The following is a transcript from the live chat on Oct. 17 with certified financial planner Linda Homsey, president elect of the Financial Planning Association of Mass., who answered personal finance and financial planning questions.
| BostonDotCom: | OK, I'd like to welcome Linda Homsey, president elect of the Financial Planning Association of Massachusetts. Please ask her your questions on personal finance. |
| BostonDotCom: | Schtdygirl: Please finish your question after (myself 9 more years to retirement)... |
| kb: | Q: Can you recommend how best to look for a financial planner? |
| Linda_Homsey: | Hello, I recommend that you check the qualifications. You want to make sure that the individual is a Certified Financial Planner This means the person has experience and education in the field. You can go to fpama.org and go to planner search. You can put in your area code and a list of planners in you area will come up. Interview them and make sure they offer what you are looking for.. |
| Jerry: | Q: Hi Linda: My wife and I have trouble sticking to a budget, and now we're running into problems due to a large mortgage. How can a financial planner help us? |
| Linda_Homsey: | That is a great question. Cash flow is the most important part of a person's/couple's financial picture. A financail planner could work with you to establish what your cash flow is - inflows and outflows. After that you would be able to look and see if there are any areas where you could reduce costs. You could also look at your mortgage to make sure that there are not better options out there for you. Another option would be to look at you goals and see if downsizing may be a choice. |
| petey: | Q: hello , who do you recommend to help with Credit repair?? I.E Lexinigtonlaw? |
| Linda_Homsey: | Consumer Credit Counseling Services is a nonprofit agency. You get the number through 800 info or go online. |
| Grace: | Q: Hello: Can you tell me what are the general rules of thumb when trying to create a budget, especially when one is on a tight income? I want to save and invest, but I still want to be able to eat out a couple times a month! Thanks. |
| Linda_Homsey: | This is very difficult. When you are developing a budget first put all of your fixed costs, rent/mortgage, insurance, etc. Then you put your discretionary expenses. That is where you want to look to cut so you can save. There are only a couple of ways to have excess money to be able to save - increase income or decrease costs. |
| steve: | Q: do you feel with real estate price possibly levelling off, stocks will begin to perform stronger? |
| Linda_Homsey: | To answer this correctly, you need to be able to forsee the future. The main thing is to have a portfolio that is diversified. |
| Marc: | Q: I'm 40, been working as a government lawyer for 10 years, my student loans are consolidated, but I still owe about 150,000 - I make 50k and find it difficult to make the minimum payments on my student loans in addition to regular monthly bills. Any adv |
| Linda_Homsey: | Marc, this is a tough position to be in. Is there anyway that you can increase your income - change jobs, get a second job? Revisit your budget and see if there is anyway to pay more on your loan each month? |
| Schtdygirl: | Q: Alot of my generation have moved so often, the possibility of retiring with a paid off mortgage is not a reality. How do we plan for our retirement with this factor? Without our equity, our current retirement funds are $247K (myself 9 more yrs to retirem |
| Schtdygirl: | Q: I am retiring in 9 yrs, my husband probably has 15-20 yrs to go. |
| Linda_Homsey: | There are a couple of options to look at. One, pay more on the mortgage monthly so that it is paid off by the time your husband retire in 15-20 years. Secondly, look at downsizing when you retire to a place that would be totally paid for. Thirdly, look at relocating to a less expensive part of the country. |
| Moe: | Q: Should I cash in my EE Savings Bonds, and put them in my Roth IRA? |
| BostonDotCom: | San: Please finish the end of your sentence: "I am in a financial crunch beacuse of high gas price..." It got cut off. |
| Linda_Homsey: | You want to look at what your bonds are earning, when they were purchased, and what they are worth now. You need to be aware that there will be taxes due when they are redeemed. You can go to www.savingsbonds.gov where you can find calculators. |
| ehennigan: | Q: I am moving to a new employer as a W2 employee that does not offer a 401K plan. The only retirement option they offer is a SEP-IRA which I cannot fund. Any suggestions as to how I can continue to save with pre-tax $ for retirement? |
| Linda_Homsey: | You can do a IRA or Roth IRA. This may not be pretaxed, depending on your income range. |
| iwannacompund: | Q: Dear Linda, I want to invest, I know the power of compounding, etc. There are so many choices I get overhelmed. (ishares, stocks, mutual funds) With the market the way it is, where should I narrow my focus? (Utlities, things that do well during periods of |
| Linda_Homsey: | If you are not a savvy investor, I recommend that you look at mutual funds. It is a way to diversify and have a professional manage the money. If you are looking at utilities in specific, that is a form of market timing and does not work over time. |
| Mark: | Q: Maybe this isn't the right question to ask here, but I'm looking for a good mortgage broker and don't know how to find a trustworthy one. Any advice? |
| Linda_Homsey: | Try going to Massachusetts Mortgage Bankers Association. |
