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.

Keep updated with the current credit crunch with today's market news: Rattled Stock Markets Continue Fall

Read today's Color of Money column: Keep a 10-Foot Pole's Distance

Submit a question or comment now or during the discussion.

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

A transcript follows.

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Michelle Singletary: Welcome all. Man what a day, week, month, year. The market is crazy but hope you haven't joined the maddness.

Anyway, lots of questions so let's get started.

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Washington, D.C.: Hi Michelle,

I have about two months of living expenses in my emergency fund ($5,000) and also about $5000 in credit card debt. Most of that debt is on a 0 percent card, smaller amounts are dept store cards. I know I want more in my emergency fund (preferably 10,000 at some point) but I also really really want to be debt free! How much should I take out of the savings to pay off credit cards? I own my own condo and I have a secure gov't job (no chance of layoff),no kids or a husband to support in my emergency fund either. I have really come around to your way of thinking, ALL debt is a drag. My goal this year is "financial heaven in 07!"

Michelle Singletary: First, take a moment, right now, and if no one is looking pat yourself on the back.

Seriously. I mean that. Right now.

You my dear have done what most of American hasn't. Managed to save more than a week or two of money to tide you over. Good, good for you.

Now, DON'T TOUCH THAT MONEY.

For now you could stop saving for the rainy fund and get rid of that credit card debt. Take every spare penny and throw it at the debt. Do this. Make a list of all the cards. At the top of the list put the debt with the highest amount, which it sounds like is the card with the 0 percent interest. Next list the dept. store cards -- highest amount to to the lowest. One by one starting with the card with the lowest amount., paid it off. You do that by making the minimum on the other cards and attacking the smaller debts. Once you pay off the card with the lowest balance, take the money you had for that card and apply it to the next card along with as much money as you can.

Keep doing this until you end up with the one card. Then may as much on that as you can.

Soon enough you will be out of debt and on your way to a big fat, WHEW!

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Frederick, Md.: Do I have to worry about my mortgage with Countywide? I have had it for over 5 years now but should I be concerned if they go "bankrupt"?

Michelle Singletary: In case you haven't seen the latest news Countrywide,largest U.S. mortgage lender, has reported that it had to use its $11.5 BILLION bank credit line because of global credit shortages has limited its access to short-term cash.

Man things are exploding fast.

But trust me, don't let such news deter you from paying your mortgage on time. You must. Even if the worst happens and the company files for bankruptcy protection you are still obligated to pay your mortgage as agreed. Even in a bankruptcy the company can't change the terms of your loan. So you should be fine.

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Arlington, Va.: I am 26, have no debt, excellent credit, savings. I am currently saving for a house down payment, which is tough in this area. My fiance made "typical" mistakes with credit cards during and after college, but has finally paid them off and is rebuilding his credit. He will be going to graduate school part-time and has the option of paying his tuition in full every semester, or taking out student loans and saving with me for a house. Which do you think is the smarter option for us? Save more to buy the house sooner, or forgo the student loans and wait to buy?

Michelle Singletary: Pay the loans and save later. Don't go into your new life and home with that student loan debt hanging over your heads. Things can change so quickly, jobs, you may get pregnant sooner than you think. Not having that debt -- even if it's low-cost -- debt will just make things go so much easier.

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Arlington, Va.: Hi Michelle,

Our current mortgage is with Countrywide. What happens to it if the company declares bankruptcy? Will they sell it off? Is it protected somehow?

Thank you.

Michelle Singletary: See my earlier questions. All of you with mortgages with companies in trouble right now are right to stay on top of the news.

However, don't panic. Keep paying your mortgage and for goodness sake keep all records to prove you have paid the mortgage on time and as agreed. It's possible your mortgage notes could be sold but also possible and probable that a possible bankruptcy everything will stay the same.

Your loan terms cannot be changed because of the corporate bankruptcy, if there is one.

