If you’re worried about your finances in these tough economic times, we can help. We’ve teamed up with the Dallas-Fort Worth Financial Planning Association to offer free financial advice.

Just e-mail your question to moneyhelp@dallasnews.com.

We’ll feature some of the top questions here.

Shashin G. Shah

Shashin G. Shah, CFP, CFA, is the owner of SGS Wealth Management in Dallas. He is a certified financial planner and a chartered financial analyst. He has worked in the investment management field since 1993. Mr. Shashin sits on the FPA Board of Directors for 2009.

Mike Busch

Mike Busch, CFP, CPA, CEBS, is president of Vogel Financial Advisors, LLC. He serves on the Board of Directors of the National Financial Planning Association. He has been recognized by D magazine as one of the “Best Financial Planners in Dallas” and was named to the Aggie 100 – a program which recognizes the 100 fastest-growing Aggie-led businesses in the world. Mr. Busch serves on the board of directors of tne Financial Planning Association and specializes in investments and taxes.

Mark McClanahan

Mark McClanahan, CFP, is a director with Robertson, Griege & Thoele, a fee-based financial planning and wealth management firm. Mr. McClanahan graduated form the University of Kansas in 1982 with a Bachelor of Science and has earned the Certified Financial Planner designation as well as his Chartered Financial Consultant designation. Mr. McClanahan has 25 years of experience in the financial services industry and serves as the 2008 president-elect for the Dallas-Fort Worth Financial Planning Association.

Martin P. Mesecke

Martin P. Mesecke, CFP, CLTC is a regular contributor to Bankrate.com "Expert Comments" regarding interest rates and also has served as a technical advisor for money makeover articles for both Money magazine and Kiplinger's Personal Finance Magazine. Mr. Mesecke is a frequent speaker and educator on financial planning topics and a past instructor in the Southern Methodist University Certificate Program in Financial Planning in Dallas. Mr. Mesecke is active in leadership positions in the local FPA chapter and also with several organizations that are increasing financial literacy standards among students and adults.

Victor H. Garza

Victor H. Garza, CFP, is a fee-only financial advisor with The Gardner Group in Dallas. Mr. Garza says he never stops trying coming up with different ways to discover, protect, and serve the needs of his friends though the use of proven financial management strategies, behavioral counseling, and a focus the big picture. Mr. Garza received his B.S. specifically in Personal Financial Planning from Texas Tech University, which he attended on full academic scholarship. Mr. Garza currently sits on the Board of Directors for the Dallas-Ft.Worth Financial Planning Association.

Mario Yngerto

Mario Yngerto, CFP, ChFC, is a Financial Planner with Securities America Advisors Inc., a Registered Investment Advisor and a Registered Representative with Securities America Inc. through which he provides clients a broad range of investment opportunities. Mr. Yngerto says he helps his clients seek financial freedom and independence through establishing clear goals and financial discipline. He works with his clients to prepare a plan that takes into consideration their goals, unique needs, time frames and risk tolerance. Mr. Yngerto says he is committed to educating his clients to make well-informed decisions and to find meaningful financial solutions.

Tara L. Scottino

Tara L. Scottino, CFP, is senior vice president of Carter Advisory Services Inc. (CAS), the registered investment advisory firm affiliated with Carter Financial Management. Ms. Scottino is responsible for the design and integration of each facet of clients' multi-disciplinary plans and is directly involved in pursuing the achievement of each client's financial plan objectives. As senior vice president, Ms. Scottino also oversees daily office operations while providing technical support for the planners of Carter Financial Management.

Question: I have a close friend that is severely in debt due to credit cards, college expenses, and utility bills accumulated in college.

He is now out of college but only makes around $38,000 a year. He is currently working to get his student loans out of the default. He would like advice on how to raise his credit score and get of debt.

He has about 9 or 10 negative collection items on his credit report. He does not have the money to pay them off and they have been on his report for about 4 or 5 years now.

Are there any non-profit agencies or free credit repair agencies that could help him get out of debt? Thanks.

Sonya

Answer: I advise your friend to contact a credit counseling agency, such as Consumer Credit Counseling Service of Greater Dallas at 214-638-2227. Their credit counselors can help your friend look at various options.

I caution you against credit repair companies. There is no quick fix to improving your credit. It will take time and discipline.

Read this advice from the Federal Trade Commission on credit repair.

Thanks for your question.

