Need advice about how to handle your personal finances? Whether the struggle is saving for retirement, organizing your bank files, or 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: Well this is it for 2008. Last chat for the year. So let's get started. Already a lot of questions.

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Springfield, Va.: I've been out of school and working for about a year now. I have a few thousand dollars of student debt and a sizeable chunk in my checking account, as well as a 401K-like plan through my employer that I am investing in. What should I being doing now? Should I put what i have in a high interst savings account? Invest in money market funds? If so, what organizations do you recommend? Are there any seminars out there for first time investors?

Michelle Singletary: What you should be doing now?

Paying off that few thousand in student loan debt before you invest money you can't afford to lose.

Start there. Best investment. Getting rid of debt.

After that let's talk.

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The crisis from Moscow: Michelle - I think you give really sound advice, but last week when I was in Moscow I couldn't help but wonder what you would say about their economic crisis turmoil.

Back in September/October everyone in Moscow asked me if I had suddenly become poor (their media does such a great job relating American news). Everyone was totally in denial about a crisis in Russia, even thought the government had already bailed out several banks. However, in December, crisis had fully sunk in. "Recession" is now an allowable word on the news first of all. Credit in Russia had been hard to come by in the first place - usually not at a rate much below 15 percent. But the most surprising to me (and I'm sure to you) was that people's philosophy was not to save money. It was the opposite! Spend it while you have it. Banks aren't insured, so you could loose everything. Many people have been victims of currency fluctuations in the past, and lost their entire savings, so saving didn't sound like a good idea to anyone. People reported to be spending more for holiday presents because they didn't know if they would have the money next month. I can see why they feel that way, because they have had several financial catastrophies in recent time. But I just wondered what wisdom you would have for the Russians since their situation is somewhat different than ours. I think you would have a challenge convincing them to save. Anyway - just thought I would share.

Happy Holidays!

Michelle Singletary: Wow. This is a tough one. In economies where the currency is so crazy it's hard to argue to save. And yet, they still have to hold back on some of their spending or a least buy things that could be stored in case the currency is devalued yet again.

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Northern Virginia: I have 2 stable jobs and plenty of cash for selling my house almost 2 years ago and have been renting since. I have no credit card nor auto debt. I'm thinking of purchasing a house and a car. I have enough for a 20% down payment and at least a 1 year emergency reserve. Even after that, I have enough to buy a vehicle with cash. The thing is, I don't really need the vehicle, since my 5 year old car still runs fine. However, with the automotive industry hurting, I worry I might lose some good deals. To buy or not to buy, that's the question.

Michelle Singletary: Not buy. That is the answer.

You have two good jobs today. But what about tomorrow? Nothing promised.

Buy what you need. And if you are so flush with cash that you can't stand to see the money pile up, bless somebody else. Perhaps there is a friend, relative, co-worker or stranger who could use some financial help.

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Woodbridge: I thought you would be interested to know that we tapped into a do-it-yourself investment account to help pay for our cat's 2 corrective urinary surgeries recently, which, all told, amounted to about $6K (as opposed to using a credit card).

Given the lousy timing, I think I sold a lot of stuff at a loss, but still. It was cash we had put away and used when we needed it.

Michelle Singletary: Good for you. That's why you save and invest to pay for the things that matter.

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Ashburn, Va.: With the news about the auto makers, do you see the cost of cars going down or up? I need a car and have been looking for a deal for the last year. I just keep thinking I can wait it out and do better. What do you think?

Michelle Singletary: Nobody knows when bottom will hit for stocks, homes or cars.

If you don't need a car, you can afford to wait it out. But the deals look pretty good right now and they need the sale.

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Scared of the Recession: Michelle, how do you prepare yourself to make it through the recession?

