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This Week/Dec. 10-16

INVESTIGATE A REVERSE MORTGAGE. Once retired, borrowing against your home’s value shouldn’t be a first choice, but a last resort. Still, it’s helpful—and comforting—to know what that last resort might be worth. To that end, try the calculator at ReverseMortgage.org. Pay attention not only to the money you’ll receive, but also to the hefty fees you will incur.

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Everything you need to be smarter about money—all in one place.

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Manage Expectations

WE ALL WANT THE BEST for our children. But what can you reasonably afford? If you’re struggling to save enough for retirement, it may be unrealistic to think you can also help with college costs. If that’s the case, you should tell your children early on and preferably no later than the freshman year of high school. You don’t want your kids to spend years imagining they will go to a college that you simply cannot afford and that, even with financial aid, is probably out of reach. Moreover, if you tell your children in time, it will give them the chance to work part-time jobs and perhaps save a little money toward college costs. Even if you can’t offer financial help, you can offer advice. For instance, if your children plan to pursue careers that won’t be especially lucrative, you should discourage them from attending a college that will necessitate taking on hefty student loans. Those loans could crimp their financial progress for decades to come. What if you can help financially? Let your children know how much assistance you can provide and where you’ll draw the line. Many parents help with undergraduate costs, but tell their children that they’re on their own when it comes to graduate school. Have your teenagers check out TimeforPayback.com, an online game that shows the financial implications of college decisions. You should also talk to them about any other financial help you will—or won’t—provide. If you can assist with a house down payment and a lavish wedding, that’s wonderful. But if that sort of help isn’t in the cards, you should say so. These financial conversations shouldn’t just happen when your children are teenagers and they shouldn’t be focused solely on the help you’ll give them in their teens and 20s. Once they’re adults, you might occasionally discuss your own retirement finances, how much they might inherit and what end-of-life decisions you would like made on your behalf. Next: Save Something Previous: Where We Stand: College Costs Blog: Think Less of Me
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My $88,000 Nightmare

THE YEAR 2011 was horrifying. I learned my Mom had a life-threatening disease. She passed away six months later.
That forced me to confront the $88,000 of debt I had accumulated during college, including $51,000 in credit card debt. I was in grief, I had no idea what to do about the debt and my Mom wasn’t there to advise me.
My friend John told me to seek professional help. A debt settlement company helped me get rid of $16,000 of higher-interest credit card debt,

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Courtside Seat (Part II)

EVERYTHING I KNOW ABOUT PERSONAL FINANCE I learned in court. As part of my law practice, I represent individuals in estate, trust, and probate disputes. Many of these cases have common themes that teach important lessons about personal finance—lessons that aren’t covered in the usual commentary about saving for retirement, paying off credit card debt, and so on. In particular, six crucial lessons stand out.
Lesson No. 1: Know where your assets are.

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Crisis? What Crisis?

THERE ARE CERTAIN HALLMARKS of financial rectitude: Never carrying a credit card balance. Maxing out the 401(k). Having an emergency fund. But do these habits deserve the sacrosanct status they’ve achieved?
You won’t find me arguing with paying off the credit cards each month or putting at least enough in a 401(k) plan to earn the full matching employer contribution. Both make ample sense. But in the past, I’ve raised questions about how much emergency money people need and how they should handle this money.

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Money Guide

Everything you need to be smarter about money—all in one place.

Start Here

Manage Expectations

WE ALL WANT THE BEST for our children. But what can you reasonably afford? If you’re struggling to save enough for retirement, it may be unrealistic to think you can also help with college costs. If that’s the case, you should tell your children early on and preferably no later than the freshman year of high school. You don’t want your kids to spend years imagining they will go to a college that you simply cannot afford and that, even with financial aid, is probably out of reach. Moreover, if you tell your children in time, it will give them the chance to work part-time jobs and perhaps save a little money toward college costs. Even if you can’t offer financial help, you can offer advice. For instance, if your children plan to pursue careers that won’t be especially lucrative, you should discourage them from attending a college that will necessitate taking on hefty student loans. Those loans could crimp their financial progress for decades to come. What if you can help financially? Let your children know how much assistance you can provide and where you’ll draw the line. Many parents help with undergraduate costs, but tell their children that they’re on their own when it comes to graduate school. Have your teenagers check out TimeforPayback.com, an online game that shows the financial implications of college decisions. You should also talk to them about any other financial help you will—or won’t—provide. If you can assist with a house down payment and a lavish wedding, that’s wonderful. But if that sort of help isn’t in the cards, you should say so. These financial conversations shouldn’t just happen when your children are teenagers and they shouldn’t be focused solely on the help you’ll give them in their teens and 20s. Once they’re adults, you might occasionally discuss your own retirement finances, how much they might inherit and what end-of-life decisions you would like made on your behalf. Next: Save Something Previous: Where We Stand: College Costs Blog: Think Less of Me
Read more »

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Timely Tale

IMAGINE AN IDEALIZED CHART that summarizes our finances over the course of our lives. What would the chart look like? Picture these five lines:

Our nest egg grows, slowly at first and then ever faster, hitting a peak of around 12 times our final salary when we retire.
Our portfolio in our 20s stands at perhaps 90% or even 100% stocks. We dial down our allocation in the years that follow, especially during our final decade in the workforce,

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Jonathan Clements

About Jonathan

Jonathan Clements is the founder and editor of HumbleDollar. He spent almost two decades at The Wall Street Journal, where he was the personal finance columnist. His latest book: How to Think About Money.

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