Friday’s need-to-know money news

taxesToday’s top story: How to save money on your taxes by deducting work-related expenses. Also in the news: Learning about financial therapy, decreasing credit card limits, and financial advice for baby boomers.

How IRS Form 2106 Can Save You Money on Taxes
Deducting the work expenses your employer doesn’t cover.

What You Should Know About Financial Therapy
Getting to the deeper root of money issues.

The Average Credit Card Limit Is Dropping: What It Means for You
Lower limits across the board.

Five Easy Pieces of Financial Advice for Baby Boomers
Planning for the road ahead.

5 Reasons Every Boomer Should Stick to a Budget
More important now more than ever.

Thursday’s need-to-know money news

401K Nest EggToday’s top story: Auditing your 401(k) plan. Also in the news: When you should buy both whole and term life insurance, the tax documents you should always keep, and how a balance transfer could help your credit score.

How Good Is Your 401(k) Plan?
This basic audit will tell you.

When to Consider Both Whole and Term Life Insurance
Why purchasing both may be best.

Tax Documents You Should Always Keep
What to keep and what to shred.

A Balance Transfer Can Help Your Credit Score
Understanding your credit utilization ratio.

6 Mistakes You Make When You Check Your Credit
Of course, not checking your credit would be the biggest mistake of all.

Wednesday’s need-to-know money news

Life InsuranceToday’s top story: How to refinance your home without piles of paperwork. Also in the news: Why you should skip credit card advances, understanding your life insurance policy, and 10 ways you could be throwing money away.

Can You Refinance Your Home Without a Mountain of Paperwork?
Finding a loan that doesn’t require a million documents.

Skip Credit Card Cash Advances: Convenience Costs Too Much
Quick cash can come with a heavy price tag.

Managing Your Life Insurance Policy: Understanding Key Terms
Knowledge is power.

10 Ways That Too Many People Throw Money Away
Stop doing that!

Tuesday’s need-to-know money news

debt collectorsToday’s top story: Getting debt collectors off of your credit report is about to get easier. Also in the news: How to change a bad spending habit, the worst financial mistakes you can make during a divorce, and the worst markets in America to buy a home.

Why Kicking Debt Collectors Off of Your Credit Report Just Got Easier
Changes are coming to your credit report.

To Change a Spending Habit, Focus on Cause and Effect
Tiny changes could make a big difference.

3 Worst Financial Mistakes You Can Make in a Divorce
How to protect your best interests.

The 10 Worst Markets in America to Buy a Home Right Now
Where you buy matters.

Monday’s need-to-know money news

homebuyerToday’s top story: Housing costs that could increase. Also in the news: How to get out of debt, what you should know about credit card loyalty programs, and surprising ways bad credit can make your life difficult.

4 Housing Costs That Could Go Up
Time to plan ahead.

The Ultimate Guide To Getting Out Of Debt
How to dig yourself out.

Credit Card Loyalty Programs: 3 Things You Ought to Know
Just how loyal are they?

Surprising ways bad credit can hurt you
You could pay more for utilities.

Q&A: Living like a student after graduation

Dear Liz: Regarding your recent column advising recent college grads to keep living like students: I helped my three children do just that. I had them live at home rent-free for six months after graduation and told them to save money like crazy.

Then when they rented an apartment, they would have the rental deposit saved as well as money for utilities, food and so on. I taught them to cook simple nutritional meals. We had already given each kid a car senior year and covered the insurance. I took home equity lines of credit to pay college tuitions, room and board, so they had no debts and six months to transition to serious responsibilities.

Answer: You’ve given your children a good head start in life at a time when so many others are starting out deeply in debt. Hopefully you didn’t do so at the expense of your own finances.
Home equity lines of credit may seem like cheap money, but the rates are variable and could spike if interest rates rise. If the debt is relatively small and can be paid off in a few years, that’s one thing.

If the debt is large and you can’t pay it off quickly, though, you may have put your home (and your retirement) at risk.

