Thursday’s need-to-know money news

Today’s top story: Equifax messed up – who pays? You do. Also in the news: 5 foolproof ways to build wealth without a lottery ticket, 3 ways to score after iPhone 8 and iPhone X release, and your ‘money personality’ is first step to financial freedom.

Equifax Messed Up — Who Pays? You Do

5 Foolproof Ways to Build Wealth — No Lotto Ticket Needed

3 Ways to Score After iPhone 8, iPhone X Release

Your ‘money personality’ is first step to financial health

Wednesday’s need-to-know money news

Today’s top story: How a public adjuster can help with hurricane insurance claims. Also in the news: How to choose a student credit card, how millennials got a 6-figure start on retirement saving, and Equifax is waiving their credit-freeze fees.

How to Choose a Student Credit Card
Finding the right card for you.

How a Public Adjuster Can Help With Hurricane Insurance Claims
You don’t have to go it alone.

How Millennials Got a 6-Figure Start on Retirement Saving
Already ahead of the game.

Equifax Is Waiving Their Credit-Freeze Fees for 30 Days
How kind.

Tuesday’s need-to-know money news

Today’s top story: How 3 people conquered credit trouble and bought homes. Also in the news: Top 10 apps for buying the right car at the right time, biting on Whole Foods new prices, and 6 Equifax hack rumors fact-checked.

How 3 People Conquered Credit Trouble and Bought Homes
How to come back from credit trouble.

Top 10 Apps for Buying the Right Car at the Right Price
Get the car you want at the price you want.

Should You Bite On Whole Foods’ New Prices? Maybe Not
Are you really saving?

6 Equifax hack rumors fact-checked
Fact from fiction.

Predict ‘surprise’ bills, no crystal ball needed

It doesn’t take much to upend many Americans’ finances. A car that won’t start, a furnace that dies or a trip to the hospital can leave households struggling to make ends meet.

According to the Federal Reserve, 44 percent of U.S. adults say they would have trouble coming up with $400 to cover an unexpected expense. Even families who have more in the bank can flounder. Surveys by The Pew Charitable Trusts found that 51 percent of families with at least $2,000 in savings reported trouble paying the bills after a financial shock.

Yet it is hardly a shock if an appliance wears out or a car breaks down.

It’s time to rethink what we mean by unexpected expenses. In my latest for the Associated Press, how to predict surprise bills without a crystal ball.

Monday’s need-to-know money news

Today’s top story: Lock down your data right now after Equifax breach.Also in the news: Health insurers ease rules for Harvey Victims, protecting critical documents from disaster with a bug-out bag, and the credit move than can bump your score in 30 days.

Lock Down Your Data After Equifax Breach — Right Now
Immediately.

Health Insurers Ease Rules for Harvey Victims
Checking your options.

Protect Critical Documents From Disaster With a ‘Bug-Out Bag’
Be ready to go at a moment’s notice.

The credit move that can bump up your score in 30 days
Pay your bill early.

Q&A: Reverse mortgages have gotten safer and cheaper but aren’t for everyone

Dear Liz: I have been making interest-only payments on a home equity line of credit but starting in January the payments will increase to include principle. I would like to do a cash-out refinance of my first mortgage (I owe about $190,000) to pay off the HELOC (on which I owe $140,000).

My home is worth about $600,000, but my debt-to-income ratio is very high, and I’ve been told I won’t be approved.

I have never been late on my mortgage or credit cards, on which I owe about $30,000. I am working very hard on paying off my debt but my income is low, $25,000 a year.
I am 72, a widow and find it hard to land a good paying job like I used to have. I have to settle for what I can get.

My son and his family live with me and pay $900 rent and half of utilities but those payments are not reflected on my taxes.

The advice I am getting so far is to get a reverse mortgage for about a year, to not take any money from it and instead pay down my credit, then after a year try to refinance again. What are your thoughts on reverse mortgages?

Answer: Reverse mortgages have gotten safer and less expensive but they aren’t a good short-term solution for anyone. All mortgages have costs, and it makes little sense to pay to set up a reverse mortgage if you plan to get rid of it a few months later.

Reverse mortgages, for those who don’t know, allow borrowers 62 or over to tap their home equity to get a lump sum, a series of monthly checks or a line of credit. Borrowers don’t have to make payments on these loans, but any debt incurred on a reverse mortgage grows over time and must be paid off when the borrower sells, moves out or dies.

The most common reverse mortgage is the Home Equity Conversion Mortgage, which is insured by the federal government. The HECM loan typically includes upfront and annual mortgage insurance premiums, third party charges, origination fees, interest and servicing fees.

The amount you can borrow is based on your age, prevailing interest rates and the value of your home (the maximum home value considered is $636,150). You’ll find a calculator at www.reversemortgage.org/About/Reverse-Mortgage-Calculator that can help you estimate what you can borrow and the costs.

