EXPERT FINANCIAL ADVICE

Question

I have a short question, should I pay all my utilities for the rest of year, and therefore pocket my social security, check, knowing it is mine, till December 2010
thank u

Question:

In 2009, my company laid me off in March. I got a W-2 for January through March. With the work that I had done while employed during that time, will I be able to take the EITC credit?

Also, I had money in a SEP at the company. Since I am not at that company now, how should I report that money in filing taxes?

Confused in Dallas

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QUESTION:

This year I will have to take my first RMD for my traditional IRA. Should I sell stocks that have gained or lost for the distribution?

P. W.

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Question:

My daughter is a full time student and has Series EE savings bonds
that were given to her when she was little. (Issue Dates are all in
the late 80's early 90's) Every year she cashes a few and uses them
for college costs, but when we prepare her taxes she is still required
to pay tax on the bond income. I thought Savings Bonds could be cashed
and were tax free if used for education. I have read the rules on this
at Tax help sites and they make no sense. Her income is very low for
the year as well. (less than 8,000 in summer job) She is 22 years old
and files her own taxes and I hate it that she is taxed on this income
as it hurts the savings bonds values in the end. Thanks for your help
on this.

Jo Ann

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Question:

I was laid off from my job in 2009. I applied to my mortgage bank for a loan mitigation. After 6 months my bank turned my request over to a loan mitigation processing company. The loan mitigation company reviewed my application and determined that I do not qualify for a loan mitigation according to Fanny Mae rules. They will not explain why I do not qualify and are reluctant to give me written notice. Is there any way to get access to the rules? Thank you.
John

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Question

I am using TurboTax to file my taxes and generally don't have a problem understanding the interview questions but not on this issue. My wife and I both work. I answered the questions on the interview noting that neither of us received SS, railroad or veterans benefits from Nov 2008 - Jan 2009. TurboTax shows my wife and I are eligible for $689 in Making Work Pay Credit. It goes on to say that most people already benefit from this credit by lower federal income tax deductions on payroll. I work for a major company but have no idea if my company has already figured the tax reduction in my withholding or not and I don't know how TurboTax would know that either. Based on what I entered it says I'm eligible for the credit. Is there something I'm missing here or just more of the government handing out money to us we will eventually have to pay back with higher taxes?

Thank you

Confused in Rockwall

Question: I know that the limit for an HSA contribution for 2009 was $5950 and I contributed the full amount.
My company also contributed in the amount of $1000. I recently received a form 5498-SA from my HSA showing a contribution of $6950.
Did I go over the allowed maximum? If so, what do I do about it? Can I still withdraw money and show it for 2009? Can I just deduct my part ($5950) on my taxes? Help.

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Question: I'm getting close to retirement (within 1 year) and I am confused about asset allocation. I sometimes think I currently have my 401k allocated very aggressively for my age. I have always considered social security and the pension I will receive to be part of my "overall" portfolio, although I realize that these 2 parts are not anything I can self direct or re-allocate. As a result, I've kept my 401K allocation roughly 80-20, (equities-bonds). I'm diversified in my holdings with domestic and international stock funds.
The 80-20 seems high, unless you consider the pension and SS as virtual guaranteed returns. Then the allocation of my total holdings comes in around 35-65, (equities-everything else)

Should I be considering the pension and SS this way? Why or why not?

Thank you in advance and I'm really enjoying the "Your Money" section in the paper. This type of information is in desperate need in my opinion. -Bruce

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Question

My wife and I would like to reduce the amount invested with our FA to save on annual fees. She currently bills us at .90 against our total. This costs us roughly $6000 a year plus we still have to pay load fees etc. on actions taken. About 1/3 of our account is in an IRA which we heard we can remove from the account without penalty but we don't know if the information is true. Nor do we know how to go about actually doing this. We have had an account with our FA for a bout 4 years and feel we want to control some of our own money. Can you help with a suggestion to go about this.

The other 2/3's is in mutual funds and such and we would like to have that too, if it didn't cost us. We feel like we are in a trap right now cause if we cash out everything with her we will lose money for good. We want to be smart about this. Slowly get money back in our control is the goal.

