Would you consider doing a Color of Money Live via Google hangout?
Good idea. Let me think about it.
I did have fun with the Google Hangout.
If you missed it, here's the link
We are blessed that we have no serious debt with credit cards and have a rainy day and a life happens fund. We have under $50,000 left on our home. Should we pay down our mortgage loan or should we pay down the car note? Extra $25-$50 per month. The interest rate on the house is higher. Thank you!!!
I recommend people pay off debts starting with the one with the lowest balance. So I'm assuming it's the car.
I have a relative who has applied for credit cards in my name and then maxed them out without my knowledge or consent. I do not want to turn this person over to the authorities, and will likely have to pay back the debt myself to avoid harming my own credit. My question is, is there a way for me to prevent this from ever happening again? Can I notify the credit agencies to block all future credit card applications in my name? (I have no plans to ever open another credit card so I wouldn't mid if such an action even prevented me from getting another credit card).
I'm curious, why don't you want to turn in the relative?
They stole, not just from you but from the stores who may not get fully paid.
I know it's hard to turn in a family member but if this person did it to you, he or she may have done it to another person or will do it again.
You do not have to pay the bills if you file a police report, which by the way may not result in the relative getting arrested. But it does protect you and helps you avoid paying debts you did not accumulate.
Whether you turn the person in or not, you probably should but a security freeze on your reports because the person has your personal informaiton and is willing to use it. A credit fraud won't be strong enough. Go to ftc.gov and search for security freeze to get details. It basically prevents new credit from being offered. Period.
Hello Michelle, my wife and I have $8K in emergency savings (covers 1 month expenses, and $1K life happens). We've eliminated more than $5K in credit card debt, with another $21K (credit cards, car notes) targeted. We are on pace to payoff $16K by December. My question, at the end of the year, should we pull the $4K to $5K difference from our emergency fund, and then rebuild our savings, or would you advise keeping the savings> Thanks!
If the money in your savings is just ONE month of living expenses, I would leave it be. It may take you a little longer to pay off your debts but keep the savings.
My Dad recently responded to a hoax e-mail that warned him his credit card was suspended and he needed to take action by clicking on a link. Luckily it was just malware and he hadn't given them any personal information. In his younger years, we would be far to skeptical to be taken in by one of these e-mails, but as he approaches 90, he's not quite as sharp as he used to be. Any tips on how to help him avoid donating his life savings to a scammer?
I'm so sorry but glad he wasn't scammed.
Could you ask your dad to let you look at any emails he might want to respond to? Just say, "Day, I want to make sure any email you are getting is legit. Just forward it to me so I can review." That way you aren't taking over but just adding a second pair of eyes.
Michelle, are there counselors one could go to, who can help a person deal with the emotional side of money. For example, I know a person who needs to show love by giving money to friends and relatives, but may be going broke. Also, did you write a book recently, and could you give us its title and where to buy? Thanks
There are definitely counselors who deal with all kinds of issues including those that lead to people not handling their money well. But really a regular good therapist could address the issues this person has, which might be to please people at any cost.
You can also find a therapist through the American Association for Marriage and Family Therapy (www.aamft.org ), which has an online referral feature. Click on the link for ?Therapist Locator.?
And my latest book just out in Jan. is called "The 21 Day Financial Fast."
May I also offer this suggestion: if you have Power of Attorney (Financial), contact the bank/stock broker/etc and just give them a heads up that your Dad's mental acuity is slipping. Also, make sure (somehow...) he is paying all of his bills. I had to do this for my mother, who had Alzheimers and didn't want to pay the the premiums for various insurance, such as supplemental health.
Thanks. Good suggestion.
And tell Dad that the scammers are getting really good at deceiving people, so this isn't about him getting old but the scammers getting a whole lot better. Heck, I'm not even 50 and there are some emails I call and talk to my spouse about. (And I always open a browser and type in the main web address.)
You are so right. I got an email recently and called our tech folks because it looked so legit.
My boyfriend of almost 4 years just mentioned the other day that he's in favor of prenups. What are your thoughts, and what is generally included in them? I should mention that while we both have a decent amount of money in the bank, I'm sure he has a lot more invested.