Pamela Yip

Question: I am presently retired and have a bond in my portfolio that is not set to mature till 2016 (I am assuming that naming names is not welcomed here).

At present, this company is teetering on the brink, and the market value has dropped to $8,500 with a cost basis of $25,000. Would it be better to take a huge hit and try to sell it or wait and hope the company's position improves. Would I get any thing if they go belly-up?

Rick

Answer: Many corporate bonds have dropped significantly in value due to the credit crisis and the increasing concern that some companies will default on their debt. You may want to review the bond credit ratings issued by the various credit rating agencies, such as Standard & Poor’s or Moody’s to help you determine the likelihood of default.

In determining whether to continue holding the bond, you will want to evaluate the situation as though it were new. Forget about the decline in value that has already occurred and deal with the facts as they now present themselves. In other words, based on your perception of the current likelihood of default, would you be willing to risk $8,500 for a possible reward of $25,000. If you wouldn’t take that on as a new risk, consider selling the bond now for the $8,500. If the payoff for taking the risk seems reasonable, consider holding the bond.

For what it is worth, I believe that many of the corporate bonds that have declined significantly in value will not ultimately default. However, you will have to evaluate whether the particular issue you hold is being impacted primarily by the general fear in the market, or if the company is truly in financial jeopardy.

As to whether you would receive anything in the event the company goes “belly-up” - that depends. Bondholders do have priority over stockholders in bankruptcy. But wages and pensions due to employees, taxes, and secured creditors will be paid first. The amount bondholders receive in bankruptcy can vary from 100% to 0% depending on the unique situation of the particular company.

Mike Busch

Question: I am having difficulty meeting my monthly mortgage payments due to unexpected medical bills. I notice that I am paying $100 per month for mortgage insurance - which I assume protects my lender from loss in case I have to gointo foreclosure. Yet, I read that my tax money is going to bail out companies (AIG, etc), which lent money to people who could not affordtheir home purchases.

Why do I - who have faithfully made payments for five years - have to pay for insurance when it is obvious that people less qualified did not have to pay mortgage insurance? Are there any moves afoot in congress which might provide assistance to hard-pressed homeowners? Is there any relief available which might assist homeowners on the verge of foreclosure? It would seem that the last thing the government and/or mortgage companies would desire would be to drive marginal homeowners into foreclosure.

Any advice would be appreciated.

Amy

Answer: Thank you for your question. There are several things you need to consider now that you can not afford your home. How much house can you really afford? If medical bills are putting you in a tight financial budget, you may need to re-evaluate if the mortgage/home you owe is too much. Would refinancing help you meet the payment?

Lastly, The Housing and Economic Recovery Act of 2008 recently signed into law included the program HOPE for Homeowners Act of 2008 (the Act). The Act created a temporary refinance program within the Federal Housing Administration (FHA) for homebuyers at risk of foreclosure. Through the FHA, an estimated 400,000 borrowers in danger of losing their homes will be able to refinance into more affordable government-insured mortgages.

The program offers government insurance to lenders who voluntarily reduce mortgages for at-risk homeowners to at least 90% of the property's current value. Please visit www.hud.gov or Call 1-800-225-5342 for more information on this program.

As you move forward, remember to make plans for the consistent unexpected expenses, by setting aside 6-12 months worth of living expenses for rainy days.

Victor H. Garza

Question: Everyone is holding on to their dollars and pennies and don't seem to be responding to business advertising regarding specials and discounts.

I have a small business and we are feeling the effects of the economy. Do I keep on spending money on advertising or should I hold on to my money to pay bills? I don't want to spend money on advertising (which is expensive) if the consumer is going to be unresponsive. Thanks.

HD

Answer: A lot of small businesses are having to make decisions on advertising, expenditures, and even staff. Your questions is extremely broad and may depend on your business, industry, and other factors.

Most financial planners work with personal finance, and in this case, you may be best served by consulting with a small business expert in your field. Depending on their hourly rate, a few hours in strategic business planning may save you money in the long run.

Shashin G. Shah

Question: My current employer was purchased by another firm, and we received a severance package. So right now I have an opportunity to invest (an opportunity I won't come across again, so I would like to make the best of it).

I have $30,000 to set up for myself and $10,000 to set an account for my 7 year old -- I believe it's called a custodial account. I am looking into Vanguard Mutual Funds and in particular, the following: Wellington (WWELX), STAR (VGSTX), Wellington Income (VIN), and Long-Term Treasury Bond(VUSTX). I do not know what funds to go with, for myself and my son.

