Color of Money Live (March 24)

Mar 24, 2016

Join Washington Post nationally syndicated personal finance columnist Michelle Singletary for an online discussion.

This week's guest is Liz Weston, a columnist at NerdWallet. She's an award-winning personal finance columnist and author of several books about money, including the best-seller "Your Credit Score." At NerdWallet, she helps provide clarity for all of life's financial decisions. Her weekly syndicated Q&A column, which appears in the Los Angeles Times and other papers, gives straight, clear answers to the money problems Americans face.

Send your money questions in early.
Read Michelle's recent columns

I have such a treat for you today. My guest is Liz Weston from NerdWallet. We are talking about her book on credit scoring. 

So let's get started. 

Hi, everybody! So happy to be here.

Hi Michelle and Liz - my credit card company has started to show my credit score as an additional service. I don't have to pay for it, so I checked it out. I noticed that my score dropped over 50 points last year, concurrently with a period in which I was aggressively paying down (and ultimately off) student loans. While the end score is still a great credit score and I'm not worried about it, it raised the question for me - did so aggressively paying off my student loans adversely affect my credit score? Perhaps due to change in credit:debt ratios (once the loans were gone)? If so, that's a ridiculously perverse system.

First step is to make sure you're looking at the same type of score from the same credit bureau. There are many different versions of the FICO, plus there are VantageScores and the bureaus' proprietary scores. If you're looking at the same score from the same bureau, then pull your credit report from that bureau and see what's up. There could be a collection or a late payment. If you don't see a negative like that, check your credit card balances vs. your credit limits. Using a lot of your available credit can hurt your scores, even when you're paying balances in full every month.

I don't want anyone to think paying off student loans will hurt your score because it shouldn't.

I think something else was up because the second thing that can improve your score is paying off debt. I don't think the downgrade was because you got rid of debt. 

Michelle, Did your husband ever get his luxury car? My husband has always driven a high end car...Mercedes, Lexus, Infiniti and BMW...we still pay cash for the cars and my husband drives them, since we have been married, for at least 8 years but what drives me really wild are the high service and repair bills...wait until you are charged $400 to change a headlight blub! But, by far the easiest luxury line on our pocket book was his Lexus. Just thought I would share:)

LOL!

Oh my goodness. Do you have a bug in my house. I was JUST talking to my husband about this. Seriously. Just. He just left for work and I was like, "Can't you get a Ford Focus?" 

I do not want to deplete our savings for a luxury car because we WILL pay cash. And he was like, "Honey that's why we save. We have the money."

So in the end yes he will get a lux... Just can't even type it.

And we are thinking about a Lexus because I don't want either a Mercedes or BMW for just the reasons you site.

I'm planning to move in with my boyfriend. We will be living in one unit of his rental property, which he has spent a significant amount of money renovating. The other unit should cover the mortgage. Our salaries are about the same. Is it fair for me to suggest that we just split all of our living expenses (e.g. utilities, food, household items), even though he will need to pay off the renovation expenses? Or should I try to contribute more than just our living expenses, which is what he is thinking?

Is your boyfriend going to add you to the title of this property, so you can share any appreciation of this investment? If not, it's hard to see why you would want to share the costs for the reno.

Ok, regulars know where I stand on this.

I don't suggest you move in together. Get the ring and all that goes with being married, including some pretty awesome financial things.

But if you do decide to move ahead with moving in, keep your money separate at all times. Pay for your own expenses. Do not pay for his house renovations because as Liz points out, you won't be sharing in the appreciation. You are not married so live like you are roommates because that is what you are. 

Thanks very much for the great column on personal saving rate in Nerdwallet. My question is: if saving between 10 to 15% of gross income (and the emergency fund and life happens fund are already funded), what percentage of that should go to retirement and what to savings? Currently I'm saving 12.5% with 8% to retirement (and I get an 8% match from my company) and 4.5% to savings. Thanks for your help!