Thank you for your time and we eagerly await your suggestion.

Question

I have an IRA with KBS REIT. I paid $10 per share for 1900 shares and it was worth $19000. In November 2009 I received a statement saying shares were now $7.00 and value $13000. My financial advisor said not to worry, but I am worried. Should I take my money out or stay in this investment?

Additional Question:

I know you haven't had time to reply but this is my second request. My question is should I roll over what's left into something else, or leave it there as my advisor says.

Thank you.

Sara, Senior Citizen

Question

I read your (Pamela Yip) column regularly but there is a topic that no one seems to want to address. There are many of us in this economy that have had to dip into or completely exhaust their retirement savings. My future retirement, should I do nothing to recover, will rely on my monthly SS check and renewals from my insurance agency. I will be 65 this month, and am earning at a good level again now and I want to start to contribute at least $500 a month into some vehicle. I am healthy and can continue to operate my insurance agency for the foreseeable future. The savings plans I've investigated pay a whopping 1-2%. Do you have any advice to those of us that are starting over instead of retiring?

Thanks.

Marc

Question

ref: http://homebuying.about.com/od/buyingahome/a/21808_taxcredit.htm

Are my wife and I eligible to claim this tax credit? If so, may we claim in on 2009 joint tax return?

She bought the home we live in now ("Home A") 7 years ago, and lived in the home by herself until we married on 2/17/07. We have lived in her home since we were married.

When I was single, I bought a home ("Home B") in August, 2000, and lived in it for 7 years until we were married in Feb 2007. After putting a considerable amount of repairs into the home, I sold it in August 2009.

We plan to close on the purchase of a home ("Home C") on 2/22/10, and will put our current home ("Home A") on the market shortly after we move to the "new" home ("Home C"), which was built in 2004.

So, my wife has lived in our current home for 7 years. I will have lived in our current home since we were married on 2/17/07 (i.e., more than 3 years).

Is there anything that would disqualify us from claiming this $6500 tax credit?

Thanks for reviewing!

Bill M

Question

My wife and I have not been good stewards of our finances over the last 20 years. We pay our bills, but, ever since I was unemployed for 9 months two years ago, (I'm employed now), we are paying right on the due date, or a few days late. We have called our mortgage company about modifying our loan, but, we make too much money. We have a high debt to income ratio and we just cannot seem to get ahead. What can we do to put ourselves in a better financial position?

Sincerely,

Jon

Question

I was laid off from my job in 2009. I applied to my mortgage bank for loan mitigation. After 6 months my bank turned my request over to a loan mitigation processing company. The loan mitigation company reviewed my application and determined that I do not qualify for loan mitigation according to Fanny Mae rules. They will not explain why I do not qualify and are reluctant to give me written notice. Is there any way to get access to the rules? Thank you.

John

Question:

I have several CD's that I need to move into something that has a better return. Do you have any suggestions? Also, what is the best way to help my grandchildren save for college?
Thank you,

Question: My husband and I are both retired with a combined income of over $50,000 from pensions. We have no debt, and we have over $200,000 in CD's. Also, we have about $40,000.00 in Pioneer Mutual Funds. He is 72, and I am 70. Also, we keep about $30,000 in checking accounts. Is there any better place for our money that we put in CD's? Is there any safe annuity? --Linda

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Question:

I had a $9,000 IRA at a bank. I withdrew the IRA on it's maturity date and would like to reinvest it in another IRA w/ a mutual fund company. I still want to contribute my $6,000 for this year. Can I transfer the $9,000 without paying taxes and without affecting my contribution this year?


Mitzi

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Question:

Good Morning-
I have been separated from a job for a year now and continue looking for permanent work. I am 57 yrs old professional and luckily have not had to use any savings until now. I have two investment accounts; one is an ESOP Diversification Plan form a company I voluntarily left three years ago (2007) and the other is a 401K from the company I was involuntarily separated from 1 year ago (2009).
My question: can I access funds from either account and pay 20% withholding but not the 10% penalty since I am older than 55 and laid off?