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Alexandria: So, with the stock market apparently in freefall, what do we do as we see our retirement funds go down, down, down? I'm already in retirement, have a pension, and fortunately have enough in CDs and cash to ride it out for another 3 years without touching my stock funds or IRAs. But it makes me feel very uneasy as my financial assets are dropping by $10,000 or more every day. Drip, drip, drip... Is it time to move the whole bundle into U.S. Treasuries until this slide is over?

Michelle Singletary: I'm writing about this very topic for Sunday's column.

Your situation is a bit different than many investors who have plenty of time until retirement. You should talk to an advisor (fee only perhaps) and see if you are overexposed in equities since at this point you may need a different plan to preserve capital. I hope you are well diversified which should counter balance losses in the real estate area.

However, if you are decades away from retirement don't panic now. Again, go back to your asset allocation plan, which I hope you have, and see if you are overexposed in any one asset category. Then be stick to the plan.

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Washington: I know how you feel about debt. I -almost- completely agree with you. But you can explain why you think it's better to have 0 debt than to have, say, a $200k mortgage at 6% with $300k invested (in diversified, relatively safe investments) and earning around 10%?

I'm anticipating you saying something about the market crashing and that $300k no longer being $300k. Would there be any other reason?

Michelle Singletary: First of all, you don't really reflect my full view. This is what I say:

-- have a cash cushion of a minimum of three months living expenses.

-- have a cash cushion for the "life happens" stuff. For example, my freezer recently died. Cost us about $300 to fix. We of course had the money no problem in our life happens fund. We didn't have to touch our "if we lose our job, get very ill, etc. fund" to pay for that. To be safe keep about $500 to $1,000 in that fund

-- We regularly invest for our retirement (my hubby and I) about 10 percent of our gross income

-- We are investing for our kids college fund -- all three.

-- we carry no consumer debt, college debt or whatever

-- we have a mortgage but are working to pay it off.

So what you don't want to do is put all your free money into your mortgage so that you are house rich and cash poor.

But if you really want to be smart, you also don't follow the world's advice that debt is good and can be used. What that advice doesn't account for is "risk."

If i have no major debts and I lose my job or I get sick or my kid gets sick and I have to stop working (which happened to our family several years ago) I can breath easy knowing I don't have a car loan or student loan or any loan other than my house.

We weathered that storm AND we kept investing because we did not have the risk of going down because of DEBT!

So does that bring you to the light of of no debt as opposed to the dark side of debt?

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Pentagon City, Va.: I know that real estate isn't necessarily your area of expertise, but I do have a question about all the mortgage insanity. I recently set the goal of buying a house/condo in a year. I'm 28 and already have about $25K saved for the down payment - this is in addition to another $10K in emergency savings that I'm not planning to touch. With the mortgage industry tightening up, I'm not sure how easy it would be to get a mortgage even though I only have a small amount of student loans remaining (at about 1.7% interest rate). I've read that most places want a higher down payment, and I'm not sure if my savings would be enough. Do you think the downturn in the sale of real estate somewhat loosen lending requirements in the near future.

Michelle Singletary: I think if you read all the articles we have been publishing of late that loan terms are going to be tougher and tough now and in the near future. Many borrowers will have to bring more to the table in terms of a down payment. Lenders will look at your debt harder and want to see a good amount in savings.

But why guess. For now, why don't you talk to some lenders, give them a look at what you have and the type and home price range you are considering and they can tell you what you need.

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Arlington, Va.: Re: mortgages - People need to understand that the loans are assets that the lender owns. Oftentimes, they sell that asset while maintaining the servicing rights (a separate asset in their world). Those assets are marketable in bankruptcy as they reorganize their debt. The long and the short of it is, you still have to pay your bills regardless of who you write the check to.

Michelle Singletary: Right you are. Thanks.

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Paris, France: Hi Michelle,

I enjoy reading your column. Ignoring mortgage companies for the moment, is now a good time to invest period? I am currently a law student--I have no credit card debt, but I do have student loans. It seems like given the recent market fluctuations stocks are a bargain. Are you buying right now?

