Money Coach with HLN’s Money Expert Clark Howard

Having trouble managing money? Do your money goals seem impossible? Clark Howard wants to help you!

We’re looking for individuals or families who are willing to be profiled on HLN. Those chosen will get money advice and information from Clark Howard.

This week’s question comes from the Lites family.

Clark Behind the Headlines
From HLN's Money Expert Clark Howard

There are changes coming to the car market that are so exciting. The cost of reliable transportation has come down and down and down. And we are now in an era where you can buy new cars for as cheap as $10,000!

Manufacturers will often release versions of their lowest price point models – some as low as $8,000 or $9,000 – and many of them come equipped with just about anything the typical buyer would want: cruise control, automatic windows, automatic transmission, etc. Wait, it gets better!

Nissan, one of the world’s largest automakers, is putting out a car in Asia in about two years that will cost around $2,000 bucks!

Now why in the world would you care about a car that’s being sold in Asia? Well, I want you to think historically. In electronics, the trends often emerge from Japan. The Japanese market is a leading indicator of what’s coming to the United States and to Western Europe.

Now we’re not going to have $2,000 or $3,000 cars in the United States anytime soon because of our safety requirements. The cars have to be designed to meet our safety and emission rules and that’ll pump up the price to around $6,000 brand new, but that’s still a heck of a deal!

Money Coach with HLN's Money Expert Clark Howard

Having trouble managing money? Do your money goals seem impossible? Clark Howard wants to help you!

We’re looking for individuals or families who are willing to be profiled on HLN .

Those chosen will get money advice and information from Clark Howard.
This week’s question comes from Dan and Heather Sostrom of Gainesville, Florida.

Clark:
Wow you’ve got a lot of mouths to feed in that household, now another one on the way. Three children that you’re going to have to raise and pay for college for.

But the thing is, do you know what? You paid for your own college you said that set you back. But the truth is there are so many ways to pay for college, but you know what? There’s only one way to pay for your own retirement.

So you love your children, you want the best for the them but key thing, your primary focus and goal should be to beef up your savings for retirement. You need to contribute more each and every month to that and then if there’s money left over, put it toward your kids’ college in a prepaid plan or the 529 plan.

This conflict I’ve just talked about, I hear this over and over and over again. And when I talk with older couples whose kids are now grown and then I ask 'What did you save for retirement?' They kind of can’t look at me because they’ve taken all the money and put it toward their kids’ college.

Remember what I just said. Your primary goal with your long term savings is not your kids’ college. There’s work, there’s loans, there’s grants, there’s scholarships but for retirement you’ve got one thing and that’s you.

Help Me Clark!
From HLN's Money Expert Clark Howard

testing captions

Jerry:
I recently received a medical bill from a doctor I used in 2007. His office said an audit turned up a lab bill that was not filed and they want me to pay it.

My insurance company says it's beyond their time limit for doctors filing claims. One person at the insurance company said not to pay it if the doctor says I'm responsible. However, I worry about my credit score if I do not pay it. Any suggestions?

Clark:
You are so right to worry about your credit score and in this case what is a reasonable amount for you to pay the doctor is what your insurance would have left as your co-pay portion.

If the doctor failed to do a timely claim it is not reasonable to hold you liable for the full amount of the lab bill when it was the doctor's office that didn't do their part. So normally with lab work there would be a portion of it that would come out of your pocket; offer them that amount of money.

If they don't want to play you send them a letter by certified mail that their failure to bill you in a timely fashion has caused you harm because it is no longer within the window that you can file with insurance and that you have made an offer to them and that if they at any time attempt to put this on your credit report, that you are prepared to sue them under the Fair Credit Reporting Act.

HLN Money Expert Clark Howard.

Help Me Clark!
From HLN's Money Expert Clark Howard

JAMES:
Two years ago, my mom charged about $11,000 dollars to my credit card and now they're coming after me. I am 22 and just graduated from college, and many employers look at my credit as a negative towards hiring me. The debt collectors call me and I have tried offering a settlement and they will not accept it even after I have explained the situation to them. What should I do? I cannot afford to pay them anything.

