Recent Posts in A Wealth of Knowledge
Q: On personal finance, what advice would best suit a May 2010 college graduate (Tennessee State) going out into this unstable economy?
@justaaron1 via Twitter
A: No matter what economy you face, the one critical piece of advice you should follow is this: Live below your means. And by that I mean, whatever you earn, spend less.
Of course, there is more to being a good money manager; but that's the first step. Here's some other basic advice I've given to many soon-to-be college graduates, including one of my nieces who will be graduating in May 2010.
Keep your housing cost ...
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Q: What is the best product available for someone looking to lower their monthly payment and get into a fixed-rate loan?
@bandre1906 via Twitter
A: There isn't one product for every homeowner. Obviously, to lower your payment from what you have now, you need to lower the interest rate. The tried and true 15-year mortgage and 30-year mortgage with a fixed rate is what people are after now.
But, what you can get these days, in terms of a better mortgage product, depends greatly on your individual financial situation.
Lenders are looking hard--finally--at people's financials. So, to qualify for the best ...
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Q: For people who live on a budget and are now unemployed, what can they do, other than look for a job and cut unnecessary expenses, to make it through this horrible economy?
Los Angeles, CA
A: I've been working with a few folks who are unemployed, and it's tough. It's tough to watch them struggle. It's tough having to advise them to cut out anything and everything that makes life comfortable and fun, such as eating out, watching cable or going out to catch the latest star-studded blockbuster movie.
I've consoled people when they didn't get a job that ...
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Q: I have an IRA, but I am not putting anything in it, because I changed jobs. The current job does not have an IRA or anything. What can I do to still continue to save for retirement? Are there any types of IRA plans that I can get? Please help me, because my husband has a 401(k) plan, and he may be all right when he retires, but I will not be.
Macon, GA
A: Just because you can't continue contributing to a former employer's plan does not mean you can't continue to invest for retirement.
You might ...
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Q: We have 15 to 25-year-old credit card debt now totaling $135,000. We are approaching retirement with five marriages between us (we have been married 20 years), but see no hope of eliminating this debt. We have closed all but one of 10 cards because we chose to opt-out rather than accept higher rates. Is bankruptcy our only choice, as we can no longer survive without the cards? Debt resolution does not seem to be a workable choice. What should we do?
New York
A: The first thing you need to do is close the remaining 10 ...
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Q: How do you determine if you are a millionaire? What items do you include in your analysis?
A: What you are asking is what's your net worth. That's how you determine if you're a millionaire.
Interestingly, most people have no idea what their net worth is or even how to figure it out. The Consumer Federation of America and the Financial Planning Association sponsored a survey a few years ago and found that only about half (49%) of adults know what personal net worth is. Even after survey participants were given the definition of personal net worth, ...
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Q: I need ideas on how to develop a retirement budget. Do you have recommended Web sites people can go to and get information for developing one?
Dumfries, VA
A: One of the best retirement calculators is the Ballpark E$timate, created by the Choose to Save Program. This nonprofit aims to help people become better money managers.
The retirement calculator is an easy-to-use, two-page worksheet that helps you figure out how much you need to save to fund a comfortable retirement. You have to complete several fields of information, including about your expected Social Security benefits and assumptions ...
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Q: Here's my situation (deep breath). Due to surviving domestic violence during spring 2006, I made an emotional purchase two years after bankruptcy. I leased a gas-guzzling SUV and, by September 2007, I had to give it back, because I fell behind in my payments and could no longer afford it due to the gas prices being $4 a gallon. Well, since I broke the contract, I now owe $17,000, and I'm thinking about filing bankruptcy again. I also have $46,000 in student loans I'm repaying and about $3,000 in credit card debt, along with the usual household expenses--rent, ...
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Q: Would it be realistic to expect the average American to be a millionaire within his/her lifetime? And, if not, what is it we're doing wrong, and how can we correct it?
Landry Tientcheu, Madison, WI
A: You might be interested to know the world's population of high net worth individuals dropped 14.9% in 2008, according to the 13th annual World Wealth Report, released by Merrill Lynch Global Wealth Management and Capgemini.
The U.S. saw its population of millionaires drop 18.5%, although it remains the single largest home to the rich, with 2.5 million, or 28.7%, of the total global ...
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Q: I lost my job and haven't worked for 8 months. Most of my savings is gone. How do I prioritize my bills, house note and car payment? What is more important? What can you do if creditors give no slack to regular payments?
