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5 big money traps to avoid in 2024, according to experts
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In the nearly four years since the pandemic took hold in the US, the economy has taken many unexpected turns. In 2020, for example, the stock market briefly plunged before soaring to new highs. But the economy got too hot too fast, and inflation soared in 2021 and 2022.
Since then, the Federal Reserve’s actions have broadly pushed up interest rates, creating dual issues of affordability — not only are prices higher in most areas, but the cost of borrowing, such as for a mortgage, also got more expensive. Fortunately, inflation started cooling in 2023, though it’s still higher than the Fed’s 2% target. In December 2023, core inflation measured 3.9%.
Now, with the new year underway, many consumers are looking forward to the prospect of lower interest rates and lower inflation. But that doesn’t mean managing your money in 2024 will be a walk in the park. There are still significant money traps to avoid.
One easy one to circumvent? Low interest-earning savings accounts. Instead, get started with a high-yield one now and start earning significantly more interest on your money.
5 big money traps to avoid in 2024
Here are five financial moves you should avoid making this year.
Earning low interest on cash
Interest rate increases have incentivized many savers to put money into accounts like certificates of deposit (CDs), high-yield savings accounts and money market accounts. And if you haven’t already moved your cash from a low-interest account to a high-interest account, you might want to do so while rates are still high. However, watch out for the trap of keeping too much of your money in cash, especially if interest rates decrease.
“One of the top money traps individuals may face in 2024 is leaning too heavily into cash at the expense of higher potential returns in the markets,” says Jill Fopiano, a Certified Financial Planner (CFP) and president and CEO at O’Brien Wealth Partners.
In 2024, with expected rate cuts, those who have not locked in rates could experience declining returns on cash. And even if you did lock in a good rate, you have to consider your objectives. If you know you want a certain amount of security and liquidity, then assets like CDs or high-yield savings accounts could be useful.
“It can be tempting, with higher yields on cash, to avoid investing in a diversified portfolio designed for growth over time. Don’t be tempted. Interest rates on cash investments are already falling early in 2024,” says Rob Williams, managing director of financial planning at Charles Schwab.
“We suggest that investors maintain the cash you need to provide an emergency fund and fund goals or spending that you may need over the next few years. Then have a plan — that fits your needs, time horizon, and risk tolerance — to stay invested for long-term goals,” he adds.
Start exploring your CD account options now and lock in a high rate while they’re still available.
Paying too much interest
The interest you earn isn’t the only thing to keep an eye on in 2024; you should also avoid the trap of paying too much interest. The pain of accruing interest isn’t always as visible as things like the interest you’re earning on your savings account, but don’t assume that you should stay in cash at the expense of paying down high-interest debt.
“Just as savings rates have increased, floating rate debt — credit cards, car loans, some student loans — has also become more expensive. Take a look at your full debt picture and apply any excess funds to paying down the most costly debt you have. Earning 5% on savings and paying 20%+ on your credit card balance is a negative arbitrage which can quickly drain your cash,” says Fopiano.
Even if interest rates decrease in 2024, that still likely means that you’re better off paying down high-interest debt rather than keeping your money in lower-returning accounts. However, you may be able to take advantage of lower interest rates in 2024 by renegotiating with lenders or refinancing with a new lender.
“With the Fed signaling that they will possibly lower interest rates in the future, there may be more opportunities to ask creditors for a lower interest rate or for balance transfers at promotional rates,” says Kayla Walter, CFP, senior financial planner, Bailey Wealth Advisors.
Relying too much on speculative assets
It’s easy to get caught up in the hype of speculative assets, especially when the past few years have been full of occurrences like meme stocks soaring and NFTs taking off. But what goes up quickly can also come down quickly — or it might fall before you even have a chance to experience on-paper gains. So, it’s important to not take on more risk than you’re comfortable with.
For example, Tom Siomades, Chartered Financial Analyst (CFA), chief investment officer at AE Wealth Management, says that one of the top money traps for 2024 is crypto ETFs because “there will be a lot of hype surrounding them, and hype and investments seldom mix well.”
The SEC also recently approved the first bitcoin ETFs. While Siomades says he would avoid this area of crypto, if you do decide to partake, “make sure you are buying one from a solid company and read the fine print.”
You also want to make sure that you’re not putting all your eggs in one basket or taking on more risk than what’s arguably warranted for your situation. For example, you probably don’t want to be gambling with your emergency fund or retirement portfolio.
“No doubt, there have been friends, family, or investors we see on television describing how they built large sums of wealth through buying a particular investment: a single stock, their own company, gold. Some of us may have had some success doing this ourselves. But, on average, for long-term investing, investing successfully is not a choice of this single investment, or this other investment. It’s a choice of how much of each,” says Williams.