Normally, people can’t access more than 60% of the borrowed amount in the first year. That’s to prevent them from running through all their equity in a short time. The exception is when the money’s being used to pay off existing loans. You probably would be able to borrow just enough to pay off your current mortgages, but the upfront mortgage insurance premium you would owe would be high: 2.5%, rather than the usual 0.5%.

Another complication is the fact that you have family living with you. You’d need to think through what would happen if you died, had to sell or moved into a nursing home, because that could leave your son and his family homeless if they weren’t able to pay off the mortgage.

A final concern is the fact that you’ve been living beyond your means for quite a while, as shown by the amount of debt you have. Eliminating mortgage payments could help you pay off your remaining debt, but that’s only if you keep your expenses in line with your current income — not what you were able to spend when you had a good job. There’s also no telling how much longer you’ll be able to continue working, which would mean getting by on even less.

Consider meeting with both a nonprofit credit counselor and a bankruptcy attorney to understand your options. You can get referrals from the National Foundation for Credit Counseling (www.nfcc.org) and the National Assn. of Consumer Bankruptcy Attorneys (www.nacba.org), respectively.

Q&A: Tax implications of parents paying off a child’s loans?

Dear Liz: My wife and I co-signed for student loans for our daughter. My daughter made payments on these loans since she graduated from college four years ago. My wife and I just paid off the loan balance, which was $22,000. Is our payment considered a gift to our daughter?

Answer: Yes, but your gift is within the annual exemption limit, so you won’t have to file a gift tax return. You and your wife can each give your daughter $14,000, or a total $28,000, without having to file a return. Gift taxes aren’t owed until the amounts someone gives away above those annual limits exceeds $5.49 million.

Outrage after outrage

Yesterday Equifax broke the news hackers gained access to the Social Security numbers and other sensitive personal information for 143 million Americans (a group that apparently includes me, my husband, our daughter and probably you).

Because that wasn’t enough, today the outrages just continued:

  • The breach was discovered at the end of July. What was Equifax doing in the meantime? Well, its executives sold about $2 million worth of company shares,  The Washington Post reports.
  • The same day the breach was announced, Congress scheduled a hearing on a bill to shield the bureaus from full accountability from their actions.
  • Equifax offered free credit monitoring for a year, but didn’t make clear whether its usual binding arbitration language applied. So were people waiving their right to sue over the breach? Equifax wouldn’t say, until the New York Attorney General demanded and got an answer: the binding arbitration clause applies to the monitoring product, not the breach. Just in case, after signing up I sent this letter using Equifax’s opt out clause to (hopefully) preserve our right to sue.
  • Credit monitoring doesn’t prevent anything; it just notifies you after you’ve been victimized. Equifax is also offering free credit freezes, which prevent others from opening accounts in your name. Well, it was supposed to be free; some journalists reported they were charged $3.
  • Experian and TransUnion aren’t offering free anything. To shut down your credit, you need freezes at all three bureaus. The others are charging $3 to $10 each, plus additional fees if you need to temporarily lift the freeze to apply for credit, a job, insurance, cell phone service, utilities, an apartment, etc. Oh, and freezes won’t help with other types of crime, such as medical and criminal ID theft or blackmail. (The hack is a potential national security threat, according to experts quoted by the New York Times.)
  • Oh, and when victims try to enroll in credit monitoring, Equifax tells them to come back in a few days. Because, apparently, they’re kind of busy.
  • In fact, all three bureaus’ Web sites were having trouble under the deluge of requests. Sites were freezing and offering error messages; people were getting busy signals or being kicked off calls.

There was no way to make this breach better, but clearly there were plenty of ways to make it worse.

 

Thursday’s need-to-know money news

Today’s top story: Americans favor debit over credit for their go-to card. Also in the news: How to choose a cash-back credit card, how to get an SBA disaster loan for your business, and the costly mistake people make when using debit cards.

Americans Favor Debit Over Credit for Their Go-To Card
The results are in.

How to Choose a Cash-Back Credit Card
What you should look for.

How to Get an SBA Disaster Loan for Your Business
Help after Harvey.

One-quarter of people make this costly mistake when using debit cards
Are you one of them?

Wednesday’s need-to-know money news

Today’s top story: 10-word answers to your biggest hurricane insurance questions. Also in the news: How to prepare before a hurricane hits, ditching debt when you’re newly single, and how to bring up money for the first time.

10-Word Answers to Your Biggest Hurricane Insurance Questions
What you need to know.

How to Prepare Before a Hurricane Hits
Essential tips.

How I Ditched Debt: Newly Single, ‘I Knew I Had to Help Myself’
Protecting yourself first.

How to Bring Up Money for the First Time in a Relationship
Making the first move.