4 Common Financial Questions About Credit, Savings, Taxes, and Debt

How can I correct errors on my credit report?

Under the Fair Credit Reporting Act, you have the right to have any incorrect or misleading information removed from your credit report. If an error appears on your credit report, you should contact the credit bureau and request a reinvestigation of the disputed information. If the error is not removed, you have the right to add a 100-word consumer statement to your credit bureau file to explain your side of the story. The three major credit reporting agencies are Experian, Trans Union, and Equifax. You can contact these agencies by phone, by mail, or through their websites.

Keep in mind that since mistakes do occur in credit reporting, you should check your credit report once a year as part of your financial planning process. Also, the more common your name is (e.g., John Smith), the more likely you are to have someone else's information added to your report.

How much money should I keep in a savings account for emergencies?

This content has been reviewed by FINRA.

Without an adequate emergency fund, a period of crisis could be financially devastating. Many financial professionals suggest that you set aside three to six months' worth of living expenses for emergencies. The actual amount, however, should be based on your individual circumstances. Do you have a mortgage? Do you have short-term and long-term disability protection? Other factors you need to consider include job security, your health and income. Be sure to review your cash reserve periodically. Since personal and financial circumstances often change, you'll want to make sure your cash reserve fits your current needs/situation.

How long should I keep copies of my tax returns?

Generally, you should keep your tax returns and supporting information (i.e., receipts, W-2 forms, bank statements) for six to seven years. The IRS has three years to audit a return, or two years after you have paid the tax, whichever is later. However, if income was underreported by at least 25 percent, the IRS can look back six years, and there is no time limit for fraudulent tax returns.

Am I liable for my spouse's debts?

This content has been reviewed by FINRA.

The general rule is that spouses are not responsible for each other's debts, but there are exceptions. Many states will hold both spouses responsible for a debt incurred by one spouse if the debt constituted a family expense (e.g., child care or groceries). In addition, community property states will hold one spouse responsible for the other's debts because both spouses have equal rights to each other's income. Also, you are both responsible for any debt that you have in both names (e.g., mortgage, home equity loan, credit card).