, and he'll need to work with his accountant to figure out what it will cost him.As a very basic example, let's say you win $20,000 on a game show and fall into the 24% tax bracket based on your income. You might, in that case, end up having to pay as much as $4,800 on your winnings. If that $20,000 is a cash prize, you could simply reserve some of it for your tax bill. But what if you win a $20,000 vacation package, or $20,000 in furniture? It's not like you can send the IRS a dining room chair or a loveseat and call things even.So be very careful when you're looking at taking home any sort of game show prize. You may even want to meet with an accountant before applying to be on a game show to get some advice.The good news is that my brother stands to gain something financially either way. But imagine you were to receive a $26,000 bonus from work. That's a great thing. But you'll likely end up losing a large chunk of that $26,000 when you account for the portion you owe the IRS.All told, my brother is grateful for his experience and now has a really fun story to tell. But if you're planning to audition for a game show in the hopes of walking away with a huge amount of cash or a set of prizes, do know that winnings like that are considered taxable income. And it might take the input of a very seasoned accountant to help you reconcile your tax bill after coming away with that sort of haul.

One Simple Decision Earned Me an Additional $5,000 This Year

At the beginning of 2023, I added more freelancing work into my regular work routine. I've been a full-time freelancer for over a decade, but I wanted to add a few additional clients through a gig work platform to improve my personal finances.I landed several repeat clients within several months and had a few one-time assignments. The result was about $5,000 in earnings for the year. It's not a life-changing amount of money, but it was certainly worth the effort.I earned a little less than the average side hustleI didn't have a plan for how much I wanted to make and it turns out my earnings were below the average annual side hustle earnings of $5,700. In hindsight, I probably could have earned more if I had devoted additional time and effort to adding new clients.Instead, I wanted something easily manageable and didn't take too much of my free time. But the extra money still helped me pay down some bills.As inflation has soared over the past few years, more Americans are turning to gig work to bring in additional income. An estimated 61% of Americans live paycheck to paycheck, and credit card debt has reached a record-high $1 trillion.Picking up some side projects is a good way to help cover rising expenses, and the number of Americans with a side hustle is likely to continue growing. Some estimates show that 50% of employed Americans have a side hustle to supplement their income.Come up with a plan for gig work in 2024If you're looking to earn additional income in 2024, here are a few suggestions for coming up with a side hustle strategy:Figure out what you want: You may only want to make a little additional money, or your goal might be to replace a significant portion of your current income. Your goal will determine how you approach the side hustle. Come up with a plan for how much time you want to spend on it each week and how much you expect to earn.Pick a gig platform: There are many great gig work platforms, each with strengths in specific industries. Find the right platform for you, or multiple platforms, that match up with your skills.Learn new skills: I'm currently exploring this option because I want to learn something new, but it's also a great way to boost your earnings. A Gallup poll found that people who learn an additional skill earn up to $8,000 more annually than those who don't.I don't plan on ramping up my side hustle in 2024, but it was an excellent way to add in some extra income over the past year. If I did it over again, I would have offered additional services to boost my earning potential.I also would have taken my own advice and devised a real strategy for building my side hustle. Just keep in mind that it can take time to start earning money. It took several months of work before I landed repeat clients.Be patient with your side hustle and give it time to start earning money. You might be pleasantly surprised with the results, even if you earn less than the average.