Michelle Singletary: Paris, really. Nice.

So here's what you should have. A plan. A plan to get rid of that debt AND to invest over time. Dollar cost averaging they call it, which means an investor using this strategy buys the same dollar amount of stocks at regular intervals regardless of price as a way to ride out volatility.

So, yes there are stock deals out there. But be smart about how you go about getting into the market.

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Washington, D.C.: Hi Michelle-

I have about $10,000 in credit card debt at about 12% interest, and a whole whole lot of student loans. Altogether, I pay about $400 a month towards the loans and about the same amount towards the credit cards. I am making only a minimal dent in the credit card debt, though, because of fees, etc. Do you think it's wise to defer payment of the student loans for a year or two and put that money towards the credit card? Or should I just keep trying to pay both? Thanks!

Michelle Singletary: Keep paying both. Can you get a second job? Cut expenses?

If you defer those loans that will only add on the cost of those student loans.

I know it's tough but just stick to your plan. And try to find ways to bring in more income to up what you are paying on the credit cards. And certainly, I know you aren't using them anymore while there is debt on them, right :)

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Midwest: I'm completely ready for you to yell at me for what I did. At age 52, I left a job; city I hated, moved somewhere I love, took 20K out of my 401K and bought a house. On an adjustable due to change in December. I'm still paying off the IRS for disturbing the 401K.

I had found it impossible to save a down payment; decided I needed to take charge; have equity in something. I banked on my ability to get a better job so I could be eligible for a fixed mortgage, which hasn't happened. But now.....I'm totally screwed, right?

Michelle Singletary: I won't yell. You've probably taken care of that. Besides, we all make mistakes. But yes, I would not have used the money from the 401 (k). I might have moved and rented for awhile until I could save up the money.

And yup, those ARMs looked good for the short term but I ALWAYs look at the worse case whenever I take on debt. I pretend like I have to pay the higher amt and if I can't handle it at the time I sign the deal, I dont' take the deal.

So, you have a few choices. Refinance if you can. Get another job. Take in a boarder to help with the increase in the mortgage note.

But you do have choices.

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Fairfax, Va.: Hi Michelle,

I recently stumbled upon your column and absolutely love it! I am hoping you can give me some guidance on my current financial situation. I'm 23 years old and have supported myself financially the past 5+ years. I have 13,000 out in federal student loans (Stafford subsidized for 9k and a Perkins for 3k) and just secured 17k in a private Wachovia loan so I can finish school. I have not used this money yet, but am tempted to do so, so I can finally finish my undergrad degree. I really feel that not having my degree is hurting me professionally, especially in the D.C. area. I don't have any other debt, but can barely save with the very the little I make ($848 every two weeks after taxes, insurance, a small amount to retirement, etc). I currently pay 750-800 in rent and my boyfriend pays for the other half. The rest of my money goes to metro, groceries, and savings whenever possible. My boyfriend and I are moving to his aunt's house in Centreville within the next two months, so we can aggressively save money. I hope to save about $800 a month while living there, but don't know where to start when it comes to tackling all this debt, especially if I use the loan. After reading your column though, I am also anxious about using the private loan. What do I do? I would love to get a second job, but not having a car and living out in Centreville will make it impossible. I'm already planning on walking a mile to a bus stop (which only runs during rush hour), metroing, and then taking another bus to work. Do you have any advice?? Thanks so much!

Michelle Singletary: Wow, you do have a lot going on. You didn't ask this but I'm going to tell you anyway as the mother of three --two girls.

Don't move in with that boyfriend. Get your life together all by yourself. Are you local? Can you move back with your parents, a sister, relative. What if you break up with that boyfriend? Where does that leave you then? It happens -- a lot.

Okay, that was the mom in me.

If I were you I wouldn't take on that $17,000 in debt. Can you pay for the classes one at a time? It's a slower process but one that won't have you end up with that much debt in high, high-cost student loan debt, which is what a private school loan is. All told you're talking about $30,000.

