Independent contractor clarity

Dear Liz: I was taken aback by your answer to the receptionist whose employer was paying her as an independent contractor although she should have been paid as a W-2 employee. I believe your response was to lie on her tax returns and hide the fact that her employer was doing something illegal. I cannot say in how many ways that is wrong. As a human resources professional, I would advise this person to contact regulators under her state’s whistle-blower protections and let them know what has happened and take the advice that they give. If the writer has been given a 1099, you can be assured that others in the company have too. Her name remains anonymous. Even if her employer finds out it was her, she has recourse if she’s fired. I’ve always enjoyed your column and look forward to reading it each Sunday, but this response was totally off the charts.

Answer: Actually, the advice was exactly the opposite. Tax pro Eva Rosenberg recommended telling the truth by filing new forms, which would alert the IRS to the employer’s deception. Rosenberg said that it probably would take the tax agency a couple of years to get around to auditing the employer, which would give the receptionist time to find a new job.

Also, not all states have laws protecting whistle-blowers, and some of those that do apply only to public employees. No one should assume she is protected by such a law without during further research.

Can a small credit card improve your credit score?

Dear Liz: I am trying to increase my credit scores so I can buy a house in a couple of years. My scores are pretty bad, but I do have a car loan that I have never been delinquent on. I have recently obtained a secured credit card with a $300 limit. Will a credit card with such a small limit help improve my credit score?

Answer: Yes, but you may need longer than two years to get your scores up to snuff, depending on how bad they are.

Regaining points always takes much longer than losing them, so you should make sure to pay all your bills on time and use your new credit card lightly but regularly. Charge less than $100 a month and pay the balance in full, because there’s no advantage to carrying a balance.

After six months or so of regular payments, consider adding another card to the mix. In a year or two, you may qualify for a regular credit card that will continue to enhance your scores.
Also, make sure you’re looking at your FICO scores, because those are the credit scores most mortgage lenders use. Other scores may be offered for free or sold by the credit bureaus, but they typically aren’t FICOs.

Love and money

Dear Liz: I am in a new relationship with a great woman. I’ve talked a little bit about money and retirement with her (she’s 30). I am trying to let her know that it would be wise to contribute at least enough to her company’s retirement program to get the full match. What are some books or articles that would show her the importance of saving for retirement? I like her, but this can be a deal breaker for me. What is the best way to introduce her to personal finances without scaring her?

Answer: You could start by hopping down from that high horse you’re riding.

The fact that she’s not saving for retirement is unfortunate but hardly unusual. Many people her age have trouble understanding the need to start saving young for retirement. Even those who do may have trouble investing their money, thanks to the 2008 market crash and subsequent recession. A recent survey by MFS Investment Management of people with $100,000 or more in investable assets found nearly half of adults under 34 say they would never be comfortable investing in stocks.

Of course, millennials need to get comfortable with the idea of stock market investing, because otherwise they’re unlikely to grow their wealth enough to afford a decent retirement. Some books that can help them understand the principles of investing — and the importance of scooping up those free company matches — include:

•”Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back,” by Kimberly Palmer.

•”Get a Financial Life: Personal Finance in Your Twenties and Thirties,” by Beth Kobliner.

•”On My Own Two Feet: A Modern Girl’s Guide to Personal Finance,” by Manisha Thakor and Sharon Kedar.

As you talk to your girlfriend, remember that few couples are on exactly the same page financially. Everyone has different family cultures and experiences growing up that inform how we deal with money. Asking her to talk about her background with money and taking the time to understand her perspective is a great place to start your conversations about finances. It’s certainly better than issuing ultimatums at this early stage.

Friday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: Consolidating you debt when you have bad credit. Also in the news: Maximizing child tax credits, what to do in your 20’s to protect your financial future, and the importance of verifying personal finance advice.

Can You Consolidate Your Debt With Bad Credit?
You might need a backup plan.

Are You Missing Out On These 11 Kid-Centric Tax Breaks?
Wringing every penny out of your kid at tax time.

5 Things You Must Do in Your 20s to Protect Your Financial Future
Goals, goals, goals.

Trust But Verify Personal Finance Advice (Huffington Post)
Only you can protect your money.

Study Finds Many of Us Still Lack Basic Personal Finance Skills
And that’s a big problem.

AT&T customers, check your plan!

Internet shopping by cell phone - concept illustrationWhen I heard last month that AT&T was dropping prices for its wireless plans, I thought our family could save a little money. I was startled to find we can save a whopping $60 a month and get a plan with twice as much data.

AT&T cut its prices to compete with T-Mobile and the pay-as-you-go companies that have been offering a lot more data for a lot less. But AT&T isn’t going to foist the savings on you–you have to seek them out. Fortunately, that’s as easy as going online to check your account (a savings offer should show up on your screen) or you can just call the carrier from your phone and ask how you can save.

I try to make it a point to call our communications providers once or twice a year to see if we can get a better deal. I wished I’d called this one a little earlier, because I was only able to backdate the changes to the beginning of last week (the start of our current billing cycle).

Changing plans does not extend your service term or add any additional termination fees, an AT&T rep assured me. So if you’re under contract to AT&T, go save some money!

Thursday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: Getting your credit score ready for a mortgage. Also in the news: The effectiveness of spending apps, the pros and cons of companion tickets, and how to protect yourself from tax identity theft.

