Dear Mary: My IRA has been steadily losing money. I'm thinking of stopping my contributions until the economy picks up and using the extra money to pay off the credit card debt I've accumulated. My parents flipped when I told them my plan. Although I'm only 32, they're afraid I'll be putting my retirement in jeopardy. Are they right?
- Molly, New York
Dear Molly: Your parents probably know that your IRA will weather many ups and downs and still yield significant profit by the time you reach retirement.
But they're overlooking a fundamental financial principle: The best investment is a repaid debt.
You're probably paying double-digit interest rates on your credit card bills, and every dollar you pay off now is a dollar saved in future finance charges. So go ahead and suspend your weekly IRA contributions, but resume them as soon as your debt is paid off.
Dear Mary: My husband is a spender, and I'm a saver. To keep the peace between us, I opened my own bank account. When I told him, he freaked. He said we're married and that makes it wrong to keep separate accounts. Is he right?
- Marsha, Minnesota
Dear Marsha: Right or wrong, your husband flipped because your actions seem to say you don't trust him and that you have plans that don't include him. Imagine how you'd feel if a partner stashed cash in a secret account. You'd probably feel betrayed and worried that he was about to bolt. Say to your husband: "I'm sorry I hurt you.
Dear Mary: After years of struggling, my wife and I have finally gotten ourselves out of debt. It is such a great feeling. Now that we aren't focused on paying creditors, we'd like to start figuring out how to secure our financial future. We thought it might be a good idea to hire an adviser. Is the expense really going to help us get our finances and future in order? And how do we find a financial planner we can trust?
- David, Missouri
Dear David: A good financial planner can be invaluable. And you want a qualified, professional adviser, not a salesman.
Financial advisers come in two flavors: commissioned and fee-based. Although advisers who charge by the hour are not nearly as plentiful as planners who get a commission for the financial products they will try to sell to you, you should be able to find one in your area. Go to the website of the National Association of Personal Financial Advisors, NAPFA.org, and type in your ZIP code. All the planners in this database are certified and fee-only.
Send questions to mary@everyâ daycheapskate.com or Everyday Cheapskate, P.O. Box 2099, Cypress, CA 90630.