Singletary: Puzzling out tough financial quandaries

I recommend that you get an appointment as soon as possible with a nonprofit consumer credit counseling agency. To find such a group, visit the National Foundation for Credit Counseling’s website, www.nfcc.org. You’ll get some excellent help with managing your consumer debts and with building a budget. This will buy you some breathing room.

My husband is disabled; I am our breadwinner. We’re both in our early 60s with some, but not much, retirement money. We have two very mature and very dead trees within 10 to 15 feet of our home. I want to take one IRA that’s in a five-year CD (it’s not matured) and cash it out, and have the trees removed. I believe losing about $3,000 from our retirement portfolio is a minor inconvenience compared to the possible losses the trees could cause. Hubby says we need all our retirement money to stay put. But our income just isn’t sufficient to save up enough to get those trees down soon. They are very dead and already dropping large limbs. What’s your thinking?

Don’t think of it as “losing” money. If the trees are a hazard, you are right to be concerned. Sure, you might need the money for something else down the road, but you need it for this important expense now. It’s a reasonable use of your retirement savings.

Next year, I become eligible to put more into my 401(k) and will be able to contribute a total of $24,000 pre-tax. I have maxed out my 401(k) my entire career and I’m wondering if I should also do this catch-up amount. It definitely would impact my cash flow, but is the extra $6,000 per year worth it?

The first thing I would ask you is: Do you know your number?

And by that, I mean: Have you calculated how much money you need to save to live the life you want or expect in retirement? That’s where you start. So go to www.choosetosave.org and look for the link for “Ballpark E$timate,” an interactive tool that helps you calculate how much you need to fund your retirement.

You may find you’re already on track with your current retirement savings.

I recently got married and my husband and I received about $10,000 cash as gifts. What should we do with it? Pay off high-interest debt? Put it in savings? I hesitate to spend it on anything (including paying off debt) at this point. For whatever reason, it makes me feel safer to have it somewhere in case of emergencies, but I want to do the smart thing. Any advice?

You had me at “high-interest debt.” And here’s why.

If you park that money in a savings account, you won’t get enough interest to offset all the interest you’re paying on that debt. Further, if you want to buy a home soon, you should get rid of as much debt as you can — all if it were me.

Take some of the $10,000 and put it in two separate accounts — an emergency fund and a life happens fund. The emergency is for dire times — someone has lost a job. The life happens fund is to cover unplanned household expenses such as a car repair. Divide maybe $5,000 between the two.

Take the remaining money and attack that debt.

Michelle Singletary welcomes comments and column ideas. Reach her in care of The Washington Post, 1150 15th St. N.W., Washington, DC 20071; or singletarym@washpost.com.