Color of Money Live (July 31, 2014)

Jul 31, 2014

Washington Post nationally syndicated personal finance columnist Michelle Singletary answered questions in an online discussion.

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Hope you are enjoying your summer. I am. 

Got a lot of questions waiting so let's get started.

I'm a mid-twenties professional who's searching for a new apartment, and thus potential leasing agents are checking my credit score. Because I am added to my parents' credit card (I'm financially independent except for some medical expenses that I charge to it and they pay) my credit score is excellent, but my credit limit (and current balance) is outrageously high for my income. My parents pay the entire bill off every month, as I do with my personal credit card, but it's definitely raised some eyebrows that my monthly credit limit is greater than my annual salary, and the current balance is generally equivalent to my monthly salary. Is this something I need to be worried about? Should I ask them to take me off the card (though won't closing an account in such good standing hurt my credit score too)?

Lot of parents have been told to put their kid on their credit cards to help them build up a positive credit history, assuming the parents pay their bills on time.

I don't recommend it. 

Nonetheless, since you've established a good credit history, yes you should get off their credit. You don't need to be worried about it because you can explain to leasing agents what you just told me.

Still time to cut the credit cord.

With all due respect to you and Ann Hornaday, I want to have engaged my brain cells when I come out of a theater. I'm certainly not saying that fun, lighter movies can't do that, but I'm far more likely to be annoyed with insipid comedic gags or implausible stunts in action movies than films that are somber and dark. A History of Violence came out in 2005, and I willingly remember far more about it than the most recent Star Trek (which critics generally praised as arch and funny; I laughed a few times but mostly counted plot holes). That said, I do wish more theaters were like Austin's Alamo Drafthouse, where they have strict rules and will ban patrons who don't abide by them.

You are free to disagree. I'm right, but you have your opinion. Plus I don't believe either Ann or myself said we didn't want a smart movie. I'm just tried of being depressed for $11.50

And don't hate on Star Trek. I'm a Trekkie! :)

I reported credit card fraud (identity theft) to Experian and they thankfully worked with the credit card company that issued the card to remove the account from my credit report. Does the fact that the fraudulent account was removed from Experian mean it was also removed from Transuion and Equifax, or do I need to contact those separately? I rotate when I get each of my free credit reports so I don't want to check them all at once and pay if I don't have to. The next one I'll get is Equifax in mid-August and I won't get Transunion until December. But if you suggest I pay to see them now, I probably will. Thanks.

You should absolutely check the other credit bureaus. Not every creditor reports to all three but most do, especially credo card companies. So right after the chat (smile) get your other two reports. And if you were the victim of fraud you can get them free and it doesn't count or shouldn't against your one free one from each bureau every 12 months.

You should also put a fraud alert on all three bureaus just in cast something more funky might happen.

I have an issue with my wife’s employer. She works for a small contractor on a project for a DC City agency. The problem is twofold: her employer claims he cannot pay her until the agency pays him (a practice I believe is unethical); but she is emotionally invested in his company and sees his family socially. Because he cannot pay her when he is supposed to (on 2 specific days of the month) he is affecting our ability to pay our bills. This is causing significant me irritation and stress. My question is this: Is the inability to meet payroll on the specified dates in violation of federal law?

I'm not a labor attorney so I don't know your wife's rights when not paid on time. But if she's owed the money, she's owed the money as her contract specifies. Whether there is a penalty or recourse, I'm not sure. 

However, I agree with you that the practice is wrong. I understand why it's happening but that's not your wife's problem. The business owner should had reserves to pay his staff while waiting to get paid from his client.

Really, I would be looking for another more stable job if I were your wife. I get that she's connected socially to her boss but business is business and he's not running it in a way that is good for your family. 

