Subscribe
During the early part of this past October, along with others we were asked by WRGB Channel 6 to be a part of their “Answers Team,” a group of individuals in the financial services industry put together to meet most Wednesday evenings from five until seven p.m., answering questions of callers, helping them get through these tough economic times. Our job was to field calls that generally pertained to investing and financial planning. We have met continually through the heart of this recession, the past seven months or so, fielding hundreds of calls. With this in mind, we thought it might be a good idea to relate some of the questions we received to our readers, hoping that perhaps the answers to these questions might help you navigate through this difficult economic period. Please note that the questions are paraphrased and italicized. The responses are not italicized and are for general information purposes only. All individuals should check with their investment advisor, tax advisor or financial planner prior to making any decisions.
Given the fact that my investments in my 401(k) has declined by so much, is it a good idea to stop contributing? No, unless there are extenuating circumstances such as debt that you are unable to service, it is a very bad. In addition to the federal and state tax deduction you are receiving on your contributions, you are also dollar cost averaging (saving a consistent amount on a regular basis) into your plan for retirement. Too many people focus on the day-to-day fluctuations in the stock and bond markets, thus losing sight on their ultimate goal, financial independence. For many, the decline in the stock market has offered them the ability to buy low over time. Take advantage of it.
I have credit card debt totaling $25,000. The interest rate was just bumped up from ten percent to twenty-five percent. What are my options? If you are unable to pay the monthly required amount, you have to determine if there are other sources of assets available to pay off the credit card(s)? Do you have equity in your home that you can tap? Do you have investments that you can liquidate? Are there assets available for a loan from your 401(k) or 403(b)? Perhaps you have to look for a second job. If you are able to pay the monthly required amount, start with the lowest card, pay that one off as quickly as possible, paying the minimum on the other cards. Then, once that first one is paid take the amount that you were paying on that one and now add that to the new card with the lowest balance and work on paying that one off. Continue on this path until all are paid off. Do not get into this mess again.
I currently receive Social Security. Do I qualify for a stimulus check and, if so when will it arrive? All of the approximately fifty-two million people receiving Social Security payments will receive a one-time check in the amount of $250 beginning in early May and continuing through early June, 2009.
When do you think is a good time to refinance my mortgage? Will interest rates go lower? With interest rates on both the fifteen and thirty-year mortgages below five percent, NOW is the perfect time to refinance, convert from an adjustable-rate to a fixed or consolidate your primary and home-equity into a new mortgage. Sure, interest rates may go a bit lower, but there is a greater chance that over the next year or two they will move higher, much higher. Look at the risk you are taking relative to the potential reward. Refi now!