Thanks! NerdWallet has great info on savings and many other topics. We recommend shooting for saving 15% for retirement. With your contribution and your match, you're there. If you started late, you may want to step that up a bit. Otherwise, great job!

My FICO credit score changes even though I have pay all my bills on time and my utilization rate (percentage of available credit used is generally under 5 percent). For example, for two straight months my credit score was 850 and then after that it dropped to 839. And then it went back to 850. Is there an explanation for the seemingly random changes in my FICO score?

It's a wonderful "problem" to have! Those are great scores. Congratulations! Our credit scores change all the time, to reflect changes in the information reported to the credit bureaus. Because your scores are so high, you're getting the best rates and terms, so it's nothing to sweat. It could be that you just used a smidge more of your available credit limit on a credit card.

Folks once your scores are over say 750, it's all pretty much the same when it comes to good lending rates, insurance deals, etc. You are golden at that threshold so 750 is as good as an 850 or 839

Thank you for taking my question, Michelle! My husband and I welcomed a baby a couple of months ago, and we are looking to start a college fund for her. We make too much for an ESA, and would like to contribute more than the $2k annual limit anyway. We will be looking at put in several thousand a year, plus contributions from grandparents. What plan would you recommend? Thank you!!

I'm a huge fan of 529 college savings plans. They're run by the states, but you can invest in any state's plan and use the money at pretty much any college or university in the US plus some abroad. The money is tax free if used for qualified higher education costs and you can put in small amounts, like $25 a month, or huge sums...like six figures!

Just sent off money for my daughter's summer course and with one phone call in less than 5 minutes had the money sent to my account to pay the school.

All through the 529 plan we set up for her 18 years ago. We've primarily saved for three children in Md 529 plan and have enough to send all three to college debt free. Because we started so early we only put in about $250 per kid. And with returns the money has grown and we are good. Now that's only enough for state schools. Just saying.

Last week, my mother and I finally submitted the FASFA application for my senior year of college. For the past three years, I have received the Pell Grant, along with additional academic/means tested grants from the university. However I will receive zero funding for the 2016-17 academic school year. My parents (both single) are stressed out and are contemplating seeking part-time employment. However they have their own financial obligations/debt and truly cannot afford to pay for tuition AND housing. They do currently pay for my rent, utilities and food (housing is quite costly- $920- because my university is in an urban area). As a frugal college student, I have been able to save (all while being debt free), and as a result, I have the funds to pay for tuition and fees. However, that will deplete my savings account entirely and I would have no emergency savings. What do you recommend for my situation? Should I work over the summer and take summer classes (I do not work now because my course load this semester is quite heavy) or take out a student loan, perhaps just for one semester and pay cash for the second semester, in order to keep that savings buffer? Thank you for your time!

All of the above. A summer job plus one during the school year will help (as long as it's no more than about 10 hours a week...more than that and you increase your chances of dropping out). Keep a small emergency fund, but it's better to use savings than take on unnecessary debt. That said, education debt is not the worst thing in the world. Federal student loans are have fixed low rates and lots of consumer protections and repayment options. You really can't overdose on them as an undergraduate. Good for you for being such a diligent saver! I predict a happy financial future for you.

So proud of your saving. Good for you.

I differ from Liz just a bit. DO NOT TAKE OUT ANY LOANS.

You have the money. Use it. All of it so avoid the loans. So work as many hours as you can for the summer to help pay and build back up your savings. I would also recommend your parents do take those part-time jobs to help so that you could leave some savings. 

But you are almost there. You can do this and still come out debt-free. Make that your default and work around that notion. You will be so much better off. 

One point I think is not made often enough is how seldom you need to call upon your "credit score." Major purchases NOT financed via CC. Changing your rental. Maybe a job application. Obviously, you want to keep the score high, but the way companies now SELL "managing your credit," is ridiculous. It needs to be repeated: if you pay off your credit cards in full every month and don't have unbearable mortgage/auto/health loans - you don't even need to think in terms of "managing" your credit score. That's probably the majority of people.

