Get smart with your money
The best personal finance advice is tailored to your individual situation. That said, a few rules of thumb can cut through the confusion that often surrounds money decisions and help you build a solid financial foundation.
In my latest for the Associated Press, guidelines for saving, borrowing, spending and protecting your money culled from nearly three decades of writing about personal finance.
Today’s top story: Cash back, miles, or…wine? Credit card rewards are evolving. Also in the news: A new episode of the Smart Money podcast on why you should question your bills and how to make the most of a raise, Medicare’s telehealth experiment could be here to stay, and the best way to ask for a cost-of-living increase.
Cash Back, Miles or … Wine? Credit Card Rewards Are Evolving
If cash back and travel feel blah, a new crop of credit cards will reward you in different ways.
Smart Money Podcast: Why to Question Your Bills, and Making the Most of a Raise
Medicare’s Telehealth Experiment Could Be Here to Stay
An astronomical increase in telehealth visits by Medicare beneficiaries in 2020 could prompt a reshaping of post-pandemic rules.
The Best Way to Ask for a Cost-of-Living Raise
Inflation rates are the highest they’ve been in 30 years.
Dear Liz: I am 83 and have always been employed and a regular saver. I find myself in the unusual position of having amassed a considerable estate and, barring a financial or medical catastrophe, probably having more assets than I will use in my lifetime. Of course these assets will pass to my wife or other heirs on my death, but I would like to help them now. I am considering passing on monies to my sons and grandchildren. I find it hard to believe, but is it correct that I can give up to a total of $15,000 per year ($30,000 for a husband and wife) to my children and grandchildren in a given calendar year without federal or state tax implications for either party? Also, does the recipient need to be a close relative for this transaction to take place without creating a tax liability for either entity?
Answer: Right now you can give away millions of dollars without owing gift taxes. Gifts are tax-free to the recipient, and there’s no requirement that they be a relative.
The annual gift exemption limit of $15,000 is how much you can give away per recipient without having to file a gift tax return. You and your wife together could give $30,000 to as many people as you wanted without having to file such a return. If you have two married sons who have three children each, you and your wife could give each family of five $150,000 or a total of $300,000 without having to file a gift tax return.
Gift taxes aren’t due until the amount you give away over the annual limit exceeds the lifetime gift and estate exemption limit, which currently is $11.7 million per person.
Given your age and affluence, you should be working with an experienced estate planning attorney to make sure your assets go where you want after your death. The attorney can discuss smart gifting strategies for your individual circumstances.
Dear Liz: Have you ever covered the fact that the credit score that a person receives from the reporting agencies is entirely different from the one provided to lenders? The difference I discovered was 819 vs. 710. I’m a retired lawyer who represented investors in securities arbitration for 20 years, so not easily shocked or surprised by financial fraud, but I was.
Answer: The fact that there are many different scoring formulas has come up frequently in this column. What you consider to be fraud is actually a manifestation of capitalism.
Credit bureaus are private, competing companies. So are the creators of scoring formulas. Lenders and other companies that use credit scores have many to choose from.
FICO is the leading credit scoring formula, but rival VantageScore has gained market share in recent years.
Both types of scores come in multiple versions. The latest version of the FICO is the FICO 10, although the FICO 8 continues to be the most-used score.
Meanwhile, mortgage lenders tend to use much older versions of the FICO formula. Scores also can be tweaked for different types of lending, such as auto loans or credit cards.
Credit bureaus have created their own proprietary scores, as well. What this means is that the same underlying data — what’s in your credit report at a given credit bureau — can create significantly different FICO scores, depending on which FICO formula was used.
Even the same type of score, such as a FICO 8, could vary depending on which credit bureau’s information was used and when the score was “pulled” or created. The credit bureaus typically don’t share information with one another. Plus the information in your credit reports is constantly changing as information is added or deleted.
So it isn’t shocking that the score your lender used was different from the one the credit bureau provided you. What would have been surprising is if the number had been the same.
Today’s top story: Medicare’s telehealth experiment could be here to stay. Also in the news: 4 best practices to simplify your small business, how Omicron could impact your travel, and 7 things to buy early this holiday season.
Medicare’s Telehealth Experiment Could Be Here to Stay
An astronomical increase in telehealth visits by Medicare beneficiaries in 2020 could prompt a reshaping of post-pandemic rules.
Can’t Keep Up? 4 Best Practices to Simplify Your Small Business
These best practices can help small-business owners simplify daily operations, free up time and focus on company growth.
Omicron, Travel Bans and How They Could Impact Your Trip
As countries rush to impose travel bans amid the omicron COVID-19 variant, here’s what you need to know.
7 Things to Buy Early This Holiday Season
Between limited inventory and shipping delays, here’s what you need to buy early this holiday shopping season.
Today’s top story: How to maximize your health span. Also in the news: Home affordability for first-time buyers, 6 steps to higher net worth, and how to avoid a tax bomb when selling your home.
How to Maximize Your ‘Health Span’
We’re living longer on average, but the number of years we’re healthy hasn’t kept up.
First-Time Home Buyer Metro Affordability Report — Q3 2021
Home affordability for first-time buyers was stable in the third quarter of 2021.
6 Steps to Higher Net Worth: A Year-End Financial Checklist
Review your health insurance and retirement contributions, prepare for tax time and monitor your credit.
How to avoid a tax bomb when selling your home
Write-off thresholds have stayed the same for decades.