Generally, I think prenups allow people to put divorce on the table at the beginning of their marriage. It's a plan to fail.
Personally, I wouldn't agree to one even if I had more money.
But there are times I see the point if there are dependents or children from a previous relationship that people want to make sure are taken care of.
And what's in one?
Depends on what you and your partner have and want to protect. If you decide to get one, you each need an attorney.
Good Afternoon! As a sophomore in college, I am curious as to whether or not I should invest my money into the stock market or perhaps a CD. I have no debt of any kind, and a small portion of savings that I've accumulated over the past two years or so. Any investing tips or advice?
So proud of you. Saving alreay. Good for you.
Before investing, make sure you are comfortable with the amount you have in savings to cover any college costs or other expenses. If you are pleased with your savings, right now you have time to invest so sure go for growth. And to do it, invest in a growth index fund. Make sure fees are low. I can't recommend any funds but go to www.choosetosave.org and look thru the section on investing basics.
Just be careful, you say it's just malware, but malware could steal information from his computer or internet history. I'd keep an eye on his cards and bank accounts
I understand it's hard to report a relative to the police but as Michelle pointed out a police report is going to protect you. If the relative stole your identity how do you know it won't happen to another family member? How would you feel if another family member was a victim and you did nothing to prevent it? The ID stealing relative needs help, counseling, both emotional and money-wise.
Exactly. Thanks for the input.
Often these folks count on friends and relatives NOT turing them in so they keep stealing.
I would not hestiate to file a police report.
Michelle - last year I had an avalanche of problems (parent died, heart health scare =$5K beyond insurance, furnace died, AC died, d/w died, washing machine died are the headlines) that ate my rainy day fund and my life happens fund, and then washed up onto the credit cards. I've got a HELOC with $10k available. Am thinking it makes better sense to pay off the credit cards with the HELOC, close all but 2 (1 low limit that I use for gasoline and one medium limit in case something else expensive dies) and have the interest deductible and funnel what used to be CC payments to paying down the HELOC ASAP. This is the best way to clean this up, right?
Don't do it.
You will be turning that unsecured credit card debt into secured debt. Don't borrow against your home.
Instead, slowly and on purpose pay off the credit card debt with money you find from your budget.
My dad just turn 71 and after cleaning many viruses from his computer, I gave him the simple rule - NEVER click on a link in an email. If it says it comes from the credit card company, open an browser window, go to the credit card company's website (via the bookmark he saved or typing in the address - not the one in the email) and after logging in he can find the same info (if it's a real email).
I really appreciate you guys weighing in on this. It's a big problem for lots of folks, not just seniors.
The advice applies all around.
I loved your column today and couldn't agree more that kids today need to live by their parent's rules and college funds are a privilege not a right!! My questions is on another matter. Do you know if divorced parents can both have flexible spending health care accounts for the same child? I am the head of household and have claims for my daughter, but my ex recently opened a FSA to offset some her minor medical expenses.
And you know, I'm not sure. Best to ask your HR department or a tax professional.
Anyone out there know for sure?
Hi Michelle, I'm with you and the judge concerning the teen who sued her parents for support. My concern is about the college fund. When my husband and I set up tax-protected college funds for our children, they were out of our control once the child turned 18. Fortunately, our children used these funds wisely. Three used the money for college and and two, one of whom went to college on scholarships, and another who did not attend college, used the fund for a down payment on a house. Does this teen legally have access to that college fund if it's in a tax-protected account? Perhaps the Cannings are just using savings, in which case we can all breathe easier.
Depending on how they saved the money, they could still have control and since the teen is suing it appears they do. For example with the 529 plans we opened for our children, we own the accounts. Same with the investment fund we save for their college in addition to the 529 plans.
And just so you know, if you have a 529 plan and your kid can't use the money or doesn't go to college you can transfer it to another person.
