I like to include reader questions that I receive by email on the blog, because others may be experiencing similar dilemmas. Here’s a question from Cynthia, on my Yahoo!Finance column ”Credit Card Chaos,” about changing credit card rules: 

Q: I have recently been hit with the notices saying that my interest rates will increase effective a certain date. I have made it my New Year’s Resolution to stop paying interest as soon as possible.  They doubled my interest rates with a 45-day notice.  Even with the option of opt out by closing my account, I did not want to risk it looking bad on my credit report. I have a great FICO score and have not been late on a payment since I turned 18. I would like to consolidate my credit cards into a low interest payment that is preferably not another credit card.  I also do not want any type of settlement account if it will stain my credit report.  Do you have any suggestions on where to begin my search?

A: Hey Cynthia: You need to open a new account as soon as possible with a lower interest rate and transfer the balance to the new card, then opt to close the old one – do it before the interest rate changes. (Watch out for balance-transfer fees.) You won’t lose the credit history on the closed account – but obviously you’ll lose the available line of credit. How does this affect your credit score? It impacts your utilization ratio (ie, how much credit you use of the open credit you have available). That could ding your score, but not seriously. As soon as you get the other account up and running you should be fine, especially if you are diligently paying down the balance.

If you feel you have too much credit card debt and are thinking about consolidation, contact the National Foundation for Credit Counseling – check out nfcc.org for a branch near you. They can provide advice on the best way to deal with your debts. Yes, consolidation will hurt your credit score, but debt elimination is more important to your overall financial health. If you become debt-free and pay off your obligations in full and on time every month, your score will improve over time.

Happy Thursday! I love Thursdays for a lot of reasons: I enjoy teaching my class at Seton Hall, it feels like I’m sliding into the weekend home plate, and they serve pizza at school so I don’t have to make my kids’ lunches. One less rush in the morning rush.

I have something totally funky going on with the comments function on this blog. Rest assured, experts who understand this stuff are looking into it. In the meantime, I’m receiving some really thoughtful comments and questions from readers by email, so I thought I’d give them their own post. Sorry about the comments thing – while we fix it, you can send your feedback directly to me at laura at laurarowley dot com. 

From Ruth, on the “Move Your Money Campaign” post: My husband and I have been moving our money out of big banks since 2007.  Before we married we had accounts with Wachovia, BofA, and Umbrella. The BofA account went first due to lack of local ATMs and bank locations. Then we learned that Wachovia was being taken over by Wells Fargo. We each had Wells Fargo accounts during college and the bank was extremely unhelpful with a tendency to place fees on anything. We closed that account immediately. As for Umbrella, its brick and mortar bank failed recently and was taken over by the FDIC.  So now we are in the process of closing that account.

All of this money has been transferred into a Morton Community Bank account. The bank has limited branch offices, just one per city generally, but offers 2% on checking with full reimbursement of any ATM fees. The online banking isn’t as slick as BofA, but it works and there is always a person on the other end of the line if you have trouble (like locking yourself out of your account). The bank appears to be thriving as it has expanded recently by acquiring other local FDIC closed banks.

We also have an account at the local credit union because it offered a great interest rate on refinances. We lowered our monthly payment by $700. That savings made moving our mortgage from Countrywide well worth while.

Nothing in our world should ever be “too big to fail.”  If something has grown so large that it threatens the existence of itself and/or others, then it is time to cut it down for survival reasons.  We all know what happened to the dinosaurs when their environment changed. The big banks are dinosaurs and our economic environment is changing. We’re better off not allowing them to take our money with them.  Regulation would be the best thing for the banks, but I doubt that it will happen. Congress likes to keep those individuals who have the majority of “cash on hand” happy.

Hey Ruth: Thanks for the comment. I moved my checking account too, from a national bank to a local one that pays 3.26% interest on checking and reimburses ATM fees if you jump through some hoops (10 debits, direct deposits, statements by email, etc.) I had the same experience — the online banking is functional but definitely not as slick as the big banks — but I am always able to get a real person on the phone to help. Enjoy the interest!

