Getting the best rate on consolidating student loans

>>> time now for today's money 911. that's where we answer some of your biggest financial questions. we have a great panel of experts this morning. jean chatzky is the author of "money 911." farnoosh torabi is host of financially fit and lenani cox joins us as well. christine from texas is on the line.

>> caller: hello. thank y'all for taking my question.

>> and your question is?

>> caller: i'm getting laid off in the next month or two. my husband's salary is enough to cover our expenses, plus i will be getting unemployment benefits or will be eligible. so we feel that we have enough money after paying bills to add a car note. my husband thinks we should buy a car before i get laid off because we will get a better interest rate . and because we have an older car, a 2005 honda pilot with 116,000 miles. i think we shouldn't because there really isn't anything wrong with my car. we did just have some minor repairs, but --

>> all right, christine. let's let jean jump in.

>> first of all, i'm sorry you're being laid off. i'm with you. if you have a car that's running fine, even though it has a lot of miles on it, i would not add any additional debt to the burden that you and your husband are carrying. drive the car, get another job. at that point you can go out and get another car loan . it just seems silly to me to amp up your debt burden at a time like this.

>> when you're vulnerable.

>> you should be conservative.

>> thank you. now to skype to check in with erin. she's skyping from madison, alabama. good morning. you've got a guest.

>> good morning.

>> who's that?

>> that's my husband dave.

>> hi, dave.

>> good morning.

>> what's your question?

>> our tax return will be enough to pay off the second mornl on our home allowing us to refinance and save approximately $200 a month. however our emergency fund has been depleted to almost zero over the last year. we plan to stay in our current home for the foreseeable future. our question is how we should plan for this chunk of money. do we refinance the mortgage making it easier to pay bills every month or put the money back in the emergency fund?

>> if i were you i would put all of the money, every penny into the emergency savings account . you have no savings and that's priority. additionally, i want you to go back and revisit your tax withholdings. i understand you're getting a $5,000 refund.

>> yes.

>> that's really high. the average refund is about $3,000. that tells me you're withholding too much. go back and revisit your withholdings. that's how much you pay the irs . i hear a baby in the background. you should definitely be saving money now. go to irs .gov. in the search bar , i want you to type in irs withholding calculator. get some spreadsheets which will tell you how to estimate appropriately so you get the $5,000 over the course of the year, not at one time. that will give you potentially an extra $400 in every paycheck helping you to pay off the second mortgage.

>> got anybody else over there? maybe a dog or something? thanks so much.

>> thank you.

>> now let's head back to the phone lines. we have lin from delaware on the line.

>> good morning, al.

>> what's your question?

>> i have two children in college. my daughter graduates in may. my son next spring. my question is about consolidating school loans. our daughter has loans in her name that are subsidized and unsubsidized and a perkins loan through the university. we have parent plus loans for her through sal may and direct loans. how do we start the process of consolidating the loans so there would be one payment at the best rate and do you know about the obama student loan plan from january 2012 to june 2012 ?

>> what do you think lynn needs to do?

>> first of all, the way to go about consolidating the loans depends on the type of student loans there are. you may have a combination of both or your daughter has a combination of federal and private loans. you can consolidate through the department of education and frankly, you said you wanted to get the best rates. they take a weighted average of all the loans and bump it up by an eighth of a percent. it can't be more than 8.25% but it can be consolidated. through a private lender you have to shop around in the marketplace to see who might offer the best deals. on the federal side there are no fees to consolidate. don't pay anybody who says i can do it for you. on the private loan side there are origination fees. those can be as much as 1% to 5% of the new loan you're taking on.

>> good luck with that, lynn.

>> thank you.

>> have a great day. jean, farnoosh and lynnette, thanks for