Michelle Singletary: You know I am doing the same thing I did when times were good. My husband and I (because we are a team):

-- Tithe 10 percent of our income

-- Save right after that building up our life happens fund (emergency fund already fully funded)

-- Invest for the kids' college funds

-- Eat dirt before taking on more debt. So if we use our credit cards pay off the balance every month

-- Watch our expenses by revisiting our budget

-- Spend wisely

-- Find ways to do things for free (We didn't buy anything for each other when we celebrated our 17th wedding anniversary last month

In other words, we act each day like we are in a recession. Not out of fear however but so that we live below our means. So now that things are tough we don't panic. We aren't scared. Concerned, yes. Pissed at what's happening to our investment, yes. But not scared.

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Arlington, Va.: Hi Michelle, thanks for the chats. My husband and I are getting ready to buy our first house next year. We are both responsible and debt-free, except for his student loans, which he is repaying as quickly as possible. My question is this (and is somewhat related to your recent column): I have never had a credit card. I've never felt the need for one and haven't trusted myself not to abuse it. Is this going to make it harder for us to qualify for a mortgage? We plan to get an FHA loan, if that makes a difference. Thanks!

Michelle Singletary: If your credit scores are good -- above 700 you should be fine and you don't need a credit card. So check on your scores (all three for each of you).

Now I want to address what you wrote: We are "debt-free except for his students loans."

You are on the right track to pay them off aggressively but you are in debt. So this is just a caution for others. Don't say, "I'm debt free except..."

Say I have debt but just xxxx.

Embrace that you are still in bondage. I am. Still got a mortgage.

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Why Military Challenge short sale?: Michelle,

Why was it better, financially, for one of the families in the military challenge to go through a short sale, rather than pay off their debt more slowly and hold onto their second house, taking some loss every month, until things broke even? As far as I can tell, a short sale hurts your credit as badly as bankruptcy and prevents you from buying another house for a while.

I've been looking into the situation because -- despite having no other debt, paying off a second mortgage early, and a 30-year fixed-rate mortgage -- we cannot sell our condo right now unless we were to do a short sale. Is our situation different? Do we have any other options? (We may have to move, like it or not, in the next year or two.)

I was very impressed by all three families' discipline and applaud the sacrifices they've made this year to get into a better situation.

washingtonpost.com: Michelle wraps-up her Color of Money Military Challenge here.

Michelle Singletary: Well, let's see many homeowners are accepting a short sale because they don't have the money to make the mortgage.

In the case of the couple in the series, they just couldn't keep paying the extra $1,000 a month. It was taking them down financially. They just kept digging a hole and when you are digging a hole the way to get out is to stop digging.

So instead of having $400,000 plus in debt they have $125,000 to deal with (what's left after the short sale and that they will be taxed on.) So in the end with the tax consideration they have to pay taxes on the $125,000 treated as income. That's way, way less than a $400,000 mortgage they could no longer afford.

And frankly what do they care about a short sale hurting their credit. They can't afford to take on anything more on credit anyway.

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Washington, D.C.: WOO HOO! I just finally paid off all of my credit card debt. somehow, I managed to get it up to over $25,000, but in the last two years, after getting a line of credit at a lower interest rate, I was able to pay it all off. I am so excited to have that $1300 extra a month now (especially in this economy!) It can be done! I was on the verge of drowning after one of my card's interest rate went from 19 to 29 percent in one month and called them practically in tears as I was trying to pay it off and this was not helping. We set up the loan and two yers later, I will NEVER AGAIN have credit card debt. I have one card, that I use and pay off every, single month.

Michelle Singletary: Hooah to you!!!

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Laurel, Md.: Dear Michelle:

I own rental property in another state. However, each year, it has become increasingly difficult to maintain both the rental property and my primary residence. I have thought about allowing the rental property go into foreclosure because I am not sure that a short sale would prove to be advantageous. What would you advise?

Thanks!

Michelle Singletary: Go for the short sale first. First, because you won't just be walking away from the property and you may end up owning less overall in a short sale.

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Rockville, Md.: Hi Michelle,

Thanks for all you do - you are a blessing to us who are trying hard to stay on top of our finances.

I had a question that I haven't seen in other chats.

