Monday’s need-to-know money news

Snip20160808_4Today’s top story: How not to pick a bank. Also in the news: bank accounts that foster independence for disabled people, how to pick the right college to avoid student debt, and newly updated government rules to help homeowners facing foreclosure.

How Not to Pick a Bank
Forget about the free toaster.

ABLE Accounts Help Foster Independence for Disabled People
Building financial independence.

Pick the Right College to Avoid Student Debt
Looking at college as an investment.

The Government Updated Its Rules to Help Homeowners Facing Foreclosure
What’s new from the Consumer Financial Protection Bureau.

A Hail Mary Retirement Plan for Those With Nothing Saved

no-retirement-savings1You’re rounding the corner toward retirement age with not nearly enough set aside.

We tell young people to start saving for retirement from their first job and not to quit, because even small sums can grow staggeringly large with enough decades of compound returns. But maybe you bumped along from paycheck to paycheck, never saving much. Or maybe you tried to save but got slammed with unexpected setbacks like a late-in-life job loss.

Let’s be clear: You can’t make up for lost time.

In my latest for the Associated Press, what you need to do in order to make your retirement more comfortable.

Q&A: How to improve your credit scores

Dear Liz: I don’t have a credit score. I have one item on my credit report that’s a court judgment. What can I do to get a score? If I pay the balance due for the judgment, would it be removed?

Answer: Paying a judgment doesn’t remove it from your credit reports, but it does limit the amount of time that the judgment can hurt you.

By federal law, an unpaid judgment can remain on your reports for seven years after it was entered against you. But creditors often have 10 to 20 years, depending on the state, to use the judgment to garnish your paycheck or put a levy on your bank account. Some states allow creditors to renew a judgment that hasn’t been paid, which means that it could pop back up on your credit reports after the initial seven-year period has expired.

To answer your other question, you get credit scores by having and using credit. The leading FICO formula needs six months’ of credit history to generate scores. One way to get credit if you don’t have any is with a secured credit card. These cards typically give you a line of credit equal to the deposit you make at the bank that issues the card. Use the card lightly but regularly and pay the balance on time and in full each month. You don’t need to pay credit card interest or carry debt to create good scores.

Another option is a “credit builder” loan, sometimes offered by member-owned credit unions. One form of credit builder loan puts your payments, minus interest, into a certificate of deposit that’s yours to keep once you’ve made the final payment. With one loan, in other words, you build your credit and your savings.

You can build credit either way, but having both types of credit — revolving accounts such as credit cards and installment loans such as a credit-builder loan — can help you build it faster.

Q&A: Amending a living trust

Dear Liz: My husband and I had a lawyer draw up a revocable living trust and a pour-over will six years ago. We need to amend a couple of areas, and I found it could be done with a form from a self-help legal site. Also, we need to add our home into the trust. My husband doesn’t want to use a lawyer. Can we legally do the amendment and addition of the home without a lawyer?

Answer: Sure. But your heirs may pay for any mistakes you make.

The big red flag is that you haven’t transferred your home to the living trust, even though you’ve had six years to do so. If it’s not in the trust, it will be subject to probate, the court process that the trust is meant to avoid. You need to be extremely diligent if you’re going to try to create a do-it-yourself estate plan, and you’ve already proved that you aren’t. All you’ve done is undermine the estate plan you paid for years ago.

Amending the trust, and having a lawyer help you transfer your home into it, probably will cost a fraction of what you paid originally. It also would give your attorney an opportunity a chance to review the documents in case other changes need to be addressed. A relatively small investment could pay off in peace of mind that the job has finally been done right.

Q&A: How to retrieve old W-2 forms

Dear Liz: I have several years missing from my Social Security earnings history, dating back to 1999. I have been filing income taxes jointly with my wife but we only kept our files for five years. How do I go about retrieving past income documents like my W-2s? I contacted Social Security and the IRS but can only get tax transcripts dating back to 2009.

Answer: Social Security says you ordinarily have three years to report mistakes. (Actually, being Social Security, it’s “three years, three months and 15 days.”) But you can correct mistakes further back if you have sufficient proof, such as tax forms, W-2s or pay stubs.

You can try contacting old employers to see if they can produce the W-2s you’re missing. Otherwise, write down as much as you can remember about where you worked, including the name of the employer, the dates you worked there and how much you earned. Then contact Social Security again, provide the information you’ve gathered and ask for help in filling in those missing years.

This is one reason why it’s smart to hang onto tax returns indefinitely. Even though you can (and probably should) shred backup documentation after seven years or so, you should keep copies of anything filed with the IRS, including W-2 forms.

Wednesday’s need-to-know money news

homebuyerToday’s top story: Credit cards that allow you to set spending limits for authorized users. Also in the news: 8 keys to getting approved for a mortgage if you’re self-employed, how to tell if you’re getting a good car deal, and how to find the best mortgage rates and lenders online.

Which Credit Cards Allow You to Set a Spending Limit for Authorized Users?
Setting limits.

Self Employed? 8 Keys to Getting Approved for a Mortgage and Buying a Home
It’s not impossible.

How to Tell If You’re Getting a Good Car Deal
Deciphering the doubletalk.

How To Find The Best Mortgage Rates And Lenders Online
Navigating the online mortgage waters.

Tuesday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: Questions you should ask your credit card issuer. Also in the news: Student loan tips your need to know, nearly half of couples split home down payments, and personal finance myths experts want to see disappear.

6 Questions You Should Ask Your Credit Card Issuer
Knowing the hows, whens, and whys.

5 Student Loan Tips You Should Know (But Probably Don’t)
Tips from exit counseling.

Nearly Half of Couples Split Home Down Payment, NerdWallet Survey Finds
Going 50/50.

8 Personal Finance Myths Money Experts Want to See Disappear
Mythbusting.

Do debt management plans work?

Nonprofit credit counselors are the good guys in the debt relief industry, which is otherwise full to bursting with lies, scams and sketchy players.

That said, credit counselors need to acknowledge that their signature offering – the debt management plan – doesn’t work for everyone.

In my latest for the Associated Press, find out when declaring bankruptcy is a better option than credit counseling.