Thursday’s need-to-know money news

321562-data-breachesToday’s top story: How to avoid an identity theft double whammy. Also in the news: How much you need to save for retirement, signs you need help managing your money, and how to tell that your financial plan is working.

How to Keep Scammers From Pulling an ID Theft Double Whammy
Look out for phony identity theft assistance.

How Much Should You Save for Retirement?
Four methods that can help you estimate how much you need to save.

21 Signs You Need Help Managing Your Money
Knowing when it’s time to call for backup.

How Do You Know Your Financial Plan Is Working?
Signs of progress.

10 Ways to Take the Fear Out of Budgeting
It doesn’t have to be scary.

Q&A: Giving financial advice to family

Dear Liz: I am 30 and have two sisters, ages 31 and 27. My wife and I both have good jobs that allow us to live comfortably and save for retirement. My sisters, on the other hand, have severe money problems. My older sister works a low-paying retail job. She is unable to save and is currently at risk of having her wages and tax refunds garnished because of unpaid student loans. My mom provides her with support when she asks for it. The other sister still lives at home. While she makes decent money by working two jobs, she spends all of her money on “wants,” and my mom pays all of her living expenses. The only bill my younger sister pays is her car payment. She also currently has close to $100,000 in student loans that she just had to start paying on.

I have tried to provide both my sisters with budgeting advice, and I have recommended books that I have used as the blueprint for our budget. Neither of them takes the advice. I have talked to my mom about both sisters’ situations. While my mom agrees that both are in bad shape, she is unwilling to show either of them the tough love that they need to improve their situations. Do you have any advice on recommendations that I could make to help any of them out?

Answer: The best advice is to stop offering advice.

Your mom and sisters have made it quite clear they’re not interested in what you have to say. Continuing to offer your opinions on their situations would be tiresome and pointless.
Yes, it’s hard to watch people struggle when you think you know what could help them. But keep in mind that: a) you might be wrong about what they need right now, and b) nobody asked you, anyway.

If you’re passionate about teaching people to manage their finances, you might look into becoming a certified financial planner or other planning professional. The CFP Board of Standards has information at http://www.cfp.net. If people are paying you for your advice, they’re somewhat more likely to listen to it.

Otherwise, you’ll have a captive audience for your financial teaching if you and your wife should have children. And as a parent, you’ll get to experience firsthand how it feels to be the target of unsolicited advice.

Tuesday’s need-to-know money news

Tax_ScampngToday’s top story: Look out for the latest IRS phone call scam. Also in the news: How social spending could be ruining your budget, why millennials should be pressing credit instead of debit, and how to extend the life of your child’s inherited IRA.

Don’t Fall for the ‘Steve Martin’ IRS Phone Call Scam
Watch out for this wild and crazy scam.

Fun And Finances: Is Social Spending Sabotaging Your Budget?
Putting your own financial well being first.

Pssst, Millennials! When You Pay, Choose Credit, Not Debit
How you could be losing out on interest.

Extend the life of your children’s inherited IRAs
Big changes could be in store for 2015.

Use Your Phone as a Piggy Bank: The 10 Best Personal Finance Apps
Putting that shiny new toy to good use.

Get free financial advice

Zemanta Related Posts ThumbnailNeed some free, one-on-one financial help from a qualified advisor with no strings attached? Check out the Financial Planning Days being offered around the country throughout October and November.

These events are brought to you by a host of reputable organizations: the Certified Financial Planner Board of Standards, the Financial Planning Association, the Foundation for Financial Planning and the U.S. Conference of Mayors. Kiplinger is the national media sponsor.

Given how hard it can be to find good, un-conflicted advice–let alone getting it for free–these sessions can be a real boon. Even if you don’t sign up to talk to a CFP, you can attend one of the informational workshops on various financial planning topics.

Sound good? Check out this link to see if there’s an upcoming event in your area. LA and OC peeps: your events will be held Sunday Oct. 18, so register now!

Q&A: Prioritizing your financial goals

Dear Liz: How do you prioritize financial goals on a small salary? I am 24 and a college graduate with about $40,000 in student loan debt. Because I work full-time at a nonprofit educational organization, about half of my loans qualify for the Public Service Loan Forgiveness program, so I currently only pay the monthly payment on a private loan and two other small loans. I earn a small salary, but I have always been drawn to jobs in service-oriented, nonprofit fields, and I am perfectly fine with the fact that I’ll never have a career with a six-figure salary. My problem is that after rent, utilities, student loan payments, groceries and other such monthly bills, I have very little money left over to divide among my different financial goals. I make a small monthly contribution to my company-sponsored 403(b) plan, but I’m also trying to rebuild my savings after paying out of pocket for an expensive root canal. I occasionally earn some extra cash from baby-sitting, and I live a fairly simple lifestyle — I own my used car, I walk to work — yet I feel like I’ve barely been making a dent in any of my goals — saving for retirement, rebuilding savings and paying off student loans. How can I leverage what’s left over at the end of the month to reach my goals? Would it be better to focus on one goal rather than all three?

Answer: Many people in your situation focus on a single goal hoping to make faster progress. They don’t fully realize what their single-mindedness is costing them.

Prioritizing debt repayment over saving for retirement is particularly costly. Not only do you give up potential company matches, but the money you don’t contribute can’t earn future tax-deferred returns. At your young age, every $100 you contribute could grow to more than $2,000 by the time you hit retirement age, assuming 8% average annual returns, which is the historical long-term average for the stock market. In fact, the younger you are, the more you give up by not contributing to a retirement fund. Ask any of your older co-workers if it gets any easier to save for retirement. They’ll probably tell you that they wish they’d gotten serious about retirement savings when they were a lot younger.

