Get smart with your money
Today’s top story: Being a loyal customer can score you free food. Also in the news: The average retirement savings by age, what to buy (and skip in September, and where your $100 goes furthest in the United States.
When Being a Loyal Customer = Free Food
Perks are plentiful.
The Average Retirement Savings by Age and Why You Need More
Do you have enough?
What to Buy (and Skip) in September
Finding fall bargains.
Want the most for your $100? Avoid San Jose
Consider West Virginia.
Today’s top story: Don’t make this common – and costly – credit card mistake. Also in the news: Paying by credit card will increase college costs, free credit freezes, and when to buy travel insurance.
Don’t Make This Common — and Costly — Credit Card Mistake
Even a day late can be costly.
To Make College Cost Even More, Pay by Credit Card
Interest rates can be even worse than through student loans.
Free Credit Freezes: Time to Rethink Your Protection?
Credit freezes will be free for everyone starting September 21st.
When to Buy Travel Insurance
When is it worth it?
I recently heard from the parents of yet another high school senior who turned down a huge scholarship from a good college to attend her “dream school,” which of course has lousy financial aid. Now her parents are scrambling, trying to figure out how to pay for it .
This madness must end.
Asking teenagers to pay the whole cost of a four-year college degree probably isn’t realistic or smart. Kids may be cut off from financial aid, since need-based help is largely based on the parents’ resources. The debt they accumulate may be crippling, and students who try to pay for school entirely on their own are more likely to drop out.
But the open bar approach isn’t wise, either. Setting limits and requiring a kid to pay at least part of the cost can actually lead to better grades while protecting parents’ finances.
In my latest for the Associated Press, why parents should set clear boundaries about how much they’ll pay for college.
Today’s top story: How to plan a vacation without getting into debt. Also in the news: How to save money and drive safer by plugging into your car’s computer, 9 expenses to pack in your moving budget, and 3 people show how they got control of their college debt.
How to Plan a Vacation Without Getting Into Debt
Sticking to your budget.
Plug Into Your Car’s Computer to Save Money, Drive Safer
Using the onboard diagnostic panel.
9 Expenses to Pack in Your Moving Budget
Don’t forget the minor details.
3 people, 3 ways of getting control of college debt
What you can learn from their approaches.
Dear Liz: What would be the ownership status of assets covered in our will and our retirement accounts when our heirs and beneficiaries receive them? In the case of married heirs, do the asset ownership laws of their state of residence dictate whether inheritance proceeds get held individually or jointly? In addition to having a candid conversation with our kids, we are debating the need for and risk associated with a revocable living trust to provide some assurance that our wishes be honored for our direct descendants to receive and manage any proceeds.
Answer: Inherited assets can be kept as separate property, even in community property states where assets acquired during marriage are typically considered jointly owned. Keeping property separate requires some vigilance, however. If an inheritance is deposited in a joint account, or joint funds are used to improve a separately owned house, those assets could become marital property.
Even if your heirs are scrupulous about keeping property separate, their spouses may ultimately inherit should your heirs die first. If those spouses remarry, the assets could wind up with another family, rather than with your grandkids.
If you want your assets to ultimately get to your grandchildren, there are a few ways to do that, such as bequeathing assets directly to them or through generation-skipping trusts. You can use either a will or a revocable living trust.
You’d be smart to talk to an experienced estate planning attorney about what you want and the best way to achieve those ends.
Dear Liz: My husband is being laid off with a severance package equal to seven months’ pay. What’s better for tax avoidance in California, a 529 college savings plan contribution or investing in an IRA?
Answer: A 529 college savings plan contribution won’t save you taxes in California. There’s no federal deduction for such contributions, and unlike most other states, California doesn’t offer a state tax break, either.
Your husband can contribute up to $5,500 to IRAs for each of you, plus an additional $1,000 per person if you’re 50 or over. Whether the money will reduce your 2018 tax bill depends on your income and whether you’re covered by workplace retirement programs.
If your husband had a 401(k) or similar plan, he would be able to deduct his contribution only if your modified adjusted gross income as a married couple filing jointly is under $101,000. A partial deduction is available until the tax break phases out at $121,000.
If you aren’t an active participant in a workplace plan, however, higher income limits apply. Your husband can make and deduct a spousal IRA contribution for you as long as your joint modified adjusted gross income is under $189,000. A partial deduction is available until the tax break phases out at $199,000.
Even if you’re able to reduce your taxable income with such contributions, you’ll still probably owe a sizable tax bill on this severance. Please consult a tax pro about how much of the money to put aside and whether you’ll need to make any payments before next year’s tax deadline.