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Home > Smart Spending > Archives > 2008 > October > 17
Friday, October 17, 2008
Money woes? Ask the experts
The Atlanta Journal-Constitution
Are you worried about your money?
We recently gave readers the opportunity to ask the experts at the Consumer Credit Counseling Service of Greater Atlanta.
The answers were provided by Mechel Glass, director of education for CCCS.
Question:
I had saved up about 18 months of living expenses to cover my mortgage and bills in case of a lay-off. Well, I had a family emergency requiring me to spend that this past year to take care of it. I contribute the max to my 401(k) that my company allows — 25 percent — and also put in $100 a month in a Roth IRA. I want to build my savings back to that 18 month level. Should I suspend or lower my retirement contributions? Or should I claim more withholding or both? - Running on half a tank
Answer:
You are doing a great job at saving and you are to be commended on your determination and ability to think about the future. Consider temporarily lowering your contributions to your IRA to rebuild your emergency fund. Eighteen months of emergency savings is very cautious. Do you believe if you lost your job you would need 18 months to find a new job making similar income? If the answer to that question is “yes,” then resume your strategy of setting aside enough money to cover expenses for 18 months. But if the answer is “no” and you probably only need three to six months to find a new job, you should be OK with allotting six to eight months of your living expenses to an emergency fund. Make sure that your other debts are also paid while you are building up your savings. Once you rebuild your emergency fund you should resume contributing the maximum allowed to your retirement plans.
Question:
Would it be wise to move some monies from my retirement fund to a new offering from my credit union for a CD with a 7.6 percent rate? - Stefanie
Answer:
If your retirement fund is an IRA or 401(k), the transfer you suggest would not be a good idea in most circumstances. If you are younger than 59 ½ there is a 10 percent penalty for early distribution from typical retirement funds. In addition, the early withdrawal from the retirement fund will be taxed as income.
However, the 1997 Taxpayer Relief Act does allow penalty free withdrawals in a handful of circumstances. For example, a first-time homebuyer who needs a down payment can withdraw up to $10,000 from a retirement fund without penalty. But would it be “wise” to withdraw retirement fund money early and park it in a CD until it’s time to close on a home? Probably not.
Question:
What is the calculation used to pay down a mortgage in half the time? For example, a 20 year mortgage with a fixed rate of 5.5 percent? - Keeps Money
Answer:
The calculation is a bit complicated because you have to take compound interest into consideration. We’d recommend you skip the algebraic calculation and go to Mortgageloan.com’s Payoff Calculator. Using that calculator, if you borrow $200,000 at 5.5 percent interest over 20 years you’ll pay a total of $330,187 over the life of the loan, with monthly payments of $1,376. If you paid an additional $800 per month, you would pay the loan off in 10 years and save $69,931 in interest.
In recent months, CCCS of Greater Atlanta has helped clients struggling to pay their mortgages. Many lenders are now more willing to help people avoid foreclosure by changing loan terms, such as lowering interest rates, in order to get the homeowner into a situation that is viable long term.
Do you have questions about working with your lender? How do you get relief and avoid foreclosure? Or, do you have questions about other money matters? Submit your questions and we’ll get the answers.
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Have fun while spending less
The Atlanta Journal-Constitution
Entertainment writer Shane Harrison gives you tips on events that are free or cheap.
Who says you have to spend money to have a good time? There are loads of fun things to do around metro Atlanta that won’t cost you a dime (except in increasingly cheaper - thank heavens - gas).
40 years of Woodruff
The Woodruff Arts Center’s 40th anniversary festivities begin with a free night of theater at the Alliance (Oct. 17) and continue with a community engagement day (9 a.m.-6 p.m. Oct. 18). There will be many other activities, too, include a performance by the Atlanta Symphony Orchestra, Jazz at the High, and Art Fusion 40, a late night celebration of art, film, music, dancing and global culture. See the center’s website for a schedule of events. Multiple venues. Through Oct. 20. Free. 404-733-5000.
Isn’t it always Halloween in Little Five Points?
Looking for costume ideas? Get a little inspiration from the outrageous denizens of Atlanta’s freakiest, funkiest neighborhood. The 2008 Little 5 Points Halloween Festival and Parade; complete with live music, street entertainment, outdoor beverage vendors, children’s area, Halloween costume contest — happens this weekend. 5-10 p.m. Oct. 17. Noon-10 p.m. Oct. 18 (parade 4 p.m.). Free. Findley Plaza, 1160 Euclid Ave., Atlanta. 404-577-4212.
Four-Footed Flyers
Canine competitors (and their human counterparts) from the United States, Canada, Japan and Europe converge at the Disc Dog World Finals. The showdown is hosted by the Greater Atlanta Dog and Disc Club and serves as a fund-raiser for the Etowah Valley Humane Society. 2-7 p.m. Oct. 17; 10 a.m.-6 p.m. Oct. 18; noon-6 p.m. Oct. 19. Free to spectators; $10 to enter Novice Division. Dellinger Park, 100 Pine Grove Road, Cartersville. 770-386-6184.
Tibetan beginnings
Official opening of the Drepung Loseling Monastery’s Loseling Gallery. The event includes Tibetan food, music, games and dance along with meditation classes, children’s arts and crafts, and a bazaar with artifacts and jewelry. 10 a.m.-5 p.m. Oct. 18. Free. 1781 Dresden Drive, Atlanta. 404-982-0051. There’s also an exhibition, “The Loseling Dolls and Traditional Costumes of the Tibetan World,” taking place at Emory University and opening 6-8 p.m. Oct. 20. It spotlights the creations of the master dollmakers of Drepung Loseling monastery that illustrate lay and monastic costumes of old Tibet. Dollmakers Ven. Geshe Pema Ludrup and Ven. Geshe Yeshe Thokme are to demonstrate their art daily during the exhibition. 10 a.m.-4 p.m. Oct. 20; 10 a.m.-4 p.m. Oct. 21; 10 a.m.-4 p.m. Oct. 22; 10 a.m.-4 p.m. Oct. 23; 10 a.m.-4 p.m. Oct. 24; noon-4 p.m. Oct. 25. Free. Emory University Visual Arts Building and Gallery, 700 Peavine Creek Drive, Atlanta. 404-727-6315.
Read other money saving tips at Your Money. Remember, it pays to save.
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