Hi Michelle, I've written in to you in the past complaining about how difficult lenders make it to pay off student loans. I wanted to tell you that I just hit send for my last payment to SallieMae, 6 years ahead of schedule. I want to break into happy tears! I have been saddled with loans since I was 18 and I'm finally debt free and it is the most amazing feeling! To everyone struggling, just try to pay a little bit more off each month and hang in there. The joy you'll feel when you finally pay the loans off makes up for the feelings of shame you feel when you have trouble making payments along the way.

Can I get a hallelujah! 

Wow. So happy and proud of you. 

Thank you for sharing your testimony.

My retired mothers car lease expires in two months. She's been leasing cars for a dozen years. The big problem is that when the contact ends the car will barely have 5k miles on it. She usually only drives short local trips. However, the $250 monthly payment fits her budget and she seems to have an irrational fear of big repair bills for a not new car. Is there any way I can convince her that leasing buying and keeping a car is the better decision?

Show her the money.

Do a spreadsheet to show her how much she's paid over the years compared to buying a car and keeping it for YEARS. 

And really if you maintain the car there is no need to fear car repairs. If she's saves when the car is in good condition no need to fear car repairs.

Help her see the folly of her financial ways by doing the math for her.

I just received a letter from my primary care physician's office requesting a "maintenance fee to help our office negotiate the never-ending challenges of practicing medicine in a compassionate yet cost-effective manner." Am I crazy to be totally offended? This is only $35/year but ... really!? My physician is wonderful but this is NOT a clinic or non-profit agency. They have offered that if we enroll in and pay $45/month for something called a Privia Health membership that affords us special care, the maintenance fee is waived. Is this the future of health care? I am appalled. Thoughts?

I have never heard of such. Really. 

I mean maintenance of their office space is the cost of them doing business. Typically what businesses do is roll such expenses into their fees or charges. 

I think it's out of line. 

And the trade off $35 a year vs. $45 a month for "extra" care. Now that would concern me. So people who don't pay that fee what, don't get a magazine?

What do you guys think?

I say this article on CNN the other day and thought of you. http://money.cnn.com/2014/07/28/pf/parents-student-loans/index.html?hpt=hp_t2

Read the story. For those who didn't.

Daughter dies leaving three kids. Parents co-sign on her $100,000 private loans to go to nursing school.

Lenders want their money.

Another caution about co-signing. It's so sad. Yet, it's what it means to be a co-signer. It's your debt too.

 

I had a phone call from a person with a very thick accent attempting to confirm that I had recent surgery. I denied it and then finally hung up, telling him that I couldn't understand him. Is this a scam? How would a telemarketer or a scammer have access to my medical records?

Smells like a scam. You were right to hang up.

I got a call from some man, with a heavy accent, saying my computer had some issues and wanted me to sign on and do whatever.

I said: "How did you get my number."

He said: "You registered your computer."

I said: "Really, cuz this sounds like a scam."

He said: Nothing.

He hung up on me!

It's called Concierge Medicine - http://en.wikipedia.org/wiki/Concierge_medicine - and more offices are doing it. It gives "the haves" faster and better access to care.

Right. 

So wrong.

I think we may have the same doctor. My primary care physician sends me this letter every year for the $35 fee to help cover administrative costs. I found another primary care physician.

Exactly!

Our pediatrician had a yearly fee (I don't remember the amount. Perhaps ~$100) to pay for the nurse call line, which enabled parents to call in at any time for medical advice. That's the only yearly fee I've heard of.

Interesting.

I have a dentist with an after hours call line. No yearly fee. 

I just assume, he rolls his expense of running his office into his fees. That's a business practice I can respect.

I really hate all these add-on fees for the cost of doing business. Just charge what it cost and leave me fee free.