Amen. 

I so agree. You manage money not credit. When you have credit you are managing debt and the only way to manage it is to kick it to the curb as soon as possible.

What if, for example, I have paid for my only daughter's tuition in a Maryland prepaid plan, and then she gets a merit scholarship for half tuition at UMD College Park? What happens next?

You can transfer the money to another account for you or another relative. You can keep it there and use the money should your kid go to graduate school. Or you get to withdraw it without the 10 percent penalty because of the scholarship but you have to pay taxes on the growth.

Hi Michelle. I'm a recent follower and get a lot out of your advice. My husband and I had a baby in January and all the bills are flooding in. Unfortunately, I was hospitalized for preterm labor in December so we're having to pay my $6500 deductible twice. Ok, we were expecting that although wish it didn't happen. One bill came that was totally unexpected - $2500 for the anesthesiologist who did the epidural. Apparently she was out of network. This is my first child so it never occurred to me that the hospital I chose (in network) and my OBGYN (in network) would also have this doctor out of network. Lesson learned. But, I feel like we've been screwed. This extra $ that we owe makes me so mad. I don't know what my question is, really. I guess it's best to have savings and life happens funds to cover these kinds of things but nobody deserves to have their savings wiped out by insurance surprises. I'm wondering, if she was the only anesthesiologist on staff was I supposed to skip the $2500 epidural?

Ugh! I hear this all the time. When I was in labor, I sure as heck wasn't in the mood to ask if the wonderful, wonderful man with the needle was in network or not. You might try contacting the doctor's office directly to see if you can get a discount for paying cash (assuming you haven't paid already).

Hi Michelle, Thank you for all your advice! I am 34 and have about $110K in my 401K account. I have $15K in cash savings. I make a good salary (>$100K) but am mired in credit card debt that started when I was in college and I've been struggling to get control of since. I put as much as I can each month towards the balances, but can never seem to make a dent since I end up using the cards for everyday needs after making payments with any cash I have available after living expenses (rent, etc.). Since the beginning of 2016 I've been trying to turn over a new leaf with my use of credit cards and am now at about 1/3 of what I used to put on the cards monthly, have cut out all unnecessary recurring payments, reduced some payments, and keep a very detailed accounting of my spending to give myself more visibility about where my money goes. I also have plans to move to a much less expense apartment in a few months when my current lease expires. If only I could stop paying card balances, all my remaining spending could be done with cash easily. I've moved some credit card debt to cards with 0% interest rates and am on track to pay those off by the beginning of 2017 with no problems. I still have about $25K on high interest cards. My question to you is: should I take a $25K loan against my 401K to pay off the high interest card debt? My company allows us to take up to 50% of our 401K as a "personal loan" at a fixed 3.5% interest rate (with auto-payments through payroll in each paycheck), though the interest actually would pay into my 401K account, not to the company or a lender. I realize I would be missing out on market gains for the amount I borrow for the next 5 years, but I just can't see a light at the end of the tunnel with this card debt. Paying a 401K loan via payroll deduction over 5 years would actually be doable for me, since the monthly payment is the same as the raise I got this year (so my income in effect would stay flat for 2016 over what I made in 2015). I'm very hesitant to put my $15K cash savings towards the card debt as I feel like I need to save that as emergency and "life happens" money. I have no other safety net in case of job loss, medical bills, car death, etc. What do you think? I would like to be able to buy a house in the next 1-3 years, and making this move would allow me to make a big push towards setting aside money for that, instead of just burning money paying off credit card balances that don't seem to budge.

