Ask Liz Weston

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Liz Weston

How to buy stuff that lasts

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Savvy consumers consider price, performance and reliability when making a major purchase, such as a car or home appliance. The greatest of these is reliability — particularly lately.

Supply chain disruptions can mean long waits for parts or replacements if something breaks. Getting a new refrigerator, dishwasher or other major appliance now often takes weeks or even months, says Paul Hope, home and appliances writer for Consumer Reports. Plus, the microchip shortage means many manufacturers prioritize making their most expensive models, which are typically the most profitable, Hope says.

“It’s getting increasingly difficult to get some of the inexpensive models of any given product,” Hope says.

In my latest for the Associated Press, how to find truly reliable and durable products.

Monday’s need-to-know money news

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Today’s top story: How to afford big-ticket items for the year. Also in the news: A new episode of the Smart Money podcast on summer travel tips and conflicting financial priorities, how a Burbank teacher got their student loans forgiven, and 4 smart ways to teach kids about saving money.

How to Afford Big-Ticket Items for the Year
If you need to make a big purchase this year, such as furniture or an appliance, plan around sales and your budget.

Smart Money Podcast: Summer Travel Tips and Conflicting Financial Priorities
This week’s episode starts with a discussion about summer travel: how to manage costs, stay safe and prepare for the possibility of flight cancellations.

How I Got My Student Loans Forgiven: Teacher in Burbank, California
A fraught program gets temporary improvements.

4 Smart Ways to Teach Kids About Saving Money
Kids can learn to save by talking about money, securing a strong savings account and setting trackable goals.

Q&A: How to avoid Medicare late enrollment penalties

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Dear Liz: I am 65, still working and have health insurance through my employer. I have not enrolled for Medicare and have been told I do not need to. I plan to once I retire. There is a passage in my Social Security statement that says, “Because you are already 65 or older, you should contact Social Security to enroll in Medicare. You may be subject to a lifetime late enrollment penalty. Special rules may apply if you are covered by certain group health plans through work.” I have tried to research further through the Medicare website but can’t find a clear answer about whether or not I am OK not enrolling at this time.

Answer: If your employer has 20 or more employees, then you’re fine for now. When you stop working for that employer, you’ll have eight months to sign up for Medicare without owing penalties.

If you want your Medicare coverage to start when your job-based coverage ends, though, you should sign up a month before you retire. Similar rules would apply if you were covered by a spouse’s workplace health insurance plan. As long as your spouse is still working for the employer that provides the coverage, you can avoid permanent Medicare penalties.

If your employer has fewer than 20 employees, however, you may be required to sign up for Medicare when you’re first eligible. Check with your employer.

Q&A: Newlyweds’ home sale taxes

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Dear Liz: You recently wrote about how home sales are taxed but I have a question. My son was single when he bought his condo. He is now married and planning on selling it. Does he qualify for the $250,000 exclusion or the $500,000 exclusion?

Answer: As you know, the exclusion allows home sellers to avoid capital gains taxes on a certain amount of profits as long as they owned and lived in the home at least two of the previous five years. With married couples, only one spouse needs to meet the ownership test but both must meet the “use” test. In other words, both your son and your son’s spouse must have lived in the home for at least two years before the sale for the couple to qualify for the $500,000 exclusion. The couple must file a joint return in the year they sell the condo, and neither spouse can have excluded gain from the sale of another home during the two-year period before selling this home.

Q&A: Credit scores and usage

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Dear Liz: Thanks for your recent column about how credit scores react to heavy credit card usage. We pay our credit cards in full each month but recently we had big charges on three cards for vacations, home supplies and other purchases. I am the primary account holder on all three cards and my credit scores tanked! I even got email warnings about it from my credit monitoring service.

I have paid off two of the cards and will pay off the third one soon. My husband has one credit card in his own name that he occasionally uses and he is an authorized user on the others. I have always been the fanatical financial partner so he thinks it’s funny he has great scores and I look like a loser! Good thing we were not planning to do a house purchase or refinance the mortgage.

Answer: Pretty soon your husband will have to find something else to tease you about. Your scores are likely to return to their previous levels once the high balances are paid off and you return to your normal spending habits.

Many people are surprised by how dramatically credit scoring formulas react to the amount of available credit they’re using. But this knowledge can help you the next time you’re planning to get a major loan.

For example, you could throttle back your credit card usage starting a couple of months before your application. Alternatively, you could make weekly payments instead of monthly ones to ensure the balances reported to the credit bureaus, and used in your scores, are as low as possible.

Another approach is to pay off your balance a few days before the statement closing date, since the balance on that date is the one that’s typically reported to the bureaus. (If any charges show up after you’ve paid off the balance, you’ll need to make a second payment before the due date to avoid late fees.)

Friday’s need-to-know money news

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Today’s top story: First-time car buyers battle skimpy supply, sticker shock. Also in the news: Can student loan borrowers handle payments and inflation, 4 money moves to make before the baby arrives, and how to avoid ATM fees with these debit cards.

First-Time Car Buyers Battle Skimpy Supply, Sticker Shock
How to buy your first car when it’s the worst time to buy a car.

Can Student Loan Borrowers Handle Payments and Inflation, Too?
After nearly two and a half years of pandemic relief, federal student loan payments will restart after the pause expires Aug. 31 — unless it’s extended for the seventh time.

4 Money Moves to Make Before Baby Arrives
Adjust your budget now to account for child care expenses and any income loss during parental leave.

Avoid ATM Fees With These Debit Cards
Or use these strategies to avoid ATM fees with the debit card you already have.