Today on MoneyLife

Chuck opens the email bag today to answer a batch of your questions. Got a question for Chuck? Send it to ChuckBentley@Crown.org.

Q. I'm 55 years old and recently finished graduate school.  My only debt is $30,000 in student loans - $9,800 at 2.75% and the balance at 5.375%.  I have about $400,000 in a 401(k) and other investments. Should I sell enough stocks to pay off all the student loans at once or pay as much as I can each month from my income to pay off the loans as quickly as possible? – Arlene in Pismo Brach, California

A. Congratulations on finishing graduate school and saving $400,000! The biblical principle here is God's view of debt.

Proverbs 22:7 says, "The rich rule over the poor, and the borrower is servant to the lender."

If you go into debt, you’re a slave to the lender. God wants you to be His slave. Pay off the student loans starting with the highest interest loan, then pay off the next lower rate loan, etc. If you have any investments outside the 401(k), consider selling them and paying off the loans at once.

Don’t take money out of the 401(k) because of the tax and penalties
If you have a good income, you should be able top pay off the loans quickly by directing more of your money towards them.

Q. I have a friend who was saddled with $10,000 in credit card debt as part of a divorce settlement.  However, he also received $12,000 in 401(k) assets from his wife.  Can he take a tax-free, penalty-free disbursement of those funds and pay off the $10,000 in credit card debt or should he leave those funds in a 401(k) account? – Matt in Lockport, Illinois

A. If your friend is younger than 59 ½ years old, he should leave the money in a 401(k) or he’ll pay taxes, penalties, and lose the future tax-deferred gains the money would have earned.

He should work at paying off the debt in another way. He can try to pay it out of cash flow, increasing his income if necessary. Developing a spending plan that directs all his extra money toward paying off the debt will be a big help.

He can use the extra time he has as a single person to be productive. Ecclesiastes 11:6 says, "Sow your seed in the morning, and at evening let not your hands be idle, for you do not know which will succeed, whether this or that, or whether both will do equally well."

Q. I am a single mother of two.  I don't really have anything left for food after I pay my mortgage, car note, utilities.  Can you help me get my money straight?

A. We understand the financial struggle of raising children on your own. It's difficult to give advice without knowing your specific situation, so I encourage you to listen to the MoneyLife program we did recently on single parenting. The link is here. You'll find many resources to help you.

Also, go online and get connected with a Crown Money Map Coach. He or she will help you develop a spending plan that maximizes the use of your limited resources. Finally, find a church in your area offering the Crown Small Group Study. Pray and trust God for His provision.

Q. I am a rising college senior who will graduate with no debt because God provided a scholarship, and I had some savings.  What should I look to save and invest in to pay for graduate school? – Laura in Purcellville, Virginia.

A. Congratulations on getting scholarships and finishing your degree! You are proof that it’s possible to graduate debt-free. Now as you save for graduate school, you'll need to keep the money in a liquid investment such as a money market account.

Look for a job in your field and work as you go through grad school, using your income to pay school expenses while you gain valuable experience. Check finaid.org for more scholarship opportunities and ask God to show you other ways to stay out of debt.

Q. I counsel several couples who have a lot of debt, especially vehicle debt.  How should I advise someone who is ''upside down'' on a vehicle?  The difference in what some owe on their vehicle and what it's worth is over $5,000. – Jay in Atascadero, California

A. The number of vehicles being repossessed is growing. The best way to handle this is to keep making payments until you are no longer “upside down”, then, sell and downsize.

Another option is to renegotiate the terms of the loan with the lender. You can possibly refinance with a different lender at some additional cost. For more information about refinancing, visit bankrate.com.

Avoid surrendering the vehicle to the lender. You'll get stuck paying back whatever the lender doesn't recoup by reselling the vehicle and your credit will be ruined.

If you have to sell it, run an ad in the newspaper and do it yourself. Don’t trade in the vehicle on the purchase of another, as this only puts you deeper in debt.

Q. I’ve heard you talk about making money by writing blogs, and I’d like to know how to do that. I have an interest in writing a devotional.  In the past, I’ve written things and emailed them to my Christian friends, and they’ve seemed to like them.  I really enjoy coming up with inspiring themes and then putting them into words. – Joseph in Norwood, New Jersey

A. Blogging, or writing for the Internet, is a great way to earn extra income. However, I'm not sure you'll get objective feedback from friends and family, so try sending your writing to people you don't know well.

Find a blog where you can post some of your devotions and ask for feedback. Also, check out the Christian Writers Guild. Many Christian organizations need writers to generate content on a contractual basis. This is a great field with a lot of demand and it’s a job you can do from home.

Q. My husband and I are both retired.  We don’t have a mortgage, but we do have $20,000 in credit card debt.  We also have two condos, but we don’t depend on the rental income to live.  Is it wise to sell one of the condos and use the equity to pay off our credit card debt?   One of our renters is interested in buying. – Elaine in Knoxville, Tennessee

A. Pay off the credit card debt, but don’t sell the condo unless you have no other option. The market is soft right now and you won't get the best price.

Keep the condo and use the income from it to pay off the credit card debt. If you don’t need the rental income to live, you shouldn’t be getting into credit card debt. Stop using credit, develop a spending plan and and start living within your means.

Crisis-Proof Your Budget

In some categories of a budget, changes can be made to save money. This money can be moved to other budget categories that need extra funding.

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Borrowing for Education

If it is truly God’s will for individuals or their children to attend college, He will supply the fun.

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Financing a New Automobile

Careful shopping will help consumers decide what financing, car, and options are best for their family needs.

• Read More

Reasons for Becoming Debt Free

Debt-free living is still God’s plan for His people today. The blessings of becoming debt free go far beyond the financial area.

• Read More

Other Resources:

• ABCs of Money Package
• Career Direct
• God's Pinciples for Operating a Business
• Your Money After the Big 5-0
• Crown Mvelopes