In other words, a diversified portfolio is often the way to go for building long-term wealth.
Not having enough life insurance
Another money trap to avoid in 2024 is not having enough life insurance. While you don’t want to fall into the trap of paying too much for life insurance by buying more than you need, you also don’t want to assume that you’re protected, such as through your employer’s coverage.
“For many people, the life insurance coverage that they have through their job covers two times their salary at best, and it’s not portable. Meaning that when you leave the employer, that coverage stays with them. It is best to have your own policy outside of your job so that you are always covered,” says Walter.
Start exploring your life insurance options by getting a free price estimate here.
Not saving enough for retirement
Lastly, watch out for the money trap of not saving enough for retirement. Many experts suggest investing 10-15% of your annual salary for retirement as a rule of thumb, depending on factors like your age and current retirement balance. If you haven’t been saving and investing, you may need to do more to catch up.
“It may never be easy to balance all the goals that can be important to each of us, including retirement, especially when we’re younger or balancing multiple goals, like most of us, including paying the bills,” says Williams.
“This may be particularly true in 2024, given the recent jump in inflation and rising cost of everything from childcare to a home, concern about the health of the economy, or just how to pay off our holiday credit card bills,” he adds. “But balancing these things, including finding a way to save for retirement, builds confidence and financial health and wealth.”
Set yourself up for success
2024 will likely bring changes to the economy and your personal finances, such as if interest rates decrease, though it could still take a while for affordability to improve. With these circumstances in mind, try to avoid the aforementioned money traps so you can better position yourself, even if conditions remain challenging. Instead, focus on the fundamentals, like diversifying your investments and investing enough for retirement.
“Finances are emotional, and we often avoid or postpone dealing with emotional things. This is normal. But also a trap,” says Williams. “But if you truly want to take ownership of your finances, being aware of these emotions, procrastination, and other tendencies, and then having a plan to address them, is the key to financial success for most investors, in our view.”
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What started out as a college romance ended in murder and mystery.
1994 – Scott Peterson and Laci Rocha met in 1994 while both were attending college at California Polytechnic State University. They married two years later. In 2002, Laci became pregnant. The two lived in Modesto, California and planned to raise their unborn son Conner there.
Laci Peterson Missing
December 24, 2002 – Scott Peterson says that on Christmas Eve morning, he left his pregnant wife alone to go fishing about 90 miles away at the Berkeley Marina. He says that Laci planned to walk the couple’s dog, McKenzie, and mop the kitchen floor. When Scott returned home hours later, he says he found McKenzie there alone, still wearing a leash – but no sign of Laci. That evening, Laci’s stepfather called the police to report her missing.
Searching for Laci
Family, friends, and volunteers launched a huge search for Laci Peterson.
Scott Peterson was interviewed by police in the early hours of Christmas Day. Now-retired Modesto Police Detective Jon Buehler says Scott didn’t seem as interested as one would expect. “Oftentimes, a victim who’s left behind is firing tons of questions at us … And we didn’t get any of that from him,” Buehler told “48 Hours.”
Amber Frey
December 30, 2002 – Less than a week after Laci Peterson went missing, Modesto detectives raced over to investigate an intriguing lead: a Fresno massage therapist named Amber Frey revealed that she had been dating Scott Peterson for over a month. She told police that Peterson had lied to her and said he was single.
Secret Recordings
Former Detective Buehler notes, “Her recall was fantastic. It was almost like it was a script from a Hallmark TV show or something.” Amber Frey recalled every detail of their romantic dates, down to what they were wearing. Hoping for clues that might lead them to the missing woman, detectives ask Frey to record phone calls between her and Scott Peterson, and she agrees.
Affair Revealed
January 24, 2003 – In an explosive press conference one month after Laci Peterson goes missing, Amber Frey publicly reveals her affair with Scott Peterson. “I am very sorry for Laci’s family and the pain that this has caused them,” she said. “And I pray for her safe return, as well.”
Prior to Frey going public, Peterson had told her in a recorded call that he was in Paris when he was really in Modesto while the search for Laci was still on. Eventually Scott admitted to her, “I’ve lied to you that I’ve been traveling.” Those recorded calls would later become part of a damning case against Peterson.
Bodies Found
April 13 and 14, 2003 – Two bodies are found on the shores of the San Francisco Bay. They are later identified as Laci Peterson and her unborn child. The two bodies were found about a mile apart.
Scott Peterson Arrested
April 18, 2003 – Authorities caught up with Scott Peterson at a golf course in San Diego and arrested him. Authorities found a wad of cash, his brother’s ID card, and multiple cell phones inside the vehicle. Days later, Peterson pleaded not guilty to two counts of capital murder.
