Wednesday’s need-to-know money news

HomeInheriting Grandma’s frequent-flier miles, how to pay less for homeowner’s insurance, and what you need to know about rising interest rates.

How Student Loans Can Hurt Your Mortgage Application
Those pesky student loans can reduce your ability to borrow money.

Can You Inherit or Transfer Your Frequent-Flier Miles?
What happens to Grandma’s miles after she takes her final flight?

How to Reduce Your Home Insurance Costs
Home insurance doesn’t have to break the bank.

The Best Children’s Books for Money Lessons
It’s never too early to start teaching kids how to manage their money.

5 Things to Know About Rising Interest Rates
How to navigate the new lending environment.

Tuesday’s need-to-know money news

My first carHow to speed up your mortgage closing, saving more money with a maxed out 401(K), and preparing for your teenager’s time behind the wheel.

Four Steps to a Speedier Mortgage Closing
Speeding up the last, agonizing step before home ownership.
How Rising Interest Rates Affect Retirement
Rising interest rates could leave you altering your retirement plans.
Maxed Out on Your 401(K)? How to Save More
Maxing out your 401(K) doesn’t mean you should stop saving.
The Impact of Adding a Teenager to Your Auto Policy
Prepare to open your wallet when Junior’s ready to get behind the wheel.

How to Budget as a Live-In Couple
Creating a budget can make a stressful time much easier.

Our #CreditChat is about to begin!

liz-westonIn a few minutes I’ll be answering your questions about how to deal with your debt on Experian’s #CreditChat, which starts at 3 p.m. Eastern/noon Pacific today. Topics include how to balance savings and paying off debt, which debts to tackle first, how to handle student loans and what to do if you’re drowning in debt. Easy ways to follow the conversation include Twubs or tchat.

Please join us!

Tuesday’s need-to-know money news

Handsome man in garageTips on summer finances, the dangers of excessive mortgages and how not to turn your home into a money pit.

How to Save More Money This Month
Six ideas to help you get through June without breaking the bank.

No, You Shouldn’t Take Out the Largest Mortgage Possible
Don’t be tempted by still-low mortgage rates.

How to Give Your Finances a Summer Makeover
Ten tips on strengthening your finances over the summer months.

Nail Your Home Renovation Budget
How to ensure your home does not become a money pit.

How to Avoid a Summer Vacation Disaster
Don’t let your summer vacation turn into a summer nightmare.

Thursday’s need-to-know money news

YCS4 coverGood credit, stolen credit and ways to save on travel to the vacation home you should have purchased when mortgage rates were historically low.

Five Reasons Why You Can’t Ignore Your Credit

While living debt free is a good thing, living credit free can have unforeseen and expensive consequences.

Here’s Everything We Know About The Rakuten/Buy.com Credit Card Breaches

If you’ve shopped at the online marketplace recently, you should pay very close attention to your statements.

26 Secrets to Save on Travel

Flying on a Saturday afternoon may not sound like fun, but it could save you big bucks.

Farewell 3% Mortgage Rates

Job gains and an improving economy signal the end of historically low mortgage rates.

Homeownership isn’t for everyone

Dear Liz: I’ve gone back and forth over whether to buy property to live in. I would only consider a condo, because I don’t think it’s ecologically responsible for a single person to live in a stand-alone house, plus I have no interest in or aptitude for maintenance. But through family and friends’ experiences, I’m worried that condos can be a nightmare to own. That leaves me stuck with renting, which gives me flexibility. I also live in an extremely expensive area (Boston) and do contract work, so purchasing something I would want to live in might be tricky. But I feel I’m being barraged by people telling me that renting is a losing proposition and that buying is great for my future. I’d rather keep putting money away in my retirement funds, but I wonder if I’m just refusing to “be responsible” as others say. I have no debt at all, so I feel responsible.

Answer: You would think the recent economic unpleasantness would have cured people of the idea that homeownership is right for everyone all the time.

