Thursday’s need-to-know money news

009fbf535e76a5f4c22dfae6c5168d0bToday’s top story: How to declare your financial independence. Also in the news: What you need to know before becoming a landlord, how the financial crisis in Greece could effect your portfolio, and a little known Texas law that could save you from medical debt.

3 Ways to Declare Your Financial Independence This July 4th
Let financial freedom ring!

Things to Know Before Becoming a Landlord
Proceed with caution.

Does Greece Matter? The Bigger Picture For You And Your Portfolio
The ripple effect.

The Little-Known Texas Law that Can Save You From Medical Debt
Even if you don’t live in the Lone Star state.

3 retirement strategies whose days may be numbered

105182624Social Security used to offer a “do over” to people who erred by starting benefits too early. Instead of being locked into substandard payments for life, those who had the cash could pay back all the benefits they had received and start over with a new, permanently higher payment. Advisors to the wealthy discovered their clients could start payments early, invest the money and pay the principal back at age 70, getting in effect an interest-free loan from the government plus a higher benefit.

As awareness of the tactic spread, Social Security moved to shut it down. Today Social Security recipients can still reset their payments, but they can only do so within 12 months of starting benefits.

A similar fate may await three other retirement “loopholes”–backdoor Roths, stretch IRAs and certain Social Security claiming strategies–that have become increasingly popular as financial advisors learned how to exploit kinks in the law. Read more in my Reuters column this week, Three retirement loopholes likely to close.

Elsewhere on the Web, I wrote two pieces for Bankrate about aging parents: Caring for Elderly Parents When They’re Far Away, based in part on experiences with my dad, and How to Sell Your Late Parent’s Possessions, where I interviewed a woman faced with disposing a massive amount of stuff accumulate by her dad.

Wednesday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: How to save for retirement while getting out of debt. Also in the news: money lessons to teach your kids this summer, money myth busting, and how to protect your Facebook information from identity thieves.

How to Save for Retirement While Getting Out of Debt
It’s not impossible.

9 Money Lessons To Teach Your Kids This Summer
And have fun while doing it.

5 Foolish Money Myths You Can Stop Believing Right Now
Myth busting!

How to Master Your Facebook Privacy Settings
Protecting your personal information from identity thieves.

My FICO score is 846. And 796. And 878. And…

Zemanta Related Posts ThumbnailOne of the most persistent credit scoring myths is that you have one.

You don’t have one, you have many, and they change all the time.

The dominant model is the FICO, but even that comes in many flavors. You can get a taste for how many at MyFICO.

When I bought my scores there recently, my FICO 8 from Equifax was 846 on the 300-to-850 scale. But my FICO 5, the score Equifax most commonly sells to mortgage lenders, was 797.

There was even wider variation in my auto and credit card scores, are calculated on a 250-to-900 scale. My FICO Auto Score 8 was 867, while my FICO Auto Score 5 was 810. My FICO Bankcard Score 8 was 869 and my FICO Bankcard Score 5 was 797.

My scores from Experian ranged from 796 (FICO Score 3, used by some credit card issuers) to 878 (FICO Auto Score 8). The clutch of numbers from TransUnion ran from 806 (FICO Score 4, used by some mortgage lenders) to 874 (FICO Auto Score 8).

MyFICO used to serve up just one score per bureau. I like this wider view, since it better reflects the fact that lenders use different versions and generations of the formula.

TMI? Maybe. But I’ll take it over the days when credit scores were such a closely-guarded secret that you weren’t even supposed to know they existed.

Tuesday’s need-to-know money news

Today’s top story: The most common used car buying scams. Also in the news: Saving an extra $1,000 by Labor Day, how to keep “funemployment” from draining your savings, and the qualities you should look for in a financial adviser.

5 of the Most Common Used Car Buying Scams
Don’t get taken for a ride!

How To Save An Extra $1,000 By Labor Day
Just in time for the beginning of holiday shopping.

Keep Funemployment From Draining Your Bank Account
It’s only fun if you can afford it.

4 Qualities a Financial Adviser Ought to Have
A combination of Yoda and Warren Buffett.

Monday’s need-to-know money news

imagesToday’s top story: The money mistakes you make in your 40’s. Also in the news: What financial documents you should keep, what every college grad needs to know about money, and the important things you need to know about Social Security.

Money mistakes you make in your 40s
A crucial time for your financial future.

What financial documents to keep
What to keep and what to shred.