Thank You-

Mike

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Question: I am retired, 61 years old and living on a pension. I did some consulting work this past year for several small businesses and earned $5000. I have not received any tax forms from these businesses and I don't expect to. How do I report this for tax purposes? What expenses can I deduct? Can I put $5000 into my IRA and avoid all taxes? --Dave

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Question:

On page 19A in Sundays paper appears an ad for First Fidelity (tax & Insurance). Rates are 4.50apy for a liquid account and 4.06 for a CD/CD IRA. In a previous ad these rates were FDIC insured. In

light of what other banks are paying, are these rates too good to be true?
Also, What is a liquid account? I understand there are maximums and minimums,still, how can they do this? Hope you can shed some light on this.

Thank you,
Dave

Question

I am a Single 59 year-old resident of Texas and was unemployed the full year 2009 and received $20,700 in unemployment compensation in 2009 and had $1,875 in federal income tax withheld from this compensation.

I had $32.92 in combined interest earned income on my checking and savings accounts in 2009.

I kept my 401K with my former employer when I was laid off in late 2008 as I was paying off a 401K loan (loan paid off Nov. of 2009).

Do I report my unemployment compensation on the tax form as $20,700; or $18,300 ($20,700 minus the first $2,400 exclusion)?

Since I did not have any wages/salary income in 2009; but still have a 401K with my former employer will I receive any year-end documentation for tax purposes regarding the 401K? Previous W-2's had 12a and 12b for this purpose.
Do I show anything about the 401K anywhere on my tax return?

Also, since Texas does not have a state tax, I as assuming this is a non-issue as far as unemployment taxes are concerned??

On a separate issue, now that my 401K loan is paid off, what are your suggestions on what to do with my 401K - keep it with former employer (Citigroup); move it to IRA ???

Thanks.

Sue

Question

This year I will have to take my first RMD for my traditional IRA. Should I sell stocks that have gained or lost for the distribution?

Question: I am currently unemployed, receiving benefits, and working part time after being layed off a year and a half ago. About four years ago, under similar dire circumstances, I took out a $10,000 loan from HFC at a ridiculous rate (about 27%) in order to pay off back property taxes, catch up on my mortgage, etc. I now find that the $256 mo. note is almost impossible to cover. I got a temporary 6 mo. reduced payment , but no longer. My once good credit has crashed after two layoffs, missed mortgage payments, late HFC payments, etc. I'm not the type to let anything go into collection, but it seems that having a 7-year bruise on my credit might be the only way to go. Should I contact them & tell them that I don't want to take this step but that I'll have to if I can't get my rate reduced? Thanks so much for your help...Bill

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Question: I will be retiring at age 55 in April 2010. I have a 401k that I can
either leave at my existing company or roll over to an IRA at that
time. I have lots of investment options through my 401K which is
handled by Fidelity net benefits. If I roll over the 401k to an IRA I
would plan to do this through Vanguard. My husband currently has money
at Vanguard in an IRA.
My question is what are the advantages and disadvantages of either
keeping the money in the 401k or rolling to the IRA? Are there any tax
considerations that are different between the two types of accounts. If
possible, I plan to leave the money and not draw from it until I am 59
and a half, so that I am not subject to the 10% penalty.

Thanks --Zoe

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QUESTION:

I am currently working for a Texas school district under the Teacher Retirement System and am qualified to purchase an additional year of service credit at the time of retirement if I pay the full actuarial value. If I retire in Dec. 2010 at 65 years of age with 29 years of service credit, I have figured that I should be able to purchase an additional service year for $17,150 which will increase my pension by $130 per month using option 1 (100% payment to spouse if I predecease him). Is this a wise investment for me to make? My pension should be $3,764/mo (without the additional purchased year) and my husband's social security is about $1,200/month. We have about $300,000 in savings. Our home is mortgage free but needs a lot of work! Thanks so much for your help!

