MONEY Taxes

Nearly 7 Out of 10 Americans Will Use Their Tax Refund for the Same Thing

Take the poll below and tell us how you plan to use yours.

The majority of Americans will use their tax refunds to pay down debt in 2015, according to a survey conducted by the National Foundation for Credit Counseling.

Of the more than 1,000 respondents, 68% have their refund earmarked for debt repayment, with 15% using it for basic necessities and 11% using it to pad their savings accounts. Only 2% plan to use it as “fun money” for a vacation or shopping spree, and 4% still haven’t made up their minds about the best use for the cash.

According to the IRS, the average tax refund last year was $3,034. That’s a hefty chunk of change that, when combined with our debt repayment strategies, can help get you back in the black in you’re looking to get out of debt this year.

How will you use your refund? Let us know in the poll below.

Here are more ways to improve your financial fitness in 2015:
4 Ways to Hit Your Money Goals
3 Simple Steps to Get Out of Debt
4 Strategies for Powering Up Your Savings

 

MONEY College

Graduates of These Colleges Make the Most Money (and It’s Not Just the Ivies)

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Lawrence Sawyer—Getty Images

Party schools do better than you'd think—but there's a twist.

Far and away, the nation’s science, math, technology, and Ivy League colleges produce the highest-earning graduates, according to PayScale.com salary data released today.

The average grad of math- and science-heavy colleges such as Harvey Mudd, CalTech, and the Georgia Institute of Technology out-earned grads of any other type of college, netting $677,000 more in earnings over 20 years than someone who didn’t attend college at all (minus the cost of attending the college).

Graduates of the Ivy League came in a close second, netting $650,000 in extra earnings over the first 20 years of their career. Both groups of schools report returns on investment that are at least 80% higher than any other type of school in PayScale’s analysis.

Hope if You’re Hopeless at Math

But what if you’re not a math genius, or lucky enough to get into an Ivy League college?

PayScale says the next-highest-earning group of colleges are so-called “party schools,” such as the University of Florida, Syracuse University, and Penn State, whose graduates’ salaries over 20 years added up to a net extra $354,000.

Graduates of research universities, such as large private universities and flagship public schools, and so-called “sober” schools, such as religious schools, commuter colleges, and military academies, earned just slightly less, on average, than party school alums.

Graduates of arts and liberal arts schools reported comparatively low salaries, notching a return on investment over 20 years of about $200,000. Music school graduates had the lowest average 20-year return of just $128,000 over their costs.

So Party On?

PayScale spokeswoman Lydia Frank says neither parents nor students should take the party school findings too seriously, however. “That was just a fun comparison and kind of surprising,” she says. “Apparently there is some studying happening in between partying.”

What’s more, the salaries reported on PayScale.com are only for college graduates whose education ended with a bachelor’s degree and who work full-time. All the students who couldn’t balance partying with class work and dropped out aren’t counted.

That could be a big number. There is plenty of research that shows that students whose partying involves lots of drinking flunk or drop out at a higher rate than those who have more moderate social habits. And federal earnings data show that college dropouts have a harder time finding jobs, and earn less, than college graduates do.

Meanwhile, other studies shows that the more time undergraduates spend intensely studying–especially studying alone–the better their odds of getting a good job after school.

Scott Carrell, an economist at UC Davis who has studied how alcohol use affects academic performance, says that the PayScale findings could reflect one important truth: Students who manage to graduate from a party school may have developed self-restraint, social skills, and networks of friends that help them find better paying jobs after graduation.

But Carrell also questioned the accuracy of Princeton Review’s labeling of selective universities such as the University of Florida and UC Santa Barbara as “party schools” over less selective and, perhaps, jollier schools such as Chico State University.

The bottom line, Carrell says, is that students shouldn’t conclude from the PayScale data that it pays to go to a “party” school because, he says, “you don’t know if you will be the one who drops out.”

The Top 10

These 10 colleges were ranked highest in PayScale’s latest return on investment analysis: the total average earnings for each school’s graduates over 20 years, minus the cost of attendance and the average pay of someone who didn’t attend college.

College 20-year ROI
Harvey Mudd College $985,300
California Institute of Technology (Caltech) $901,400
Stevens Institute of Technology $841,000
Colorado School of Mines (in-state) $831,000
Babson College $812,800
Stanford University $809,700
Massachusetts Institute of Technology (MIT) $798,500
Georgia Institute of Technology $796,300
Princeton University $795,700
Colorado School of Mines (out-of-state) $771,000

Money uses PayScale.com earnings data as a part of its college rankings, but balances that data with graduation rates, student loan repayment rates, educational quality indicators, and value-added measures. See which colleges Money judges offer the best value overall.

