HELP ME CLARK!
From HLN's Money Expert Clark Howard

Kathy:

I have recently inherited enough money to pay off my mortgage ($130,000) and still have a lot left over ($100,000.) I also have $12,000 in savings for emergencies. I am single, 62 years old and give 10% to charity each year. Should I pay off my mortgage?

Clark:

Generally, the answer to that question depends on what your interest rate is. If the interest rate on your mortgage is 5.5% or higher, then it would be a no-brainer to pay that mortgage off. If your mortgage interest rate is below 4.5%, it's really a lifestyle choice if you want to pay off the mortgage just so you have the peace of mind that you no longer have that obligation. But I'll tell you, if you have a mortgage rate that is 4.875% or less, forget the piece of mind. Keep the money and pay the mortgage off as agreed for the entire length of the loan. So you've got a three-parter here. One, your interest rate is higher than 5.5%, pay it off. Your interest rate is between 5% and 5.5%, it's a tossup. If your interest rate is below 5%, no way you should rush to pay it off.

Clark Behind The Headlines
From HLN's Money Expert Clark Howard

I recently dug in and researched all the college savings plans available around the country so I could update the guide on my web site. And did that take a lot of time! But did I find a pleasant surprise. The plans known as 529 plans have gotten much better. Not all of them are better, but a lot of them around the country have improved.

If you're familiar with 529 plans, you know that you can put money into them and if it's used later for eligible college expenses, then all the earnings accumulated through the years are yours tax-free.

529 plans were growing like crazy earlier this decade. And then when the bottom fell out of the economy and the stock market, 529 plans just froze, essentially. They stopped growing and people stopped contributing to them. Because when you're at a point in your life where you're just trying to put food on the table, putting money aside in a college savings plan goes by the wayside, as it should.

My 529 guide went from the #1 most-visited section of my web site, to way down the list. There's some sense that people are feeling a little more confident now, because more people are going to my 529 guide.

I said a lot of plans were getting better. So, what makes a 529 plan better?

Each plan has an annual fee for the manager of the money for your kids' college. And those management fees have declined a lot since I revised my guide last year. It is now much easier for you to find a good plan.

The way Congress wrote the law is that states have to sponsor 529 plans. So, each state can sponsor one or more plans. In most situations, your money can go into any state's plan. But if the state where you live has a good plan, you should put your money there because you may - if your state has an income tax - have a tax benefit for putting money into your state's 529 plan. And remember, at the time you spend the money, it's tax-free if it's used for college expenses.

A single state may have several plans. But all of them could be junk. So in my 529 guide, I have links for you to the best plan available in each state. The only plans I recommend are commission-free plans.

If your state is not on my list, you should go with one of the Dean's List with High Honors plans. The three best plans in America are sponsored by the states of Utah, Iowa and New York. Utah is my favorite of all the 529 plans in America. But again, if you live in a state that's on my Honor Roll, go into your state plan. For the complete list, click here.

Having trouble managing money? Do your money goals seem impossible? Clark Howard wants to help you!

We’re looking for individuals or families who are willing to be profiled on HLN. Those chosen will get money advice and information from Clark Howard.

This week’s question comes from Andy and Debbie Rishmawi of Flushing, Michigan.

Money Coach with HLN’s Money Expert Clark Howard

Having trouble managing money? Do your money goals seem impossible? Clark Howard wants to help you!

We’re looking for individuals or families who are willing to be profiled on HLN.

Those chosen will get money advice and information from Clark Howard.

This week’s question comes from the Kerry Genter of Duluth, Minnesota.

HELP ME CLARK!

SID:
My mother gave me $2,000 to invest for my children for college. My children are 14 and 10. What should I invest the money in?

CLARK:

HLN's Money Expert Clark Howard

In a 529 account. 529 is a special tax-free account for college.

There are many many plans and each state will generally sponsor its own or even several. But you don't have to put your money in your own state plan, and in many cases you shouldn't.

I have a guide on 529 plans at cnn.com/clarkhoward, and you should look at my guide to make a selection.

If your state is on either my Dean's list or my honor roll list, go into your state plan. But if your state is not listed, then go into one of the Dean's list plans.

Money Coach with HLN’s Money Expert Clark Howard

Having trouble managing money? Do your money goals seem impossible? Clark Howard wants to help you!

We’re looking for individuals or families who are willing to be profiled on HLN. Those chosen will get money advice and information from Clark Howard.

This week’s question comes from the Lites family.

Clark Behind the Headlines
From HLN's Money Expert Clark Howard

There are changes coming to the car market that are so exciting. The cost of reliable transportation has come down and down and down. And we are now in an era where you can buy new cars for as cheap as $10,000!