P. C.

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Question:

We are 59 and need help with our large debt. My husband is currently unemployed and we have only $30,000 in savings. I have about 65,000 in mutual funds. We have 2 kids in college and have taken a lot of student loans. We have a lot of debt on credit cards.
We now can not sell our house worth about $360,000 and down size because we can't get a loan. We have already taken a lot of equity out of our house.

I am a school counselor making about $60,000.
I know there are consolidation programs and people that can help but I don't want to go through a lot of history and it end up costing us money.
Where can you direct us?

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Question

I have been unemployed for several months and while employed I made some pay day loans which I paid on time several times, but now I owe these companies these loans and they keep on charging big fines, for example a $900.00 loan now it grew up to $1700.00 and these people are harassing me for not paying, can they actually threat me for not paying now, and can they put a lien on my house, I am not refusing to pay, I have told them that I am unemployed and I can only pay $25.00 per month, but they refused to accept.

What should I do?

Question

Hello, I'm 58 yrs old and a school administrator. I am planning on retiring in June 2010. My wife is a school teacher but she will continue to teach for a couple of years. We have a 2yr old house that we owe $72,000. It is appraised at $230,000. This is our only debt. I will draw $55,000 a year in retirement. I can take a lump sum payment of $55,000 upon retirement but it will lower my retirement by about $400 a month. I had planned on doing this and then cashing in some mutual funds to pay off the rest of my home. We also have about $200,000 in 403b but did not want to touch them. Is this a sound decision in paying off the home and eliminating the interest of 5.30 % apr for 13 more years but lowering my retirement by $400 per month for life and cashing in almost $20,000 in mutual funds to pay off house and pay taxes? I would appreciate your help.

Thanks, Tim

Question

Dear Sirs:

I am considering bankruptcy. I have debt of $110,000.00 I have no income coming in at this time. I moved from Calif. when the economy got really bad. I was working in my mothers business for several years. She had to close it. I moved to Dallas. I was still getting work from Calif. I have been paying my credit card bills fine up until this month. I have no monies coming in at all, no income. should I call the credit cards and tell them I cannot pay? Tell them anything? I must file bankruptcy.

Thanks desperate in Dallas!

QUESTION:

I have a small IRA (about $8,000) that I would like to liquidate to cover some current debts. I am 57 yrs. old and a retired federal employee. I have other substantial investments to take care of retirement. What is the cost to liquidate this account now?

R. S.

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QUESTION:

I earn under $30,000 so my college son receives college aid. Some are loans and some are grants. He is offered more in loans than he needs. Should he take all the loans and keep the money for the remaining 2 years of college as they are totally uncollaterized and would not be able to get that money by any means?

D. G.

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Question

I want to ask your financial adviser about whether it is better to put 40,000.00 in 1% guaranty bank CD for 1 year or capital one l.5% simple savings?

Question

Can I move my 401k at my current employer, that no longer matches my
contributions, to somewhere else.

Cliff

Question: I am retired and interested in moving some equity investments to a bond fund. I am concerned about the impact of potentially rising interest rates on the principal.
Would a broad based indexed fund be the best way to minimize the impact.
I would anticipate about a 5% withdrawal annually.
Thanks for any suggestions/comments/ideas you might have. --Rick

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Question: Should I payoff the mortgage on my house? The house is tax valued at around $165,0000 and I owe $59,000. I am 80 yrs old living on Soc Sec, Teacher Retirement, and a small pension inherited from my late husband. Other income is from CD's and an annuity that is automatically reinvested. If the answer to my question is yes, how would this best be accomplished? --Mary Lou

