Tuesday’s need-to-know money news

Today’s top story: How to keep an eye on your college kid’s spending. Also in the news: How to help your kid get a credit card in college, what you need to know about stock splits, and the 10 things every non-finance person needs to know about finance.

How to Keep an Eye on Your College Kid’s Spending
Making sure they don’t go nuts.

How to Help Your Kid Get a Credit Card in College
Finding the best way to help.

Stock Splits: What They Are, How They Affect Your Portfolio
What you need to know.

10 Things Every Non-Finance Person Should Know About Finance
Learning the essentials.

How debt consolidation can go wrong

Daniel Montville knew a debt consolidation loan wouldn’t solve his financial problems, but the hospice nurse hoped it would give him some breathing room. He had already filed for bankruptcy once, in 2005, and was determined not to do it again.

Montville took out the loan in 2015, but within a year he had fallen behind on its payments and on the payday loans he got to help his daughter, a single mother with four children. The payday lenders all but cleaned out his checking account each time a paycheck landed, leaving little money for necessities. Then his daughter lost her job, and the $5,000 tax refund she had promised to him as repayment went instead to supporting her kids.

“That’s when I wised up and realized this was a no-win situation,” says Montville, 49, of Parma, Ohio. Montville is now repaying his creditors under a five-year Chapter 13 bankruptcy repayment plan.

In my latest for the Associated Press, learn why debt consolidation isn’t always the best idea.

Monday’s need-to-know money news

Today’s top story: How to responsibly handle an inheritance. Also in the news: 7 questions to ask before selling a stock, how to create your own pension, and why 35% of college seniors don’t know what their student loan repayments will be.

How to Responsibly Handle an Inheritance
Don’t run out and buy a sports car just yet.

Selling a Stock? Ask 7 Questions First
What you need to know.

How to Create Your Own Pension
Filling in the gap.

35% of college seniors don’t know what their student loan repayments will be
That’s an alarming number.

Q&A: Start saving early for retirement in case that last day of work sneaks up on you

Dear Liz: What advice would you give to a Silicon Valley professional who hasn’t done a good job planning for retirement? I’m 53 and maxing out my 401(k), saving $24,000 a year with my employer matching my contributions dollar for dollar up to 6% of salary. In addition, I’m saving $50,000 to $60,000 of my $240,000 annual salary. I’m debt free.

I wish I had started saving like this early in my career. Looks like I’ll probably have to work until I’m at least 65 or 70. Any advice on retirement planning would be greatly appreciated.

Answer: Your current savings rate is impressive, but you probably should plan to work at least until your full retirement age for Social Security, which is age 67.

Retiring earlier would require you to cut back even more on your spending or increase the odds your funds won’t last you through a long retirement.

Early retirement may be involuntary, of course.

Many people retire sooner than they expect thanks to a layoff, a health crisis or the need to take care of a family member. That is yet another reason why people should get started saving for retirement as early as possible — they may not have as many years to save as they think, and making up for lost time gets increasingly difficult the longer they wait.

Most people aren’t in the fortunate position to be able to save 30% or more of their incomes in their 50s, which means catching up is close to impossible.

You may still have options if your career and your savings sprint are cut short.

If you own a home, you can tap the equity either by downsizing (selling and moving to a smaller place) or using a reverse mortgage. You can reduce your expenses, possibly by moving to an area with a lower cost of living. You can supplement your retirement income by working part-time.

You also should consider maximizing your Social Security check by delaying benefits until age 70, even if you wind up retiring earlier. Social Security benefits grow by 8% a year between full retirement age and age 70, which is a guaranteed rate of return you can’t find anywhere else.

Delaying Social Security is a way to insure against longevity — if you live longer than you think and run out of other money, that larger check can help protect you from poverty at the end of your life.

Q&A: Keeping retirement money in various accounts helps with tax bills

Dear Liz: I am having difficulty determining if I should invest money in my 457 deferred compensation account or in a taxable account, as I am in the 15% tax bracket.

Also, does it matter whether I invest in a Roth IRA instead of my traditional IRA? My biggest pot of money is in a taxable account, then my IRA, then a Roth. I am single, no dependents and over 50.

Answer: In retirement, having money in different tax “buckets” can help you better control your tax bill.

