Color of Money Live

May 21, 2020

Welcome to a weekly discussion about your money hosted by Michelle Singletary, nationally syndicated personal finance columnist for The Washington Post.

This week, Michelle took your questions on when you can expect to receive your stimulus payments and why you might still be waiting for a check if you receive social security, disability, or survivor benefits.

Did you know: "Knowledge isn't power. The right knowledge is power." So, stay informed.

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Thanks for joining me today. So much going on with our money. But I'm here to help you. 

And I could really use some good news. Feeling a little low. Had to cancel our family vacation so going to miss my beach outing. 

We received our letter and will get it in the mail. We will donate it and hope it will help others. We are ok, so it's the least we can do.

So kind of you.

Good Morning Michelle! I am the sober chater from a few years back that needed advice after I paid back the costs for my rehab. Testimony - celebrated 4 years sober during this mess. And because of your advice I have been making progress on my student loans and contributing to my son's 529 account. So I am fine money wise during the pandemic. I appreciate your article on the FSA. I am lucky that my employer allowed me to stop my contributions to my dependant child care account almost as soon as the CARES Act passed. Any word on any alternatives we can use the money for? My son turns 13 at the end of the summer and there is close to $1000 that will never be used. As I stated earlier, due in part to following your advice, I don't NEED the money. I would love for it to go into my son's 529 account or donate it to a charity. Thank you for all you do, I truly appreciate it! (She/her/Virginia)

Wow. What a testimony. Thank you for returning with the update and congratulations on your sobriety. At this point no word that you can use the money for anything other than for dependent care. So sorry. 

For others who missed the column here it is: With summer camps canceled, IRS relaxes rules on flexible spending accounts.

 

  

Hi Michelle, I first want to say thank you for taking all of our questions, there is literally no one else to talk to. I don't understand why I still have not received the stimulus payment. In 2018, I was in school and my parents claimed me as a dependent, but in 2019, I was not in school anymore and I filed my own taxes in mid April. I have already received my state and federal tax return so my banking information should be correct for a direct deposit. Almost everyone I know who is eligible for the payment has received it already. When I check the Get My Payment site it says status unavailable. Do you have an idea what is going on? Thank you!

You are very welcome. It's very likely you will get your money soon. The IRS announced this week that 4 million payments will be send out on debit cards. I think it's just a matter that you are in the last line of folks getting payments. Even though you got your refund, the IRS may not have fully processed your return. Sounds crazy I know. Plus, the agency is still not fully functioning. Hopefully it will come soon.

Is it better to buy a house during the pandemic considering the overall uncertain financial situation at the macro level? Or is it better to do long term retirement portfolio investment?

I'm getting this question or versions of it a lot these days. Mortgage interest rates are down and in certain areas there are sellers willing to come down in price fearing that if things get worse they won't be able to sell. 

But you have to look at your overall budget and decide is this the right time for you to buy. Do you have any credit card debt? Student loans? Do you have an emergency fund separate from a downpayment and closing costs? Are you on track for saving for retirement? 

The banks look at one set of numbers to qualify your for a loan but I want you to answer those questions first. Make sure your financial house is sturdy before you buy a home. 

My federal student loans were automatically deferred under the CARES Act. While I still have a job and my pay hasn't been cut, I'm happy to have the extra cash for a few months to build up my emergency fund. I got an alert from credit karama that a note was added to my credit report that my loans were deferred. Now it looks like it's been removed. I'm curious how that impacts my credit score or report if loans are deferred, especially since in this instance I didn't initiate it.

Under the Cares Act if you received a deferral it is not supposed to impact your credit score. So it appears your loan servicer may have corrected the reporting. I will say this. If you have a fairly secure job and you have an decent emergency fund, I would pay as much on the student loans as possible. Why? Because at 0% right now every penny you pay goes straight to reducing the principal and this means getting out of debt sooner. 

Hi Michelle, I had my student loans forgiven last month through Public Service Loan Forgiveness (PSLF). My husband and I are down to our mortgage as our only remaining debt! Thank you for all your advice and encouragement! The PSLF program has had a lot of negative media coverage for its low acceptance rate, but I wanted to encourage your readers that although the program has very specific rules that must be followed, if you meet the criteria, your loans will be forgiven. Of course I think the best advice is that parents and students should avoid student loans if at all possible, and no one should borrow more than they have to in reliance on this program. But if you are in a position to benefit, my biggest advice is that anyone who is relying on PSLF must do their homework and be sure they thoroughly understand it for themselves. There are many financial professionals who do not have a good understanding of the program and end up giving poor advice, and you can't even rely on the customer service reps with your loan servicer to give you accurate information. And of course don't rely on something you heard from a friend, co-worker, or random internet person, without checking against a legitimate source of information. The Federal Student Aid office is the best place to start: https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service

I may need to hire you as my assistant. So happy for you and you are right on the money about the advice on understanding the PSLF program. So many people assume they are in the program and find out that they did not qualify. 

