• David Bach: Stay the course with the 401(k)!

    Today Money financial expert David Bach joined us for a live Web chat Wednesday to answer your questions.

    Here’s one of his answers to questions from the live chat. (See below for the full Q&A and video of David’s TV appearance this morning.)

    Guest asked:

    “Hi - I am contributing 15% to my 401K but my company only matches 50% up to 6%. Should I be doing something else with my 9%?”

    David replied:

    “Dear Guest! You should leave it alone...you are brilliant and doing everything right. You will look back later in life and be sooooooooooooo GLAD you put 15% in your 401k plan. You friends will wonder how you go to retire ten years before them and it will be because you saved three times more than they did! Well done, stay the course.”

    Here’s the full chat archive and David’s TV appearance:

    If you have a question for our TODAY Money experts, submit it here.

    To sign up for an e-mail reminder for our next chat, click here.

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  • David Bach: It's never too late to save for retirement!

    TODAY

    TODAY Money expert David Bach, author of the book "Debt Free for Life," joined us for a live Web chat Wednesday morning after the show's Money 911 segment.

    Here are two of his answers to questions from the live chat. See below for the full Q&A and video of the Money 911 segment.

    Jessica's question:
    Hi David! My husband and I are both in our early 40's and have no real savings or retirement money set aside. Is it too late? What type of accounts should we have besides our employer's 401(k) plans? 

    David's answer:
    Of course it’s not too late! I wrote a book called Start Late Finish Rich, because this is the number one question I get every single day. It's only too late if you don't get started. 

    The first thing you need to do is pay yourself the first 15 percent of your gross income into your 401(k) plans. This will help you catch up.

    You also need to start building an emergency account, and then focus on saving for a home. Sounds like a lot but you can do this, and you can get started today.

    Michelle's question:
    Good Morning! I am a teacher who currently does not have a summer job. I have about $18,000 in credit card debt. Any suggestions on how to get my debt down? The interest is killing me. 

    David's answer:
    Michelle, my best advice is to work this summer -- go find that summer job. I know they are hard to find, but there has to be something out there you can do (even if it's babysitting). Your best bet to pay down debt is to earn more money and then use it to pay down your debt. 

    I would try also and see if you can transfer high interest rate credit card debt to a lower interest rate card. Go to a website like CreditCard.com or Credit.com and review other offers, but read the fine print on transfer fees. You can also try and renegotiate with your current credit cards.

    I cover all of this in detail in Debt Free For Life, which you can get details on at FinishRich.com. Good luck!

    Complete archive:

    If you have a question for our TODAY Money experts, submit it here.

    To sign up for an e-mail reminder for our next chat, click here.

    Watch this week's Money 911 segment:

    A panel of experts led by TODAY's financial editor Jean Chatzky answers viewers' questions about saving for retirement, passing a credit check and more.

     

  • David Bach: How do you stop credit card companies from calling?

    TODAY

    TODAY Money expert David Bach, author of the book "Debt Free for Life," joined us for a live Web chat Wednesday morning after the show's Money 911 segment.

    Here are two of his answers to questions from the live chat. See below for the full Q&A and video of the Money 911 segment.

    Guest's question:
    I often get credit card companies calling me by phone. They say they can reduce my interest rate if I pay in full. I always pay my bill in full and have good credit. I feel as if they are trying to make me pay early to get a lower interest rate which to me seems wrong because I am an EXCELLENT customer. Any thoughts?

    David's answer:
    Love this question. I have a really simple answer: Tell them to stop calling you! By law, if you ask credit card companies to take you off their call list they have to or it’s criminal. If it's your credit card company and not a new company bugging you, ask them why they are bothering you with this. Again, tell them to stop. Good luck! You have rights -- and they know it.

    Tam's question: 
    I have a $65,000 in student loan with the interest rate of 6.8 percent. Is it possible to use my credit cards to pay off my student loans and then file bankruptcy to start off fresh again?

