You Ask, Jean Answers
Enjoy your segments on the Today Show — wish they could be longer. I’m looking for information on how much tax deduction I realize for donating an item. I have a couple of instruments that could be donated to organizations who will put them into the hands of kids who wouldn’t otherwise have the opportunity to make music, but wondering if donating will be a huge loss or if I should continue to try and sell them.
– sheepdog55
When you’re donating an item or piece of property – rather than cash – you have to get at its fair market value, that is, what the item would sell for on the open market. That’s the amount that the IRS will allow you to claim as a deduction on your tax return. In most cases, it’s going to be a lot less than what you paid for it, because the item is now used. More…
Hi Jean! My sister has found herself close to chapter 13 bankruptcy. Her attorney advised that she stop paying on her credit cards, which has now increased her total debt considerably. She is still making her mortgage payments on time. She and her spouse make too much money to file chapter 7, which she is fine with because she would rather pay off her debts. Her attorney said her monthly payments would total $3000 to do so – she knows she can’t afford that. Now the attorney is asking for another $1500 to continue to represent her. She doesn’t have that, so she can no longer use their service and she doesn’t know where to turn next. Do you have any suggestions? I advised that she contact her creditors herself to see what she could work out. Is it unwise to let one creditor know that you are working with other creditors as well? I have referred her to your website and your new books to see about finding some answers. She already has some of your books. Please help if you can. Thank you!
– Charger
At this point, your sister wants to look into credit counseling – and in fact, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires that she – and all consumers – do so before filing bankruptcy. More…
I am a single 28 year old female and I have $180,000 in student loan debt. My debt is growing every day, regardless of my effort to pay. My annual income is $40,000. I have consulted with two separate bankruptcy attorneys who have not been able to offer any long term solutions. Do you have any solutions/advice? Thank you,
mbaker
Yes, Melinda, talk to your lender about income-based repayment. Of course your debt is growing — your income simply isn’t large enough to keep up with it. But income-based repayment is a relatively new solution that takes your income into the equation when determining how much you have to repay each month. And if after 25 years of steady payment (10 if you work in a helping profession) any remaining debt is forgiving. I hope you qualify for this. If you don’t, please let me know and we’ll strategize some more.
Hi Jean,
My husband and I have a $60,000 credit card debt. He is head of the household and is overseas for another year.We are a military couple, and have recently moved back to our home of record. We are renting a house since we don’t know what type of job he will have or where when he returns to the states. I am going back to school on the GI bill but have had to use our money to get started until it kicks in. He makes good money; however, we never seem to get ahead. We don’t have much in savings. It seems that something always comes up, or the kids need help. We do have savings bonds, and invest in a savings plan from his employer. He owns a house here in the states that we would like to rent out, it is to small for us, and it does need some touch up work. This has become such a strain on our marriage that we are on the edge of divorce. Could you please offer some assistance. Thank you – jddowning
Dear Joanne,
You’re in a boat with many people, unfortunately. New research has shown that debt — in particular — is the money issue that drags on families and spurs them into divorce. Conversely when couples can accumulate assets, their marriages become stronger. More…
Q: I’m 24 and just starting out. I really want to save money, but how can I do so while only making 10K per year? I’m trying to put money into a savings account, but it’s not adding up fast, at all – Ashley
A: I know the feeling! When I graduated from college, I was only earning 11,000 a year. Granted, my rent at the time was much lower than rents today (only $400 in Brooklyn) but I couldn’t save at all. I couldn’t even make ends meet. I very quickly racked up credit card debt equal to a half year’s salary. Eventually I did what I think you may have to think about doing – I got a second job. I started teaching and tutoring SATs at night. And (once I dealt with the credit card) I was able to start to save some of that money. That may be tough in this economy, but I think you should give it a try. The other thing to look for is a savings account that pays a little more interest. While it’s true that savings account interest rates are very disappointing right now, some are better than others. Look at smartypig.com where the APY is 1.75%. And know that interest rates will eventually go up, and this rate will go up with them. Finally, I just want to say that I don’t know all that many people your age who are as focused on saving as you are. Just the fact that you’re thinking about it – and that you took the time to write me – tells me that you’re going to get where you want to go! — Jean
Ms. Chatzky, I recently heard you say on the Today Show that if someone makes 24 consecutive payments on their student loan and it is cosigned that they can get it placed under their name. Was that only for federal loans? I have a private student loan with Citibank and they have told me that 48 payments are required. If you could clarify your information that would be great. I have made 44 payments on time and think it’s about time they let me have the loan. I have been doing my part. Thanks for your time, Travis
– travandsuz
Travis, you’re right – this is going to vary by lender. I said 24 months on that Today Show segment you saw because that’s about standard. But some lenders will only require 12 months of on-time payments, some 24 or 36, and others, like yours, may require 48. More…
I bought EE savings bonds to assist with the education of my children.
Fortunately, or unfortunately, we earn too much money to qualify for the tax
savings if these were used for their educational costs. I am wondering if
there is a way to transfer ownership of these bonds to the children so that
when the bonds are redeemed, the proceeds and the tax burden are theirs.
Most of these bonds have matured but are still earning interest at a rate of
4% and are safe. Thank you.
– Anita Mann
Hi Anita. Unfortunately, there’s no way to get out of this tax burden
completely. Your best bet is to have the EE savings bonds reissued to your
children, identifying them as the co-owners of the bonds. However, if you
do that, you’ll still have to pay taxes on the interest that was earned up
until the date of the reissue. That tax bill can’t be transferred, along
with the bonds, to your children. More…
I’ve been really good about saving money. Now that I’m beginning to need it I need to know how to take it out. I have money in mutual funds, stocks, Roth IRA and regular IRA and CDs. I’m sure lots of others (I’m on the leading edge of the Boomers) have or will soon have the same issues.
- orchid44
Ahhh — withdrawal. In the years I worked for financial magazines we spent so much time (and so many pages) talking about how to accumulate. Withdrawing and making the money last as long as you do deserves at least as much attention. There’s a rule of thumb that says if you pull no more than 4 percent of your money a year out of your retirement accounts then it should last your lifetime. You have to remember that the 4 percent is a moving target. More…
My daughter just started her college and would like to know if she should apply for her own credit card or I should add her as an additional user? I want to make sure she has good credit score throught her life.
Thanks, Sonny
Hi Sonny,
This is a very timely question — not just because your daughter just started college, but because of the recent changes in credit card rules under the CARD act. At this point, unless she has income of her own that she can document or is 21, she can’t get her own credit card. So that takes that option off the table. Now, let’s talk about whether you should add her as an additional user to your card. This comes with some risk. If your daughter uses your card above and beyond the level you agreed to allow her to use it, then your financial life and your own credit score could be at risk as well as hers. I know of an issuer that will allow you to add your daughter to build her credit score without putting your finances at risk: the American Express Charge card. More…
Hello Jean,
I just became a member. Per this article, you are saying it’s wise to erase or retreive your credit card numbers after you make a purchase online…is that correct? So, in other words, you should submit the information every time you purchase and erase it after your order is complete? I order at Amazon, and have an account at Paypal. Should I retrieve my credit card info that I have left there?
– Susanm
Thanks for your question. Sites like Amazon often store credit card information when you make a purchase – although in most cases, they’ll ask your permission first. In the future, if you want to be really safe, you should decline to have them store your credit card information, and simply type it in every time (you should always do this if you make a purchase from a public computer – and in fact, just to be on the safe side, try not to make purchases from public computers, like those in libraries or Internet cafes). It takes a bit more time, but gives you peace of mind. More…
