Color of Money Live

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 offered her advice and answered your questions on Thursday, June 4 at 12 p.m. ET.

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

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Michelle Singletary: Good afternoon everyone. It's a rainy day where I'm am but no matter I'm in good spirits and ready to take your personal finance questions and comments.

So let's get started.

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Falls Church, Va.: Weird situation, Michelle: My 58-year old wife has $40,000 in law school loans - to make it worse, she left after two years and now is (voluntarily) unemployed. She is on deferral schedule now, so no payment is due til 2011 but interest is accruing. You can probably guess how I feel about writing a check every month to pay on this, but I hear that student loan debt stays with you forever. I really don't want to be on Social Security and be paying off student loans. However, also have a home equity line of credit to pay off. Should I concentrate on paying on that or the student loan? Both loans have relatively low interest rates.

Michelle Singletary: Wow. Lot going on. Can you wife go back to work doing something because really unless she's ill, she NEEDS to be working to help pay off that bill. I'm serious.

And I would concentrate on paying off the debt with the lowest balance first.

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Bay Area, Calif.: Hi Michelle, I'm about to get married (as in a week from now) and I'm wondering about advice on how to best handle our money jointly. We've drafted a budget and talked about the concept of having our own "play money allowance: that we can each use for whatever, no questions asked, while using everything else for joint expenses. What other things should we consider? What are the logistics of actually combining accounts? Thanks!

Michelle Singletary: Good question. I do hope you have had some formal marital counseling.

If not get thee to somebody quick --even with a week left.

And I would be remiss not to mention my book, "Your Money and Your Man" in which I lay out all the things and ways to handle your money as a couple. Book is for women and men.

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Denver: Hi! You're a trustworthy adviser and a brilliant savvy business woman. Please straighten me out. Did I make a mistake? I'm closing on a house soon and I bought the mortgage down to 4.375. I figured out that with the savings each month from not buying it down it would take me three years to get back the extra I'll pay at closing. I really hope to be in this house until my infant child graduates high school if not longer so to me it seemed like a good decision. But, then I spoke to a mortgage broker in a social circumstance and he said that anyone who buys down is an idiot because people always end up refinancing in a couple of years so they loss out. I'm a first time home buyer. I called a lot of banks, brokers, credit unions to get my loan, but none of them seemed to think buying down is a bad idea. Why would I refinance in a couple of years? Wouldn't rates have to be in the 3's for it to make sense in my situation? Has that ever even happened? What am I missing?

Michelle Singletary: It's hard to answer without knowing more but stop second guessing yourself. IF you had the money and you looked at the numbers and you decided this was the right thing to do, then it was the right thing to do for you.

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I'm so glad you are chatting today!!! Please help!: So my husband just lost his job. He was making about 4000/month teaching for a grant. This is way more money than he would ever make doing anything else. He has a spotty work history, and no education about his GED. We are looking into schools for the Fall, but for now, I am freaking out.

We have about 30k in credit card debt, 162k mortgage, 20k in student loan, 10k in personal debt. No car loans. One kid in daycare and one kid in private school (pd for with tax refund). I only make 30k a year with a Bachelor's.

Our house note is 1498.31. We cannot afford this any longer. Should we sell our house even if we take a loss?

Michelle Singletary: Wait. Calm down.

Don't make any decisions yet.

You need to really look over all your finances. And your husband needs to look for employment, whatever he can get to help out.

Also find out if he qualifies for unemployment.

I don't know where you live but right now isn't the best time to try and sell a home. And honestly with your family size paying $1,400 for a mortgage is reasonable.

What's not reasonable obviously is all the debt.

So here's what I want you to do. Go to www.debtadvice.org

Talk to a counselor to help you get on a budget and see about getting on a payment plan for that credit card and personal debt. I also hope you are NOT using the cards anymore.

You may be able to work thu this without getting rid of the home. You just need a plan for the debt and your husband has to bring in some income.

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Boston, Mass.: I have been following your advice since I "found" you in 2001. I was living paycheck to paycheck. I have in that amount of time paid off my small credit card amount and 2 car loans(sold both cars),paid off college loansand have 6 months savings, a life happens fund, am saving for a new car and for travel,put 20 percent down for a housen invest in 401k and this month started saving in mutual funds for retirement. I'm 36. My savings started small and has gotten bigger since I got married. It was hard but has gotten easier. I take the money out before i even see it. Only thing I need to do is stop using thr credit card. I do spend more that way i've noticied. Though we pay it off every month. I just wanted to say thank you. It is possible with determination and hard work and looking to your column when I'm feeling down.

