Your Questions Answered

Adam Lashinsky
This week Adam Lashinsky, senior writer for Fortune Magazine, answers YOUR money questions. Keep e-mailing us — we're making this a weekly feature. So, tap into the power of the #1 business team on cable at and be sure to tune in to "The Cost of Freedom," Saturday starting at 10am ET.

When experts discuss the housing market I always hear predictions in reference to investment buyers, but what about the average homeowner? I'm in my 30s and recently bought my first house with my wife on the East coast. The price was high, but we love the house and plan to be there for at least the next ten years. We basically put our entire life savings into the down payment. Did we make a big financial mistake? -— Charles, Nanuet, NY

I can't make you any promises, but if you aren't stretching too much to make your monthly mortgage payments and your 30-year mortgage doesn't adjust for at least 10 years, you almost certainly did not make a big financial mistake. You ought to do what you can to build back your savings to a six-month reserve in case you and your wife were to lose your jobs. But otherwise you're going to love that house for at least 10 years, and whatever happens in the housing market between now and then won't affect you in the least.

I just retired from the Post Office. I have a pension, some savings, and Social Security in a year and a half. I have approx. $35,000 in thrift savings. Not enough for much of an annuity. Should I simply take the cash, pay the tax, and have a larger cash backup? I'm looking for income stock with safety of principal. Are stocks that pay dividends the answer? — BJ

Dividend-paying stocks are becoming more and more popular, and value-oriented investors like them not only because they provide income, but because it shows that the management is thinking about its shareholders. Just remember, they can — and do — go down just the same way stocks with no dividends do. With your desire for income, you probably want a good portion of your cash reserve in bond funds. Here’s one last thought: Money-market accounts are now paying upwards of 3%. That may not sound like much, but it satisfies your need for safety.

When starting a small business what's the best way to divide your money coming in to pay business bills, personal bills, savings, etc.? — Laura

In researching your question I came across a great line from an article in Entrepreneur Magazine: “There is no set amount an entrepreneur should earn. Strictly speaking, it's all yours.” As you’ve anticipated, the same is true for everything else: The expenses, savings and decisions are all yours too. You need a business plan that starts with your true needs personally, including those of your family. Your financing — whether it be a bank loan or some money from a rich uncle — ought to provide enough cash flow so that you can pay yourself enough to cover personal bills. Your company can lose money for a while, of course, but you can’t stop paying your mortgage.

I'm just out of college and have started my first job. I was wondering if you had any advice for starting my financial life on the right foot. — Johnny (Oklahoma)

Open an account with a mutual fund company and buy into a broad, diversified fund. The minimum investment might be as little as $250 if you agree to put in as little as $50 a month after that. Do it. Pick a monthly contribution that's just a little bit painful and make it automatically through deductions from your checking account. Ten years from now you'll be delighted you took this first, easy step.

Hello, I have a question about monetary gift-giving. My husband and I are in our 70s, and we have a fairly substantial savings. We want to give each of our five children a large cash gift instead of leaving it for them in our wills. Do you foresee any problem with this idea or have any advice for going about it? Thank you — Mary Sue (Illinois)

The gift-tax laws are complex, as you might imagine, and you absolutely cannot just give away as much as you want when you want without later being taxed on your estate. One thing you can do is give gifts to each of your children (and grandchildren, and anyone else you darn well please!) of $11,000 each per year. No strings attached to Uncle Sam whatsoever. As for the rest, I read a good primer on the subject at TurboTax, the folks who make tax-filing software ( This is serious stuff, and it's probably best to consult an accountant so you get it right.

Adam Lashinsky ( is a senior writer for Fortune Magazine and a regular FOX News contributor.