Dr. Laura, America's #1 Relationship Talk Radio Host
On: SiriusXM Stars Channel 109
Call 1-800-DR LAURA (1-800-375-2872) 11am - 2pm PT
Image 01 Image 02
IconJoint Credit Card Trouble The Dollar Stretcher by Gary Foreman Dear Dollar Stretcher, I have three joint account credit cards with my brother. I was the only user of the cards and now the cards are over the limit and behind in payments. I am on the path to paying them off but my credit history is not perfect any more. Because the credit card accounts were joint accounts my brother's credit history is also effected. He wants to purchase a house and I would like to remove the credit card items from his credit history. I have called the credit card companies regarding removal of my brother's name from the account but they will not do it. I am now thinking about getting a debt consolidation loan but have had no success because I am not a home owner. Is there a way to get a debt consolidation loan to pay off those cards? Thanks, Norm Norm and his brother have gotten into a pretty tough situation. But there are some things that they can do to help his brother to get a mortgage. There's also a lesson for all of us in how to avoid similar situations. A lesson that also applies to couples involved in divorce. First, let's take a look at the facts of the situation. When Norm and his brother opened a joint account they both agreed to be completely responsible for paying off any charges. No matter who used the card. That means that the credit card companies can collect from either brother. Legally it's just as if Norm's brother used the card and has fallen behind in his payments. The credit card company won't remove the brother from the account. That would reduce the odds of them getting paid. So what can the brothers do? Norm is already investigating the best option. That's to pay off the debts entirely. Once closed the accounts will show that they were late but are now repaid. Getting a consolidation loan may be tough. Most lenders want to be able to have a mortgage on a home or some other asset. A 'secured' loan (one guaranteed by real property) offers lower rates. Norm may have some other property that he could put up as collateral. Cars, jewelry, antiques or anything else that has value could work. If he has something like that, the best source for a loan would be a local bank. There are other sources for loans that Norm should consider. If he has a 401k plan at work, he might be able to borrow against that. Typically there's a fixed rate of interest which would be lower than what he's probably paying the card companies now. Another option, although it might be touchy, would be to borrow the money from his brother. It's possible that his brother would get a lower interest rate on his mortgage if he took some money from his down payment and used it to pay off the credit cards. Assuming that none of that is possible, they can include an explanation in his credit report. Norm's brother should request a copy of his report. Everyone should check their credit report regularly. Especially before buying a house or car. Independent surveys show that 70% of all reports contain errors. Ten percent of the errors are significant enough to cause credit to be denied. Norm's brother will want to send a letter to each credit card company. Get a return receipt. In the letter he should simply state the facts. Ask that a note be placed in his credit report. It won't change his credit score, but a potential mortgage lender might consider the information when they evaluate his mortgage application. In a few weeks he needs to recheck and make sure that the information was added. He can write the credit reporting agencies at: Equifax , PO Box 740241, Atlanta GA 30374-0241; 800-685-1111 Experian , PO Box 2002, Allen TX 75013; 888-experian Trans Union , PO Box 1000, Chester PA 19022; 800-916-8800 Norm's brother should tell any potential mortgage lender of the situation before he submits an application. By bringing up the problem first he won't be asking the lender to reconsider a rejection. He'll be advising them of a potential problem and asking that they give it proper, but not undue attention. It's possible that Norm's brother will have to pay a higher interest rate because of the problem. What can we all learn from this? Joint accounts can be dangerous. Especially if you're not the one using the account. Sure, it's hard to turn down a family member when they ask for help. But if they need your credit rating to borrow money, they probably shouldn't be borrowing. Don't help them to dig a deeper hole. If you really want to help them out financially, loan them the money yourself. Even if it means that you have to borrow it first. At least that way if they can't make the payments your credit rating won't get hammered. Couples in the process of divorce should also be careful. A divorce agreement may specify that one partner pay off a joint account. But if they don't, the other partner is still liable as far as the lender is concerned. If you're in that situation make sure that you get statements on the account so you know it's being paid properly. Hopefully Norm will get the debts paid and his brother will find a home and mortgage. Gary Foreman is a former Certified Financial Planner who currently edits The Dollar Stretcher website. You'll find hundreds of free articles to save you time and money. "The Dollar Stretcher, Inc." and DrLaura.com does not assume responsibility for advice given. All advice should be weighed against your own abilities and circumstances and applied accordingly. It is up to the reader to determine if advice is safe and suitable for their own situation. Permission granted for use on DrLaura.com More >>