May be worth making clear to the OP and that there are 4 possibilities: 1) You will receive a direct deposit (timing unknown). 2) You will receive a physical check (timing unknown). 3) You will receive a debit card (timing unknown). 4) Since you filed your 2019 return in mid-April the IRS may have already used your parents' 2018 return to determine you appear not to be eligible. In that case, you will receive the credit when you file your 2020 return next year.

All good points 1 to 3. But a clarification on the last point. Since the person filed fro 2019 and even if there is a delay in processing despite the issuance of a refund, it's not likely he or she will have to wait until next year for a stimulus payment. I spoke to IRS yesterday and he said they are still processing 2019 returns to issue stimulus payments before the end of this year. So it's unlikely the 2018 return from the parents will result in no payment this year. 

Now THAT is a Testimony! Congrats to the OP [and *thank you* for your decade-and-counting of Public Service].

I needed some good news today. I've been telling people, "It's okay if you can't go on a vacation. Do a "staycation." But often hard to take your own advice. I love, love, love the beach. I really look forward to our annual two-week family/extended family vacation time. I loathe to even write this knowing so many people are out of work and struggling. So I need to be grateful. Still, I'm sad.

I think we are all going to have to take even nicer than expected vacations once everything is safe. As for me? I'm going to go through every single piece of paper in my apartment that has a number on it. Most of the others too. Time to create the death book. I already got the binder and the sheet holders when I was sure I would actually do it, but went on vacation or had fun on staycation instead. No excuses left.

Thanks for this. I'm going to take some days off to relax -- and get to my finishing my estate/funeral/here is where all my stuff-book too. 

I don't know anything about the PSLF, but it occurs to me that if a program is so complicated that nobody can understand it, even financial professionals, it's just TOO complicated. Maybe it was designed that way to evade giving relief to more people? I also wonder if some people might be taking lower-paying jobs than they might otherwise find specifically to get breaks on their loans, which might ultimately be counter-productive.

It's a government program. Need I say more?

And, yes I often run into people who stay in bad job situations, low-paying jobs to get the debt relief. But if they cut expenses, got better jobs they could pay off the loans themselves and sooner than 10 years. 

I qualified for Medicare last June and I added a Part B policy (Plan G). I received a letter last week telling me that my rates are going up 24 percent, effective July 1. Is that normal?

Unfortunately, yes. Increases come because medical expenses keep rising. 

Im on full dissability. I read your grocery line analogy and it is quite good, but is there anyone i can ask when i can expect to receive my funds. I lost my PT job because of the shutdown. Im in financial duress and your the most reliable and caring source for info.

I'm so sorry about your job loss. At this point there isn't anyone you can appeal to to help get the payment sooner. The IRS has opened up some phone lines but I'm already hearing the representatives can't really do anything but tell you what I'm about to tell you: You are in a line and it is still long. The IRS has about 10 to 15 million more payments to deliver and that's just the ones they know about. There are still millions more who may not know they have to use the non-filer tool at irs.gov to get a payment. 

Isn't leaving your affairs a mess a way to ensure that your heirs and relatives mourn you much longer? Why make it easy for them to get your stuff?

Or, more likely they will be cussing you out! 

I want to make it easy because I've been the witness to some hot messes when folks die with their affairs in disorder.

I'm guessing you are joking but I've actually seen fights at the funeral home. 

My brother opened a 529 for my nephew shortly after he was born three years ago, and I make a contribution each month. My brother and his wife recently had their second child, and we’re all wondering whether it’s necessary to open a separate 529 account or if the single account can be used for both children. Seems inefficient to have to open separate accounts. I thought I’d read that funds can be used or transferred to other offspring. Thanks for everything you do. You’ve been an amazing source of financial information over the years.

You are too kind. You can't have two beneficiaries on one account. Each child has to have his or her own account. Now, if one child doesn't need the money, you can transfer it to a sibling or qualified relative. So, yes open two accounts. My husband and I had three for our three kids. One my oldest won a scholarship we did transfer some of her money to my son, who did not get any aid. By the way what a great gift you are giving. It's so much better than showering them with toys, etc. 

