Ask Liz Weston

While it’s not actually true that money is the leading cause of divorce, finances are certainly a big source of tension in many relationships. Recessions put extra strain on those relationships, which is why the new book “In Good Times and Bad: Strengthening Your Relationship When the Going Gets Tough and the Money Gets Tight,” comes at just the right time.

Written by husband and wife team Gary and Melisa Neuman, the book has some wise words and gentle wisdom about how to help your relationship survive life’s setbacks. Among them:

Fight the problem, not each other. Tensions over money can cause people to lash out and blame each other. It’s understandable, but horribly counter-productive. To weather bad times, you need to come together as a team and work out solutions.

Let go of the past. Any therapist will tell you a relationship can’t improve if you keep throwing past mistakes in each other’s faces. But in this case, the past refers to your past financial life, whatever that looked like. Maybe you’ll never again make the kind of money you used to make, or live in as fancy a house as the one you lost to foreclosure. Life may have better things in store for you, such as a less-stressful job that allows you to spend more time with your family, or a smaller home that’s simpler to take care of. In any case, you can’t go back, and hanging on to the past will just make you miserable.

Commit to communicating. If talking about money leads to fighting, you’re likely to start avoiding the topic just to keep the peace. But silence leads to misunderstandings and isolation from each other. To keep the intimacy in your relationship, you need to talk about money, and continue talking. Some ground rules:

• Set aside 30 minutes to talk each week. Schedule a time when you’re not tired or distracted.
• Share your earliest memories about money and how money was handled in your household growing up. These revelations can help couples better understand how their partners view money.
• Acknowledge you’re not always right. Couples need to compromise and acknowledge each other’s needs and wants.
• Work together to define your top financial goals and draw up a budget to help you get there.
• Track and review your spending weekly to make sure you’re on track.

photo credit: Archie McPhee Seattle

Some critics disparage the database breach laws that force companies to reveal when your private personal information has been compromised. Only a small percentage of such stolen information is used to commit theft, they say.

Except if you’re a victim of a database breach, your risk of becoming an identity theft victim is four times higher than the that of the general population.

That is the conclusion of a new Javelin Strategy & Research study:

Overall, Javelin’s 2008 Identity Fraud Survey found that 4.32% of U.S. adults had experienced fraud within the past 12 months. Yet of the 11% that said they had been notified of a data breach within the past 12 months, one in five reported that they had also been the victim of some kind of fraud within the past 12 months. That means victims who had been notified of a data breach were almost four times more likely to be victims of fraud as well. The pattern of increased fraud victimization among consumers notified of a breach within the past 12 months remains consistent from 2006 to 2008, indicating that this is not a one-time anomaly.

If you’ve been notified that your data has been compromised, you should:

• Closely monitor your existing accounts
• Consider a credit freeze, particularly if your Social Security number was compromised
• Otherwise, put a fraud alert on your credit reports.

FT Press is giving away 15 sets of my three books–”Your Credit Score,” “Easy Money” and “Deal with Your Debt.” Another 10 people will win copies of “Your Credit Score.”

Just by entering, you’ll get a free download with sample chapters from each of the books.

Enter now at www.ftpress.com/weston. The contest ends Nov. 20.

Dear Liz: My credit scores are good (over 800 when I refinanced my mortgage last year). I was thinking of listing my son, who is 14, as an authorized user of my credit cards to start establishing his credit history. Will it work? Is there any other way to help him? If it is too early, when is a good time to start?

Answer: As long as you handle your credit cards responsibly — using 30% or less of your credit limits and paying on time — adding your son as an authorized user could indeed help him build his credit history.

This is important, because under the credit card reform law that goes into effect in February, people younger than 21 will have a much harder time getting credit cards and thus building credit on their own. Yet they will need good scores to get apartments, good insurance rates and decent loan rates when they leave the nest.

Adding a child as an authorized user to a card is a low-risk way to build his credit since you don’t have to give him the card or access to the account. Instead, your history with the card is simply added to his credit reports, assuming your credit card issuer agrees (call and make sure first; some issuers report authorized-user information only for spouses). All versions of the leading FICO credit scoring formula factor authorized-user information into their scores, although the latest iteration — FICO 08 — limits how many authorized-user accounts are included.

When you decide to do this is up to you. A longer credit history is generally better, but you should add him only when and if you’re comfortable doing so.

If you decide to do this, discuss with your son the reasons why and also take the opportunity to talk about responsible use of credit. Make sure he knows the importance of paying all balances in full every month and how carrying credit card debt is foolish and expensive. He may not be using the card now, but he’ll have his own credit soon enough, and it’s never too early to instill the importance of using cards as a convenience rather than a crutch.