IconAre We Really Depriving Our Kids? By Jill Cooper One of the main questions I get asked about frugal living is "won#146;t I be depriving my children if I live the frugal life?" Maybe I can answer that question with a question.How am I depriving my children by having them drink water for every meal instead of juice and soda? Isn#146;t one thing doctors are always complaining about is we don#146;t drink enough water? Cutting out just one glass of soda per person per day for a family of four would save $547.50 a year and make them healthier. How am I depriving my children by having them eat an apple or homemade granola bar for a snack instead of a bag of chips? Obesity is a major problem among children in the United States. If you cut out just one bag of chips a week you would save $104.00 a year and make them healthier.How am I depriving my children by having them walk to school or to a friend#146;s house instead of my always driving them there? Lack of exercise is a big problem. You would save time and wear and tear on your car by having them walk and make them healthier at the same time. How am I depriving my children when I don#146;t buy them every toy they see and want? We wouldn#146;t dream of giving a baby on baby food all the chocolate that he wants because we know it would make him sick. His body can not tolerate that much chocolate even if he desires it. In the same way, an older child can#146;t emotionally deal with the overload of toys. I as an adult become stressed just from trying to buy a bottle of shampoo. Have you ever noticed how many options you have? Trying to make a decision can be overwhelming. Do I get it for thin, fine, dry and damaged or colored and permed hair? The list goes on and on. In the same way when a young child looks at mounds of toys, he can become very stressed over choosing which one to play with. If you watch, you will notice that they tend to play with the same couple of toys over and over. If you didn#146;t give them all the toys they asked for and bought one less brand new toy at $10 a week, you would save $520.00 in one year and you would help relieve them of some stress. It is no wonder our children stay confused. We insist that they should eat healthy yet we take them out to eat 3-5 times a week at Mc Donald#146;s. We give them a bag of carrot sticks in their lunch because it#146;s healthy and then give them a bag of chips when they get home from school to get them off our backs. We want them to have strong character yet the moment they whine or cry for another toy or some candy at the store we give in out of guilt. We are afraid that if we don#146;t give them what they want, they won#146;t love us so to rid ourselves of uncomfortable feelings we say yes. How can we teach them to be strong in character when we are so weak? How could our society and way of thinking have gotten so mixed up that we think a child is deprived if a mom chooses to stay home and not go to work? We have come to believe that moms should work outside the home so that children can have the most expensive clothes, education or material things. (Note I didn#146;t say best but rather most expensive since the most expensive doesn#146;t mean the best.) If a mom goes to work so a child can have all those things it#146;s not considered depriving the child of anything but it#146;s mom. Which do you think does a child more harm- being deprived expensive things or it#146;s mom? For you stay at home moms: Before you become too puffed up with pride be aware that too many social, church and school activities can deprive your children of you just as much as working. Do all things in moderation. Jill Cooper is the inspiration behind her daughter Tawra#146;s frugal cookbook Not Just Beans: 50 Years of Frugal Family Favorites. Not Just Beans is a frugal cookbook which has over 540 recipes and 400 tips. For more tips and recipes visit our website at www.notjustbeans.com . Permission granted for use on DrLaura.com. More >>

IconMAKING ENDS MEET By Joanne Watson Getting By On One Income If your spouse's income alone doesn't cover all your expenses, you may havethought putting your child in day-care and working outside the home was youronly option. However, by lowering your expenses or raising your spouse's income (or acombination of both) you may be able to stay home with your child and stillmake ends meet. Expenses With the expenses of you working (daycare, a second car, work clothes,lunches out, a possible higher tax bracket due to combined incomes) you mayfind that the second job isn't bringing in as much money as you thought. By cutting back here and there, you may be able to make up for thedifference, and still stay home with your child. Money-saving tips: Your Mortgage You can check mortgage rates on-line at sites like www.Americanloansearch.com and www.Bankrate.com . If your current mortgageis at a much higher rate, you may be able to bring your bills in line byrefinancing at a lower interest rate. Groceries Plan meals ahead for 1 week, and only go to the grocery store after you'veeaten. You are much less likely to blow your budget on impulse buys. Take advantage of sales and