I used to save for Christmas in a Christmas Account at my old bank. It was great as a small amount was withdrawn every month and when Christmas rolled around, I had a sizeable balance that I could spend without feeling guilty.

That money was earmarked for Christmas and whether I ended up using it for gifts or something for myself, it was the most liberating experience to not feel stressed about spending.

Just wanted your take on that idea. I checked and my credit union offers Christmas accounts and I'm planning on opening one in January.

Thanks.

Michelle Singletary: I have no problem with Christmas accounts. It's a good way to save for and pay cash for the holidays. Just make sure you are paying off or don't have any other consumer debt -- student loans, credit cards.

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Denver, Colo.: We barely (and sometimes don't) make ends meet every month. We are one of those people who signed for a 1st mortgage (80 percent) and a 2nd mortgage (20 percent). We have now missed two of the 2nd mortgage payments. How does foreclosure work? We owe 249,000 on a house that is now worth 135,000. It is a losing battle, but we are determined to get through it. Can the 2nd mortgage company force foreclosure even if we are up-to-date on the first mortgage?

Michelle Singletary: You poor dear. Try to see if you can get some help from a HUD approved housing counselor. Go to www.hud.gov to find one in your area.

It's not likely the 2nd will force a sale of the home because you are upside down. If there was a sale the 2nd wouldn't get anything since the 1st mortgage wouldn't be satisfied. Try hard to work with the 2nd mortgage lender. Perhaps you can negotiate for a lower interest rate or a forebearance until things get better. Also have you really, truly tried to cut expenses, get a second job, take in a border, who do whatever you can to manage?

Still if nothing else work with the 2nd. They should want to because if you get foreclosed on they get nothing anyway.

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Delaware: Thanks for all your advice! In the beginning of this year I paid of all my debt- 6 cards in 6 months after becoming a Singletary convert. My question is for the future. I want to start putting money aside for a car in a few years, a house, a wedding. Should I put it in a money market account? plain savings? CDs? I won't even be touching it until summer 2010 at the earliest. Even then I will want to take some out but then continue adding to it. Thanks!

Michelle Singletary: First congrats on getting rid of the debt. Give yourself a big hug for me.

As for what to do with the savings, since you need it in such a short period of time don't invest it. Find the highest paying FDIC insured savings for money market you can find. Go to www.bankrate.com to look for banks, lenders offering the best rates.

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Alexandria, Va.: Is it better to hold assets jointly or individually when considering estate planning? My husband and I (aged 60 and 58, respectively, no children) own nearly everything jointly and thought that would ensure ease of transfer upon death, regardless of which of us should be the first to go, but an expensive lawyer is telling us to un-do that and hold financial assets individually so that we can set up trusts. What would be your response to such a suggestion?

Michelle Singletary: Find another lawyer.

Keep your stuff together. A good will can distribute your assets.

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Somewhere, Md.: Michelle, I admire your work (kudos on the military families from Sunday's Post!) and nearly always agree with you. But I find myself wavering. I've faithfully paid all my bills and saved, have several degrees, and a good, recession-proof, pension-paying job. I don't have cable, I don't have a big TV, I drive a 9 year old car, and I live in a condo which I bought within my means 9 years ago but that's on the 4th floor with no elevator and no in-unit washer or dryer (our rules don't allow it). Everything is starting to break down because the place is so old. I am on track to completely pay off the mortgage by July of 2009, but even if I'm able to sell the place in spite of the economy, I would still have to take out a huge mortgage to upgrade to a decent, reasonably recently built place place where I don't have to call the plumber once a month or have to lug groceries and other things up four flights of stairs on a regular basis. All I want is a condo with a couple of bedrooms and an in-unit washer and dryer. Then I see articles in the newspaper about people who buy new places, benefiting from programs for low-income buyers. I worked so hard to go from zero (I grew up poor) to making decent money, but other people who haven't get to live in a decent place (thanks to my tax dollars!) and I have to live in a dump if I am to remain fiscally prudent. It's very hard not to see other people's beautiful homes and not wish I could have even a fraction of what they have (or at least an elevator to the 4th floor!). Maybe they take on credit, maybe they inherited money or married well, but still. Maybe some people are struggling, but seriously, I am the only person I know without cable. I don't see much in the way of sacrifice. And in my experience, all that seems to get you is an old condo that you constantly have to repair, in a not-so-great neighborhood to boot.

