A reader named Tony wrote it with the following question:

My grandmother found among her papers a certificate of deposit (CD) from 1984, with a 9.5%(!) interest rate. The bank, of course, is no longer around. Is there any way to find out how to claim this? What would you do?

Short of trying to figure out if the bank has been bought by someone else, I’m afraid that I don’t have a good answer for him. What if the bank went out of business? Is there a statute of limitations on FDIC insurance? How would one go about trying to get their money back? I’m not sure. I therefore thought that I’d throw this out there so you guys can take a whack at it. If you have any suggestions as to how to proceed, please post them in the comments.

A reader recently wrote in with what he termed a “complex question” about creative strategies for debt reduction.

My wife and I have FICO scores around 750. We have about $28K of debt on top of $238K in two mortgages (191K & 47K). The first is at 5.75% for another 5 years, while the second is at 11.25%. I just thought about loaning ourselves the $28K from our 401K in order to pay that portion of the debt off (temporarily), closing all open credit lines, then applying for AmEx cards that offer 4.99% lifetime rate on balance transfers in order to balance transfer back the $28K plus some of the second mortgage. Now the questions… How long would the loan be necessary before applying for the cards to ensure maximum credit from AMEX? How much credit might we expect?

First of all, it’s nearly impossible to predict how long it will take to secure new cards and get the balance transfer to come through. In fact, nothing is guaranteed, so there’s a risk of not being able to get enough new credit to pull this off. [more]

A reader recently wrote in with the following inquiry:

I am looking to pay off a student loan of just under $22,000 and saw that I can borrow from my IRA to pay for school without incurring the added 10% tax penalty, would this also apply to paying off a student loan? This is a private loan not federal and my rate is around 10%, it’s adjustable. What do you think I should and can do?

The ability to use IRA funds to pay for Qualified Higher Education Expenses (QHEEs) without incurring the 10% penalty is described in Chapter 9 of IRS Publication 970. As far as I can tell, the Qualified Higher Education Expenses don’t include student loan repayment. Rather, qualified expenses include things like tuition, mandatory fees, books, supplies, equipment, and room and board. Based on that, it seems that you can’t use IRA funds to pay off your student loans (at least not without incurring the 10% penalty).

The one obvious exception to this is Roth IRA contributions (but not earnings), which can be withdrawn at any time, for any reason, without penalty. Note that I’m not saying this is a good idea, I’m just saying that it’s possible.

Also, just to clarify something from the original question… You’re not really “borrowing” when you take a qualified distribution. You’re making a withdrawal, and the only way you can put the money back in (short of sticking the money back in within 60 days) is by making regular contributions, which are subject to annual limits as well as income restrictions.

Of course, I’m not a tax expert, so it might be a good idea to run this stuff past a pro before acting on it.

This article is part of my Money Q&A Series.

I just received an interesting question from a reader that relocated from New York to Denmark in 2003. They have since decided to make the move permanent, and have a question about using IRA funds to help with the purchase of a home overseas:

“Can we withdraw from our traditional IRAs to use as a down payment on a house (we are first time buyers) if that house is in another country? I know that you can do this in the United States, but am curious if we can withdraw the money without penalty if our first time purchase is overseas? Any help would be greatly appreciated!”

Let’s first set aside the issue of whether or not using IRA funds to purchase a house is a good idea. Rather, let’s take a look at the rules… [more]

A recent search engine visitor asked:

Who gets to keep the earnest money a real estate deal falls through?

My answer: While I’ve talked in the past about the cost of a failed house deal, I’ve never really dealt directly with the issue of earnest money. In case you’re not aware, the whole point of earnest money, which a prospective buyer typically pays to the seller when they make an offer on a property, is to ensure that the buyer is serious, and intends to go through with the deal. Thus, if the buyer backs out of the deal, the seller gets to keep the earnest money. If the deal goes through, the funds are applied to the purchase at closing.

Of course, there are possible exceptions, like when the buyer makes their offer contingent on securing financing, the outcome of the home inspection, etc. But for the most part, if a deal falls through and it’s the buyer’s fault, the seller keeps the cash. Of course, the seller could also try to sue for ‘performance’ (i.e., to make the buyer honor the contract) but the most common thing to do is pocket the earnest money and put your house back on the market.

This is something to keep in mind when deciding whether or not to accept an offer on your home… If the prospective buyer offers a relatively small amount of earnest money, they might not be as serious as you had hoped. In that case it’s probably a good idea to ask for more in a counteroffer. Around here it seems that ~1% of the offer price is standard. From the seller’s perspective, more is always better (and vice versa for the buyer).

This article is part of my Money Q&A Series.

In looking at my site stats, I’ve noticed that a number of people arrive here from search engines looking for answers to fairly specific question. In some cases, those answers can be found in one or more articles within my archives, but in other cases they can’t. Thus, I’ve decided to periodically pluck out some of these questions and spend a bit of time answering them.

Alternatively, if you have a question that you’d like for me to answer, please drop me a line. I love getting e-mail from readers, and I’m also always on the lookout for good article ideas. I can’t promise that I’ll tackle your question, but we’ll do our best to accommodate your interests.

As always, these articles will be categorized by subject matter, but they will also be cross-referenced in the Money Q&A category.