Money Talk: Consult attorney about garnished wagesQ: Do you have any advice for a family of six with only $200 a month to spend on food? My wife and I are in dire need of advice, as our bills keep increasing but neither of us has gotten a raise in six years because of salary caps at our employers.
By: Liz Weston, INFORUM
Q: Do you have any advice for a family of six with only $200 a month to spend on food? My wife and I are in dire need of advice, as our bills keep increasing but neither of us has gotten a raise in six years because of salary caps at our employers. We have two garnishments on our paychecks that effectively take 50 percent of what we make. After health insurance and 401(k) loans are deducted, we bring home $2,000 a month. Our rent takes $1,400 of that, and utilities take most of the rest. Do you have any miracle advice for us?
A: Many families are facing your dilemma: flat incomes with rising costs. But your wage garnishments and 401(k) loans indicate you have a history of mismanaging the money you have, which has led to even more pain.
You need the advice of an experienced bankruptcy attorney. Wage garnishments by federal law aren’t supposed to exceed 25 percent of your disposable income, and state laws often provides even lower limits. If you can get your garnishments adjusted or have them wiped out in a bankruptcy filing, you may be able to create some more breathing room.
In the meantime, you should check if you qualify for the federal government’s Supplemental Nutrition Assistance Program (formerly known as food stamps). If you make too much money or have too much in assets to get that help, you can still visit a food bank to supplement what you’re able to buy.
If you can’t find a way to lower your costs any further, the only solution is to make more money – not an easy prospect given the current unemployment rate, but you may be able to find a job at a competing business that pays more or start a sideline business.
Unfortunately, there are no miracles when it comes to money math. You can’t make two plus two equal five or have outgo that exceeds your income without eventual disaster.
Q: I would like to get all three of my scores at one time, and I’m willing to pay! But I find no options on either the MyFico site or on the Equifax site to do this without having to sign up for some complex and expensive program. Didn’t it used to be possible to purchase all the scores for about $30? If you know of a way to do so, I would appreciate your sharing it.
A: Each of the three credit bureaus sells its own, proprietary score to consumers, but those aren’t the FICO scores used by most lenders.
The only place you can currently buy two of your three FICO scores is from MyFico.com, for $19.95 each. MyFico.com used to sell FICOs from all three bureaus, but Experian no longer sells FICOs to consumers (although it continues to sell them to lenders).
Q: My husband and I are 62 and 58. We both are still working and have IRAs. Our financial adviser of 20 years is encouraging us to purchase a variable annuity with some of our IRA money. We lost quite a bit in the recession and have not gotten it all back yet. I have read nothing really good about the variable annuities and keep telling our adviser that, but she insists we really need to do it. We cannot afford to have another big loss either so do not know what to do.
All our IRA money is in mutual funds. Can you give us any guidance?
A: If your adviser gets paid a commission for selling annuities, as she probably does, then she’s not an objective source for you on this topic. You may want to consider investing a few hundred dollars in a consultation with a fee-only financial planner, who can review your financial situation and your current investments and offer advice.
Variable annuities aren’t always a terrible option, but they’re a poor fit for IRAs, which already offer the tax-deferral that’s a big part of an annuity’s appeal. The so-called “living benefits” that guarantee a certain payoff typically come at a high price, which is why you should always run these investments past an objective source before you buy.
Liz Weston is the author of “The 10 Commandments of Money: Survive and Thrive in the New Economy.” Questions for possible inclusion in her column may be sent to 3940 Laurel Canyon, No. 238, Studio City, CA 91604 or via http://asklizweston.com.