Q&A: Uniform Transfers to Minors Act

Dear Liz: My in-laws have gifted stock to our children through the Uniform Transfers to Minors Act (UTMA) to help pay future college expenses. The value of the stock has increased significantly over the past few years.

We would like to sell the shares and move the proceeds into more stable investments for our children. What are our options for those funds? Do you recommend one option over another? I don’t expect them to get much need-based financial aid.

Our household income is approximately $95,000 a year. We have 529 plans for each of our three children and account currently has $6,000 to $9,000.

Answer: If you only have one child in college at a time, then you’re right that you probably won’t get much need-based aid.

If, however, your kids are close enough in age that more than one will attending college simultaneously, you may qualify for more help than you think. One way to find out is to use the EFC Calculator at the College Board website, which can give you an estimate of the amount your family is expected to contribute to higher education costs.

If your kids may get need-based financial aid, then they probably shouldn’t have money in UTMA or other custodial accounts. UTMA accounts and their predecessor, Uniform Gift to Minors Act or UGMA accounts, used to be a good way to save on taxes but changes to the so-called “kiddie tax” rules have made them less appealing.

Income from the accounts above $2,000 a year for children under 19 and full-time college students under 24 is now taxed at the parent’s rate. What’s more, these custodial accounts count heavily against families in financial aid calculations.

Often it’s best to spend down the money by the child’s junior year in high school (by paying for tutoring, a laptop, private school or other expenses that benefit the child.)

Another option is to transfer the proceeds to a 529 college savings plan, since these state-run investment accounts typically are viewed favorably in financial aid formulas. What’s more, the plans offer professional management and diversified portfolios known as “age-weighted” options that grow more conservative as a child approaches college age.

You’ll want to talk to a tax pro about what makes sense in your specific situation, especially since selling the shares all at once may trigger a big tax bill.

Q&A: Delaying Social Security benefits

Dear Liz: If I retire at 66 but don’t collect my Social Security until 70, will my benefit increase or stay the same since I wouldn’t be working? I can’t find this answer anywhere! Thanks so much.

Answer: Your benefit will increase eight percent each year you put off starting benefits between your full retirement age (currently 66, but rising to 67) and age 70. You get those “delayed retirement credits” whether or not you continue working.

Many people erroneously think the two decisions—when to quit work and when to start Social Security—have to be linked. In fact, they can be entirely separate.

You can retire years before you start Social Security and vice versa. Given the built-in benefit increase for waiting to begin Social Security checks, it often makes sense to tap other retirement money if you can while you wait for your check to max out.

Friday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: Finding a credit card after declaring bankruptcy. Also in the news: Money mistakes for Millennials to avoid, finding relief for your student loan hangover, and what you need to know about the new credit reporting rules.

5 Credit Cards You Can Get After Bankruptcy
Easing your way back into the credit game.

Don’t Make These Money Mistakes, Millennials
Time to face the real world.

Relief for the Student-Loan Hangover
Beginning the slow emergence from years of loans.

What You Need to Know About The New Credit Reporting Rules
Fixing an error on your report is about to get easier.

Thursday’s need-to-know money news

retirement-savings3Today’s top story: How to choose the best credit card perk. Also in the news: Why you should avoid taking a retroactive Social Security benefit, what we can learn from the IRS data breach, and why putting off saving for retirement in order to be debt free could be dangerous.

Cash Back vs. Miles: Which Credit Card Perk Should I Choose?
Which perk gets you the most for your money.

Don’t Let Social Security Reduce Your Retirement Benefit By Making You Take Retroactive Benefits
Getting what you’ve worked for.

Are You ‘Over-Exposed’ Online? Lessons From IRS Hack
What we can learn from the latest data breach.

Don’t Put off Retirement Savings to Be Debt Free
Good intentions could backfire.

Essential Money Moves to Make in Your 40s
Retirement is closer than you’d think.