Manufacturers will often release versions of their lowest price point models – some as low as $8,000 or $9,000 – and many of them come equipped with just about anything the typical buyer would want: cruise control, automatic windows, automatic transmission, etc. Wait, it gets better!

Nissan, one of the world’s largest automakers, is putting out a car in Asia in about two years that will cost around $2,000 bucks!

Now why in the world would you care about a car that’s being sold in Asia? Well, I want you to think historically. In electronics, the trends often emerge from Japan. The Japanese market is a leading indicator of what’s coming to the United States and to Western Europe.

Now we’re not going to have $2,000 or $3,000 cars in the United States anytime soon because of our safety requirements. The cars have to be designed to meet our safety and emission rules and that’ll pump up the price to around $6,000 brand new, but that’s still a heck of a deal!

Money Coach with HLN's Money Expert Clark Howard

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Those chosen will get money advice and information from Clark Howard.
This week’s question comes from Dan and Heather Sostrom of Gainesville, Florida.

Clark:
Wow you’ve got a lot of mouths to feed in that household, now another one on the way. Three children that you’re going to have to raise and pay for college for.

But the thing is, do you know what? You paid for your own college you said that set you back. But the truth is there are so many ways to pay for college, but you know what? There’s only one way to pay for your own retirement.

So you love your children, you want the best for the them but key thing, your primary focus and goal should be to beef up your savings for retirement. You need to contribute more each and every month to that and then if there’s money left over, put it toward your kids’ college in a prepaid plan or the 529 plan.

This conflict I’ve just talked about, I hear this over and over and over again. And when I talk with older couples whose kids are now grown and then I ask 'What did you save for retirement?' They kind of can’t look at me because they’ve taken all the money and put it toward their kids’ college.

Remember what I just said. Your primary goal with your long term savings is not your kids’ college. There’s work, there’s loans, there’s grants, there’s scholarships but for retirement you’ve got one thing and that’s you.

Help Me Clark!
From HLN's Money Expert Clark Howard

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Jerry:
I recently received a medical bill from a doctor I used in 2007. His office said an audit turned up a lab bill that was not filed and they want me to pay it.

My insurance company says it's beyond their time limit for doctors filing claims. One person at the insurance company said not to pay it if the doctor says I'm responsible. However, I worry about my credit score if I do not pay it. Any suggestions?

Clark:
You are so right to worry about your credit score and in this case what is a reasonable amount for you to pay the doctor is what your insurance would have left as your co-pay portion.

If the doctor failed to do a timely claim it is not reasonable to hold you liable for the full amount of the lab bill when it was the doctor's office that didn't do their part. So normally with lab work there would be a portion of it that would come out of your pocket; offer them that amount of money.

If they don't want to play you send them a letter by certified mail that their failure to bill you in a timely fashion has caused you harm because it is no longer within the window that you can file with insurance and that you have made an offer to them and that if they at any time attempt to put this on your credit report, that you are prepared to sue them under the Fair Credit Reporting Act.

HLN Money Expert Clark Howard.

Help Me Clark!
From HLN's Money Expert Clark Howard

JAMES:
Two years ago, my mom charged about $11,000 dollars to my credit card and now they're coming after me. I am 22 and just graduated from college, and many employers look at my credit as a negative towards hiring me. The debt collectors call me and I have tried offering a settlement and they will not accept it even after I have explained the situation to them. What should I do? I cannot afford to pay them anything.

CLARK:
Well what a sad thing that your mom betrayed your trust and charged to your credit card. I get this question a lot where a family member or a friend abuses your credit card and you're left holding the bag.

Normally you would have to fill out an affidavit where you swear that you did not make the charges and you say that they were made by your mom and if you do that at the time that the charges have taken place or the time you knew the charges had taken place you normally are not liable for those charges.

You've let this go on and it doesn't sound at all like you want to put your mom in to legal jeopardy so it's going to be up to you to try to make a deal. You have two issues. One is the affect on your credit which for seven years the unpaid debt harms you on your credit report. If you reach a deal and the debt no longer exists on your report the harm to you lessens enormously and with time essentially disappears so the most important thing is to try to cut a deal. And the key number for you is you're two years out from this, once you hit statute of limitations in your state, which means the amount of time that somebody could sue you against a debt you have far more negotiating power to negotiate a settlement for a much smaller amount than the 11,000.

Likely once you go outside of statute of limitations you should be able to settle the debt for 1,000 or so dollars.

If you go and do a Google or Bing search and put in your state and put statute of limitations on debt as the search, you'll see. And that varies by state from either 3 or 4 years on a credit card debt. Some states it will be longer than that.