Get smart with your money
Today’s top story: What will long-term care cost you? Also in the news: Social Security myths, the best cities for first-time home buyers, and how to pay less to your credit card company.
What Will Long-Term Care Cost You?
Almost everyone will need it after 65.
Don’t Believe These Social Security Myths
Checking the facts.
These are the best cities for first-time home buyers
7 spots to look at.
Here’s how to pay less to your credit card company
Just pick up the phone.
Today’s top story: Why you should shop for a car loan before going to the dealership. Also in the news: The lowdown on new tools to jump-start your credit, 7 Father’s Day gift ideas under $50, and the best beach towns to spend your retirement.
Car Buyers’ Best Cost-Saving Move: Shop for a Loan First
Don’t put yourself at the mercy of the dealership.
The Lowdown on New Tools to Jump-Start Your Credit
The pros and cons.
7 Father’s Day Gift Ideas Under $50
It’s the thought that counts.
Dream of spending your retirement on the beach? Here are the best towns
Spending your golden years on the sand.
Researchers tell us that most people would be better off waiting to claim Social Security benefits. Yet most people file early.
More than half apply for Social Security before they reach full retirement age, which is currently 66 and rising to 67 for people born in 1960 and later. More than 30% apply as soon as they can — at age 62. Only about one in 25 applicants waits until age 70, when monthly benefits max out.
Some people have little choice, of course. They may have no savings and no job. Others have better options than applying early, but don’t realize it.
In my latest for the Associated Press, the myths surrounding Social Security.
Today’s top story: Amazon, Synchrony launch credit builder card. Also in the news: 5 reasons to keep renting, 5 steps to consolidate your debt with a personal loan, and when to use cash instead of credit.
Amazon, Synchrony Launch Secured Credit Builder Card
Amazon targets the secured credit market.
5 Reasons to Keep Renting
More freedom?
5 Steps to Consolidate Your Debt With a Personal Loan
What you need to know.
When to Use Cash Instead of Credit
Going old school.
Dear Liz: In a recent column, you wrote that “only six states … have inheritance taxes.” My state of Oregon is not listed. Oregon certainly has an estate tax (one of the highest in the U.S.) and Washington also has one.
Answer: Many people confuse estate and inheritance taxes, but they’re not the same thing.
As the name implies, estate taxes are taxes levied on the dead person’s estate. The federal government, 12 states (Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont and Washington) and the District of Columbia have estate taxes.
Only the six states mentioned in the previous column — Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania — have an inheritance tax, which is levied on the person who inherits. New Jersey had an estate tax, but that was repealed in 2018, leaving Maryland as the only state with both types of tax.
Dear Liz: I am trying to purchase my first home. I have a 20% down payment for the price range that I am looking for. The issue I am running into is that I have relatively new credit and my credit score is not great at all. I had to go to the emergency room two years back with no insurance and have medical expenses that went into collections. I am now in a financial spot to pay them off. These are the only negatives on my credit report that are unresolved. Will paying these off get my credit to the point that I can buy a home? I am lost as to how to get my score where it needs to be.
Answer: Unfortunately, paying collection accounts typically doesn’t help your credit scores, especially the scores used by most mortgage lenders.
Since you’re new to credit, you may not realize that you don’t have just one credit score. You have many. The two major types are FICO and VantageScore. The latest versions of each (FICO 9 and VantageScore 3.0 and 4.0), ignore paid collections. In addition, FICO 9 and VantageScore 4.0 count unpaid medical collections less heavily against you than other unpaid debts.
But mortgage lenders typically use much older versions of the FICO score, which count all collections against you even if they’re paid.
That said, it would be tough to get a mortgage with unpaid collections on your credit report. Since you have the cash, you may be able to negotiate discounts so that you can resolve these debts at a somewhat lower cost. (Collectors typically would much rather get a lump-sum settlement than wait to be paid over time.)
You’ll also want to get some positive information reported to the credit bureaus to help offset the negative information. The fastest way to do that would be to persuade someone you know who has good credit to add you as an authorized user to one of his or her credit cards. This person doesn’t have to give you the card or any access to the account. Typically, the account history will be “imported” to your credit reports, which can help your scores as long as the person continues to use the card responsibly.
Another way to add positive information is with a credit-builder loan, offered by many credit unions and Self Lender, an online loan site. Usually, credit-builder loans put the money you borrow into a savings account or certificate of deposit that you can claim after you’ve made 12 on-time payments. This helps you build savings at the same time you’re building your credit.
Secured credit cards also can help. With a secured card, you make a deposit with the issuing bank of $200 or more. You get a credit limit that’s typically equal to that deposit. Making small charges on the account and paying it off in full every month can help you build credit without paying interest. You’ll want a card that reports to all three credit bureaus, because mortgage lenders typically pull FICO scores from all three bureaus and use the middle of the three scores to determine your rate and terms.