A Visitor, Upper Marlboro, Maryland
A: I don't have to tell you the awful unemployment numbers.
It's bad out there for a lot of people. I'm working one-on-one with several people who are unemployed, and often, after speaking with them, I want to cry. (Sometimes I do.)
At this point, you are in crisis mode. What gets ...
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Q: We hope to sell our home as soon as possible, but we are not due to leave the area until June 2011. When is it smart and not smart to refinance our interest-only mortgage?
A Visitor, Upper Marlboro, Maryland
A: First, I highly recommend you talk to a real estate agent and find out how long it's been taking for people to sell their home in your area. Given the uncertainty of the housing market and how difficult it's been for many people to qualify for loans, you might want to sell now and rent for a year ...
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Q: I currently have a medical school loan that is $200,000. I went into deferment because I went back to school. While in school, I was paying on the interest. What is the best way to pay on the primary loan now?
A Visitor, Wadsworth, IL
A: I thought I'd share this with the masses.
The average educational debt of graduates in the class of 2008 was $154,607, an increase of 11% over the previous year, according to the Association of American Medical Colleges.
Part of the reason the medical debt is so high is because students defer paying down ...
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Q: My husband's drug and alcohol use is threatening our credit and ability to pay bills on time. He's a ticking time bomb, and I could be paying the mortgage and bills by myself instantly. Should I forgo keeping my house, move someplace cheaper and take one hit to my credit report, or take several hits based on nonpayment to several creditors?
A Visitor, Southern Maryland
A: I'm so sorry you are going through this. But, before we get to the money stuff, I hope you don't mind that I recommend you seek qualified counseling. What you have on ...
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Q: In 2007, my brother was getting a divorce and did not know where he would live. He had no money to rent an apartment. I decided to purchase a townhouse for him. Now the house that he owned, and sold at the time of his divorce, is up for sale--with a significant price drop.
My brother wants to move back into that house, but I would have to sell the townhouse I bought him in order for him to buy his previous home. My real estate agent thinks that it would be a good idea, because there is more ...
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Q: We paid off our house and received a letter from our mortgage company congratulating us. Aren't we supposed to get a title or deed showing that we are now the owners of this house?
A visitor, Cedar Park, TX
A: Can I put this question in perspective of the times?
Foreclosure filings--default notices, scheduled auctions and bank repossessions--were reported on 358,471 U.S. properties during August 2009, an increase of nearly 18% from August 2008, according to RealtyTrac, a leading online source for foreclosure information. The same report found that 1 in every 357 U.S. housing units received a foreclosure ...
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Q: I have been following the "7 Money Mantras" for three years now and have gone from $21,000 on my credit card to $0! I still owe a pension loan for $2,000, but what a great lesson you taught me. I listen to the book on my iPhone often, to remind me.
My question is will you be extending the Money Mantras, now that the financial tide has turned for this country?
Poet Minor, Harlem, NYC
A: I'm so delighted that my book Spend Well, Live Rich has helped you get out of bondage.
That's what I call it when ...
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Note to readers: The following is a long question--although really, it's someone venting. I'm posting all of it (except for some minor edits) with the thought that many of you may see yourself in this woman's shoes.
Q: I lost my job last May. Since January, I've been in grad school full-time, working on my Ph.D. I'm trying to save for a nice church wedding when I finish the program, in fall 2013. I only make $1,650 per month (gross)/$1616.76 after taxes. My car note is $515.74, rent is $615; then I have utilities, grocery, books, gas, etc. Mind you, ...
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Q: My sister opened an account in my name about four or five years ago, and now she's lost her job and can't make the payments, and I cannot afford to pay her monthly minimum, which is a crazy amount. Is there any way to negotiate with them without messing up my credit? I've worked really hard to have decent credit score.
A visitor, Chicago, IL
A: I just have to ask. Why would your sister open an account in your name without your permission?
I ask because, technically, what she did is called identity theft.
An identity thief will ...
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Q: I am paying down several credit cards, as well as two auto loans. I received a bonus recently and thought it might be best used to pay off the collateralized auto loans instead of putting that money into my six-month savings. Please advise.
A visitor, Ft Lauderdale, FL
A: It's always a good idea to have an emergency fund. Six months is ideal. Three months is good. A year is fantastic, if you have a job or income that would be hard to replace right away if you're laid off.
So, if you are fairly confident about your ...
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Q: I owe about $7,300 on two credit cards. I have two certificates of deposit maturing, for about the same amount of money. My question is, do I pay off those cards, or do I take a loan using those CDs as collateral and pay about 4% interest on the loan to pay off the credit cards? I am thinking it will take me a long time to save that much money again.
