Live Q&As

I always love starting off the chat with a testimony. And boy is this a testimony. 

So proud of you. And in 6 months! Glorious.

When you write that last check let us know so we can rejoice with you. 

I get this question a lot. The life happens fund is one in which you will be constantly putting in and pulling out money.

So to determine how much to put in there think about about large expenses you might have outside your typical monthly budget. For example:

-- Your car is a hoopty and you are pretty sure you are going to have some big repair bills to keep it running as long as you can. Then aim to keep from $500 to $1,000 for car repairs.

-- You are planning a big vacation. Put the savings for that in the life happens fund.

-- You know you need some home improvements and are saving up for it.

See what I mean?

Thank you so much for such a lovely and kind response to a question from last week about a woman whose husband died and left her a $2 million insurance payout.

I agree with all that you said. Get help and good help to make sure the money is uses well.

So you are really asking should you refinance to pull money out to pay for home improvement. That's what I'm getting from your question.

And no I wouldn't. I would save to pay for the home improvements. 

Refinancing rates are good but you have to factor in the cost of refinancing and whether given your pretty good rate if it's worth it. Plus you would be including the extra money in the mortgage paying interest on those funds. 

It's hard for me to tell you which 529 plan works for your family. Here's a website with lots of information to help you choose: www.savingforcollege.com. It's the best one about 529 plans. I will say this, look into the one for your state. Many states offer a tax deduction for investing in your state's plan. Let's what I do. Maryland's plan offers a $2,500 a year deduction for each account. Also pay attention to fees. 

As for your question about her maybe not going to college, you can always transfer the money to another child, relative or even yourself. But let's say there isn't anyone to give the money to or that you want to give it to. It's still your money. But you will have to pay taxes on the returns and a 10 percent penalty for not using the money for qualified education costs. 

You are asking some great questions. Unfortunately, I can't answer because I'm not a financial adviser. These are great questions for a professional with the license, background and experience to help you develop a post retirement financial strategy. Really, the best for you is to find a fee-only planner who can map out exactly where you should take your funds based on your monthly financial needs, age,health and  lifestyle (will you be traveling a lot, visiting grandchildren, moving, etc.)

Ask around for recommendations for an adviser or go to this site www.napfa.org for the National Association of Personal Financial Advisors.

But really what a great problem to have.

It's hard to refinance when you owe more than the current mortgage amount i.e, being underwater.

But I've heard from folks who were in this situation and they just kept shopping around for lenders who may do the deal. So keep shopping around. But realize you may have to bring money to the table or be open to other things to make the loan happen.

Also look into the government's Making Home Affordable program. You may be eligible to refinance through the federal Home Affordable Refinance Program, or HARP. There are of course a lot of caveats but check it out. Here's the site

http://www.makinghomeaffordable.gov

So young and saving. Love it!

If the money you are saving is your emergency fund money and life happens money you don't really have a lot of options. You want to keep these funds safe so you have to live with the low savings rate. You certainly can try to find institutions offering the best of the low rates. Go to bankrate.com for tools to  help in that search.

I feel you pain. Been there. Am there.

Yes, many people have been helped through HAMP. Not as many as some had hoped. So absolutely your mother should apply and see what happens. If she can't qualify or get out of that awful mortgage she may have to sell short or give up the house. If she doesn't quailfy you can help her look for other housing options, renting or bringing in renters if she tries to keep the house.

I would not put your family out on a limb with a bigger house you might not be able to afford. However, you do need to have some serious conversations with your husband and any other siblings if you have any about where you mother might move if she can't afford to live on her own. Could you make room in your home? Could another sibling? Are there nearby apartments she can afford on her retirement income.

Just keep talking to her and helping her explore all options, even ones she might not be comfortable with but don't include you putting your family's finances in jeopardy. 

I would love the picture. Really send it. We could start a trend.

 I can post it on Facebook or Twitter as inspiration for others!

She may need to find another job. Sorry. It's true.

She may also need to consider bringing in a roommate to help with the mortgage expense. But given that she only owes $39,000 that might not be for too long.

I would suggest she take part of the $80,000 and pay off the credit card debt and then encourage her to not use the cards unless she can pay the bill off the next month.

She might also take some of the retirement money and buy the most reliable but least expensive car she can find. 

The point is for her not to have any debt payments other than the mortgage.

Now about that job. If she's healthy she may still be able to find jobs that don't require a degree. I just profile a book in my Color of Money Book Club about jobs for folks over 50.

It's “Great Jobs for Everyone 50+: Finding Work that Keeps You Happy and Healthy . . . and Pays the Bills” by Kerry Hannon, who writes the Great Jobs for Retirees column for AARP.

You can relax by rereading the post in this chat from people worried about parents with no money. 

It's all about perspective. I get that you have a lot on your plate. But hey at least you have a lot to work with namely money, job, support, etc.

So slow down. Having a baby can make you anixous.

Breathe. Right now. Take a deep breath.

Make a list. Figure out what you need to spend money on. Put on paper the tasks  you have to get done financially and one by one work though the tasks on the list.

And remember, as you pointed out, you are blessed.

Push the move back. Become debt free before you move forward.

And really, I would also make sure you have a healthy emergency fund before you move. 

Take your time. Get rid of the debt. Save more. Then move. You will be better off.

I'm so sorry about the furlough but glad you paved the way to be better off when it happens.

Thanks for sharing.

I would use some of that $250,000 to:

-- Pay off the last bit of the mortgage.

-- Take a really nice and long vacation.

Paying off the mortgage will free you from that last bit of bondage. Taking the vacation will get you some of that now enjoyment.

And you are right. You are in the position now to spend a little to live well. 

Once the baby comes you might consider opening a 529 plan. Earlier in the chat I mentioned a good site to find out information about that savings vehicle. 

And no I wouldn't tell me in lieu of gifts, etc. Miss Manners wouldn't approve. But is someone asks what could they get the baby, you then can mentioned the college savings plan.

Exactly.

Thanks.

Bill collectors do what they can to find the people they are trying to wring money out of. 

But I wouldn't pay for an unlisted phone if you don't want to. However I love caller ID. It's not hard to figure out those type of calls.