My specific questions are: Wellington fund has minimum investment of $10,000 and the others range from $1,000 to $3,000. Does this mean the Wellington Fund is a better fund overall? Also, what drives the value of the Long-Term Treasury Bond versus the other funds that are affected by the stock market? I currently do not have any savings for retirement and would like to invest this money for the long term -- 20-25 years. I am currently 42.

I appreciate your answers and additional advice.

JAG

Answer: Thanks for the question. Funds can increase their minimum investment or even close to new investors for a variety of reasons. In most cases, the fund has gotten too big and wishes to shut down to new investors so they can keep their edge at managing a particular size fund- they don't want to get too big. One reason may be money inflows may have increased based on past success. In other cases, funds may increase their minimum to attract "longer term" investors with higher commitment levels. In either case, it does not indicate if a fund is currently outperforming others.

Bond funds can be extremely broad. The two drivers typically are credit ratings/quality and interest rates. The term (short, intermediate, or long) also factors in. If interest rates drop, bonds have an inverse relationship and usually increase in value. Just the opposite if interest rates go up.

Shashin G. Shah

Question: We make $95,000 per year before taxes. Husband and wife both work. Have excellent credit. We have a $102,000 remaining and 20 years left on mortgage. We have a $7,600 home equity loan. We have a $13,500 Car loan. We have $8,000 in our savings/emergency fund. We or our daughter will need to borrow $17,000 for college next year.

Should we:
• Pay off the home equity?
• Pay a chunk of car loan?
• Don't pay either, because we won't get a $17,000 loan next year, so we'll need the $8,000 for college?

Lance

Answer: You are ahead of the curve with the establishment of an emergency or reserve fund. Right now your emergency fund is approximately equal to about one month of your combined total combined income. A good goal is about three months worth of monthly expenses. With that in mind as a goal, I would not do anything with your emergency fund at this time other then try to add to it.

I would suggest that you explore options about the possibility of consolidating the home equity loan and your primary mortgage into a 30-year fixed mortgage. Although it extends the debt repayment out 10 additional years, it should increase your current net cash flow, and that could be used for more pressing short term needs such as adding to your daughter college savings and paying down your car loan.

If your daughter is a high school senior this year, don’t wait to learn about any student loan options or financial aid that you may qualify for. A good place to start is the www.Finaid.org Web site. I personally recommend that parents play with the calculator on the Web site to see how their income, debt and savings may affect how financial aid and their expected family contribution is determined.

Martin P. Mesecke

Question: I am self-employed, and my husband is a coach. Due to some job difficulties in the past, we have accrued over $100,000 in credit debt. (Not including a car loan of $14,000 and our mortgage). We are not behind on any of our payments, but we are not getting anywhere on paying them down either.

Is there a rule of thumb of when bankruptcy should be considered? Such as a debt ratio, etc.? We have about $50,000 in equity in our home, plus I have about $25,000 in an old 401(k), and $8,000 in a SEP IRA, and my husband has his teacher retirement. Thanks!

Julie

Answer: There are no rules of thumb that I know off. In my eyes bankruptcy should be avoided by all means. Drastic measures might be needed. Try reducing your expenses way down, selling your assets to pay debt, getting another job for more income, etc. Don't expect bankruptcy to offer you an easy solution to income being bigger than expenses or financial mismanagement.

With that said, how do you know if you should go bankrupt? If your situation is temporary and will change for the better in the near future, you may just need some breathing room. Contact your creditors; they may offer to lower your payments or interest rate under a hardship program. Or perhaps a credit counseling service can help you restructure your debt and get on your feet again. In fact, for bankruptcy filings, credit counseling is a prerequisite.

Then again, you may not see your income going up in the foreseeable future, or maybe you can't cut your living expenses any further. Perhaps your pleas to restructure your debt have fallen on deaf ears or the relief you've been offered isn't enough to help.

A bankruptcy notation will appear on your credit report for 10 years. It's a serious blemish that can affect you in many ways. Aside from the difficulty it will cause when you try to get new credit, insurance companies may correlate your ability to pay your debts with your ability to make premium payments. As a result, a bankruptcy notation on your credit report may make it difficult (and more expensive) to get certain types of insurance. What's more, an employer may take your credit history into account when deciding to hire or promote you.