Kudos for the progress you've made so far. You've dealt with toxic debt while keeping your credit scores strong (as evidenced by the zero percent offers you're getting). The two red flags are that you're continuing to use the cards while you still have debt, and you're considering borrowing from your retirement funds, which really should be left alone for retirement. Plus, if you lose your job and can't pay back the loan balance quickly, it's typically considered a withdrawal and you owe taxes and penalties (equal to 25% to 50% of the withdrawal). Worst yet, you've lost all the future tax-deferred compounding on that money. Every $1,000 withdrawal now costs you $10,000 in lost future retirement income. Since you have great credit, consider investigating a three-year, fixed-rate personal loan. Yes, you'd be paying interest to someone else rather than yourself, but you wouldn't run the risk of trashing your retirement fund. The fixed payments can help you finally retire this debt while learning to live within your means. Once it's paid off, you can use your credit cards the way they should be used--as a convenience, paying off the balances in full each and every month.

 

Liz lays out a great plan. And I'll only add that you can't dig out because you're still dug in by continuing to use credit.

Pull them out of you wallet RIGHT NOW. If you don't have them when you get home put them in the freezer. You've got to wean yourself off them

Further, if you are like a lot of folks, you may clear those cards but if you haven't really change for the long term they will be run up again. That's why you NEED to go through the pain of paying them off with income and not another loan personal or 401 (k). 

Feel the pain. Feel it and remember. So put a hold on any plans to get a house until you have paid it all off. If you think your job is fairly secure -- as secure as any of us might feel - I would take $10,000 and pay down the cc. Then use the raises aggressively attack the rest of the debt. Get a part-time job. Cut more. Once you've gotten rid of the cc then you build your emergency money back up and start planning for the home. 

Hi Michelle - I sent a message several months ago about splurging on a family cruise with my terminally ill mother. My whole family went last week (parents, 2 kids & spouses and us) and prior to the trip I felt guilty about spending so much money because you never know when something will come up. Well, we returned last Sunday and we had the best time. It was beyond special to spend quality time with those you love. Driving home my husband & I discussed the financial impact of the trip and decided that we need a third savings account titled "No Regrets" and that money is designed to be spent on anything that is meaningful to our family. And guess what happened today? I received a message from a dear friend that her daughter is getting married - so I've already decided to spend this months contribution on a airline ticket to go to the wedding. Prior to this cruise, I would have stuffed the money away for a rainy day - but I have the rainy day fund so why not buy the airline ticket. Anyways - I always appreciate reading your chats during my lunch break and wanted to say thanks for taking away the guilt!

Michelle, this was addressed to you but I'd like to chime in to say Yes!! This is what savings (and smart money management) are for--to have amazing experiences with our family and friends.

I'm so glad you took my advice and went on that trip. 

And I LOVE the new pot "No Regrets." I've got to write about it.

Because you had been so good with your money, your trip and future ones is worth the money. 

I recently paid off my car and student loans in the last year or so. I currently own a town home but need more space. How much money should I save for a down payment on the new home I'm looking to purchase sometime next year?

You'll get the best rates and terms with a 20 percent down payment, plus you'll have some cushion against market downturns (which we know can be pretty severe).

Is it better to close credit cards, especially ones for department stores, or to hold them open but not really use them? If they should be closed, should newer or older ones go first?? Thanks!

Closing accounts can damage your credit scores, but that doesn't mean you have to keep accounts you never use. Once your scores are high (say, 750 and above), you can start closing some. You can close the lower-limit department store cards without much concern that you'll tank your numbers. Just don't do it right before applying for a mortgage or other major loan. I'd also close any cards that are charging you fees if you don't get enough rewards to offset those fees. If those cards have high limits, though, you'll want to make sure you keep open several other high-limit cards.

How do I get rid of items from my deceased father appearing on my report because I am a junior? I have tried writing and calling.

The credit bureaus have gotten a lot better about mixed files--the times this still seems to happen are like yours, when there are similar names with the same address. You can use the "contact" form on my site, AskLizWeston.com, and I'll help you get this fixed.

