Live Q&As

Hi Michelle, Love your advice - always spot on. I keep hearing a local diamond jewelers ad that goes along something like this: "Your heart should dictate when you propose, not your checkbook. If you got the honey, we got the money!" I always think you must be having heart palpitations when you hear that (I hope not!), but really, I think that ad says so much about peoples' mindsets about spending - oh, I want it NOW. I know it would be a long answer, but since I have a toddler - what are the best ways to ensure he doesn't grow up thinking that way? We leave within our means (although if hubby and I are furloughed tomorrow, that will be a damper on things, though we have our 3 months savings), but beyond that, what can we do to raise him to be money-wise?

Hi Michelle, love your chats! I'm 27-years-old and make about $51,000 a year before taxes. Now that I've paid off my car and lowered my car insurance, I'm trying to figure out how best to spend my extra money (about $300-400 a month). Should more money go toward my Roth IRA or pay off my students loans faster? I have a $6,000 private student loan and about $58,000 in a consolidated federal loan. I work for the government, so I am hoping to have the remainder forgiven once I've made 120 payments on the federal loan. I'm already contributing $300 a month to student loans. I just started the Roth IRA and only have about $1200 in it so far and contribute about $200 per month. I have a three month emergency fund and a $1,000 "life happens" fund. Also trying to save for buy a place, but I know that's a longer term goal once I have my loans paid off and more money saved for retirement. How should I best spend my extra money? Many thanks!

A couple weeks ago you took a question about a spouse who can't find work in his field and won't look elsewhere. I have always heard that for someone looking for work, having any job is better than having no job. You makes some money, you prove to prospective employers that you are worth at least something to someone, and you are demonstrating a basic work ethic. On the other hand, when does taking any job look like desperation? If someone with extensive training and experience in a specialized field takes a job as a retail clerk or a taxi driver, does that work against him? Does that signal to prospective employers that there is something wrong with him? Will employers look at an applicant as a potential executive or professional when he is currently slinging coffee? Would you personally hire an experienced reporter or editor who had worked as, say, a bookstore clerk or a house painter for the last two years? When is no job better than any job?

Hi Michelle, How important do you think it is to secure a 20percent down payment when buying your first home, in this market? I've calculated that, if I save $400 a month, it will take 10+ years to save the $50,000 additional (on top of $10,000 in the bank) to get to $60,000 , which is 20 percent of $300,000. I'd like to buy a house before I'm 40, plus I'd like to take advantage of current market conditions!

I am a one income household - my husband is quitting tomorrow with no other job lined up (sore subject in the house). Anyways., I make enough to cover the mortgage and bills (minimum on credit cards) with little left over. We have $2,000 left on a car payment and about $20,000 in credit card debt (I know bad) along with a $3,000 per month mortgage. The car payment is normally $400 per month. Would you take the last paycheck of my husbands to pay off the car this way that additional money from the payment can go to other debt? There's no telling how long he's going to be unemployed which is scarey. My husband thinks we should save that last check in the bank. We have about $9,000 in savings but I want to pay off the car and be done with it, what's your take?

Hi, Michelle -- checking my bank account on line two days ago, I noticed a pending eleven dollar charge from Orbitz that neither my husband nor I made. I notified the bank, and they will dispute the charge when it posts. Last night, someone from Smart Fares.com called me, trying to verify the name of the cardholder who tried to make a reservation on their site. He gave me the name (unknown to me) and recited the last four digits of my card (still in my possession). I told him that someone was trying to use my number fraudulently. I also called the bank to report the phone call. My card has been canceled and another is being reissued. My questions: Is there anything else I need to do? And how could this have happened? Could the cause be all the on-line shopping I did for Christmas? I'm worried now about shopping on line.

Michelle, for my Christmas present, can you please get my wife to stop working? We both retired from high-paying government jobs under the old Civil Service Retirement system, and have high five figure pensions. We sold the house we bought many years ago in Bethesda for $130,000 for $800,000, and used the proceeds to buy fully paid for houses in Naples, FL and Maine. We have no children or needy relatives to support. We have enough money to travel, attend cultural events, and donate generously to charity. After all, isn't that why we worked so hard all these years? However, my wife now has a second career as a free-lance editor, ad she can't seem to let it go. She's continually taking on new assignments, causing her to work late nights and even skip events for which we have tickets. I'm afraid we're destined to live largely separate lives, but am hoping she might listen to you if you told her to cut back. Can you help? Thank you very much.

I bounght a house in 2008, so before the full on melt down, and I had no trouble getting a loan with my 10 percent down. A few things that were in my favor: the 10 percent was in cash in my savings account, and a review of the past year's bank records showed that I had steadily built it up--in other words, it wasn't a gift; a credit score of 800; and not buying at the top of my 'approved price range', which was 3.5 times my annual salary! Michelle's advice is exactly right--look at what your monthly payment will be (make sure that amount includes taxes and Homeowner's Insurance) and figure out your mortgage amount from there.

