Monday’s need-to-know money news

Today’s top story: How to find a good tax preparer. Also in the news: Excuses for delaying retirement savings, what the TCF bank suit means for you, and why used cars usually have higher interests rates.

How to Find a Good Tax Preparer (and Write Off the Bad Ones)
Finding good help during tax season.

Excuses, Excuses When Delaying Retirement Savings
No more excuses.

What TCF Bank Suit Means for You: Defend Against Overdraft Fees
What opting in really means.

Why Used Cars Usually Have Higher Interest Rates
Guarding against risk.

Q&A: Paying an advisor vs. doing it yourself

Dear Liz: I started with a fee-only advisor 10 years ago. She moved to another company a few years after and I followed. She’s really done well for me. My question is, now that I’m getting ready to retire, should I manage my own accounts to avoid incurring commissions or fees? I don’t anticipate making any major changes to my portfolio.

Answer: If your advisor is truly fee-only, then you aren’t paying commissions on your investments. You’re paying fees to her plus fees for the various investments you own.

You can’t avoid fees. While you’re smart to want to avoid paying too much, you also need to consider the value you’re getting. Is your advisor a comprehensive financial planner who can answer your questions on most aspects of your finances, from budgeting to estate planning? Has she helped you stick to your investment plan in good times and bad? Can she serve as a watchdog as you age, monitoring you and your accounts for signs you’re at risk for fraud or bad decisions?

If you’re not getting your money’s worth, then you have two options: looking for a cheaper deal or an advisor who will give you more service.

For example, if your advisor is just providing investment management and you’re paying more than about 1% of your portfolio for her services, then you might well consider doing it yourself or turning to one of the many automated investing services that charge one-quarter to one-half a percentage point. Alternatively, you could look for an advisor who can be a comprehensive planner for the same fee, or less, than you’re paying now.

Q&A: Taking a look at the confusing world of credit scores

Dear Liz: I was recently denied a credit card and told my score was 150 points lower than what my credit reports show. Why would this be? Am I being deceived by the credit reporting agencies? It was such a low number that it’s a little hard to believe since I have been approved for other cards recently.

Answer: The creditor that denied you should have told you which score it used and from which credit bureau in addition to the actual number. Lenders employ a variety of different scores, but most use some variation of the FICO formula. Credit card lenders tend to use FICO Bankcard scores, which are on a 250 to 900 scale in contrast to the usual FICO 300 to 850 scale. Your numbers will vary depending on the version and bureau that lenders use. For example, a card company may pull a FICO Bankcard 4 from TransUnion, a FICO Bankcard 2 from Experian or a FICO Bankcard 5 from Equifax, although many issuers use the latest version, which is FICO Bankcard 8.

If that isn’t confusing enough, FICOs aren’t the only scores in town. The scores you get directly from credit bureaus, for example, typically won’t be FICOs. You may have been looking at VantageScores or at a proprietary score. The free scores offered at many websites tend to be VantageScores, which are on a 300 to 850 scale but may not be the same as your FICOs.

If you want a clearer snapshot of where you stand before applying for credit, you can pay $20 at MyFico.com to see a bunch of your FICO scores from a single credit bureau or $60 to see FICOs from all three bureaus.

You may not be able to determine in advance which score from which bureau a lender uses, however. You also should understand that whether a score is good enough may depend on the lender and on the product. Many lenders require higher FICO scores for their better credit card deals, for instance. Sites that track credit card deals may give you some idea of how high your scores generally need to be to get approved, but there are no guarantees.

Your best course is to make sure all your scores are as good as they possibly can be. That means, among other things, paying your bills on time, not letting disputes turn into collections and using your credit cards lightly but regularly. You don’t need to carry a credit card balance to have good scores, and you should try to use 30% or less of your available credit limit at any given time. Finally, apply for credit sparingly, and don’t close credit accounts if you’re trying to improve your scores.

Friday’s need-to-know money news

Today’s top story: How to prep (or not) for President Trump’s proposed tax changes. Also in the news: You could be owed money in the Western Union fraud case, why inauguration rental hosts could get a tax break, and 4 ways your expenses can skyrocket when having kids.

How to Prep (or Not) for Trump’s Proposed Tax Changes
How these changes could affect you.

Western Union Fraud Case: Are You Owed Money
A new website has been set up for victims.

Inauguration Rental Hosts May Get Tax Break
A federal tax code could save hosts money.

Thinking of Having Kids? 4 Ways Your Expenses Can Skyrocket

Thursday’s need-to-know money news

Today’s top story: 5 financial goals to set in 2017. Also in the news: What you should do with rising home equity credit rates, simple tasks to prepare you for tax season, and 7 ways to prepare for an unpaid maternity leave.

5 Financial Goals to Set in 2017
Short-term and long-term.

Home Equity Line of Credit Rates to Rise; What Should You Do?
Assessing your options.

