Should we tap our home equity?

Q: We are both newly retired and living on one Social Security check and investments. Would it be ridiculous to borrow on our already mortgaged home? In doing this, we would be getting a tax break and invest the amount not needed. We would use that amount borrowed to supplement our monthly income in place of the drawing down our investments. Common sense tells me that this is not a good idea. Do you think it's crazy?

A: I recommend listening to your common sense. Using home equity as a piggy bank to finance living expenses is something best saved for when you are in your 70s or older and have no other options. Borrowing against your home equity to make investments is a high-risk strategy I don't recommend, especially not to retirees. You don't say how old you are, but I assume that one of you is too young to collect Social Security. If you are concerned about the adequacy of your investments to last you through retirement, you've probably retired too soon. Working a few extra years or continuing to work part-time in retirement can make a huge difference in the adequacy of your retirement income.

Is the Tampa Bay area still a good place to retire?

Hurricanes, sky-high property insurance rates, clogged roads.....I could go on. It seems as though there's plenty to complain about regarding life in the Tampa Bay area. But then I take a walk along Tampa Bay and I feel incredibly lucky to live here.

Do you think the Tampa Bay area is still a good place to retire? Why or why not?

I would particularly like to get a few responses (with first and last names and city) that I could put in the newspaper. Email me or post your comment here.

How are you planning to spend your tax rebate?

Congress is still working on the details, but it looks like all of us who pay federal income taxes for 2007 will get a rebate of our taxes paid up to $600 (single) or $1,200 (married joint filers) plus $300 for each child claimed as a dependent on your return. The remaining debate is over what to do for people who don't pay income taxes. The proposal the House has agreed to offers a rebate of at least $300 for anyone with earned income of at least $3,000. The Senate is looking at proposals that extend rebates to people on Social Security who don't pay taxes.

My question is: If you expect to qualify for a rebate, what are you going to do with it? If you plan to spend it, tell us what you'll buy. If you plan to save it, tell us how you'll invest it.

What's the best purchase you ever made for $1 or less?

I thought about that question the other day as I was working on a sudoku puzzle book I picked up at a dollar store. Undoubtedly it's the best $1 purchase I ever made. The original price tag said $6.95 and its only flaw was a ripped title page. However, it's not just the good deal that made the paperback book a great purchase; it's the fact that I love these puzzles. They are billed as "very hard," which means they are very absorbing, but (here's the good part), they are not so hard that I can't solve them. I'm a third of the way through the 300 puzzles and already feeling a little sad that the day is coming when I'll be finished. Maybe I'll erase all the markings and start over at the beginning.

Do you feel that enthused about anything you ever bought for $1 or less? If so, tell us. Here's how some Times readers answered the question.

Do you have a financial resolution for the new year?

January is often at time for turning over a new leaf and trying to do better. Here's what some Times readers have resolved to do. Feel free to add your resolutions as a comment if you like.

Start getting rid of all the stuff we have and buy or accumulate less, resulting in less clutter and saving more money.
Nancy Schreimann, Tarpon Springs

Increase my 401(k) deduction. My hope is that the down economy will continue until the end of the summer and after the election the markets will return. If this happens, it could maximize my investing for this year.
Floyd Mounts, St. Petersburg

Reduce my equity exposure from 80 percent of my portfolio to 60 percent and increase my bonds and other fixed income.
Sam Lasley, Clearwater

Use a more formalized (Quicken) approach to my personal budget in 2008. Tracking where exactly our money goes will allow myself and my family to make an informed decision on where we should be allocating our budget. I imagine this will quickly pinpoint how much we are spending on dining out on a monthly basis and we can make a choice to limit that and allocate to savings or vacation.
Scott Strepina, Tampa

Contribute more money to my Roth IRA.

Tony Rizzo, New Port Richey

Continue funding my 401(k), resume funding a Roth every month, but also start enjoying life a little bit more, buying something I really want, going somewhere I really want to go. While saving money for retirement is important, living a little now is too. Who knows what the future will bring?

Anonymous

How have higher gas prices affected you?

Here's last week's question of the week:

How have higher gas prices affected you? Have you changed your driving patterns?

Here are some of the responses I received from Times readers. Feel free to add your own as a comment.

As a small business owner, it has affected me greatly. I have employees that I reimburse for gas and have noticed a significant increase in my operating costs. If this continues, I will be forced to pass these costs onto the customer.
Michael Dash, Hudson

Regardless of price fluctuations, my consumption remains very stable. I take steps to ensure the best fuel efficiency when driving, such as having proper tire inflation, keeping the engine tuned and performing all scheduled maintenance.
Michel Curi Jr., Seminole

I will definitely reconsider some longer day trips that I had wanted to make in the near future. Since everything, not just gasoline, has gone up in price in the last year or two, the rising gas prices are just about “the last straw,” making longer trips very expensive.
Margit Crowell, Spring Hill

There is not much more I can do short of buying a hybrid or similar car, but the payback period for a hybrid is still unacceptably long, even at today’s gas prices. I try to incorporate everyday errands into my daily commute and I use www.tampagasprices.com to find low prices on or near my commute route.
Chas. E. Lehnert, Riverview

The days of driving across town for a dollar coupon are over.
Marv Bachman, Clearwater

Money question of the week: Will you spend more, less or about the same this holiday season than you did last year? Why?

This is the time of year when retailers and economists would like to be able to figure you out. Have higher gas prices and other costs put a crimp in your holiday plans? Or is gift giving a priority for you regardless of other concerns. So tell us: Will you spend more, less or about the same this holiday season than you did last year? Why? If you include your first and last names and city, your comments will be considered for publication in the Times.