MONEY credit cards

Check Out the Insane Rewards Offered by this New Credit Card

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Rudyanto Wijaya/iStock

You can get 3% cash on everything you buy, at least for the first year.

We don’t get too excited about new credit cards around these parts. So the fact that I’ve personally already signed up for Discover it Miles should tell you something about this card.

The new addition to Discover’s “it” platform, announced late last month, is geared toward consumers who want to earn travel rewards without having to participate in specific airline loyalty programs. To that end, it’s joining into a competitive pool that already includes the Capital One Venture, the Barclaycard Arrival Plus World Elite and others.

Discover it Miles rewards program is unusually generous, but not in the way it’s marketed. According to my analysis, this travel rewards card can actually provide the best cash back value of any card on the market. At least for a year.

What “it” Offers

Discover it Miles is positioned in the non-branded travel rewards credit card space. That means that rather than earning miles for, say, United or American’s loyalty programs, customers instead rack up miles on their card that they can then transfer as a statement credit for travel purchases.

Such cards typically offer better value for your charging dollar, since airline programs have been devaluing miles and making it harder to redeem for tickets.

With Discover it Miles, cardholders earn 1.5 miles for every dollar spent, no cap. Every mile earned is worth one penny, so $10,000 spent equates to $100 in rewards.

Most travel cards offer some kind of signup bonus as an incentive. For example, if you spend $3,000 in three months on the Capital One Venture, you’ll receive 40,000 miles.

But Discover it Miles doesn’t do this. Instead, the card doubles all of the miles you’ve earned at the end of the first 12 months. So $10,000 in spending translates to 30,000 miles, or $300, after a year.

Other perks include no annual fee, no foreign transaction fee, and up to $30 in credit for in-flight Wi-Fi charges. Discover also waives late-fee charges on your first missed payment.

How “it” Compares as a Travel Card

To be fair, the Discover it Miles offers better terms than other no-fee travel cards.

But if you’re someone who spends at least $475 a year, and you’re looking for travel rewards, you’re generally better off going with Barclaycard World Arrival Plus Elite, one of MONEY’s Best Credit Cards.

While Barclaycard holders endure an $89 annual fee after the first year, they also receive a 40,000 signup bonus, two miles for every dollar spent, and a 10% rebate when miles are used for a travel credit. The signup bonus alone is worth $440 if used for travel purchases.

So $10,000 spent on the Barclaycard would net you 60,000 miles (including the signup bonus), which equates to $600 off on travel statement credits. Throw in the 10% rebate, and you’re looking at $660 for that first year. That’s far more than what you can get by using the it Miles as a travel card.

How “It” Compares as a Cash Card

But you shouldn’t think of Discover’s new card as a travel-rewards product. Think of it instead as a cash-back card that nets you 3% (!) on all purchases for the first year.

How? Besides letting you redeem the miles on your statements for travel purchases, the Discover it Miles lets you claim them as a direct deposit into your bank account. So if you accrue 30,000 miles, you get $300 or 3%.

This is a major boon for consumers looking for cash back. Right now, the highest flat-rate uncapped rewards comes from the likes of Citi Double Cash and Fidelity Investment Rewards American Express Card, which offer 2% for all purchases. The Discover it Miles is a full percentage point better.

That’s a big deal. For $10,000 in spending, the Discover it Miles earns you $300 vs. $200 for the 2% cash back cards.

There are mutual funds on our MONEY 50 list that haven’t returned 3% over the past year!

The doubling miles feature is only good for the first year, so the card is less valuable than other products after the first 12 months. After that, you’d be better off using Citi Double Cash. But since there’s no annual fee on the Discover It Miles, there’s no harm in getting the card, using it as your primary for a year, then holding onto it.

You might actually see your credit score improve, especially if you keep your spending at the same level: A lower credit-utilization ratio is a major plus in the FICO scoring formula.

More from Money.com:

5 Things You Didn’t Know About Using Personal Email at Work

How I Made $100,000 Teaching Online

10 Smart Ways to Boost Your Investment Results

MONEY College

Some Small Private Colleges Are Facing a “Death Spiral”

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Courtesy of Sweet Brair College Virginia's Sweet Briar College, facing a "financially unsustainable" future, announced this week that it would be closing.