Try to negotiate with any out of network providers, you can ask if they will accept what a network provider would have been paid (with maybe a 10% increase). It's not unusual for a out of network provider to ask 2 or 3 times what an insurance company would pay. Since the alternative is possibly not be to paid at all many providers will accept a lower payment rate (I used to work in a hospital billing department). Always make the hospital aware you are unhappy about the inclusion of out of network providers and see if they will help with the negotiations.

Good advice. Thank you!

Contact the health insurance carrier, the hospital and if this is coverage through work, your employer about that out-of-network anesthesiologist. I am a benefits manager and we are often able to get these charges to go away or reduced to the in-network charge. Paying the doctor should be a last resort.

Love it.

Thanks for sharing your experience and tip.

And if you -- the poster -- follow the tips and it works, let me know. 

You shouldn't have to pay an out of network price. It wasn't your fault. Contact the doctor and the hospital and your insurance company. Offer to pay whatever the in network price is and no more. I have protested bills and not paid them FYI when I haven't gotten what I was supposed to. You aren't just a pawn. You have rights. They were wrong you shouldn't pay.

Folks are in agreement. Protest those charges!

Also try contacting your insurance company. I got billed and after talking to the insurance found out I wasn't supposed to, even if it was out of network. They were able to straighten it out with the doctor's office.

I so love the input.

I would definitely call. And have when stuff like this happens. 

Michelle (love your newspaper column, btw): you just said that one should kick debt to the curb; does that include the mortgage? My husband & I disagree on this. His dad (rip) told him that one should always carry a mortgage; I believe we should pay it off ASAP. who is right?? BTW, the mortgage is the only outstanding debt that we have as we repaid our student loans years ago, have 2 vehicles that are paid off, and we always pay our credit cards in full every month. If it matters, our interest rate on the mortgage is 3.87.

Dear old dad was wrong.

Kick

The 

Mortgage

To

The 

Curb

Especially in your case. Now you don't want to be house rich and cash poor, so make sure you are saving for retirement, kids college fund, got emergency fund, life happens fund, etc.

But why keep debt like it's a pet. If housing is the largest item on your budget, why wouldn't you want to get rid of it. And that tax break, which so many people think is the reason to hold on to debt isn't all that it's hyped to be. You pay far more in mortgage interest than the break you get, if you get the break at all, which you don't if you take the standard deduction.

I will be mortgage free before I retire. It is one of my requirements to retire. 

Then I'll be truly free. 

I was able to get a car loan on my own a few years ago. After the loan I realized I could get approved for credit cards. I ended up getting 10 of them. I started getting behind on payments and now all but 3 of them have defaulted. I ignore the collectors calling my job and home because I don't know what to tell them. Some of the payments are $100+ I want to pay off these cards but I am in way over my head. I know have completely destroyed my credit score. Can it be improved after this? What should I do?

Credit scores aren't permanent--they change all the time and can be improved. But you do need to fix your financial mess first before you can start rebuilding your credit. Contact a legitimate credit counselor via www.nfcc.org and set up an appointment to see if you qualify for a debt management plan. If you don't, they may recommend you consult a bankruptcy attorney. Consulting a BK attorney can be a smart move in any case--even if you don't intend to file, you need to know your rights and vulnerabilities if your creditors start suing you.

Michelle: I'm almost 55, single with more than $400,000 combined in savings and retirement accounts. Only debt is mortgage. My [first-world] dilemma? What to pay me and when. I'm six months into a new job, after a year of underemployment. I'm only contributing 3% to my new company's plan (no match but a vested pension after two years), I haven't made my Roth IRA contribution for 2016 yet and would like to pay off my mortgage — under $30,000. I'm worried that if I up my contribution (paying me), transfer money to the Roth (paying me), AND pay off the mortgage (paying me out of debt), I'll panic when I see that savings number drop and won't be able to save more and be able to spend a little, too, after that year of near-monastic living. Should I do one over the other? How would I space them out? I'm just so nervous with market volatility that I won't have enough to retire in 10 years even though I'd have not mortgage. Your thoughts? Thanks so much for all you teach us!