coupons. Try to stock up when there is a greatprice, and check your pantry before going to the store. On-line coupons are available on sites such as. www.Coolsavings.com and www.Valupage.com that can help you lower your expenses. Major purchases Another great feature of the Internet is that you can comparison shopwithout running all over town. On major purchases, you may save asubstantial amount of money. Surf the sites you are familiar with, and don't forget to check the searchengines for new places to shop. Sites like www.Mysimon.com can help you findthe best bargains on larger items Car payments Can you do without the second car? If your husband works nearby, maybe hecan leave you the car if he takes the bus or if you drop him off. Whether you have one or two cars, if your payments are too high, think abouttrading in and reducing your payment. Keep track of spending. Those "helpful" ATM cards may be using up your freedom $20 at a time. It'seasy to lose track of spending when you don't register each purchase in acheckbook. Put away your ATM and credit cards. Try using only checks for 30days, and for smaller items, decide at the beginning of the month exactlyhow much money you want to spend. Take that out in cash and put it in anenvelope. Then, when it's gone-it's gone-you can't spend money that isn'tthere. A useful guide to cutting back is You Can Afford to Stay Home by MaliaWyckoff and Mary Snyder. Income Sometimes, no matter how much you cut back or how many coupons you clip, youjust need more money. By helping to raise your husband's income, he may be able to make up for thedifference in what you would be bringing home in after-tax (and afterwork-related expense) dollars, so you can stay home.. The just released book, Team Work: How to Help Your Husband make More Money,So You Can Be a Stay-at-Home Mom by Joanne Watson provides strategies on howto build your husband's confidence, help him negotiate a raise, find a new,higher-paying job, or build a business of his own, and how to use theInternet to help him succeed. Team Work tips include: Build his confidence - and you may build his income. Remind him of how terrific he is by asking himto tell you about the five accomplishments he is most proud of. Tell him youknow he is worth more, and his employer is lucky to have him Network Think about who you know. One of those people may be in a position to helpyour husband by introducing him to a potential employer. Employers oftenprefer to hire someone who has been referred to them by a person they trust.Also encourage your husband to join the trade association for his professionand add to his network. Find one at www.associationcentral.com Help your husband to learn new skills. Knowledge is power-and more money. Take advantage of sites that offer freeon-line training such as www.free-ed.net or www.webmonkey.com , and check outthe low cost management training from the American Management Association at www.amanet.org . Offer to watch the kids so he can study. Help "market" your husband. Make sure his resume shows him in the best possible light. You can get yourhusband's resume re-done professionally at a site like www.resume.com . oruse your local phone book. Ask to see samples of their work before choosinga resume writer. Find out if your husband is underpaid. Check out the salary surveys at www.salary.com or at the reference desk ofyour local library to find out what the average pay is for your husband'sposition. If he is underpaid, print out the survey for him to use innegotiating for a raise. Practice for success Help your husband practice asking for a raise or interviewing for a new job.By being prepared, he is much more likely to be cool, calm and collected inthe actual interview. Drill the possible responses and his come-backs to his raise request untilhe is comfortable and confident at it. Rather than let your financial situation dictate your decision about whetherto stay home or return to work, getting (and using) the right informationcan empower you to make choices based on what is right for you and yourfamily. Ed. Note: Tips from Team Work: How to Help Your Husband Make More Money, SoYou Can Be a Stay-at-Home Mom by Joanne Watson are re-printed with permission from Family Books. Permission granted for use on DrLaura.com. More >>

IconChecking and Savings Accounts The Dollar Stretcher by Gary Foreman gary@stretcher.com Dear Dollar Stretcher, My wife and I will be needing a car soon. I want to know how I can go about saving for it. Also, for buying special items for the house, should I use my savings account at my bank? Is it wise to use my checking account for monthly expenses only? Thank you. AC AC packs a lot into one paragraph. And, he's right in assuming that how you handle your money will make a difference in how much money you have. Many families invite money troubles by keeping all their available funds in a checking account. Money flows in and out without much thought. It's certainly a convenient way to handle your money. But, not the best way to manage it. Aren't we making a big deal over nothing? No. A good system for controlling your money can save you time and make you money. It can provide helpful information at a glance and keep your money from disappearing. It's the first basic step to controlling your finances. Think about how your life works. Your expenses could be divided into four categories. Monthly routine bills, larger expected bills (like vacations), larger unexpected bills (like auto repairs) and very large expenses (like a house or car). Just as there are different kinds of expenses, the money that's used to pay for them should be handled differently. And AC has a pretty good system started. Let's flip his questions around and look at the last one first. Yes, it is best to limit your checking account to paying regular monthly expenses. There are a couple of reasons why that's true. It's easy to write a check to pay a bill. That's good. But that easy spending can be bad. If you're saving money for a new stove you don't want the money too accessible. Temptation could make it easy to buy a fishing rod or theatre tickets. When money is real tight it might be necessary to keep everything in a checking account. Naturally, the risk is that the money tends to disappear making it harder to save. AC is doing the right thing by putting some money into a savings account. Taking it out of the checking account protects it. If AC wants to dip into savings for a special purchase he'll need to consciously make a decision to take the money from the savings account. The money won't disappear a little at a time. The 'big expense' money needs to be safe and reasonably available. It's helpful to be able to know how much money you have available for the unexpected. Most people use a savings account or money market fund. And since you don't routinely dip into savings, a look at your account balance will quickly tell you how much you have for the home insurance or auto repair bill. If AC is saving for a new car he might even want to set up a separate savings account just for that purpose. In fact, watching the balance grow could be a way to encourage him to save even more. Making use of a savings account or two along with his checking account could definitely help AC keep track of his money. It could also help him to accumulate it faster. Gary Foreman is a former Certified Financial Planner who currently edits The Dollar Stretcher website www.stretcher.com/save.htm . The site contains hundreds of free articles to help stretch your day and your dollar. Permission granted for use on DrLaura.com. "The Dollar Stretcher, Inc." and DrLaura.com does not assume responsibility for advice given. All advice should be weighed against your own abilities and circumstances and applied accordingly. It is up to the reader to determine if advice is safe and suitable for their own situation. Permission granted for use on DrLaura.com More >>

IconGetting Out of an Auto Lease The Dollar Stretcher by Gary Foreman gary@stretcher.com Dear Dollar Stretcher: I would like some advice on how to sell, trade-in or otherwise get rid of a car. I have a 2000 Toyota Camry with 53,000 miles on it. The lease is up in 2004. The last car dealer I spoke to told me that I needed to wait for the lease to be up in order to trade down. He said that the difference between what I owe and what it's worth is $10,000 and that my mileage should be okay if I move closer to where I work. Is this person telling me the truth? Is there any other way I can get a lower car payment or get rid of this car before 2004? My goal is to be a stay-at-home mom to my little boy and this car payment is stopping me. Linda Lexington, KY Linda has asked a question that I get regularly. How can I get out of a car lease? Anyone who is already leasing or thinking about leasing should consider how they would answer Linda's question. Linda needs to recognize that a car lease is fundamentally different from buying a car and making payments. When you buy a car you own it and have agreed to pay a certain amount for it. You can sell the car. Typically you can pay your loan off early. When you lease a car you've agreed to keep it and make payments for a certain period of time. You do not own it. So you can't sell or trade it. A typical new car depreciates approximately 30% in the first year. Linda's car isn't typical. It's a high mileage car. A Camry with her mileage is worth about $8,000 less than when the car was new. She hasn't paid that much so far. But she will before the lease is over. A trade isn't going to help even if she went to a much older, cheaper car. It will cost thousands to walk away from the Camry. Unless she can pay that amount now, it will just be added to the cost of the 'cheaper' car. The end result would be payments that are similar to what she already has. If Linda insists on trying to terminate her lease, she should do it directly with the leasing company. Involving a car dealer could cost her more. Linda will need to read her lease agreement carefully. Sometimes there's more than one fee or penalty involved. The transaction charges alone could cost up to $750. She'll want to contact the leasing company to see what it would cost to terminate the lease early. Then recheck their math. Mistakes are rarely in the customer's favor. Very few leases will allow you to turn the lease and the car over to someone else. It might be tempting to try to do that without telling the leasing company. Avoid the temptation. Linda could find herself financially responsible for the other person's accident, negligence or carelessness in using the car. If Linda did find someone who wanted to take over the lease, she should contact the leasing company and arrange to have them work directly with the other person. Experts generally suggest that it's best financially to stay with a lease until