From Joe, on the post “Do Rich People Get the Money & Happiness Connection?“: I read with interest your column on whether or not rich people get the money and happiness connection.  I’m not sure they can.  Of late I’ve given quite a bit of thought to what will define happiness for me, next in my life.  I tend to think of things I would like to do, things that I enjoy and also how I will earn a living.  Like many others I’ve tried to figure out if I can make the two align.  It wasn’t until I read your blog today that I was reminded that money doesn’t have to be the key part of that equation.

I was child number 6 of 7 and grew up in very modest surroundings.  In retrospect we didn’t have much, but most of the people around us didn’t, so I wasn’t that aware of it until I went to school.  I have early memories of not being able to afford to do the things other kids were doing as early as fourth of fifth grade.  By high school I was keenly aware of it.  I took out loans to go to a private college where the income gap was even more noticeable.  I always worked.  But I had an awful lot of fun and made some of the best friends in my life there.

I’ve been very fortunate and now earn a comfortable living.  I don’t consider myself rich and still don’t indulge in many of the luxuries my peers do.  But somewhere along the line making money became very important to me and perhaps more an end in itself than I’d like to admit.  Perhaps I’ve started to see living a lifestyle as synonymous with my happiness, even though I have life experience to tell me it isn”t so.

Anyway, I’ve rambled on for a few paragraphs here and am not sure I’ve arrived at a point.  Just wanted to drop a note to say thanks for your post, it’s given me food for thought.

Hey Joe:  I have definitely found myself focused more on making money as I get older if only because it can be so helpful in facilitating goals like nurturing your kids (i.e., saving for college). The problem is if I think too much about money, I start to do things like take on too much work so I can save more for college — which ultimately results in my spending less time with my kids (and violates the underlying value I was trying to achieve, which was nurturing my kids).  I have to occasionally step back and think about my larger intentions in my work, and make sure they still align with my values and the sense of purpose for my life.  Thanks for your note. I appreciate your perspective.

I want to give a plug this morning to a charity that I support: The Central Asian Institute, which builds schools, mainly for girls, in remote regions of Pakistan and Afghanistan. You may have heard of its founder, Greg Mortenson, whose story is told in the best-selling book Three Cups of Tea.

Today in Pakistan, the Taliban blew up a roadside bomb in front of a girls’ school, rebuilt with American assistance, that was reportedly holding re-opening ceremonies. Among the dead: At least three children, a Pakistani soldier and three American soldiers who were in Pakistan to train security forces. More than 50 people were wounded, many of them school children. (A spokesperson for the Taliban took responsibility for the bombing, according to news reports.)

Schools have been a particular target of the Taliban militants, who don’t want girls to be educated. The BBC reports that more than 72 schools have been bombed out or burned down by militants in Lower Dir district during the past two years, according to local Pakistani administrators. The target school in this bombing was previously blown up in January 2009.

Girls who receive an education are uniquely positioned to help their families and communities  in the developing world.  As a mother of three girls, it sickens me to think of these warped Taliban militants devoting their energies to diminishing,  impoverishing and killing children. 

Help the parents of Pakistan defend their daughters against the Taliban’s war on girls.  For CAI to build or improve a school, it requires an invitation from the local community and its leaders, who form committees to guide a school to its completion. For $20 you can provide a student with school supplies for a year; for $600 a teacher’s annual salary. Click here to donate to the Central Asian Institute.

In 2002, the Census Bureau came out with a research report titled “The Big Payoff.” I quoted the study in my book and have cited it in stories about the financial benefits of a college degree. “The Big Payoff” estimated that the average high-school graduate earns $25,900 a year, and the average college graduate earns $45,400, based on 1999 data. The difference between the two figures is $19,500; multiply it by 40 years, as the Census Bureau did, and the result is $780,000. The College Board cites the value of a college degree at $800,000 over a lifetime on its Web site.

In a story by Mary Pilon in today’s Wall Street Journal, Mark Schneider, a vice president of the non-profit American Institutes for Research, calls it “a million-dollar misunderstanding.”