Until you can get a better job, you just might have to take a second job. I know. You said no car. So perhaps moving to Centreville, where you have to rely on your boyfriend and his aunt to keep a roof over your head AND you won't have transportation. Not a good plan. Too risky.

Move closer to your employment and a second job. Is it possible to find another job where your employer may help you finish school? Move in with someone who won't kick you out if the love goes. Just have a plan b is what I'm saying.

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Floris, Va.: Michelle: Your colleague, Steve Pearlstein, in his chat this week said that there is a 2/3 chance that the country will be in a recession by 2008. Do you agree and if so what would be your plan--if any--to revise your finances?

Michelle Singletary:

But you know this is a great question.

I've felt for years that this country's reliance on other people's money has been dangerous. And I was right.

But I don't plan on making any major changes because I've put in place a plan that works during up and down times.

I save like my life does depend on it. Big cushion. I keep my spending in check -- in good times and bad. My retirement plan is diversified so that I'm not overexposed in any one asset class -- got large, mid, small, international stocks, growth, value and bonds, and cash.

We don't carry any consumer debt -- no car loans, credit card debt, or student loans. If I lost my job or my husband lost his good gov't job, we could go work for a fast food chain and be okay for months. We might have to sell our home if we couldn't find work in a year or two. But we would sell and move into an apt. And we wouldn't be upside down on the home because we didn't buy as much as the lender said we could afford.

You see the trick is to live well below your means so when and if those means get lean, you've established a budget with lots of cushion. And this is so whether you are making $40,000 or a six-figure income.

If you are making $40,000 and it's tough to cover rent,food, in a certain market -- you get a roommate (not a lover but a roommate that might not move out if you have a lover's spat), or you live with relatives or take in a boarder into your home.

You know what I mean.

Again, live well below your means so when and if those means get lean, you can weather the crisis or recession or whatever.

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Washington, D.C.: Michelle,

I have about $20k in interest bearing checking and $26k in a short term CD at 5.5% APR. I also have about $17k in fixed interest debt at 3.99% which I am paying off at $750/month. Should I use my available cash to pay off the fixed debt completely or keep it in these modest rate of return investments?

Michelle Singletary: If that $20,000 is your emergency money and you may need it, don't touch that. Just keep aggressively paying off the debt.

However, if that's extra money aside from your rainy-day fund, pay off the debt.

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Northern Va.: Hi Michelle,

I don't think I've ever seen you put your plan so succinctly before. Here's my question. I've done pretty much what you've done (cash cushion, life stuff, 10% retirement, no consumer debt, paying off college debt fairly aggressively, no college fund because no kids). So - the question is this - my only investments are in my TSP (401K-like thing for federal workers). Should I be trying to invest outside of that fund, save up a bigger cushion (its in a 5% savings account), or something else?

Thanks!

Michelle Singletary: Oh, I've said it like that before -- many times. People (not you) just want to say I'm simple minded, that I don't understand the power of using other people's money.

I understand the danger -- as we are seeing right now in this market.

Anyway, I have funds outside my retirement funds. If you have extra money and you don't want to tie up all your money in tax advantage vehicles that have penealities if you withdraw early or outside the tax rules, then certainly invest in other funds. How and what you invest depends on your plans for the future

I put money in an index fund to supplement the kids' college funds and perhaps, one day walk into my mortgage lender and hand them a check for the balance of my mortgage.

I do like having my money work for me in many ways.

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Washington, D.C.: What is the best way to start getting back on your feet financially after a personal bankruptcy proceeding, especially with regard to applying for future student loans?

Michelle Singletary: Don't apply for future loans. You've seen what debt can do.

So start by having a budget. A good one that you follow. You can search www.washingonpost.com for a budget template I created. Just tailor it to your situation.

Then set up various funds--emergency fund, life happens fund, retirement etc.

Save to go to college or back to college.

Although the bankruptcy stays on your credit reports for 10 years, with each passing year it has less impact.