Michelle, I'm very thrifty and responsible with my funds. I want to get your take on a situation. A "friend" owes me about $800. I didn't loan her this money. (If she had really needed it, I would have given it to her, and not expected to get it back.) I paid her this money for a trip she was planning for a group. The trip was cancelled a couple of days before we were to leave, and she said she would refund everyone's money. As her friend, I told her she could pay me back last, since some of the people were threatening to take her to court. Well, it's been over a year!! and she has not paid me back. She has health problems and has been in and out of the hospital, but when she's well, she dines out and travels with her group. She just returned from Las Vegas. She acknowledges that she owes me money (in emails and texts), but when I've asked her WHEN she will pay me back, she doesn't respond. She doesn't take or return my phone calls. I could take her to small claims court, but it seems like a hassle, so I really didn't want to do that. I could call her out publicly, so that her group members know not to trust her with their money. Or I could just suck it up, consider the friendship dead, and move on. Except, it's really burning me up that she's doing me this way. I work hard for my money, and it's not right for her to keep it. What do you suggest I do? (Or should I direct this to Carolyn Hax, LOL)
You are a good friend.
You were being a good friend.
You have lost a friend.
I would just count the money gone and no longer count her as a friend.
Let it go because it's costing you much more by continuning to hunt her down for the funds.
Get your peace back.
Let it go but hang on to the lesson from the experience.
Don't volunteer to be paid last if you're not asked. When you can pay money for a trip directly to vendor or vendors with a refund policy if they cancel the trip.
Hi Michelle, ready for a loaded question? Here goes. I'm a 26 year old single female dentist with about $225,000 in student loans acquired from dental school (fairly average amount compared to my colleagues); I'm currently in residency and will be so for the next two years, with a reduced income of about $45000 annually. Fortunately, I have the option of income based repayment so my current monthly payment is manageable but I do not want to spend the next 20+ years paying off these loans and essentially paying double the original amount owed during the lifetime due to interest. However, that being said, I would also like to live life and eventually be able to buy a moderate home in the next 5-7 years and am also thinking about saving for retirement. Do you have any suggestions regarding management of this crazy debt? I have no other debt, have excellent credit, have an emergency fund, and pay off my credit card every month so I've been throwing any excess money towards my loans, because, quite frankly, looking at the amount I owe gives me a headache every time I look at it. Any advice you have would be appreciated!
Not a loaded question. A good question.
Ready for the hard advice?
If I were you, once you start making really good money, live way, way below your means. Spend a few years of living with someone or with lots of roomates and throw most of your net pay onto the debt. I mean it. Most of your pay@
I would not get a house until the debt is gone because really you have a house note in the student loan debt.
If you do this for a few years once your pay goes up, you can eliminate that debt, get your home and be happliy debt-free except for your mortgage.
We need to make a decision now on which health insurance plan to enroll in. Living in VA, there are several decent ACA options both from a coverage and cost standpoint. Our other choice is a an expensive retiree plan with excellent coverage from my husband's employer. Its self insured, and the pool consists solely of their retirees. The big concern for us - what is the likelihood that the ACA would actually be repealed at some point in the future?? Like many others, I have a pre-existing condition (cancer in my case) and likely could not get insurance later on the open market if the provisions of the ACA were to be repealed. Any insight or advice you can share? This is a high stakes decision for us, tough to make without a crystal ball. Thank you!
I wish I could tell you what would happen in the future. But first. I think it's unlikely if ACA is repealed the provision preventing insurance companies from denying people with preexisting conditions will go away. That provision is very, very popular by the masses.
So I might go with the ACA choice.
Talk more with a health care navigator with the health exchange so that you are truly comfortable with the doctors you'll have access to.
My mother recently died suddenly. She handled all of the finances for her and my father. Without my father's knowledge, she racked up over $45000 in credit card debt, which he can now not pay. He is 75, and his only income is social security. He also still has a mortgage and equity line. We have been trying to figure out what the best option is for him; bankruptcy, credit counseling, or just not paying on the credit card debt?
I don't normally recommend bankruptcy if the person has income to handle the debt.
That does not appear to be the case with your dad. You should consult a bankruptcy attorney.
