Your Unbiased Advisor: How much of your credit limit should you use?

How much of your credit limit should you use?

Why is this question important to answer? Your credit score, which is used for everything from loans to rental agreements to job offers, is determined in part by your credit utilization—how much of your card limit you are using. Maxing out a credit card—having a balance equal to the card's borrowing limit—has a negative impact on your score. Folks with the highest credit scores often have (and use) multiple credit cards every month. So how much usage is too much? Most of us that pay all of our balance each month tend to have the highest scores. When I shop for a used car, I give the dealer permission to check my score. I know it is over 800 because I have been given a high limit but I don’t use it. When I bought a fridge recently, I paid with my credit card (to protect me if it didn’t work) and earned points. I had saved up before hand so I could pay off the monthly bill when it came due. Most credit bureaus do not cut your score if your ratio is under 30%. For instance, total cards limit $5,000, balance carried $1,500, ratio = 30%. People with the best scores tend to keep utilization under 10% for each card and for total credit card use, according to Experian.

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Is a South Dakota tax haven right for you?

South Dakota has become one of the most popular tax havens in the world. South Dakota offers everything a wealthy person setting up a trust could want. There is no state income tax or capital gains tax, so investment gains on assets placed in the trust are tax-free if it's structured correctly. Robust protections provide anonymity and shield assets from creditors and governments. And special provisions allow trusts established there to last forever, which means those assets would never be subject to the federal estate tax (40% for estates worth more than $11.7 million). However, the popular types of trusts used in South Dakota and Nevada have never been tested in a court of law. That means it's unclear if it would last. This trust, known as an incomplete gift non-grantor trust, or ING, could be challenged because the user is actually lying. They say they are hands off but they also claim they still have some control over the assets because the gift to the trust is ‘incomplete’. They claim they aren't tapping the annual $15,000 limit for gifts or the $11.7 million lifetime exemption before the federal gift tax starts to kick in. They claim a special ‘committee’ has to approve any payouts made to the creator of the trust.

Use the IRS approved tax haven: https://www.amazon.com/Your-Tax-Haven-Tax-FREE-working-Americans/dp/1482659441

How much tax will you owe for this year in April 2022?

With all the changes in income this year—unemployment, new job, child tax credit—etc, you may owe taxes that you have not had your employer withhold by December. So this calculator may help you understand where you stand: https://www.cvnb.com/calculator/tax-margin. Usually there is no penalty for under paying by December if you owe less than $1,000. If you will owe more, send in more by changing your W-4 with your employer or using this form: https://www.irs.gov/pub/irs-pdf/f1040es.pdf. You can wait to complete your taxes before April 15 and ask for a waiver of the penalty. There are no guarantees of course.

Consider changes: https://www.kiplinger.com/taxes/tax-law/603037/tax-changes-and-key-amounts-for-the-2021-tax-year

How to remove fake bad credit info from your credit report

Although one credit inquiry is not going to hurt your credit score it can affect your credit scores for up to two years. You may have looked for a new or used car or credit card or house, but that inquiry may also have come from some fake internet site or merchant trying to punish you. If you are not checking your credit report regularly, you will never know why you don’t get the best rate or rental deal. When you find the questionable hit on your report, don’t hire a credit repair firm. That may just add to your unfavorables. Use the online request form at the credit bureau to request bad info removal. Congress gave bureaus the right to ding you but not the responsibility to check data. You have to do it yourself. Thanks for nothing Congress! Around 25% of U.S. consumers found errors that could affect their credit scores in one of their credit reports. My report had data from someone in Long Island with my name and another from Maryland who stiffed a hospital and owed a lot of money. I filed the forms and got them removed after months. Bureaus don’t have a time limit on their failures. If they don’t act, use the sample credit dispute letters from the Federal Trade Commission. Let the FTC know about your dispute.

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Is “personalized investing” right for you?

Headline: ‘Personalized Investing Coming Like a 'Freight Train'. If you were a broker/advisor this is sweet music to your ear. But guess what—this is just a marketing slogan for a sales person pushing the firm’s ‘selling list.’ And we get to pay through the nose for their guesswork. A Schwab employee said “investors were seeking an “even higher level” of personalization.” Yes, if your advisor asks enough questions about your situation and goal and objectives, they are bound to be able to find some securities that you personally will like. Yes, over time and through experience, your advisor should be able to assemble securities you feel meet your needs—but at what cost? Some picks will be winners and some losers and advisors don’t know. They can’t predict the future no matter how well they know your data. The reason passive investing has done so well for index users is that no matter how much you pay for ‘personalized investing,’ you may not do well. Warren Buffett who is not a sales person has proven that most folks do better without the ‘personal investing.’ The stats show you do better with an index alone.

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What is your retirement dream?

Some folks working to attain or maintain their middle class status are now questioning the path to their retirement dream. The pandemic and the shift in steady wage growth and asset building have made some folks reevaluate their situation. If they have had to change jobs and start all over again in a new career, can they ever catch up to their dream amount? Traditionally we have planned our retirements around the expectation of combining a pension, Social Security benefits, and personal savings to provide sufficient income for later years. These days we change jobs, our employers don’t pay pensions, and wages have been flat since the 70’s. The median retirement savings of Americans between the ages of 55 and 64 is currently zero. For those with retirement savings, the balance is less than in the past. Many of us have turned to ‘professionals’ with mixed results. It is estimated that retirement savers lose $17 billion to conflicted advice each year. This is a staggering sum that has real world consequences for retirees. Regulators have failed to fix the situation. The middle class has given up assets to the upper class. Here is how: One analysis shows that over a 50-year investing lifetime, that 2% [total annual cost of investment advice and trading] will erode 63% of what you would have had. At $250 a month, that means you will have $660,000 instead of $1.3 million. Some folks have solved this problem by doubling the amount they save/invest. Some have taken John Bogle’s advice and cut out the middle person by using index funds.

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