Read Liz’s Columns

Liz writes a twice-weekly personal finance column for MSN Money, one of the Internet's largest and most-respected financial sites. She also writes a weekly question-and-answer column, Money Talk, that appears in newspapers across the country.

MSN: You can find her latest columns here and sign up for her newsletter here. Or click on one of these featured articles:

Prom night for less

Tis the season....for some teenagers to spend more than $1,000 on a single date. If that gives you pause, here are some ideas for a memorable night that won't leave a lasting dent in your wallet.

Your paper check is a thief's best friend
A crook can use just one check to steal your money and ruin your good name. And paper gives you far less protection than a credit or debit card. (For more identity theft stories, click the "Financial Privacy" link to the left of this column on MSN.)

20 questions for an easier financial future
Setting goals is the first and most important step in personal financial planning, but actually figuring out what you want can be surprisingly tough. Here are some questions to ask to put yourself on the right track.

7 fast fixes for your credit score
We know more than ever about how credit scores are calculated. Learn how to clean up your record, polish it to a new gleam and reap the financial rewards.

9 ways to build a killer credit score
If you're just starting out, these steps will make sure you get all the credit you deserve.

4 credit scoring myths
Looking to buy a house? Make sure you know what will truly hurt and help your case with lenders -- and don't fall for the misinformation mortgage lenders can spread.

The consumer's guide to credit counseling
Credit counselors are falling all over themselves to help you out of debt, but some do more harm than good. Here's what you need to know, including whether you need it and the red flags for ripoffs.

When paying bills can hurt your credit
Now that you've decided to clean up your act, use caution: Settling some old debts can harm your credit score. Here's how to do the right thing the right way.

Bounce back fast after a bankruptcy
Carefully rebuild your credit and you could qualify for almost-normal rates, even a mortgage, in a year or two. Here's what you need to do.

Money Talk

You can find an archive of Liz's recent Q&A columns here (free registration required).

Here's one of her latest:

Question: In the past, we'd heard that a bank account could be protected from creditors, U.S. Bankruptcy Court and other government authorities if it were set up to receive only Social Security funds.

For several years, we thought we had such an account, but now the bank denies that such protection is possible. We're not facing any lawsuits or other problems, but we do wish to protect this money in the event of a catastrophe. Could you discuss this issue?

Answer: You can protect your Social Security income from most creditors, but it's up to you — not the bank — to take the proper steps, said Lowell Kepke, a Social Security Administration spokesman.

"Banks generally will not have any special kind of account just for Social Security payments," Kepke said. "It is up to the customer to maintain the account with only Social Security deposits."

Specifically, you have to arrange for Social Security to electronically deposit your checks into the account and make sure you don't mingle that money with other kinds of payments or deposits.

Social Security benefits are generally protected against garnishment, levy or bankruptcy proceedings as long as money is "still identifiable as Social Security benefits in a bank account where the only payments into the account are from direct deposit," Kepke said.

There are some exceptions to the creditor protection, Kepke notes:

• The Internal Revenue Service can seize an account to collect unpaid federal taxes.

• The account can be garnisheed to enforce child support or alimony obligations.

• The state can be reimbursed for interim assistance to Supplemental Security Income recipients. (SSI is the Social Security disability program.)

Also, the protection may not prevent a creditor from trying to raid your account — it just provides a remedy in case such an attempt is made.

If a creditor gets a judgment against you in court, for example, and asks the bank to freeze your account, you may have to contact the creditor's attorney to get the funds released. Your bank statements showing Social Security as the only source of funds in the account should be proof that the account is protected. If the attorney balks, though, you may have to go to court to reverse the freeze.

Given what's at stake, you may want an attorney's help if you should ever face the catastrophe you fear. Your local bar association can provide referrals.

Q: I am on active duty in the Air Force and stationed overseas but due to return to the States in August. I plan on retiring from the military in December 2007.

In preparation for that, I want to purchase a town home for $175,000 to $200,000 in the area where I'll be living. My military pension, about $1,500 a month, will cover mortgage and taxes, so my civilian job will need to pay only for utilities, insurance, food and investments, which I estimate will total about $2,200 to $2,400 a month.

The last time I checked my credit scores at the three credit bureaus, I averaged around 800, so I think I will get a good interest rate. I have been saving diligently for the last seven years and have no debt.

My question is: How much, besides the 20% down payment, should I have available before purchasing? My rough calculation is about $60,000 ($35,000 to $40,000 for a down payment, $10,000 for closing costs and $10,000 for an emergency fund). I will be a first-time home buyer, so I have many fears, especially because it will be the biggest investment I've ever made. Am I calculating this right?

A: Buying your first home can be scary, but you're absolutely on the right track.

Closing costs can vary enormously, although they usually depend on the amount of the loan and the customs in the area where you buy. Budgeting 3% to 5% of your purchase price, as you have, is generally wise. You'll also want to have an amount equal to at least three months' mortgage payments in your emergency fund after the loan closes.

Because your mortgage payment will probably be in the $1,000-to-$1,500 range, you've also got that covered.

Once you've got the house, try to deposit an amount equal to 1% of the home's purchase price into savings each year to cover maintenance, repairs and any assessments by your homeowners' association. Many years, you won't use the entire sum, but you'll have a good-size stash in case a major repair or assessment is needed down the road.

If you have other questions about the process, consider consulting a good primer such as Ilyce Glink's "100 Questions Every First-Time Home Buyer Should Ask" (Three Rivers Press, 2005).

Good luck, and enjoy your new home!

Liz Pulliam Weston is the author of "Deal with Your Debt: How to Manage Your Bills and Pay Off What You Owe" and "Your Credit Score: How to Fix, Improve and Protect the 3-Digit Number that Shapes Your Financial Future." This column may not be resold, reprinted, resyndicated or redistributed without written permission from its distributor, No More Red Inc.