Keep up the good work. What are your thoughts on ensuring your mortgage is covered if you die or are disabled? Right now, I’m trying to decide whether to up my life & disability insurance to cover my mortgage or continue with mortgage insurance through my bank. It seems going the L&D route is smarter. But I’d like to hear your thoughts…

As far as I’ve read ING looks ok at the moment as does HSBC. The biggest banking systems to have failed are the Icelandic ones. Irish banks have had all their deposits guaranteed. Each member of the EU is approaching the crisis differently as they have different exposures to US debt.

Keep in mind though, that if your house loses value, that you won’t have to pay the money back…in that case you get free money!

Honestly if you are on this site, then it means that you’re financially disciplined or on your way towards becoming so. For all of us on this site that are eligible, you should take the money and run. It’s not often you get the chance for free money, and even though it’s a loan, it’s a payback of only $9.60/week…talk about the Latte Factor.

Honestly I’ve never heard of a deal like this with so few strings attached. I’m definitely going for it and can’t wait to use the money as needed for my situation.

http://www.irs.gov/newsroom/article/0,,id=186831,00.html

If you intend to stay in your home for 15 years, go for it. If you do not, know this: You will owe the full amount if you sell the home. And it will NOT come due at the closing table. You’ll owe this money in the next tax year.

Which means that if you’re not a VERY disciplined money manager, it’s quite likely that the equity from the sale of your first home will be securely located in the down payment of the second home before you even remember that you owe it. This will leave hundreds of people in this country owing a debt to the government that will collect fees and penalties.

I qualify for this credit and I am NOT taking it. I would never take out debt to save–even interest free. An emergency fund built out of this money is never really safe to use for an emergency because you’ll need to have your full balance on hand–just in case.

I’d prefer to take the money I’d be paying back to the government each year and put it directly on my mortgage.

SAB – Congratulations! Here’s what I suggest for the bonus:

1) Figure out how much it will be after taxes so you know what you actually have (maybe $15k).
2) Use $500-$1000 as fun money (either right away or put in a vacation fund).
3) Then use a little to get set up in an apartment if you need (I don’t know what you have already, but don’t go overboard).
4) Set up an emergency fund with maybe $2000.
5) Check your dental benefits and see what they cover. Then get the dental work done.
6) Set up 2 Roth IRAs with $3000 EACH for yourself and your husband.
7) Put whatever is left toward the debt with the highest interest rate and stop using the credit cards.

Now, take a look at your budget. Continue to live on the amount you have been until you have paid everything off. If your combined salary is $60,000 and you have been living on $25,000, you have maybe $15,000 or more after taxes to put toward debt/savings. With that money:
1) Make sure both you and your husband are putting enough in your 401k to get an employer match if you are eligible (this will actually reduce your taxes).
2) Your max for the Roth IRA is $5000 each, so try to put $150/mo into each of your Roth IRA’s that you set up before.
3) Put $200-300/mo into your emergency fund.
4) Then I would divide the rest between saving for a house and applying toward debt. Use Dave Ramsey’s debt snowball for the debt portion and put the house savings into a high interest online bank (maybe set up 2 accounts at ING, one for house and one for emergency fund).

You can have a little fun but this is a great opportunity to use the extra money you’re getting to get your financial life in better shape. With a good salary you can increase your standard of living later on but right now continue to live like grad students until you’re on more solid ground.

I’m not US citizen but I have one account in the US. The bank is not so bad but the CD earnings is too slow (1%) to keep the money there. As foreigner, Can I open an account in another bank, like ING direct?. What about oppening an 401K, is this possible?. What would you suggest for readers from outside the US?.

I have a husband, who is just starting his career, and a young child. We have $11,000 in credit card debt, a $6000 car loan, more student loans than you can imagine, we need about $3000 in dental work, we have no savings really, we’d like a house sometime in the next year or two…

Essentially we’re starting out with nothing but our jobs and this sign-on bonus. Do you have some advice to keep me grounded at this exciting time? I have some financial discipline, and I read your blog regularly, but please tell me I can do something fun, too!

Thanks!

According to Charley Blaine and Elizabeth Strott today on MSN:

“The meltdown has been ugly in the U.S., but it’s looking worse in Europe.”

The EU is looking at their options but apparently can’t do a similar bailout to the US one because they don’t have a federal budget (for the EU as a whole). The article mentioned Italian bank UniCredit and Fortis, which operates in more than one country and has already been bailed out once unsuccessfully *in the past week*.

I haven’t seen any mention of ING (where so many of us bank online) but I’m wondering what effect the European situation is having on it or may have in the near future and how that affects us in North America.

I realize that US and Canadian deposits are insured up to the amounts required federally in both countries, but if ING were to have difficulties in Europe what impact (if any) would that be likely to have here in North America?

And, just as a comment, reading that investors are now flocking to TBills even at their newly lowered rate of .48% because of their perceived security makes me even happier to have just arranged to lock $5k into a 2 year GIC with a
guaranteed rate of 4%! Now is *not* the time to take risks if you are approaching retirement age!

You might also look into a single-member LLC to add a layer of legal protection between your husband and potential lawsuits. They are pretty easy to set up and ignored for tax purposes (meaning you just keep filing the schedule C or F or whatever he’s doing now).

First, to Bobbi: As of today I am 100% consumer debt free because of a similar bonus. I thought about it and decided that the reduced stress was worth it (ie, it felt right in my gut even though, technically, it wasn’t a perfect financial decision). I would not do that with non-consumer debt, though, and current plan to put everything towards getting my IRA funded from now until the end of the year.

Second, to Elizabeth: As a child of self-employed parents, please please look into incorporating and getting your finances un-mingled. It will make your lives easier as the business grows. Becoming an LLC is not difficult and can be done with a minimum of legal-wrangling and forms. The goal is to completely separate your family/household finances from the business finances in the event that something ever goes wrong.