Of course, you'll be able to get credit again, but you may have to pay higher interest rates or provide a cosigner or collateral to get started. Getting new credit will help you establish a new track record. But be careful; you won't be able to declare bankruptcy again for several years.

Again, don't expect bankruptcy to offer you an easy solution to getting your income higher than expenses or a solution for financial mismanagement.

Victor H. Garza

Question: Pension Benefits have not been filed for. I have no existing regular IRA or Roth IRA. My age will be 70 1/2 in December, 2008.

Is there an IRS Code that mandates the deadline for receiving Pension Benefits?

I'm ready to do company's paperwork resulting in first receipt of pensions. Having said that and knowing my age, [what is your] financial advice?

Thank you in advance for professional assistance.

Erv

Answer: Generally, you must begin to receive required minimum distributions from pension plans by April 1 of the year following the year you attain age 70 1/2, similar to IRAs. However, if you are not a 5 percent or greater owner of the business, you may wait until April 1 of the year following the year you retire, if that date is later.

As far as advice about making your pension benefit elections, I recommend that you seek the advice of a Certified Financial Planner who can guide you once he/she has a firm grasp on the details of your particular situation. There are too many variables to make generalized recommendations on something so important. Just a few of the factors that are important include whether you are married, your relative health/life expectancy, whether you have a desire/need to leave something for heirs, other assets and income streams that are available to you, and your personal tax situation.

You can find a Certified Financial Planner in your area by visiting www.fpanet.org.

Mike Busch

Question: I am in my mid 20s, and I do have debts (car payment, student loans, credit card debt). I have been paying these off and sticking with a budget.

There are two credit cards under my name, but they actually aren't my debt. They are my parents debt. What happened is when I was in college my parents ran into financial difficulties and with their bad credit they couldn't apply for any credit cards. They opened up two cards under my name and have charged a lot on them.

I will admit that earlier in my life I didn't know or understand a lot about finances myself. I have since reported the cards as stolen and they no longer have access to the cards. My parents do make the monthly payements on these cards, but the interest rate is so high on them that the payment is less than half of what they send in.

If I report this as fraud, my parents will go to jail and I don't want this. Is there any way to have my name taken off these cards, be cleared from my credit report, and only their names be on the account? Or should I possibly look at taking out a loan myself to consolidate these with a much lower interest rate and then have my parents pay me for the loan? (Due to their bad credit they are unable to be approved for a loan to consolidate these cards themselves). Or is there another option?

Thank you for your advice.

K.W.

Answer: I'm so sorry to hear of what has happened with your parents. Unfortunately, there is a real possibility the events that have occurred could constitute fraud and my main advice is that you seek legal help. An additional option would be to contact Consumer Credit Counseling Services.

While you are working on the issues related to your parents, make certain to stick with your own budget. It sounds like you have done a great job of controlling your own expenses and taking care of your personal responsibilities.

Tara L. Scottino

Question: What do I need to know about rolling from an IRA into a Roth? Also, I just bought an annuity (single payment interest of 6 percent 10-year). Can I roll it into a Roth?

Lew

Answer: Depending upon your annual income and federal income tax filing status, you may be able to transfer all or a portion of your current traditional IRA to a Roth IRA. Although you may currently qualify to convert your traditional IRA to a Roth IRA, that doesn't necessarily mean that you should. Although, most of these conversions work seamlessly, problems can arise trigging an unexpected increase in taxable income and even a possibility of a reduction in any Social Security benefits that you may be currently receiving.

To avoid these possible problems, I would suggest that you discuss this with either your tax or financial planning professional to fully understand the tax and investment ramifications of a Roth conversion.

Martin P. Mesecke

Question: At the present time my IRA investments are mostly in American Funds which is handled by a broker. I have not been real satisfied with that arrangement because of having to make appointments to talk with them, etc. I have wanted to move money to non-load accounts such as Vanguard index funds so I can have more personal control of my account by use of the computer.

My question is this: Am I better off to leave the money in American Funds since I have already paid the load on them or would I still do better by moving to Vanguard Funds which has a lower annual expense on their funds? Thank you for your time.

George

Answer: Thanks for your question. Many people are reviewing their investments and advisors after an extremely volatile month in the market. Both American Funds and Vanguard have good fund options, depending on your goals. Some additional items to consider would include your tax consequence, and back-end fees, and expenses involved in transferring your funds.

If your relationship with your “broker” has not worked, it may be time to look elsewhere for advice. One option would be to “do it yourself”. Another option would be to seek out and meet with a Certified Financial Planner professional. While investments are one function for most CFP professionals, other will include retirement, tax, estate, education, employee benefits, and risk management to name a few.