The closure of Sweet Briar College is an example of how winner-take-all economics is starting to hit colleges.

The announcement that Sweet Briar College, a private women’s college in rural Virginia, would shut down this summer—even as elite private colleges such as Harvard reported record numbers of applications—reflects a new reality for students and colleges, experts say.

While the elite colleges can keep raising prices and soliciting big donations, small private colleges that don’t offer what today’s students want – generous financial aid, access to urban activities and job markets, and a name that will impress employers – are facing potentially devastating financial pressures that can lead to a “death spiral” of declining admissions, tuition revenues, and contributions.

The pressures facing small private colleges are part of a larger financial squeeze on almost all kinds of colleges. Nearly all of the nation’s public universities, for example, suffered dramatic budget cuts after the 2008 recession. Some public college systems, such as those in Louisiana and Maine, have been so debilitated by cuts that schools have had layoffs, closed entire departments, and are facing the prospect of having to shut down campuses entirely.

Several for-profit colleges, like Anthem and Corinthian, have shut down in the last year, in part because of government crackdowns on schools with low graduation and student debt repayment rates.

Many traditional nonprofit private colleges are struggling for two other reasons: declines in the number of 18-year-olds in certain parts of the country (especially the Northeast and Midwest) and the worsening financial outlook for the middle-class families who, historically, have wanted to send their children to private institutions.

The Census Bureau says the total number of college-age Americans (18-24) is expected to decline slightly between now and 2020. from 30.9 million to 30.8 million. In addition, the median income for American families was around $52,000 last year—about 5% less, in real terms, than it was a decade ago.

The result, according to a December 2014 Moody’s analysis of the financial situation facing colleges, is a widening winner-take-all divide, in which wealthy institutions with global reputations that can attract high-paying international students will continue to thrive. Schools that aren’t attractive to a national or international market and don’t have a “demonstrated return on investment…will face increased competition from cheaper public higher education as well as distance learning options,” Moody’s warned.

(MORE: See if your college offers a good return on investment.)

The rich and famous colleges are certainly enjoying unprecedented success. Harvard, for example, reported a record 37,305 applications for its fall 2015 freshman class. And between donations and the booming investment market, its endowment rose by $3.5 billion to $35.9 billion in 2014.

Meanwhile, the median American college saw an endowment gain of just $15 million, to bring the typical endowment up to just $113 million. And the average private college has had to provide so much financial aid to attract students that its net revenue per student from tuition, fees, and room and board have remained flat, in real terms, over the last decade, according to the College Board.

An analysis of schools that have recently shut down, or are facing an imminent closure, shows that certain kinds of private colleges, such as small, rural colleges that serve comparatively small communities, appear to be facing the most difficult struggles to recruit enough students to stay afloat.

(MORE: See how to tell whether your college is in deep financial trouble.)

Sweet Briar, located in a small community 120 miles southwest of Richmond, has only 710 students and was having trouble recruiting new ones because fewer women seem to want to attend an all-women’s college these days, college president James F. Jones Jr. said in the closure announcement. “The declining number of students choosing to attend small, rural, private liberal arts colleges and even fewer young women willing to consider a single-sex education, and the increase in the tuition discount rate that we have to extend to enroll each new class is financially unsustainable,” he explained.

Mid-Continent University, of Mayfield, Ky., a Baptist college that shut down last June after the federal government found problems in the financial aid office, had about 2,200 students in a town about 150 miles northwest of Nashville. And Lebanon College, a two-year private college 75 miles northeast of Manchester, N.H., had fewer than 90 students when it closed last summer.

Tennessee Temple University, which The Chatanoogan reported recently is considering closure, is a Baptist school with about 1,000 students.

Richard Ekman, president of the Council of Independent Colleges, an association of small private schools, says predictions of a tsunami of private college closures are unfounded. “It is pretty hard to kill a college,” he notes. And in fact, while there is no official count of the number of college closures, a search of news reports for private, nonprofit colleges that have closed or considered closure in the last year turned up no more than about a dozen or so names out of the approximately 1,650 private nonprofit colleges operating today.

The vast majority of private colleges are responding to financial pressures by using technology and online materials to reduce their costs, raising more financial aid donations to be able to enroll more cash-strapped students, and developing new professional and online programs to attract new kinds of tuition-paying students such as working adults, Ekman says.