Michelle Singletary: Let's see you need a reality, count your blessings check:

1. You have a good job.

2. You have a pension. HUGE!

3. You have savings.

4. You have a home, even tho it's a pain in the butt right now.

5. You are getting regular exercise walking up all those stairs :)

Many people today:

1. Don't have a job.

2. Don't have a pension, retirement savings, NADA!@

3. No savings.

4. Are overweight with health issues.

But I still here you. You want better for yourself. So get better for yourself. If you can upgrade do it. You dont have to get a mortgage you can't handle. Besides in this market you won't be able to anyway. So go looking for a nicer condo or townhouse that is affordable to you. In this market there are great deals.

Get what you can for your condo.

Most importantly stop looking at other people's grass. It probably got that way because of a lot of chemicals (ie. debt, working too long and too hard and not seeng family, etc.)

Are some people getting over because of this recession. Yes.

But those of us who did the right thing and are doing the right thing are still WAY better than those who didn't and don't.

Doing the right thing is ALWAYS the right thing.

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New York, N.Y.: What is a good rule of thumb of what percentage of your salary should go to rent/housing? And are we talking gross or take home salary?

Thanks! Please keep up the good work. I think you should do weekly chats to help us keep on the debt-free and narrow.

Michelle Singletary: We are taking net and it's anywhere from 26 percent to 36 percent. You can push it to 38 percent but that's getting dicey.

So you shouldn't spend more than 36 percent of your net pay every month on housing/rent.

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Laurel, Md.: Michelle, three-month T-bills are currently paying 0.01 percent according to Yahoo. Why is ANYBODY buying them when three-month CD's pay 2%?

Michelle Singletary: Some people want safety above returns.

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Oakland, Calif.: Hi Michelle: Please don't scream at me... I start using credit cards with caution; i.e., charing and paying off every month, and then I sway. I finally realize that I'm unable to pay off every month, and the balances get overwhelming. Just then, I lose my job. This is the second time it's happening. What can I do, or go for help? Thanks

Michelle Singletary: First, cut up the cards or cards. Right after this chat.

I mean it.

Then go to www.debtadvice.org if you don't think you can put yourself on a reasonable payoff plan. But you can do it yourself but you first have to stop using credit. Period!

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Holiday Advice?: Hi, Michelle--

I am a faithful reader and chat-observer. I have a holiday dilemma--I have tried to convince my siblings that we should give gifts to our mother and our respective kids generously (within our respective means)--and that for the non-grandparent adults, we do something like bring great food, beverage to the holiday celebration, or each one take us to a favorite place for a meal during the time the family is together (can be out for coffee, does not need to cost $). I honestly just don't need or WANT stuff, and it causes so much stress not to mention unnecessary expense, and the thought put into the gifts is minimal at times (seriously, a pink furry purse for a marathon runner who never carries a purse at all?). But they keep looking at me like a scrooge. A few years ago, I made charitable donations in everyone's name, and everyone looked at me like I had three heads, and give me looks of pity--it's not that I cannot afford the gift-giving, but it just seems forced at this point.

Help!

Thank you--and happy holidays! This year, my daughter and I are adopting a family in Fairfax that needs a bit of help, through church, and I want to teach her the true spirit of giving, not the gift card or furry purse dance.

Michelle Singletary: I understand your situation. Imagine how my family looks at me.

But you know what? I don't care. My money, my rules, my life.

I would say that I'm not a huge fan of making donations in people's names unless you know for sure they support that charity or that's what they woudld want.

