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I need a reputable resource to help me with credit card debt. My husband and I make over $200,000 annually, but are drowning in debt. Is consumer credit counseling a good option?
I am interested in consolidating my credit cards into one monthly payment. Please advise on organizations that offer this and please note that I am not looking for debt reduction. Thank you
I always read columns on many magazines and financial shows on finding your retirement number. This number is always into the hundred thousand or million dollar amount for your retirement. This number is based on certain criteria so a retiree will live comfortably. For a person who has no mortgage payment, a small amount of debt, no credit card or personal loan. That individual with a pension/401k plan and Social Security would not need the high dollar number that is always brought up. What is your input on that? That is my position I will be upon retiring in 5 years. Thank you.
I recently came out from under the mess of the recession but I still have minimal yet manageable credit card debt. I want to start rebuilding my savings and retirement plans so I took your advice and looked up certified financial planners in my area. Unfortunately, a couple of them never got back to me and the one who did said he deals with wealth management and since I have no wealth, I’m not a candidate for his services. He recommended that I seek help from companies like Fidelity Investments and TD Ameritrade but aren’t they biased to their own products? If so, how will I know my money is being invested in the right place? What should I do?
Hi Kelly. It sounds as if you’d prefer an advisor not affiliated with a particular firm. Take a look at the Garrett Planning Network. Sheryl Garrett, a fine planner in her own right, has built a network of planners willing to work with customers by the hour. So you can spend just the time you need to get the plan or information you need, then execute the recommendations yourself. This will save you a considerable amount of money. Then, once a year, I’d go back to the planner for a check-up to make sure you’re moving in the right direction.
Hi Jean. I recently transferred a portion of the balance on my higher interest credit card to a Slate 0% card. Is it better to focus on paying down the higher interest card or getting the balance on the 0% card paid off within the introductory offer period?
Oh Trish! I have to tell you, I have thought of this question so many times and never, ever been asked it. In the best of all possible worlds, you’d transfer all your high interest rate debt to the Slate card, then wail on it at that 0% interest rate to make as big a dent in the teaser period as possible. (You did choose well when it comes to balance transfer cards, by the way — the 15 month 0% interest rate is just about as good as it gets.)
I’m a recent widow and was left with no insurance. My house is being sold via short sale and I have moved to a small apartment, where I’ve paid the rent on time for the full year I’ve been here. I would like to open a credit card, but would like a suggestion on where to go. I know my credit rating is very poor, but I would like to get it back on track. Do you have any suggestions?
Hi Jill. I’m so sorry for your loss and for the tough time that has followed. The answer is that there are credit cards available for you. Most of them are secured cards, so called because you deposit a sum of money (usually a couple to a few hundred dollars) to secure your credit. The best of these report to all three credit bureaus on a regular basis, which enables you to build the sort of credit you need to eventually get a regular old credit card.
Among these, the folks at CardHub.com recommend the Capital One Secured Mastercard, which you can get with a deposit of as little as $49. If you’d prefer a card for which you don’t have to make a deposit, look at the Credit One Bank Credit Card with Gas Rewards (it gets around the deposit by charging an annual fee of $35 to $75.) Note: Your credit limits on both of these will be low, but your interest rate high. So whatever you get, use it as a credit-building tool. Note what your credit limit is. Never rack up purchases that account for more than 30% of it at any time. And pay it off every single month.
My husband called Chase Visa about his Marriott card (which he has had since 2002 in excellent standing) to have his 22.4% interest rate reduced (which I have done often for my card based on your recommendations– I now have 13.2% for a long time). They refused. He asked for a supervisor who also flatly refused. He told them he would cancel his card, and they did! He carried a large balance each month, and was either paying off a large portion of it or, lately, paying the total balance. We enjoyed the Marriott points, but now he says he will share my card and use his American Express instead. Is this typical in this economy? Thanks so much for your time.
Hi Jennifer. I really can’t say how typical it is. It’s been a very long time since I’ve seen a large piece of research where hundreds or thousands of people tried – at once – to get their interest rates lowered and the results were recorded. (Hey US PIRG: How about it?) Anecdotally, though, I’ve heard some stories like yours. I’m very glad your husband is paying off his balance every month – rewards, whether they’re hotel points or frequent flyer points or even cash back, are never worth what you pay in interest. What I would suggest is figuring out what kinds of rewards matter to you the most and then perhaps applying for a card that will give you a lot of them. The Amex may do the trick for that, but there are a lot of cards offering big bonuses these days just for signing on and spending a few thousand dollars in the first few months (which business travelers like your husband often do anyway). You might as well get the kind of rewards that can put you on a tropical island (or wherever you want to go) for a few days for free.
Hi Dave. Generally, no. There are a few exceptions — alimony and scholarships, for example. But perhaps the biggest is spousal income. If you have a spouse who works, you (and your spouse) can both make contributions based on that income.
Not being able to qualify for an IRA, however, doesn’t mean you shouldn’t save. Invest your money in a discretionary account just as you would an IRA, based on your age and your risk tolerance – and let the time value of money work on your behalf.
You can open a discretionary account at any major brokerage.
Is there a rule of thumb that a monthly pension payment should equal a certain amount of dollars of savings? We hear that we need X dollars for retirement, but with a pension, what might that equate to? Some of us will have pensions from previous employers and wonder what it means in terms of the amount we need to save. (For example, does $1,000 in a monthly pension = $125,000 in savings?) What are good numbers to use in planning? Thank you.
Kathie, it really all boils down to how much of your pre-retirement income you’re trying to replace. That’s what you should focus on. Recent research has shown that spending in retirement isn’t linear as previously thought. You were often told you should plan on spending 70 to 80% of your pre-retirement income in retirement. In fact, spending usually tails off after the kids go to college and leave the house and, eventually, you stop working full time. Then life gets really expensive when you hit uber old age and healthcare expenses ramp up.
That said, on average, aiming for that 80% replacement rate is probably a pretty good move. You need to head to a retirement calculator that allows you to input how much you’re expecting from Social Security and your pension as well as how much you’ve saved. The AARP’s retirement calculator – which you’ll find here – will let you do just that. It’ll run the numbers and help you figure out how much more you need to save to meet your goals.
Hi Jean. We bought our home in 1982 for $67,000 and refinanced in 2001 for $85,000. This company sold our mortgage without our knowledge in 2013 for $72,000 @ 8.5% interest. Unfortunately things happened that were beyond our control. For the past ten years I took care of my parents. They both passed away last year. Our whole life we’ve taken one step forward, three backwards. It seems when we get caught up something else happens that takes us back. Our credit is poor. We have never asked anyone for help; that’s why we are in this mess. We don’t know where to turn. Can you please point us in the right direction. Thank you.
Hi Toni. I have to admit, I can’t tell from your letter exactly where you are right now – but I can sense that it’s somewhere very difficult. And having lost one of my parents, I cannot imagine losing both – let alone in the same year. I’m so sorry for all you’re going through. In situations like these, fixing everything quickly is just not an option. The world of money just doesn’t yield results that dramatic that fast (if it did, I’d have a television show like The Biggest Loser). Rather, it’s the smaller, habitual changes that add up to something meaningful over time. Focus on controlling the things that you can control. The top three things I’d do? 1. Look at your spending and see where you can cut back. 2. Take that money and pay down high interest rate debt if you have it, or save it if you don’t. And 3. Pay your bills on time. Even if you’re just playing a little more than the minimum (a number you should try to nudge up) paying on time will help move your credit in the right direction.