    David's answer: 
    So that's a new one! The real point here that you clearly understand is that bankruptcy doesn't wipe out student loans but it can wipe out credit card debt. The courts can, however, review your behavior and choose to not give you a clean slate. 

    What you are talking about is really fraud. While it may sound creative, it's still illegal. It would be the same as taking a $65,000 vacation with the intention to then go bankrupt. Not legally acceptable. But glad you asked -- now go work on paying off the student loans. Good luck!

    Complete archive:

    If you have a question for our TODAY Money experts, submit it here.

    To sign up for an e-mail reminder for our next chat, click here.

    Watch this week's Money 911 segment:

    Financial experts Jean Chatzky, David Bach and Sharon Epperson answer viewer questions, including how long it generally takes to see an improvement in credit score.

  • Discussing money with children should not be taboo

    Live Poll

    Do you think parents should discuss their money woes with children?

    View Results
    • 142113
      Yes. It's important children learn from your mistakes.
      77%
    • 142114
      No. Your problems should not become your children's.
      23%

    VoteTotal Votes: 132

    By Ryan MacClanathan, contributor

    Parents should be honest when teaching their children about finances, money guru David Bach says.

    "Money should not be a taboo subject," he says. If you are in debt and experiencing money woes, share your problems with your children — don't keep them behind closed doors.

    The best-selling author of "Debt Free for Life," Bach says his family taught him about investing and the value of money at an early age. His grandmother helped him buy McDonald's stock at age 7. He is passing along some of the same lessons to his own 7-year-old son, Jack.

    Watch the video below for more tips on how to teach your kids about what things cost, the importance of savings, strategies for allowances and how to give to charity. Our favorite lesson: how a child can turn $5 a day into a half-million-dollar cash stash.

  • David Bach in Web chat: Tips to reduce student loan debt

    TODAY Money expert David Bach, author of a new book "Debt Free for Life," joined us for a live Web chat Wednesday morning after the show's Money 911 segment.

    Here are two of his answers to questions from the live chat. See below for the full Q&A and video of the Money 911 segment.

    Question from Becky Rogers:
    My son's W-2 came in the mail yesterday, and one of the perforated sides was either torn or removed from the form. Our mail box is at a bank of boxes at the end of the street. When I peeked inside where the form was accessible, I could easily see his social security number. Not knowing if this was random or if somebody purposely opened the form to steal his ID information, is there a place to report possible identity theft, even if I can't substantiate that claim? Are there any other steps you would recommend taking to prevent any long term issues? My son will be taking out student loans for his senior year of college next year, and I don't want this possible identity theft issue to be a concern. Thank you!

    Answer from David:
    My suggestion is that you immediately pull your sons credit reports. You can do this for FREE at http://www.annualcreditreport.com. You also might want to consider buying an identity theft monthly membership that will notify you if you anyone is trying to use his credit. You can also lock his credit files with the credit bureaus by visiting their websites.

    You can't report identity theft because you don't actually know if anything has been stolen. So checking his reports is the first step. Thank you for asking, and for being so on it for your son!

    Question from Jenny:
    My husband owes $50,000 in student loans. How can we find ways to reduce this debt? It is crippling. We are now 49 and only make $52,000 a year. He is Native American and has consolidated the loans, but it's still an emotional for us because it has stopped us from buying a home.

    Answer from David:
    Jenny, there are multiple options. First, to pay the loans off, you can simply up what you are contributing to the loans and pay the principal down fast. But my guess is you don't have that money.

    Student loans don't have to stop you from buying a home. Many people save to buy a home and make minimum payments on their student loans while they build savings to buy a home. The good news is your husband consolidated his debt already and my guess is the interest rate is extremely low because its government loans not private.

    I would also look at my new book "Debt Free for Life," and read the chapter on student loans. You can get more details on this book at http://www.finishrich.com.

    Good luck to you both. And know that student loans are crippling a lot of Americans -- it’s the next credit crisis facing American's. It's a real problem -- you are not alone!