You have a good retirement fund going but it's hard to say whether it's "enough"--depends on how much you spend in retirement, how long you'll live, what happens with the markets, whether you have a pension in addition to Social Security. Since you're within a decade of retirement, consider hiring a fee-only (NOT fee-based) financial planner to look at your situation and give you objective advice about what to do next. Typically, people in your situation should be stuffing as much money as possible into retirement funds and not worrying so much about paying off the mortgage, but your planner can give you personalized, comprehensive advice.

First, breathe. 

I can sense your hyperventilating from your note.

You are in a good place, better than most. Right now, make sure you are putting enough away for the retirement you want. With such a low balance on your mortgage sounds like you can pay it off before you retire, which I would recommend.

Go to choosetosave.org Try out the retirement calculator. See where you are. Don't freak out if you aren't where you want to be. 

You got this.

You are doing great. Saving more for retirement or paying off your mortgage early. Either choice puts you in such a better place than most.

Michelle, I've been back and forth over the past year on whether to get dental implants or keep the denture that I now have (and dislike). My dental insurance doesn't pay much of the cost. My dentist office originally gave me an outrageous price for the work, which made me even more willing to keep the denture. However in a recent visit - he reduced the cost by almost half, claiming a new, less expensive kind of implant was now available. Coincidently, the new cost is just about the amount I have in a savings account. Could my dentist possibly have gotten access to how much my savings funds are?

Maybe the dentist is psychic. But love that he or she has come down.

Can you get the dentist to allow you to pay half of the cost and do monthly payments (without interest) for the rest of the implant. I don't want you to deplete your savings but I also understand about fixing your dental issue.

Or start saving for the implant using some of the savings toward it. 

Hi Michell and Liz, not sure if you got my previous submission. I need/want dental implants to replace dentures. My dentist office quoted one price about 6 months ago. Since I don't care for the denture, I am wavering back and forth because of the very expensive cost (my insurance doesn't contribute much). Recently, the dentist said that a new kind of implant is available at half the original cost quoted. Coincidently, the cost is just about the balance of my savings account. Could he have accessed my account balance in an effort to get me to make up my mind?

Almost certainly not. Have you talked with him about what implants actually involve? It can be a lot of time and a lot of pain. If you're determined, then consider starting another savings account just for this expense. I understand that you hate dentures, but implants are not the kind of life-or-death medical expense that justifies wiping out your savings.

How quickly are credit scores affected if one pays off their debts?

Pretty quick, if you're talking about paying off your current creditors. Credit card issuers, for example, typically report balances every 30 days or so. If you're paying off collections, though, you're unlikely to see any change at all in your scores unless you somehow convince the collector to stop reporting the account. Even then, the effect may not be huge, since the original creditor likely will still be reporting all the late payments and chargeoff that led to the collection.

They're built like tanks and can protect passengers in an accident much better than less expensive and lighter cars. This isn't something that most people appreciate until they've been in an accident, unfortunately.

I hear you. 

 

Could the score have dropped because those accounts were closed? I've seen some suggest leaving a trivial balance on the loans if you're paying them far in advance (obviously not incurring late fees or more than a few bucks in interest over the course of a year) and don't have a lot of accounts or a variety of accounts on your report.

No, you don't need to leave any money on a loan.

Paying off loans, debt is great for your score.

And even if the accounts are closed that does not impact your score. It's closed accounts because you defaulted and it's the default not the act of closing the account. 

 

OK, I'll be the nagging mom. You say you write down your purchases. Are any of those line items morning coffee? Brew your own. How about lunch out? Pack a brown bag. Happy hour with friends? Bars once a month, rotate friend's apartments the rest of the time. Cut to the bare bone and pay off that debt!

Yes mom!!!!

No one would stop you from working after 65. Even if you don't like your job or don't want to work full time even aart time job would help a lot. And you will still be young enough to work why not? 10 or 20 hours a week. Or babysitting or something. It isn't all or nothing. Remember that when the social security law was passed life expectancy was 65

Very true. Thank you!