Dear Liz: We’re refinancing our mortgage and home equity loan and will be paying about $200 less per month. Would we be better off applying this extra money toward the mortgage so we can pay it off in less than 15 years? Or would it be better to put it into savings or invest it?

Answer: Most people have better things to do with their money than pay off a low-rate, tax-deductible debt such as a mortgage — especially if you’re already on the road to paying it off in 15 years.

You should first make sure you’re on track with your retirement plan. If you’re not already getting the full company match from your 401(k) or 403(b), that extra $200 could win you an instant 25% to 100% return, depending on the generosity of the company match.

Even if your plan doesn’t have a match, you could get a tax deduction on your retirement contributions that you won’t get paying down the principal on your mortgage. Plus, your money is likely to earn greater returns over time than what you’d net by paying off your loan early.

If you’re maxed out on saving in your workplace plan, consider contributing to a Roth IRA. If you’re on track for retirement, paying off other debt and bolstering your emergency fund would be the next smart moves. Once that’s done, review your insurance coverage to make sure you’re adequately protected on the life, disability and long-term-care fronts.

Only after you’ve got all your financial bases covered should you consider accelerating your mortgage payments.Don

Dear Liz: Most of the articles I read about saving money seem to be written for people who make a lot more than I do. I don’t eat out, drink lattes or buy clothes anywhere other than discount stores. Where are the articles for me?

Answer: All over the Internet. Start with one of the oldest frugal-living sites, the Dollar Stretcher, at www.stretcher.com. It’s filled with articles and tips for every budget, including the tightest. Mary Hunt’s Debt-Proof Living at www.debtproofliving.com is another good one to try. You also should check your local library for the book “Your Money or Your Life” by Joe Dominguez and Vicki Robin. It will open your eyes to the possibilities of financial freedom on any income.

If you don’t use Twitter—or you’ve dipped your toe in only briefly, and run shrieking from the seeming chaos—what I’m about to say next will seem incredible.

But this social media site has become my go-to resource for money news, great personal finance stories and jaw-dropping deals. It’s also helped me connect to an array of smart folks I might never have met otherwise.

The first time I experienced the power of Twitter was Feb. 24, just a few weeks after I started using it regularly.

A Chicago radio station called to interview me about American Express paying some of its customers $300 to close its accounts. Instead, I suggested that they might want to talk to the blogger who had broken the story the day before. I didn’t know the guy’s name, since he blogged anonymously, but we followed each other on Twitter and I shot him a direct message with the station’s contact information. He called and they got their interview.

In my pre-Twitter days, I might never have stumbled across this guy. But I saw some of his tweets and realized he knew his stuff. (Sadly, he finally graduated law school and gave up blogging at CreditMattersBlog.com; the bar’s gain was our loss.)

I’ve since met plenty of other bright, insightful folks. The people I follow point out interesting stuff I might have otherwise missed. The people who follow me give me valuable feedback, story ideas and anecdotes that help me illustrate in my columns how financial developments affect real people.

Oh, and then there are the deals. Many of the airlines tweet special fares, various Web sites highlight short-term bargains and a number of bloggers (such as @FreeSampleMama and @DealsDiva) specialize in tweeting deals (including a recent $159-a-night rate on a 4-star Orange County beach resort—yahoo!).

Twitter feels like e-mail once did—it’s a small, more manageable world of people you can connect with quickly. Since you only get 140 characters to send your message, you have to be concise, which I really like.

If you’re just getting started, I’d recommend downloading TweetDeck or HootSuite to help you manage the deluge. You’ll want to follow different people for different reasons and keep track of what others are saying about and to you—TweetDeck or HootSuite can help.

Then for starters, add these news services to the list of Twitterers you follow:

@USATODAYmoney (money news from the nation’s largest newspaper)

@MSN_Money (the leading financial site that runs my column, among others)

@walletpopper (AOL’s lively consumer money site)

@planetmoney (NPR’s global economy team)

@ConsumerReports (the venerable product-testing site and magazine)

@Consumerist (another great consumer-oriented site, affiliated with CR)

Of course, I’d be delighted if you follow me, @lizweston, and you might enjoy these other writers as well:

@alphaconsumer (columnist Kimberly Palmer)

@DLFreedman (MSN Money columnist and loveable tightwad Donna Freedman)

@GaryForeman (founder of The Dollar Stretcher)

@GetOutOfDebtGuy (blogger and debt expert Steve Rhode)

@Glink (author and columnist at ThinkGlink.com)

@KathyKristof (longtime LA Times columnist now blogging for Money Watch)

If you want to follow some personal finance authors, check out:

@BarbaraStanny (author Barbara Stanny, “Prince Charming Isn’t Coming”)

@BethKobliner (author Beth Kobliner, “Get a Life”)

@thomasjstanley (author Thomas J. Stanley, “Millionaire Next Door”)

Finally, add these top bloggers:

@wisebread

@jdroth

@flexo

@ramit

@trenttsd

These are only a fraction of the people I follow, but Twitter is enough of a firehose—I’d suggest starting out slowly, figuring out who you like, see who they recommend and then build from there.

photo credit: EmilianT

One of the few disadvantages of working from home is that I meet more than my share of door-to-door salespeople—typically people hawking overpriced magazine subscriptions or books.