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Question: Bank of America has sent me a 1099 for Money I did not receive It was Sent to an attorney on April 13, 2009. I did not know that it was taken Till I went on line and found the account missing. After talking to Bank Of America In person, Also Customer Service,IRA Department. Legal Dept. and Pensions Services, Dallas California & Florida, as well as the IRS. They all said that The money could only be dispersed to me. The IRS for back taxes for which I have none. When I Finally reached the person that dispersed the funds she said the same thing until I ask her to put it in writing. She stated that she would have to ask her supervisor. After about 3 minutes she came back to the phone and stated that they had done nothing wrong and hung up. This was also told to me when I opened up the IRA. My 401k was at $87,000.It had dwindled $ 46,000. They said They would take care of the rollover and to sign some papers and they did. Now the have sent a 1099 saying I withdrew $46,263.29 and Fed Tax was sent to the IRS for$ 4,626.33. Problem I am on Social Security and This over the limit I can urn before penalty reducing my next years Social Security. I can not pay the taxes on my house we can barely get buy now on just social security, I do not know what else to do I can not Fight Bank of America I am seventy years old and no other income. Any help or advise or help you can give will be appreciated. IT IS ONE BIG MESS!!!!!! --Don

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Question: My mother died last year and left me 4 US savings bonds that have been matured for several years. They are worth around $4,300 each. I need to cash them but need to know how to do so without incurring an income tax charge. I want to invest the money in something like bank CSs. This is the only savings I will have and I need to make the most of it. I know this is a very petty amount in your eyes but it is very important to me. Before she died she put my name on the bonds so they were owned jointly. -Camille

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Question: In 2008 my father passed away, he had a traditional IRA and I converted to an inherited IRA invested in bank stock. I had to take a distirbution in 2008 due to the fact he was over 71 and had been taking them prior to his death. I took it in a bank stock certificate and paid income tax on the value of the distribution.
My question is: if the value of the stock certificate has increased, do I have to pay income tax on what the current value of the stock would be at the end of 2009? And if so, how do I do that?
Thanks,
Deb

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Our grandson is 28 and single. His ex spouse (married less than a year) ran off, use his credit card to run up 13,000 in CC debit now 8,000. Now his credit it poor.

I am considering helping consolidating his debit using my excellent credit. 500,000 in liquid assets. 75,000 year income.

First question how can I negotiate with the credit card collection agency to reduce the 8,000?

Second is it wise to go to my bank with the plan. Get him a loan me signing it. Paying off the debits below then. Get him on reducing the loan.

His income is 2,000 a month after taxes. With 1,500, a month in debit payments there is no room for normal living expenses.

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Question

Dear DMN and FPA folks,

Here's my financial question:

If the required minimum distribution percentage schedule for married couples is used, would the annual withdrawal calculations apply to the pre-tax retirement accounts for both spouses even if one spouse hasn't reached 70 and 1/2 yet?

Thank you.

Dick

Question

All the advice I have read suggests you put money into bonds for safety. I am 55 and have a 5 year CD ladder set up to have 2 CDs per year come due( worth $224,000.00) . I also have $69,000. in series EE savings bonds. The balance of our funds are in IRAs and some non-IRA mutual funds ($907,000.) How do you research and decide upon municipal funds? How can they be purchased? As we plan to retire at 65 and will not have any pensions to fall back on, we still need to grow but worry we don't have enough in "protected" type of products. Can you suggest anything?

Thank you Robin

Question: I contributed nearly the maximum to my Roth IRA in 2009 assuming I'd fall under the income limit, however I was fortunate enough to earn more than I thought and my MAGI exceeds the limit for contributions to a Roth. How do I correct this? I presume I'm allowed to recharacterize the roth contributions to a traditional non-deductible IRA without any tax consequences but I can't find a clear answer. --Eugene

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QUESTION:

Corporate employees can generally contribute pretax dollars to a medical saving account. Can the unemployed get a similar benefit? Thank you.

B. S.

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Question: I am 63 years old, living off of my pension, my social security, and my investment portfolio. Roughly 50% of my income needs come from my portfolio which is currently weighted 70% bonds and cash and 30% equities.

With the exploding national debt, I am concerned about the impact on pending inflation and interest rate rise on the bond holdings of my portfolio. Are there any general guidelines you can provide to help mitigate this exposure? Would an increase in my inflation protect securities mutual fund holdings help in this regard?