it's over. So is there anything that Linda can do? It's possible that the leasing company might extend the term of the lease and lower Linda's payments. Moving to reduce her commute might be a good idea, but that could be expensive. A cheaper solution might be to find a job closer to home. Carpooling could provide Linda with a solution. A three person carpool could cut her commuting costs by 2/3. It would also reduce the excess mileage. Another possibility would be for Linda to provide rides for a couple of co-workers and charge them. That would provide some money to help pay the monthly lease. Before starting she should contact her insurance company to make sure that she has the proper coverage. If Linda's family has two cars they might consider trading their other car for something less expensive. Any money left over could be used to pay the monthly lease payments. The bottom line is that it will be very hard for Linda to stay home with her son until the lease is over in 2004. That's sad, but it's true. What can the rest of us learn from Linda's experience? A car lease is very easy to get into and very hard to get out of. When you commit to a lease you will almost certainly pay the entire amount no matter what happens in your life. Lay-offs, babies and medical problems will not get you out of a car lease. Even if you don't need the car you'll continue to pay month after month until the lease is over. Leasing companies shout about their 'low monthly payments'. If you ask around you'll find someone like Linda who knows just how high those payments can be. Gary Foreman is a former Certified Financial Planner who currently edits The Dollar Stretcher website www.stretcher.com/save.htm . The site contains hundreds of free articles to help stretch your day and your dollar. Permission granted for use on DrLaura.com. "The Dollar Stretcher, Inc." and DrLaura.com does not assume responsibility for advice given. All advice should be weighed against your own abilities and circumstances and applied accordingly. It is up to the reader to determine if advice is safe and suitable for their own situation. More >>

IconA New Air Conditioner? The Dollar Stretcher by Gary Foreman gary@stretcher.com Dear Dollar Stretcher, Our house and the central air conditioner is at least 12-14 years old. Our serviceman has told us that the compressor unit is too small for our house and the original builder should have put in a larger unit. We are considering having the AC unit changed to a new, more energy efficient model that would be the correct size for our house. My question is - where can I get information to compare costs of running the two units, so we can decide if a new unit would be worthwhile, financially? Donna Highland, IL For many in the U.S. this has been a scorching summer. Fortunately, about half of all homes have central air conditioning. The bad news is that it does cost money to run them. Central air conditioning and heat pumps rank third in total residential energy usage. Only heat and water heating consume more. Let's take a look at three topics: air conditioner efficiency, selecting the right size air conditioner and buying a new system. An air conditioner's efficiency is measured by it's SEER (Seasonal Energy Efficiency Ratio). The Department of Energy defines SEER as the total cooling in BTU's divided by the watts consumed. A higher SEER indicates a more energy efficient system. Until 1979 the average central home air conditioning system had a SEER of 6.0. In the '90's a minimum standard of 10.0 was set. New, even higher standards, are being debated now. As you might expect, an air conditioner with a higher SEER will cost more. The DOE estimates that a unit with a SEER of 13.0 will cost about 15% more than one with a SEER of 10.0. But that 13.0 unit will provide 30% more cooling per watt consumed. Will a more efficient unit save enough to pay for the increased cost? The DOE thinks so. They figure that operating the 13.0 SEER unit vs. a 10.0 SEER one will save $113 more than the additional cost to purchase it. If you have web access you'll find the DOE's fact sheet on air conditioners at www.eren.doe.gov/erec/factsheets/aircond.html Not for Donna, but if you live in a warmer climate you might even want to consider a higher efficiency unit with an SEER of 15.0 or more. It will cost more, but could pay dividends in areas requiring heavy air conditioning usage. Remember that SEER only measures the efficiency of the air conditioner. It doesn't take into consideration how well your home is insulated, the condition of your ductwork or other factors that affect cooling. Determining the correct size is a harder problem. Air conditioners are rated in Btu's/hour or in 'tons'. A ton is 12,000 Btu's/hour. A bigger air conditioner is not necessarily a better air conditioner. If a unit is too big it will cost more to buy, more to operate and won't do as good a job dehumidifying the air. According to The Consortium for Energy Efficiency (CEE), a national, non-profit public benefits corporation, a properly sized air conditioning system can reduce energy usage by up to 35%. Determining the correct size isn't easy. It's not just a matter of calculating the volume of air that you need to cool. The climate, style of your home, number of windows, amount of insulation, weather stripping and shade as well as other variables all effect the size of the unit needed. It's hard to do the calculation