The 3 biggest money decisions you’ll ever make

Some factors that influence your financial success are beyond your control. Older people tend to be richer than younger people. White U.S. households, on average, have many times the wealth of black or Hispanic households. Those born into the top or bottom of the economic strata typically stay there.

But the decisions you make about three key areas in your life can have an outsize impact on whether you’re able to build financial stability.

In my latest for the Associated Press, the three biggest money decisions you’ll ever make.

Tuesday’s need-to-know money news

Today’s top story: How seniors can save money with discounts. Also in the news: Home equity borrowing and taxes, smart ways to save on car expenses, and the 3 times you shouldn’t ask for a raise.

How Seniors Can Save Money With Discounts
Every penny counts.

Is Interest on Home Equity Borrowing Tax-Deductible
Understanding the rules.

Smart Ways to Save on Car Expenses
Tips to find savings.

3 times you shouldn’t ask for a raise
When the timing is right.

Monday’s need-to-know money news

Today’s top story: 5 ways to invest in real estate. Also in the news: What makes small-cap stocks mighty (and risky), why auto insurance could be limited in self-driving cars, and how to negotiate a cheaper cellphone contract.

5 Ways to Invest in Real Estate
It doesn’t have to be exhausting.

What Makes Small-Cap Stocks Mighty (and Risky)
How to get started.

With Self-Driving Cars, Auto Insurance’s Time Is Limited
Being a backseat driver in your own car.

How to Negotiate a Cheaper Cell Phone Plan
Don’t pay for what you don’t use.

Q&A: Watch out for shady companies promising to help you repay student loans

Dear Liz: I’m 32 and have a little over $100,000 in student debt from undergraduate and graduate school. I’m trying to get my professional life on track, and I can’t figure out how to pay the loans off. Everything I see online seems shady. What are the questions I need to be asking myself? What are the things I should be searching for on the Internet to help me get control of my financial situation?

Answer: “Shady” is exactly the right word to describe many of the companies promising student loan debt relief. They’re making false promises and charging troubled borrowers fat fees for government help that’s available for free. Many of these outfits get disciplined in one state, only to pop up in another.

If you’re struggling to pay federal student loans, you have several options for making the payments more manageable. You can research income-based repayment programs at StudentLoans.gov. Private student loans don’t have the same consumer protections or numerous repayment options, but you can contact your lenders directly to see what they offer.

The amount of debt you have is large but not insurmountable, especially if it qualified you for a well-paying job.

You don’t have to rush to pay off the federal student loans because those offer low, fixed rates, but you may want to prioritize paying off variable-rate private loans.

Also, don’t let your concern about your debt prevent you from saving for retirement. That, too, will be expensive, and the longer you wait to contribute to a retirement fund, the harder it will be to catch up.

Q&A: Avoid running out of money before you run out of breath

Dear Liz: I have two questions regarding the required minimum distributions from retirement accounts at 70½ years old. If I started taking 15% per year at 68, would I still be required to follow the IRS tables and take 27.4% at 70½? Also, can I take the required minimum distributions and roll them into a Roth?

Answer: Please, please, please hire a tax pro before you do anything else. Required minimum distributions can get complicated, and the cost of getting it wrong is huge. If you don’t withdraw enough, you’ll pay a whopping 50% federal penalty on the amount you should have withdrawn but didn’t. If you withdraw too much, you’re paying unnecessary taxes and losing years of future tax-deferred growth.

Which is exactly where you were headed. The IRS table to which you refer does not say you need to withdraw 27.4% of your nest egg at 70½. The 27.4 number is the distribution period. You divide your account balances by that figure to get the amount you’re supposed to withdraw the first year. Think about it: otherwise, your retirement accounts would be emptied within four years.

Even withdrawing 15% a year would exhaust your funds relatively quickly. A sustainable withdrawal rate — one that leaves you a reasonable chance of not running out of money before you run out of breath — is closer to 4%.

There are situations where you might want to start distributions early, even if you don’t need the money. Diligent savers might discover that their distributions would push them into a higher tax bracket if they wait until age 70½ to begin. When that’s the case, it can make sense to withdraw just enough to “fill out” their current tax bracket and pay a lower rate now rather than a higher rate later.

Here’s a simplified illustration. Let’s say a couple in their 60s has a large retirement portfolio and waiting until their 70s to start withdrawals would push them from their current 15% bracket to the 25% bracket. Instead, they might begin taking distributions early. If their current taxable income is around $30,000, for example, they could withdraw as much as $45,900 before being kicked into the 25% bracket, which begins at $75,900 for married couples.

These calculations have lots of moving parts, including different tax rates for taxable investments and for Social Security. That’s another reason to have a tax pro help you run the numbers.

Your pro will tell you that you can’t avoid taxes by rolling required minimum distributions into a Roth. You can contribute new money to a Roth, but only if you have earned income and your modified adjusted gross income is under certain limits. Those limits start to phase out at $118,000 for single filers and $186,000 for married couples filing jointly.

Friday’s need-to-know money news

Today’s top story: What to do when your credit card issuer blindsides you. Also in the news: Watching for snags with free money offers, rock-solid tips for buying a diamond online, and how to make a grab for $150,000 in college scholarships.

What to Do When Your Credit Card Issuer Blindsides You
Expect the unexpected.

Free-Money Offers Can Be Alluring, but Watch for Snags
What to consider before signing up.

Rock-Solid Tips for Buying a Diamond Online
Getting the most for your money.

Need money for college? Here’s how to make a grab for $150,000 in scholarships.
Every bit helps.

Thursday’s need-to-know money news

Today’s top story: 5 things your credit reports won’t reveal. Also in the news: More credit card issuers are letting you pay off debt for free, everything you need to know about mortgage loan modifications, and how to stay debt-free during back-to-school shopping.

5 Things Your Credit Reports Won’t Reveal
What’s missing from your credit report.

More Credit Card Issuers Let You Pay Off Debt for Free
It’s never been easier to transfer balances.

All You Need to Know About Mortgage Loan Modifications
Modifications could help prevent foreclosure.

How to Stay Debt-Free During the Back-to-School Shopping Rush
Tips for getting it done.

Wednesday’s need-to-know money news

Today’s top story: The average American saves less than 5%. Also in the news: Strategies for lowering your closing costs, how to make money with YouTube, and should credit card perks coax you to go steady with a bank?

Average American Saves Less Than 5%
See how you stack up.

Strategies for Lowering Your Closing Costs
Saving as much as you can.

How to Make Money With YouTube
Monetizing your cat videos.

Should credit card perks coax you to go steady with a bank?
A one-sided love affair?

Tuesday’s need-to-know money news

Today’s top story: How to tackle credit card debt when you’re young and overspent. Also in the news: How to make it work when sharing expenses with roommates, how to honeymoon in style instead of debt, and how to pick a good kids’ savings account.

Young and Overspent? How to Tackle Credit Card Debt

Sharing Expenses With Roommates? How to Make It Work

How to Honeymoon in Style, Not Debt

How to pick a good kids’ savings account

How to stop being the family ATM

If you want someone to stop asking you for money, the worst thing you can do is say no and then give in after persistent pleading.

Such “intermittent reinforcement” — granting a reward after an unpredictable number of requests — makes it more likely the person will ask for another handout than if you just said yes at the start, says Brad Klontz, a certified financial planner and psychologist in Lihue, Hawaii, who researches financial psychology. It’s the same dynamic that lures people to slot machines and lotteries.

Klontz doesn’t actually advise giving in. But he says understanding the psychology on both sides of what he calls “financial enabling” can help people change their behavior.

In my latest for the Associated Press, how to stop financially enabling your family.