Tuesday’s need-to-know money news

Today’s top story: Apps that encourage you to spend. Also in the news: Advice for weaning your grown kids off your credit cards, why some people don’t mind overpaying the IRS, and how to protect yourself from falling interest rates.

These Types of Apps Could Prompt Impromptu Spending
You don’t need extra help spending money.

Advice for weaning your grown kids off your credit cards
Time to cut them loose.

Here’s why these people don’t mind overpaying the IRS
Yes, you read that correctly.

How to Protect Your Savings From Falling Interest Rates
A few options.

Will you be a scam artist’s next target?

Believing that fraud can’t happen to us — because we’re too smart, logical or informed — may make us more vulnerable. Successful scam artists skillfully overcome our defenses and get us into emotional states that override logical thinking, says Kathy Stokes, AARP’s director of fraud prevention programs.

“Scammers call it getting the victim under the ether,” she says.

Various studies have tried to identify characteristics that make people more susceptible to fraud. But that can create a “blame the victim” mentality and give the rest of us a false sense of security, she says.

In my latest for the Associated Press, how to reduce the chances of being taken by a scammer.

Monday’s need-to-know money news

Today’s top story: How credit unions fit in your financial life. Also in the news: How to recover from being rejected for a personal loan, 5 simple ways to get out of credit card debt faster, and 9 ways to teach kids about money.

How Credit Unions Fit in Your Financial Life
More personal banking.

Rejected for a Personal Loan? Here’s How to Recover
Start asking why.

5 Simple Ways to Get Out of Credit Card Debt Faster
Tips to hack away at your debt.

9 Ways to Teach Kids About Money
Get them started early.

Q&A: Be strategic when closing credit accounts

Dear Liz: I recently moved to a new state and would like to open a credit card at my new credit union. I’m concerned that closing my old credit union account and card will hurt my credit scores, which are over 800. The old card, which I no longer use, has a high credit limit. My income is also lower, so I’m not sure how that will affect the credit limit I get.

Answer: Closing credit accounts can ding your credit scores, but that doesn’t mean you should never close an unwanted account. You just need to do so strategically.

First, understand that the more credit accounts you have, the less impact opening or closing an account typically has on your scores. If you have a dozen credit cards, for example, closing one will likely have less impact than if you only have two.

Still, you’d be wise to open the new account before closing the old one. That’s because closing an account lowers the amount of available credit you have, and that has a large impact on your scores.

If the new issuer doesn’t give you a credit limit close to that of the old card, you’re still probably fine closing the old account if you have a bunch of other cards. If you don’t, though, you may want to hold on to the old account to protect your scores.

Q&A: Divorced spousal benefits

Dear Liz: I never expected to be where I am financially. I work as an independent piano teacher and my present earnings are just enough to get by (which isn’t saying much in Southern California). I was married for 18 years and am now single, with no plans to remarry.

After I turn 66 next year, I intend to apply for Social Security benefits as a divorced spouse because my personal Social Security benefits would amount to just $875 a month and my ex is doing quite well (with earnings somewhere in the six-figure range). I anticipate the divorced spousal benefit will be greater than my own.

But I have a lot of questions. Will waiting until my former husband is 66 or 70 (he is 64) do anything to maximize my benefits? Will my Social Security be taxable? How much am I allowed to continue earning if I also receive Social Security?

Answer: Spousal and divorced spousal benefits can help lower earners get larger Social Security checks. Instead of just receiving their own retirement benefit, they can receive up to half of the higher earners’ benefits. But divorced spousal benefits are different in some important ways from the spousal benefits available to married people.

If you were still married, your benefit would be based on what your husband was actually getting. If he started benefits early, that would reduce the spousal benefit you could get. You also couldn’t get a spousal benefit unless he was already receiving his own.

