Making Up for Bad Loans

Still trying to get your head around what's happening with the housing crisis? Then read some of The Post's recent coverage. The big news came late last week when President Bush laid out a bail-out plan for borrowers collapsing under subprime loans. Many, including myself, however, are doubtful the plan will avoid further problems in the mortgage industry.

As I wrote in Sunday's Color of Money column: "Although I'm glad some homeowners are getting interest rate relief, this plan doesn't help enough people and doesn't address the systemic problems that led to this mess. The fact is, too many people are in homes they can't afford today, tomorrow or probably five years from now. The bad lending practices that prompted people to buy homes they could ill afford won't go away by helping the worst-case situations."

Read more from the column: "A Subpar Plan to Save Subprime Borrowers" (Dec. 9).

Also get caught up on the news with these stories:

* FED INTEREST RATE STORY GOES HERE

* Local Home Foreclosures on the Rise (Dec. 10)

* Those Who Avoided Risk Call Plan a Raw Deal (Dec. 7)

* A Buffer? Or a Bailout? (Dec. 7)

* Steven Pearlstein's column: On Wall Street, Mortgaged Principles (Dec. 7)

* For continuing coverage (and archive of past stories), take a look at washingtonpost.com's Special Report on the Credit Crunch.

Regifting: Thumbs Up or Down?

The results are in - unofficial of course - and the overwhelming majority of those who wrote to me endorse the practice of regifting. (Read my column from Nov. 29 for more of my own thoughts: Give It Again, Sam.)

Here are what some readers had to say:

"I think regifting is a great idea, as long as you remember who gave you the gift, and you don't regift to someone who is in the same group as the original giver (friends, coworkers, family) so that nobody gets their feelings hurt. I received an awful vase from a dear friend. She meant well and spent a fair amount of money on it. I could not regift it to a mutual friend, because she might find out and get her feelings hurt. I regifted to my sister-in-law, who lives two states away, and she loves it. I call that win-win."

"I'm all for re-gifting," another reader wrote. "It's a great way to save money and resources and there's no reason why someone wouldn't be just as happy with a re-gift as a first-time gift."

If you're not sure how to re-gift without any guilt or a faux pas read my column from a few years ago on the dos and don't of this seasonal practice "A Gift That Keeps On Giving (Dec. 8, 2002)."

Chat Leftovers

An hour is just not enough time to get through the dozens of questions I receive during my regular online discussions. So here are some more answers I didn't have time to answer during last week's Web Q&A.

Q: "I'm having a hard time dealing with my husband's family's spending habits at Christmas. I grew up in a house where Christmas was first and foremost about church and family, and presents were usually modest (less than $100 per person). My in-laws, on the other hand, spend easily $1,000 per family member at the holidays (my husband is an only child), and expects us to come close. My husband's family exchanges Christmas 'wish lists' of expensive presents every year. Aside from feeling bad that I'm spending so much less on my own family than on his every year, how do I get him to see that really, this is ridiculous behavior? It's not a major financial concern in the sense that we put the gifts on credit cards (we don't), but it really bothers me.

A: The holiday season can be so intense especially around gift-giving. Of course, this isn't about the money (and hardly ever is). So have a sit down, real honest, heart-to-heart, baby-I-love-you-but discussion with your husband. Share everything: your frustration, concerns about the excessive, uneven spending, etc. It may be too late for this year, but suggest everyone on both sides of the family do a secret Santa exchange, where everyone picks one person and gives one gift. Or together (after your talk) set a strict budget with a dollar amount for each person, family. But you have to get on the same page otherwise the resentment will build up. In this case, talk isn't cheap.

Q: Can you provide a link to a column you wrote when you worked through your own inner scrooge and decided to purchase a new car?

A: I sure can. Here is it. And to understand the "inner scrooge" reference, read my column from last Thursday. I'm not a miser, but I can hang on to a dollar pretty tightly.

Q: When does your show air on TV? Secondly, we have a four year old and would like your advice on investment options for her money.

A: My cable show, "Singletary Says" airs every Saturday at 9 a.m. on TV One. You can check channel listing for your local area here. As for investment options for your four year old I would recommend saving for his or her college. To do that I suggest you open a 529 plan. You can put some of her money in her own college fund. Make her part of the saving process. Money contributed to a 529 plan grows tax deferred and when withdrawn, if the money is used for qualified higher education expenses, returns are not taxed. To find out more about this type of investment go to www.savingforcollege.com.