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Vienna, Va.: Just curious, Michelle, what do you think of Dave Ramsey? He seems to have a lot of fans among people who are also trying to get out of debt.

Michelle Singletary: I like Dave. Try to listen to his radio show everyday. But my kids have been throwing things at me from the back seat. They prefer Radio Disney.

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Oviedo, Fla.: My teen will have free college tuition thru a state program, at any state school she can get into. She is very bright and plans to get a doctorate one day. Should she save toward that while in college or just make it thru debt-free and call it a day??

Michelle Singletary: Definitely save for that doctorate, why not?

Debt is not a tool, it's a hangman's noose. With a house it's doesn't have to be tight but I know I feel the pressure and can't wait to get rid of it.

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Single mom with a question here...: I am a single mom of a 5 year old with ~20k in debt to pay off (mostly credit cards and a failed roommate venture where she left me holding the rest of the lease so now I have a judgement on the rent on my report). But i digress...on to my question...

As a single mom, would it be worth it to take on a second job if I have to pay out of pocket for a babysitter for those extra nighttime hours? For example, I could wait tables and earn at least 400/week to pay debts but I would have to pay a sitter 200/week to cover those nighttime hours to work said job. I have no family in the area as backup.

Or should I simply look for a higher-paying day job? I currently work for a non-profit (meaning low salary, I'm in the low $30's) with excellent chances of advancement but it will take at least 1 more year to finish my degree (no student loans and I am paying out of pocket, I know better!)

Thanks for your advice!

Michelle Singletary: For you, don't leave your kid anymore than you have to. Take the extra year or two to pay down the debt, keep saving and go to school and eventually that advancement will come. As long as you can keep up with the debt and it doesn't take you out, don't put your kid in more daycare.

You will never get that time back.

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White Plains, Md.: Michelle

My husband and I are working on our debt snowball and we estimate about five years before we can scream debt free. We live in a townhouse right now with a manageable 15 year mortgage and about $11k in the bank. Given the volatility right now should we put that money towards our debts or hold on to it until we know how hard this landing is going to be?

Michelle Singletary: Keep your cash cushion. Anything above that you can apply to debt.

If you estimate that cushion will be needed, I wouldn't use it to pay down the debt.

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Apple Valley, Minn.: I have another question: I was saving for an emergency fund, and both my husband and I have roughly $23,000 in it. Our issue: We have no house savings, and we don't have a 'long term' savings account. I made the mistake of calling the accounts 'emergency' but I always considered them long term savings. Any ideas on how to divide and conquer? You're the best!

Michelle Singletary: So sounds like you need two more accounts. You have the emergency account with the $23,000. Don't touch that. In fact, calculate what you need for three months and if the $23,000 is more than that transfer some over to the life happens fund.

In the life happens fund keep about $500 to $1,000. More if you have old cars that may need some major repair.

After the life happens is done, then start your house fund. If you've funded the other two accounts, stop putting money in them and start saving for the home.

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Ogden, Utah: Man, is the market dropping like a rock or what?

Michelle, did anyone ever tell you that if people had listened to you instead of that Greenspan guy over the last decade we wouldn't be in this mess? People only buying homes who can afford them? People having low debt? The nation as a whole run in a fiscally conservative manner?

Just imagine.

Anyway, keep it up. I send your stuff to my own kids on a regular basis

Michelle Singletary: Thank you Utah. I appreciate the "atta girl."

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Herndon, Va.: I have cash (300K) from a sale which i could roll over into any retirement plan. I'm 44 years old with a current 401K (107K). Due to the current market and the length of time before retirement, I'm thinking about taking the 300K as cash, paying IRS the early withdrawal penalty, placing the cash in a savings account for the future use. What would you suggest doing? Roll it over to my existing 401K or taking it out, then placing it in savings for quick use if needed?

Michelle Singletary: I'm confused. Why would you pay a penalty on the $300,000? If you meant, just taxes, okay.