Building up your emergency savings may seem prudent as well, but you don’t want to do so at the expense of your retirement fund or instead of paying down high rate debt.

So here’s your game plan. Instead of divvying up what you have left after paying bills, start by paying yourself first. Contribute at least 10% of your income to your company retirement plan. Then investigate the possibilities of consolidating your private student loan into a fixed-rate loan, since rates probably will rise in the future. If you can lock in a low rate, it would then make sense to start building up your emergency savings. If you can’t, you might want to divide your money between savings and debt repayment.

It will be tough to swing all this. You may be able to make it easier by finding a roommate or a cheaper place to rent, or looking for more outside gigs such as baby-sitting until your income rises enough to allow you to comfortably pursue all your goals.

Money rules of thumb: car edition

Thumbs upToday for public radio’s Marketplace Money we talked to a guy who has a $600 a month car payment. It turns out he bought a car worth more than half his annual pay, and financed it over six years. (The segment airs this weekend, if you want to listen in.)

I no longer try to talk car guys out of their love affairs with wheels. But too often they’re prioritizing car payments over retirement savings and other more important goals.

So here, in my continuing “Rules of thumb” series, are three guidelines regarding cars:

Cars, Part I: “Buy used and drive it for at least 10 years.” I run through the numbers in my book “Deal with Your Debt”—you can save a quarter million dollars over your driving lifetime by holding on to cars for 10 years instead of trading them in every five years, assuming the cars cost about $20,000 each in today’s dollars and you finance them for five years. If you buy used and/or pay cash, you’ll save even more. Not only will you buy half as many cars, but you’ll avoid the 20% or so loss to depreciation that happens as soon as you get the keys. Today’s cars are better built and will last longer than ever before, so buying used isn’t the gamble it used to be.

Cars, Part II: “If you have to borrow, follow the 20/4/10 rule.” Make a 20% down payment so you’re not upside down as soon as you drive off the lot. Limit loans to four years and payments to no more than 10% of your income—less if you have other big debts or a fat house payment.

Cars, Part III: “The real cost to own is about twice the monthly payment.” If you’re trying to decide whether you can really afford the car the salesman is pitching, double the payment, since that’s roughly what you’ll pay for insurance, maintenance, repairs, depreciation and other costs averaged over five years. Some cars are much cheaper to own than others, obviously, but keeping the true cost in mind can help cool your ardor for a too-expensive ride. You can get more precise figures about how much a car will cost over five years by using Edmunds.com’s “True Cost to Own” calculators.

 

 

Friday’s need-to-know money news

valentines-day-money-100092381726Today’s top story: How your net worth can keep your budget in check. Also in the news: What to do when your employer switches 401(k)s, protecting elderly parents finances, and watching out for Valentine’s Day scams.

Calculate Your Net Worth While Budgeting to Maintain Perspective
Looking at the bigger picture in order to focus on the smaller one.

Your Best Moves When an Employer Switches 401(k)s
First move: Don’t panic.

Why Do Elderly Parents Fall For Scams That Seem So Obvious To Us?
How to protect elderly parents from falling victim to financial predators.

Don’t Fall for these 5 Valentine’s Day Scams
Guarding your heart and your money.

The Hidden Costs of Buying a Car
Don’t let your wallet get taken for a ride.

Monday’s need-to-know money news

Today’s top story: Finding the best strategy to pay off your debt. Also in the news: The best way to use your tax refund, the credit scores needed in order to obtain a mortgage, and how to get rid of your bad money habits. refund

What’s the Best Debt Payoff Strategy for You?
You need to have a gameplan.

Eight ways to use your tax refund wisely
Oddly enough, purchasing a Harley is not on the list.

How Many Credit Scores Do You Need to Get a Mortgage?
Start with one from all three credit bureaus.

3 Simple Steps to Help Change Bad Money Habits
Identifying your triggers is essential.

How to Stop Living Paycheck to Paycheck
Four steps that will help give you some breathing room.

Monday’s need-to-know money news

Today’s top story: What a poor credit score can cost you. Also in the news: The worst money moves for the new year, how to cut next year’s expenses, and tips to get tax season started off on the right foot. Tax refund

What a poor credit rating is costing you
Your job prospects could be at risk.

10 worst money moves for the new year
What NOT to do in 2014.

14 Ways to Slash Your Expenses in the New Year
Do you really still need a landline?

7 unbeatable tax tips for year’s end
April 15th will be here before you know it.

Kids and Money: Advice for mastering finances in 2014
How to teach your kids to spend and save smartly in the coming year.

Holiday tipping: what you really need to know

Holiday tipsWriting about holiday tipping for MSN was always a bit fraught, mostly because a fair number of people every year seemed to think I invented the practice–and resented me deeply for it.

Here’s the scoop, per the Emily Post Institute: Holiday tipping exists. It’s a thing, in every region of the country. Who you tip and how much varies by your situation, your budget and where you live (“Tipping averages tend to be higher in big cities,” the Post Institute advises.)

In the Weston household, we tip the people who make our lives easier throughout the year who aren’t regularly tipped at the time of service. That includes newspaper deliverers (yes, we still have those), the mow-and-blow guys (called “gardeners” elsewhere), our house-sitter and our cleaning lady. The tips generally equal the cost of one week’s service, with something extra for the folks who have been with us a long time.

I’d feel pretty weird about not tipping them, to be honest. If I can afford to pay for their services throughout the year, I can certainly come up with a little “thank you” at year’s end.

If your budget really can’t accommodate cash tips, the Post Institute says it’s okay to substitute a handmade gift or (at the very least) a handwritten note of thanks. It’s all about taking a minute to say “I appreciate you.”

But nothing says that quite like cash.