Michelle Singletary: Oh my, thank you so much for that great testimony.

And you know it was ALL you right?

I just showed you the path. It was you who chose to go down the path.

And if you are ever feeling down, just look from where you've come. In this case looking back should give you encouragement to look forward.

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Baltimore, MD: Michelle, I have been mulling over your recent column on the real costs of credit cards. I'm one of those "free riders" who has been getting a good deal -- I pay off the bill every month, have a no-annual-fee card, so I basically take advantage of the free float.

But I'm not really a free rider: the credit card still gets paid by the merchant every time I buy something. And the card that gives me $$ back (AmEx) also charges the merchant more $$ per transaction.

Now, clearly, that 2-3 percent isn't what was fueling the explosive growth within the credit card industry over the past two decades. But 20 years ago, those same credit card companies considered it enough to pay their bills and justify keeping me as a cardholder. And, btw, my cards back then didn't have annual fees, either.

So I suspect that the "solution" here has to be joint. Yes, I expect to have some of my benefits rolled back -- it will be harder to find cards with freebies, more cards will go back to charging annual fees, etc. But I also think the credit card companies need to dial back their exorbitant profit expectations. If they try to find ways to transfer the same profit expectations onto the backs of their "good" customers, I'm going to drop them like a hot potato. And there goes that steady stream of 2-3% income.

Michelle Singletary: You make some good points.

Interesting since I wrote that column all the nasty notes I've received for pointing out that folks like yourself are not the cash cows but others less fortunate. It's not a situation I created.

Also I've heard from some merchants who aren't too happy about the fees THEY pay either.

And yet we all still play in this game.

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Falls Church, Va.: Michelle,

My husband and I disagree about how best to save for things now that we have one full year of net pay in our emergency account. I would like multiple "savings funds' dedicated to specific items such as a vacation or big-ticket purchase. He wants all savings lumped together in a single account -- even the emergency savings. To be fair, he administers all of our money so he understandably does not want more accounts to manage and track. But I find it so much easier and more satisfying to save when I can see the dedicated funds building.

Michelle Singletary: Um....he's doing the bookkeeping and you want more work for him :)

I would defer to hubby on this one. And I say that knowing I'm like you. I like having different pots.

So how about a compromise. Keep the emergency money separate from other savings (it's what I do) and lump the other savings together.

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Atlanta, Ga.: I have approx $20K in retirement funds from previous employers that I have been letting sit.

I realize that I would be penalized for withdrawing it but I also have an opportunity to purchase some real estate with built in equity at a bargain price. I believe the real estate market will come back and that my return on that investment will be many times what I could earn in those 40lK accounts. I am currently 52 and trying to plan for my retirement.

Is there a way to set up a real estate investment as a retirement item and avoid being penalized?

Michelle Singletary: Nope. You take out the money and you pay taxes on it.

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Anonymous: Hello. My name is Clare. I would ask what if I save my lunch money everyday. Will that look weird to others around me working together at the office ? I just want to save a small money and a half hour time for working. I have no problem in not eating lunch because I bring some snack with me and I eat two meals a little later and a little early.

The other question is that what I can do with this small savings ? I mean how I can make this small saved money to big.

Thank you.

Michelle Singletary: Clare, what are you saving the money for?

I am a BIG believer in saving but for a purpose. Not sure I like the idea of you skipping lunch for savings.

If you bring your lunch and you are saving for a reason then no it's not weird. And if anyone ask why you aren't going to lunch you can say I'm saving for xxx. Or say nothing or that you just want to get more work done.

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Reston, Va.: Over the past several weeks I have received the following:

1. mailings detailing increases in fees and charges with a bank and credit union - including charges for mailing monthly printed statements.

2. mailing notifying increased mgmt fees for retirement account... it seems likely my total will actually decrease from month to month since earnings won't cover fees.

3. mailing from homeowner's insurance stating that standard items of coverage will be reduced, but I can purchase those items separately.... Meanwhile the basic policy has increased in price.

Is this happening pretty much across the board to everyone these days?

Michelle Singletary: Yup!!!!