Trial and Error
June 1, 2004 – Scott Peterson’s trial begins in San Mateo County, California. Because of massive publicity the trial was moved from Modesto to Redwood City, in San Mateo County. The decision was made because the judge decided it would be difficult for Peterson to get a fair trial too close to home, where emotions were running high.
High Suspicions
August 10, 2004 – In what many consider a major turning point of the trial, Amber Frey took the stand for the first time to tell the jury about her relationship with Scott Peterson, a secretly married man, and about all the lies he told her. Frey painted a picture of a dishonest man who could tell falsehoods with ease, hurting his credibility.
Jurors heard the lies for themselves in those recorded phone calls Frey made.
Justice for Laci and Conner
November 12, 2004 – Scott Peterson was found guilty of first-degree murder for the death of his wife Laci and second-degree murder for the death of his unborn son Conner. Crowds outside cheer.
Peterson Jurors
March 16, 2005 – Four months after his conviction, Scott Peterson is sentenced to death. At a press conference, Juror No. 7, Richelle Nice, [pictured center] called Peterson a “jerk” and commented “San Quentin is your new home,” referring to the prison where he would serve his sentence. Nice was nicknamed “Strawberry Shortcake” during the trial because of her hair color.
Death Sentence Overturned
August 24, 2020 – After two appeals, Scott Peterson’s death sentence was overturned by the California Supreme Court after deciding that the original trial judge made a mistake when jurors were being picked for trial. The result of that mistake, Peterson’s supporters say, was that the jury was stacked with pro death penalty jurors. Peterson, shown here in 2018, will now receive a new trial for only the sentence phase.
The court upheld his murder convictions.
Juror No. 7
October 14, 2020 – The California Supreme Court orders a lower court to reexamine Peterson’s murder convictions and decide if he should get an entire new trial. Scott Peterson’s supporters say it all comes down to the actions of that juror once nicknamed “Strawberry Shortcake” – Richelle Nice, pictured here in 2005.
During jury selection, prospective jurors filled out a questionnaire asking if they had in the past been in a lawsuit and if they had been crime victims. Nice checked no. “It’s pretty clear… that she lied to us straight to our face about her own situation,” Peterson’s current attorney Pat Harris told “48 Hours.” In fact, Nice was involved in two domestic disputes in the past. But prosecutors say when Nice filled out that questionnaire she didn’t lie, she just didn’t think her past experiences were relevant to the questions and didn’t see herself as a victim. Now a lower court will consider if Peterson will get a complete retrial. Richelle Nice declined to speak with “48 Hours.”
New Evidence?
March 7, 2021 – CBS News’ Jonathan Vigliotti interviewed Scott Peterson’s sister-in-law Janey Peterson in her “war room” of evidence she claims proves his innocence. She claims witnesses saw Laci walking in the neighborhood near the Peterson home after the time Scott said he left for the fishing trip. If that’s true, Scott couldn’t have killed Laci.
Scott Peterson’s attorney explains, “there’s been a lot of criticism because we didn’t call some witnesses who saw Laci that day,” and that the thought process at the time was that “a number of the witnesses who saw her didn’t have great – memories or had contra – were contradicting each other.”
Retired detective Jon Buehler says there are no witnesses who saw Laci alive that morning. He says there were other young women in the neighborhood who were pregnant and looked similar to Laci, and that “it would be real easy for somebody to mistakenly see one of those three girls as being Laci.” Still, Janey Peterson insists that Scott is innocent.
A Burglary
Perhaps more important to a new defense case is what Janey Peterson believes actually happened to Laci. She points to a burglary she believes happened on the same day Laci disappeared, right across the street from the Peterson home. Scott Peterson’s supporters theorize that Laci confronted the burglars and that ended badly. But police quickly arrested the burglars – Steven Todd and Donald Pearce – pictured here in a 2003 Modesto Police Department press release.
Awaiting a Decision
April 27, 2021 – Scott Peterson appeared in court remotely for a status hearing on a new death penalty trial.
Dec. 8, 2021: Scott Peterson was resentenced to life in prison without the possibility of parole for the deaths of his wife and unborn child.
2024: The Los Angeles Innocence Project took up Peterson’s fight for a new trial. Since then, a California judge has granted his defense team access to previously undisclosed evidence as well as permission to do additional DNA testing.
Peterson and his supporters maintain the wrong man is in prison for Laci and Conner’s deaths. According to Detective Buehler, “Well, I guess it’s possible. But you know, there’s still people that believe the Earth is flat too.”