But Ekman acknowledges these strategies won’t save every college. There is growing competition among colleges for working adult students and online courses, for example, he notes. And most private colleges don’t have big endowments to allow them to ride out continuing economic stresses. “The colleges are doing what they should be doing,” he said. “The question whether they are doing it quickly enough.”

MONEY financial skills

Who’s Worst With Money: Baby Boomers, Gen X or Millennials?

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Alamy

Older and younger generations alike face financial challenges, but they share different concerns.

A new report confirms what we all fear to be true: Americans, no matter their age, are generally terrible at managing their money. In short, we all need to save more. A lot more.

This insight comes from Financial Finesse, a think tank geared toward helping people reach financial independence and security, in its 2015 generational research study released today. Financial Finesse’s assessment of each generation’s financial health is based on employee responses to its financial wellness questionnaires, which is used at more than 600 companies in the country.

In this study, generations are broken into millennials (employees younger than 30), Generation X (30 to 54) and baby boomers (55 and older). Based on what people reported about their financial situations, no group gets bragging rights or much room to criticize their older or younger counterparts. As for how they scored, it’s pretty even: On a scale of 0-10 millennials got a 4.6 for financial wellness, Gen X a 4.7 and boomers a 5.7.

Millennials

The youngest segment of the workforce seems to do pretty well with the in-the-moment financial decisions. Essentially, these consumers were scarred by the debt problems they saw in the recession, and they’re more likely to spend within their means, have plans to pay off debt, pay their credit card balances in full and avoid bank fees than Gen Xers.

Despite being in the best position to prepare for retirement (the earlier you save, the easier it is to reach your goals), millennials listed it as their third most important priority, after paying off debt and managing cash flow. The other generations had retirement planning at the top.

The debt issue is really what sets millennials apart. More of their income goes toward student loan payments than it did for other generations when they were younger, and those payments may be cutting into savings potential. The lifetime cost of debt calculator shows how even low-interest debt can impact your savings.

Generation X

Gen Xers have a higher median income than millennials, but they have a harder time managing the bills. This report attributes that to having so much going on, with managing their own finances, supporting children and caring for aging parents taking up a lot of time and resources. At the same time, the report identifies this generation as focused on improving their credit, despite the trouble they have paying bills on time and spending within their limits. (You can see your credit scores for free every month on Credit.com.)

With so many demands on their finances, Gen Xers generally don’t have enough savings to fall back on, sometimes leading them to take money from retirement funds in a pinch. With each passing year, it gets harder to catch up on retirement savings, which could really hurt Gen Xers as they near the end of their careers.

Baby Boomers

With insufficient retirement savings threatening the financial stability of many older Americans, boomers need to focus on analyzing their investments and adjusting their living standards to meet their resources. There’s not much time to make up for poor retirement saving earlier in life, so boomers may have to re-evaluate one of the few things they can really control: Their expectations.

We’re not all doomed for financial ruin, but this report highlights something that cannot be emphasized enough: Setting long-term goals and sticking to plans for meeting them should dominate your financial planning. Do it your own way — there are many effective approaches to balanced money management — but don’t dismiss the importance of planning ahead.

More from Credit.com

This article originally appeared on Credit.com.

MONEY Credit

Help! I Lost Out on an Apartment Because of a Credit Report Mistake

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Chris Ryan—Getty Images

A reader got turned down for an apartment thanks to a mistake on a credit report. If you're looking to rent, here's what to watch out for.

A reader, Emily, wrote to us after being turned down for an apartment because of a previous eviction for her husband — only he’d never been evicted. Instead, she thinks his records may have been confused with his father’s. Here’s her story:

My husband and I tried getting an apartment last month and they denied us because my husband supposedly has an eviction, but it’s not him, it’s his dad who has the same exact name, and my husband wasn’t even old enough to rent when the eviction happened. How did the third party get this information mixed up if we submitted my husband’s social security, and this eviction doesn’t even appear on his Experian acct.? We are mind-boggled.

Rod Griffin, Experian’s director of public education, says it’s unlikely the couple were denied an apartment because of an eviction on a credit report, but she is right to be concerned about a possible mix-up between her husband and his father.