When you have a mortgage and have to pay PMI, what happens when you have paid enough in that the PMI is no longer required? Do you keep paying the same amount with the former PMI figure going to the principal? Or do you get a reduced mortgage payment because the PMI is no longer required? Do you get a choice in the matter? Personally, I would rather keep making the current payment to get the principal paid off sooner. Thanks!

Regarding the cleverness of credit card thieves: It has long been a problem that someone in a restaurant or store might copy a credit card number or even use a pocket scanner to record it. I was told recently that the latest scam is to use a cell phone to photograph the card: In two clicks you've got both sides of the card, and it doesn't set off any alarm bells to see someone with a phone in his hand. Never let your card out of your sight.

I have a collection that appears on my credit report from a hospital stay in 2006. I have documentation to prove that the bill should be paid by my insurance company and not by me and have sent that documentation to the hospital's billing people. I have disputed the charge with all three credit reporting agencies and sent them that same documentation, and yet it remains on my report. The collections agency has never contacted me to pay the bill; it is under $200. Do you think this will negatively affect my credit history? And how can I get this off my report? I plan to purchase a house in the next six months and am trying to get all my finances in order before beginning that process.

Hi Michelle, I wrote you a couple of months ago about my fiance and I. We are getting married soon and we have discussed financial matters in the past couple of months. I want to say this: it was one of the hardest discussions I've had. Money has been a contentious issue in my family, and I was afraid to have the conversation. With him, no one combines finances with their spouses. It took a lot of talking and I will say, crying and arguing too. Now, he can't believe how great it's working out financially since we have agreed on a budget, how to combine assets, etc. We each have our own ideas about money but we work it out. I'm so glad we had this conversation before the marriage. No question here but just wanted to support you. Thanks!

I am trying to pay down a $5,000.00 loan. I have been making payments on it each payday instead of just once per month to try to speed things along. Well, I thought that my "extra" payments would be applied to the principal balance with no interest taken out, but I was wrong. When I contacted my Credit Union because the balance wasn't going down as fast as I thought it should have, the rep told me that the interest that accrued daily would be taken out of the extra payments. I asked him what's the best way to pay the loan off more quickly and he said to add the extra money to the one monthly payment instead of making two payments each month. Is this true? I want to be wise in paying this loan off well prior to the established term. Thank you.

Sometimes, I feel like I am drowning in debt, but I don't know why. We make a "comfortable income" of $60,000- $80,000, depending on overtime worked. We have three kids. We also have a few debts, but they are large ($500 for a truck payment; $300 for college loan repayment, $300 in loan repayments, $300 for a credit card-we no longer use it EVER, but we do have to pay it off), childcare (only one of our children is in school), then utilities and groceries, our mortgage, etc. My husband has tried to refinance the truck loan but he is repeatedly turned down because of his credit score.Please help us. It feels like we are on a ferris wheel that just continues to go 'round and 'round. What should we do? Where should we start? I am lining up items to sell online to get us started. We are just tired. We know we have to dig out of this mess somehow. The sooner, the better. Thanks!

Michelle- after saving up for years, I finally bought my first house this week! Now that my savings goal has changed from "house down payment" to "furniture/decorating/maintenance" fund, I'm having a hard time figuring out just what my budget is for all of that. I have not debt, $5,000 in my Life Happens fund, $10,000 in my emergency fund, and another $6,000 in savings which I was going to use to buy my furniture, get the floors refinished, replace the broken dishwasher, etc. But I'm scared of pulling the trigger and wiping out that $6,000! How do I know when I have "enough" saved to spend it on that stuff?

Hi Michelle, I'm starting grad school part time in January and have saved up enough cash to cover all my expenses for both years I'll be in school. I'll still be working full time while I go to school too. This will take a significant chunk of money out of my savings but I'll still have more than six months of living expenses saved up. I have no other debts and a stable job. My masters will be well worth it in the end, I work in science where a BS really only gets you so far and I've now hit that ceiling. And in all honesty, I'm excited to go back to school. I just feel like I'm going to have a panic attack when I think about taking that money out of my savings. How the heck do I get past this? I have to write my first tuition check here soon.

Contact you bank's fraud prevention/detection department. Most banks and credit lenders have such departments specifically to handle issues like this. Nowadays, many banks will look over the history of when you called, what your spending patterns are and talk to you to try to determine when charges are fraudulent and when they are real. For every forgiven fraudulent fee, the lender has to eat those costs because they can't get the costs back from the vendor. So, fraud prevention/detection departments try to hunt down the perpetrator and attempt to sue to get the money back. They are the ones that you should contact and they should talk to you about recent history of use which may help to track down where and when the theft occurred. Sometimes it is impossible to track down the perpetrator, but if it is possible, your bank has a vested interest and far more significant resources than you to track down the thief.

But of course your heart should determine when you propose. And your checkbook (and not your credit limit) should determine the size of the bling. Or not. Happily married without a diamond.

Another testimony: I just bought a house and paid 15 percent. In addition, I paid $2,000 to pay the mortgage insurance up front and saved a lot on the amount/interest that would have otherwise been added to each payment. Not necessarily what you will do, but just wanted to let you know that I too freaked about having 20 percentuntil I actually met with my mortgage company and realized there are plenty of alternatives.