yourself. You really need a professional. In fact, the industry has created a formula that considers all the variables. The easiest way for Donna to get an idea of the correct size is to get three bids on a new system. Not only will that allow her to compare prices, it will also give her three estimates of how big a system is required. Before calling for estimates she should do any insulation upgrades or weather-stripping since that will effect the calculation. She'll also want to check with the local electric company before making a purchase. Many offer rebates when you buy a more energy efficient air conditioner. Don't forget to consider the repair record and the warrantee offered by the manufacturer. Should Donna replace her air conditioner before it quits working? According to the DOE, a 13.0 SEER unit would only reduce the electric bill by $42 per year vs. a 10.0 SEER unit. Of course that's an average. If Donna's unit has a SEER of 8.0 and she replaces it with one at 12.0, she'll reduce her cooling bills by one third. At 12 to 14 years old, the air conditioner is nearing the 15 year average life span. Donna might be wise to start shopping now while she has time to make a careful selection. Even if the new unit doesn't pay for itself right away it could be a wise purchase. Gary Foreman is a former purchasing manager who currently edits The Dollar Stretcher website www.stretcher.com/save.htm . The site contains hundreds of free articles to help stretch your day and your dollar. Permission granted for use on DrLaura.com. "The Dollar Stretcher, Inc." and DrLaura.com does not assume responsibility for advice given. All advice should be weighed against your own abilities and circumstances and applied accordingly. It is up to the reader to determine if advice is safe and suitable for their own situation. More >>

IconFinancial Planning for Baby's Future From newswise.com and the University of Alabama at Birmingham: Financial planning for a new baby goes beyond saving to pay for the hospital bill, which can cost as much as $5,000 for a healthy child. Read the entire article here. More >>

IconMARRIAGE AND MONEY MINDSETS By Cheryl Gochnauer Danny and Tricia's combined income places them firmly in the upper middleclass, so most of us would assume their financial problems are over. Notso. Though they bring in a substantial amount each week, Danny and Triciahave never learned to effectively handle their resources. Like many couples, Danny and Tricia don't keep close track of where theirmoney is going. They have separate accounts, since each respects theother's right to "their own money." Tricia likes not having to answer toDanny for every penny she spends. Unfortunately, she doesn't answer toherself for every penny she spends, either. Dollars flow into their threechecking accounts - hers, his and theirs -- then flow right out againwithout hanging around long enough to draw interest. With all the activity in their accounts, Danny and Tricia figure they aredoing okay. Bills are usually paid on time, and when the checking accountbalances disappear, they always have their good credit to draw on. Whenthey receive their charge card statements each month, a fleeting discomfortsets in while reading the multiplying totals. But they've never had aproblem making the minimum payments. After all, two more checks are comingin next week. At least, they assume so. Tim and Rhonda make half of what Danny and Tricia bring home, and yet are inbetter financial shape. That's because they regularly do the math to seeexactly where they stand, money-wise, using a loose budget that guides theirspending decisions without hog-tying them emotionally. Early in their marriage, Rhonda and Tim pledged to openly discuss all moneyissues. Together, they planned and identified mutual goals. They usecredit sparingly, and postpone big purchases until they can pay cash or atleast make significant down payments. That doesn't mean they don't enjoythe occasional financial fling. It's just that those sprees are plannedfor, not regretted in a resulting 21 percent APR after-glow. Because they know where the funds are flowing, this couple knew exactlywhere they could cut when Rhonda decided to become a stay-at-home mom.Budget modifications were minor, since they had never delved into seriousdebt. Freedom from monetary strangleholds enabled them to make family, notfinance-, focused choices. Tim and Rhonda understand the fundamental difference between "wants" and"needs". You can bet this young couple can visualize themselves in the sameluxury car their friends drive, and would savor the same 5-star meals andcostly vacations that launch Danny and Tricia's account balances into thestratosphere. Sure, Tim would look great in that car. But the paid-off one he alreadydrives is dependable and economical. Yes, Rhonda needs a new outfit. Butis she really getting twice as much quality by spending $100 on that dress,instead of $50? And though a special meal is nice every once in a while,how often should they spend $40 for dinners they could fix at home for $7? Free-spiritedly riding the financial wave from week to week is both riskyand restrictive. The most glaring potential peril is losing everything dueto an unforeseen layoff or illness. But it isn't a prospective catastrophethat poses the most danger to a couple's emotional bottom line. Instead,it's the strain accompanying financial uncertainty and consistently livingbeyond their means. To positively approach marital money management: Review finances together. Agree on spending priorities. Identify mutual goals. Make a budget. Regularly review the budget, tweaking it to reflect your currentsituation. Stay in tune financially with your partner. It'll nurture the kind ofmoney-handling relationship you each want and need. (Homebodies is available as a free weekly email newsletter. To subscribe,visit Cheryl's website at www.homebodies.org . Copyright 2001Homebodies.Org, LLC. Permission granted for use on DrLaura.com.) More >>