“The apartment leasing company was almost certainly looking at a tenant screening report (rather than a credit report),” Griffin said. “A tenant screening report may incorporate information from multiple sources, one of which may be credit report. However, credit reports do not include information about evictions. So the information likely was provided by another consumer reporting company that compiles information about things other than credit or from public record sources,” he said in an email.

If Emily and her husband had been turned down as a result of something in a credit report, they should have received an “adverse action” letter explaining why they were rejected and giving them any credit scores obtained in the process.

As it is, they might want to ask the apartment leasing company for details on how to reach the provider of the tenant screening report. They’ll want to find out who supplied the information about the eviction and how to contact them.

One way an eviction could affect a credit report and score is if a landlord turns a delinquent account over to a collection agency. In that case, a collection account (though not an eviction) would appear on the credit report. And in the case of people who have the same name and once shared the same address, a mix-up is possible.

And although shopping for a place to live doesn’t feel like applying for credit, it’s smart to check your credit reports before you start looking. Check for accounts you don’t recognize or other information that is inaccurate. If you see problems, you can dispute them and get a resolution before misinformation hurts your score. Griffin said most disputes are resolved within 14 business days, but could take as long as 45 days.

Some property managers do ask for permission to see credit reports and/or credit scores as part of the application process, so it’s smart to be ready and to know what the leasing company will see if it requires a credit check. You can check your own credit as often as you want, without affecting your score. (You can get a free credit report summary, with updates every 30 days, from Credit.com, and you are entitled to one free credit report annually from each of the three major credit reporting agencies.)

More from Credit.com

This article originally appeared on Credit.com.

MONEY First-Time Dad

How to Avoid Spoiling Your Child

Luke Tepper
One-year-old Luke, having his cake and eating it too

First-time dad Taylor Tepper learns how not to be the kind of parent he fears becoming.

Our son, Luke, recently celebrated his first birthday. Family and friends generously gave the tyke rubber soccer balls, race cars, pegs, hammers, marbles, and chic winter gear. Luke now has more toggle coats than I do.

Luke’s things, like a rebel army, have begun to outnumber my own. He now has nearly a dozen bins filled with plastic and wooden products crafted by large companies and bought by suckers like me. His clothes occupy a spacious three-drawer dresser, while mine are packed tightly in a small closet. He has twice as many pairs of socks as I do. This all feels silly. Give Luke the option to play with an empty milk carton or a fluffy stuffed animal, and he’ll be shaking the carton between his hands like a boy possessed before you can blink. The box carries more value than the toy inside.

As I cleaned up after Luke’s party, I started thinking about the nature of toddlers and their stuff, and I’ve been mulling over a few issues ever since. The first has to do with spoiling. I know that you can’t really spoil a baby—infants’ needs must be met. But am I developing habits of indulgence now that will ossify over time and lead me to spoil Luke when he’s older? Am I setting myself up to be a bad parent? The second issue has to do with the presents themselves, the catalyst of my spoiling concern: there must be a better use for all that money.

The truth about spoiling

On the first question, the experts are clear. “You’re not going to spoil a baby,” says Tovah P. Klein, assistant professor of psychology at Barnard College and author of How Toddlers Thrive. “They need to be comforted and cared for.”

That Mrs. Tepper and I do. We also warm Luke’s baby wipes, pull him around in a red wagon for hours on end, and turn on “Sesame Street” whenever he’s systematically broken us down. My fear is that our good-natured, responsive parenting will morph into something more unseemly as he ages. It’s not a big leap to image a world where I’m cooking a second dinner because 2-year-old Luke is dissatisfied with the first. I shudder when scenes like that unfold in my mind’s eye.

The key thing for me to recognize, says Klein, is that I don’t need to protect my son from unhappiness.

“If you think, my role is to make him happy all the time, or to entertain him, the child doesn’t learn how to handle hard times, like when he’s angry or frustrated or sad,” Klein says. “Your goal as parents is, how do you help him deal with anger when limits are imposed.”

That’s an intuitive point, but one slightly difficult to reconcile with experience. Luke is our first child, so everything is new to us. Call it the Unbearable Lightness of Parenting. So in the next five to 12 months, as he develops a sense of self and forms his own ideas of what he wants, it will be challenging to hold a firm line. How do I know this tantrum isn’t just a test of limits but a true expression of real pain? Will I have the stomach to stay the course?

“He’ll be happy if you love him and let him know you’re there,” Klein told me. “Put up some reasonable limits and help him through those frustrating moments. That is what counters spoiling.”

