Live Q&As

This is a tough one. On the one hand, I'm very worried about your only having $60,000 in savings. Paying off your own would make you house rich but cash poor.

But if you have a stable job and you truly capture that $350 a month in savings by refinancing, I would pay off the house.

However, work your buns off to rebuild that savings. Could your husband get a job to bring in some income while you wait for his pension to kick in? If so, you could quickly rebuild your savings over the next two years.

Can I give you some hope? You are still fairly young. And if you stay healthy, you could work another 10 years or so to catch up on your savings. Once you pay off your debts, take the money you were using for that burdent and save some and invest some. You can do this because I have seen others do it.

You've already done the hardest thing and that's recognizing you had to do something.

I used to cover bankruptcy so I've talked to a lot of people going through the process. And I didn't meet one who didn't feel bad about having to declare that couldn't pay their bills. 

Generally, I do try to get people to do what it takes to avoid filing for bankruptcy but sometimes it is appropriate if you just don't have the money and won't have it, especially because of a job loss or illness.

So don't be so hard on yourself. You did a lot of things right. As for what gets wiped away, all unsecured consumer debt. That means if you include in your filing all your credit card debt it gets wiped out. But generally the credit card company, not your landlord takes. There are some rules about running up debt before filing so ask your bankruptcy attorney about that (and you should get one).

I'm actually relieved that you feel bad, because that means you care that someone won't get paid. But we have a bankruptcy system to allow people to get a fresh start. It's unfortunate for the businesses but it is the cost of doing business. 

I tried one of the credit monitoring services and found it didn't really help that much. Monitoring only tells you something after it's been done to your credit. Other programs offer to help clear things up if you become a victim of identity theft. So there is still little upfront protection. It's like insurance. You hate paying for it but glad it's there when you need it. But generally, I don't think most people need any of it. You can put fraud alerts on your credit files and you can be sure to get your reports once every 12 months to protect yourself (go to www.annualcreditreport.com and only that site). 

I think you can do this alone by being proactive yourself.

Thank you. Did you take the advice? What happened? 

By the way, lots of folks took me to task for recommending that you help the relatives who had not been good money managers and therefore didn't have the resources to help themselves after the storm.

But I believe in compassion. 

Be grateful. It's really that simple. 

What is intended for you is intended for you. What was intended for your sister was intended for her.

I tell my kids all the time life isn't fair. They are constantly bickering that I do more for one than the other or somebody got a bigger slice of the pie or whatever. As a parent you look to see who needs what and give it. Maybe she was spending too much and your parents wanted to be sure she didn't end up in debt. 

You are getting $2,000, which sounds like more than you need. I understand your hurt, but you are still receiving. 

Until you have that new job and your financial life is back to truly being stable, I would bank the money. Don't worry about how much interest you are getting. The job market is crazy right now and I've known people who were SURE they would find another good job and it took them 12 to 18 months to find an equally good paying job. Better to plan for the worse and hope for the best. Just save the money until you know for sure you won't need it. Then you can talk to an advisor (and you can call and do planning over the phone) about how to best invest the extra funds.

Oh you are so on my street right now. We are exactly facing this situation. My daughter has applied to 4 schools (two in-state, two out-of-state). Part of me hopes she will choose to go to University of Maryland, College Park, where both her parents graduated from and is about 30 minutes from our home. But she of course wants to go out of state. I really, really don't want her to overspend for undegraduate when I know she had to go to graduate school (she wants to be an educator). So my husband and I have been constantly talking to her about how to leverage the savings that we have. If she doesn't overspend for undergraduate by going out of state (assuming she doesn't get any scholarship money) she can keep whatever money if left over and use it for graudate school. It's a hard sell. But you know what? We are the parents and we have a say in this big time and we will continue to have that say pushing her in the direction we think is financially better (like staying close to home will save in traveling costs, etc.)

Pay your bills on time. That has the biggest impact on increasing your score.

And don't be in a rush to return to credit anyway. It's a trap, a monkey on your back.

I hear you but the truth is also that many people can't and don't work into their 70s because of health reasons. So it is not a myth to make people realistic about how long they might be able to work or even want to work at a grinding 9 top 5 job. I actually am an advocate for continuing to work but at something you like, is fun and not taxing. I don't expect I will ever "retire." But I hope to one day get away from all these deadlines that stress me out.

It concerns me because what if the wife can't work anymore? What if they still have a morgage, which many seniors do these days. And I don't know how large the pension is? Is it enough, often it isn't to cover retirement expenses. 

There is a difference between an emergency fund and retirment assetts to supplement what typically is small pensions and Social Security. Go to www.choosetosave.org and do the retirement calculaor. For many $60,000 would be woefully not enough.

I would get rid of the rest of the student loan debt before buying a home. Then you would have some of that room you are worried about. Also, you need to save not just the money for a downpayment, closing costs, but a nice starting emergency fund (based on the projected new mortgage payment). The right time to buy a home is when you can afford it. And for me that's when you don't have $35,000 still in student loan debt. Don't be in a rush. It will happen and if you do it without the debt load, you will feel so much better and secure.

I think you did the right thing. And you will be rewarded for your compassion.