IconAlmost Retired Planning The Dollar Stretcher by Gary Foreman gary@stretcher.com Dear Gary, I am 53 and my husband is 60. We have managed to have our house nearly paid for, one car free and clear, the other will be paid off in 2 years. We have modest savings and some stocks ($30,000). It is unfortunate that both our careers were in industries that either made no provisions for retirement or went bankrupt leaving behind very small pensions. All the articles I have read are for people wisely planning for retirement early on. Can you give me some pointers for late comers such as myself and my husband? We truly have been unwise and are growing old too fast. Patricia Miami, FL Each year about 4 million people celebrate their 65th birthday. And many of us don't think about how we're going to finance our retirement until a few gray hairs appear in the mirror. And the process of retirement planning has gotten harder. Patricia and her husband might not live into their 90's. But they need to be prepared in case they do. The basic problem that Patricia faces is obvious. They probably don't have enough income to support a comfortable retirement. The question is: how much do they really need. Finding out will require estimating after-retirement income and expenses. First, how much will Patricia and her hubby spend after retiring? Traditionally experts figured about 70% of pre-retirement expenses. That estimate will probably get her close but she might want to take a look at her current expenses and calculate work related costs. One wild card in Patricia's calculation is the cost of health care. AARP estimates that those over 65 pay $480 per year for prescription drugs. But that's not as bad as the $56,000 per year it costs for the average nursing home. Medicare will cover many, but not all, medical expenses. Patricia shouldn't worry about getting an exact number on expenses. For now she just wants to get a reasonable idea of her after retirement expenses. Next she'll need to estimate their income. You can find out how much you'll get from Social Security by filling out an online form at www.ssa.gov or by sending a request to: Social Security Administration, Wilkes Barre Data Operations Center, PO Box 7004, Wilkes Barre, PA 18767-7004. For private pension plans the plan administrator or your employer should be able to tell you what you'll get. Now for the moment of truth. Compare the income and expenses. Patricia will have three options for any shortfall. She can trim expenses, earn extra income or count on income generated from their savings. Reducing expenses can be hard for retirees. Once you get past travel and entertainment, there isn't much discretionary spending. Housing, food and medical expenses can only be reduced so much. Earning part of your retirement income is becoming more popular. As more retirees enjoy good health, they happily consider some work as part of their lifestyle. AARP estimated that there are over 30 million workers who have passed their 50th birthday. But Patricia will need to be careful. If she earns too much she'll begin to lose Social Security benefits. Up to age 65, she'll lose $1 for every $2 earned over a limit of roughly $10,000 per year. Past age 65 the loss is $1 for every $3 earned once she's reached the limit ($17,000 to $25,000 per year depending on when you reached age 65). Patricia is correct. They don't have enough money saved. If her $30,000 nest egg earns 5% it will only generate $1,500 per year in income. Their investment plan is important. Although CD's are safe, they won't provide the higher return that Patricia needs. She'll want to find a good stock and a good bond mutual fund. Approximately two thirds of their savings should be in the stock and one third in the bond fund. Either fund could lose money in any given year. But with a 30 year horizon there's time to recover any losses. Once they retire they'll take income from their savings account. About 7% per year is a reasonable amount that won't deplete the principal. How much do they need in savings? To calculate that, take the desired income (for instance $3,000 per year) and divide it by the rate of return (say 7%). In this case $3,000 divided by .07 equals $210,000. Patricia might be overwhelmed by the amount they need. She can't let that keep her from getting started. Better to save half of what you need than to have saved nothing at all. Fortunately, they still have a few years left to aggressively save money for retirement. And they might need to get aggressive. A move to a smaller home or selling a second car might be in order. Patricia and her husband do have some things working for them. They don't have a lot of debt. Social Security income will provide for most necessities. There are more job opportunities for people in their 60's and 70's. Will they live out their golden years traveling the world? Probably not. But, if they take appropriate action now, they probably won't end up among the 10% of retirees who live in poverty. Gary Foreman is a former Certified Financial Planner who currently edits The Dollar Stretcher website www.stretcher.com/save.htm . The site contains hundreds of free articles to help stretch your day and your dollar. Permission granted for reprint on DrLaura.com. "The Dollar Stretcher, Inc." and DrLaura.com does not assume responsibility for advice given. All advice should be weighed against your own abilities and circumstances and applied accordingly. It is up to the reader to determine if advice is safe and suitable for their own situation. More >>