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Question:

I have an IRA rollover with Wells Fargo via Wachovia via AG Edwards. The
majority of my 401 (k) money is with Vanguard funds through my employer.
The rollover has approx. $42,000 in stocks and a mutual fund. I have $6700
in AT&T stock as well as $3500 in Cisco Systems and $14000 in Johnson &
Johnson stock. The rest is in Capital Income Bldr. Class C (CIBCX) mutual
fund, a move they had also recommended 3 years ago and I am not so sure it
was good.

Now my financial adviser is telling me that the stock is risky (I'm 57) and
I should move it to a managed mutual fund "FundSource SM" - core American
Moderate Growth Optimal Blend that is a no load fund with a .8 expense
ratio and 1 1/2 flat fee paid quarterly. I am not able to find anything on
this FundSource team on the internet, that would shed light as to how good
they are. She did send me some financial data on Calendar Year Returns as
of 09/30/09 (4 years) as well as Trailing Returns as of 09/30/09. Not sure
how to interpet all this but I am not so sure this would be a good move.

Please let me have your thoughts.

Thank you,

Irmgard

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QUESTION:

I am trying to decide whether or not to convert my two traditional IRA's into Roth IRA's. I have $140,000 in the two of them altogether. I am a 55-year old retired teacher. I have the money to pay the taxes in a money market account. I am able to live on my pension and still save, and don't anticipate withdrawing from my IRA savings for 10-15 years. I have additional savings/principal in my house of about $200,000. Do you think it is a good idea for me to do the conversion?

K. H.

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Question: I feel very confused about the qualification of the federal housing home buyer credit for move-up/repeat home buyers. The FAQ web site at http://www.federalhousingtaxcredit.com/faq2.php mentions the time frame of the credit applied to purchase between Nov. 6, 2009, and April 30, 2010. But, none of the news on TVs and newspapers mention the time frame of the purchase. The FAQ on the web page does not have a question about the time frame, either. Do I have to have a purchase made between the time frame in order to claim the credit?

I purchased a new home and closed the home in April 2009. Will I be eligible to claim the credit? Thanks, --Joseph

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QUESTION:

I will be retiring in a few months and have a lump sum of $350,000 to decide on an annuity or other investments. I do not want to do an annuity as it will not leave anything to my children should something happen. Together with my husband who is also retiring, we will be in good enough financial shape not to have to need an annuity. Our advisor has mentioned a plan management which actively manages and has a fee of 1.6% which seems very high. Supposedly this firm will actively manage in both up and down markets to offer a better return on investments. Was wondering your views and any alternatives that would not be so expensive!

DLM

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My wife and I are retired (age 69), we lost most of our savings in a Ponzi scam (Madoff). We had enough money to purchase a small home in East Tx. and it's paid for (1200 sq. ft.) We have downsized a great deal, but have not been able to sell our other home as yet, and still have substantial debt.
We have only approx. $3,000 income at this point (primarily Social Security).
My question is this...I've been told we can get a reverse mortgage on this smaller house, use that money to pay off all our other debts, which amounts to approx. $30,000. Is this a wise move? is a reverse mortgage as good as it sounds.
Your thoughts would be greatly appreciated. Thank you.

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I have about 500K which provides my sole source of income plus $700 in SS.
300K of it is invested with the largest securities Co. and 200K in
various CDs which were paying around 4% originally and are now 1%..
I get no help from my securities "advisor". The last thing he got
me to do was buy a second hand C.D. that, when I asked every
question I could think of, was actually going to realize about 3/4s%. He is the Jr. member of a "team".

In the meantime it's just old me with the 200K in 6 different C.D.s.
As I get older, I need more money, not less, and I don't mean to
travel or play golf, I mean for teeth (close to $5,000 in 09)
hearing aids which average around $4,500, old home and old car
needing more and endless repairs and personal services as energy and
strength lag. My income has been in the mid 30s . Where does that
put me on the national individual income scale, from welfare
recipients (I guess everybody is a consumer of some sort) to the
highest (like Gates, Buffet, Soros, etc.) They speak of the middle
class or middle income so what is the range of the bottom 1/3,
middle 1/3 and upper
1/3 for the last year the information is available.

Thank you for helping me with my personal finances and to understand
the national financial picture .

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