Tuesday’s need-to-know money news

401K Nest EggToday’s top story: The cost of spending your retirement money before you retire. Also in the news: How to build a high credit score from scratch, how to get over spending mistakes, and the boring secret to getting rich.

Should You Ever Spend Your Retirement Money Before You Retire?
It’ll cost you.

3 Steps To Build A High Credit Score From Scratch
A great opportunity for millennials.

Get Over Spending Mistakes With a “Money Regrets” Budget
Quit beating yourself up!

The Boring Secret to Getting Rich
Try not to fall asleep.

Q&A: Parental identity theft

Dear Liz: I have been dating my boyfriend for about eight months and he recently told me that his dad took out a credit card in his name when he was a baby. He has about $150,000 in debt because of this! This is a very serious, life-changing crime but my boyfriend is reluctant to take his dad to court. I’m worried about our future together and don’t know where to go from here.

Answer: Parental identity theft is unfortunately not uncommon — and the parents typically get away with it. Victims are reluctant to file the police reports necessary to clear their names because doing so could trigger criminal prosecutions of their family members.

If your boyfriend is not willing to file a police report, the debt is considered his and he probably will need to pay it, settle it or declare bankruptcy to move on with his financial life.

If he’s ready to hold his father responsible, the Identity Theft Resource Center at www.idtheftcenter.org has more information about filing police reports and starting the long process of cleaning up his credit.

Q&A: Credit card useage

Dear Liz: I recently refinanced my home and one of the perks was a 0% interest credit card. The problem is that I have two credit cards and I am happy with them, but I am afraid that having a third will adversely affect my credit score. I have no plans to borrow money in the near future but I can’t shake the feeling that it is a detriment to have the card. I haven’t activated the new card and I never carry a balance on either of the older cards I use. What do you advise?

Answer: The new card affects your credit reports and scores whether or not you activate it. Chances are good, though, that the overall effect will be positive.

Yes, your scores may have been dinged a few points when the new card was issued, but over time responsibly handling multiple credit cards will help, not hurt, your numbers.

Failing to use the card, on the other hand, could cause the issuer to close it, and that could negatively affect your scores.

Just do what you do with your other cards: Charge lightly (no more than about 30% of the card’s limit) and pay the bill on time and in full. There’s no credit score advantage to carrying debt.

Q&A: State tax breaks for 529 plans

Dear Liz: You recently answered a question from grandparents who were contributing $20,000 to their grandson’s college education. You correctly told them they did not qualify fdownloador federal education tax credits or deductions because he was not a dependent. You might let grandparents know, however, that they may get a state tax break for contributing to a 529 college savings plan.

Answer: Most states that have state income taxes offer some sort of a tax break for 529 college savings plan contributions. (The exceptions are California, Delaware, Hawaii, Kentucky, Massachusetts, Minnesota, New Jersey and North Carolina, according to SavingForCollege.com. Tennessee has a tax on interest and dividends but no 529 tax break.) In some states, even short-term contributions qualify for a deduction, so grandparents could contribute money that’s quickly withdrawn to pay qualified higher education expenses and still get the break. SavingForCollege has details on each state’s tax benefits.

Q&A: Thrift Savings Plan

Dear Liz: I am a federal government retiree with a very small retirement account in the Thrift Savings Plan. Where can I invest my small savings so it can safely grow? The balance has not changed for over six months now. If I keep it in the Thrift Savings Plan, what fund is the safest?

Answer: “Safe growth” is an oxymoron. If your balance isn’t changing, then you’re probably in the safest option — which means you won’t see much if any growth in the future, either.

You probably chose TSP’s G Fund, which invests in Treasury securities. You won’t lose money, but you probably won’t earn enough to offset inflation. If you want your money to grow, you need to have at least some of your retirement account in stocks.

Fortunately, the plan offers several “L” or lifestyle funds geared to when you expect to begin withdrawals. L funds offer professional management and a mix of investments that grow more conservative as that date approaches. Retirees who are tapping their accounts typically invest in the L Income fund, which has about 20% of its balance in stocks. If you are five years or more away from using the funds, the next most conservative lifestyle option is L 2020, which has half of its total invested in stocks.

Monday’s need-to-know money news

Today’s top story: Beware of new estate planning laws. Zemanta Related Posts Thumbnail Reducing your financial stress, what you need to know before buying your first home, and five credit card hacks that can save you money.

Your estate plan: Be aware of new laws
Introducing portability.

3 Ways You Can Reduce or Remove Your Financial Stress
Prioritizing what’s important.

3 Things to Know Before You Buy Your 1st Home
Time for a reality check.

5 Credit Card Hacks That Can Save You Money
The good kind of “hacks”, of course.

10 Money Mistakes a Financial Planner Can Find in 10 Minutes
Learning from the pros.

Friday’s need-to-know money news

scamToday’s top story: How you may be exposing yourself to fraud. Also in the news: Why responsible people can have bad credit scores, tricks advertisers use to make you spend money, and the money nightmares keeping us awake at night.

16 Ways You May Be Exposing Yourself to Fraud
Stop being your own worst enemy.

3 Reasons Responsible People Have Bad Credit Scores
It takes more than just responsibility.

7 Tricks Advertisers Use to Make You Spend Money
Resist!

These Money Scares Are Keeping Americans Up at Night
Are any of these yours?

30% of people would sell an organ to erase student debt: Survey
Are you one of them?

Thursday’s need-to-know money news

debt collectorsToday’s top story: How a single missed student loan payment can damage your credit. Also in the news: Finding a financial advisor who won’t rip you off, how tax liens can affect a spouse’s credit, and seven fall budget moves you need to make before the holidays begin.

Most Students Don’t Get How Bad It Is to Miss Loan Payments
A single missed payment could take a severe bite out of your credit score.

How to Hire a Financial Advisor Who Won’t Rip You Off
Due diligence is key.

Life Insurance Agents and Commissions: What You Should Know
Beware the sales pitch.

How Tax Liens Affect a Spouse’s Credit
Community property states mean trouble for both credit scores.

7 Fall Budget Moves You Need to Make Now
Get busy before the holidays.

Wednesday’s need-to-know money news

22856641_SAToday’s top story: College financial aid advice for divorced families. Also in the news: Getting teens to save can have a long term payoff, bad money habits you need to break, and how to make living on a budget less of a slog.

College Financial Aid Advice For Divorced Families
Navigating through the financial aid maze.

Why Teen Savers Have More Financial Success Later in Life
Good financial habits at a young age can have lasting effects.

3 Bad Money Habits You Should Finally Kick
Kick them to the curb!

Peppy ways to fight budget burnout
Living on a budget doesn’t have to be drudgery.

Tuesday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: How your house payments can unexpectedly increase. Also in the news: Why grandparents should be careful with 529 plans, why right now could be the right time to refinance your student loans, and six reasons why early retirement could be a mistake.

4 Ways Your House Payment Could Unexpectedly Go Up
Don’t get caught off guard.

Grandparents: Don’t Make a 529 Plan Mistake
529 disbursements come with some risks.

Now Could Be the Right Time to Refinance Your Student Loans
Taking stock of your student loan situation.

6 reasons early retirement might be wrong for you
What sounds like a good idea might not be.