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Solid financial solutions to ride out rough times

Many folks are looking for reassurances that the financial choices they're making — whether they're about credit, their homes or student loans — are the right ones. TODAY Financial editor Jean Chatzky addresses the concerns of four readers.
/ Source: TODAY contributor

Money is at the top of many minds these days, and that means questions are flooding my inbox. Here are a few answers that should help give a bit of clarity in this confusing and rocky economy.Q: Should I pull out my money from my employer's 401(k) retirement account now? I want to retire in four years. I am over 59, and will put the money in a money market paying 5.53 percent at my credit union.
— Vincent in New Jersey
A: If you don't need the money for daily living, then no, don't pull it out of your 401(k), where it is protected and can grow, tax-deferred. What I think you're saying is that you want to move the money to a safe place. There's a lot of confusion over this because people think that a 401(k) or an IRA is synonymous with stocks. In reality, those accounts are just the basket for your contributions — you can invest the money any way you like. At your age, you should only have about 40 percent of that money in stocks. The rest can be in safer places, like the money market option within your 401(k).

Q: My son just graduated with his master's and now owes tens of thousands of dollars in government student loans. Should he consolidate these loans? If so, should he consolidate by loan type or just lump them all together?
— Sandra in Maine
A: Whether or not your son should consolidate actually has to do with the type of loan that he has, says Mark Kantrowitz, who runs "The primary considerations for pursuinga federal consolidation have to do with whether the loans are fixed-rate or variable-rate, what the impact is on loan discounts, and the impact on loan forgiveness programs." Federal Stafford and PLUS loans borrowed before July 1, 2006, are variable-rate, meaning that the interest rates reset each year. Loans borrowed after July 1, 2006, are fixed-rate. The interest rates on those cannot change.The benefit of consolidating federal loans is that you can lock in the interest rates on those variable-rate loans. So if your son's loans are variable, he'll probably save some money by consolidating and locking in today's rates. Lumping them together also makes things a bit easier on the administrative front, because he can pay one bill each month and be done with it. Many lenders have ducked out of the federal loan consolidation market, so the best place to consolidate is the Federal Direct Loan Consolidation program at One thing to note: Private student loans can't be consolidated with federal loans.Q: My husband is in the military and we have had to put our house on the market. Now we are paying rent and making our mortgage payments. We are living on credit cards. The house has been on the market for six months and it's not receiving any interest from buyers. Our realtor told us that even lowering the asking price won't help in this market. Is there anything we can do?
— Jessica in North Carolina
A: I'm inclined to disagree with your realtor on this. I think that people are looking for deals and if you can lower the price a bit, or even throw in a few extras — closing costs, perhaps a new appliance — you might get a bite. Real estate is one of those things that really varies by city, town and even neighborhood, so be sure you've done the research to make sure that the home is priced right for your area. You can do that easily by driving around looking at "for sale" signs and even attending a few open houses. Too often, people overprice their homes because they hold a lot of value for them — but unfortunately, at least some of that value tends to be sentimental and doesn't register with potential buyers.If the price is right, and you've done everything you can to stage the home well — meaning that the grass is cut, the bushes are trimmed, the inside looks appealing and homey — and you still can't find a buyer, you might want to try renting it out until this market starts to turn around. That would give you some extra income to help cover that mortgage and start paying down those credit card debts.Q: We have a few thousand dollars’ debt on a credit card and several thousand in the bank. Is it better to pay off the credit card and have no liquid cash? Or should we hang on to the cash?
— Chelsea in New YorkA: In this market you have to be careful, because banks are really starting to cut credit lines, says Gerri Detweiler, credit expert for Normally, I'd say pay off the credit cards and if you have an emergency, put it on your card, but there's no guarantee you'll have that card down the road. So I'd pay off some of the debt, but leave at least $1,000 in the bank in case you need some fast cash.

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, .