So do what you want as far as gifts. Give to whom you want. Let them look at you funny. Still love them and find other ways to show it. If they can't accept that then poot them.

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When a will doesn't help: If I have to choose -- giving up some inheritance (life insurance policy) in order to keep the family peace -- what is the best thing to do?

Not everyone DOES have a 'good will' that lays everything out well. My relative did not.

I want to stop bickering....

Michelle Singletary: To answer I need more info. Do you need to use the money to help live or help kids or what?

I'm assuming the policy is in just your name and folks are saying you should share?

What's the family situation?

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WDC: Dear Michelle, I have a basic question about my student loan with Wachovia. I pay my regular monthly payment on time each month. I also pay an extra payment each month. While I have told the bank that the extra payment should go to the principle, an portion of it is taken out to go towards interest. For example last month's extra payment was $550, and 500 went to principle and 50 went to interest. I called and asked about this and they said this was just how it is done. Is this normal procedure? Does it matter if a portion of the extra payment goes to interest, since I'll have to pay it eventually anyways? Thanks.

Michelle Singletary: I'm not sure what's going on but I woudld protest. You certainly can have money go directly to principal if you want. Go though your loan documents and if you don't see anything that explains this policy call the bank back and talk to someone higher up.

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Desperate, Va.: Hi Michelle, My husband's parents are in just about the worst situation possible. They are dead broke after a series of unforunate events over the last several years. Small business failure, serious car crash with injuries (and inability to work), unable to qualify for disability, social security, unemployment (tried all of those). His mother is working 50-60 hours a week bringing in about $100/month and the father is trying to find work. But ends are nowhere near meeting and they are about at the end of the line now--no rent money, no money for food. Moving would help, but there is no money for security deposits, moving truck, etc.

Until they can get more income (which they are trying to do) is anything help out there for them? My husband and I help what we can, but we have shouldered a lot of costs for them and are paycheck to paycheck ourselves.

Thank you.

Michelle Singletary: I'm so sorry. Be sure your in-laws are applying for food stamps and any other state aid (welfare).

Short of that, contact local food banks to help with food. Also contact the utlity company to see if they qualify for a bank on that.

If all that doesn't work is there anyone they could live with until they can support themselves?

You and your husband?

Friends?

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Estate law question: I disagree with your answer to the person who was wondering about the estate law advice. I would seek another opinion, but I think the estate lawyer is right for estate planning purposes and the unified credit amount, in some situations it is better to split up assets so that the maximum amount can flow to the children (after the second spouse has died) without incurring a significant tax hit. It was off the cuff advice from you, when you are not an attorney. People come to you for advice, many will read what you wrote quickly and perhaps then have it affect them to their detriment. You should be more careful, how you wrote that, you are seen as giving legal advice.

Michelle Singletary: I said exactly what I wanted to say. I have covered this issue before and there are many ways to leave your stuff to children, etc. without spliting up ownership.

I suspect some lawyer is trying to get a lot of fees by setting up expensive trusts.

You may even be a lawyer for all I know.

I encourage people to get a few opinions before doing something but in my reporting I have not hear that couples need to split up ownership to pass along assets. I certainly wouldn't do that. My house is our house until the day one or both of us die!

And frankly settling an estate is not as expensive in many areas as it has been in the past.

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Boston, Mass.: Do you have confidence in/suggestions for using Internet banking, as long as it is fdic insured?

Michelle Singletary: I do. As long as the internet bank is FDIC insured -- and you've doubled checked that it is!

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Alexandria, Va.: For "Somewhere, MD" - I'll wave at you because I'm another person who doesn't have cable! We are lucky in this area because we can get HDTV off the air with just an antenna; looks like you are doing that too. y husband and I are fine with that and don't miss cable one bit. How much TV can 2 people watch? We have a monthly subscription to Netflix and watch the movies we want that way, and avoid the $100-plus monthly cable bill. Why make the cable companies any richer - there's enough to watch without it.

