Answers to Your Money Questions

During my last online discussion, as with most of my Web chats, there were many questions I just didn't have time to answer. So here are answers to a few of the leftovers:

Q: Is there a type of professional in the real world that gives the same kind of advice you do? Personal finance seems to be about investments ... [but] I need advice about making short- and long-term family financial decisions.

A: As I keep telling my husband, I'm just so unique. Seriously, there really aren't too many professionals you can hire to give you everyday money advice. There's just not much money in that. So where can you turn? I suggest finding a personal finance course at a local community college. Check with your church or local community groups to see when or if they offer basic family finance seminars or classes. If budgeting advice is what you need, you can seek help from a legitimate credit counseling agency. Go to www.debtadvice.org. Finally, read as much as you can about personal finance. Get a subscription to a personal finance magazine. And of course, keep reading this e-letter and the business section of your local newspaper.

The following is more of a comment regarding a statement I made during the discussion about home equity. Read the chat transcript to see the full context.

Q: Home equity is just that, it is their money and not the bank's money. They may have to pay interest to access it, but it is theirs and when they sell the house, they would keep any equity they built.

A: That is utter nonsense. This is how Bankrate.com explains a home equity loan: "A home equity loan or line of credit allows you to borrow money, using your home's equity as collateral. Equity is the difference between how much the home is worth and how much you owe on the mortgage."

I'm not surprised that so many people don't view a home equity line of credit or loan as other people's money. But the fact is, the equity in your home -- if there is any -- is only truly realized when you sell your home.

As we are seeing in the current housing slowdown, many homeowners are finding out the hard way that a home equity loan is debt. More and more people, in today's market, have to bring money to the closing table when they sell their home because they can't sell it for a price that will cover their mortgage. And yet these same people have home equity loans. That's why you should be very careful before taking out a home equity line of credit or loan on the assumption that the market value of your home will always rise or stay the same.

Q: What's the best way to increase your credit scores if you're trying to buy a home? My husband's middle score is 630 and mine is 570 but we have no debt, no loans, and a combined salary of $140,000. We're desperately wanting to buy a home but can't because of our low scores. We're trying to get approved for 100 percent financing but everyone keeps telling us that we have to increase our scores to least 620+ to do so.

A: It sounds like all you have in your credit files is negative information. Because you have no loans or debt, that means you aren't generating any positive credit behavior. Talk to a lender to find out what you can do to improve your score without hurting your chances of getting a loan. For example, one thing you might do is use a credit card you already have or apply for a new card and occasionally charge something on it. Then, make sure to pay the bill off the next month, on time! This will generate positive credit activity. Finally, the fact that you are trying to get a home loan for 100 percent of the purchase price makes me wonder if you are really ready to buy. Do you have an emergency fund of at least three to six months of living expenses? And on top of that, do you have the money for closing costs? What about a fund for the things you will want to buy once you get the home? Be sure you don't empty out all your bank accounts to purchase a home.

Mega-Money Mistakes

I'm starting a new contest this year: "My Mega-Money Mistake."

To participate, send me an e-mail outlining what you think your biggest financial error has been. The amount of money lost, misspent or mismanaged doesn't have to be huge. Perhaps you refinanced your home to pay off credit card debt and then ran up the cards again. Or tell me about some financial advice you followed that resulted in a huge money blunder. When you send your entry, please tell me what you learned from the gaffe. The point of this contest isn't to judge but to learn. Even smart people make big money mistakes.

Read more about this contest, and even a mega-mistake I made, in my column: "$2,500 for 4 Pots, And Other Mega-Mistakes" (May 13). Then send your entries to colorofmoney@washpost.com. Put "My Mega-Money Mistake" in the subject line. Your submission should be e-mailed by May 26. Make sure to include your name, day and evening telephone numbers and address.

Conscience Investments

A challenging aspects of managing your hard-earned money is finding where to properly invest it. In last Sunday's Business section, Jeff Brown, a personal finance columnist for the Philadelphia Inquirer, writes about socially responsible investing. That's where investors use current issues such as the crisis in Darfur, or global warming to guide where they put their money.

While this kind of investing may be good for the earth, humanitarian relief, and your conscience, critics argue that it may not be the best for your bottom line. Read "Save the Earth, Sacrifice Your Returns" to see if this kind of investment is worth it to you.

Wedding Price Tags

I'll admit, whenever I hear someone is getting married, I wonder how much they plan on spending on the wedding. That's because far too many weddings today are all about the party. People spend more time picking out the cake, napkins or flowers then getting counseling that may help them live happily ever after. I also cringe at the thought of many foolish couples paying for the wedding on credit.

In last Sunday's Outlook section, Meghan O'Rourke, Slate's literary editor, explains why we spend so much on these one-day events in "Selling 'I Do': Wedded to Consumption." (This topic was also the subject of a recent online discussion with Rebecca Mead, author of "One Perfect Day: The Selling of the American Wedding.")

Stamp of Approval?

Before you put that next bill or letter in the mail, make sure you have the proper postage amount on it. Earlier this week, standard letter rates increased to 41 cents. There are other price changes that you should be aware of as well. The U.S. Postal Service is moving to a shape-based pricing system.

As I wrote a few weeks ago, the new "Forever" stamp is also on sale. These stamps allow you to purchase one rate now and the next time the U.S. Postal Service decides to raise its rates, you won't have to pony up the extra change for the difference. But before you rush out and purchase a bunch of these stamps, go back and read "These Stamps Are Forever, but the Savings" (May 3).

If you still have questions about the new rates, read this online discussion with Dan G. Blair, chairman of the Postal Regulatory Commission.

You are welcome to e-mail comments and questions to singletarym@washpost.com. Please include your name and hometown; your comments may be used in a future column or newsletter unless otherwise requested.