10 Things Every College Grad Needs To Know About Money
It’s a whole new world.

4 Important Things You Need to Know About Social Security
Finding your way through the maze.

Q&A: Debt collection

Dear Liz: I am trying to help my daughter deal with enormous student loans.

She is a doctor and very busy and simply cannot deal with the stress of almost $350,000 of education debt. I want to help her refinance, but to get the best rate I would like to help her improve her credit score (even if it is already 712).

She had three small debts turned over to a collection agency after a visit to an emergency room a couple of years ago. We plan to pay them off. Do I have to ask the collection agency to erase them or contact the original creditor?

Answer: You mention that your daughter has a 712 score, but she actually has many credit scores that change all the time. Small medical collections can have an outsize impact on those scores — or they can have no effect at all. It depends on what credit scoring formula the lender happens to use.

The latest version of the leading credit score, FICO 9, ignores paid collections and treats unpaid medical debt less harshly than other types of collection accounts. The most commonly used version, though, is FICO 8, which ignores only those collections under $100 and doesn’t differentiate medical from other collections.

Some lenders still use older versions of the formula that punish people for even small collections.

FICO also has a rival, the VantageScore. The latest and most-used version of that formula, VantageScore 3.0, also ignores paid collections.

You can contact the lenders you may use to refinance the debt to find out which scores they use, and which versions. That could help you decide how hard to push to get these collections erased.

If paid collections aren’t counted, you can just pay them off and be done with it. (You’ll of course want to keep the paperwork showing the debts have been paid and have your daughter check her credit reports to make sure the accounts reflect a zero balance.)

If the accounts could hurt her even if they’re paid, you have a couple of options.

One is to ask the hospital to take back the accounts, since medical bills are often placed with collection agencies on consignment rather than being sold to them outright. Then you can pay the hospital, and the collections should disappear. (Although, again, your daughter will need to follow up to make sure.)

Another option is to try to negotiate a “pay for deletion” — which means the collection agency promises to stop reporting the account in return for payment. You’ll want this agreement, if you can win it, to be in advance and in writing.

Q&A: IRS direct pay

Dear Liz: Regarding the reader whose tax payment never made it to the IRS: I agree that electronic payments are the best and safest, but you might want to emphasize that the payments should be done directly through the IRS website.

I made the mistake of scheduling a couple of payments through my online banking, and a month later I received a notification from the IRS that I was in arrears, although the bank statement indicated that the payment has been debited.

It took several months of correspondence before the IRS acknowledged that the money was received. Luckily, the penalties and interest were only about $20, so I didn’t have to go through the additional hassle and filling out forms to reclaim it. The IRS website is very easy to use, and I haven’t experienced any problems since.

Answer: The IRS’ Electronic Tax Payment System, which was designed primarily for businesses, has been around for nearly two decades, but the agency only recently added a “Direct Pay” option expressly for individuals to make estimated tax payments and pay bills.

These methods and others, including electronic funds withdrawal when you e-file your return, are explained at http://www.irs.gov/payments.

Q&A: Electronic Federal Tax Payment System

Dear Liz: I’m often required to make estimated quarterly payments and was always concerned I would miss one of them.

A few years ago, I came across the Electronic Federal Tax Payment System (EFTPS) that is offered by the U.S. Treasury. The beauty of the system is that once it is set up, there is nothing more for me to do. I set up all the payments I need to make and the system takes care of it.

I just have to set it up each year at the time I file my tax return. I have been using the system for several years and have had no issues whatsoever with it.

Answer: Thanks for sharing your experience with EFTPS. While that system allows you to schedule payments up to 365 days in advance, the Direct Pay option for individuals allows scheduling only up to 30 days in advance.

Friday’s need-to-know money news

Hand with money and toy car isolated on white background

Hand with money and toy car isolated on white background

Today’s top story: Why you need to pay close attention to your car insurance. Also in the news: Supreme Court ruling makes finances easier for same-sex couples, financial resources for active military, and when it’s okay to take a hit on your credit score.

4 Ways Being Forgetful Can Raise Your Car Insurance Rates
Set reminders.

Marriage Ruling Ends Personal-Finance Confusion for Gay Couples
Taxes just became a lot less complicated.

4 Financial Resources for Active Military
Managing your money while away from home.

3 Times It’s OK to Let Your Credit Score Take a Hit
A credit score hit isn’t always a bad thing.