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Money question of the week: Should the U.S. share our hurricane risks?

Should we have national windstorm insurance or some other type of federal catastrophe fund? That's a hot topic for Florida politicians but more like a hot potato for those in other states. Times Business Editor Bob Trigaux wrote last week about the politics involved. In theory, if we have national flood insurance, we could have national windstorm insurance. What do you think? If you give your first and last names and city, your comment can be considered for publication in the Times.

Money question of the week: Do you have a budget?

Has budgeting gone out of style? Do you have a budget and if so, do you follow it? Please share your experiences and tips. You are welcome to post here or, if you prefer, send me an email. If you include your first and last names and city, your comments will be considered for publication in the Times. One good source for money-saving tips is Mary Hunt's Debt-Proof Living site. If you've got a budgeting favorite site, share it.

Money question of the week: Do you have tax tips to share?

This week's column is about year-end planning opportunities. The state sales tax deduction is expiring, so if you were thinking of buying a car or boat, do it before year end and you can deduct the sales tax on next yea'rs income-tax return. The kiddie tax-the tax on your children's unearned income-is extending its reach next year and will include children up to age 24 who are full-time college students. If your kids that age own appreciated securities, you might want to sell them before they're subject to higher tax rates. Here are more tips from CCH.

Now it's your turn: Do you have a tax planning tip? Share your secrets for saving on income tax. If you include your first and last names and city, we can consider your tip for publication in the Times.

Money question of the week: How have student loans affected your financial life?

How have student loans affected your financial life? If you had to do it over again would you still borrow the money?

In this week's column, I wrote about a new law that will help people with big student loan debts in relation to the size of their incomes. The income-based repayment program caps the size of the monthly payment and subsidizes interest payments in some instances. This calculator will allow you to figure out how you might benefit from the program. In addition, many loans can be forgiven after 25 years of payments. Those working in certain jobs (including teaching, government, social work) can have their loans forgiven after 10 years.

If you would like your comments to be considered for pubilcation in The Times, please include your first and last names and city.

Money question of the week: Where's the dollar headed?

The dollar has been in a steep decline against many of the world's currencies. The Canadian dollar reaching parity for the first time in more than 30 years and anyone who's been to Europe in recent years knows the exchange rate is grim.

Do you think the dollar will keep sinking or are you looking for a rebound? Has the decline in the dollar had any impact on you?

My column in Sunday's paper points out some of the opportunities and pitfalls of trying to cash in on currency movements. Here's a CFTC consumer alert about foreign currency fraud.

Please include your first and last names and cities if you would like your comments considered for pubication in the Times.

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Money question of the week: Do we need PIP?

   What do you think about the state doing away with PIP (Personal Injury Protection) as a requirement for all drivers? Will you add to your other coverage as a result?

The requirement to buy PIP coverage will expire Oct. 1 unless the Legislature decides to extend it. Right now they're working on a deal to call a special session to do just that, but it's still not a guarantee. Opponents of PIP say it leads to fraud and people should have a choice about what coverage they buy. Proponents say it assures at least basic coverage for injuries and that without it, hospital emergency rooms will get stuck treating injuries with no reimbursement. What do you think? If you include your first and last names and city, your comments will be considered for publication in the Times.

This also is a good time to remember that PIP pays no more than $10,000 per person for car crash injuries. If you are injured in a serious accident, or are at fault in an accident that does serious injury to someone else, the bill certainly will be higher. In my column today, I look at the other types of coverage that pay for accident injuries.

Money question of the week: Have you ever attended an investment seminar

Have you ever attended an investment seminar? Tell us what it was like and how you fared if you bought an investment as a result. Include your first and last names and city so your comment can be considered for publication next Sunday.

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Money Question of the Week: The proposed super homestead exemption

Do you support the proposed super homestead exemption that will be on the ballot in January? If it passes, would you give up your "save our homes" exemption in favor of the new super exemption? Please give your first and last names and city so your post can be considered for publication in the Times.

For background information, check out this Times report.

Money question of the week: How are you managing your income in retirement?

Making your income last as long as you do is one of the greatest challenges facing retirees. There are inevitable tradeoffs--the more you spend now, the more likely you won't have enough later to maintain your lifestyle. But being too conservative exacts a price as well. In my column in today's Times, Gail Bruckner of Franklin Templeton gives her recommendations. This report from Fidelity talks about the potential role of annuities.

I want to know how you are managing your income in retirement. Do you have any tips to share with others? If so, I'd like to hear them.  Please give your first and last names and your city so we can consider your comments for publication in the St. Petersburg Times.

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Money question of the week: How have you been affected by problems in the mortgage market?

Have you found it more difficult to get a mortgage? Are you caught in an adjustable rate loan you can't refinance? Been unable to sell a house because your would-be buyer can't get a mortgage? Seen your high-yield bond fund take a hit?

A sampling of responses to this question will be published in the Sunday Money section. Comments must include your first and last names and city. If you don't want to answer here, you can email your comment to me.

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Money question of the week: Are there investments public pension funds just shouldn't make?

We don't want to support terrorism, but could we be hurting our pension plans by saddling them with restrictions on investing? The state of Florida recently prohibited the Florida State Board of Administration from investing in companies that do business with Iran and Sudan, as my column today discusses. Gov. Charlie Crist thinks this is a great idea. But Alicia Munnell, director of the Center for Retirement Research at Boston College, has major concerns. So does Governing.com columnist Girard Miller in this column. And Pensions & Investments columnist Edwin Burton chimes in.

What do you think? Please include your first and last names and your city with your comment.

(Photo credit: Getty Images)