I am absolutely opposed to the government sending out the next round of stimulus money on debit cards. It make it so much harder for people to use, especially for elderly people who may not be comfortable with them and end up handing them over to caretakers and such. I know my Dad wouldn't know how to pay a bill with debit card. Do you know if they're really going to implement this?

They really are. And I agree. 

Have to tell you our quarantine story. My parents are in high risk category, so they have been in quarantine at their home since early March. They are still very independent and capable, however as their named executor in the event of their passing, I have been concerned about finding all their documents. So early on, while I was doing their grocery shopping and dropping off, I dropped off a 3 ring binder, folder, and paper and told them I was going to send them homework every day. So every day or two I would give them another task to accomplish to complete their estate folder. We have worked through bank account info, wills and P of A, credit card info, car info, title to house, living will, retirement info, monthly bills and how they pay them, etc. Only have a couple of things left, and we are done. Thanks so much for the info over the years that made me realize not to wait on this stuff, and thanks to my parents for going along with me!! Will make things so much easier during a difficult time.

I love your testimony. Thank you! And such a great idea, too. 

For anyone wondering if this is worth it read this: A promise to a friend

 

I used the non filers tool to enter my bank information. Im on full dissability and havent filed a return in years. I tried to submit one (a tax return) but it was rejected for some kind of 1st time homebuyers code that must have happened a decade ago. Will my bank info still be saved?

Actually, you tax return filing was probably rejected because you use the non-filer tool. If you plan to file a return for 2019 you cannot or should not use the non-filer tool. By putting in the information, the system thinks you have a return on file already. The solution is to file a paper return, which won't get looked at for a long time since the IRS is not processing paper returns right now. 

(NY, she) My husband and I recently finished graduate school and moved to NYC, so we'd only been working for a matter of months before covid hit and he lost his job. Thanks to years of reading your advice, we did not buy a house when we moved here (though we qualified) and instead moved into a small apartment so we could build some savings and pay off student loans. So appreciative that we're in a position to cover our expenses from my salary and won't have to dip into our (small) emergency fund for months. Very happy that we don't have to deal with the stress of a mortgage on top of being locked down with kids, even though a yard would be nice.

Thanks for sharing your story. Such a great example of pausing before a major decision. And yards are overrated -- and costly to maintain. 

True enough, but we are now in unprecedented territory. Can we expect huge premium increases as a result of pandemic costs? Or will the cost of covid care be balanced out by less spending on elective procedures?

I think we should expect more price increases. 

Am going thru paperwork as well. What needs to be put in this? Am also sad that I'll miss my family's vacation as well as I'm high risk -- tho not everyone understands. : ' ( Thanks for all you do

You are welcome. 

Death book

-- bank account information, including being clear who is on what accounts

-- homeownership information, including who mortgage servicer

-- any titles to anything you own

-- retirement accounts/pension info. if beneficiaries

-- life insurance policy information, make sure beneficiaries are up to date

-- What you want done with all your stuff - yes people will fight over the turkey plate.

-- What kind of funeral arrangements you want. I've told my people do not bury me. I want to be cremated. Don't want flowers. (I won't be able to smell them). 

-- Healthcare power of attorneys, which are documents that list who can make medical decisions for you.

-- Power of attorney, make sure you can really trust the person.

-- Will - please get one!

 

Not sure how this works in other states...But in Virginia, you can deduct up to $4000 a year on state taxes per ACCOUNT. Therefore, I have two accounts for one child and can deduct $8000.

Many state have tax deductions so you are right. 

On Tuesday I submitted a question about whether, in the course of your indefatigable work to update us on stimulus checks, you had heard anything about tax refunds. Then on Wednesday the Post published Lisa Rein's great story about delays at the IRS. Based on that story I have simply given up hope of receiving that money before Christmas. So my new question is: are there statutory requirements that compel the IRS to review returns or issue payments by a time certain? And will I be entitled to treat that unreceived refund as a tax payment for 2020?

None laws I know about. They get to it when they get to it. But don't give up hope. You may see your refund before then. I am hearing from folks who have filed a return April and later getting their refunds and stimulus payment. 