Yes, I do see that as the future of medicine in this country, unfortunately. Michelle, when you say "Typically what businesses do is roll such expenses into their fees or charges" - how exactly is a doctor supposed to do that? The insurance companies (and the gov't - if the doc accepts Medicare or Medicaid) negotiate fees, the doctor has very little control over that. Key example - call a dermatologist's office, and ask for a Botox appointment -- you'll get that set up in no time. But call and ask to have some suspicious moles looked at -- and you'll wait a much longer time for that appointment. Reason: Botox is out of pocket, and the doc can charge whatever she likes (or whatever the market will bear). Mole check is covered by insurance, and reimbursed at a very low rate. That being said, I'd be unhappy about it, too, if I were a patient in that practice.

And this is why we have to change the way we handle medical care in this country! 

We were asked to pay $200 a year to a family practice to help their conversion to electronic records. The problem is there's no guarantee the office will stay in business. We left, and found a more stable medical group associated with a big hospital.

Another testimony about medical add-on fees.

Thanks for sharing.

I agree that maintenance is part of the cost of doing business and should be covered in the fees. That way, people who use the office's facilities more, pay more and those that don't, don't. As to the "special care" charge, nuts. That's $450 a year for something you should get anyway. Pay with your feet! Go elsewhere.

Agree!

Listen to Michelle and tell your wife to find another job. I was in the same spot as a government contractor a long time ago - in addition to not paying us, the company was also not paying our health insurance or payroll taxes. My Social Security form said I didn't work at all in 1999 until I dug out my old W-2 to prove I did. Call the Department of Labor and start looking for another job. This will not get better.

Listen to us!

And thanks for the suggestion about calling the Labor Dept. I wonder too now whether the employer is paying the payroll taxes.

Get out. Friend or not. Your family comes first.

Definitely never give out information who seeks YOU out first. My husband is a software engineer who detests the Windows Operating System. We use Linux. So when I got a call from "Windows" asking to remotely reboot my computer and to give them a credit card number to do so, it gave me untold amounts of delight to say, "Really? How is that possible since my computer uses Linux?" Click...dial tone. People, NEVER trust someone who solicits YOU for a service you didn't initiate.

Great story.

And it shows that if you start asking questions, they will hang up on you because they want to get to someone who will believe their lies. 

 

The last couple of times I've had a sugical procedure, the surgical facility has called me a few days later to follow up with me. In the OP's case, it ceratinly could have been a scam, but a call shortly after surgery doesn't necessarily seem out of the question to me.

Good point.

So here's what you do. If you EVER are unsure about a call. Let them know. Hang up and call the doc, credit card company, etc. Use the number you have, not one given to you.

Be very, very careful out there.  

While I doubt that a doctor asking for an "administrative fee" is violation of his/her medical license, I would still write a letter of complaint to your state MD licensing board. Maybe if the board gets enough complaints, it will outlaw the practice.

Perhaps. Doubt it. But maybe.

Thanks.

Hi Michelle. Do you know anything about these companies that will pay for solar panels to be installed on your roof, but then you just buy the energy that you harness, at some promised lower-than-Pepco rates? I'm definitely interested in solar panels, but I know that owning them will likely never happen on our household income.

So sorry. Don't know much about this. 

But for those interested, just do a lot of research and do the math (what it cost to install vs. promised savings, etc.)

Hi Michelle - Love your chats! My question is what should my husband and I do with our W-4 withholdings? Have more taken out? Should be we file single or jointly - or better yet, what should we consider while deciding that? Thanks!

Get thee to a tax professional :)

You are asking some great questions that you should put at tax person because the answers depend on your income, deductions, etc.

And now's a great time to do it. It's summer. Tax business is slower and you have time thu the rest of the year to make any adjustments you might need to put yourself in a better tax position. 

Michelle, I learned from reading Krebs on Security, the blog by the wonderful Brian Krebs, that there is a FOURTH credit bureau called Innovis. File a fraud alert with Innovis at this link: https://www.innovis.com/InnovisWeb/pers_placeFraudActiveDutyAlert.html (I love this chat!)

Thanks. Good tip. 