Schneider notes that the Census estimates don’t factor in student debt — which has mushroomed in the last decade (see my story on it here.) The numbers also do not account for deductions from income taxes or breaks in employment. Moreover, they don’t consider the fact that the cost of college tuition is racing well ahead of the rate of inflation. The income data used for the Census estimates is from 1999, when total expenses for tuition and fees at the average four-year private college were $15,518 per year. For the 2009-10 school year, that number has risen to $26,273.

I’m still convinced college is essential to long-term employment prospects — and is an important experience on many levels. But I’m seeing more parents get creative about how they manage the costs. They include having their kids obtain college credits in high school through AP and online courses; attending junior college for two years before transferring to a university; looking for work-study opportunities; or living at home while attending school.

My husband and I started saving for college with the birth of our first child in 1997. But there’s frankly no way of knowing if we’ll be able to foot the entire bill. (I know for certain that our average annual investment returns aren’t keeping up with the annual growth in costs, which means we have to save more.) I’m all for creative solutions (and crossing fingers: My 10-year-old is 5-foot-4 and loves basketball — maybe she can get a scholarship like her dad.)

The NPR program “All Things Considered” today featured the Web site Yourenew.com, which offers cash for old electronics. It appears simple: You search for your old device on the site (ideally by model number); answer a few questions about its condition and accessories you have; and click “Add to Recycle Bin” to check out.  Enter your email and the company sends you a pre-paid shipping label and you might qualify for a free box. You can get paid by check or Paypal.

A nice perk to using the site: Consumers who do transactions get to choose a green cause that YouRenew.com will donate money to – either domestic renewable energy production or reforestation efforts. Recycle a phone, plant a tree.

Alternately, consider donating your old device to Cellphonesforsoldiers.com, which trades your donated cell phone to the company ReCellular for a one-hour prepaid calling cards — so troops overseas can contact their families for free.

There’s a heart-wrenching photo at the Boston Herald’s Web site of Nancy Kerrigan embracing her mother as the flag-draped casket of her father, Daniel Kerrigan, was carried into St. Patrick’s Church in Stoneham, MA today. As you have probably read, Daniel Kerrigan collapsed after an altercation with his son Mark, 45, who allegedly assaulted his father in a drunken rage after an argument over using the telephone.

Court records show that Mark’s parents sued him for $105,000 in 2008 for refusing to pay back an array of loans for living expenses – including his mortgage, heating oil, legal expenses related to a 2006 assault charge, even food for his cat. When the suit was filed, Mark was serving a two-year sentence for assault and other charges, and reportedly has a history of substance abuse. (A judge dismissed the parents’ suit, citing no documentation of a loan agreement.) 

The tragedy underscores the agonizing decision of when to bail out adult children and when to cut them loose. I’ve written about potential pitfalls of parents subsidizing their adult children financially; some psychologists call it dangerous, others see no harm if it doesn’t undermine the child.

I’ll never forget the email I received from a reader who had immigrated to the U.S. with great hopes of upward mobility. Her son had managed to gain entry to one of the nation’s most prestigious medical schools. If he dropped out, he would not be allowed to return. He had started skipping classes, she wrote, so she had moved into his apartment to make sure he attended. Her question: Should she write the check for $50,000 for the next semester?

I said no, suggesting that if he was bright enough to get into an elite medical school, there would be other opportunities. But he wasn’t likely to graduate from medical school and make it through a residency if he wasn’t motivated enough to go to class.

While one parents responds by trying to control a child, another chooses to push his kid out of the nest. An acquaintance told my husband the story of a falling out with his 20-something daughter, who was living at home and making no efforts to go to school or get a job. He offered her an airline ticket anywhere she wanted to go — with the stipulation that it was a one-way flight.  She took him up on it, and eventually got her act together.

When your child is a Peter Pan who refuses to grow up, or a troubled adult who has made terrible mistakes, what’s a loving parent to do? Comment here or email me at laura at laurarowley dot com.

