Color of Money Live

Need advice about how to handle your personal finances? Whether the struggle is saving for retirement, organizing your bank files, talking about money responsibility with your spouse or loved one, Post personal finance columnist Michelle Singletary offers her advice and answers your tough questions.

A transcript follows.

Read Michelle's latest columns, check out her Color of Money Book Club selection archive or sign up for her weekly e-mail newsletter.

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Michelle Singletary: Good afternoon everyone. So glad you could join me. Well, lots of questions so let's get started.

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Washington, D.C.: Michelle, I just wanted to say how much I enjoy reading your columns and chats. I'd like to encourage your readers to just keep plugging away at paying off debt and saving money. Don't get discouraged!

One thing I enjoy most is to look at where I was financially in 1995 and compare it to now. I basically had no retirement savings and a total net worth of maybe $3,500 (was 35 in 1995). I can look at the year-by-year progress in Quicken. Currently I'm at over $250K in retirement accounts (very little of that is employer contributions) and another $250K in home equity. My 2002 car was purchased with all cash, and I have over $60K in CDs in bank accounts.

It was done little by little, by maxing out my 401(k) contributions every year, adding to my IRA, paying off my credit cards every month without fail, and shopping for clothes at secondhand stores and outlet malls.

I make saving money a game, with me the winner when I get items I need at a great discount. Items I want get put on a wish list that may stay on the list for a long time, until I can afford them. Playing the game correctly is a lot of fun.

My mortgage lender continually begs me to refinance or borrow more money (I owe $73K at 5 percent fixed on a 15-year loan) and I basically just tell them 'buzz off.' It's not in my interest to take on debt unless it makes sense financially. My goal is to pay off my condo mortgage within 10 years, which I should be able to do easily.

Michelle Singletary: What a wonderful story to start off this chat.

Thanks for sharing and good for you for taking control over your financial life.

But how do you feel paying off your mortgage off before your 90 when experts, bankers, financial advisors, and general knuckleheads say it's a big mistake?

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San Mateo, Calif.: Hello, Michelle. I thought today's column about starting your own business was very helpful (as your columns always are). BUT I feel you let a huge issue slip past right at the beginning. In describing the multiple pitches you've gotten recently from friends and relatives for their online "travel agencies," you say you have no objections to that business model per se.

However, I think there is something fundamentally wrong with a business model that depends on the owner exploiting his or her personal connections. It's like those "buying parties" for Tupperware, makeup, purses, jewelry, or what-have-you, where the hostess often guilt-trips friends, neighbors, and family members into attending and buying junk they probably would never look twice at in an impersonal store setting. Moreover, from the way you describe this business, it doesn't sound as if the "agents" have gotten any training to become well-informed travel advisors (like your colleagues in the Flight Crew), but are just regular folks asking you to book your flight, cruise, etc., through them rather than directly through Delta or Carnival Cruises.

To my mind, that's not much different from buying a chocolate bar from the kid next door who's raising money for a marching band trip, or saving up box-top coupons for the PTA -- i.e., a favor you might do for someone you know, but hardly a sound model for a profitable business. (I could see the point if these Web-based "travel agents" offered lower prices than you could get directly. But given your known thriftiness, I think you would have mentioned a price advantage if there were one.)

Frankly, it sounds a lot like those "Make Million$ in Real Estate!" spiels. I suspect most of the profit in this line of work comes from recruiting others and giving seminars, not the actual travel. In fact, your friends could even have been sucked into a scam, if they had to pay a lot up front.

Unfortunately, when money is tight, some people become more open to sketchy get-rich-quick schemes. If they read your column more often, they would realize that becoming financially secure depends not on "secrets" but on some basic rules and a lot of hard work and patience. Keep up the good work.

washingtonpost.com: Being Your Own Boss Isn't All Play and No Work

Michelle Singletary: Whew. Have a lot to say do we?