The FPA Web site may be a good resource to start. There’s more to planning than just investments!

Shashin Shah

Question: My husband died earlier this year and his 401(k) is now in my name. We had a joint credit card that has $12,000 on it. Should I borrow from the 401(k) and pay the money back or continue to make money payments at an interest rate of 10 percent? Thank you.

H.K.

Answer: My sympathy for your husband’s passing. One thing you will want to verify is whether you are truly eligible to take a loan. I would be surprised if your spouse’s plan allows a non-employee beneficiary to take a plan loan. Also, you mention that the funds are now in your name. I wonder if that might mean that the funds have been rolled over to an IRA in your name. If so, loans cannot be taken from IRAs – only 401(k)s.

In most cases, I believe 401(k) loans are bad ideas. However, in your case, if you determine that you are indeed eligible to take a loan and the proceeds are used to pay off debt bearing a 10 percent interest rate, a case probably could be made for doing so. Just realize that this would only work if you were diligent to not run up new debt. If the spending patterns that created the original debt are not dealt with, you would soon find yourself in the same spot you are now but with a depleted 401(k) balance.

Mike Busch

Question: I am 74 years old and my wife is 68, and we just don't have a good plan to convert [our adjustable-rate mortgage].

The mortgage rates are now much higher than 4 1/2 percent (my current rate)

Should I wait until early 2009 hoping that this financial crisis may have become more stable or should I immediately proceed to convert?

Wells Fargo writes my that they will just roll my mortgage over into the current rate(last time I check with them it was 6 1/2 percent) with no closing costs etc.

Any suggestions that you may provide to me will be much appreciated.

David

Answer: Trying to predict mortgage rates is like trying to stack marbles, very difficult. Currently we have seen rates fluctuate wildly due to the credit crisis. Mortgage are sold in the marketplace, and currently, investors are demanding a premium return, thus driving rates up.

As the crisis abates, you could see mortgage rates come down. However, looking into the future 12 to 24 months, many believe that due to massive amounts of money the government is putting into our economy, we will see higher inflation pressures that will move rates upward.

My counsel to you would be to look at your budget and see what amount of mortgage payment you could afford. There are a number of online calculators that can give you an idea of your monthly payment based upon various rates. Then decide on an interest rate goal. Possibly 6 percent on a 30-year fixed mortgage for example. Once you see this rate available then lock that rate in.

I hope this helps. Best regards

Mark McClanahan

Question: I am 39 and have the maximum amount allowed put into my IRA each month. Also, I have another account that I deposit $300.00 each month that is an account that I can easily obtain the cash if needed.

It is my understanding that my money is being used to buy funds. Since the market is so horrible, am I better off just keeping the cash myself in a bank account or should I keep buying the funds since I can buy more now since they have less value? I understand that when the market recovers I will have more funds than I would have been able to buy if the market was not bad, but I wonder if I should just quit investing and keep the money as cash in a savings account. Please advise! Thank you.

Anonymous

Answer: Thanks for the question. It is one on the minds of many savers currently.

The first thing is to review is your time horizon. Typically, the longer you have, the better the chances of success with most investments. At 39, if you are retiring at 65, you have 26 years to go. In 1982 (26 years ago), the Dow Jones Industrial Average was between 800-900. Even with the recent downturn, the returns are significant. If your time horizon is shorter, like with your “cash” account, you may need to review your investment strategy.

The second thing to consider from your e-mail are your “funds.” You may want to review what you are actually investing in. Mutual Funds can be bonds, stocks, and a variety of other investments. Before to see where you are putting your money and talk to your advisor to align that with your personal goals.

Shashin Shah

Question: I was hoping you could help me with a few questions.

1. Who can look at my credit report? Only banks, mortgage companies, credit card companies, and other lenders? Or any business, including the owner of a small business in Connecticut who wants to hurt and harass me?

2. If so, how much data would he get? My social security number? Credit card numbers? Banking information? My unlisted phone number?

3. Can I find out who has seen my credit report?

4. If he has gained access to this data, what recourse do I have?

Thank you for any advice you can give me.

Ruth

Answer: Only those with a legitimate business need can view your credit report. Available data does include your social security number, address, date of birth and phone number – even if unlisted. By requesting a copy of your credit report, you can see who else has seen your credit report recently. If a credit reporting agency or a user of credit reports violates your rights under the Fair Credit Reporting Act, you may be able to sue.