This week’s Yahoo!Finance column looks at ways to get free and low-cost help with your taxes. Here are some of the top mistakes that people make when doing their returns:

Mistake #1. Simple math

According to the Internal Revenue Service, it’s addition and subtraction that trip up taxpayers more than anything else. If you made a mistake, the IRS will send you a correction notice. If you overpaid, you can ask the IRS to apply the extra to future tax or send a refund. If you underpaid, send that check in quickly, or you’ll be subject to penalties of 0.5 percent a month up to a max of 25%) plus quarterly interest charges of 5 to 6 percent. (If you discover the mistake before you receive the IRS notice, file an amended return.)

Solution: Use Free File if you earn $57,000 or less or tax software. See my column on January 28 for details.

Mistake #2. Forgetting about interest and dividend payments that you earn on your investments. This income is reported to the IRS by banks, brokerage houses and other financial institutions, and the IRS cross-checks them in most cases.

Solution: Before you start, make sure you gather not just the W-2 from your employer but all the 1099s that come from financial institutions.  Go to irs.gov and see IRS Publication 552, which lists the records you need to gather to prepare your return.

Mistake #3. Taking the wrong credits and deductions.

Taxpayers get confused on deductions – not taking the ones they qualify for, or taking ones they don’t qualify for. For example, you can’t write off expenses related to a home office unless it’s your primary office. On the other hand, millions of Americans were out of work in 2009, and they can deduct the costs of their job search, things like phone, travel, job counseling and resume preparation.

Solution: Go to irs.gov and search “Itemized Deductions” for more information. Free file and tax software will guide you through your return with simple questions to ensure you get everything you qualify for.

Mistake # 4. Record-keeping

People lose, misfile, or throw out the wrong stuff, and keep stuff they don’t need.

Solution: Always hang on to any receipts and checks that you plan to deduct from your taxes. Group them by deductible category and keep them for at least three years from the date you filed that return. Unless the IRS can prove fraud, the statute of limitations to disallow deductions is three years. Receipts for expenses that may be deducted in later years, such as improvements to your house, should be kept for three years after the return on which they are claimed. 

What’s the biggest mistake you ever made in filing your taxes? Do you have a solution to make the season less onerous? Comment here by registering or email your comment to laura at laurarowley dot com and I’ll post it here.

I was commiserating with a friend today about our early experiences with poverty; newly out of college, she with lots of debt, me with no debt but barely making it paycheck to paycheck in New York. I remember buying one beer at bars that had a happy hour buffet so I could eat. She recalled living in a basement apartment with mice and roaches, and refusing invites to the bars because she couldn’t swing the cost of one beer. (This reminds me of the Monty Python Sketch “Four Yorkshiremen”: “There were a hundred and fifty of us living in a shoebox in the middle of the road…”)

Fortunately, we’re both in a better place.

We were cash poor at that moment, but obviously abundant in education, health, social capital (friendships and loving families) and the opportunity for upward mobility. While chronic poverty is a terrible thing, experiencing empty pockets at various junctures in life can — in the long term — be a wonderful thing.

Empty pockets force you to be creative, clever, resourceful and resilient in finding solutions when money can’t buy them. Empty pockets help you find moxie, because the answers come from your brain and your heart and your character instead of your wallet. You learn that you can survive, get by, even thrive on little money. In the process you discover that you are more than capable of taking care of yourself, which builds confidence. You find that other people will reach out to help, which reinforces your faith.

And you understand, deeply, that money can indeed make a difference in your happiness, because it creates options — and because you once lived in a world without those options. On the other hand, you also know that you were happy even when you had fewer options, so your happiness doesn’t depend on money. And that if you find yourself with empty pockets again, it’s okay. Been there, done that.

Monty Python's Four Yorkshiremen

I was the tenth of eleven children (cue the Monty Python music), so we didn’t have a lot of money growing up. I started working at 14 to save for college, and though I wanted to go to a private university in Chicago, it was simply out of the question. Children of the Depression, my parents didn’t believe in debt if there was an alternative. Luckily I had a wonderful experience at the University of Illinois. I still worked two or three jobs every semester to pay the bills, and my parents gave me a few hundred a month for rent.