A visitor, Rochester, NH
A: I get asked this type of question all the time. What people really are asking is: "Should I use debt ...
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Q: I was laid off six months ago. My health benefits with my former employer will expire soon. I was solicited by a contracting company, which traditionally does not offer benefits to a new contractor-employee. However, to bring me on board, they did offer me access to their medical and dental plan and sent me a 30-page PowerPoint presentation.
Aside from the plan being generally weak, with large deductibles and premiums, compared to what I was used to with a large, well-established company, I noticed that I would not qualify for coverage, as I have a pre-existing condition.
It ...
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Q: I've been doing contract publicity work since experiencing a "reduction in force" in January. How do you recommend I handle earnings to avoid tax problems? I've never had tax problems, and I don't need to start any.
Tracey New, Dallas TX
A: First, I'm sorry you lost your job, but it's great that you are finding work.
This is actually a great question for our times. Many people who have lost their "day" jobs are turning to contract work or becoming consultants, and now are self-employed.
And, I'm afraid many people who work for themselves fail to pay their ...
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Q: I love your show Singletary Says on TV One. I am learning a lot. However, I was unemployed for eight months. I've had a part-time job for the past year. I have just gotten a roommate, but I am having a hard time building my savings account back up, due to trying to "catch up." Can you help me?
A Viewer, Suffolk, VA
A: I'm not sure if it's any consolation, but you are not alone in giving up looking for finding full-time work.
The number of long-term unemployed (those who are jobless for 27 weeks or more) rose ...
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Q: My significant other just got approved for a home loan. I asked her to co-sign for a car for me. Would this affect the amount she was approved for? I don't want it to affect her chances of getting the house of her dreams. So, I need some advice.
Veronica, Houston, TX
A: You are right to be concerned. If your partner co-signs for that loan, it may affect not just the amount for which she gets approved for a home loan, but also the interest rate she will pay.
When someone agrees to co-sign, they are agreeing ...
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Q: I'm a 52-year-old disabled lady on Social Security. When I was working, I was able to save around $30,000 in a retirement fund. Currently, it is still with the company. What is the best way to grow this money? I have lost several thousand dollars because of the stock market. Is it better to roll it over to an IRA? This is my only savings. I'm driving a 1995 car, and I will need this money for a car one day. I don't know if I'll ever be able to work again. If so, it would only ...
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Q: Over the years, I've had bad luck managing my checking accounts. The "occasional" overdraft fee averaged $2,500 annually. I've since closed my accounts and gone with a pre-paid debit card company. These days, with banks collapsing without notice, how can I be sure of the integrity of this "new" industry and of a particular "bank" or company?
David, Las Vegas, NV
A: Can I do some truth-slaying before I get to your questions?
David, it's not a matter of "bad luck" to have $2,500 a year in overdraft charges. That's bad money management. Bad luck would mean, ...
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Q: I need to buy a new home for me and my family. However, I had co-signed on a house for my mom, just before I got married. I've been told that I need a down payment that I have no way of accumulating any time soon, since I'm the only one working. I never benefited from the first-time homebuyer program, since that was not offered to us at the time. Is there any chance that I could benefit from that now, eight years later? If not, any chance that I may need less down payment for a ...
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Q: I would like to know where I can find information about classes being offered to youth groups concerning financial planning and wealth building. I recently started a mentoring program for girls and thought this would be an interesting topic for them. Please provide me with some resources.
Tabitha Boyce, Atlanta, GA
A: What a wonderful thing you are doing in mentoring young girls and wanting to offer them financial ...
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Q: My dilemma is whether to stay in my current position as a government contractor that pays $140,000, but offers no long-term benefits beyond a 401(k) plan, or pursue a more permanent position in a government or private organization that will pay at least 25 to 33% less, but offers long-term stability through pension, investment opportunities, etc.
Currently, I invest through a commercial firm, but I am contemplating leaving them and going on my own. I have been reading and attempting to educate myself before making this decision.
I am 34 ...
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Q: What are some effective ways to reduce tax consequences?
Brian Humphrey, Jersey City, NJ
A: I imagine, for most people, the ideal is to never owe taxes. So, people spend time figuring out how to reduce their tax obligation. And some people go to jail because they figured wrong! Remember the first season winner of Survivor? Richard Hatch went to jail for trying to avoid paying his taxes.
As you look for ways to reduce your tax burden, keep in ...
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