Dear Mary: The rent on our three-bedroom house went up from $850 to $1,000 a month. We were struggling to pay the $850, so we really can't afford the increase. We have looked in an apartment community where our rent would be about $750 a month. I also found another home that could be a great permanent family home. It is a rental, with the option to purchase. The monthly rent would be $1,000. We have huge student loan balances, and our credit isn't that great.

Should we move to the cheaper apartment, into the house with the higher rent and option to purchase, or should we just stay where we are? -- Julie, e-mail

Dear Julie: If you already are struggling to make your $850 rent each month, how are you going to handle $1,000 a month -- with or without an option to purchase clause? Have you looked carefully at the conditions and terms on that option? Typically, what that means is that a portion of the rent you pay will be credited against the purchase price, if and when you are able to buy, but that could be a small amount, maybe $25 a month. Given the information you've told me -- even if that option to purchase is very favorable -- I would advise you to go with the $750 apartment. You need to cut expenses, not add to them. Lower rent plus a strong commitment to go on a spending diet should give you the boost you need to get your debts paid in the next two or three years. Then you'll be ready to start looking for a home to buy.

Dear Mary: If my bank is FDIC insured, what happens to my money if "the worst" happens and they go bust? -- Nichole J., e-mail

Dear Nichole: There are three possibilities, should your bank "go bust." Most likely, another bank would buy up the assets of your bank, and nothing would change for you except the name of the bank. Or, as was the case with IndyMac, the Federal Deposit Insurance Corp. takes the role of conservator and things go on pretty much as they have been, with the FDIC making sure all of the insured deposits are safe and secure. A third possibility, while remote, is that the FDIC just writes you a check for the full amount of your insured deposits, and they nail a for-sale sign on the bank building.

What you need to know is that if you or your family's deposit accounts at one FDIC-insured institution total $100,000 or less, your deposits are fully insured. If you hold deposits in excess of that amount, they may be insured, but you need to find out to what extent. If you have deposits held in individual retirement accounts at the same bank, federal law provides up to $250,000 in insurance coverage. You can use the FDIC's Electronic Deposit Insurance Estimator at www.fdic.gov/edie to determine your insurance coverage beyond the basic $100,000 amount.

Do you have a question for Mary? E-mail her at mary@everydaycheapskate.com, or write to Everyday Cheapskate, P.O. Box 2135, Paramount, CA 90723. Mary Hunt is the founder of DebtProofLiving.com and author of 17 books, including "Debt-Proof Living." To find out more about Mary and read her past columns, please visit the Creators Syndicate Web page at www.creators.com.
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