Michelle Singletary: See you are not alone non-cable people!

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More on when will doesn't help: We're fine. No mortgage, own property to eventually build our retirement home (totally paid for already), husband and I have tenured faculty jobs, lots of retirement built up (over 1 million before this September).

Yes, I am named beneficiary of perhaps $400,000 policy. Some members of family not mentioned at all (the males), etc., so lot of pressure to dump all into pot and divide it up equally (3 other sisters, our dad).

Michelle Singletary: So this is a matter of keeping the peace.

I wouldn't give up ownership of the money. I would however look at who may need it and set up guidelines. So if you have relatives attending college and are borrowing to pay for school I might help them. If someone is trying to buy a home and needs a downpayment, I would help.

If dad needs money, help.

The thing is the person who died left the policy to you. Use it the best you think.

But at the end of the day if it's peace you really want, and you don't need the money and others do, split it up among all who are left.

Sometimes peace is priceless.

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Catonsville, Md.: Merry Christmas Michelle,

Do you plan to do a column on what we should be doing finacially in the new year or what we need to do at the end of this year.

Thanks.

Michelle Singletary: Hi. Yes I am. Proabaly the Sunday after Christmas.

Got any ideas? I'm open to them.

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Tithing question: You said that you and your husband tithe 10 percent of your income. Could you elaborate on that a little, please? I'm interested in doing that, too, but want to learn more about what's reasonable and standard. Do you mean 10 percent of your gross income? Or 10 percent after deductions? And by income, do you mean salaries, or salaries plus investment income?

Michelle Singletary: If tithing is something your faith calls for you should seek specific guidance from our pastor, minister, leader of your religious organization.

In our case we tithe 10 percent of our gross --everything we earn. And no investment income to worry about in this economy. But yes, if we had earnings from we would tithe on it.

We also give to charities on top of that.

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Orinda, Calif.: Hi Michelle, Keep up the great work! I only hope that you are heard as much as Mr. Krugman and Thomas Friedman! NO DEBT is the answer! Not only for citizens, but for our government.

I know that fiscal stimulus is needed and that means deficit spending, but we have to get this country back on track to savings and living within our means. Doing that will strengthen the greenback as well.

I lost my job this spring and haven't been able to get another, YET. But my wife works and we are good savers. And reading your column makes me realize how lucky we are.

So keep on preaching!

Michelle Singletary: Thank you.

And I will definitely keep on preaching.

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DC Burbs: This past weekend was the annual holiday gathering at my husband's grandparents house. One of his cousins showed up in a brand new truck and was talking about his new big screen tv and new pool table. I thought this was strange since last year when we talked to him he and his wife were having problems affording their mortgage, but I figured maybe one of them had gotten a better paying job or come into some money or something.

Last night my husband mentioned that his cousin invited him to go on a deep sea fishing trip in February down in the Carolinas. I asked how his cousin was affording all this?

Well, apparently they walked away from their house and are renting another house for about a third what they were paying on their mortgage, and they just haven't been bothering to pay their mortgage for the last 4 months.

I am really bothered by this, he is getting all kinds of new things by being a skunk on his mortgage! What really bothers me is that he is not going to be held responsible for the difference on what his mortgage was and what the bank can sell it for at foreclosure.

Years ago I know banks used to come after you personally for the money, but apparently the cousin's lawyer told him banks weren't doing that anymore, so will basically be able to get out of it scot-free (although his credit will be ruined, I should think).

Why aren't people being held accountable anymore? People like this are making me feel very ba-humbug about helping out delinquent homeowners.

Michelle Singletary: Don't feel bad. Many of the folks losing their homes aren't skunks. They are hurting.

And so wil your cousin-in-law. This bad financial behavoir will come back to get him trust me.