    Complete archive:

     

    If you have a question for our TODAY Money experts, submit it here.

    To sign up for an e-mail reminder for our next chat, click here.

    Watch this week's Money 911 segment:

    A team of experts, led by TODAY's financial editor Jean Chatzky, answers viewer questions about personal finance, legitimately getting back into the job market and more.

     

  • David Bach on best investments over the next 5 years

    TODAY Money expert David Bach, author of a new book "Debt Free for Life," joined us for a live Web chat Wednesday morning after the show's Money 911 segment.

    David also talked about his Debt Free Challenge. For more information, click here.

    Here are two of his answers to questions from the live chat. See below for the full Q&A and video of the Money 911 segment.

    Question from Lisa Lybarger:
    I received an inheritance with enough to pay for both of my girls' college education. One daughter will go to school in five years; the other in 9 years. Stocks are too risky; bonds aren't paying. Where do you recommend I invest this money to be certain I still have it in 5 years?!

    David Bach:
    Lisa, that is a great question. To get a decent rate that is guaranteed for five years right now is tough.

    You could buy a government bond, a CD, a municipal bond or a zero coupon muni bond. In either case you could buy a five years bond. And be guaranteed the money will come back to you with interest. The problem is you are only going to earn about 2.25 to 3.5 percent.

    If you want it guaranteed, I would personally split the money right now between a one-year CD and a two-year CD. I think rates are going up, and that rates will go higher by the end of the year.

    Your other option is to invest in a 529 plan and pick an asset allocation that comes due in five years. It won't be guaranteed, however, because it will invest in stocks, bonds, etc.

    I personally think a balanced account over the next five years will do well. I think market is going higher over the next five years.

    Question from Scott:
    I'm 27, have a steady well paying job and was wondering what the benefits are of a traditional vs. a Roth 401k ... which should I be contributing to more when I'm younger and should that mix change as I get older?

    David Bach:
    Scott, I love tax deductions ... and a traditional versus a ROTH 401k plan gives you that. With a ROTH IRA you will be putting after tax dollars in the plan. Still, with that said, if I were 27 today I would suck it up and use a ROTH 401k plan because all of the money will grow tax-free and come out tax-free. For most people I suggest splitting it. Put 50 percent in a traditional 401k plan and 50 percent in a Roth IRA plan. Then you have both options.

    Full archive:

     

     

    If you have a question for our TODAY Money experts, submit it here.

    To sign up for an e-mail reminder for our next chat, click here.

    Watch this week's Money 911 segment:

    TODAY's financial editor Jean Chatzky, David Bach, creator of FinishRich.com, and CNBC's personal finance correspondent Sharon Epperson answer viewers' questions about retirement benefits and more.

     

  • David Bach in live chat: Pay off debt, retire early

    TODAY Money expert David Bach, author of "Start Over, Finish Rich," joined us for a live Web chat Wednesday morning after the show's Money 911 segment.

    Here are two of his answers and a complete archive.

    Question from Stephen:
    I am 15. Should I start saving now and put money into an IRA?

     

    David Bach:
    Stephen you ROCK. Fifteen years old and looking to invest in an IRA! I say absolutely GO FOR IT. And I would use a Roth IRA since you are so young, and your taxes are so low -- if at all. My friend, if you start saving at 15, you will be a millionaire. Get a copy of The Automatic Millionaire, it's my number one book and will show you exactly how to do all of this.

    Question from Janice:
    My husband is interested in paying down our mortgage. I think we should bank the money for emergency. We have very minimal debt otherwise. What do you think?

    David Bach:
    Janice, I think you should be thrilled you husband wants to pay down your debt and be free from the mortgage. Being free from debt is the ultimate form of financial security. And those who pay off their homes retire early -- in my experience, five to 10 years sooner. I am all for having an emergency account, and you do need, I suggest, at least three to six months of expense set aside to be safe. Remember even if he pays down the mortgage -- that money can always be refinanced out later through a home equity loan in case of emergency.

