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Ask Farnoosh: I’m Unemployed and Underwater. Is My Situation Hopeless?

Glen emails: I am 73 years old, and have been unemployed for over 3 years. My retirement savings and unemployment benefits have been exhausted and all I have now is Social Security. My wife is working 30 hours a week for $11 an hour. Our home is underwater by about $80,000 but moving to a smaller place would only save about $200 a month. We did a loan reorganization a couple of years ago to get the interest down to 2%. Also, since my hip replacement surgery, I am not physically capable of doing some jobs that are advertised. Some people have said our situation is hopeless. What should I do?
 
Dear Glen,
 
Ignore these naysayers! To reach a better place financially, you and your wife will need to consider some adjustments, but your situation is not hopeless. You are fortunate your wife can still work and, despite your physical ailment, I’m confident there are ways you can make money from home (more on that in a moment).
 
First, with regards to your underwater mortgage, you could simply continue to live in your home since it seems you’re able to make the monthly payments on time. You’ve taken the right steps to restructure the loan and reduce the interest rate.  If you’re still desperate to move, it wouldn’t be impossible; it would just be a lengthy and somewhat hairy process. Before moving to another house you’d need to settle your upside-down mortgage. You could probably qualify for a short sale, which involves your lender selling your home and absorbing the loss, without making you pay for the deficit. You’re also likely eligible for Mortgage Forgiveness Debt Relief, legislation extended through 2013 that allows homeowners who sell their properties in a short sale or foreclosure to avoid paying taxes on the loss, says Gerri Detweiler, director of consumer education at Credit.com. And keep in mind, if you downsize to a smaller home (and I’d recommend renting not buying at this stage), you’d save not only on monthly housing payments, but also maintenance, real estate taxes and utilities (if it’s, indeed, a smaller home).
 
As for making money from home, do you have a computer and Internet connection? Sometimes that’s all you need to be in business. Check out RetirementJobs.com, a free website which helps to connect you with companies looking specifically for workers over 50. “There are plenty of work-from-home opportunities, which would be perfect for someone whose been recently injured. Most are in tutoring, caregiving and are part-time,” says the site’s CEO, Tim Driver. Other websites like Care.com and Tutor.com can also help. You might be interested in earning some passive income, too, which requires no work at all. In my Yahoo series Financially Fit, we’ve explored ways people can safely rent out their car or even driveway to out-of-towners, and earn several hundred dollars per month. Check out relayrides.com and parkatmyhouse.com to learn more about these opportunities.

@kandacehyland tweets: Is it better for working, married couples to contribute more to one 401(k) or less to both?

If you and your spouse are investing one stream of money that you both plan to tap in retirement, then the overarching goal is to simply maximize your retirement vehicles.
 
Whether that means an equal split or contributing more to the best 401(k) available to you depends on the nature of the accounts. One of you may have an outstanding 401(k) at work that provides a generous match with plenty of investment options, while the other may have a plan with no match (or a smaller one) and limited investments. In that case, put more money in the plan that offers a match and more options.
 
“They should both make sure they’re putting in at least a minimum amount that will make them eligible for the match. If only one of you has that, invest as much as you can in the account with the match. That’s a huge benefit. It’s free money,” says Bill Losey, a retirement expert and certified financial planner.
 
On the other hand, if both plans offer decent matches, consider a 50/50 split and develop a strategy that ensures your respective investments complement each other in terms of diversity, says Kevin Kautzmann, a certified financial planner with EBNY Financial in New York.
 
Got a question for Farnoosh? You can reach her on Twitter @Farnoosh or email her at farnooshfinfit@yahoo.com.
 

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