Taxable accounts, for example, can allow you to take advantage of low capital gains tax rates plus you can withdraw the money when you want: There are no penalties for withdrawals before age 59½ and no minimum distribution requirements.

Tax-deferred accounts allow you to save on taxes while you’re working but require you to pay income taxes on withdrawals — and those withdrawals typically must start after you turn 70½.

Roth IRAs, meanwhile, don’t have minimum distribution requirements, and any money you pull out is tax free, but contributions aren’t tax deductible.

Because most people drop to a lower tax bracket in retirement, it often makes sense to grab the tax benefit now by taking full advantage of retirement accounts that allow deductible contributions.

That means the 457 (generally offered by governmental and nonprofit entities) and possibly your regular IRA. (Your ability to deduct your IRA contribution depends on your income, since you’re covered by the 457 plan at work.)

If your IRA contribution isn’t deductible, then contribute instead to a Roth. If you still have money to contribute after that, use the taxable account.

If you expect to be in the same or higher tax bracket in retirement, though, consider funding the Roth first. Prioritizing a Roth contribution also can make sense if you have plenty of money in other retirement accounts and simply want a tax-free stash you can use when you want or pass along to heirs.

Friday’s need-to-know money news

Today’s top story: Three student loan risks parent borrowers should avoid. Also in the news: Why you don’t have to be rich to feel good about your money, how second chance checking reopens doors to banking, and the lazy person’s guide to travel hacking.

3 Student Loan Risks Parent Borrowers Should Avoid
Be careful.

You Don’t Have to Be Rich to Feel Good About Your Money
You don’t need fancy cars and mansions.

Second Chance Checking Reopens Doors to Banking
Bringing back customers.

The Lazy Person’s Guide to Travel Hacking
Rack up miles without becoming obsessive.

Thursday’s need-to-know money news

Today’s top story: Which states have estate and inheritance taxes. Also in the news: Why making money with online games is a bad bet, cities with the most and fewest young homeowners, and a decade after the Great Recession, 1 in 3 Americans still haven’t recovered.

Which States Have Estate and Inheritance Taxes?
How about your state?

Making Money With Online Games Is a Bad Bet
Don’t get lured in.

Millennial Homeownership: Cities With the Most and Fewest Young Homeowners
Where does your city rank?

A decade after Great Recession, 1 in 3 Americans still haven’t recovered
Women and African-Americans have been the hardest hit.

Wednesday’s need-to-know money news

Today’s top story: Suing banks will get easier – if CFPB rule survives. Also in the news: 2017 Driving in America report, 7 tips for preparing your taxes in a divorce, and why you need to stop beating yourself up over past money mistakes.

Suing Banks Will Get Easier — if CFPB Rule Survives
And that’s a big “if.”

2017 Driving in America Report: The Costs and Risks
A NerdWallet report.

7 Tips for Preparing Your Taxes in a Divorce
Don’t ignore Uncle Sam.

Why You Need to Stop Beating Yourself Up Over Past Money Mistakes
Stop dwelling.

Tuesday’s need-to-know money news

Today’s top story: How folks took charge of their credit card fears. Also in the news: Getting tax relief from good deeds, five sales to shop on Amazon Prime Day besides Prime Day, and how to tell where your state tax dollars are actually going.

How Folks Took Charge of Their Credit Card Fears
Taking the first steps.

No Good Deed Goes Unpunished — but You Can Get Tax Relief
Doing the smart thing can be costly.

5 Sales to Shop on Amazon Prime Day Besides Prime Day
Lots of good deals to be had.

This Chart Shows How Your State Government Is Funded
Where your hard-earned money is going.

Chasing a dream? Fix your finances first

Mark Howard of Basalt, Colorado, earned a hefty six-figure income during his 25-year career in financial services. His dream, though, was to teach high school — a job that paid about $40,000 a year.

When he floated the idea past his wife and business partner, Danielle Howard, her reaction was surprise and unease. He was 54, she was 44. They had two kids in college, a big house and a lifestyle based on their $250,000-plus income.

But her experience in the life planning branch of financial advice taught her to ask searching questions of clients and follow up on their answers.

In my latest for the Associated Press, why it’s important to fix your finances before chasing your dream.