Is Your Credit Score Ready for Mortgage Shopping?
Prepping your credit score for home shopping.

Can’t control your spending? There’s an app for that. But does it work?
Just how effective are spending apps?

Companion Tickets: The Perk That’s Not Always Rewarding
Smoke and mirrors.

Tax Identity Theft: Why You’re Vulnerable
It’s a busy season for hackers.

Wednesday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: Identity theft’s youngest targets. Also in the news: Tips to increase your savings and investments, how to cut your summer energy bill this spring, and who inherits your debts after you die.

When Should You Check Your Child’s Credit Report?
Kids aren’t immune to identity theft.

Six Steps To Financial Spring Cleaning For Divorce
Airing out your home and your marriage.

7 tips to increase savings, investments
Advice from the experts.

Do My Debts Pass On to My Kids After Death?
A different type of inheritance.

How to Reduce Your Energy Costs This Summer
Acting now could cut your bill later.

Tuesday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: The dangers of medical identity theft. Also in the news: the pros and cons of identity theft insurance, how to pick the perfect credit card, and how to save your retirement after losing your job.

Medical Identity Theft: The Fraud That Can Kill You
The repercussions are serious.

Is identity-theft insurance a waste of money?
Is the protection worth the cost?

How to Pick the Perfect Credit Card
The important things to consider.

Lost Your Job? Here’s How to Save Your Retirement
Don’t panic.

5 Ways to Fix a Failing Personal Budget
Everyone makes mistakes.

Tips for a great (and affordable) road trip

Majestic Vista of the Grand Canyon at DuskMy daughter and I just got back from a 1,300-plus mile road trip so I could attend a business conference in Phoenix. Along the way we checked out Joshua Tree, Prescott, the Grand Canyon, Sedona, Montezuma’s Castle and the Tuzigoot National Monument. The trip back included stops at the Salton Sea and the amazing Living Desert zoo and botanical gardens near Palm Springs.

Her dad and I took several road trips before she was born, exploring the West and Southwest. They were among our most memorable (and cheap) vacations.

I was pleased to find road trips can still be a frugal way to travel. Our motel rooms typically cost less than $100 a night; even at the Grand Canyon’s comfortable Yavapai Lodge, we paid just $140 to sleep in two queen beds not far from the South Rim. Meals were rarely more than $20 for the two of us, and we spent less than $150 on gas thanks to my 36-mpg-plus Chevy Volt.

So here are my best tips for a memorable road trip that won’t cost a fortune:

Bring the right supplies. Snacks, breakfast makings and a cooler can save you a lot of money on the road. I bring oatmeal (which you can make in a mug, adding water heated by the motel coffee maker), peanut butter for the kiddo, fruit, milk and crackers.

Spring beats summer. At least in the West, the crowds tend to be thinner and the weather less scorching. Since schools schedule their spring breaks at different times, you’re not traveling at the same time as every other family in the freakin’ universe.

Use Yelp. Or TripAdvisor. I found good, affordable places to stay and eat thanks to user reviews. The best find was The Views Inn in Sedona, a clean, comfortable spot with a nice breakfast and an eager-to-please manager. Being willing to stay on the outskirts of town rather than in the center can save you $100 or more a night (or $200, when it comes to Palm Springs in high season).

Ask the locals. Yelp is also good for finding great cheap eats, but asking locals for their recommendations is a great way to start a conversation.

Give the kid a camera. We figured out years ago that our daughter stays much more engaged when she can capture what she’s seeing. Yes, she winds up with 16 pictures of lizards scuttling through the desert, but so what? I have many, many more of her grinning in front of various national monuments.

Catch the ranger talks. I didn’t think “Men, Mules & Mining” at the Grand Canyon would be particularly riveting, but I was so wrong. The stories and accompanying slides were fascinating. So was the geology talk the next day at the Yavapai Museum of Geology. Most of the rangers we encountered were good story-tellers and great about keeping kids engaged.

Set limits on your driving time. When our daughter was an infant or a toddler, driving four hours a day was a lot. Now she can tolerate more, but I found myself pretty weary at the end of an 8-hour travel day. Which may explain why I blearily clipped a dead elk some other unfortunate driver had previously killed on the road to the Grand Canyon. No damage to us or the car; wish I could say the same for the poor elk. In any case, next time I’ll probably limit drives to four hours, tops.

Download an audio book. There are only so many rounds of 20 Questions an adult can, or should, play. Fortunately, we had the third book in the Hunger Games trilogy to keep our minds occupied for much of the trip home. Your local library has tons of audio books you can borrow (in CD version or via digital downloads).

Bring emergency supplies and tools. We never needed the water or trail mix I always pack in the trunk, but I always feel better knowing they’re there.

Monday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: Personal finance tips for single parents. Also in the news: Overlooked tax deductions, deciphering credit card offers, and upgrading a forgotten 401(k).

5 Personal Finance Tips for Single Parents
Planning for emergencies is key.

5 Tax Deductions That Are Typically Overlooked
Don’t shortchange your deductions.

How to Read a Credit Card Offer
Pay close attention to the fine print.

Upgrading forgotten 401(k)s
Reclaiming your retirement.

How A Personal Finance Journalist Manages Her Own Money
Learning from the experts.