Real estate investors often tout the benefit of “leverage”–using borrowed money to control an asset that can appreciate in value. As we learned, though, leverage can work both ways and can leave you owing more than a property is worth.

In reality, much of the financial benefit of homeownership comes from the “forced savings” aspect of paying down a mortgage. Homes do tend to appreciate in value over time, but on average the appreciation usually doesn’t exceed the overall inflation rate. Plus homes are expensive to own and maintain, which can dramatically reduce the return on your investment. Investments in stocks and stock mutual funds probably will give you a better return over the long haul, and you’ll never have to buy a new roof for them.

Homeownership can be a good idea if you can afford all the costs, plan to stay put for several years and truly want to be a homeowner. Otherwise, renting gives you freedom and flexibility. That’s neither irresponsible nor a losing proposition.

Should you pay to boost your credit scores?

Dear Liz: I’ve seen advertisements for services that promise to help you raise your credit score by the exact number of points you need to qualify for a good mortgage rate. Are these services worth the money?

Answer: There’s one thing you need to know about these services: They don’t have access to the actual FICO formula, which is proprietary. So what they’re doing is essentially guesswork.

They may suggest that you can raise your score a certain number of points in a certain time frame, but the FICO formula isn’t that predictable. Any given action can have different results, depending on the details of your individual credit reports.

Rather than pay money to a firm making such promises, use that cash to pay down any credit card debt you have. Widening the gap between your available credit and your balances can really boost your scores. Other steps you should take include paying your bills on time, disputing serious errors on your credit reports and refraining from opening or closing accounts.

My book is out! Get it for free.

DWYD cover2013Deal with Your Debt” is now available, and I’m giving away five copies this week.

To enter to win, leave a comment here on my blog (not my Facebook page).

Click on the tab above the post that says “comments.” Make sure to include your email address, which won’t show up with your comment, but I’ll be able to see it.

If you haven’t commented before, it may take a little while for your comment to show up since comments are moderated.

The winners will be chosen at random Friday night. Over the weekend, please check your email (including your spam filter). If I don’t hear from a winner by noon Pacific time on Monday, his or her prize will be forfeited and I’ll pick another winner.

Also, check back here often for other giveaways.

The deadline to enter is midnight Pacific time on Friday. So–comment away!

Skip a payment, trash your scores

Dear Liz: We are trying to negotiate our second mortgage and have not paid it since June. Will this affect my wanting to purchase an auto?

Answer: It may not affect your desire to purchase a car, but it’s likely to affect the actual transaction if you’re not able to pay cash.

Failing to pay a credit obligation can devastate your credit scores, the three-digit numbers lenders use to gauge your creditworthiness. The worse your scores, the less likely you are to find a lender willing to do business with you. Even if you can secure a loan, it’s likely to come with a scandalously high interest rate.

Selling home could ease student loan burden

Dear Liz: Your answer to the parents with $200,000 in student loans for their daughters’ educations was interesting — and cautionary. I wonder, since they mentioned refinancing their home, why not explore using their equity by selling the home and renting?

Depending on the amount they have in the home, they might be able to fund more retirement as well as reduce the loan balance. Also depending on the size of the mortgage, they might be able to rent for the same monthly amount or less. Presumably, their house was big enough for four, but now they could “live well with less.” And be more flexible.

Answer: The writer did mention getting a new mortgage, but didn’t say whether it was a refinance or a modification, or whether the couple had any equity in the home. Although a conventional refinance requires considerable equity, a mortgage modification or a refinance made through the government’s HARP program would not require that they owe less than the house is worth.

If they do have equity, it would be worth considering using at least some of it to alleviate their debt burden and supplement their retirement funds. If they don’t have equity, selling the house might still be an option if they could substantially reduce their living costs. Given that their income plunged by more than half, they would be smart to cut their expenses as far as possible to free up money to save for retirement and pay their debts. Taking such a big step down in their lifestyle might be painful, but it’s often to better to do so now rather than risk being old and broke.