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Loans

Wednesday’s need-to-know money news

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Today’s top story: Using your employer as a payday lender. Also in the news: One woman’s debt diary, how to get online coupons, and 10 things not to do if you win a billion dollars.

Short on Cash? Use Your Employer as a ‘Payday Lender’
A much lower interest rate.

Debt Diary: Feeling ‘Stretched Thin’ on Over $85,000
Curbing expenses.

Sign Up and Save: How to Get an Online Coupon
Never pay full price online.

10 things NOT to do if you win a billion dollars
Advice for South Carolina’s newest billionaire.

Managing Debt in Retirement Takes Some Planning

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Owing money in retirement isn’t ideal — but most people do.

Seventy percent of U.S. households headed by people ages 65 to 74 had at least some debt in 2016, according to the Federal Reserve’s latest Survey of Consumer Finances. So did half of those 75 and older.

Paying debt usually gets more difficult on a fixed income. Mortgage debt, especially, can be a huge burden in retirement. Retirees may have to withdraw larger amounts from their retirement funds to cover payments on debt, which can trigger higher tax bills and increase the chances they’ll run short of money.

People have the most options to deal with debt if they create a plan before they retire, financial planners say. Refinancing a mortgage, for example, is usually less of a hassle while people are still employed. It’s also typically easier to generate the extra income that may be needed to pay off debt.

“It is much easier to keep working for another year or two than to try and come back into the workforce when they are older and the employer needs have changed,” says Linda Farinola, a certified financial planner in Princeton, N.J.

In my latest for the Associated Press, three loans to consider before you stop working.

Tuesday’s need-to-know money news

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Today’s top story: How grads can get another shot at student loan forgiveness. Also in the news: Spring cleaning your credit cards, how to sidestep 3 unethical financial advisor tactics, and how to handle loaning money to your parents.

How Grads Can Get Another Shot at Student Loan Forgiveness
This could be your last chance.

This Spring, Clear Mediocre Credit Cards Out of Your Wallet
Get rid of the credit clutter.

How to Sidestep 3 Unethical Financial Advisor Tactics
Protect yourself.

How to Handle Loaning Money to Your Parents
Role reversal.

Would a bank payday loan be any safer?

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A “safer” payday loan sounds like an oxymoron. Critics have branded these notoriously high-cost loans as debt traps that cause borrowers to go ever deeper in the hole.

Thanks to a recent regulatory change, it now may be possible for banks to offer small, short-term loans that could be a lot less dangerous for borrowers. Whether banks will actually do so remains to be seen.

The right moves could save low- and moderate-income Americans billions of dollars a year. The wrong moves could create yet another sinkhole for those who are already struggling. In my latest for the Associated Press, how to avoid falling into the payday loan trap.

Monday’s need-to-know money news

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Today’s top story: Feds, 11 states crack down on student loan scams. Also in the news: Adding a loan to your shopping cart, 5 top benefits of a Roth IRA, and setting your holiday spending budget in October.

Feds, 11 States Crack Down on Student Loan Scams
Cracking down.

Should You Add a Loan to Your Shopping Cart?
A new option at the register.

5 Top Benefits of a Roth IRA
What you should know.

Get Christmas budget set for holiday spending in October
The holidays will be here before you know it.

Q&A: Co-signing a loan may affect credit score

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Dear Liz: Despite having high credit card debt (about $35,000), which I am working hard to pay off, my FICO score is consistently over 765 and I have never been denied credit — until now. I was recently denied for a card because of “high debt to earnings” (I earn about $85,000 annually.) Could that be because I recently co-signed for a $15,000 education loan for my grandson? I trust him completely to pay off the loan, but is it now showing on my credit history as money owed even though it is not payable until after he graduates?

Answer: You’d need to check your credit reports to be sure, but it’s entirely possible the new loan is already showing up and affecting your scores. Your debt-to-income ratio was high even before adding this loan, though, so it’s not surprising that the credit card company balked.

It’s unfortunate that you weren’t clear about this when you co-signed, but you’re on the hook for that student loan every bit as much as your grandson is. If he misses a single payment, you could see your credit scores lose 100 points or more overnight.

If you want to protect your credit scores and have the opportunity to get good credit card deals in the future, continue to pay down your debt. Also, consider making the payments on the education loan yourself and having your grandson reimburse you. That’s really the only way to make sure a missed payment won’t torpedo your scores.