These Simple Tasks Prepare You for Tax Season
Getting your documents in order.

7 Ways to Prepare for an Unpaid Maternity Leave
Creating a less stressful maternity leave.

Navient student loan lawsuit

Federal regulators just smacked the student loan servicer formerly known as Sallie Mae with a lawsuit accusing it of all kinds of bad behavior. This is a big deal, since the company, now called Navient, handles billions of dollars of loan payments for about one out of four borrowers. The New York Times said the accusations were “eerily similar” to the systematic failures during the foreclosure process.

Read on to find out more about the lawsuit and what to do if you’re struggling with education debt:

Feds Sue Student Loan Giant Navient: What Borrowers Need to Know

Wednesday’s need-to-know money news

Today’s top story: What happens when you can’t repay a payday loan. Also in the news: How to upgrade your old car with new-car tech, why women may face retirement shortfalls despite the closing pay gap, and the biggest complaints about 401(k)s.

When You Can’t Repay a Payday Loan
Preparing for the consequences.

5 Ways to Upgrade Your Old Car With New-Car Tech
You don’t need a new car in order to have the bells and whistles.

Pay Gap Closing but Women May Face Retirement Shortfall
Good news and bad news.

The Biggest Complaints About 401(k)s
Know what you’re dealing with.

Tuesday’s need-to-know money news

Today’s top story: How to prepare financially for your death regardless of your age. Also in the news: The best industries for starting a business in 2017, how insurance companies use your driving record as a crystal ball, and 5 practical steps for creating a retirement backup plan.

How to Prepare Financially for Your Death (No Matter How Young You Are)
Making important decisions.

5 Best Industries for Starting a Business in 2017
Time to start working for yourself.

Your Driving Record: Insurance Companies’ Crystal Ball
Analyzing your behavior.

5 practical steps for creating a retirement backup plan
Always have a Plan B.

Retirement advice from retired financial experts

Most retirement advice has a flaw: It’s being given by people who haven’t yet retired.

So I asked money experts who have quit the 9-to-5 for their best advice on how to prepare for retirement.

In my latest for the Associated Press, what the experts say you can do to prepare yourself both financially and mentally.

Q&A: When a new spouse brings surprise debt to the marriage

Dear Liz: I’m 58 and got married for the first time almost two years ago. I discovered my wife has several incredibly large outstanding student loans, including a parent Plus loan for her son’s education that she thought was in deferment and that has nearly doubled to well over $100,000. In addition, my wife has her own student loans, which total over $40,000 and have rates from 3% to nearly 7%. Needless to say, I was shocked and dismayed to discover this debt and wish she had shared it with me earlier.

We have looked into consolidating the loans into the U.S. Department of Education’s student debt relief program, which creates a monthly payment program based on income and forgives the remaining balance after 25 years. I’m uncomfortable with this plan. The long duration of monthly payments would be a big struggle and, after 25 years, we would have paid nearly $40,000 over the current principal even with the outstanding balance being forgiven.

I’m contemplating liquidating all my non-retirement accounts and half of our savings to pay off the larger parent PLUS loan.This would leave us with very little liquid reserve but still some substantial retirement accounts. Our combined income is around $75,000. We would then consolidate my wife’s lower-rate debt and try to take a personal loan out to pay off the higher rate loans if we can secure a lower rate. Do you have any other suggestions as to my options?

Answer: Your situation is a perfect example of why couples should review each other’s credit reports before marriage. At the very least, you could have figured out a plan to deal with the debt at least two years earlier and saved the interest that’s accrued since then.

As you probably know, your wife is stuck with this debt. The government can pursue her to her grave because there’s no statute of limitations on federal student loan debt collections. The government also can take part of her Social Security retirement or disability checks, something collectors of other kinds of debt can’t do. Even bankruptcy isn’t a viable option for most borrowers because student loan debt is extremely hard to get erased.

It’s understandable that you don’t want to be making student loan payments into your 80s, but paying the loans off much faster probably isn’t a reasonable option, given your income. So liquidating other assets to pay off the parent loan may be the best option. The wisdom of this approach, however, depends on how well you’ve saved for retirement, your job security and how much of an emergency fund would remain. If you lost your job after paying off the parent loan, you couldn’t get that money back to pay your expenses. By contrast, you could have your payment lowered under the Department of Education’s plan if you lost a source of income.

Consolidating your wife’s debt inside the federal student loan program would allow her to retain some important consumer protections that aren’t available with other debt, such as the ability to defer payments for up to three years if she faces an economic setback. If you do refinance your wife’s debt with private lenders to lower the rate, consider doing so with a private student loan rather than a personal loan if you want to retain the ability to write off the interest.

This is a complex decision with a lot of moving parts, so you’d be smart to discuss your plan with a fee-only financial planner before deciding what to do.