Ask Liz Weston

Get smart with your money

Liz Weston

Monday’s need-to-know money news

By

Zemanta Related Posts ThumbnailToday’s top story: The tax mistake you cannot afford to make. Also in the news: The best time to shop for Christmas (seriously), how to keep your kids out of debt, and how to use your Roth IRA as an emergency fund.

The 1 Tax Mistake You Must Not Make
Making sure your figures match.

Best Time to Shop, Save for Christmas? Now
It’s practically right around the corner!

5 Tips for Keeping Your Kids (and Grandkids) Out of Debt
Teaching the value of money during Financial Literacy Month.

How To Use Your Roth IRA As An Emergency Fund
Not just for retirement.

Negotiate Your College Financial Aid to Get the Best Deal
If done right, the school of your choice could match your best offer.

Independent contractor clarity

By

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?

By

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

By

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

By

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!

By

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!