Ask Liz Weston

Get smart with your money

Liz Weston

This week’s money news

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This week’s top story: First-time home buyer affordability report – Q2 2024. In other news: September mortgage outlook, weekly mortgage rates drop, and pay interest while in school.

First-Time Home Buyer Affordability Report – Q2 2024
Making a larger down payment or choosing a less desirable home could make this initial purchase easier, but not all homebuying hopefuls will find those options possible.

September Mortgage Outlook: Rates Should Fall Again
Mortgage rates have fallen four months in a row, and they’ll probably go down in September and extend the streak to five months.

Weekly Mortgage Rates Drop, Easing Affordability
Mortgage rates fell this week after the chair of the Federal Reserve uttered long-awaited, market-moving words.

Want Cheaper College? Pay Interest While in School
Making optional student loan payments while you’re in school or during your grace period can save thousands in the long-run.

Q&A: After her husband died, a widow’s credit limit plummeted

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Dear Liz: You’ve mentioned how important it is for spouses to each have credit cards on which they are the primary account holder. My husband died last year. We had a credit card with statements that showed the charges we each had made on our separately numbered credit cards. I found the account was in his name only. I had to get a new credit card in my own name, and the credit limit dropped from $75,000 to $7,000. Hope this warns others.

Answer: It bears repeating that most credit cards these days are not joint accounts. If two of you are using a card, one is probably the primary account holder and the other the authorized user.

After a primary account holder dies, credit card companies are often willing to work with surviving spouses who were authorized users to establish new accounts. But as you experienced, the credit limits for these new accounts may be much lower than those of the original.

Q&A: Beware the insurance salesperson in financial planner’s clothing

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Dear Liz: Do you have any general advice for choosing a tax preparer? My financial advisor has recommended switching my 403(b) contributions over to Roth 403(b) with the same investment plan. I am worried that this could put us at risk for a higher tax bracket currently.

Answer: Ideally, a financial advisor wouldn’t recommend switching to a Roth option without knowing a fair amount about your current and future tax situations. Otherwise, the advisor wouldn’t be qualified to determine whether giving up the current tax break is likely to pay off later.

Unfortunately, not all financial advisors are truly qualified to give the advice they do. Some, particularly those advising people about 403(b) investments, are insurance salespeople rather than fiduciary financial planners.

You can get referrals to tax pros from the National Assn. of Enrolled Agents and your state’s chapter of certified public accountants. (The American Institute of CPAs has compiled a list of those at its website.) Both enrolled agents and CPAs are fiduciaries who promise to put your best interests first.

For broader financial advice, consider getting referrals from one of the organizations representing fee-only fiduciary planners such as the Garrett Planning Network, the XY Planning Network, the National Assn. of Personal Financial Advisors and the Alliance of Comprehensive Planners.

Also, teachers should consider spending some time on the nonprofit 403bwise website, which grades school districts’ retirement plans and seeks to educate teachers about the costs of trusting the wrong people.

Q&A: A parent had life insurance, but the companies are gone. What to do?

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Dear Liz: My mother died last year. I discovered she had two old life insurance policies written by companies that no longer exist. How can I determine which modern insurance company is responsible for policies written by these old companies? How can I submit a claim? My mother was born in 1932. The first policy began 1939 for $350. The second began in 1943 for $600.

Answer: It’s not a given that a modern insurer still has these policies, but it’s possible. You can start by entering the old companies’ names in an internet search engine to see whether new owners are mentioned in the results. If that doesn’t work, contact the insurance department in the state where the old company was headquartered because it will have records of mergers or other changes.

If the company went bankrupt, you’ll need to consult the guaranty association in the state where your mother lived. State guaranty associations protect policyholders when an insurer defaults or becomes insolvent. The National Organization of Life and Health Insurance Guaranty Assns. has a search tool you can use to find the correct association.

Another option is to check the life insurance policy locator service offered by the National Assn. of Insurance Commissioners at https://eapps.naic.org/life-policy-locator/#/welcome. You’ll need to input your mother’s Social Security number as well as her dates of birth and death.

Also check the unclaimed property offices of any states where she lived. You’ll find links at unclaimed.org.

This week’s money news

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This week’s top story: 6 milestones and how they might change your life insurance needs. In other news: First EV road trip, weekly mortgage rates, and how to land the financial helicopter to support grown kids.

6 Milestones and How They Might Change Your Life Insurance Needs
Getting married, welcoming kids and starting a business are some reasons you might be thinking about life insurance.

What I Learned From My First EV Road Trip
If you’re new to electric cars or just curious about what a road trip with one is like, here’s what I learned from my cross-state drive.

Weekly Mortgage Rates Remaining Low Could Offset Higher Prices
Mortgage rates held mostly steady during the week ending Aug. 22, as mortgage lenders rolled with the punches.

Supporting Grown Kids? How to Land the Financial Helicopter
Most parents financially support their young adult children. Communication and deadlines can help.

Are two savings accounts safer than one?

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Dear Liz: My wife and I will be receiving a sizable amount of money. We want to put the money into a high-yield joint savings account. We don’t want to exceed the FDIC protection. Can we each open joint accounts at the same bank and have each account covered up to the $250,000 limit?

Answer: That’s not quite how it works.

FDIC insurance is per depositor, per ownership category. Ownership categories include single accounts, joint accounts, certain retirement accounts such as IRAs and trust accounts, among others.

A joint account for the two of you would be covered up to $500,000, or $250,000 for each owner. A second joint account at the same bank would not increase your insurance coverage. If you had one joint account plus two single accounts, then your total coverage at the bank would be $1 million ($500,000 for the joint account, plus $250,000 for each individual account).

This assumes none of the accounts has beneficiaries. Naming one or more beneficiaries turns either joint or single accounts into trust accounts, for insurance purposes. Each owner of a trust account is covered up to $250,000 per beneficiary, to a maximum of $1.25 million for five or more beneficiaries.