Children, especially really young ones, crave structure. It’s the lack of it that results in insecurity. So if he doesn’t want to eat what I’ve cooked for dinner, fine. But I’m not frying up another meal.

Getting presents—and other stuff—under control

Limits are certainly in order for all of his toys. Between Christmas and his birthday and well-meaning friends doting on the little guy, we have enough Elmos and plastic cell phones and wooden school buses to open up our own boutique. This overflow of generosity leads to a short-term concern as well as a longer-term one.

In the here and now, the problem is sheer volume. “Children need less material goods,” says Klein. “More stuff tends to overstimulate them.” We already try to highlight only a few options for him to play with, but we’ll resolve to be even more selective going forward. We’ll offer him one bin to tear apart rather than two.

Later on, though, I worry about relying on toys (and ice cream and other objects that cost money) as a means of reinforcement. I don’t want to get into the habit of giving him things all the time so that he’ll do X or Y. Plus, I don’t think I’ll be able to afford it.

“Not every reward has to be a material reward,” says psychologist and parenting expert Lawrence Balter. “Sometimes rewards can be privileges as they get older.”

I was discussing the issue of presents at Luke’s party with a friend from college, and she asked me if we had starting saving for his college fund. (We started a 529, but it’s tragically underfunded.) Instead of toys, she asked, why don’t you ask people to donate to the fund instead?

Which is what we’re going to do from now on. Rather than stuff our bins full of perfectly fine but ultimately useless things, we’ll ask friends and family to chip in to help pay for his insanely expensive education. While that might make the act of gift-giving a little less fun for them, it will help us afford an essential good that will dramatically improve his life.

Plus, it’s one less spaceship for me to trip on in the middle of the night.

More From the First-Time Dad:

MONEY Credit

5 Ways You’re Accidentally Wrecking Your Credit

pieces of credit card in hands
Roy Hsu—Getty Images

Certain actions, like closing a high-fee credit card, might seem financially savvy. But there could be consequences for your credit.

It’s one thing to knowingly make decisions that hurt your credit score. We’ve all been there, and sometimes tough decisions must be made. But it’s an entirely different situation to accidentally wreck your credit.

In some cases, we make decisions without realizing the impact on our credit. In other cases we may know that certain decisions can hurt our score, but we don’t appreciate the severity of the impact. Either way, maintaining good credit requires more than casual attention.

It is entirely possible that you could be accidentally wrecking your credit, and here are some of the ways that you could be doing just that.

1. Not Paying Attention to Your Credit Balances

Good credit is about more than just paying bills on time. About 30% of your credit score is based on your amount of debt, which includes your credit utilization. That’s the ratio of how much you owe on your credit lines divided by the total credit limit of those lines. For example, if you have total credit lines of $40,000, and you have a total outstanding balance of $10,000, your credit utilization ratio is 25% ($10,000 divided by $40,000).

If that ratio exceeds 30%, it can have a negative impact on your credit score. If you are casual about your credit balances, they can slowly creep up to 40%, 50%, 60% or more. At that point, you may see your credit scores begin to sink.

2. Closing Accounts

A lot of people make it a habit of closing out any credit cards that they pay off. From a credit perspective, however, this can have a negative impact. Though it seems counter-intuitive, a paid in full line of credit or credit card is a positive contributor to your credit score, even if you stopped using the account.

This brings us back to credit utilization. If you pay off a credit card that has a line of $5,000, that available credit is contributing to the total amount of credit you have available. That will improve your credit utilization ratio. Closing the card will lower your available credit, increase your overall credit utilization, and potentially lower your credit score.

3. Co-Signing Loans

Co-signing loans is another area where people are often very casual. They often assume that they are just doing a good deed to help a friend or family member, and may even mistakenly believe that it’s simply a one-time event.

But when you co-sign a loan, you will be involved in that loan and that loan will be on your credit report until it is fully paid. In the event that the primary borrower makes a late payment, this will have an impact on your credit score. Worse, should the loan go into default, this will also show up on your credit.

4. Applying for Too Many Lines of Credit

If you have good credit, it’s likely that you are getting bombarded with credit offers in the mail on a weekly basis. If you are in the habit of applying for the better ones every month or so, you could be unknowingly hurting your credit.

Credit inquiries account for 10% of your overall credit score. While this is the least significant factor, these hard pulls — as they are called — can ding your credit. Consider the impact these inquiries can have the next time you consider a 0% credit card offer or bonus miles sign-up deal.