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U Street: Hi Michelle, I have about 70k in student loans and I'm not sure how to focus my repayment. I have no other debt, but almost no emergency fund. I have 47k in Federal Stafford loans at 6.5 percent, 12k in Federal Perkins at 6 percent, and a private loan for 14k with interest related to the LIBOR plus 2 so it's pretty low right now. My salary is 45k per year and I was able to get a reduced payment forbearance for the 47k (payment should be 550 per month and I'm paying at least 200). The smaller loans will come due late this winter and I think I can qualify for a forbearance for the private loan. Is there any benefit to using forbearance time to pay off one loan completely? Should I just chip away at all of them slowly together or is it better to do them one at a time? Thank you so much - your advice has really helped me clean up my spending.

Michelle Singletary: Start paying off the loans with the lowest balances.

And don't get any more forberances. You are only digging a deeper debt hole.

I hope you are cutting your expenses, have a roommate, second job, etc. whatever it takes to get rid of this debt soon. You have a lot of debt to tackle.

Good luck.

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Los Angeles, Calif.: My wife and I have been paying our son's mortgage payments for a few months since he's a construction worker and is out of work. He was close to foreclosure when we started doing this. How can he access any help for people who face foreclosure if we keep paying his mortgage payments? He lives in Delaware.

Michelle Singletary: Honestly, he won't get help if he's paying his mortgage or you are paying his mortgage.

I wouldn't pay it anymore. You may just be throwing good money after good money (I won't say bad money because it's all your good money).

I knwo you want to help but he's got to figure this out. You are only prolonging what will probably be a foreclosure anyway.

Let go and get your son to seek help. It will be tough but he's got to do it.

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Baltimore, Md.: My fiance and are I trying to repair our credit. When we pulled his credit report, he had an item that was sent to collections. He tried to contact the company to work out a payment arrangement, but they want him to 1000 a month, which we can not do. They suggested he get a loan to pay the amount off, but he can not because his credit is messed up because of it. Although we both believe that he should pay it off anyway he can, we would also like to repair his credit to eventually buy a home. But, I heard that if you start to pay a collection item that can reflect badly on your credit as well. Is that true? If so, what other options do we have to repair the credit and eventually buy a home?

Michelle Singletary: Just keep trying to get them to come up with a reasonable payment plan. If they won't he should send what he can by check or money (for proof). It's all he can do, really.

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Best investment - get rid of debt: Michelle,

I have $85K in federal student loan debt that was consolidated at 2.75 percent. We have no other debt (other than a mortgage). We have almost enough money invested in stocks and mutual funds to pay that off but with that interest rate, I am thinking we make an exception to your general rule that paying off debt is the best investment. Do you disagree?

Michelle Singletary: I do. If you have a cash reseerve and good jobs. Then get rid of the debt, as long as the money invested isn't in tax advantaged accounts.

If so, don't cash out. But I wouldn't take the attitude that this debt is only at 2.75 percent. It's stil $85,000 dollars in debt. That's a big, big hole.

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Chevy Chase: Hi Michelle. Happy Holidays to you. My husband and I are expecting our first baby in about a month and we'd been planning on opening a 529 college savings account for him right away. Given the volatility of the market, should we just keep the seed money for that in a regular savings account or should we go ahead and set up the 529?

Michelle Singletary: Hi. Congrats on the baby.

And yes, I would still open the account. Look at it this way, you can get more stocks for less money right now. Maryland has a top-rated 529 plan by the way.

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Michelle Singletary: Well folks I'm way over time.

Thank you so much for coming to my chats. I couldn't do this without you. I'm always so sorry I can't get to more questions or answer them more fully. But I try.

Anyway, I wish you all a very Merry Christmas or Holiday and Happy New Year. See you in the New Year.

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Alexandria again: This is me again with the estate question. Your advice sounds right to me. Lawyer wants $5,000 to set up trusts, etc. We have no children, which I mentioned. The poster who talked about unified trust to pass assets to children skipped over that bit in my initial post. Since we'll leave whatever is left to nieces, nephews, and charities, leaving things to children (that we don't have!) doesn't enter into the equation.

Michelle Singletary: I had signed out but wanted to pass this along.

Told you!!!

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