Hunt_Mary_2018

Mary Hunt

Dear Mary: What is the difference between a bank and a credit union?

— Justina

Dear Justina: Great question! A bank is a for-profit financial business run by paid board members that’s primary purpose is to make profits for the shareholders.

A credit union is a nonprofit financial business that’s owned by its members and run by unpaid volunteer board members. In a credit union, the profits go back to the members in the form of better rates and lower fees.

To find a credit union you can join, go to MyCreditUnion.gov and click on “Credit Union Locator.”

Dear Mary: When a person, who shall remain nameless, overdraws her bank account by accident, is there anything she can do to stop the chain of events and horrendous fees?

— Bettye

Dear Bettye: Don’t worry. Your secret is safe with me. Banks hope you won’t fight back by requesting a courtesy credit, but you should. The minute you realize you have a problem, call the bank or go into your local branch in person.

Many banks will credit back the fee, or some of it, if it’s your first offense.

You need to move into prevention mode by setting up an overdraft protection account that attaches to your checking account. Then, to make sure you never have to use it (you have to pay it back, so it’s not some kind of gift), get into the habit of checking your balance frequently (set up your account online so you can check using your smartphone), and never let it drop below, say, $100. Ever.

Dear Mary: Thanks to you and “Debt-Proof Living,” my husband and I have been debt-free for three years.

My father has recently been very ill, and my mother spilled the beans about their debt. They have two credit cards and several store cards with balances. They also have a mortgage and a car payment. I’m frustrated, disgusted and heartbroken to find out they have so much debt at their age.

My husband and I paid off one major credit card for them that had several thousand dollars on it. Afterward, my mother went out and ran the account right back up to the limit.

I’m not willing to go into debt to pay off their debt. I explained to her that with that kind of debt, they will never retire.

Am I wrong? I would appreciate any advice you might have for us.

— BethAnne

Dear BethAnne: Congratulations on your debt-free status! I am so proud of you, and I’m sorry to hear about your father’s illness. But that doesn’t change my response: You are not wrong. You shouldn’t bail them out by going into debt. I think you’ve discovered why paying their debts isn’t such a hot idea, either, even if that does not create new debt for you.

I would say the same thing if your mother were writing to me about you: You cannot fix anyone by making them comfortable in their misery. That only enables them to stay there. And buy more stuff.

I suggest you diligently save and invest now because the day may come that you decide you want to contribute to their day-to-day care. But even then, you will not be responsible for their debts and should not feel guilty for that.

I hope everyone reading this — regardless of age — will take stock of the way they are managing their finances and preparing for the future. The best gift we will ever give our kids is our own solvency. In that way, we will not become a financial burden to them.

Dear Mary: Last year, I started doing some transcribing work at home to earn a little extra money. Now that it’s tax time, I am confused about what I can deduct as home business expenses.

I’d like to include my home office and internet costs, but my kids also use the computer. How do I figure out just how much I can list as a deduction?

— Bethany

Dear Bethany: I am not a tax professional, so please do not rely solely on what I have to say here.

The way I understand the home office deductibility for a business that you run out of your home is that the space and equipment must be “regular and exclusive.” That means if you use a spare bedroom for your office, it cannot also be used as a spare bedroom. You would need to move the bed out and set it up as an office because — trust me — the IRS could make you prove the exclusivity of this space if you claim it as a home office.

The IRS has prepared a useful resource, a webpage entitled “Home Office Deduction,” in the Small Business and Self-Employed area of its website. It should answer all of your questions.

Mary Hunt writes this column for Creators Syndicate. She is the founder of www.EverydayCheapskte.com, a lifestyle blog, and the author of “Debt-Proof Living. Submit comments or tips or address questions on her website. She will answer questions of general interest via this column, but letters cannot be answered individually.

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