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Chicago, Ill.: I recently paid off some outstanding debts that had been sent to collection agencies. I now make payments on just my car and student loans, plus my car insurance, all of which are done on time. I have no credit card. How long will it take before I can expect to see a change in my credit rating? Six months, a year? Is there anything else I can do to help improve my rating, other than paying down my debts and making those payments on time?

Michelle Singletary: You should see improvement in your credit score in a few months. But the system is so secret noone knows for sure.

The best thing going forward is to pay your bills on time.

In a year at the most you should see major improvement.

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Anonymous: More of a comment. You advocate having only one checking account per family, share everything. It is a beautiful thought, and I and my husband of double-digit years had just that. We never had money troubles, money related misunderstandings, anything of that sort. We were a very good couple. Then he left me. And emptied the checking account when he did. I was left with bills and scheduled payments that required me to empty my 401K. Had I had 20K put aside on my own name, I would have had time to pick up and move on, financially. I did not. And I think that it would be wise to advocate the women to have a personal savings account with a reasonable money for marriage-emergencies.

Michelle Singletary: I'm sorry you married a louse.

But are you saying you had $20,000 in your personal checking account?

The fact is the advice still applies. I bet you would have still been in financial trouble even if you had that account on the side.

I don't like teaching people to live for failure. Rather I teach couples be be better couples.

Honestly wouldn't you say things didn't go bad in a day. So having that separate account wouldn't have protected you from a failed marriage and a louse who ran off with both your funds.

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At the Beach, NC: We have an emergency fund, cash for upcoming tuition bills, etc. in a money market at a credit union paying 2.02 APY, as well as assorted CDs. Additionally there is a bit of cash in a second money market associated with our brokerage account which is paying 0.03 APR! Not 3% but 0.03%!!!!

Two questions: Is this the best we can do in these times with money we do not wish to risk? Secondly, what is with this brokerage account? Is this the norm at the moment?

Love your column, Tightwad Mom

Michelle Singletary: Are you on vacation and chatting with me?

If so, so very cool.

I'm afraid savings and money markets are paying a pitiful amount these days. You can eek out a bit more by shopping around (go to www.bankrate.com) but it is a sign of the times for saving type accounts.

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Washington, D.C.: I've been laid off from my job for 4 months now. I've applied to jobs, went to job fairs, headhunters, and networking with people who are currently working. Still nothing right now. I have a bachelors degree and have even thought about getting a masters but not until I can save or get tuition assistance once I've gained employment. I don't want to go into anymore student loan debt. I know that things will turn around eventually.

I am in good health, I've moved back home, have a roof over my head, and food to eat. In spite of my circumstances, for this I am thankful.

I write this to say to all Be Encouraged, things will get better!!!

Michelle Singletary: Oh thank you. What a wonderful note of encouragement.

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KY: I'm a 49-year-old female and just divorced after 28 years of marriage. I will receive a relatively small amount of cash from the settlement ($15,000). I earn $39,000 yearly. Should I save the $15,000 and rent, or should I put the cash towards purchase of condo?

Thanks

Michelle Singletary: It depends on whether you have any other money.

You should have an emergency fund and what I call a life happens fund (for the things in life that happen such as major car repairs), not other debt (except a car maybe) before buying the condo.

Why don't you spend at least six months renting and seeing how you manage on your own with just your salary.

Then if you have a good savings cushion as I mentioned above you can start looking around to see what you can afford to buy.

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nutrition is important: Skip going out for expensive, high calorie lucches that eat up you entire lunch time. But don't skip eating, that's not healthy. Pack yourself a healthful lunch and tell peolpe you're taking a more healthy approach to your diet and finances. Use the extra 15 min to walk around the block and clear your head. I would say, try to go out with the gang once a month or so for the sake of networking, career advancement.

Michelle Singletary: Good advice. Thanks.

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Out West: Hi Michelle, LOVE chats! Quick question, what are your rules of thumb for considering a refinance? My lender called me out of the blue this week to offer me a refinance and I'm cynical. Thoughts?

Michelle Singletary: Thanks.

And do the refinance ONLY if it makes financial sense such as:

-- you can save a lot every month

-- you can recoup the cost of refinancing soon

-- you don't reset a mortgage you've been paying on for awhile. Why refinance if you're 5 or 6 or 10 years into your mortgage.

