Ask Money

I am a 52-year-old single woman with no children. I have three older siblings and several nieces and nephews, although we are not particularly close (not estranged, just not close). This summer, my goal is to put in place basic end-of-life preparations like a will and a burial plan -- possibly long-term-care insurance as well. I learned from my parents' aging and deaths how much help the elderly can need, and how much stress and anxiety that can cause for those who love them. Can you give me some direction before I head to a lawyer? Julia, Omaha, NE

Hi! I'm living in Europe for a year or so, but all my bank accounts are still in the U.S. I've been using my credit card for everything and paying off the balance monthly. Is this bad credit card behavior? Could I be hurting my credit score? Thanks! Alexa, Baltimore, MD

Can you recommend a book on how to put yourself on a budget? Thank you, Elizabeth, Unionville, PA

I received a large bonus, and I'm going to use it all to pay down credit card debt. I have many cards. They all have about the same outstanding balances and about the same interest rates. At one time, most of the cards were "maxed out," which was bad for my credit score. Should I pay off a couple cards entirely, or should I make larger-than-usual payments to all of them, bringing down the outstanding balances substantially below the credit limits? Thanks. Henry, Chicago, IL

I returned to graduate school and accrued about $45,000 in federal student loans. The interest rate on these 10-year loans is 6 percent, with repayment beginning in 2013. I also have a 401(k) worth about $100,000 (roughly $60,000 of my contributions and $40,000 of employer contributions). I realize that an early 401(k) withdrawal would result in a 10 percent early-withdrawal penalty and that any withdrawal would be considered taxable income. This would effectively reduce the amount the 401(k) would need to earn in order to be the better investment. Still, it can't be much less than 6 percent, can it? Is there anything about my assumptions that are wrong, or is there anything I am overlooking? Derek, Chicago, IL

My 11-year-old son won some money in a math contest at school. He doesn't have anything that he is interested in spending his money on immediately, and I suggested that instead of spending it just for the sake of spending it, he might consider buying stocks and building a little portfolio. He seemed interested in this idea, but I wasn't sure where he should start. He has around $150. Can you help us decide where to start? Thanks! Michelle, South Jordan, UT

I am very lost and uncertain of our financial road to retirement. Our company doesn't offer defined payment retirement; it is all up to individual and 401(k). The company does match 3 percent. I am married and we have been working for 14 years now and have combined liquid assets (401(k), outside investment account, savings) of about $400,000, plus home equity of $100,000 on a good day. What shape are we in on our road to retirement? Thanks much. Martin, Chicago, IL

My wife and I have taught in Alabama public schools for the past 2 years and have made (forced) contributions to the state retirement system in that time frame. Together, we've got around $8,000 invested in the state retirement system. Realizing the limited income prospects for career teachers, we both applied and were accepted to a top 25 law school on full-tuition scholarship. My question to you is this: For my retirement account, I have the option of either a) taking a lump-sum payment of the $8,000, minus 20 percent in federal income tax, or b) rolling it over into a 401(k), IRA, or similar long-term savings plan. Should I take the money and run, or should I start building a retirement nest egg while I'm financing the rest of my life with borrowed money? Alex, Montgomery, AL

My husband and I gave our daughter $40,000 for a down payment on a condo. She defaulted on the loan and went into foreclosure. Consequently, our credit score has tanked. How can we get our old great credit back? Nobody cares that we were not the ones who defaulted. Please help. Cathy, Redmond, OR