Today’s top story: What you need to save every day for a comfortable retirement. Also in the news: The three tax buckets, the 10 commandments of savings, and four boring but essential money conversations.
$82 a Day Is the Average Savings for a Comfortable Retirement
$82.28 to be exact.
What Pre-Retirees Should Be Asking About Taxes
Introducing the three buckets.
The 10 Commandments of Saving Money
Thou shall follow these rules.
4 Boring Money Talks You Need to Have
Boring but necessary.
How to Find Financial Assistance for Your Down Payment
Don’t let your down payment hold you back.
Today’s top story: What to do if you made a mistake on your taxes. Also in the news: How to help a friend in financial trouble, money mistakes to avoid on your honeymoon, and what you need to take care of financially before your baby arrives.
Help! I Did My Taxes Wrong
Helping a Financially Troubled Friend (Without Spending a Cent)
And without risking your friendship.
3 Money Mistakes to Avoid on Your Honeymoon
Don’t get started on the wrong foot.
6 Vital Money Tasks to Tackle Before Your Baby Arrives
Taking care of things before the sleepless nights arrive.
8 Things That Smart Parents Shouldn’t Buy for Their Kids
Starting with new movies.
How To Spot A 401(k) Rip-off
Don’t sell your retirement short.
Big Tax Bill? IRS Offers Payment Options
Taxes don’t have to drain your wallet all at once.
5 Mistakes Renters Make
Don’t let your rental become a money pit.
6 Financially Freeing Tasks Not to ‘Pass Over’
A festival of financial freedom.
2 Legal Documents You Can’t Live Without
As a nation we’re not getting much better at managing our money. Efforts to change that by teaching money skills in schools haven’t done much to improve the situation. Follow-up studies on people who took financial literacy courses in school typically show the education has little effect. So the debate rages on about whether we should still try.
You won’t be surprised, given what I do, that I think it’s essential people educate themselves and their kids about money. So I’m looking forward to tomorrow’s Google Hangout with CFP Neal Frankle, who runs the Wealth Pilgrim site, where we’ll talk about financial literacy, including ways to get it and give it. The event is sponsored by Bankrate and AOL DailyFinance.
If you’d like to join us, our chat will stream live starting at 2 p.m. Eastern, 11 a.m. Pacific. Hope to see you there!
Update: If you missed the event, the link to our conversation can be found here, on the DailyFinance site.
Heartbleed: Why Changing Your Passwords Isn’t Enough
Welcome to the web’s worst nightmare.
How to get more time to file your tax return
An extension can save you money in the long run.
5 Tax Mistakes for Last-Minutes Filers to Avoid
Don’t get sloppy while playing “Beat the Clock”.
Five of the Best Personal Finance Tools
Users share their favorites.
Dear Liz: I went with my brother to his credit union to refinance his house and found out his wife has about eight medical bills that went to collections and he owes a phone company more than $2,000. Their debt totals about $6,300. I could lend them the money or they could do a debt consolidation or talk to a credit counselor. What’s your opinion on these options?
Answer: None of these options is likely to work the way you hope.
Your brother should be wary of any “debt consolidation” offers he gets, as many will be scams and others will charge outrageous interest. The collections accounts have trashed the couple’s credit, which means mainstream lenders will probably avoid them until their situation improves.
The debt management plans offered by legitimate credit counseling agencies, meanwhile, are designed to help people pay off credit card bills, not past-due medical or phone bills. A credit counselor may give the couple some helpful budgeting advice to enable them to pay their debts, but it typically wouldn’t arrange payment plans.
Lending your brother the money would enable the couple to pay off the overdue bills. That won’t help their credit scores, however, unless your brother is able to persuade the collectors to remove the accounts from their credit reports. That’s often difficult to do, said debt collection expert Gerri Detweiler of Credit.com.
Your brother could start by asking the medical providers to take back any accounts that have been assigned to collectors and making payment arrangements directly with those providers. Medical collections are often on consignment and can be called back if the provider wishes.
The phone account, by contrast, was probably sold to a collection agency and can’t be reassigned to the original company. Even if your brother can’t get the account deleted from credit reports, he’ll probably need to pay or settle it if he hopes to refinance his mortgage because lenders usually don’t like to see open collection accounts.
Before you lend him the money, you should understand that loans to people with debt problems often don’t get repaid. If you can’t afford to lose this money, don’t lend it.
Today’s top story: What parents and students need to know about financial aid. Also in the news: Using your smartphone or tablet to clean up your finances, tax tips for procrastinators, and what to do when your teenager has become a financial disaster.
Eight Financial Aid Secrets That Parents And Students Need To Know
What you need to know before filling out the FAFSA.
12 Powerful Ways Data Can Help Clean Up Your Finances
Putting your smartphones and tablets to work.
6 tax tips for procrastinators
Help! My Teen is a Money Monster
What to do when your kid is out of financial control.
How to Budget For Health Care Expenses in Retirement
Health care expenses will eat up a significant part of your retirement savings.
Liz, I’m 30 years old and looking into starting [to invest in] mutual funds and IRAs and have no idea where to start. I know I really need to invest for the future and am eager to do so, but again, have no knowledge on any of this nor know where to start. Any advice or pointers would be more than appreciated.
I suggested he start with reading two really good books for beginning investors, Kathy Kristof’s “Investing 101″ and Eric Tyson’s “Personal Finance for Dummies.” But here’s a summary of what you’ll learn:
Get started investing as soon as possible, even if you don’t quite know what you’re doing. You’ll learn along the way, and you really can’t make up for lost time.
Invest mostly in stocks. Stocks over time offer the best return of any investment class, and provide you the inflation-beating gains you’ll need for a comfortable retirement.
Don’t try to beat the market. Few do consistently. Most people just waste a lot of money. Instead, opt for mutual funds or exchange traded funds that try to match the market, rather than beat it.
Keep fees low, low, low. Wall Street loves to slather them on, but fees kill returns. Here’s an example: An annual IRA contribution of $5,000 can grow to about $1 million over 40 years if you net a 7 percent average annual return. If you net 6 percent, that lowers your total by a $224,000. That’s a heck of a lot to pay for a 1 percentage point difference in fees.
If you have a workplace retirement plan such as a 401(k), that’s where you should start investing. If you don’t, then an IRA you open yourself is the next best thing.
So here’s a prescription for getting started: Open an IRA at Vanguard, which prides itself on its low expenses. Send them a check for $1,000 (the minimum to get started with an IRA). Choose a target date retirement fund that’s close to the year when you expect to retire (in this reader’s case, that would be the Vanguard Target Retirement 2050). Target date funds take care of everything: asset allocation, investment choices, rebalancing over time for a more conservative mix as you approach retirement age. You can get the $20 annual account fee waived if you sign up for online access and opt for electronic delivery of account documents.
There you go–you’re on your way.