I have a follow-up question - if I get off my parents' credit card, I will still need their help with medical expenses. Should I just put them on my credit card (my credit limit is high enough to do so) and ask them to send me a check to help me pay my bill every month? Will it look odd to have monthly expenses so much larger than what I could reasonably pay on my salary? (Yes, I agree with you that we need a different healthcare system in this country!)

I'm not sure how to answer this without more info.

Are you living on your own? Have your parents agreed to help pay for your medical expenses? Can you cut other things to pay your own medical bills? 

Either way, I still don't like it when relatives are connected to each other's credit. 

Just read the article- very sad. Not sure if it's possible all the time, but if you co-sign on a huge amount debt, consider taking a term policy out on the person for the amount of the loans. If something unforeseen happens, if the co-signer(s) is the beneficiary of the life policy, they could pay off the debt. Not always feasible but something to think about if you are going to co-sign for a large amount of money

I see your point. And if you are the co-signer makes sense to help pay off the debt.

But I still believe you shouldn't put yourself in this position in the first place. Period.

And if you do decide to co-sign you better be in the position to take over the loan payments because it is your loan. You are not a back up borrower. 

Here's a first-world problem for you. My husband and I make a combined income of $200k. That seems like a lot of money, and yet somehow it disappears quickly. So after IRS maximums in 401ks, and health care premiums, and taxes, we each bring home less than 1000 a week. The mortgage and insurance are about 3000 a month, plus utilities on top of that, and we are also maxing out our IRAs (over 900 a month total). In a few weeks, when I go back to work, add 1100/mo in day care expenses to that. Oh, and a taxable retirement account just to make sure, extra 1000 on the mortgage when we can... At what point can I just say, enough, and allow us to travel a little, or stop worrying? With 200k annually, you'd imagine we could just take a vacation without worrying about pennies, right? Are we really the oppressive rich?

You probably need to really go over your budget and find the money to put aside for vacations and some fun. It may mean pulling back a bit on saving for retirement or the extra mortgage payments. 

Make it a line item just like retirement, mortgage etc.

Because yes, you are doing well. It's a good problem to have. 

Michelle My husband and I are going to be selling our house in 2 years and moving out of state to be closer to family. We are under a mountain of debt (30k) not including mortgage. We had a realitor come out and give her thoughts and she basically said we're going to have to spend some money to at least get what we paid for it back in 2010. The biggest expense is a new deck that's up to code - I do agree with this as our deck is completely rotten and unsafe. The problem being, how do you get the money to do a project in order to sell? Granted when we do sell (moving in with family for 1 year) we'll have about 60k and will be able to pay off all debt then but in the interim what do you do?

Can you move out your moving timeline?

Can you give yourself a few more years to make the move without the financial worry?

If so, I would spend the time (2 years +) saving up to fix the deck. Cut expenses and find money to get rid of the $30,000 in debt. 

At that point move and take the $60,000 to start a really good emergency and life happen fund.

Or at least spend the time saving up to fix what you need to sell the house and then take proceeds and pay off the $30,000.

 

My doctor's office has solicited such a fee for the past three years. I pay it. Why? Because in fact they do have a lot of costs they can't charge the insurers, and they are unable to set fees themselves--that's up to the insurers. Still, they accept my insurance, which fewer & fewer docs do. They saw me on Dec. 23 at 5pm one year, same-day request. The office staff is nice, & competent. As part of the fee solicitation, they also offer the option of paying more, so that money can go to cover the fee of someone else. So yes, until the health care system gets fixed, expect to see these fees.

Thanks for sharing. You clearly see the benefit. 

I hear you on not taking on other's debt. A while back, my brothers & I agreed to payoff our mom's high interest credit card debt. My bright idea was to transfer the debt to my credit card using the zero interest for xx months; my brothers would then make the monthly payments to pay it off. One year later, one is out of work and can't make the payments. Guess who has to increase her payments to get the debt paid off. And, our mom keeps charging on her other card anyway plus now that the one brother is out of work, he's using her card as well. Lessons learned

Hard lesson learned.