Mike Busch

Question: I have recently started to read the Dollarwise column online. My question is why does the Fed rate cut not affect gasoline cards? My other two cards have seen a decrease but not the gas card. Is there a reason why?

Rochelle from Ft. Worth

Answer: The Federal Reserve adjusts interest rates with the intent of "fine tuning" the economy. By lowering rates, they are attempting to give the economy a boost. When they raise the rate, they are trying to slow it down. These rate adjustments are really only for the large banks since only they can borrow from the federal reserve directly.

The general idea is that these larger banks will pass these adjustments along to their customers. However, they do not have to. Although, rates have fallen, banks and credit card companies have no obligation to lower the interest they charge their customers. As a side note, what you may see in the future is that credit card companies may and can lower the credit limits they extend to their clients.

Carrying balances on multiple credit cards only delays repayment of your total debt. My suggestion is that you use only one credit card. If you need some ideas on how to pay off your current credit cards, Google "Snowball debt repayment".

Martin P. Mesecke

Question: My husband has abut $30,000 in a Haliburton stock fund from when he worked for Otis Engineering back in the '70s and '80s. They are closing the fund on Dec. 31, 2009.

We would like to put the money somewhere where it can grow and where we would not be taxed until after I retire. What would you recommend? Let me know if you need to know more about our situation. We are both in our 60s. Thank you.

Helen

Answer: Dear Helen, while not fully aware of your overall financial situation, I can only make limited suggestions. Something to consider would be if the money is in a taxable account, then selling the stock could potentially trigger a taxable event.

Looking for “growth” in this market is hard to find. When making any investment decision, you will first want to consider your risk tolerance and time horizon, this will determine which investments are available to you. How the “rest” of your money invested is also something else to consider and a determining factor in how you should invest “this” money.

If you are looking for growth, not income, and are comfortable with the risk inherent in stocks (very risky as we have all witnessed lately), then you may want to consider investments like equities as opposed to fixed income that would provide you with diversification across a broad variety of asset classes.” The Morningstar style box will give you some direction as to which asset classes to consider.

Mario Yngerto

Question: I have a 401(k) through my work which I contribute 6 percent of my gross salary. My company at one time matched my 6 percent with a 4 percent contribution but discontinued this several years back. My 401(k) has lost $10,000 the past six months.

Should I take my money out of the 401(k) and, if so, where do you recommend I put it? I don't want to pay any penalties, but as it stands, I am losing my "you know what." Any advice? Thanks for the help!

Mitch

Answer: I know little about you, age, risk tolerance, goals etc. Having said that, it rarely makes since to sell into a stock market that is already fallen 30 percent. Remember buy low sell high.

The great benefit you have is that you are continually buying into your 401(k) mutual funds at lower prices. I would tell you to review your portfolio allocation and compare your performance to the broad market.

Since you did not give a value of your 401(k), I do not know what percentage your 401(k) has dropped. If you have a $100,000 balance, then a $10,000 loss is 10 percent, and relative to the stock market, that would be exceptional performance. What is your current allocation to bonds? Do you have large stocks, small stocks and international stocks in the investment mix? Historically diversification has helped although in this bear market most every asset class has fallen.

If you would like a more conservative portfolio in the future, then add bonds, or guaranteed investment contracts that pay income and usually fall less that stocks in down markets. John Templeton, a very famous investor, said bull markets are born in pessimism and die in euphoria. Stay the course. Good luck.

Mark McClanahan

Question: My question is whether or not I should pay off my mortgage with bank savings. I am currently employed in the auto industry and make about $100,000 gross. My wife works as a teacher's assistant and makes about $17,000 gross annually. I am 56 and she is 54.

Our 401(k) was up to about $350,000, but is now about $220,000. Our credit cards are current, and our loans consist of a mortgage balance of about $58,000, a home improvement loan of about $9,000 and a SallieMae student loan of about $8,000.

My wife's job is probably secure, but mine is questionable with pending salaried severances. I don't know if I will remain employed with my current job or will get cut. If I do get cut, our income will drop drastically. We would be unable to meet our current expenses even though we don't have much debt.

One option that I have considered would be to pay off the mortgage that would drop principle/interest about $600/month. That would leave about $450/month to reserve for property taxes and insurance. Paying off the mortgage would drop our bank savings from just over $100,000 to about $42,000. We are not making much on bank interest, so the mortgage interest savings would be greater than the bank interest loss.