Frequent Flier Questions

Many of you will be hopping on flights for the holiday season. Perhaps some of the tickets were courtesy of a reward program. Or maybe you're already planning for trips next year. If so, you might be interested in the answers to some frequent flier questions from my recent online discussion with Tim Winship and Randy Petersen, co-authors of "Mileage Pro." The authors joined me online to discuss their book, which was the pick for the Color of Money Book Club.

Here are the answers to questions the authors couldn't get to during the chat:

Q: My frustration with my dividend miles is that when I joined, I heard all I needed was 20,000 miles to get a round-trip ticket anywhere in the continental U.S. Yet, when I seek to redeem the miles, I discover that most of the locations I wish to travel require 40,000 miles and that I will need to return a week later and that earlier return dates are blacked out. Do I have a right to feel a little cheated?

Tim Winship: Legally, U.S. Air (and all airlines) makes it clear that awards are capacity-controlled, and blackout dates may apply, and so on. But such legal disclaimers are buried in the fine print, and most consumers do expect that they will have a reasonable chance of securing a restricted award (for fewer miles) for flights close to their desired departure and return dates. So you have every right to feel disappointed, but no legal recourse.

Q: My husband and I travel for pleasure about two to three times per year. We like to fly out of National Airport whenever possible. We're thinking it would be smart to get a credit card that earns miles with one of the major carriers that serves National. These airlines include American, Continental, Delta, Northwest, United, and USAir. Which airline(s) do you think are a good bet to get a credit card with?

Tim Winship: The general rule is to go with the credit card of the program operated by the airline you use most often. That means you'll be adding miles for credit charges to miles earned for flying, resulting in the maximum number of miles in a single program, and the maximum number of awards.

Randy Petersen: Of these choices, I think you might consider the credit card for American Airlines. A few reasons: they have a "short-haul" award at only 15,000 miles. This is important for two reasons for you -- if the destination that you want to fly to is within 750 miles of National, you'll only be paying 15,000 miles for the award vs. 25,000 miles with most of the other programs. Since your pleasure trips are somewhat limited, earning miles by credit card will be important to you and we all know, the fewer the miles the award is, the easier they are to earn. Plus American has a fairly good reputation for making seats available. Another plus -- they have an offer right now that will award you 25,000 bonus miles just for signing up for the card and spending at least $750 over the next three months. That alone is almost two free tickets for you right at the start (15,000 mile award) without doing anything other than choosing the right card and the right program. It's a MasterCard so it will easily be accepted most anywhere you might choose a credit card for. Another plus ... every quarter they have special destinations for as few as 12,500 (in addition to the 15,000-mile short haul award) including some international destinations (for a few more miles) and these special awards are only offered to their credit card customers. Certainly something to consider and if I were making the decision, it would be the one I would personally make.

Q: My husband and I are going to London in March and Paris this summer. We have enough miles for two free tickets to London or an upgrade to business for Paris. What are our chances of being able to upgrade in the summer? Should we just get the free flights now? My husband thinks that since the airlines are in trouble, that it's better to use miles as soon as possible.

Randy Petersen: I would not worry about the airlines being in trouble for you to make your decision. They have all found ways to make it through 9/11 and except for the price of fuel, are all doing quite well -- if we count full flights as any indicator. As for upgrades, that's a tricky answer since many of the upgrades are dependent upon the type of fare class your coach ticket is bought. Cheaper fares require more miles, more expensive coach fares require less and as well, it depends upon which program you have your miles with. Some airlines like Delta and Continental are really expanding into Europe so have more flights for which you can upgrade with. As well, they share partnerships with Air France and KLM to Europe which you can also use your miles with. Paris is a tough market to upgrade. Try to get the free tickets to London and then take the train (from London) to Paris if you need to. The reason I say that is certain programs like American and Continental both have caveats that when using miles for upgrades, you still have to pay a fee and that can really get expensive and somewhat nerve wracking because with some of the rewards they do not clear your request until a month before your flight and by that time you have little chances of another strategy to upgrade with someone else, etc. While I'm a gambler for some of my miles and rewards, with summer in mind, I'd say a bird in hand is the better way to go - that is, take the tickets to London.

Now, one more possible great tip. The most popular period when members are trying to redeem their miles for summer travel is mid-January. So if you do anything, try to redeem for your summer awards now, before everyone else thinks about it. You'll have a much better chance.

XM Show

Tune into "Singletary Says" every Sunday on XM Satellite Radio, Channel 169 The Power. The show airs from 8 p.m. to 10 p.m. ET. Call in with your questions or comments.

The number is (866) 801-TALK or (866) 801-8255. You can also e-mail your questions to michelle@xm169thepower.com or singletarym@washpost.com. Be sure to put "XM" in the subject line.

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