HELP ME CLARK!

SID:
My mother gave me $2,000 to invest for my children for college. My children are 14 and 10. What should I invest the money in?

CLARK:

HLN's Money Expert Clark Howard

In a 529 account. 529 is a special tax-free account for college.

There are many many plans and each state will generally sponsor its own or even several. But you don't have to put your money in your own state plan, and in many cases you shouldn't.

I have a guide on 529 plans at cnn.com/clarkhoward, and you should look at my guide to make a selection.

If your state is on either my Dean's list or my honor roll list, go into your state plan. But if your state is not listed, then go into one of the Dean's list plans.

CLARK BEHIND THE HEADLINES

I talk about us all being part of a team: Team Clark. We'll get tips from listeners to my radio show, and I'll say to the listener, "You are now a member of our team." Well, just such a thing happened recently, and this story is all over the news now.

HLN's Money Expert Clark Howard

A listener called and she was talking about how when the feds redid withholding at people's work early this year, the consequences of that are going to be really awful for a lot of people when they file income tax after the first of the year.

It was called the Making Work Pay tax credit. The problem is that the feds apparently messed up the tables, didn’t take some things into account and were too generous. And there is now a guess from the IRS - are you ready for this number? - 15 million Americans may have to pay back some of that tax credit. That's going to be ugly.

Who are the likeliest, according to the IRS? If you moonlight at a second job, if you're married and both spouses work, or if you’re an early retiree who receives Social Security and works part time, your withholding could be all messed up and you may owe taxes that you ordinarily wouldn’t.

So you only have a few pay periods left this year if you fit any of those circumstances. If you can afford it in your budget, boost your withholding, which you can do very easily through a little form on the IRS website. Do that and you will eliminate some of the surprise that you would have when you do your returns next year.

As an alternative, what I would recommend you do is start a savings account now, and pop some money in it each week or each month or each pay period until April 15, so if you do end up with a significant tax bill due, you would have already budgeted for it and started saving for it. If you end up not owing money, look at the great thing that's occurred: you’ve saved money! And you know how much I like for you to do that.

HELP ME CLARK!

ROSEMARIE:

We are scheduled for a cruise to Antarctica and the company is suggesting that we get insurance, $528 per person, for emergency events: lost luggage, illness, etc. We are 65 years old and have no health conditions. What do you think?

CLARK:

HLN's Money Expert Clark Howard

If you're going to go on a cruise and your inability to show up at the port would mean you forfeit all your money - which is almost always what it does mean - you should buy trip insurance.

But don't buy it from the cruise line. You want to buy it from an insurance company. And the best website to shop the policies is insuremytrip.com.

Now, the coverages will vary and the exclusions will be different one company to another, so take the time to sit down and compare the exclusions that various companies have and, in turn, the coverages.

The typical price, though, for trip cancellation or trip interruption insurance is 6% of the cost of the trip.

From HLN's Money Expert Clark Howard

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

If you've listened to me for any period of time, you know how hostile I am to gift card giving. Because gift cards come with so many disadvantages and so few advantages.

HLN's Money Expert Clark Howard

In fact, I'm not sure there's any advantage at all unless it's one of the deals where you get more in value than what you pay, which is true for a lot of restaurant gift cards and that sort of thing, where you might pay $80 and get $100 worth of food, or pay $100 and get $125 worth of food. That's worth the risk.

The Federal Reserve has issued new rules on gift cards that make them a little less rotten. And they have done away with a lot of the fees.

First year of a gift card, people can't charge you fees on them anymore. And when there are fees, they have to be disclosed in bright lights, basically.

And even what fees can be charged after a year are limited. Now, after five years - this is a real help for the retail industry - the money will go to the retailer if somebody hasn't redeemed in five years.

But the best rule of thumb if somebody does give you a gift card is, go use it pronto, right away. You use it immediately, you don't have to worry about forgetting about it and it gathering dust somewhere.

Now here's the funny thing: the Federal Reserve is suddenly issuing all these regulations that are supposedly pro-consumer. But at the same time, the Fed is such a captive of the industries it's supposed to oversee that it delayed the effective date of the new gift card rules long enough that somebody could become pregnant today and deliver a baby before the new rules go into effect.

They go into effect in late August of next year. What a joke that it would take that long. I think if they said 60 days or something like that, that would be fine. But to wait long enough for another school year to go by, or for someone to give birth - how silly is that?

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

DWIGHT:

Is it better to get a loan from your bank for a certified used car or try and get financed through the dealer?

CLARK:
Absolutely 100% of the time you go to your bank to get pre-approved for a car loan for a used or new car.

Now if the car dealer will then meet or beat the interest rate offered by your bank, fine to do it with the dealer.

But almost always if you don't shop in advance for that loan you're gonna get chopped off at the knees.

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

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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.