Call your insurance company. Tell them the situation, fully. I've had more experience with insurance companies than I'd like, as my husband has life long health issues - ask them what their policy is for approving out of network providers. Be persistent. Like you said, you did not CHOOSE to go out of network. You'd be surprised at how successful you may be (ok, no promises, but do it).

More on calling.

You you gonna call?

Your provider.

Today.

We all agree. 

Do I need a lawyer to restore my credit?

The short answer is no. Credit repair companies are sometimes frauds and typically can't do anything for you that you can't do for yourself. Arm yourself with some books about dealing with debt and credit. There's a free ebook at DebtCollectionAnswers.com that can help if you're still dealing with collectors.

Good Afternoon: Our family just consolidated into one home and I am looking for suggestions to ease or forestall future money problems. The members of the house include my older sibling (retired, stable income $60K annual), my self (disabled, 10 years to retirement if health doesn't get worse, $50K annual), my son (24, $30K annual no benefits, no education debt, just starting working 4 months ago) and his girlfriend (19, job hunting). How do we document home improvements (wheelchair accessibility) and fairly share out costs like utilities? My second question is how do the young people document financial history when their names aren't on any bills? My son has 1 credit card and prefers to pay cash, which is his way of not overspending. They don't own a car (they use public transportation) and don't much in the way of savings. Thank you.

I'll start with the second question. As long as your son has and uses the credit card, and the issuer reports to all three bureaus, then he's building his credit scores. He could also look into a credit-builder loan, which are offered by many credit unions and online lenders. Basically, his payments would go into a CD, so he would have savings + better credit at the end.

As for expenses, it's a roommate situation. So all sit down (although girlfriend would be living someplace else. Just saying.)

Anyway, work out what everyone can pay to what: rent, food, utilities, home insurance, upkeep. Figure out what everyone can afford. Set the price. Set the agreement -- in writing. Set a due date, etc.

Have regular monthly meetings to make sure everyone is on the same page, including who cleans, washes dishes, etc. 

The key is communication. 

2 Questions. What are the best and fastest ways to: 1) get errors removed from credit scoring agency records, and 2) improve credit scores?

I'm still a fan of the old school method: put it in writing. Send a dispute letter for each error to each bureau reporting it, and include any documentation you have to prove that it's wrong. If the creditor insists it's correct, follow up directly with that creditor. If the creditor refuses to budge, contact the Consumer Financial Protection Bureau. They help with every complaint, and creditors are a lot more afraid of it than they are of you! Once the errors are gone, continue to use credit responsibly. That means using your credit cards lightly but regularly and paying in full every month. Secured cards and credit builder loans can help you build your scores if you don't already have credit cards.

Michelle and Liz, What do you think about P2P lending and people taking out personal loans to manage their debt or to use for big purchases rather than using a credit card?

When you have good credit, you can get some amazing rates on personal loans. Michelle's justifiably concerned about being taking on debt to pay off debt, because so often it doesn't work--you just pile up MORE debt. If you've really fixed the problem that caused you to overspend and you're disciplined, a fixed-rate, three-year personal loan can help you kick higher-rate debt to the curb. Personally, I'd rather pay 3-5% to a P2P investor than 22% to a big bank. But to repeat: you have to be seriously disciplined and you can't run up any more credit card balances if you want this to be a smart move.

Ditto to what Liz says.

I wouldn't be a P2P lender or borrower.

Dave Ramsey doesn't but anything on credit. Says he is happy that his credit score is zero

There's no such thing as a zero credit score. He probably means his credit history doesn't generate any scores. Some people truly don't need scores--they don't need mortgages or auto loans, they're never going to rent an apartment, they don't mind paying more for auto or homeowners insurance (insurers use credit history to determine premiums, sometimes more than claims history). The rest of us need to pay attention to our scores at least until we're rich enough not to care.