Just be sure to do your homework and pay attention to the costs. Many people just focus on the monthly savings. Don't do that. If you cost you thousands of dollars and it takes several years to recoup that and you don't think you will be in the house that long OR you are already far along in your mortgage, it may not be worth it.

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Washington, D.C.: Michelle: no question but a testimonial; love, love your advice and have followed it for some time. Well, all that saving paid off. Yesterday I was furloughed - working only three days a week instead of five for the month of June. Still have a job and will be able to make all the bills. I have 16 months of living expenses saved up and no debt. Having been laid off twice in 2007 I vowed never to be that scared again! Thanks, your advise really does help the regular Joe and Jane's out here.

Michelle Singletary: Thank you!

So glad you have a cushion.

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Philadelphia, Pa.: Hi Michelle! Do you know where I can find information about the IRS tax credit for a house purchased in 2008 but with a certificate of occupancy in 2009? irs.gov doesn't seem to address this situation in the frequently asked questions or other information on the two credits. We purchased our first home on December 19, 2008, but didn't take the $7,500 loan (in part thanks to your good advice). However, we just recently moved in after doing major construction so our certificate of occupancy is from 2009. If we are eligible, we would like to take the $8,000 credit. Thanks for your help and for all of your good work!

Michelle Singletary: When did you "close" on the house?

If you closed in 2008 you can't take the $8,000 credit.

Here's a link on the IRS Web site that may answer your question

http://www.irs.gov/newsroom/article/0,,id=206294,00.html

Q: A qualifying taxpayer bought a home in August 2008 that needed a lot of work before occupying. They finished the renovations and moved in the home in January 2009. Can they claim the $8,000, since they did not occupy the home until 2009?

A. No. Taxpayers who purchase an existing home and renovate the property before moving in are eligible for the first-time homebuyer credit based on the date of purchase, not the date of occupancy.

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Houston, TX: My husband and I have spent several years focused on paying down debt, building up emergency savings, life happens fund and baby savings (due this summer). We are down to the mortgage and have completed our savings goals. We're in our mid-30s and my husband has never put anything away for retirement (I have a pension and small 401k). Our intent was to put all of the money we had been putting towards debt towards retirement, but my husband is really miserable in his job and is thinking of going to grad school next year to change careers. Our plan is to have him work part time to cover tuition and daycare, but I'm wondering if it would be a better idea to take the money we were going to put towards retirement and save up his two years of tuition. It would probably take 6-8 months to save up the full amount. We would not be able to save anything towards retirement outside of what I contribute to my pension while he is in school. Thoughts?

Michelle Singletary: Save for grad school. And if you can save for grad school and start contributing to retirement all the better.

You are doing so well, don't go into debt now especially with a baby on the way. What if you decide you want to stay home with the kid or God forbid you the baby has health issues or you get health issues (I did with all three of my kids).

I say save for the grad school. I know it may be tough for your hubby now in a job he's not liking but again with a baby coming, and in this economy better to be safe than sorry.

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Washington, D.C.: My employer just informed us that they will be suspending our 401(k) match. I am (and my husband too) are already contributing more than the match at both of our places of employment. Losing the match is really bugging me. Realistically I tell myself that it isn't that much money and is only supposed to be temporary. Obviously being employed is what is most important. The ironic part is that I still got a 3% raise at the beginning of last month. I had dedicated that amount to paying off credit card debt (the only one I have). Should I opt to increase my 401(k) percentage instead?

Michelle Singletary: Pay off the debt first.

Then if you have an emergency fund AND life happens fund and you think you need to boost your retirement savings you could invest more.

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St. Louis, Mo.: Michelle, when I renewed my homeowners insurance this year, my premium was almost doubled. When I asked why, I wasn't given an adequate explanation. I've never had a claim and my credit is actually better now then when I bought my house 3 years ago. I shopped around, though was able to get a lower rate, not by much. Does this have to do with foreclosure rates in certain areas?

Michelle Singletary: That's interesting but not sure it's connected to foreclosure rate.

Just another sign of the times. Insurance companies are depending on stock market returns too so could be the hike is connected to more that they are losing money elsewhere and making it up with higher premiums.