I do not want to touch the 401(k) as acting on that now would be a realized loss -- I hope to wait until comes back before I need to withdraw in retirement. My current age reduced retirement from my employer would only be about $920/month. My wife brings home about $1,400/month. I won't be eligible for Social Security benefits until July 2014 and that would be another $1,600+/month.

William

Answer: You have got a lot going on with the possibility of job uncertainty and trying to determine your debt repayments if certain event happen. I would not rush to pay off this mortgage at this time. In fact I may do just the opposite.

One suggestion is that you may want to take your current debt: your current mortgage, home improvement loan, and the student loan debt and roll that into one debt and refinance it all. With current rates around 6.5% on a 30-year fixed, your monthly payment should be around $480. This is a net savings of $120 over our current house payment. Add in your payment for the home improvement loan and the student loan and the net cash flow savings are more impressive. The main idea is to maintain good cash flow in uncertain times.

I realize that there some expenses associated with this strategy, but consider this cost, part of the cost of "insurance" in knowing that should you lose your job that you may have a better financial cushion to weather these uncertain times. I would encourage you to sit down with your tax or investment professional and discuss the pros and cons of a decision like this and make a decision based solely on you and your wives particular situation. Only after this conversations would I make any changes to your emergency reserve funds or 401(k) allocation.

Martin P. Mesecke

Question: I have a reverse mortgage on my home with a variable interest rate. However, I have an option to lock in the interest rate. The rate now is 0399.

Could I have the benefit of your speculation on where the interest rates on mortagages such as these might be heading?

Clarence

Answer: Reverse mortgage interest rates are based on U.S. Treasury rates plus a margin. We have very low Treasury rates now, so interest rates on reverse mortgages are low too.

Are they likely to get lower? Maybe, but they are more likely to increase and return to more normal levels. Analyze the upside you will get if they drop a little more compared to the downside of not locking if they return to more normal levels.

Victor H. Garza

Question: My wife and I are seniors, 71 years old and have to take the mandatory RMD this year except we really don't need the money. Since we have to sell shares that have tanked, would we be better off not taking our required distribution this year and just pay a penalty tax?

We have lost over 40 percent so far anyway vs. what would be the penalty (even at 50 percent, we still retain all our shares) if we leave it alone in the hope that the market stabilizes in the next year. Can this be done lawfully?

Hal

Answer: You are in luck, Hal! There is actually an elegant way around your predicament. Many people don’t realize it, but you do not have to take your required minimum distribution in cash. You can take it in the form of shares distributed from your account.

In this way, you can avoid the 50 percent penalty for not taking your required minimum distribution, but you don’t have to sell your shares while the market is down. Simply request that the custodian of your IRA journal the shares from your IRA to a taxable account.

If for some reason your custodian requires the distribution to be in cash (they shouldn’t because the IRS does not require this), there is still a work around. Once the custodian cuts you a check, simply use the distribution to buy back your shares in a taxable account.

Mike Busch

Question: I am currently an employee of the Carrollton Farmers Branch School District. I have worked for the district for 19 years and at the present time, I work at Creekview High School as a Records Secretary.

I would like to retire from the district within the next two to three years. At the present time, I am putting in $700 a month into my 403(b). Since the market is so volatile right now and I am losing money, should I stop putting any more money into my 403(b), and put the money into my money market fund.

Thank you for your help.

Susan

Answer: As long as you have an asset mix that takes into account how long you plan to draw on the funds as well as your personal risk tolerance, you should keep right on investing, Susan.

I know the temptation is great to alter your investment approach in response to current conditions in the market. But there are at least a couple of problems with giving in to this temptation.

First, the market is having a fire sale. While scary, this is the perfect time to stay the course, because each deposit to your 403(b) is able to purchase more shares while prices are low.

Second, you likely have a longer investing time horizon than you realize. Although you may be retiring in 2 to 3 years, it is unlikely that you will cash out your 403(b) on the day you retire. Rather, you will probably draw it down over your life span, which for many retirees can be 25 to 30 years. As a result, you should have plenty of investing years left to recover from the current crisis.

My advice to stay the course comes with one important caveat – that you have done the necessary planning to craft an appropriate asset mix to meet your personal goals and objectives.

Mike Busch

Question: I have a question that is not necessarily as a result of the current economic state. I recently had my bankruptcy discharged (couldn't maintain the payment schedule). I have about $80,000 in debt to about 15 creditors.