Anyway, you should have an overall plan for the cash. I wouldn't dump all of it in a 401 (k), which you can't anyway. There is a yearly limit.

Look at your finances. do you have an emergency fund, etc.

Consumer debt -- car loan, student loans, etc.?

Are you going to use the cash to buy a home? If so you don't want to invest it right now, since you would need the money soon.

Talk to a financial advisor -- fee only.

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Washington, D.C.: Michelle,

Thank you for your help in the past - with your help, we're paying off CCs as fast as we can! Given the forecasts for the real estate market in the DC area, thoughts on paying off student loans & car loan before saving to buy a house?

Complication: we may make too much for the first time home buyer programs if we wait till we're totally debt-free.

Thanks!!

Michelle Singletary: Typically first-time home buyer programs qualify you on your income or lack thereof as opposed to letting you in because you have debt.

Now if you think your income will dramatically increase and lock you out of a program and you have money for the home, go for it now -- as long as your income can cover the mortgage and the remaining debt.

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Arlington, Va.: Hey Michelle,

I really just wanted to write in and say how much I love your advice. I've done my best to follow it - I have a 6 month cushion, no credit card debt and no student loans, although I seem to have hit a savings wall, and I'm trying to work on that and figure out just where that money is going. Guess I really do need to do a budget.

I also wanted to weigh in on your advice about not moving in with boyfriends. I might have disagreed in the past, but I'm living it now. Bought a house with the fiance. Thought it was a good idea. Thought we'd be together forever. Wrong. Wrong. Wrong. As if breaking up wasn't hard enough, trying to figure out how to deal with that has made it all the worse. So although I never thought I'd say this, I'd really recommend waiting until you're married to buy together (assuming of course that you can legally marry). Just wanted to throw in my two cents.

Michelle Singletary: Girl, that's more than two cents worth.

Thanks. Experience is one of life's best lessons!

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Austin, Tex.: The question: Do you know of a website where I can get authoritative information about whether my state permits security freezes upon request? I live in Texas and (thankfully) am not a victim of fraud.

The rest of the story, as briefly as I can tell it: We rotate the annual free credit reports, so approximately every four months I request the reports from one of the agencies. Last month it was Experian. With the credit report I received a "Notification of rights for Texas consumers," which provided instructions for placing a security freeze. I also surfed the web and found instructions for use with all three agencies, including what documentation to send, where to send it (certified mail), and that the fee is $10. I sent separate checks for my husband and me in separate mailings on July 31 to each of the three agencies. Here's what has occurred, so far.

-Equifax cashed the checks.

-TransUnion sent them back with a note that security freezes are not available in Texas unless one is a fraud victim. A couple of days later we each received a form letter which repeated that statement, and also indicated that if our state permitted a security freeze, the fee would be $29.95.

-Experian sent us each a notice, part of which stated that "We have processed your recent request. However, the payment you enclosed was not necessary." They said that the checks would not be cashed and had been shredded. That was several days ago, and we have not received specific confirmation of the security freeze, nor the PIN we would need to lift it.

-Equifax (via CSC Credit Services) sent me a credit report, received yesterday (I look forward to seeing what my husband gets). They also included a "Notice to Texas Consumers," which in part stated that the fee for a credit report was $10, and the fee for a security freeze is $8. (Recall I sent a letter specifically requesting a security freeze.)

Before I pursue any argument with these agencies, I'd like some authoritative documentation, either that the laws in Texas have changed to permit security freezes upon request, or that I have misinterpreted the "Notice to Texas Consumers" I have read in several forms. Any idea where I could find that?

Thanks

Michelle Singletary: Whew. Go to this website:

http://www.consumersunion.org/campaigns/learn_more/003484indiv.html

It's Consumers Union's Guide to State Security Freeze Laws

Here's in part what you will find for Texas:

Eligibility: Currently only identity theft victims with a police report. Beginning September 1, 2007, the law will apply to all consumers.

Fees: No fees for identity theft victims.