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Washington, D.C.: Dear Michelle: Gail Collins recently noted in one of her columns that while Congress was patting itself on the back for restricting credit cards aimed at college students, they didn't seem at all concerned about the amount of debt students take on to get an education. I thought it was an excellent point and wonder when people will really start to get real about solving the problem of attaining higher education at reasonable costs. I worked my way through college 20 years ago and frankly don't think I would be able to do it today because grant aid has fallen and costs have escalated.

Michelle Singletary: Very good point.

As many of you know I discourage a lot of borrowing (if any) for college.

But you are right we must address this issue otherwise only the very rich will be able to obtain a degree without debt that they take to their grave.

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New York, N.Y.: I'm 31 and after having massive credit card debt for about 6 years I have finally paid off every penny that owe anyone. I have about one month worth of funds in savings and I want to continue to save so that I eventually have enough for a downpayment on a home. What are some tips you have for those of us trying to save money? Also, it feels overwhelming, like by the time I have saved enough for a downpayment the real estate prices will skyrocket again and I'll never be able to afford a home. It makes me feel like a failure because I don't own my home while almost all my friends do (most have 2 income homes, which would also help some).

Michelle Singletary: The biggest tip is just to stay on point.

You have a goal and that's the best way to save, with a plan in mind.

Nobody knows where housing prices will be tomorrow let alone in a few years. So don't let that worry rush you into buying a home you can't yet afford.

Take your time, save like you've been doing.

And my friend you are looking at your friends from the outside. You have no idea how they may be struggling to own those homes. Trust me after looking at people's budgets for years you would be shocked to see how others live.

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Deltona, Fla.: Life certainly has gotten more difficult in the past 10 years, in fact for my wife and I it comes close to being like when we were first married and living on the pay of a young sailor. The income was fixed with only the hope that we get a good cost of living increase or I could earn a promotion. The "good" cost of living increase seldom if ever occurred. The promotion was not easily earned but they did come.

Now some 40+ years later we are both disabled and again living on a fixed income, SSDI and my military retirement, since early 2001. The cost of everything has been rapidly going up while the value of our major asset, our home is rapidly declining. With the rapid increase in the cost of almost every item our already stretched budget is threatening to break. Adding insult to injury one might say is the fact that the utility companies all want major increases in the amount they are allowed to charge, the local and state governments are in a bind because of a amendment to the state constitution concerning how much of an increase in property taxes may be levied so the various levels of government have become "creative" in methods of raising income. The prime method to raise income used by all levels of government is, of course, to increase the taxes that the utility companies are charged and which are passed almost directly to the home owners or renters. This has a much more direct impact on those who can least afford this new tax, those on fixed incomes and those close to living in poverty. Meanwhile the people who worked to ensure that there was this constitutional limit placed on increases of property taxes, meaning the well to do and those who we call "snow birds" are enjoying the fruits of their labors in limited property tax increases.

My question after a LOT of history and complaint then is how to stretch even more the already strained budget we currently work within. We shop mostly at either Walmart or a membership store where one purchases items or food in near bulk levels and in return pay considerably less for meats, other foods and health products. We seldom go out to eat or to other entertainment since we both became disabled. Our use of our automobile is limited, driving less than 5,000 miles/year now but we must keep the car since public transportation is severely limited. Our one "big" entertainment expense is the bill for combination cable T.V., telephone service, and internet connection. We could go back to using a dial up internet connection but that would also require that we go back to using the telephone company to provide phone service at a much higher cost than what is charged by the current provider. Have you any suggestions which we might consider short of turning the cable off?

Michelle Singletary: Wow, sounds like you are penny pinching as much as you can.

I wish I have more tips for you (maybe cutting back to just basic cable could shave $20 or $30) but all I can say is keep doing what you're doing.

If you have a home you could consider taking in a boarder to help. Maybe a college student, someone who has lost their home in this crisis.

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Albany, N.Y.: Charge cards (not credit cards) were invented to solve a couple of problems. Most merchants liked the idea because they got paid in full right away and didn't have to maintain a billing department. Some merchants didn't take checks, especially for small transactions, and they liked that charge cards solved some of their banking problems. Consumers liked charge cards precisely for the reason that they could shop at places that didn't take checks. And it also improved safety, because merchants could keep less cash in the till and because people didn't have to carry cash or checks. Of course, banks didn't really buy into the system until they figured out they could convert charge cards into credit cards.

I understand that debt is a bigger problem in our country today than crime, but it seems to me that we are addressing this problem without also tending to the other needs I mentioned. I'd rather see support for some kind of universal charge card or fee-free debit card, rather than shifting costs onto consumers who happen to use their credit cards as charge cards.

