Liz Weston

Wednesday’s need-to-know money news

August 28, 2019 By Liz Weston

Today’s top story: Save more money for your next vacation with this simple trick. Also in the news: How LexisNexis identity mix-ups could be scrambling your finances, how to review your LexisNexis report and fix errors, and all the ways your credit card use reveals personal info.

Save More Money for Your Next Vacation With This Simple Trick
You won’t even miss the money.

LexisNexis Identity Mix-Ups Could Be Scrambling Your Finances
Your Comprehensive Loss Underwriting Exchange could contain errors.

Check Yourself: How to Review Your LexisNexis Report and Fix Errors
Getting your information straight.

All The Ways Your Credit Card Use Reveals Personal Info
Privacy is a myth.

Tuesday’s need-to-know money news

August 27, 2019 By Liz Weston

Today’s top story: What to buy (and skip) in September. Also in the news: Why streaming services are the new credit card rewards binge, hard-won tips from borrowers who got student loan forgiveness, and why podcasts can actually push people to start saving for retirement.

What to Buy (and Skip) in September
September is the month of big sales.

Why Streaming Services Are the New Credit Card Rewards Binge
Millennial-friendly reward categories.

Hard-Won Tips From Borrowers Who Got Student Loan Forgiveness
You’ll need lots of patience.

Why podcasts can actually push people to start saving for retirement
Catch up on your retirement planning while driving to work.

Who gets your digital assets – heirs or hackers?

August 27, 2019 By Liz Weston

A bank or brokerage can’t just take your money when you die. If you don’t have a will or other estate plan, the laws of your state determine who gets the value in those accounts.

Your digital assets are a different story. Your online photos and videos, frequent flyer miles, cryptocurrency and other digitally stored files may well disappear without a trace if you don’t make a plan to pass them along.

In my latest for the Associated Press, steps you can take to secure and protect your digital information.

Q&A: Why not to prepay a mortgage

August 26, 2019 By Liz Weston

Dear Liz: I want to save interest by making biweekly mortgage payments. My loan company said I couldn’t do that, but I wondered if there was a way by first paying the monthly mortgage and then making a half payment mid-month toward the next month’s due date, to get started. Then I’d make another half payment at the beginning of the following month. Ideally, this would all be arranged with autopay. I’m retired with a 4%, 30-year mortgage that has a $1,900 monthly payment and my retirement accounts are currently paying better returns.

Answer: You actually won’t save any interest until your mortgage is paid off, which could be 25 years from now if your mortgage is relatively recent. And getting a better return from your investments is a good reason not to accelerate your mortgage payments. You also shouldn’t prepay a mortgage if you have any other debt, lack a substantial emergency fund or are inadequately insured. (Those who are still working also should be maxing out their retirement contributions before making extra mortgage payments.)

With a biweekly payment plan, you’d pay half your monthly mortgage payment every two weeks. Instead of making 12 payments a year, you make the equivalent of 13 payments. Paying the extra amount helps you pay off the mortgage sooner. A bi-weekly payment plan would shave about four years off a $400,000 mortgage at 4%. The interest savings kick in once you’re mortgage-free. Then you’d save the $47,000 or so in interest you’d otherwise pay in the final years of the loan.

If you’re determined to do this, you should talk to your mortgage lender, because the arrangement you’re describing sounds a lot like the biweekly payments it won’t accept. You could hire a company that specializes in these arrangements, but the fees you pay for the service detract from your savings and aren’t really necessary. Instead, consider simply making an extra payment against the principal each month. Ask your lender how to set this up with autopay so that you’re actually paying principal. Otherwise, the extra amount might just be applied to the next month’s payment, defeating the purpose.

Q&A: Can this marriage’s finances be saved?

August 26, 2019 By Liz Weston

Dear Liz: I am 64 and my husband is 63. I retired five years ago after a 30-year professional career. My husband is an executive and plans to work until 70. We own two homes and one is a rental property. Both our boys are successfully launched. Currently, 67% of our retirement money is in stocks and stock index funds. The rest is cash and IRAs or 401(k)s. I am working on re-allocating that 67% to safer investments, but our two investment advisors don’t even agree on what that would look like. And my husband does not want to leave potential stock market gains. Help! I think it is time to switch to more conservative investments. What do you think?

Answer: Many financial planners would say you should only take as much risk as required to in order to reach your goals. Exactly what that looks like depends on how much you’ve saved, how much you spend and how much guaranteed income you expect to receive from Social Security, pensions and annuities, among other factors.

Most people need a hefty exposure to stocks in retirement to get the returns they’ll need to beat inflation, but whether that proportion is 30% or 60% depends on their individual circumstances. Your current allocation could be fine if your basic expenses are entirely covered by guaranteed sources (Social Security, pensions, annuities) and you want to leave a substantial legacy for your sons. Or you could be way overexposed to stocks and vulnerable to a downturn if you’ll need that money for living expenses soon.

Your IRAs and 401(k)s are not investments, by the way. They’re tax-deferred buckets to hold investments. How that money is allocated among stocks, bonds and cash matters as much as how your other investments are allocated and should be included when calculating how much of your portfolio should be in stocks.

If neither of your investment advisors is a certified financial planner, consider seeking one out to create a comprehensive financial plan for you and your husband. The plan should consider all aspects of your finances and give you a road map for investing and tapping your retirement savings. You can find fee-only financial advisors through the National Assn. of Personal Financial Advisors, the XY Planning Network, the Alliance of Comprehensive Planners and the Garrett Planning Network.