    Full archive:

     

    If you have a question for our TODAY Money experts, submit it here.

    To sign up for an e-mail reminder for our next chat, click here.

    Watch this week's Money 911 segment:

    A team of experts led by TODAY financial editor Jean Chatzky answers viewer questions about personal finance, taking out a reverse mortgage on your home and more.

     

  • David Bach in chat: Buying a home the best investment

    TODAY Money expert David Bach, author of "Start Over, Finish Rich," joined us for a live Web chat Wednesday morning after the show's Money 911 segment.

    He recorded a special behind-the-scenes video after his live chat. Check it out here.

    Here are two of his answers and a complete archive.


    Question from Terri:
    I have several credit cards to children's clothing store. My children are grown now, and I no longer shop at those stores. Is it all right to cancel these cards, or is canceling them going to hurt my credit.

    David's answer:
    Terri, in the old days (like five years ago) I would have said, just close the accounts. Today I usually say keep them open because cclosing them may affect your credit score. For instance, if you have $10,000 in available balances on these cards and you close them your utilization rate could go up. It won't hurt as much, however, if the cards have super small credit limits. The big thing with old cards that you don't use is to monitor your credit reports regularly to make sure they are not being used by someone else!

    Question from Paula:
    Hello David! I make $5,000 a month. I rent. I'd like to buy a house. How do I do that with less than perfect credit? How much do I need to put away each month?

    David's answer:
    Paula, you are wise to want to buy a home. I still believe its the best long-term investment you can make, and homes are now much more affordable. Plus, rates are at a 50 year low. You can now borrow to buy a home and pay less than 4 percent (it's just amazing). I'm refinancing now at 3.5 percent on a jumbo mortgage. My suggestion is you go to your bank and see if you qualify now to buy a home. The big thing banks want is a down payment, and if your credit is less than perfect they can work with you over the next six months to help you improve your credit so you will qualify in 2011. GOOD LUCK!

    If you have a question for our TODAY Money experts, submit it here.

    To sign up for an e-mail reminder for our next chat, click here.

    Watch this week's Money 911 segment:

  • David Bach answers TODAY Money users' questions

    TODAY Money expert David Bach joined us for a live Web chat Wednesday morning after the show's Money 911 segment.

    If you have a question for our TODAY Money experts, submit it here. To sign up for an e-mail reminder for our next Money chat, click here and scroll down.

    Here are two of his answers and a complete archive.

    Question from Mike from Ma.:
    I'm 10 years from retirement. Should I pay off mortgage or contribute more to 401k?

    David Bach:
    This is a great question. I spent nearly a decade at Morgan Stanley as a financial advisor and I specialized in retirement planning. This question is exactly what I dealt with daily.

    My answer to my clients was always to MAX OUT THEIR SAVINGS.

    Whatever you can do to increase your 401k plan, stock purchase plan, Roth IRA ... do it!

    And also, yes there is more work ... make one extra payment a year on your mortgage, because you will pay your mortgage off seven years faster. In truth with most of my clients 10 years away from retirement, we also worked on having their home paid off by retirement.

    In an ideal world, it's pay the home down faster and, yes, save more. You'll be so happy you did. And if that means you don't buy a new car for 10 years, so be it!

    Question from Guest:
    What is your thought about buying a home vs. renting a home/condo or apartment? We are approaching retirement and are planning to sell, both to simplify the effort involved in home ownership and the expenses. Are we right?

    David Bach:
    It all depends. First and foremost if you sell your home are you going to make money? What will you do with the money?

    Sometimes people sell their homes, and take the profits and invest it in CD's and then live off the income, which covers their rent. It's a great idea, but now rates are so low it won't work at the moment.

    The other question is where do you want to live?

    What I can tell you from working with real life retirees is that you should always rent for a year if you plan to move to a new area before you buy. I have seen too many people retire, move to another state, buy a home thinking they would love it and then hate it.

    The complete Q&A:

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