I didn't really let it slip by about the pitching of friends and family. I see no problem in that as long as you are upfront. Often when you start a small business, you do approach the people you know to patronize your business. It's up to them to determin if the product or service is worthy of their money. And trust me I NEVER buy from a friend or family member unless I feel the purchase is worth my money.

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Houston, Tex.: I had 2 or 3 late payments on a small student loan. But I have since paid the loan off in full. Will the late payments always be on my credit report or will they be trumped by the fact that I paid the entire loan off?

Michelle Singletary: Your late payments can stay on your credit report for SEVEN years.

But don't be dimayed. The impact of those last payments go away month after month after month. As long as going forward you continue to pay on time and stay below (about 50 percent) of your available credit on your credit cards etc. your score should rise.

Your on-time paymeents will help going forward.

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Middletown, Md.: Michelle, Love your advice. I do not owe any debt, have fully funded my 401K but do not qualify for the Roth and am on track to achieve my goal of saving for college education for two young kids. Here is where I need your help: I have a decent windfall from the sale of my stock options and savings over the years, I am trying to decide whether to invest it for retirement or pay off my mortgage which I can do now with the money. Thanks for your help. Eric

Michelle Singletary: Oh my, if you have the done the following pay off that mortgage then open your front door and scream "I'm DEBT FREE:

-- You have an emergency fund of at least three to six months.

-- You have a nice cash reserve in addition to your emergency money for what I call the "life happens fund." Meaning you don't have to touch your emergency money to fix your car or repair something in the house

-- You are on track for saving for your retirement

-- You are on track for saving for your kids college fund

-- You have no consumer debt (credit cards, student loans, etc.)

What you want to avoid is being house rich and cash poor. If all your money isn't tied up in your home you are blessed. If you have done all the above pay off that mortgage! Then take those monthly payments and save and invest them.

I'm jealous!

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Lansdale, Pa.: I have read in your column that the IRS intends to "crack down" on charitable contributions. The problem is that now under federal law (I believe) banks no longer have to return your cancelled checks and besides a lot of checks are converted to electronic payments. What do you suggest in this regard? Thanks for your attention.

Michelle Singletary: You are right that the rules for contribution to a charity are tougher. You have to show proof of your contribution. But you can always get a receipt from the charity and you can get a copy of the cancelled check even if it was electronically converted. Also your checking account statement will contain information about your payment, including the date, the check number, the name of the person or company you have paid, and the amount of the payment. The statement is generally accepted as proof of payment.

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Laurel: Ms. Singletary, when I open your chat page the following were the first two "Featured Advertiser Links:"

Refinance Rates As Low As 2.9 percent - FREE QUOTES!

$300,000 Mortgage for $965⁄mo! Refinance and Save $1,000's!

Anyone with a modicum of knowledge about the mortgage business knows these rates can't apply for more than a few months; why does the Post accept such obviously deceptive advertisements?

Michelle Singletary: As you probably know I have nothing to do with the ads that are accepted. But I do try to inform people about these teaser rates to entice you to go deeper into debt.

And I assume the post doesn't want to discrimnate against debt dealers :)

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Washington, D.C.: think you should take over for Tyra Banks.

Michelle Singletary: I don't have enough hair weaves.

But thanks anyway.

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College Park, Md.: My partner and I are planning to see a financial planner together next week, but I'm a little nervous about the visit. We've been pretty disciplined at budgeting, saving, and paying off debt, but we've still got a chunk of credit card and student loan debt left to pay off. What we're hoping to get out of this is a big-picture look at our goals and some expert advice in how to achieve them. But I'm wondering if we should wait until we're in less debt to see a planner. We're in our twenties, so I know the planner isn't expecting us to be in the same place as, say, our parents, but I'm still nervous about going in with that big red negative net worth number. Should we wait, or is this the sort of thing where it's never too early to start?

Michelle Singletary: It's never too early to start. Keep the appointment.

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Washington, D.C re: Today's column : One other thing to consider -- if your company is generating NO revenue as a start-up make sure that you have part-time job or even stay at your full-time job longer, so that you have a way to pay bills. Your creditors do not care that you have a brilliant idea that one day will make you a million dollars...they want their bills paid when they are due. (Speaking as one such creditor)

Michelle Singletary: I do believe I made that point but it's worth making again.

Thanks.

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Ardwick, Md.: Hi Michelle, echoing your last Sunday's column, we really do have to do a better job of training young people about financial realities.

I'm a government lawyer who was recently approached by a 20-something colleague who wanted to get out of a modeling course she had signed up for. As you know, some of these can be real rip-offs, so I agreed to take a look at the contract. To be surprise, this was written in "plain English." It clearly set out all terms and conditiones, the total cost of the monthly payments, what to do if you had to miss a class, and more. It also stated that, while the firm had contacts in the field and would try to help participants obtain assignments, different employers had different needs, which change over time, so there was no guarantee that this would happen. Even the price seemed reasonable to me, though I have no expertise in this area.

When I asked my colleague on what grounds she wanted to challenge this contract, she replied, I just don't want to do it. Sorry, that's not a legal defense. She had spoken with them and, not surprisinhgly, they are going to hold her responsible for the money. I hope she follows through with the course but, if not, I hope she has learned a valuable lesson.

washingtonpost.com: These Little Piggies Save at Home (Post, April 8)

Michelle Singletary: This will indeed be an expensive lesson for your young co-worker.

But don't be too hard on her. Many times even tho the contracts are clear in our more wise opinion, they often are sold following some inspiring presentation. I feel that does take advantage of their youth.

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Index Funds: Michelle, My husband and I are in a position that and we have decided that it is time to start investing heavily in mutual funds, index funds and other vehicles that are easy on the tax bill in preparation for retirement. We are 34 and 35 and don't plan to have kids.

What does one do first? Does one just take 10K and put it into an acct. after doing some research? Does the 4K maximum a year for an IRA mean the maximum for the tax benefit? Can one put more in an IRA? I think we need a financial planner even though we don't have any "problems" BUT we just don't know much about options out there above and beyond our Fortune 100 company 401k's.

Michelle Singletary: Yup, you need a financial planner. You've got a lot of questions most of which I can't answer not knowing more about your financial situation. And definitely don't do anything until you have a master plan on how you want to invest.

You ask about IRA contributions but I wonder if you are maxing out your retirement plan. You can get a tax break for putting money in an IRA but the break phases out at certain income levels. For 2007, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified adjusted gross income (AGI) is:

-- More than $83,000 but less than $103,000 for a married couple filing a joint return or a qualifying widow(er),

-- More than $52,000 but less than $62,000 for a single individual or head of household, or

-- Less than $10,000 for a married individual filing a separate return.

The 2007 IRA contribution limit for a both a traditional IRA and a Roth IRA is $4,000. This is the same as it was in 2006. If you are over 50 years old, you may also contribute an extra $1,000 as that is the 2007 catch-up contribution limit. This is the same as it was in 2006.

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Minneapolis, Minn.: Hi Michelle. My husband and I think we are relatively responsible with our money. We have an income of $140K combined, we donate $10K to charity, save approx. $25K a year and contribute another $2K to our child's college fund (she is 1). We have a dilemma concerning having a second baby. My doctor has recommended, for medical reasons, that if we have a second kid that I need to do it before I turn 35 (I am 33). We've crunched the numbers, and after we save, we don't have enough for day care for a second child (our current day care is $14K/year). We could do it, but then we'd have to stop saving - stop contributing to our 401Ks and IRAs, mostly. We're of two minds on this: one is that the day care expense is temporary, and that we can get by for a couple years without contributing to our retirement. The other is that if we get used to having that money in our checking account, we'll never go back to putting it toward retirement. We currently have about $400K saved in retirement accounts plus another $100K in non-retirement accounts. I am completing my medical residency in 5 years, at which point my income will go from $40K to approx. $200K. My husband's income will remain relatively flat but he makes the money that supports the household. How large a factor should finances be in having a second kid? I can't imagine not having another baby, but I don't want to stop saving to do so. Thanks for your insight.

Michelle Singletary: I give this answer without a complete picture of your finances but sounds to me like you are making enough or will make enough to have that second kid. If we just look at the next three years you could dial back (not stop) your retirement saving or emergency savings (you already have $25 k) and save enough before you get pregnant.

You may be over anyalyzing this a bit much.

And at that income level you far exceed the household income of most Americans.

Still good for you and your hubby for thinking ahead and making sure all is in place before having another baby. Honestly, unless you're Bill Gates many people never feel they have enough for their kids. Many don't but you appear not to be in that place.

As for me, I told my husband we should get a dog. But noooo, he wanted more kids.

Got three rugrats and I'm still wearing my maternity underwear (to save money).

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Charlottesville, Va.: Hello, Michelle. I just saw a commercial this morning for a Bank of America visa check card that rounds purchases up to the nearest dollar and banks the change in your savings account. What do you think about that idea?

Thanks!

Michelle Singletary: It's okay. You won't save enough participating but hey it's a start.

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D.C.: Why do you say it is a "big mistake" to pay off your mortgage?

Michelle Singletary: I don't say it's a big mistake. I was being sarcastic

I think we all should aspire to pay off our mortgages early. But there are many fools who are telling folks to hold onto their mortgage for the tax break.

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Regretful, D.C.: Hi Michelle,

I will be 50 this year. Over the years I have wasted a lot of money, mostly helping ungrateful family members. I don't have any children so I doted on other relatives and their kids.

I realize now that I was "buying love." Now that I have stopped no one comes around which reinforces that for me. I made some really bad choices (refied house twice) and now, while I make a good salary, I feel like I have jeopordized my retirement future. How can I forgive myself and rebuild.

Thanks.

Michelle Singletary: Forgive yourself and rebuild.

Just make the decision to start saving. It's never too late.

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D.C.: Hi Michelle:

Any advice for a single, college educated, individual working two jobs and saving money that wants to buy a house in our area? It seems that the market has gone way out of my price range only over the last five years. Should I wait this out, and continue to pay rent and save? My parents tell me that is the worst idea and I should go through NACA (the housing association) to purchase a home or to sign a no money down loan. I love them, but I think their views about home loans are a bit dated. Any advice?

Nick

Michelle Singletary: I think you should look into a first-time home buyers program. But just because you don't have to put money down on a home doesn't mean you are ready to buy a home.

You are right. Keep saving.

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Fairfax: Michelle,

I have enjoyed reading your advice.

Currently my wife and I have approximately $23,000 in credit card debt.

She is Federal Govt. worker and has over $100,000 in her TSP.

Would you recommned borrowing against it to pay off the credit cards, with interest rates all over 12%, while the TSP Loan rate is 4.5% and has to be repaid within a max of 5 years?

Michelle Singletary: I would recommend you NOT borrow from the TSP.

What you want to do is pay off borrowed money with borrowed money.

I know. I know. The interest rate is lower. You tell yourself you are paying yourself back.

How about you and your wife cut expenses or even get a second job and pay off that credit card debt the hard way.

That my friend may remind you both to not get in this position again.

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Chicago, Ill.: Do you know of any good books or web resources for the teen/pre-teen set to learn about investing? An 11 yo neighbor girl is good at saving her money but wants to learn about investing too. She wants to pay for her own Sweet 16 and car as well as save for college.

Michelle Singletary: Have the young woman go to www.choosetosave.org.

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For College Park: Go see the financial planner. I first went to one in my mid 20's because a mentor at work hounded me about it for over a year and set up the intro (I'm 29 now). I had done some stuff on my own, but it was only doing OK.

What the planner did was look at where I wanted to be and do in retirement (point B), where I was at the moment, with cc, school and car debts (point A), and figure out a plan to get from A to B. When I moved from San Diego to DC, he even got me an introduction for an incredible planner here in the area.

With the plans that those two have helped me formulate, I've been able to weather a job layoff and major career switch, and still be on track. Knowing that I have someone I can ask questions and that he is knowledgable is major peace of mind for me.

Michelle Singletary: Wonderful. Glad it worked out for you.

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Rockville, Md.: How much debt is okay? I've always been debt-free and at 40something realize that the chances of meeting someone else debt-free is abysmally small. How much is "okay"?

Michelle Singletary: None!

My goal is to be completely debt free. Just got the house to go. I think it you set a goal of zero debt you're always question any debt you might take on.

But you are right, it's harder to find kindred saving spirits.

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Gaithersburg: The most important thing about starting a home business is deciding how committed you are to practicing business disciplines. My (non-outside-employed) wife is an immigrant and her social network from their homeland gets together to make native handicrafts to sell around Christmas time, and around the time of one of their holidays.

They might cover expenses. It keeps them occupied with a hobby they enjoy, but this is not really a home-business. Few hobbies are.

Michelle Singletary: Good point.

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Richmond, Va.: Are there organizations that provide one-time basic financial advice? For instance, my husband and I may come into a small lump sum of cash, I'd like someone to look at our overall finances and tell us if the money would be better spent paying of a particular debt or putting it into retirement. Are there businesses that provide this service, without any strings attached. We already have a broker who deals with our stock investments, but it's difficult to understand what he's talking about and I need basic, basic, advice.

Michelle Singletary: You could hire a fee-only planner. You might ask friends or family for a recommendation or go to the Web site for The National Association of Personal Financial Advisors

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Goodwin, Minn.: Gretings from the frozen northland --

About those Visa check cards: how often do you use it a month? Assuming rounding up to the nearest dollar averages 50 cents per transaction, if you do this 20 times a month (and I hope you don't, unless you pay off your balance in full every month), that comes to an entire $10 per month. As Michelle says, yes, it is a start, but a very, very small one.

My wife stashes her loose change every evening she has spent money. That comes to $20-$30 a month which we use for occasional nice evenings out. Of course in DC that would take awhile longer to accumulate than here in rural Minnesota.

Michelle Singletary: Right you are.

I do like the idea of saving up your change. And in DC that might get you a kiddie meal at a fast food place.

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Regretful--It is OKAY!!: I feel bad for Regretful. We have ALL wasted money on dumb things. I spent money on a dating service years ago before the internet became the way to meet people. I was struggling financially but I was not meeting quality guys so I did it anyway. I did not meet anyone that terribly special. Ironically, I met my wonderful husband at work.

We have all bought a car we should not have or a timeshare or something else that was just not a smooth move. It happens--just work on fixing the situation.

Michelle Singletary: How right you are. I once bought a bright orange Datsun that I failed to get checked out by a mechanic. Even bought it late in the evening so I couldn't really see that ugly, ugly color.

Man, good thing my grandfather was a tow truck driver. I saw a lot of him during the year I owned that car.

Money mistakes happen. The key is to learn from them and move on.

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Leesburg, Va.: Michelle:

Thanks for the great column on being your own boss. I am a part-time realtor and have been so for the last three years. I have a day job and work with my clients nights and weekends, which is conveniently when people are available to look at homes anyway.

My point is this, I am doing this part time and spend more time in the office then many of the so-called full time realtors in my office. Your article makes a great point, don't get into a business because it seems like there is great money in it, get into business because you are passionate about it, otherwise you won't be motivated to put in the time required to make it a success. My counterparts have basically found an expensive hobby.

Michelle Singletary: Amen!

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Washington, D.C.: I have to admit that I am really upset right now as I read the Post. Are we really going to bailout people who are about to get foreclosed upon? What does that mean for people like me who spent years building their credit only to be finally in a position to buy a home when a "fixer-upper" is listed at $659K in this area? Why should they get help when there are those of us who will never own homes if the prices don't come down and they won't come down if they continue to be artificially inflated by people who couldn't afford what they bought. Ugh!

washingtonpost.com: $1 Billion Pledged to Help Fend Off Foreclosures (By Dina ElBoghdady and Nell Henderson, April 12)

Michelle Singletary: First of all, calm down. Did you read the story.

The government isn't bailing out anyone --yet. This all private moeny to help people with subprime loans.

The story in question says the Neighborhood Assistance Corporation of America, which is a housing advocacy group, has promised $1 billion to refinancing the loans of lower-income people at risk of losing their homes.

The financing will come from CitiGroup and Bank of America.

Yes of course people should know what they are getting into. But the fact is many didn't. They were sold on these crazy loans and now could lose that American dream.

In times like this we have to try and find compassion for people in trouble.

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Alex, Va.: Bank of America keep the change program adds up. It is good if you have problems saving. 5 cents here, 90 cents there does add up and the bank will add a small percentage every few months. (though you do have to pay taxes on that "free money") I know I have about $250 in my savings account because of this program

Michelle Singletary: I believe that $250 is the max.

You aren't going to get to that 3 to 6 months rainy day fund with change. But as I said it's a start.

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re: couple with $23K in debt: Michelle, i do find value in your chats, but sometimes i question your advise.

How realistic is it get a second job, if you currently work 50+ hours a week, Monday - Friday, commute and other basic necessities ? My wife and i both work, 60+ hours a week, Saturday is our day to get things done around the house and deal with dry cleaning and food shopping. It would be almost physically impossible for either one of us to get another job.

Thanks for the chats.

Michelle Singletary: Wait. You asked me. I don't believe you mentioned you worked like a dog and didn't have a spare day (even tho you do).

This happens all the time. People ask. I give the hard answer and they want to do what they want anyway. Then why ask.

If you want permission to use borrowed money to pay back borrowed money, you still won't get it from me.

I firmly believe that you have to take the time and discipline to pay off that debt with cash. If you're working all those extra hours where is that money from those extra hours going?

If you can't get another job, cut expenses. Change your lifestyle.

Just stop using debt to live above your means.

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To the TSP "borrower": It's important to note that while the "loan" is at 4.5%, the money would no longer be in your TSP account. As a result, if the market returns 8% during this year and you have a loan, you've just lost on 3.5% in earnings. Sure, you're adding 4.5% from your own pocket but you've lost out.

And what if the market goes very bullish and returns 16% this year????

Michelle Singletary: Right, this too.

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Bowie: MS: Man, good thing my grandfather was a tow truck driver.

A tow-truck driving drunk?

Or is this the other grandfather?

Michelle Singletary: I want to post this so all of you can see just a sample of the nasty notes I often get. And my crime -- trying to help people manage their money better.

This person is referring to the fact that I've written that grandfather had a drinking problem. Often he didn't make it home with his paycheck on payday to help my grandmother, who raised me.

I never said he drove drunk. He was an after hours and weekend drinker. I'm sure many of you are quite familar with this type of drinker.

So no. He wasn't drunk on the job. And despite his financial failures he was a good to me and often came to rescue me when my car broke down.

Got anything else nasty to say, punk!

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Arlington, Va.: Michelle,

I'm a recent college grad working for the government. I've started saving for retirement, but only through my TSP. In the next year I'm going to have to start paying off some hefty student loans on a rather minute salary.

I've been contemplating seeing a financial advisor for some help in what I need to do for the next year so that the loan payments don't kill me...but it seems counterintuitive to pay someone to teach you how to save money. Where can I find an experienced yet affordable advisor who will understand the needs of a 23 year old? Thanks!

Michelle Singletary: Actually what you need is a budget and money management counseling. I suggest you go to www.debtadvice.org.