Divorced spousal benefits are available if your marriage lasted at least 10 years and you aren’t currently married. If you meet those qualifications, you can apply for divorced spousal benefits as long as both you and your ex are at least 62 — he doesn’t need to have started his own benefit. Your divorced spousal benefit will be based on his “primary benefit amount,” or the benefit that would be available to him at his full retirement age (which is 66 years and two months, if he was born in 1955). It doesn’t matter if he starts early or late; that doesn’t affect what you as his ex would receive.

Spousal and divorced spousal benefits don’t receive delayed retirement credits, so there’s no advantage for you to delay beyond your own full retirement age (which is 66, if you were born in 1954) to start. Your benefit would have been reduced if you’d started early, though, so you were smart to wait.

Also, waiting until your full retirement age means you won’t be subjected to the earnings test that otherwise would reduce your checks by $1 for every $2 you earn over a certain amount ($17,640 in 2019).

Friday’s need-to-know money news

Today’s top story: Why the Good Enough home may just be perfect. Also in the news: How to turn your retirement plan into an early-retirement plan, how to mess up a variable annuity, and why it’s important to calculate the cost of college – not just tuition.

The ‘Good Enough’ Home May Be Just Perfect
Don’t let perfect be the enemy of good.

How to Turn Your Retirement Plan Into an Early-Retirement Plan
Tweaking your ideas about retirement.

How to Mess Up a Variable Annuity
Mistakes can be costly.

Calculate the Total Cost of College—Not Just Tuition
There’s a whole lot more to pay for than just classes.

Tuesday’s need-to-know money news

Today’s top story: 5 simple ways to get out of credit card debt faster. Also in the news: Why you should take a first-time homebuyer class, taxes on micro-investing earnings, and 10 frugal back-to-school shopping tips.

5 Simple Ways to Get Out of Credit Card Debt Faster
Becoming debt-free faster.

First-Time Home Buyer Class: Why Take It?
You could have a lower monthly payment.

Don’t Forget About Taxes on Microinvesting Earnings
Those apps come with 1099s.

10 Frugal Back-to-School Shopping Tips
Back-to-school doesn’t have to break your budget.

Tuesday’s need-to-know money news

Today’s top story: How kids influenced by social media push parents to overspend on back-to-school shopping. Also in the news: How one man paid off nearly $120K of debt in 5 years, the number one airline rewards program, and the pros and cons of giving your child a credit card.

Back-to-School Shopping: Kids Influenced by Social Media Push Parents to Overspend

How I Ditched Debt: Whipping Up a Payoff ‘Tornado’
How one man paid off nearly $120K of debt in 5 years.

This is the No. 1 airline rewards program
Did your favorite airline make the list?

How young is too young for a kid to have a credit card?
The pros and cons of giving your child access to your card.

How to mess up a variable annuity

Variable annuities are complex insurance products — so complex that what people actually buy and what they think they’re buying may be quite different. Those misunderstandings can end up costing them, or their heirs, a lot of money.

For the uninitiated: Variable annuities are insurance company contracts that allow people to invest money in a tax-deferred account for retirement. Returns can vary according to how the investments perform (that’s the “variable” in “variable annuity”). These contracts typically include death benefits guaranteeing your heirs will get the amount you’ve invested, and perhaps more. Many variable annuities also have living benefits, which guarantee the amount you can withdraw during your lifetime. In my latest for the Associated Press, how all these guarantees come at a cost, which can make variable annuities expensive to own.

Monday’s need-to-know money news

Today’s top story: Green Dot launches 3% cash back and savings account. Also in the news: Apps that could prompt impromptu spending, how to avoid lifestyle creep, and how to financially plan for having kids.

Green Dot Launches 3% Cash Back and Savings Account
A new offering from Green Dot.

These Types of Apps Could Prompt Impromptu Spending
You don’t need any help spending money.

Don’t Let Lifestyle Creep Sneak Up on You
Staying in your lifestyle lane.

How to Financially Plan for Having Kids
They’re both cute and costly.