Ask Karen Gibbs

Veteran business correspondent Karen Gibbs answers your personal money questions and addresses current topics that affect YOUR finances on a daily basis. Karen is the financial expert in your corner--no question is too basic or too small. Karen boils down the issues simply: here's what you need to know, and here's what you need to do. Send your money questions to AskKaren@mpt.org and post your comments below.

21

October

Having the Financial talk with Kids

Karen Gibbs

Karen, how do I talk to my son about money?  He knows I pay child support, but still thinks I have all the money in the world to spend on him and I feel guilty saying “no”.

- Steve, PG County

 Teenage Son
Steve, this is probably one of the most important discussions you can have with your child.  Laying the foundation for good money habits is one of the best gifts you can give your son.  Children make the association between money and the ability to buy stuff very early.  Teaching them the importance of money and credit as early as possible will put them on the path of financial capability.


Does he understand the connection between work and pay?  I’m big on paying children for age-appropriate chores instead of just handing out an allowance.  It’s never too early to teach the gospel of saving.  Money from the tooth fairy, birthday cash from Grandma, even the penny found on the street all offer opportunities to teach about saving, spending ...

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5

October

Save More for Retirement Now!

Karen Gibbs

Hi Karen, my husband I are both in our fifties and we want to aggressively save more money for our retirement.  What do you suggest we do?

- Paulette, Randallstown

 Couple
Hi Paulette.  This is probably the number one question I’m asked, regardless of age. Nearly one-third of people over the age of 50 have not saved enough for retirement. However, you and your husband have an advantage; you can play catch-up.


As of 2015, the Internal Revenue Service allows you to contribute up to $6,000 in an employer-sponsored saving plan such as a 401(k), 403(b) or 457(b), depending on if you work for a corporation, tax-exempt organization or government agency.  You can also play catch-up if you’re self-employed.


Once you’ve maxed out those contributions, consider establishing or adding to an Individual Retirement Account (IRA).  A traditional IRA is a tax-deferred account, meaning you put in pre-tax dollars and only pay tax when you withdraw money.  A Roth ...

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16

September

Credit Advice for College Freshman

Karen Gibbs

Karen, my daughter is starting college this fall and I want to make sure she’s financially responsible.  What is the best way to teach her about credit?

- Dina, Cecil County

 Student Budgeting
Dina, this is great opportunity to teach your daughter about the importance of managing credit responsibly while helping her make the first step toward independence, financial and otherwise.


Before the financial implosion of 2008, credit card companies flooded college campuses with credit card applications.  It was almost like free money in every mailbox.  The temptation to open and use many credit cards doomed many a college student and plagued them once they entered the work world, saddled with high interest rate debt along with student loan debt.  Being this deep in debt can be a heavy burden than can hobble financial security for years to come.  The 2010 Credit Card Reform Act put an end to the slew of credit card offers and made income verification mandatory.


I would discourage ...

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Hi Karen, I know I can get my free credit report from the three credit reporting agencies once a year, but how do I get my FICO credit score without paying?

- Nicole, Howard County

Credit ReportThanks Nicole for a great question.  FICO credit score, created by the Fair Isaacs Corporation, is a score that is used in most lending transactions and can make the difference between a low auto and homeowner’s insurance premium, or could be the determining factor when you apply for a secure job with the government.


A FICO credit score is different from the free credit reports that you can get from Experian, TransUnion or Equifax, but it is calculated using the information in your credit report:  how much debt you carry, how diverse your credit mix is, the length of time you’ve carried credit, whether you pay on time and/or if you are delinquent.  FICO scores can range from 300-850, with 300 being the worst credit score and 850 being the best.  A credit score of 750 will be ...

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 Hi Karen, I want to sell my house.  What’s the difference between a quick sale and a short sale?

 - Lee, Pikesville

 For Sale SignHi Lee, and thanks for your question.  Let’s start with a quick sale then tackle a short sale.

quick sale is a sale where the homeowner is motivated.  He or she may be moving or has bought another house and doesn’t want to carry two mortgages.  They could be in financial straits and just need the cash.  Whatever the reason, the transaction can take a little as ten to thirty days and no middle man needs to be involved.  For sale by owner puts the onus on the seller to do all the leg work that a real estate agent would normally do, but the time saved may be worth it.

short sale is when you contract to sell your house for less than the outstanding balance on your mortgage.  It may be an option if you are facing foreclosure and your mortgage lender is open to the option of a short ...

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