Michelle Singletary: Amen.

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Washington, D.C.: Hi Michelle! My child will be going to college in 4 years and I do not have anything saved for her college education. Help! Where do I start?

Michelle Singletary: Start saving something, anything.

And start thinking about what you can afford. Maybe she can stay home and attend community college for a few years and then transfer.

Scholarships, grants, working while in school going part-time.

You still have some choices that don't involved going deeply into debt.

Start now exploring the various options, including a good long conversation with your child about what you can afford.

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Washington, D.C.: Hi Michele, my husband has agreed that I spare head the finances. But how can I present a successful spending,saving and bill paying plan without the hassel? He likes to spend and I like to save. Any suggestions? thank you

Mia

Michelle Singletary: You've gotten off to a good start. You will be the treasurer since you handle the money better.

So know come up wit a plan for each of you to have some spending money. And agree that you won't spend more.

That way he can spend without you looking over his shoulders.

Get my book, "Your Money and Your Man." I have a ton of tips and strategies to do this.

The best thing is that you are talking about it. That's more than many couples.

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save or pay down?: I'm new to your columns but looking forward to learning. Spouse and I have a lot of debt. Does it make more sense to try and save a little or to pay down debt? We also have a baby.

Michelle Singletary: Well congrats on the new addition.

So save and pay down debt. If you don't save, if you get into a financial bind you'll end up using credit again.

So sit down and look over your expenses. Do a budget and see where you can cut to find money to save and pay down your debt.

If for example you can find an $100 a month, put part of it in saving and part toward paying down your debts.

Also, I would list your debts starting with the ones with the lowest balance. That will give you a boost to pay them off quickly.

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Bethesda, Md.: Hello Michelle

I'm a government employee and I've been offered a job in NY paying 5,000 more than I make now. The problem is I don't have any savings and my credit not that great. Would love to live in NY but should I get things straight first then consider moving later.

Michelle Singletary: New York vs Maryland and cost of living.

Slam dunk for Maryland.

If that $5,000 is gross I wouldn't move for that. By the time you take out taxes the difference in pay isn't that great while the cost of living would be.

I would probably stay put and concentrate on getting rid of the debt and building up my savings.

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Multiple Savings Funds: Hi Michelle, I hope I'm not too late. I know you talk about having the nest egg, what if, life happens funds, and I'm a little lost on how to fund all of these. My husband and I put about $5000 into a life happens fund and have started contributing more monthly to the what if fund (should one of us become unemployed). My question is, since it will take YEARS to fully fund that, or so it seems, how can I go about putting aside some money for other stuff, like a vacation?

Michelle Singletary: You can do it.

Let's say you have $100 extra every month and you are building up your emergency fund.

Take $50 and put in the emergency fund and $50 toward the vacation.

When I tell people to have these funds I don't expect them to have them tomorrow. It's just important that you are moving in the direction of building them up.

Just takes time and patience. That's all.

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Arlington, Va.: Dear Michelle,

Love your columns and advice! Keep up the great work!

I began thinking about this crises and how largely, President Obama has not spoken to the public about what WE can do to help. Bush might have been way off with the encouragement to go shopping after 9/11, but the message "Don't panic and stop everything you do" was important.

Obama is such a wonderful orator and the public is still largely enamored with him. Why doesn't he implore the American public to: 1) To make(even if underwater) every effort to stay in their homes and make mortgage payments (using assistance as necessary), 2) Pay off debts responsibly and honoring commitments, 3)Help their family and neighbors in a prudent but charitable manner, 4) Break the cycle of debt and so forth? I think the people are hungry for the "only thing to fear is fear itself" reassurance, but he's been largely silent.

You are doing a great job of getting these messages out there - you could write the speech for him!

Michelle Singletary: Thanks.

And I do think President Obama has said everything you outlined perhaps not in a nice and neat package like I get to do every week in my columns and eletter and on this chat.

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Boulder, Colo.: No question, just a comment about how backwards the financing/credit system is. About 5 years ago I became a Michelle/Big Mama disciple...I was living paycheck to paycheck, had debts and no money. Well, I started saving, paid off my debts, started with a secured credit card to rebuild my credit, bought an old car with CASH, etc, etc. 5 years later I am debt-free, have lots of savings (emergency, life happens, etc), a stable job, and decided to purchase a new car and give my niece my old car so she can get back & forth to college.

