I know from experience that if one person has a question or problem, there are thousands more behind the scenes who are struggling with a similar situation. I'm not the least bit surprised: The stock market is up, then way down. Gas prices are soaring. Now we're hearing that food prices are on the rise. Add all of these together and you've got a lot of people who are concerned about their bottom line. So I like to dole out the answers and tips in this space whenever possible.
Q: We purchased our first home in 2006. We were in a subprime loan, and our mortgage was $4,500 a month. Needless to say, we were not able to pay our house taxes. A few months ago, our new lender refinanced us at a lower rate so we were able to keep our home, but we still owe thousands of dollars in property taxes. Are we going to now lose it because we haven't paid? — Charlie, San Francisco, Calif.
A: The first thing you need to do is call your local tax office, because chances are, they'll be willing to work out a payment plan with you. The caveat? "They usually want this year's taxes paid before next year's come due," says Gail Cunningham, senior director of public relations for the National Foundation for Credit Counseling. To get an idea of what your monthly bill might be, you can split the amount you owe over the number of months you have before next year's due date. If it comes out to be more than you can swing, you need to consider finding another source of income, either by moonlighting or working overtime. Filter all the extra money toward your tax bill, and then start planning ahead for next year so you don't start the cycle all over again.
Q: I make good money, but due to the rising costs of gas, food and everyday goods, things are tight. I'd like to get rid of one of our vehicles, but it's a lease. What should I do? — Jennifer, Tulsa, Okla.
A: I'm hearing this again and again these days, especially from people who bought or leased SUVs and are now regretting it because of the absurd amount they're paying for gas. Luckily, you do have some options. The first is to go back to the dealer and explain the situation to see if you can strike a deal that will cost you less than your original payments, preserve your credit and get you out of the car. It will, however, likely cost you something, which is why I like the second option better: Swap the lease.
In this scenario, you use a lease transfer program to find someone else to take over your car lease. These companies are like the match.com of car leases; they'll put you in touch with someone who's looking for a short-term lease, then work with you to make an official transfer of the contract. They also screen applicants to make sure their credit and income are sufficient, which takes a load off your shoulders, although John Sternal, a spokesperson for LeaseTrader, tells me that once the contract is transferred, you're not liable for any defaults. There's also no black mark on your credit from the transfer, and it's relatively inexpensive. LeaseTrader charges $79 to post your vehicle online and about $150 to do the transfer.
Q: I work as an independent contractor. What steps can I take in saving for my retirement, since I don't have a company-sponsored plan? — Shawna, Charlotte, N.C.
A: Your first stop should be a Roth IRA if you fall under the income requirements ($166,000 if you're married and filing jointly; $114,000 if you're single or filing separately). These are unbeatable because your contributions are made after taxes and as a result, withdrawals are tax-free. You can even pull out contributions (but not earnings) at any time without paying taxes or penalty. It does limit your contributions to $5,000 in 2008 if you're under 50 ($6,000 if you're over), so once you max that out, you might want to look into either a SEP IRA or an individual 401(k).
A SEP will likely have a broader range of investment choices, but an individual 401(k) is going to let you contribute more money. Both limit contributions to 20 percent of your net self-employment income, but with the individual 401(k), you can throw in an additional $15,500. Contributions to both plans are capped at $46,000 in 2008.
Q: What should I expect if I offer a debt collector the original amount owed on a credit card in one lump sum? Is this realistic? What is the smart way to handle this so that the company gets paid and I can get rid of this debt? — Jack, Brooklyn, N.Y.
A: Most of these debts get settled through negotiation, so you want to offer up an amount that seems reasonable to you. The original amount owed is a good starting point, because the debt is likely much more now due to interest, late fees and collection costs. The collector will likely come back with a counteroffer, and you'll then negotiate. A couple of things to consider: Every state has a statute of limitations when it comes to collecting on a debt, generally ranging from about three to six years. If that time period is almost up, the collector will be much more willing to settle for less, says Cunningham. Also, keep in mind that just because you settle and pay up, the fact that the debt went into collection will stay on your report for seven years. And once you pay, be sure to get the agreement in writing.
With reporting by Arielle McGowen.
Jean Chatzky is an editor-at-large at Money Magazine and serves as AOL’s official Money Coach. She is the personal finance editor for NBC’s TODAY Show and is also a columnist for Life Magazine. She is the author of four books, including 2004’s “Pay it Down! From Debt to Wealth on $10 a Day” (Portfolio). To find out more, visit her Web site, .