Sometimes you have to cough up your SSN

Dear Liz: I want to get satellite television, but the company wants my Social Security number to check my creditworthiness. I dislike giving out my Social Security number to anyone in this climate of identity theft. Are there any laws that can help me?

Answer: You’re smart to be careful with your Social Security number, but if you want this company’s service, you’ll probably have to cough up the number.

Lenders are not the only businesses that want to check your creditworthiness before they’ll do business with you. Cellphone carriers, landlords, utilities and employers often want a look at your credit reports or credit scores as well. Some states have passed laws restricting how credit information is used in certain circumstances, but in many cases, individuals have just two choices: comply with the request for Social Security numbers or don’t do business with these companies.

That’s not to say you should hand out your number to any business that asks. If the business isn’t establishing a credit relationship with you, and isn’t in financial services — which are required to have your Social Security number to report tax information to the IRS — you should find out why they’re asking for the number and consider declining.

DIYer? You still need a financial planner before you retire

Dear Liz: How important is it to have a financial planner to help me plan for my retirement? I am 43. I must admit that trusting someone with my life savings is a daunting prospect, although I am also not too financially savvy.

Answer: You don’t have to actually turn your life savings over to an advisor to get sound financial advice. Some fee-only planners charge by the hour to create recommendations for your portfolio, which you can then execute. You can get referrals to these fee-only, hourly planners via the Garrett Planning Network, http://www.garrettplanningnetwork.com.

You have other options, as well. Sites including FinancialEngines.com and ESPlanner.com offer software that can help you create a portfolio. Brokerages and mutual fund companies typically offer advice. Sometimes it’s offered for a flat fee; other times, you pay commissions based on the advisor’s recommendations.

If you educate yourself about investing, you may be able to do an OK job of building a portfolio on your own. But you really should consult an objective, experienced financial planner once you’re within 10 years of retirement. It’s really easy to make mistakes in the years immediately before and after retirement. If the mistakes are bad enough — retiring too soon, withdrawing too much, taking too much or too little risk — you could wind up paying for them for the rest of your life.

Another source for free business advice

Dear Liz: You mentioned Small Business Development Centers in a recent column. An additional avenue of free business advice is through SCORE, which is also closely affiliated with the Small Business Administration. SCORE uses its 10,000-plus business-savvy volunteers to assist small businesses, either starting out or needing some free professional guidance. In many areas of the country the local Small Business Development Centers and SCORE work closely together in assisting small businesses.

Answer: Thanks for mentioning another important resource for entrepreneurs. SCORE offers online as well as in-person mentoring, and can be found at http://www.score.org.

Why interest rates are so low

Dear Liz: Why are banks not offering a higher interest rate for savings accounts? Why so darn low?

Answer: Blame the economy. Both individuals and businesses are wary about borrowing money. Less demand typically drives down the cost of a product. The product in this case is loans, and the price is the interest rate. With little demand for loans, banks don’t need to compete much for depositor funds and so aren’t paying much on their deposit accounts.

Another big factor is the Federal Reserve, which is keeping interest rates low to try to stimulate borrowing, spending and the economy. The Fed’s big fear is that higher interest rates would choke off the economy’s recovery and send us spiraling into another recession.

How long will this low-interest period last? Nobody knows. We could see higher interest rates if the economy really takes off. In that case, higher demand for loans probably would bid up interest rates and the Fed would switch its focus to containing inflation, which typically means it would try to raise rates further. Many economists are predicting a slow recovery, however, which means low savings account rates are likely to be with us for a while.

In the meantime, you can look for slightly higher rates at sites like MoneyRates (http://www.money-rates.com) and Bankrate.com. Recently the national average for one-year certificates of deposit was under 0.5%, but several financial institutions on those sites were offering rates above 1%.

If you’re being offered rates much above that level, you’re either dealing with a riskier investment or being asked to lock up your money for a considerable period. Neither is a good idea if this money is your emergency fund or you otherwise need it to be safe and accessible.

Use inheritance to pay down debt, boost savings

Dear Liz: My grandfather gave me his car just before he passed away. I drove it for a few years and now am ready to sell it. My question: What to do with the money? The car is worth about $10,000. Should I put the money toward my $13,000 credit card debt or should I put the money in savings, as I currently don’t have any?

Answer: Use your grandfather’s generous gift to both help you retire most of your debt and get a start on an emergency fund.

After you sell the car, take $500 to $1,000 of the proceeds for your emergency fund. That will cover most minor emergencies and should keep you from adding to your credit card debt. Put the money in a safe account that’s accessible but not too accessible. If it’s too easy to tap, you might be tempted to raid it for non-emergencies. A savings account at an online bank or a credit union are two good choices.

Take what’s left and pay down your credit card bills. Stop using your cards and figure out how much you need to put toward your debt to get the rest of it paid off in a few months. Then trim your expenses to come up with the money and set up an automatic transfer from your checking account to your cards.

Despite what you may have heard, credit card debt isn’t normal — a majority of U.S. households don’t carry credit card balances, according to Federal Reserve statistics — and it’s a real cancer on your finances. While you’re young, you should get out of the habit of carrying balances and into the habit of paying your cards in full every month. You’ll be richer for it, and less likely to find yourself in the sad position of being old and in debt. Read on: