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 all. So glad you could join me. Well let's get started.

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College Park, Md.: Thanks for creating the budget worksheet that's posted by your column online. It's exactly what I needed!

washingtonpost.com: Budget Worksheet (pdf)

Michelle Singletary: You are so welcome.

And if you don't have a budget, get busy.

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Washington, D.C.: I'm curious to hear your thoughts on charitable giving while in debt. I know that you support tithing and giving money to charity, but I know that you also advise readers to pay down debt as quickly as possible.

Right now, my husband and I have boatloads of student loans that we're trying to pay down, but we also give some money to charitable organizations each month. Should there be a balance between charitable giving and consumer debt?

Michelle Singletary: I believe that you can still give and tithe, even while you are in debt. But it takes an incredible amount of discipline.

I recently wrote that folks in bankruptcy can now tithe. Congress passed a law recognizing that for some tithing is a faithful obligation.

The balance comes in budgeting and prioritizing those things that are important you. For me it's tithing. That comes first, even before my mortgage.

For you it seems charitable giving is important. So keep that priority even as you work yourself out of debt.

But please now I also believe it's important to honor your debts.

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Towson, Md.: Dear Singletary,

Regarding the differing opinions of yours and Professor Angel's (whom I met few years back)about the $21000 bonus, I believe the answer truly lies in the arts and science of investing. Although quantitatively Professor Angel's answer makes more sense (especially when you teach undergraduate financial management) in terms of "maximum return" of an investor, without knowing the age and personality of the investor, this seemingly easy scenario becomes very complicated for our students. However, with all the information provided, it looks like the investor has very good discipline in saving for retirement ($370,000 accumulated in the 401(k)), then the de facto forced retirement plan makes more sense for the investor. Then again, if the investor is now approaching a period to enjoy his wealth, a stress-free screaming at the front-yard debt-free strategy will be a more appropriate one. By don't we begin by asking how do you feel about "debt"?

washingtonpost.com: Today's E-letter

Michelle Singletary: You have to read the e-letter to fully understand this debate but the bottom line here is yes, start with your feelings about debt.

I say get rid of it as fast as you can. The problem with all the academic pushing and selling by financial institutions to invest is they often don't talk about risk. Investing isn't a sure thing. Getting rid of debt is.

My goal is to get people to stop thinking they are chumps if they don't use other people's money. Don't hang onto student loan debt for 20 years because you've been told it's cheap debt. It's debt. Debt makes you a slave.

So pay if off as quick as you can.

Here's what I've done all my life:

-- I keep a well cushioned savings account for the tough times

-- I invest for my retirement and now kid's college fund

-- And when I get debt I pay if off as fast as I can, to free up that money to invest, give to charity, help family members and be free from having to worry that if anythng happen creditors will be calling me a deadbeat.

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benchmark for age: Michelle

Is there any online source to check out where I "should" be, assets/savings etc wise, at my age (41)?

I'm doing really well and would like to consider a career change in 4 years. By then I should have both of my houses paid off and a decent amount of cash in the bank (but mostly just two paid off houses).

I am assuming with no house payment(s) I should be able to do something I really love but that doesn't pay very well. Or is that bad strategy - should I stay in a high paying job for much longer and squirrel away even more?

Michelle Singletary: Check out www.choosetosave.org.

I think you will find some useful links there.

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Vienna, Va.: Hi Michelle,

Love your advice! Hope you can squeeze me in and help me out. I know for a fact that I will be needing a new(used) car in 3 years. So I was hoping I could start saving right now so I could have a shot at paying for the car in cash by the time I need it. On the other hand, I also have a student loan at 9% interest. Should I just concentrate on paying off the student loan? The student loan is 20K which is about the same amount a car will cost me. I will either have to choose between paying off the loan first and then financing the car, or vicecersa. Please help.

Thanks!

Michelle Singletary: Pay off the student loan.

And if you can stash some money away if you can to keep that car running until you can save enough to pay cash for it or take out a small loan or buy a really, really good used car for far less than $20,000.

Even if say the hoopty needs a new engine, it's cheaper than buying another car.

Just think how wonderful it will be to get rid of that debt and then when you truly can't run that car you have money to get another one without plunging yourself into another four or five or six or seven years of car payments.

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Jessup, Md.: Hi Michelle,

I read you "Color of Money" today and was amazed at what I was reading. Just yesterday I received a debt letter from an attorney's office saying I was in default of a loan agreement from a credit union, which I am no longer a member. It turns out that I was automatically enrolled in the overdraft protection plan by the credit union. Granted, I over extended my checking account a few times and the overdraft protection was utilized, I paid a fee of $50 for "each" transaction that some times exceeded $100 monthly.

I responded to the attorney requesting a copy of the Loan Agreement, which I signed, for overdraft protection. I plan to pay the debt,(to protect my credit rating) but my question is, do I have to pay this debt, since I did not request or sign a Loan Agreement for overdraft protection?

I know you are not an attorney,(but you are smarter than most) and your advice is always helpful.

Thanks

Sinking in Jessup!!!

washingtonpost.com: Today's Color of Money Column

Michelle Singletary: The problem is if you look at the agreement with the institution in tiny, tiny print, it probably did say you agree to the automatic overdraft protection.

It's often part of the agreement when you sign up for checking.

If it were me, I would pay the money and be very, very careful about checking my balances.

You might also consider parking some money in savings and linking your checking to that account for the times when mistakes do happen. That's what I do.

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Portola Valley, Calif.: Re: Pay off the mortgage or save?

Our situation is quite fortunate. We have about $4M in a diversified investment portfolio, including about 50 percent in retirement accounts, a solid income of $400K/year, and no debt whatsoever except for a $600K mortgage on a $2M house. We could easily pay off the mortgage (interest rate: 5-7/8%, 30 year fixed, about 25 years remaining) by decreasing our stock portfolio. Should we (a) pay off our mortgage, (b) keep our mortgage, or (c) increase our mortgage and invest the funds along with our portfolio? In other words, when should affluent people choose mortgage debt and invest the proceeds in a diversified portfolio that can be invested for a long time horizon? Thanks.

Michelle Singletary: What I'm about to say will just kill financial experts, finance professors, etc

If I had millions I would not have a mortgage. Why give all that interest to the bank. You don't need to because you have a handsome income AND handsome investment portfolio.

So pay the morgtage off and take the money you would have paid in a mortgage payment and invest that. Then if something happens to the market (it does go down people) or you lose those great paying jobs, you have no morgage, you still have great savings, you are not a slave to debt.

Oh and if people want to yell at me that I'm not considering the mortgage deduction -- my answer is give money to a charity. Make that your deduction.

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Upper Marlboro, Md.: We paid our child's tuition with our income tax refund and received a discount. We plan to use the money we would have spent on tuition on paying off about $3K in credit card debt we acquired due to a remodel, and contributing to the 529 plan. We make about $130K/year. Are we on the right track? We knew if we kept the refund we would probably spend it and then wonder where it went. Thanks.

Michelle Singletary: Sounds like you made the right decision.

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College Savings Plans: Michelle,

What happens if you save a significant amount of money in a 529 or other college savings plan and then your kid doesn't go to college? What are your options?

Michelle Singletary: Well, you can transfer the money to an account for yourself, a relative, another kid.

If that isn't an option, you have to pay a 10 percent penalty and taxes on the growth.

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Budget worksheet: Why no line for the cost of public transportation?

Michelle Singletary: You are right. But you can enter that in the line for "workplace parking, tolls,...

I intended for it to go there. So I'll have to update it.

But please keep in mind, you can tailor the budget worksheet to fit your individual situation. Copy it and just change the entry.

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Silver Spring, Md.: My 2nd mortgage loan is a line of credit (interest rate around 8.5 percent). In view of the high interest rate, my mom thinks I should pay off this loan ASAP. Since I get tax credit for it, I think that it is good debt. I was planning on using the extra money in my budget to buy a car. Do you think I should use the extra money to pay off the loan or buy a car?

Thanks

Michelle Singletary: Listen to you mother.

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Washington, D.C.: Hi Michelle--i have found myself having to start over after a job disaster and a divorce, with no resources and a job that pays less than i earned 10 years ago, benefits are the only benefit. i am still struggling to stay afloat but i see my once pleasant apartment complex changing in a direction that makes me want to move immediately. can't see where i can save enough quickly to finance a move. job searches have been fruitless -- what i need is to make enough money to finance a life for a single woman of a certain age. don't even mention retirement . . . i'm scared to death! the occasional movie is a luxury. help!

Michelle Singletary: So sorry for your losses -- marriage and job.

If I were you I wouldn't jump to another apt. until you do have a cushion. So start saving whatever you can to move eventually.

In the meantime, you might also look for a roommate who coudld help you share the expenses at another place.

Also, look around for someone who may need a border in their home to help them. Ask at your job. Look in the want ad section.

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Re: 529: We have a 529 opened in my name, earmarked for "Baby TBD" (we hope to start having children soon). If the child thing doesn't happen, we will use it to pay for some higher education expenses I will likely incur over the next few years, but we plan on transferring to the child's name, otherwise. Smart? Any pitfalls we should be aware of?

Michelle Singletary: I rarely see the folly in saving ahead. Just be careful you don't put more money in the 529 than you may need for yourself in case the baby thing doesn't happen. You want to avoid the penalty should you have to take the money out for non-educational purposes.

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Silver Spring, Md.: I agree with you on paying down the debt but I think you're overlooking something on the 401(k). You say they can contribute later after they've eliminated their mortgage and car payment, but that may not be so. With 370K already in their 401(k), it's very likely that they already contribute the max that their plan allows out of their annual salary. If they pass up the chance to contribute money from the bonus now, they may not have the time to save that much from the extra money in the budget after paying off the loans before they're out of the tax year that they received the bonus in.

Michelle Singletary: Don't care. Non issue for me.

The missed opportunity is to get rid of the debt.

You can't do everything all the time.

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East Orange, NJ: Hello,

I have been on a mission to get out of debt for over 5 years. But in the last year I have really tried to push it-I stopped freelancing and got a regular job and I have $13,000 left in debt. I'm not a shopper and I don't usually travel or go out. This summer I have the opportunity to go to Denver and do a cross country drive back. I decided when the opportunity came up that I would not miss out and blame lack of money, and just save because I don't want to use my cards. I got my plane ticket early but I have 4 weeks to go - rent due, my mother's b-day, my partners 50th birthday and gas etc. to get back. I have only managed to save $100. I can cancel going on the trip. Or use my cards? I don't want to. Coupled with finding out that I was $300 away from paying off one card when my other two jacked the interest rates to 24%. Frustrated. Any recommendations?

Michelle Singletary: Cancel the trip.

I'm serious.

You couldn't afford it.

I know. I know. You deserve the trip. You've been working hard to pay down your debt. I get that.

But please look at the situation. You still have massive amount of debt $13,000. The money you claim you would be using for the trip in cash is not really money you have. It's debt money.

Buy yourself some freedom and continue on your mission to get rid of that debt. Then when you take that ride from Denver or whereever the drive will be so much better.

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Alexandria, Va.: I have bad credit and I am paying small bills to clear it up. I have cut back on alot of things but it seems like this credit repair I am doing on my own is not quick enough. But I have found no leder that would tell me what I should be doing first to repair it...Desperate help!

Michelle Singletary: Breathe.

Paying off debt takes time. Just like it took time to get into this mess.

And don't worry about your credit right now. There's nothing you can do to repair it if what broke it was late bill paying, not enough money etc.

Stick to your plan.

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Re: Portola Valley: Pay off the mortgage or not? I think there's a better option neither you nor the reader considered - sell the $2M house and go buy a $1.2M house for cash with your equity (after commission and transaction costs). Now you're debt free and you still have your savings.

Michelle Singletary: They don't need to sell. They only have a mortgage of $600,000, money they have.

That is the point.

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Washington, DC: Hi Michelle,

I hope you're staying cool! Love the columns and chats. Quick question, with background:

$91k annual income (2 people)

$10.5k credit card debt ($1500 at 12.9, $9k at 9.9), down from nearly $30k, should be paid off by next April through snowballing.

Credit scores were 758/761 this spring.

We'd like to buy a house next fall. I keep hearing that some debt is good when credit scores are pulled, but husband wants to pay it all off asap. With that in mind, at what point do you think we can reasonably shift from debt pay-off mode to debt pay-off plus savings for closing costs? Thanks!

Michelle Singletary: Listen to your husband.

Wise man.

The credit score is a non issue. You've got great credit.

The issue here is freeing yourself of that all consuming debt. Then put the cards away and save like crazy. In no time, if you put away the same amount of money you were paying on that debt you'll get that downpayment saved up.

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Washington, D.C.: My parents will reach retirement age in about 20 years and I don't believe that their saving and retirement funds will be enough for them to maintain their current lifestyle, which is not extravagent. What is the best way for me to plan to help them out in their retirement years? A savings account? CDs or savings bonds? Or just wait and pay directly for their needs at that time? I am on track with my own retirement savings and do not yet have children.

Michelle Singletary: Don't wait.

Go to www.aarp.org. The site has some great tips on talking to your parents about their retirement needs.

And look, start talking to them now and as respectful as you can say, "Mom, dad, I'm concerned about what you may have for retirement. I want you to be able to do this yourself and not count on me. So can we talk about how you may start saving for your retirement."

Then start sharing with them information about investing in mutual funds, diversified funds or target funds, which invest money according to when you may retire. Check Vanguard, T. Rowe Price and other sites for information about such funds.

It's good you are starting now. But don't be an enabler. They have plenty of time to get their act together.

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charity giving versus helping family and friends: Hi

what is your position regarding using the money you would have given to a charity.. to give to family or friends who need it (not tons, just help - think putting money into savings for kids' college fund, etc).

In other words, direct giving to someone you already know (and may be under hard times or may just need a leg up since this world is so expensive) versus sending it to an organization, shelter, etc.

I'm single, no kids, and plenty of extra money. My brother and his wife have two kids and do ok but most of the money goes to just plain living and then saving.

Michelle Singletary: Sounds like you can do both.

I do and would.

My tithes go to help my church, which has more than 100 ministries to help those in my community.

I also give to relatives who aren't triflin' , ie. trying to get a college education, buy a home, etc.

I wouldn't want to discourage anyone from giving to charitable organizations because as citizens I feel we should also help those we don't know.

But good for you for thinking about someone other than yourself.

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Greenbelt, Md.: Michelle,

My sister has horrible credit. She has taken out lots of student loans with cosigns from my parents and is now defaulting on them. Her theory is that she already has bad credit so not paying her bills on time is not a big deal.

My parents don't mind helping her out and they pay a significant part of her monthly expenses. She is in her late twenties. I am worried that eventually I am going to get roped into this mess and I have no intentions of supporting her reckless money habits.

How do you bring someone back to reality about the importance of credit and paying one's bills. I suggested she look at her credit report to get the full picture of what this all means but i don't know if that is enough.

Michelle Singletary: Having her look at her credit report is a good start.

But you know sometimes you can't tell triflin, hardheaded people anything. They have to fall hard on their behind before they get up with some sense.

I would, however, concentrate on talking to your parents. They are actually not being good parents right now. I often tell folks, it's like if you have a kid on drugs. Would you supply them with the drug? I certainly hope not.

The same is true with financially irresponsible adults. Giving them money to bail them out is like giving them their drug of choice.

If you can stop your parents from bailing your sister our maybe, just maybe she will grow up.

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to the newly divorced woman: consider moving to a smaller metro area: there are lots of nice places WAY cheaper than DC where you could buy a house for what you're renting an apartment for.

Head up. Join a support group, church singles group, knitting club--anything for some freindship and support. One day you'll look back and be proud of how you forged a new life for yourself! hugs

Michelle Singletary: Thanks. Good advice.

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North Bethesda, Md.:"So pay the morgtage off and take the money you would have paid in a mortgage payment and invest that. Then if something happens to the market (it does go down people) or you lose those great paying jobs, you have no morgage, you still have great savings, you are not a slave to debt. "

You probably won't post this since I'm going to tell you how wrong you are.

Taking $600,000 out of market to pay off a 5 7/8% mortgage is foolish. The market historically returns significantly higher rates than 5 7/8%. The difference is pure profit (after taxes paid) for the person. Run the numbers yourself. If you replace the savings spent to payoff the mortgage with monthly contributions equal to the principal and interest portion of the payment (still have to pay taxes and insurance), you will be far worse off.

Sure, if they lose their job(s), they could sell investments and payoff the mortgage then. But why do something so drastic "in case" something bad MIGHT happen. The market will NOT drop so much that their $4,000,000 investment would be less than $600,000.

Michelle Singletary: Oh yeah, the market can't drop?

Tell that to the folks who invested in Enron or Worldcom.

You don't scare me with your dare.

Look, I know all the reasons people say to keep debt. I've got a masters in business from a top university.

I also know that no debt is good. I have never, ever met a single soul, you jumped for joy everytime they had to make a mortgage payment or pay on their student loan.

I'm taking about risk. If you have a savings cushion and all the other things in order --saving on schedule to retire the way you want GET RID OF DEBT. Don't believe the hype.

Keep listening to the fools who tell you to stay in debt if you want.

I'm not pushing fear. I'm pushing freedom.

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Anonymous: How are the Challenge participants doing? I am looking forward to the next update.

Michelle Singletary: Thanks. There will be an update in about two weeks.

But because you asked, they are doing great. All are on target to get rid of all if not most of their debt.

See what happens when you listen to me.

Stop listening to the money changers.

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Maryland: paying off debt for most people means you FIRST have to stop accumulating it. It really is the first step.

You know what the payoff is? You really do sleep better at night.

Michelle Singletary: Thank and amen!

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Washington, D.C.: Is there any situation, ever, that you would advise against paying off debt? How about if I'm unemployed and living on my savings? Could I get you to say THEN that I should put off paying off debt?

Michelle Singletary: Don't try to trip me up. I've been at this a long time.

Get a job, any job and continue paying down the debt.

No no never a time when I tell people to stop trying to pay what they owe.

I never say you HAVE to pay off all your debt at once. But you do have to keep trying even if you are unemployed.

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Alexandria, Va.: My husband and I recently sat down and itemized all of our debt. Together we have 40K on credit cards. Although this wasn't surprising for us considering most of this is from our wedding, unexpected emergencies, and grad school expenses, we are unsure as to know where to start paying first. We understand that cards have different APRs and you should pay the higher ones off first, but was wondering if there are other rules that could help us get this down quicker.

Michelle Singletary: I tell folks to list all the debts, smallest to largest.

Start tackling the smallest debt first. This gives you a sense of accomplishment and motivation to continue.

It's the plan I gave to the Color of Money Challengers and it worked for all three!

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This is a dumb question: BUT, I'm getting married. We agree with you that we should have one checking account for our family. Here's the problem: I've had my checking account since the week before I left to go to college in August 1987. Whenever I think about closing this account, I get teary. It was the first grown up thing I ever did. I know this is silly. I know it is! But...I haven't been able to bring myself to close my account. Help push me over the ledge. Thanks.

Michelle Singletary: Keep your account and use if as a couple.

And if that isn't possible let it go. You are getting something so much better.

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Arlington, Va.: Solar cookers save money!

I loved your column featuring Louise Meyer and her frugal solar cooking habits. There are a growing number of us in the DC area who are using solar cookers and also promoting their use in the developing world especially in refugee camps. I learned about solar cookers while I was in Afghanistan and have been trying hard to get the U.S. government to support their distribution in refugee camps.

So far no luck, but I'm not giving up. I love your columns.

Pat

washingtonpost.com: Conservation Saves More Than the Environment (Color of Money, July 15)

Michelle Singletary: You are so very welcome.

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Edgewater, Md.: Michelle,

I agree with your answer to the couple who received the $21K bonus. I had exactly the same situation and I did as you suggested.

washingtonpost.com: Slaying the Debt Monster (Color of Money, June 24)

Michelle Singletary: Good for you.

I was blessed with my Big Mama's common sense.

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Michelle Singletary: Well folks I have got to run. It's been fun. Love being challenged. It's all good.

See you back in two week.

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