My husband has been out of work for almost eight months. He is going to be 64 in May. Unemployment payments and my part-time job are able to pay for most expenses, but not our mortgage, which we refinanced for 15 years several years ago. We have $42,000.00 in student loan and credit card debt. What is our best course of action? Should we sell our home? We have already used retirement money to sustain us thusfar.

I'm so sorry for your situation. Earlier in the post we mentioned credit counseling. Please seek out a nonprofit agency to help. Go to debtadvice.org.

Quick testimonial- pay of the mortgage! I agreed to retirement for my husband at 61 (his work had him physically exhausted) if the mortgage was paid off. We did it, he retired and I cannot tell you how wonderful it is to not have any debt. None at all. 10 year old car paid for. Credit cards paid in full every month. I'll work til 67 because I want to remodel the kitchen, and keep building my retirement, but there is nothing like the feeling of being debt free. So ignore your father-in-law's advice and pay it off before you retire!

Free at last. Free at last.

I can't wait until I'm in your shoes!

Michelle, You said that the second thing that can be done to improve one's score is to pay off debt. I always thought was #1; what IS the first recommendation then??

The No. 1 way to get a better score or improve your score is to pay your debts on time. And recent late payments impact your score more than say a late payment three years ago.

This happened to us. My husband had a major operation a little over a year ago, and the anesthesiologist cost us as much out of pocket as the surgery. The hospital had even posted a sign letting everyone know that they would receive a separate bill for anesthesia. Everyone I know who's had surgery in the past two years has had the same experience. I think it's a nationwide change due to the Affordable Care Act.

This was happening well before ACA. We got the same notice when my daughter was born and when we had our colonoscopies.

Recently, I had a meeting with a financial adviser and he said that I should NOT pay off my mortgage early because the interest rate is only 3% while I could be earning at least 4% if I invest that money. I would like both of your opinions on this as I feel he has a "vested interest" (sorry for the bad, unintended pun) in me having his help investing my money instead of using it to pay down my mortgage.

I've written about this issue a few times--I wouldn't pay down a mortgage until all your other financial ducks are in a row: you're saving enough for retirement, you have a fat emergency fund, all other debt is paid and you're adequately insured. That said, I'd rather be mortgage-free in retirement, so we'll have ours paid off by then. If you're really wealthy and you can pay off the loan any time, you might chose to keep a mortgage in retirement because you can invest elsewhere and get a better return. I think the rest of us are better off being debt free.

Debt free baby. All the way in retirement.

And yup, he has a "vested interest."

If you get rid of your biggest expense in retirement, think how much longer you can live on your money.

I agree with Liz and recommend the same, get your ducks in a row AND pay off that mortgage before you retire.

It's been enlightening to see all the Q's and A's which gave me answers to my questions. Blessings to you all and especially to Michelle and Liz for their leadership in financial knowledge.

Ah, thank you!!

I could have asked this question 24 years ago. So sad that nothing has improved with out of network anesthesiologists in the meantime. Our hospital helped by saying that we only had to pay the "fair and reasonable" price. Eventually they stopped calling.

Thanks for sharing.

My fingers hurt. So many questions and comments. And we still had more. But Liz and I have to run.

I'll have her back. I promise. It's good to get two opinions.

Thank you all. As I say every week, I read every question and every comment. Some I use in the future. So your time has not been wasted.

Thank you all and if you celebrate Happy Easter!

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Michelle Singletary
Michelle Singletary writes the nationally syndicated personal finance column, "The Color of Money," which appears in The Post on Thursday and Sunday and is carried in more than 120 newspapers.

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Liz Weston
Liz is an award-winning personal finance columnist and author of several books about money, including the best-seller "Your Credit Score." At NerdWallet, she helps provide clarity for all of life's financial decisions. Her weekly syndicated Q&A column, which appears in the Los Angeles Times and other papers, gives straight, clear answers to the money problems Americans face.
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