Michelle, I really appreciate all you've been doing to help keep us aware about stimulus payments and the delays in getting credits issued. My concern is about my federal tax refund. I filed our 2019 taxes in late March, and we are due a refund of about $8,500, which is obviously much more than a stimulus payment. For what it's worth, I filed on paper, rather than through a fee-based electronic filing provider. Has the IRS given you any sense of whether the stimulus payments are being prioritized ahead of refunds, or when it's reasonable to expect to receive refunds? Many thanks. (Minnesota, age 53, he/him)

Oh dear. If the IRS didn't get to your return before the shutdown due to coronavirus you will not get your refund for a long time because the agency is not processing any paper returns right now. So sorry. 

(She/her, mid-30s, location undisclosed for safety) Ugh. I am not the DV survivor who posted last week, but I very well could be in their shoes if I didn't have the wherewithal to forward my mail on the day--mid April--when I made my (overdue) safe exit from my abuser. And the only reason I even collected myself together enough to do that is because I have an education and professional background that planted seeds that somehow sprouted as soon as I got out of the immediate danger. I just wanted to help raise awareness that, despite the pandemic craziness, fear of COVID-19 and financial issues is *not* a reason to stay in an unsafe situation. Even as things in my home escalated from emotional abuse to financial abuse to physical abuse, I stayed months longer than I should have because of fear of financial insecurity (and health concerns, given the pandemic). It is only in hindsight that I realize how quickly the situation was escalating and how close I was to being killed. If your readers are afraid for their safety, I highly suggest they contact the National Domestic Violence Hotline at 1-800-799-SAFE (7233) (when it is safe for them to do so). They can guide you towards local resources for legal, medical, housing, financial, and other logistical support. The IRS may not be fielding many calls these days, but the DV organizations (at least the ones in the DMV area I've been fortunate enough to work with) are still operating at full speed (if only remotely). And from one survivor to others: As awful as it is to start over in every way--including financially--the material stuff is all replaceable, but you are not. There is no shame in accepting help, especially if it enables you to pay it forward to others.

Thank you for this.

Our daughter decided not to go to college. We have about $30k in a 529 plan for her. Is there anything bwe can do with that money to avoid a penalty? Thanks Paul. BTW...Love reading and listening to your financial advice.

Unfortunately you can't avoid the 10% penalty if the money isn't used for qualified education expenses. But you can keep the money in the account for grandchildren. Or maybe your daughter will decide to go to school later. But if you decide you want to withdraw the money you will only need to pay income taxes and the 10% penalty on just the earnings. So that might not be as bad a hit as you think. Check with the financial company manages the account. 

My husband and I have $80K left on our mortgage (we moved in 9 years ago and have been aggressively paying down for the past 4 years). We are feeling that our family of 5 is on top of each other with everyone home all the time. We've started house hunting and found a house last week that we loved. We made an offer at asking price and it was accepted (YEAH!) but then after sleeping on it, decided although it's a great house it isn't the right house for us (SIGH) so we withdrew our offer. Our realtor was great about it, she let us know that so many offers came in (we put in our offer the day the house went on the market) that the sellers are going to final and best offer, and the house is expected to go for significantly over listing. We live in a commuting suburb of NYC, and apparently our housing market is taking off as people realize they want more space - especially if they're going to be in an indefinite lockdown with little kids. Although new inventory is coming on every day, I'm still nervous that we aren't going to find the right house for us and we'll get priced out of the market... Over the 3 weeks we've been looking our "max" price point has gone up almost 50% and there's still not much available!

You are just $80,000 from being MORTGAGE FREE!

The kids will grow and be gone before you know it. Me, I would not expand just for the sake of expanding being that close to being rid fo the biggest expense in your budget. Definitely don't move if you aren't funding college accounts for them so they won't have debt. You are on top of each other now but that won't last for long. 

I think your gut was right and knew you would be chatting with me today. 

I mailed my paper return in mid-March (16th) and I haven't even gotten the Certified Return Receipt back. Fortunately my refund is not a significant amount ($58) and not necessary for expenses, but evidently even that early things were just piling up if you weren't sending in a check.

Yes, that seems to be the case. 

The IRS did bring back employees to start sorting through the high volume of mail that has come in. And then there were positive test results in three of the facilities and they had to partially close for another week for deep cleaning. The IRS employees are working as best they can with the same challenges as everyone else: fear of contracting the virus, juggling work, child care and home schooling. I know people are desperate but they are doing the best they can with a muddled mess that was dumped on them by the administration.

I've said the same many times in this chat and in my columns. Thanks for the reminder. 

