Q: We have a 2-year-old and just had a second son three months ago. We have always felt we lived very responsibly. We paid off school debt, put money in our 401(k), paid off one car loan and haven't had credit card debt. But it is just not working. We are barely keeping our heads above water. Did we spend too much on our house? Do we need to sell? Do I go back to work, though we don't know that I can make enough to cover child care? Do we borrow from our 401(k) to pay the bills? — Ashley, Marietta, Ga.
A: Ashley: You are feeling out of control because you haven't taken a good hard look at the numbers. I know that sometimes the numbers are frightening and overwhelming, but in your case, they are the ONLY way to get the answers that you're looking for.
Here's what I want you to do. You need to figure out how much is going in, how much is going out and where it's all going. You can do that on a computer or with pencil and paper. You know the answers to some of your questions: How much is housing costing you? Not just your mortgage, but insurance, taxes and maintenance. How much is transportation costing you? Not just your car loan, but gasoline and upkeep. Track every single dollar for a solid month, and you'll find the answers.
A lot of people are feeling this squeeze because they're pouring so much more into heating their homes and filling up their cars. And while you're doing this, look into part-time jobs you could take on from home while your kids are, perhaps, napping. But do not rush to borrow from your 401(k). That's a road you don't want to go down until you absolutely have to.
Q: Eight years ago I got a divorce and that wiped out my retirement and my savings. I had to start over. I was able to get a house, but I have no money for my kids for college. I will have to help the kids take out student loans. I am building up my retirement again, but I am far from where I should be. I have talked to my kids and they seem to understand about the loan but they won't realize how much it will impact them until they have to pay it back! — Wade, York, Pa.
A: Wade, I hear a lot of parental guilt in your letter — and I want to encourage you not to go there. You are looking for ways to help your kids, and that's commendable, but you need to do it in a way that won't sabotage your own financial future.
I find myself saying this a lot, but it always resonates: There is no financial aid for retirement, there is plenty of financial aid for college. Start early with your children — junior year of high school is best — looking not only at federal student loans (many people make the mistake of looking for private loans before exhausting their cheaper federal loan options), but looking for scholarship and grant dollars. There are a lot of them out there. SallieMae.com maintains a good database.
Also, consider putting retirement dollars into a Roth IRA if you're eligible. Those are dollars that you can pull out down the road for education as well as for retirement, so if in a few years you find your situation has improved, you'll be able to tap the Roth dollars to help your children.
Q: I have a bit of an emergency. Back in November, I called our mortgage company to ask if we could have one payment added to the back of our loan; they are working on a modification. I have called them almost every week and they keep putting me off and say to give them another 5-7 days. Well, almost four months later, my credit is shot and they still haven't done anything. The person who is working on our modification said not to make a payment. I am so worried we are going to lose our house. — Melissa, Cold Spring, Minn.
A: Note: I decided to step in here to see precisely what was going on at Melissa's mortgage company. So I called Countrywide and that got them moving. They have worked with Melissa on a loan modification and her first payment is due in May.
They said that the problem was this: Countrywide has been working diligently to increase resources and improve processes in order to help as many financially strapped borrowers as possible. The company has helped nearly 12,000 borrowers retain their home in January. Currently, Countrywide has 120,000 borrowers in some stage of workout review. When borrowers contact their servicer, they should ask for the home retention division. Once in the process, borrowers who have not heard back from the company should continue to follow up on their loan until they get an answer.
If you are in this situation, there are a few things that I want you to do. Call the mortgage lender and don't just talk to the person who answers the phone — ask for the "workout department." And do not hesitate to make a lot of noise. You should also know about "Project Lifeline," which is an effort by six major lenders — Bank of America, Citigroup, Countrywide, JPMorgan Chase, Washington Mutual and Wells Fargo — that says they'll stop the clock on foreclosures for 30 days for borrowers who are identified as candidates for workouts.
Another resource — a place to call if you're in trouble — is the not-for-profit Homeownership Preservation Foundation's hot line, which can tell you if you're in the right position to work out a solution, or if you need to consider selling the home. The number is: 888-995-HOPE.
Q: My husband is having a hard time getting a job. He is a wonderful hard worker, but he was in the military for 20 years and then in the private college sector since he has been out of the military. He tried starting his own business and it did not fare well, so now he doesn't have a job and can't seem to get a good, steady full-time job. We are OK for a little longer but soon we won't be able to make all of our payments. What do we do now? — Dee, Lake Stevens, Wash.
A: Dee, this is, I know, a very tough time to find a job. And an even tougher time to start your own business. I'd encourage a two-pronged approach for your husband. The first is to simply get a job. It doesn't have to be a career job, or something that he even sees doing for a long time. He needs to get out of the house and get the satisfaction of having a paycheck (don't worry about the size).
I'd also encourage you to think of jobs that are social, where he'll talk to people so he can network. Then, look for a good headhunter or outplacement counselor in your area who could help guide him into a career-oriented job. Finally, for the both of you — I want you to listen to the advice I offered Ashley above. This is a time to really track where your money is going and see if there are any other ways to cut back so that you can alleviate some of the worry you have about the mortgage and other big payments.
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 “Pay It Down! From Debt to Wealth on $10 a Day” (Portfolio, 2004). To find out more, visit her Web site, .