Rather than blow them off, lately I’ve been listening to their raps to see how they try to rope in unsuspecting marks. Here are the five lies they tend to have in common, and three sure-fire ways to make them go away.

Lie #1: “I’m from around here.” The salespeople might claim to be the child of a neighbor or to attend a nearby school or college. In reality, they’re often from another state and were dumped off in your neighborhood with a mini-van-load of other sellers. They understand that it would be tough to start a relationship by saying, “I’m an outsider trying to hustle up some business.”

Lie #2: “I’m really close to winning a prize.” They probably do have a sales quota to meet to keep their jobs, but what they’ll tell you is that they’re earning “points” toward a trip or a scholarship or some other goal and they just need a little help from you to get to the prize. Since he’s a neighbor, you’ll feel an obligation to help, right? Especially since:

Lie #3: “Your neighbors have really been generous.” The wording on this may vary, but the obvious implication is that people you know are handing over their cash, so you should, too.

Lie #4: “This is a good deal” or “It’s for a good cause.” Except it’s not. You can get most magazine subscriptions for $10 or less online and books for $10 to $20. The salesperson is charging three to four times that amount. And this assumes that you, or the charity to which you’re donating the items (another version of this rap), actually get what you paid for. Since these guys only accept checks or cash, you can’t use a credit card to cancel the deal if he simply disappears with your money.

Lie #5: “You have to act today.” It’s the salesperson’s job to create some kind of pressure that will get you to buy, and your job to resist it until you’re sure you’re getting a good deal. If you aren’t given time to research the product or the company, then steer clear.

Some ways to head door-to-door salespeople off at the pass:

Don’t answer the door. You shouldn’t be opening the door to strangers, particularly if you’re home alone.

Answer the door with a phone in your hand. Pretend to be having a conversation. Each time he gets his rap going, start talking into the phone. “Well, that’s what I said, but she wouldn’t listen….” Keep up your end of the bogus conversation until the salesperson gives up and goes away. If he or she is particularly tenacious, you may have to finally say, “I’m sorry, I have to finish this call” and close the door.

Blame your spouse, even if you don’t have one. Let’s say the salesperson catches you when you’re already outside and you don’t have your phone with you. Cite marital responsibility. “I’m really sorry, but I can’t make any decision without

Dear Liz: We want to have an estate plan that doesn’t cost a ton of money. We’re both in our early 40s and have no children. I’d label us middle class, with not much money left over after monthly bills. Lawyers want too much money to “help” us. Isn’t there a better solution?

Answer: If your estate situation is truly simple, you can draw up the documents you need with Quicken WillMaker software, which is available from the self-help legal publisher Nolo at www.nolo.com. The software costs about $50 and guides you through the process of creating wills and durable powers of attorney (which you need to name someone to make financial and health decisions for you should you become incapacitated).

Nolo also has an online will form, plus a number of books that can help you, including “Plan Your Estate” and “The Busy Family’s Guide to Estate Planning.”

The do-it-yourself approach can work when your situation is straightforward, but you should consider consulting an attorney if your estate ever gets big enough to worry about estate taxes or if complications (such as children or contentious relatives) become a factor.

Dear Liz: With the rise in personal delinquencies these days, my husband and I are in the same boat as a lot of people with common surnames: We get daily robo-calls from collection agencies attempting to collect debts from individuals with names similar or identical to our own.

These are not our debts, and we check our credit report regularly enough to know that these also are not fraudulent charges made to our accounts or accounts opened fraudulently in our names. Is there a way to stop these calls?

Answer: Under the federal Fair Debt Collection Practices Act, you have the right to tell collection agencies in writing to stop contacting you, and they’re supposed to comply.

This, unfortunately, can be tougher than it sounds.

Some of the agencies employing automatic dialers routinely ignore the laws requiring that they identify themselves and provide you with contact information, including the firm’s name and address. If they leave a return phone number, you can try calling it or entering it into an Internet search engine to see if you can determine who’s calling.

If you get a name and address, you can write a letter telling the agency the debts aren’t yours and to stop contacting you. If the agency calls again, you can report it to the Federal Trade Commission or sue it in Small Claims Court for violating the Fair Debt Collection Practices Act.