So here’s my question: Can someone who is lucky enough to be born into a family where they never had to think about money ever really get it? At the moment, happiness is hot, and many people are writing about it. But can you comment on the money-happiness relationship with any authenticity if you always had plenty of money? Can someone who never faced the disappointment of narrowed options — and growth that comes with figuring out another path – really understand the connection between money and happiness?

 Tell me your views — comment here by registering or just email me at laura at laurarowley dot com and I’ll post your remarks.

A new study finds people experience better moods, greater vitality, and fewer aches and pains from Friday evening to Sunday afternoon. To state the blatantly obvious, everyone loves the weekend.

Researchers monitored daily mood variations in employed adults, and found the ‘weekend effect’ is largely associated with the freedom to choose one’s activities and the opportunity to spend time with loved ones. The study appears in the January  issue of the Journal of Social and Clinical Psychology. (One can extrapolate the idea that autonomy and friendship might be a good thing to fit into the work week as well.)

“Workers, even those with interesting, high status jobs, really are happier on the weekend,” said author Richard Ryan, a professor of psychology at the University of Rochester, in a press release issued by the university. “Our findings highlight just how important free time is to an individual’s well-being. Far from frivolous, the relatively unfettered time on weekends provides critical opportunities for bonding with others, exploring interests and relaxing — basic psychological needs that people should be careful not to crowd out with overwork.”

Ryan and two others followed the moods of 74 adults, aged 18 to 62, who worked at least 30 hours per week. For three weeks, participants were paged randomly three times a day, completing a brief questionnaire describing the activity in which they were engaged. Using a seven-point scale, they rated their positive and negative feelings of anxiety, anger, and depression. Physical symptoms of stress, such as headaches, digestive problems, respiratory ills, or low energy, were also noted.

Everybody feels better on the weekend, the researchers found  – regardless of age, education, marital status, how much money they make, how many hours they work or the industry in which they work. (And incidentally, fans of the band Loverboy, will get the title of this post. The rest of you, spend part of your weekend catching up on ’80s rock bands.)

Next up on the research front: Do children really enjoy Halloween?

Are you outraged that the six largest bailed-out banks have used their government largesse to award another round of employee bonuses — to the tune of $90 billion, according to the New York Times? A new campaign suggests you don’t call your Congressman — just move your money to a community bank. 

The grassroots movement Move Your Money is sponsored by Ariana Huffington and Rob Johnson, director of Economic Policy Initiative at the Franklin and Eleanor Roosevelt Institute. (Yahoo!Finance posted an interview with him today.) They want consumers to shift funds away from the six largest  ”too big to fail” banks: Citigroup, Bank of America, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo.

George Bailey and his customers, "It's a Wonderful Life"

Those banks, they argue, were largely responsible for the financial crisis because of their reckless derivatives trading. They enjoyed a record year of profits in 2009 by returning to those risky schemes — rather than using government bailout money and guarantees to lend money to ordinary Americans, particularly small business owners. (And don’t forget what happened with credit cards in 2009 … interest rates hiked, credit lines slashed, accounts closed.)

The Move Your Money campaign argues that the special protection given to the too-big-to-fail banks is wreaking competitive havoc on small community banks — putting even more power in the hands of the mighty. The mega-banks have been sending taxpayer cash back to Capitol Hill to thwart reform, including the regulation of derivatives.

The website includes a video with clips from the Frank Capra classic “It’s a Wonderful Life,” contrasting the David and Goliath banks. It also has a search tool to connect you with a local bank. (No matter what bank you put your money in, as long as it’s FDIC-insured, your deposit is protected up to $250,000.)

I moved my money in December from my bank, which was acquired by Wells Fargo, to a local bank — but I have to say it was purely mercenary. The new bank offers 3.26 percent interest on the checking account if you’re willing to follow certain rules. I can call Jenny, my personal banker, with any questions. I love it.

Would you move your money as a form of political protest? Comment here or email me at laura at laurarowley dot com and I will post your remarks.