5. Not Monitoring Your Credit Scores

One of the best ways to know if you are hurting your credit is by monitoring your credit scores. Credit scores change on at least a monthly basis, but typically stay within a tight range. A significant drop in your scores, say more than 25 or 30 points, is an indication that something is wrong. You won’t know about the drop, however, unless you are paying attention to your credit scores on a regular basis.

A significant drop in your score could be an indication that your credit utilization ratio is getting too high. It can also indicate an unsuspected late payment. Errors are also possible when it comes to credit. And at the extreme, a big drop in your credit score could be an indication that you are the victim of identity theft.

You won’t know any of these unless you are monitoring your credit scores on a regular basis. Unfortunately, ignorance is not bliss when it comes to your credit. You shouldn’t obsess about it, but at the same time, you should never be too casual about it, either. Bad things can happen when you’re not paying attention.

Fortunately, there are a number of ways to obtain and monitor your score for free, including through Credit.com.

More from Credit.com

This article originally appeared on Credit.com.

MONEY Aging

Handling Family Finances When Dad Is Losing His Grip

family of piggy banks
Sean McDermid/Getty Images

When the person in charge of family finances has dementia or Alzheimer's disease, a difficult transition is required.

A client’s daughter told me recently that she was beginning to notice her father having difficulties with memory and comprehension.

I had known that her father’s health had deteriorated somewhat, but he still seemed relatively sharp mentally up until the last conversation I’d had with him, around Christmas time.

The client’s wife has never been very involved in the family finances, and his son lives out of town. The daughter has been playing caretaker for some time. Now it seemed we needed to have a more in-depth conversation with everyone involved regarding family finances, longevity and what happens after the patriarch has passed away or can’t function as financial head of the household.

The loss of a loved one is unbearable, but far worse is losing a loved one to cognitive conditions such as Alzheimer’s disease or dementia. These decisions may cause personality changes. In some cases, a client may become belligerent or paranoid, especially when dealing with financial issues.

It is always preferable to have a client himself or herself acknowledge that something is wrong, but this may not always be the case. For this reason, financial advisers need to have a plan in place to address situations such as this one.

The first step is to get the family involved. Most of the time, the spouse or children will already be aware of the issue.

In this particular case, I could not discuss financial details with the daughter without a financial power of attorney. Fortunately, we were able to schedule a time for father, mother and daughter to meet and discuss family finances.

What if someone refuses to admit that he is losing his mental acuity? We dealt with this a few years back with another client. He was going through a divorce at the time — a process which may have either contributed to, or resulted from, his mental decline. We ended up being a part of an intervention involving the client, his children, his business partner and his pastor. The pastor referred him to a psychiatrist; luckily, the client pursued treatment that helped.

The key to handling many of these situations is having a ready stable of referable professionals in all aspects of life. In addition to the colleagues we deal with on a regular basis, such as lawyers and accountants, it is helpful to have contacts in the arenas of medicine and psychology.

Solid and consistent documentation is a standard in our industry, but it becomes absolutely imperative when dealing with cognitively questionable clients. Keeping communication records protects everyone involved and can go a long way to explaining client actions to family members if they are unaware of the problem.

Things don’t always go so smoothly. In some situations, you must fire the client. We have had to have these tough conversations in the past. It would be nice to say that we are always able to help facilitate a changing of the guard, but many of these personality issues are beyond our control. When cutting ties, it is important to do it with an in-person meeting. We’re honor-bound to do what’s best for the client, but it is also important to protect our practice. If we are unable to make progress, it may be best for clients to find someone who can better help them.

I’m very thankful the daughter came to me, rather than my having to reach out and have what could have been an unpleasant conversation. At this point we have now gathered financial powers of attorney and reviewed updated wills and trusts, coordinating with the family attorney. The mother and daughter are much more aware of the family financial situation and are not nearly as fearful about the future. I expect the daughter will take a more active role in the management of the family’s finances. We want to make sure that everyone involved is aware of, and on board with, the transition.

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Joe Franklin, CFP, is founder and president of Franklin Wealth Management, a registered investment advisory firm in Hixson, Tenn. A 20-year industry veteran, he also writes the Franklin Backstage Pass blog. Franklin Wealth Management provides innovative advice for business-minded professionals, with a focus on intergenerational planning.

MONEY Wealth

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