Because I have been doing the right thing, I have a "thin" credit report - only one item on it - my credit card that I pay off monthly. As a result lenders weren't willing to give me a really good finance rate. It's so backwards. The girl at the dealership even told me that if I had tons of bills that I paid late I'd get a better rate!! And one of the only reasons I'm financing part of the car is to boost that credit report when it comes to buy a house.

It was a frustrating process getting dinged for not having any debt! No wonder this country is in the mess it is!

Michelle Singletary: Yes, no wonder.

It is folks like yourself and others who haven't gotten into debt that should get the best rates.

It is why we are so messed up and broke.

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The person who bought down their mortgage..: remember who you were talking to - a MORTAGAGE BROKER - who makes money off each mortgage, so refinancing benefits him, not you. And anyone who would call someone, especially someone they just met, and idiot - well, let's just say who the idiot really is. And a rude idiot at that. The house buyer - you go girl - thinking about your future finances is always smart, don't apologize to anyone, much less a rude jerk, for that

Michelle Singletary: Amen!

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Why lowest balance?: Why do you advise people to pay the debt with the lowest balance first? It does them much more good to pay the one with the highest interext rate.

Michelle Singletary: I've been helping people get out of debt for YEARS.

In my practical experience people who pay off little debts first get charged up and end up paying off their debts faster when they see progress.

That's why I said what I said. Experience.

I know the math works the other way around but if people were rational, they wouldn't be in debt in the first place!

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Washington, D.C.: So I am one of those dummies who held on to GM stock. Now I am stuck with something utterly worthless (I shudder to think of what I bought it at). If I sell it now (and there's someone out there actually willing to risk buying it - after reading your column, I wouldn't), is that the only way to claim the loss on my taxes? I have some other stocks I am selling on which I will make a small but reasonable profit. I plan to reinvest the money more carefully (got myself an independent fee-only financial planner), but I think taking the loss would help with the taxes next year.

Thanks for your good advice.

washingtonpost.com: GM Stock Looks Like a Bargain, but It's a Real Gamble (Color of Money, June 4)

Michelle Singletary: I'm so sorry for you. Really.

You can also check with the IRS or a tax professional about the best way to offset the worthless stock with a gain.

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save or pay down - Yes, both: I can attest that it is better to do both. I started with saving about $50/month, now I'm up to $200. Last month my dog needed surgery on his leg, I was able to find a vet that did it for $700 less than what my vet wanted to charge and I had the money to pay for it.

Michelle Singletary: That's what I'm saying.

Good for you!

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For NY, NY: You're not a failure. I'm 32 and have been renting for 9 years. Two years ago, when I got my act together and started to save money for emergencies, major purchases, etc, I was told by a financial analyst that I should make my investment portfolio complete by buying real estate. I knew I couldn't afford it on my income. I'm really glad I followed my instincts. Plus I don't have to pay to fix things...

Michelle Singletary: Right, you are not a failure if you rent.

Thanks.

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Washington, DC: To the NC Beach vacationing Mom: I concur w/Michelle's idea of visiting bankrate.com. Also, consider saving your money w/ING Direct, which is easy to do, has no minimum initial investments, no fees and great rates. I know I sound like a shill, but I've had ING for over 6 years, and lots of my life happens funds are with them. Good luck!

Michelle Singletary: Thanks for passing this along.

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Washington, D.C.: Hi Michelle. I hope you can help. My mother-in-law divorced her husband a few years ago, has little money and no job skills, bought a home and recently determined she could no longer afford the payment. She put the home on the market, and with a buyer lined up, signed a lease to move into an apartment. The day before closing, the seller backed out. Now she's worried the home will go into foreclosure, as she cannot afford the house payment and the monthly apartment rent. The realtor is recommending a "short sale." How can we get help for her? My partner and I have very limited real estate experience ourselves, and have no idea who she should talk to for advice about this or just financial matters in general.

Michelle Singletary: I'm not sure there is anything you can do.

The realtor is right her best bet right now is probably a short sale.

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Michelle Singletary: Wow, can't believe the time is up already. So sorry if I didn't get to your question.

But I may get to it in my eletter or column. Check both out.

Thanks again for joining me today.

Take care.

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