Ask Liz Weston

Get smart with your money

Liz Weston

Dealing with collectors? Here’s a free ebook to help

By

dca-new-ebook-free-3DsmGetting calls from collection agencies, or spotting collection accounts on your credit reports, can be scary. You can deal with this, but not alone. Check out  “Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights,” which is now a free ebook on Smashwords. You can get it here: https://www.smashwords.com/books/view/520261.

Written by long-time consumer educators and advocates Gerri Detweiler and Mary Reed, this book will tell you what you need to know to deal with collection accounts and fight unethical collection agencies. Longtime readers of the column will recognize Gerri’s name, because she’s the person I turn to when I have questions about debt and debt collections.

Get the book and get started!

UPDATE: Gerri tells me some people have trouble downloading from Smashwords, so here’s another link:

http://www.debtcollectionanswers.com/buy-now.html

 

 

Wednesday’s need-to-know money news

By

scamToday’s top story: How your Social Security benefits will be taxed. Also in the news: A Millennial’s guide to moving out, how to make sure your favorite charity isn’t a scam. and what would you do if you had a surprise windfall?

How will your Social Security benefits be taxed?
What everyone needs to know.

Millennial’s Guide to Moving Out of Your Parent’s House
You have to leave sometime!

How Do You Know Your Favorite Charity Isn’t a Scam?
Making sure your money is going to the right place.

The $10,000 Question: What Would You Do With a Surprise Windfall?
Following the 90/10 rule.

Tuesday’s need-to-know money news

By

Image9Today’s top story: How to manage your money right from your smartphone. Also in the news: How that smartphone could cost more than you realize, how to save money on college text books, and what happens to a loved one’s debt after they die.

7 Personal Finance Apps to Manage your Money
Money management right at your fingertips.

Why Your Smartphone Costs More Than You Realize
Especially if you’re clumsy.

How to Save Money on College Textbooks
The most expensive books you’ll barely read.

Could I Inherit My Loved One’s Debt?
What happens to debt after death?

To Become Financially Independent, Embrace These Five Habits
The road to independence.

Monday’s need-to-know money news

By

Zemanta Related Posts ThumbnailToday’s top story: How to protect your bank account. Also in the news: How to financially survive moving, how to rebuild your credit, and how to curb your impulse buying.

5 Steps You Can Take to Protect Your Bank Account
Defending your assets.

Married and moving? Heed these money tips
Packing is stressful enough.

How to build, or rebuild your credit
Starting over.

Put a 30-Day Delay on All Impulse Purchases to Ensure You Really Need It
Find out how much you really want it.

Q&A: Paying off student loans vs saving for retirement

By

Dear Liz: I’m engaged to be married and need your advice on getting started in the world of shared finances.

My fiance is 43, I’m 31. He’s debt free, with a savings account but no retirement fund. I have $34,000 in student loans (consolidated at 4.25%) and it weighs heavily on my mind as I’m desperate to become debt free. I’m debt free otherwise with $10,000 in savings.

We both make good money but my income as a freelancer is sporadic, while his is steady with periodic bursts of additional income.

We want to be debt free as a couple, save up a solid emergency fund and start making up for lost time on retirement savings, all while being aware that a family and a house might not be far away.

He’s very supportive and wants to pay off my student loans. Should I let him and pay “us” back to the emergency fund or maybe a house down-payment fund? What’s our best course of action to start on a solid financial footing?

Answer: You’re already behind on retirement savings, which should have started with your first job. Your fiance is even farther behind.

Don’t let your zeal to repay your debt blind you to the very real risk that you might not be able to save enough for a comfortable retirement if you don’t get started now.

If your education debt consists of federal student loans, then your low rate is fixed. The interest probably is tax deductible, which means the effective rate you’re paying is just a little over the inflation rate. It isn’t quite free money, but it’s pretty cheap.

You don’t need to be in a rush to pay it off, particularly with all your other financial priorities looming.

Instead, get going on some retirement accounts. Your fiance should take advantage of his workplace plan, if he has access to one.

Most employer-sponsored workplace plans have company matches, which really is free money you shouldn’t leave on the table. An individual retirement account or Roth IRA can supplement the plan or be a substitute if he doesn’t have access to a workplace plan.

As a freelancer, you have numerous options for setting aside money for retirement, including Simplified Employee Pensions (SEP), Savings Incentive Match for Employees (SIMPLE) and solo 401(k)s that would allow you to contribute more than the standard $5,500 annual limit for an IRA.

Ideally, you would be saving around 15% of your income and your fiance 20% or more.

If you can’t hit those targets just yet, start saving what you can and increase your contributions regularly. Work your other goals around the primary goal of being able to afford a decent retirement.

Q&A: Delaying Social Security benefits

By

Dear Liz: I’d like to get something straightened out. Between things that you and other columnists have said, we laymen have been told that if we wait until we’re 70 to start taking Social Security, we’ll get 8% more for each year we delay, and a total of 40% more than if we start taking it at our retirement age.

But the retirement age is 66, not 65. So there’s a four-year difference, which would produce an increase of only 32%. Even if the yearly increase is exponential (compounded), the total increase after four years would be 36%. So where does that 40% figure come from?

Answer: It didn’t come from this column, so it probably came from someone who was writing when 65 was the full retirement age.

As you note, the full retirement age is now 66 and will move up to 67 for people born in 1960 and later.

Delayed Social Security benefits max out at age 70, so there are fewer years in which a benefit can earn a guaranteed 8% annual return for each year it’s put off. Delayed retirement credits aren’t compounded, but the return is still better than you could get guaranteed anywhere else.

That doesn’t mean delaying Social Security past full retirement age is always the right choice. Social Security claiming strategies are complex, with a lot of moving parts, particularly if you’re married.

Before filing your application, you should use at least one of the free calculators (AARP has a good one on its site) and consider using a paid version, such as MaximizeMySocialSecurity.com, if you want to tweak some of the assumptions or if you have a particularly complicated situation.