CLARK:
Well what a sad thing that your mom betrayed your trust and charged to your credit card. I get this question a lot where a family member or a friend abuses your credit card and you're left holding the bag.

Normally you would have to fill out an affidavit where you swear that you did not make the charges and you say that they were made by your mom and if you do that at the time that the charges have taken place or the time you knew the charges had taken place you normally are not liable for those charges.

You've let this go on and it doesn't sound at all like you want to put your mom in to legal jeopardy so it's going to be up to you to try to make a deal. You have two issues. One is the affect on your credit which for seven years the unpaid debt harms you on your credit report. If you reach a deal and the debt no longer exists on your report the harm to you lessens enormously and with time essentially disappears so the most important thing is to try to cut a deal. And the key number for you is you're two years out from this, once you hit statute of limitations in your state, which means the amount of time that somebody could sue you against a debt you have far more negotiating power to negotiate a settlement for a much smaller amount than the 11,000.

Likely once you go outside of statute of limitations you should be able to settle the debt for 1,000 or so dollars.

If you go and do a Google or Bing search and put in your state and put statute of limitations on debt as the search, you'll see. And that varies by state from either 3 or 4 years on a credit card debt. Some states it will be longer than that.

Money Coach with HLN’s Money Expert Clark Howard

Having trouble managing money? Do your money goals seem impossible? Clark Howard wants to help you!
We’re looking for individuals or families who are willing to be profiled on HLN. Those chosen will get money advice and information from Clark Howard.

This week’s question comes from Tasha Alexander of Columbus, Georgia.

HLN Money Expert Clark Howard.

HELP ME CLARK!
From HLN's Money Expert Clark Howard

KIM:
I have student loans, a Stafford subsidized and Stafford unsubsidized, that were consolidated to lock in a low interest rate. I have heard that after either working for the government or in law enforcement for 10 years you can ask to have your loans forgiven. I work for my state's government and am considered law enforcement. It will be 10 years in November. My loans are current. In fact I pay more than the minimum payment very month. Can I ask for my student loans to be forgiven if they have been consolidated?

CLARK:
Okay, here's the story. Under the income based repayment plan you are eligible for forgiveness of the remainder of your student loans after 10 years of payments if you're working for a non-profit or for government, or 25 years if you work in the traditional private sector. But you have to go in to the income based repayment plan first for the clock to start ticking. Believe it or not the years you've already been paying don't count toward the 10 years so get yourself converted to income based repayment and get that clock running.

Money Coach with HLN’s Money Expert Clark Howard

Having trouble managing money? Do your money goals seem impossible? Clark Howard wants to help you!

We’re looking for individuals or families who are willing to be profiled on HLN. Those chosen will get money advice and information from Clark Howard. This week’s question comes from William Hickey of Arlington, Virginia.

HELP ME CLARK!
From HLN's Money Expert Clark Howard

KRIS:

I've fallen into severe debt and am trying to cash out my 401k to satisfy my debts. When I told my investment company I wanted to do so, they told me that since I'm still repaying a loan from my 401k, I can't cash it out. When I asked if I could use the available funds to satisfy the existing loan and have the remainder cashed out and sent to me, they balked. Is there any recourse I have and what steps do I need to take in order to have the funds ASAP?

CLARK:

Well first, everybody's telling you can't do this and I'm telling you not to do it, even if they say you can.

You don't solve a problem by wiping out your retirement funds to deal with the debt.

The real thing that eats you up with that is the tax burden.

A typical person who does a withdrawal from a 401k pays, with taxes and penalties, 40% of that amount of money in taxes.

So if you take out $10,000 you actually only have $6,000 that you can use for debt, you're going to have to have that other $4,000 to pay tax next April.

Instead, attack debt one step at a time.

If you need help negotiating, you need help working out a plan, go to your NFCC affiliate, check them out at nfcc.org, that's the National Foundation for Credit Counseling.

Money Coach with HLN’s Money Expert Clark Howard

Having trouble managing money? Do your money goals seem impossible? Clark Howard wants to help you!

We’re looking for individuals or families who are willing to be profiled on HLN. Those chosen will get money advice and information from Clark Howard.

This week’s question comes from Sarah and Ben Perkins of Decatur, Georgia.