| ljb: | Q: What is your take on the new Roth 401k and 403b? |
| Linda_Homsey: | I think it is a great option. The problem is that it makes the choices more confusing. You are best served talking with your financial planner or tax advisor. |
| fern: | Q: I am starting a business and need to invest some of my own money. Should I liquidate my retirement money or refinance my house? |
| Linda_Homsey: | This is another tough question. There is risk involved in this proposition. If at all possible, you want to leave your retirement money alone. You can borrow money for your new business, you can't borrow money for retirement. Taking a home equity loan is an option as well as a small business loan. |
| Zorro: | Q: What tips can you give me when working with a financial planner? How do they get paid? What's the average cost? What shouldn't I give them? |
| Linda_Homsey: | When working with a financial planner, you want to make sure that you have found someone that you trust. When the trust is there, the question of what to give them disappears. Financial planners are all paid in different ways, fees-only, commissions, and a combination. The main concern is not how they are paid, but that your best interest is at hand. Do ask how they are paid so that you understand. |
| TimO: | Q: Hello Linda, I was laid off after only 5 weeks & I understand the company may not be responsible to pay unemployment benefits, is that true? If so, I have a wife & 2 kids should I liquidate an IRA to cover costs? |
| Linda_Homsey: | To get a better understanding of the unemployment benefits, contact Unemployment Commssion in Boston. If you can avoid liquidating your IRA, I would. Is there a way to pick up temporary employment while you are looking for a permanent job? Does your wife work? Do you have otjher savings to draw on? |
| cal: | Q: What is your opinion on using whole life insurance policies as a retirement tool for those who do not qualify for Roth's, but have a 401K/403B |
| Linda_Homsey: | I do not recommend life insurance for a savings plan. If you need the life insurance for estate planning purposes, that is another matter. If you do not qualify for Roths then another option may be an annuity. This would give you tax-deferred growth. Or just saving in a taxable account with tax-efficient investments. |
| ItsJustMoney: | Q: I have a healthy 401K and contribute the maximum to it, but not a Roth IRA. Is it necessary for prudent finanical management to also have a Roth? |
| Linda_Homsey: | It is not necessary, but it is a beneficial since the money comes out tax-free. Go to www.irs.gov to see if you qualify for a Roth. |
| Martha: | Q: I'm living in a market that I am priced out of the real estate market, but luckily I have low rent and no credit card debt. I'm currrently saving $10,000 a year in my 503b plan at work. What do you think of my retirement strategy? |
| Linda_Homsey: | I want to commend you on not having any credit card debt! It is terrific that you are able to save so much for retirement. Keep up the good work! Have you priced condos? It would be desirable to own a home before retirement to eliminate rent during retirement. |
| Melissa: | Q: Hello - What is your opinion of the education IRA vs. the different 529 plans that are offered? My sons are 6 and 8, so I have a while to save for their college. Thanks! |
| Linda_Homsey: | They are both great vehicles. The Educational IRA does not allow you to contribute as much as a 529 Plan. They both allow you to withdraw the money tax free at the moment. This could change. The Education IRA does allow money to come out for secondary education should you wish to send your kids to private schools. |
| BostonDotCom: | Folks: We'll be ending the chat shortly. Please post your final questions now. We're trying our best to get to all of them... |
| _: | Q: everyone says to pay off your home, but I am concerned about taxes on my retirement income. if the current tax benefit is not changed, why would I want to give up the tax benefit of that money from the mortgage so long as I am being smart with it ?am |
| Linda_Homsey: | As far as paying off your mortgage, look to see what your rate is. Do you think you can beat it in the market? The mortgage rate is a known, the market rate of return is an unknown. Mortgages do give you a tax benefit, but you are still paying more for the interest. |
| BostonDotCom: | Everyone: If you've missed any portion of the chat, we'll post a transcript at www.boston.com/business/ within the hour. We have time for two more questions. |
| Jill: | Q: I've just gotten a home equity loan to pay off my credit card debt, but am really worried about falling back into debt. However, I am afraid to just cut up the cards, since there are times I'll need them. What's the next step I should take? |
| Linda_Homsey: | First, do a budget. You need to live within your means so that you do not need to use a credit card. If you don't want to cut them up, leave them home. |
| cgmoore: | Q: Hi Linda. I'm 25 make $40,000/year and want to own a condo or house by the time I hit 30. What is the most realistic way to prepare and save money for this? |
| Linda_Homsey: | Again, do a budget. This seems repetitive, but it is critical. Once you have a handle on what you can save, put it in a safe investment as 5 years is not that far off. |
| BostonDotCom: | Everyone: I'd like to thank Linda Homsey for joining us today. You can read the full chat transcript at www.boston.com/business/ within the hour. Thanks again! |