Thanks for the testimony. Hope others learn from your mistake.

I did contact the dept. of labor; they referred to their Maryland counterpart (even though the company and agency supplying the contract are DC); the MD labor dept. referred me back to the federal Dept. of Labor, so I decided to get off the merry-go-round for now.

Thanks for the update.

So it's decided. We all think wife needs another job.

Start helping her look.

Sounds to me like they are putting away far more for retirement than most people. Plus extra mortgage payments? Don't wait for retirement to travel and do fun stuff - you've no idea what the future holds, and whether you'll be healthy enough at age 65 to go to Costa Rica or climb the Great Wall of China - or even hike in Yellowstone. Putting $ for a rainy day is great, but enjoy the sunny day you have today!!

It took me a long time to embrace what you just said.

I was in save all the time mode. Now I do take the time to play a little. Still save a lot. But I enjoy the fruits of my labor now too.

Thanks.

I have gotten several calls saying in a heavy accent "I am calling from Windows Technical Support," or "We have a report that your computer has a virus." It's a ripoff big-time. There have been a few investigations, and one company got its accounts frozen, but it's all a scam. Warn your elderly relatives with computers. (I hope they call my dad though. He's a former Unix Admin and runs Linux on all of his PCs.) For more information see http://arstechnica.com/tech-policy/2012/10/i-am-calling-you-from-windows-a-tech-support-scammer-dials-ars-technica/ and http://arstechnica.com/tech-policy/2014/05/stains-of-deceitfulness-inside-the-us-governments-war-on-tech-support-scammers/

Thanks. Sounds exactly like the call I received.

 

Hi Michelle, Unfortunately, I have quite a bit of credit card debt, which I am taking steps to pay down. A few years ago, when I spent some time unemployed, I got behind on a few of my debts (never my credit cards). Almost immediately, several of my credit cards lowered my available credit to just over my then-current balance. Of course, this made it appear that my credit cards were mostly maxed out, and I'm sure my credit suffered even more. I've been steadily employed and haven't had a late payment on any account for more than 2 years. Nevertheless, one of my credit cards--the one that I'd been focused on paying off first because the interest rate is the highest--suddenly lowered my available credit again. Now that account appears maxed out, and my current balances are back up closer to my total available credit. Very frustrating. Is there anything I can do to avoid this happening in the future with other credit card accounts as I pay down the balances? Should I try to pay them all down at around the same pace? I'm reluctant to pay any one account down too quickly, to avoid this happening again. Do you think it would be to my advantage to close a couple of my credit cards and continue paying them off, so my "available credit" will remain constant, and my ratio of debt to available credit will finally increase? Thanks

I'm so sorry you've had financial trouble.

Right now just concentrate on getting rid of the debt. Don't worry about credit scores, appearing to be maxed out, etc.

Just get rid of the debt.

Then once you've paid off all the cards just stick with one or two or just one. Close the ones you don't want.

Charge if you like on the one card you want to use but pay off the balance every month.

Then you won't have the problem again of looking maxed out. 

If your wife's employer is not paying *her* on time (someone he sees face to face on a daily basis), you can bet big money that he is NOT paying those payroll taxes to a faceless agency. Get out before it gets worse. It is highly, highly unlikely to get better. Businesses that operate from behind like that ordinarily get further behind until they eventually go under.

Good cautionary tale.

Thanks.

So sorry but I have to go. Times up.

Thank you all for joining me today. For your questions, comments, tips and testimonies. 

See you next week. Same time. Same place.

 

In This Chat
Michelle Singletary
Michelle Singletary writes the nationally syndicated personal finance column, "The Color of Money," which appears in The Post on Thursday and Sunday. Her award-winning column is also carried in more than 120 newspapers. In her spare time, Singletary is the director of a ministry she founded at her church, in which women and men volunteer to mentor others who are having financial challenges.

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