Typically people seek help from these organizations because they have a lot of debt but they also provide good budget counseling.

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Woodbridge, Va.: Hi Michelle,

One question....my husband takes college courses that are reimbursed by his company according to his grade (100 percent for an A, etc.) We do not have the cash to pay for these classes upfront so we charge them and then use the reimbursement money to pay it. However we do end up paying a few bucks finance charge. Do you have any suggestions to get around this? I just don't want to blow our budget by spending the $500 upfront.

Michelle Singletary: So when you get the check for the courses he's completed where does that money go.

Technically you would only need to put out that first $500 for the course and after that when you get reimbursed you would have the money for the next semester.

So you have a money management problem not a cash problem.

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Atlanta, Ga.: Wow, Michelle, I sometimes have trouble remembering my kid's names - and someone has the time and energy to remember this stuff about you. Just ignore it...

Michelle Singletary: I try. But they do get on my last nerve!

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re: Bowie: I'm not sure I see that question as nasty. It's hard to read tone in email but to me it just seemed pithy. If you've raised the issue publicly, then I don't think it's so unreasonable that a reader would ask about it.

Michelle Singletary: Oh please, maybe it's my coming cramps but I know nasty! Been doing this a long time.

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"basic": Hello,

Just my two cents, but I see a lot of families that have "basic needs" including things like premium channels, 3rd cars and multiple computers in their homes. Not to say that they can't have them, but I do think they need to realise that there is a trade off. That third (or even second car) might not be a necessity.

Reston

Michelle Singletary: True. I don't know if that is the situation with the couple with the $23,000 but every single time I sit down with folks to help them with their budget and they claim it's cut to the bone, I find more to cut.

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NY: Yeesh! Nasty nasty from Bowie. Why do people even join the chat if they are just going to be mean? Obviously they have nothing else to do with their time. I don't always agree with your advice, but I think you do a great service to the public. I hope those bad apples don't get you down. Keep up the great work!

Michelle Singletary: Thank you. And what do you mean you don't always agree :)

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re: 23K in debt: I didn't ask the original question, i was making a comment...

Michelle Singletary: Oh, sorry.

Okay, but my first answer still stands.

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Southern Maryland: I know its late but try to squeeze me in.

One your guests spoke about MBNA credit cards holding all household members liable for the credit card bill is this true??? Even if the family members did not sign for the credit card???

Michelle Singletary: Not sure if I recall what you mean but family members who did not co-sign for a credit card cannot be held liable for the debt.

This question often comes up when people die. Some creditors -- not sayign MBNA-- but some try to get relatives to pay old debts. The estate is responsible but if there is no estate or no money you are not obligated.

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Louisville, Ky.: Tax refund question

I'm 24 and trying to decide what I should do with the $3,000 I will get back from the IRS. I own a house (100% mortgage), a car (14 years old and fully-paid for), and I also have $9,000 in my emergency fund. My goal is to have $12,000 in my emergency fund by July and I'm on track to do that. $12,000 is a little more then 6 months of living expenses. I live within walking distance of work and only drive on the weekends. I have to wait another year and a half before I can start over paying on my mortgage (there is a pre-payment penalty). I'm not maxing out my 401K, but I do put in 10%. Part of me wants to use the money to go on vacation and part of me wants to buy bonds with the money and use it to pay down my mortgage ASAP.

washingtonpost.com: Make Wise Use of Windfalls (Michelle Singletary, March 8)

Michelle Singletary: Hey since you're near your 6 month goal why not split the difference. Put $1,500 in your emegency fund (earmarking $500 for what I call life happens (see earlier answer for explanation) and take the rest and treat yourself.

You my dear have done just what I advise so have some fun.

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Michelle Singletary: Well folks I have to run. Thanks for joining me today. I appreciate all the comments and questions. I'm sorry if I didn't get to your question today. I so save them and answer them either in my print column on in my e-letter which I hope you have signed up for.

Have a wonderful savings day!

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