Today’s top story: six steps to building a bullet proof retirement portfolio. Also in the news: what your everyday expenses actually cost you, what you shouldn’t buy at a dollar store, and how to use Pinterest to map out your budget.
6 steps to a bulletproof retirement portfolio
How to get the ball rolling.
Take Control of Your Spending: What Everyday Expenses Actually Cost
You’ll be surprised by what you’re really spending.
5 things not to buy at dollar stores
In honor of Dollar Tree purchasing Family Dollar, find out which products aren’t worth the low price.
5 Ways to Use Pinterest to Plan Your Budget
The social media time vacuum could help you save money.
Today’s top story: How to keep your energy costs down during summer’s hottest weeks. Also in the news: Why paying rent with a credit card could be a good thing, five signs of a financially needy friend, and lifehacks that’ll help you save money.
6 Ways to Beat the Heat Without Making Your Wallet Sweat
Staying cool and thrifty as the dog days of summer approach.
Paying rent with a credit card can make sense
Being rewarded for paying one of the essentials.
Time to Cut Them Off: 5 Signs You Have a Financially Needy Friend
Knowing when to say when.
Dear Liz: I don’t know where to turn. My husband is 76. He has a federal government pension and collects Social Security but he has only a $17,000 life insurance policy. We still have a $229,000 mortgage and no savings other than my small 401(k). I am 59 and also a federal worker. Do you have any suggestions or guidance for me? Is there such a thing as an insurance policy that could pay off the mortgage if he passes before me?
Answer: Buying a life insurance policy on your husband that would pay off your mortgage isn’t necessarily impossible, but it would be expensive and might not be the best use of your funds. You can explore that option, of course, but you also should research your own retirement resources and what’s likely to remain after he’s gone.
Will your husband’s pension make payments to his survivor or will it end when he dies? How much will your own federal pension pay you when you retire? How much will Social Security pay you, and how does that compare with your survivor’s benefit (which is essentially equal to what your husband is receiving when he dies)? What are your options for maximizing those benefits?
You also need to know if your Social Security benefits could be reduced because of your public pensions. Some federal employees and employees of state or local governments receive pensions based on earnings that were not subject to Social Security taxes. When that’s the case, their benefits could be reduced by the Windfall Elimination Provision or the Government Pension Offset. Most federal employees hired after 1983 are covered by Social Security, but just in case you should check out the information at http://www.ssa.gov/gpo-wep/.
Once you have an idea of your income as a widow, you can compare that with your expected expenses and see whether continuing to pay your mortgage will pose a burden. If that’s the case, you might consider downsizing now to a place you could afford to buy with cash or a much smaller mortgage. Reducing your expenses also could help you build up that 401(k), which will help provide you with a more comfortable retirement.
Establishing a relationship with a fee-only planner now will help you prepare for the future and give you someone to turn to for financial advice should you be left on your own.
Dear Liz: I have really bad credit. I always have because I have never really had any money. So now I am inheriting a lot of property and some cash. Most of the property is rental properties that bring in income. There are no mortgages on them. I may want to sell one or two of them and buy a four- or five-unit apartment building so I can live in one and rent the others out. How do I do that? Unfortunately, it isn’t happening as quickly as it should since one of my siblings thinks it is all hers. So I have to go through litigation first.
Answer: Let’s start with some reality checks.
The kind of litigation you’re talking about can get expensive fast and eat into the estate’s assets. If your sister happens to be the executor, she may be able to have the estate pay for her defense. You’ll need to come up with the money to hire your own attorney to advise you, but often in these cases a settlement makes a lot more sense than a family war.
The next reality check has to do with your bad credit. Yes, it’s harder to pay your bills on a low income, but people do it. In fact, income is not even a factor in credit scoring formulas, since how much money you make doesn’t predict whether you’ll pay your debts. If you have bad credit, it’s because you borrowed money that you didn’t pay back on time, not because you “never really had any money.”
What will change if you get your hands on a substantial amount of money is that your creditors will renew their efforts to get paid. You’ll probably need some more legal advice to deal with those efforts and to avoid getting sued.
What probably won’t change, without some effort, is your poor money management skills. If you don’t improve, you’ll probably blow right through your inheritance. So you should add to your list of advisors a fee-only planner who can help you with budgeting, rebuilding your credit, investing and retirement planning. Seeking good advice and following it are the key to making money last. You can get referrals to fee-only planners from the Garrett Planning Network, http://www.garrettplanningnetwork.com. Another option is the National Assn. of Personal Financial Advisors at http://www.napfa.org.
Today’s top story: How to escape the big banks and their fees. Also in the news: What not to buy at the big warehouse clubs, getting a credit card with poor credit, and why you should pay yourself first before paying any other bills.
Plot Your Escape From the Big Fees of Big Banks
Why give them more of your money?
What not to buy at warehouse clubs
Put back the three gallon drum of mustard.
Are You Paying Yourself First? The Money Habit That Can Boost Wealth
Don’t wait until you’ve paid everything else before taking care of you.
Surprising ways to pay for your dream trip abroad
Turning your dream trip into a reality.
Today’s top story: Are you behind the financial times? Also in the news: How to better organize your bills, talking with your family about inheritance, and learning the five parts of your credit score.
6 Signs You’re Behind the Financial Times
Still writing checks?
4 Ways to Better Organize Your Bills
And kiss late fees goodbye in the process.
On Inheritance, UBS Urges Families to Break the Silence
The importance of difficult conversations.
Everyone Should Know the 5 Parts of a Credit Score; Do You?
Let’s find out.
5 Ways to Make Peace With Money
What to do when money is your nemesis.
Today’s top story: What happens when couples disagree on the right time to retire? Also in the news: Bad financial habits you could be passing on to your kids, understanding charge-offs, and how to avoid extra costs when renting a car this summer.
When couples disagree on when to retire
Hot to reach common ground.
5 Bad Financial Habits You May Be Passing On to Your Children
Not the kind of legacy you want to leave.
I Paid My Debt. Why is it Still ‘Charged Off’?
Understanding your credit report.
7 Costly Car Rental Mistakes to Avoid
Don’t pay more than you already have to.
10 Terms You Need to Know If You Ever Plan to Retire
Becoming familiar with the vocabulary of retirement.
Today’s top story: How early withdrawals can take a chunk out of your retirement savings. Also in the news: The smart way to go into debt, retirement mistakes you need to avoid, and three ways consumers become victims of identity theft.
How Early Withdrawals Can Tax Your Retirement Savings
Taxes and penalties abound.
The Smart Ways to Go Into Debt
Yes, you read that correctly.
The 7 Retirement Mistakes That Finance Experts Tell Their Clients to Avoid
You don’t want to make these.
3 Ways Consumers Fall Victim to Identity Theft
You’ll want to avoid these, too.
Laziness Can Cost You: 5 Ways Renters Set Themselves Up for Failure
Due diligence and research is an absolute must.
Today’s top story: How to raise kids who are smart about money. Also in the news: How to save on your trip to Disney World, deciding when to hire a financial adviser, and the five things identity thieves are hoping you’ll do.
3 Ways You Can Raise Kids Who Are Smart About Money
Starting them off early.
Twelve Money-Saving Tactics for Disney World
Don’t turn your wallet over to Mickey.
When is the right time to hire a financial adviser?
Knowing when it’s time to get help.
5 Things Identity Thieves Want You to Do
Don’t give the jerks what they want.
Risk and Responsibility: Should You Cosign on a Loan?
Assessing a huge responsibility.