I'm trying to find the best option to pay back the debt. I obviously will not be able to get a loan. I also have zero assets. I rent and have a car note. I probably have enough to pay 10 percent of the debt today and would be able to pay $800 monthly.

Is it best to haggle with these creditors independently or search out a debt management company to help me? If so, what is a trustworthy resource to go to for the debt management information?

Michael

Answer: Normally I suggest that when individuals in your similar situation cannot refinance or consolidate their debt that they contact their creditors and let them know that they are having financial difficulties. In most cases, creditors are receptive to these types of attempts, especially if they are done before they fall too far behind on payments.

However, in your case with 15 different creditors and about $80,000 in debt, it is my belief that you may be best served by seeking professional assistance with this negotiation.

I would suggest you contact the Dallas Branch of Consumer Credit Counseling Service for additional information.

Martin P. Mesecke

Question: I am retiring and I going to have my 401(k) rolled over in an IRA acount. Can I borrow against an IRA for home improvements, and if so, is it tax deductible? What are the advantages?

Elmer

Answer:There are many missteps that an individual may make in this process and the first may the idea of rolling over your 401(K)into an IRA. The pros and cons of a decision like this are based solely on your particular situation and some decisions if made, may be irreversible and trigger serious tax consequences.

Before you do anything, I am going to suggest that you sit down with your tax or investment professional and discuss your particular situation to determine what is in your best interest.

Martin P. Mesecke

Question: I am wondering if we should sell our house, or find an alternative way to pay our property taxes in January. We do not have property taxes included in our monthly mortgage payment, so we will need to pay our taxes in January.

Our income is significantly lower this year (we are both in the real estate/mortgage industry), and thus have not been able to save the money for property taxes. We have approx. $70,000-$75,000 equity in our house, approx. 28% of our property taxes saved, and approx. $9,000 in a savings accout we are having to pull from for monthly expenses right now.

Would it be better to refinance, at a possible higher interest rate, and pay off our property taxes? Put our taxes on a credit card? use nearly 50% of our savings towards property taxes? or sell our house?

Elizabeth

Answer: I commend you for taking the courage to tackle your finances head on. In regards to paying your property taxes, you may need to use your savings. Credit cards only postpone the inevitable plus cost you interest.

Refinancing might decrease your house payment yet it might not fix the problem, which is getting cash outflows below inflows and saving the difference. Can you afford your house? Use the most powerful machine in the financial toolbox -- a good 'ole budget. Like most corporations and people are beginning to recognize the hard way, bottom line.it comes down to fundamentals and basics. Can you afford your standard of living? Can you afford yourself now and are you allowing breathing space to safe/invest to afford yourself in the future?

Now you know that variable expenses are going to come up, like these property taxes, and they are due next year again. Plan for them, is your own future.

Victor H. Garza

Question: In May 2003, we purchased into the Texas Tomorrow Fund for both of our children. We paid the full amount at that time so we are totally paid up on the contract.

My question is this. Given that this particular fund closed and another recently opened and given the financial issues with the economy, can we still count on this contract being honored for payment of "tuition and required fees" to "Senior College" for a total of 128 credit hours at a Texas state school.

Tom

Answer: Great question! In 2003 through deregulation the Texas legislature removed the “cap” on tuition in the state of Texas. At that time public universities were no longer limited on the annual increase they could apply to their tuition rates. Without that “cap” the Texas Guaranteed Tuition Plan was unable to predict future tuition costs.

This is why the original Texas Guaranteed Tuition Plan closed to new enrollment. The good news is that you were able to get into the program before it closed. And, to answer your question, yes the plan you purchased in 2003 is still guaranteed and will be honored. It is guaranteed by the full faith and credit of the State of Texas.

See below for an excerpt from the website:

“Is my contribution guaranteed against loss? Yes. The Texas Guaranteed Tuition Plan is backed by a constitutionally guaranteed trust fund and the full faith and credit of the State of Texas. The Texas Guaranteed Tuition Plan was created by the Texas Legislature in 1996. In November 1997, Texas voters passed Proposition 13 - a constitutional amendment that put the state's official backing behind the Texas Prepaid Higher Education Tuition Program-thereby guaranteeing the Fund with the full faith and credit of the State of Texas.”

If you have any other questions regarding your plan, the website is http://www.tgtp.org.

Tara L. Scottino