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Friday’s need-to-know money news

December 21, 2018 By Liz Weston

Today’s top story: 5 smart ways to use and repay holiday debt. Also in the news: Gamifying your financial goals, what your credit card rental car coverage doesn’t include, and how much the wrong savings account cost you in 2018.

5 Smart Ways to Use and Repay Holiday Debt
Reward yourself for giving.

Budgeting No Fun? Try Gamifying Your Financial Goals
Winning the budget game.

What Your Credit Card Rental Car Coverage Doesn’t Include
Reading the fine print.

How Much the Wrong Savings Account Cost You in 2018
Don’t make the same mistake in 2019.

Filed Under: Liz's Blog Tagged With: credit card rental insurance, credit card rewards, financial goals, holiday debt, rental cars, Savings, savings account

Monday’s need-to-know money news

January 25, 2016 By Liz Weston

60710Today’s top story: The important reason you should check your credit card bills right now. Also in the news: What you need to know about charitable giving, how to avoid IRS scams, and what to consider before signing a VA loan.

The Reason You Should Check Your Credit Card Bills Right Now
Detecting fraudulent holiday purchases.

6 Things To Know About Charitable Giving This Tax Season
Getting the most from your tax deductions.

IRS calling about money? Most likely a scam
Protecting your personal information.

3 Important Considerations for VA Loans
What to consider before signing on the dotted line.

Create a Shopping Ban Savings Account to Collect Your Impulse Spending
Curbing impulse spending without denying yourself.

Filed Under: Liz's Blog Tagged With: credit card bills, credit card fraud, Credit Cards, impulse buying, IRS, savings account, tax deductions, tax scams, VA loans

Friday’s need-to-know money news

March 21, 2014 By Liz Weston

Zemanta Related Posts ThumbnailToday’s top story: You cannot hide from debt collectors. Also in the news: Why you’re losing money with your savings account, the most important document you’ve been ignoring, and how to talk to your child about your finances.

Why You Can’t Hide From Debt Collectors
They specialize in relentless.

Why you’re losing money by stashing cash in a savings account
Your checking account could provide more favorable terms.

The most important document you’ve never read
Meet the Free Disclosure Statement.

Smart Money: Five Essential Financial Discussions for Parents and Children
Including your children in the conversation.

Child Tax Credit: Are You Eligible?
Taking advantage of a way to reduce your tax bill.

Filed Under: Liz's Blog Tagged With: 401(k), child tax credit, debt, debt collectors, Kids, money talk, savings account

Why you need an emergency fund for your parents

April 2, 2013 By Liz Weston

Old Woman Hand on CaneWe recently lost my wonderful mother-in-law to complications from a stroke following a diagnosis of cancer. As we prepare for her memorial service, I’ve been thinking about what a blessing it’s been to be able to help care for parents in their final days—and to do so without having to worry excessively about expensive plane tickets, time off work and other potential financial burdens.

If you have parents who are elderly or in poor health, consider opening a savings account dedicated to making their lives, and yours, a little easier. That fund can pay for:

Getting there. In the five years my mom battled cancer, I spent a small fortune on plane tickets getting from my home (which was then in Anchorage) to hers in Washington state. Sometimes, these were pretty routine visits where I could plan ahead and score reasonable fares. Other times, I’d get the call that there was a crisis and that I needed to get there fast, grabbing whatever seat I could. Because I didn’t carry credit card debt and had a fat emergency fund, I was able to buy airfares without triggering a financial crisis.

Some other tips: Sometimes reward seats open up at the last minute, so if you have frequent flyer miles you can use, check out that option. If you’re within driving distance, consider buying a $50 or $100 gas card and setting that aside for use in emergencies.

Being there. About three years into her fight, Mom had a serious setback. Dad was providing most of her care and he was overwhelmed. I was able to take a two-month unpaid leave from work to help out—again, thanks to my emergency fund and to the flexibility of my employer, which held my job for me. (This was before the passage of the Family and Medical Leave Act of 1993, which allows covered employees to take unpaid, job-protected leaves to care for a spouse, child or parent with a serious health condition.) Two months with no paychecks took a serious bite out of that savings account, but I’ll never regret the cost. I was able to take another month off a couple of years later, at the end of her life, and was again so grateful to be able to be there.

Getting help. A few years ago, my father had a massive stroke while visiting a relative in Florida. We couldn’t fly him home, since he was too ill to travel. To help us manage his care long distance, we hired a geriatric care manager who was worth her weight in gold. She not only translated the medical-ese that baffled us, but helped us find a good nursing home for him and a friendly companion who could keep him company in between my frequent visits. Families are often left on their own to figure out how to care for an incapacitated relative, and she hooked us up with resources we might never have found otherwise. None of this was cheap—we spent about $10,000 on the care manager alone over four months—but she dramatically shortened our learning curve and ensured my dad got good care at the end of his life. Whenever friends are dealing with an ill or declining parent and don’t live nearby, I encourage them to hire a geriatric care manager to help them assess the situation and find solutions. A session with a care manager can even help when you live locally, since these folks live and breathe elder care, which is a new world to most of the rest of us.

It’s impossible to know in advance how much money you might need, but anything you can set aside will help ease the financial burden when the time comes to help your folks.

Filed Under: Liz's Blog Tagged With: elder care, elderly, emergency fund, emergency savings, Savings, savings account

Pay down low-rate debt or boost savings?

August 27, 2012 By Liz Weston

Dear Liz: I’m not sure whether I should be aggressively paying off the balance of my student loans or saving that money for a down payment for an apartment. I graduated from law school with $150,000 in federal and private loans. Over the last few years I’ve paid off most of that, but I still have about $50,000 in federal loans with a rate fixed at 3.75%. I fully fund my 401(k) each year, have an emergency fund of five months’ bare-bones living expenses and another $35,000 in fairly conservative, mostly liquid investments. I plan to change jobs in the next six to nine months and will likely take somewhat of a pay cut. I am torn right now as to whether I should continue aggressively paying off my loans, since that is a guaranteed 3.75% return on that money, or put the surplus into my investment account, which may earn a better return but also has some risk of losing principal. This would be my down payment money; I live in New York, so I have another five years or so before I could consider buying, and I’m currently single, so changes in my relationship status could change this goal. It would be wonderful to be debt-free, but it would also be comforting to have a bigger balance in my bank account.

Answer: You’ve already done well by fully funding your retirement, paying off those private student loans and building an emergency fund. At this point, you can’t make a truly wrong decision about what to do with your money. What comes next depends on your comfort level.

Many financial planners would advise against paying off that low-rate student debt. If inflation returns, the rate you’re paying could seem incredibly cheap. Also, paying off student debt doesn’t really increase your financial flexibility. It’s not like a line of credit that you can pay down and tap again later. The money you send off to your student lender is gone for good.

On the other hand, you’re not likely to earn a whopping return on money that’s earmarked for a goal within the next five years. If you need money within 10 years, it shouldn’t be in the stock market; if your goal is five years out, most of it should be in shorter-term bonds and cash, such as an FDIC-insured savings account or certificates of deposit with varying maturities. You could decide the guaranteed 3.75% return of paying off the debt is better than the alternative.

Like so much of adult life, the choice is yours. Unlike so much of adult life, you really can’t go wrong whichever path you take.

Filed Under: Credit & Debt, Q&A, Real Estate Tagged With: Down Payment, down payments, emergency savings, federal student loans, private student loans, Savings, savings account, Student Loan, student loan debt, Student Loans

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