Ask Liz Weston

Dear Liz: I filed a personal Chapter 7 bankruptcy five years ago to erase my debts. The reason I filed wasn’t because I lived beyond my means, but because I used my personal credit to finance my business, which fell apart after the Sept. 11 terrorist attacks. Since that time, I have emerged with credit scores in the 665 to 700 range. My problem is that when I apply for loans, I’m sometimes denied because the creditor says I have too many late payments on my credit cards. Those late payments are all from my previous life and the debts were wiped out in the bankruptcy. Now I pay everything off in full every month. How can I get these late payments off my credit reports?

Dear Liz: You’ve written a couple of times about how safe deposit boxes don’t necessarily keep your valuables safe. We wanted to tell you our story.

We recently went to put some papers into one of the two boxes we maintain at a bank where we’ve been customers for more than 20 years. We were given the box and I almost fainted when I discovered it was empty.

Apparently it had been drilled in error. After a week of searching, bank employees found part of our box contents tied up in a plastic bag. But property was missing that was historic, personal and irreplaceable. We had papers in there with our names on them, but apparently no effort was made to contact us.

It is a horrifying situation that a bank can be so casual and apparently unconcerned with property that most people assume will be secure. This should be made public more often.

Answer: As you’ve read here before, banks are required by law to make an effort to contact box owners before a safe deposit container is drilled and emptied, but sometimes those efforts are pretty cursory. (The fact that you were longtime customers and that your names were on papers in the box shows just how cursory.)

Some readers say they’ve tried to prevent situations like yours by putting their full contact information on a sheet of paper atop the contents of their boxes. In any case, you also should check on your box a couple of times a year and ask your bank during those visits whether you’re up to date on your box rental fees.

Many times, after a merger, banks begin to charge customers who used to have free box rental. Longtime customers may assume the charges don’t apply to them, because they’ve had free rental for so long, and fail to pay the bill. The bank could then decide the box has been abandoned and drill it open.

Q: How do you stay on a budget? I have tried several times, and it never works. I’ll buy something on impulse or to take advantage of a sale, or friends will call and ask us to go out for dinner. My friends complain that I’m tight, but if I were so tight, I would have a lot more money in the bank. We are in our 40s, and I feel we are not where we should be at this stage in our lives. Plus, I am always thinking about money. How can I get a budget started and stick to it so we can finally see some savings?

A: Wouldn’t you like to stop thinking about money? Or at least when you do think about it, to feel calm and in control, confident that you have enough, that you’re making progress toward your goals and that you can handle any setbacks likely to come your way?

Managing your money well gives you the power to achieve what you really want in life while dialing back the anxiety that plagues people who live paycheck to paycheck.

Budgets tend to fail when people view them as an awful exercise in deprivation, instead of as a tool to help them stop wasting money on things they don’t really want so that they can get the things they do. Once you view your spending plan in this light, it’s easier to skip those sales and invitations.

You might want some inspirational reading. “Your Money or Your Life” by Joe Dominguez and Vicki Robin would be an excellent beginning. You might find David Bach’s “Start Late, Finish Rich” helpful as well. (Savings tip: Check these out at your local library or buy them used online.)

Let go of ideas about where you “should be” at this stage. You are where you are. Regrets about not having more, or being able to spend more, can lead you to chuck the whole idea of a budget.

You also may find it helpful to seek out a support group of people who are trying to get their finances under control. You might join an online forum, or the Simple Living Network at http://www.simpleliving.net can direct you to study groups in various cities that use “Your Money or Your Life” as their basic text.

You can do this. Good luck!

Q: Thank you for writing about the fact that sometimes a person’s financial troubles are due to underearning. I am a stay-at-home mom with three children and my husband does not make enough money. As a result, we aren’t saving anything for retirement and college and in fact we’re going deeper into debt every month. He does not understand how much kids or for that matter life costs where we live. His solution is that if I want more money, I should go back to work, but that was not our deal. How do I get him to realize that he needs to generate more income?

A: Hold your horses.

You may be right that your lives would be easier if your husband made more money, but that does not relieve you of the responsibility of living within your means. The fact that you’re not saving and piling up debt shows very clearly that you’re not taking that responsibility seriously.

You have choices about how much to spend, and if you’ll look around in your community you’re likely to find families surviving on a lot less than your family makes now. You may have to make sacrifices, get creative and stop keeping up with the Joneses, but you can do it.

If you aren’t willing to make that effort, then your going back to work may be the only solution. It doesn’t matter what “deal” you made back when you decided to stay at home; that was then, this is now. The agreements couples make about money often have to change over time as circumstances change. If you demand a lifestyle for your family that exceeds your present means, then you need to help finance that.

Either way, you may find that your taking responsible action has a positive effect on your husband’s earning ability.

Right now, he may feel like every dollar he earns goes into a black hole; why should he work harder or look for a new job if the extra money he makes will disappear into that maw? If you switch gears and become an effective money manager, he may come to believe the extra effort is worthwhile.

In any case, you need to stop rowing against your husband and start rowing with him. Lay off the poor guy, and take care of your end of things.

Dear Liz: My sister, who is a 29-year-old single mother of three children, has committed identity theft by taking out loans and credit cards using my mother’s name. Her total debt is $30,000.

My parents are torn about what to do. I feel that she needs to be turned in so that they don’t have to pay this debt themselves, using their retirement money to do so.

They are concerned for the kids, but I feel that she needs to learn a lesson and that the family can take care of the kids. My sister suffers from bipolar disorder. I’m not sure what she would do if my parents turn her in.

Answer: If your mother lives in California or one of the other states that allows credit freezes, she should put one in place immediately — as should you and the rest of your family.

A credit freeze prevents anyone from opening credit accounts in your name, and is a much stronger protection than the fraud alerts that credit bureaus typically recommend.

A family member who has stolen one person’s identity could well steal the identities of others, because she probably knows the essential details — names, Social Security numbers, dates of birth and addresses — that would allow her to commit more of these crimes.

You seem to understand that to avoid responsibility for this debt, your mother almost certainly will need to file a police report, which means your sister could be prosecuted and sent to jail.

Occasionally lenders will let a victim off the hook without such a report if the thief admits the deed, commits to making payments and has the means to do so, said Linda Foley. She is co-founder of San Diego’s Identity Theft Resource Center, which helps victims of this kind of fraud.

The family typically needs to hire a lawyer to conduct such negotiations and draw up the necessary paperwork, Foley said.

It doesn’t sound like your sister’s a great candidate for this kind of deal, however, unless she’s gotten her act more together than your letter would indicate.

Your best move now, after recommending credit freezes for your family members, is to point your parents to the Identity Theft Resource Center, which has resources for victims of familial identity theft. Then back off. This is your parents’ decision to make.