IconBut First Consider the Consequences by Mary Hunt I wish I had a quarter for every stupid purchase I#146;ve made in my life. I#146;d have some major coinage. Regrettably, my financial faux pas have been remarkable in both quantity and quality. I#146;ve made some real doozies. Take the above-ground swimming pool. Its a la carte price was bad enough. Adding everything required but not included took it past barely reasonable to absolutely ridiculous. First there was the heater and filter. Then a cover, chemicals and test kit. Of course we needed search and rescue equipment (this was one monstrosity of a pool) and a few necessary pool toys. Oh, and let#146;s not forget the cost of eventually getting rid of the albatross. Let me put it this way: There is not a lively secondary market for this kind of thing. If I#146;d had the courage to consider the consequences of such a major purchase before making the decision to buy, I am quite certain we could have avoided a five-year industrial-strength headache and saved one huge pile of dough. I#146;ve since learned how important it is to keep a simple self-test handy. A check list clears away impulsivity and allows good sense to prevail. This process allows for no feelings-based answers. Nothing that includes "I feel" or words like happy, disappointed, sad, guilty or afraid. This exercise is about facts not feelings. Feelings are fickle. They trick us, but worse they change like the wind. When it comes to making wise financial decisions feelings cannot be trusted. Do I need it? If the honest answer is no and you do not have oodles of discretionary income, case closed. You#146;ve just saved yourself from a foolish purchase. Can I afford it? If you have to go into debt to make the purchase, you cannot afford it. Forget it. Do I already have something that will do just as well? An honest assessment of all the stuff you already have could easily produce an affirmative answer to this question. End of discussion. Can I wait until I find a cheaper more reasonable substitute? Have you ever noticed that you require your children to be patient but rarely put the same requirement on yourself? The bonus with this question is that while waiting, the need often disappears. Have I found the best deal? It takes time and effort to comparison shop and that also makes for breathing room. When making wise decisions, time is a valuable ingredient. Am I willing to wait? A false sense of urgency brought on by overwhelming desire#151;or a sale#151;can really skew your otherwise good sense. Simply getting away from the situation for a couple of days has a remarkable way of clearing your mind. If the purchase is right for you today it will still be right a few days from now. What if I don#146;t? Make a list of what will happen if you don#146;t make the transaction. If it#146;s paying the rent you#146;re questioning, that#146;s simple. The consequence is eviction. You must proceed. But if the subject is buying another pair of shoes, a faster computer or season tickets to the symphony, the consequences of not making the purchase will be quite different. What if I do? Here#146;s where the rubber meets the road. What will be the exact consequences of going through with this transaction? Don#146;t cheat on yourself. Don#146;t accept "I don#146;t know" as an answer. If you don#146;t know the true costs you are not ready to make the decision. So you think my pool fiasco was a financial disaster? Truth be told, that purchase was relatively mild compared to impulsive acquisitions I#146;ve considered since then. Trust me. And no one is more grateful than I#151;-my husband being a close second#151;-that I#146;ve learned to consider the consequences first. Mary Hunt is the founder and publisher of Cheapskate Monthly newsletter and is a respected authority on spending habits and financial responsibility. She and her husband Harold dug their way out of a horrible mountain of consumer debt and lives to help others get out of debt and live joyfully beneath their means. The door is always open at her popular Web site, www.cheapskatemonthly.com Permission granted for re-print on DrLaura.com. More >>

Make an Appointment
Stay Connected
or connect at a place below
Normal Gear
Latest Poll
When you're stuck on a neverending errand and your kidlet has ants in their pants, how do you keep them busy?
I give them a book
I give them a toy or my phone
I play with them
I ignore them
Archives  |  Results
About Dr. Laura
E-mail of the Day
From Listeners
Audio & Video
YouTube Videos
Stay at Home
Simple Savings
Work at Home
Tip of the Week
Help & Support
Family Premium Help Center
Podcast Help
Contact Us
Terms of Use
© 2018 DrLaura.com. Take on the Day, LLC
Terms & Conditions  |  Privacy Policy
Powered By Nox Solutions