Beginning September 1, 2007, all other consumers pay $10 to place the freeze, lift it temporarily, or to remove it altogether. $12 to lift the freeze temporarily for a specific creditor.

Hope this helps.

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Madison, N.J.: I am a 52 year old mom with 9 year old twins. I've been out of the workplace for over ten years. I never had a "career" ie teaching, nursing, law etc. I need to re-enter the world but don't know where to start. Where does someone my age with limited funds start? What new careers are open to mature adults. Of course I am also going through a messy divorce at the same time. Thanks

Michelle Singletary: Why don't you call the local community college near you. Make an apt. to see a guidance counselor. Often he or she can help you map out a career path and any courses or training you may need to enter or enter the workforce.

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Austin, Tex.: Good Afternoon Michelle. My question is, I am a single parent with two boys ages 7 and 2. I don't receive assistance from either of their fathers and I only have one job. I attend University of Phoenix online and have 2 credit cards with small limits but are both maxed out and I also owe a payday loan, along with re-occuring bills and some credit issues. I can't seem to save anything because there is always something that is coming up. Right now, my account is going to be negative and I just got paid yesterday. I am at the point that paydays don't matter to me anymore. I never see the money and it's been such a struggle to set up a plan and stick to it and still live. HELP ME PLEASE!

Michelle Singletary: You poor dear. I'm so, so sorry.

It's hard to help in this forum but a couple things occur to me. If you live near your parents or relatives, try to move in with them. If they are out of town, you may want to move to where you have help.

And of course you know don't take out another payday loan, even if it means the telephone gets turned off.

Find the budget template on this website and walk through your budget, looking for any place to cut. I know that will be tough because you probably are already down to the bones.

I also hope you have made efforts to file for child support. If not do that right away.

Also, check with local agencies to see if you qualify for any public assistance. There's no shame in asking for help until you can get back on you feet financially. For right now, you may also need to stop paying for classes until you can get a handle on the necessities.

Finally, go to this website www.debtadvice.org. It's for a national credit counseling. Put in your zip code and call or go see someone who can help you sort through all this.

I do wish and pray for the best for you.

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Ashburn, Va.: Michelle

Please help, if you can!! I have a soon-to-be 28 year old daughter (technically, stepdaughter, but I've been in her life since she was three and her dad and I had sole custody when she was growing up). She is in MAJOR debt--she had about $60K in unsecured line of credit/credit card debt and about $150K in law school loans, so a total of OVER $200K. She is a licensed attorney in NYC, three years out of law school, and has been working temp legal work for over a year. Her career has not gotten off the ground. Add to all of this, a 35 year old live-in boyfriend, who is going to college full-time and who she is supporting (rent, food, transportation, entertainment). He pays his tuition with grants/loans. They both think his big break as a movie producer is going to happen!

She doesn't really listen to us (her dad and I are both CPAs). The creditors, though they bug and bug her (she really doesn't have any or much money to give them), do not take the next step and file a lawsuit against her. So she just ignores everything, because she can. We've tried to get her to go to a legit credit counseling agency for advise and a debt mgmt program. But she never does anything.

Would it be helpful for us to pay for a career coach or therapy or something? She doesn't look seriously for a REAL job.

Can you help us? And, yes, this is REAL. I can give you my phone/email if you want to discuss.

Michelle Singletary: I'll make this the last question and it's a big one.

Honestly, right now you need to step back and let her fall AND hard. You've done all that you can and paying for a career counselor is just a waste of your money. She's hardheaded. Clearly. Paying for a live-in lover is all I need to know.

So let her fall on her behind because only then will she -- if she's got any smarts from that expensive education -- will she realize you are right and that she needs to get her act together.

Don't enable her to continue being stupid. Love her. Listen to her but don't give her any money.

Trust me on this one. Been there, done that.

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Michelle Singletary: As I said that was the last question. I've got to run and write more about this mortgage mess.

Take care and don't panic as the news continues to get bad.

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