Your Money Matters
Financial experts solve day-to-day dilemmas about dollars and cents. Courtesy of USAA.
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Question: We have contributed to the federal government's retirement savings plan for the past few years, but the economic upheaval is making us think twice. Should we stop adding money, or ride out the crisis? My husband is 40, and IÕm 36. We have no debt and a significant emergency fund.
- Cassandra, Naples, Italy
Answer: Your reaction to the financial crisis is understandable. "The markets have given many investors' retirement accounts dramatic cuts," says Certified Financial Planner practitioner June Walbert of USAA. "It's a shock to the system, but the value of those accounts today is largely irrelevant. What matters is what they're worth in another 25 or 30 years."
Given your age and strong financial position, you may want to view the current bear market as a potential opportunity - and consider increasing your contributions. "It's interesting that the stock market is one of the few places where buyers shy away from lower prices," says Walbert.
She also points to the long-term potential of investing in stocks. "Between 1926 and 2007, stocks averaged a 10.4 percent annual return, compared to 5.9 percent for bonds and 3.7 percent for cash," says Walbert. Of course, that does not mean you should invest everything in stocks. "A portfolio that includes a mix of investments can potentially give you a smoother ride and help you sleep at night," she says.
Question: My husband is an Army veteran and we would like to buy a restaurant. Are there any special loan programs for veterans?
- Emily, Collbran, CO
Answer: The U.S. Small Business Administration offers the Patriot Express Pilot Loan Initiative to veterans, some active duty military members and qualified spouses and widows. "The SBA can also help you write a business plan and consider ways to expand your enterprise," adds Certified Financial Planner practitioner J.J. Montanaro of USAA. Visit sba.gov/patriotexpress.
Question: How long should a delinquency appear on my credit report?
- Sarah, deployed from Fort Sill, Okla., to Camp Bucca, Iraq
Answer: "Most negative information, including delinquencies, can be reported for up to seven years," says Montanaro. Beyond that point, take action.
The Fair Credit Reporting Act holds two parties responsible for errors: the credit reporting agency and the business providing the erroneous information. "When you find a mistake on your credit report, send a letter to each of them," advises Montanaro. "Include copies of any documents that support your position, but hold on to originals." The credit reporting agency generally has 30 days to investigate your dispute. It must share findings with you in writing and send a free credit report if the investigation resulted in a change. If an error is found, the creditor must also notify all three major credit reporting agencies.
Request a free copy of your report annually from each of the major agencies by visiting annualcreditreport.com or calling (877) 322-8228. Note that while your report is free, you will have to purchase your score for about $8.00 from each credit bureau on annualcreditreport.com.
This material is for informational purposes. Consider your own financial circumstances carefully before making a decision and consult with your tax, legal or estate planning professional.
Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP and Certified Financial Planner in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
Financial planning services and financial advice provided by USAA Financial Planning Services Insurance Agency, Inc. (known as USAA Financial Insurance Agency in California), a registered investment advisor and insurance agency and its wholly owned subsidiary, USAA Financial Advisors, Inc., a registered broker dealer.