Hi Michelle; I have a follow up question to your article on student loan debt relief. I have loans from graduate school (all Department of Education loans, graduated in 2018) that are currently in forebearance. I would like to continue making regular payments while the interest rate is at zero. However, in response to the pandemic, my employer cut the salary of all employees by 20% in April; it's meant to be a deferral, but I am assuming for budget purposes that I won't get that money back. Luckily, my budget is such that I felt comfortable making April and May payments on my loans, although I opted to pay 80% of my standard monthly payment to reflect my pay cut. Now my employer has informed us that they won't make a decision regarding reinstating pay until mid-July at the earliest, and I'm not sure if it's wise to continue making these optional loan payments or if I should be diverting that money to my savings. I could definitely live on my current reduced salary and keep making some sort of monthly payment on my student loan with no issue (especially with my discretionary spending way down), but not knowing when I'll be back to 100% pay is starting to make me wary.

I think at this point you are right about opting to save the extra money. It would be nice to take advantage of the 0% but your job situation concerns me too. What if they ask employees to take a deeper cut. Better for now to save more just in case. 

User IDs and passwords for your online accounts!

Oh, yes. I meant to put that on the list as well. Thanks.

Ask me how I know :( And Michelle, it’s okay to be upset about missing your vacation. I think I can speak for all your readers when I state that we KNOW you deserve a vacation. You work so hard to keep us on the straight and narrow!

Yup, I forgot to put that down. Just be sure you trust the person who may handle your book. And by the way, you don't have to give people your passwords while you are alive, just make sure they can get into your devices should something happen to you. 

P.S. I appreciate the sympathy. The blessing is that I have a super fine, kind and all-around wonderful husband so more time with him. 

Instructions if you are entitled to military honors at your funeral.

Oh, yes. 

Dear Michelle, I am confused by your answer above about using the non-filers tool. I was told in the EIP FAQs that if I got certain types of Social Security and if I normally wasn't required to file a return that I should do nothing and the payment would come to me automatically. Are you saying I should have used it and the reason I haven't received my payment is because of that? TIA

No, you don't have to do anything. Some people used it to give the IRS banking information for a direct deposit. 

Hi Michelle, Thank you for your critical advice during the years. My question is this: I have both an FSA and HSA, so my FSA can only be used for dental and vision expenses. Has there been any guidance from the IRS or employers about changing elections midyear without penalty? And thanks to your advice, my husband and I are in good shape and thankful for it every day.

Yes, read the column I posted about FSA. The guidance include FSA for dental and medical. But your employer has to agree to do the mid-year change.

Is the same as a Letter of Instruction, yes?

Yes. The idea is to leave a book, letter, something to guide people upon your death.

You frequently promote the benefits of being mortgage-free? Are their non-financial reasons to maintain at least a small mortgage? If you have a mortgage you are essentially in a partnership with the bank. It would be much harder for somebody to steal your deed and sell your house (an actual and not rare fraud), or for you to miss notices about taxes and other important matters, as long as the bank was involved, too. Would it really be so bad to carry a 20% or 10% mortgage?

Nope, no reason to be in partnership with the bank just because. My real estate taxes are paid through my mortgage yet I still get notices and I pay attention to every single one. You don't need to carry a mortgage to be responsible. 

I have a death book, but it makes me nervous that it is just on a shelf (not labeled, but my fam knows where it is). Its like a blueprint to ID theft. Any ideas for the best way to keep it safe, but still accessible in an emergency?

You could and should put it in a home safe, with a key tucked away where someone knows where it is. 

Totally feel your pain re: beach vacation. I purposely left the DMV a few years ago to be closer to the beach in FL. I'm only 20 minutes away and yet I might as well be 2000 miles away - not going anywhere near there until I feel more comfortable with crowds.

This is exactly why we decided to cancel. Our health and the health of others isn't worth a walk on the beach right now. 

My husband and I are retired, so nearly all of our income is guaranteed, by pensions, Social Security, withdrawals from our IRAs. Ok, the IRAs aren't "guaranteed," but we are conservative in our withdrawals. And so much of that money is now piling up in our savings accounts! Just aren't spending anything, no travel, no going out for dinner, very little shopping. Good time to appreciate how much we had been mindlessly spending just because we could. We are re-evaluating what our habits should be once this whole mess is over.

Thank you for this testimony!

I'm so sorry but I have to stop here. I read all your comments and questions. I already see some I want to turn into a column. 

Thank you for joining me today and I'll see you next week. 

Happy Memorial Weekend. Please be safe!

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

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