Good afternoon. I have several unpaid charges on my credit report that are almost 7 years old. Should I contact the creditors to try to pay the balances off? Or should I just leave it alone?
There's two ways to answer this question.
First negative credit card debt by law has to be removed from your credit files. So contact the three credit bureaus to have the information removed if it's truly been 7 years.
Now, there's the moral responsbility. Are these debts yours? Are you in the position to pay it off? If so, think about your responsibiliy to honor your debts. If you chose to pay off the debts, get any offer in writing (you could offer less than you owe) and be sure they do not try to reset the clock on the debts because they should be taken off your reports.
I respectfully disagree with your advice. I loaned a friend $2000 to help her pay a divorce lawyer to work out a child support arrangement with her ex. She did not pay me back on time, even though she had enough money to buy a new car. I thought about "letting it go," but in the end, I felt that I could not respect myself if I let her treat me that way. So, I sent her a letter saying that I was going to sue her in small claims court if she didn't pay me, and I attached a copy of the small claims court form, all made out and ready to be filed. She somehow found the money in a few days, and sent me a check for the full amount. I was very glad that I didn't let it go.
Worked for you.
But the person who wrote said she didn't want to do that.
If you can't afford to let it go, then sure sue if you want.
The mistake is always lending money you want or need back. I never lend money.
That's what I thought you'd say. It's just hard letting go!
See the recent response.
What's really hard I suspect isn't the money but that friend would do that to you. But money has a way to really ruin relationships. Still a good friend wouldn't avoid you.
I just wanted to share that my husband and I paid off his car yesterday--two years early! (We paid for my car in cash) Now the only debt we have is our house, which we just purchased in August! Lessons learned: Pay more off each month than what the bank suggests, if you can. And we personally wouldn't buy a brand-new car again.
Good for you and thanks for sharing.
All banks, financial institutions, etc, tell their customers they will NEVER send emails regarding accounts with links in them. PERIOD.
True. Still the emails can be very clever.
IRS Pub. 969 says your flexible spending account can cover healthcare expenses for "your child under age 27 at the end of your tax year," even if you don't claim them as a dependent on your tax return. Thus, both divorced parents can cover a child's medical costs on their own FSA. Naturally, it has to be expenses the parent actually paid for, so only the parent who actually paid the bill can claim the cost of that bill.
http://www.irs.gov/pub/irs-pdf/p969.pdf - Page 16 The FSA account is not for a child. The account is yours and you can receive funds for claims made on qualified medical expenses. These include expenses of you and "all dependents you claim on your tax return." If you claim your daughter, your FSA will be used and your ex's cannot. If your ex claims your daughter, your ex's FSA will be used and yours cannot.
A prenup could be useful in a situation like mine, where my husband's parents are dependent on him for support. Were my husband to die, all his money would go to me, his wife, automatically. I insisted on a prenup to ensure that his parents would have some funds that would go to them (as I don't necessarily trust that I, while in a fog of grief, would turn over part of the husband's estate to someone else).
Thank you. Yours is an exception I can see.
I am dumbfounded by the case of the teen (adult) who is trying to sue her parents for child support after running away from home. If the friends family had the money to bankroll the $13,000 lawsuit, why didn't they just pay the tuition and give the money so she could attend college. A lot cheaper and faster than anything that will come from a trial.
You are so right on the money.
They were so wrong in taking the course they did.
I understand not wanting to turn in a relative. It's family. But family did not make this person stop and not do it. This person did say I CAN STEAL FROM MY RELATIVES AND THAT IS OKAY WITH ME. Turn them in.
Yup, turn him or her in!!!!
Michelle, in the question about the possibility of ACA repeal, the poster said that he/she was considering RETIREE insurance, which should be Medicare secondary or supplemental (gap) insurance. If we're talking about retirees on Medicare, why would that person get an ACA insurance plan, which are all designed to be primary insurance? I don't believe that Medicare gap policies are available on the ACA. So, I think that the person should compare the employee's plan to other gap policies, not the ACA plans.
You are right. I was thinking the person was retiring but not eligible for Medicare yet.