Mellody's Free Money Tips

June 29, 2009 — -- "Good Morning America's" financial contributor Mellody Hobson took to the streets in Chicago this weekend to dish out financial advice to anyone who asked. But for every personal problem she listened to, she had more advice and tips for many others in similar situations.

Check out her advice on how to tackle various financial situations below, then click hereto find more of Mellody's financial wisdom.

Joy Ragsdale Wants a Home, Has Credit Card Debt and Student Loans

Joy Ragsdale is an attorney in Washington, D.C., who is looking to buy a home, but she said she still has to pay off student loans and has $5,000 in credit card debt. She has consolidated her loans, but the interest rate on her credit cards is "like 23 percent," she said.

For cases like Joy's, Mellody said debtors need to set priorities for their debt.

"If you are confronted with student loans and credit card debt at the same time, you almost always want to attack the credit card debt first," she said. "I would start by knocking that credit card debt down, because that rate is killer. Then I would make a commitment to save 20 percent before buying a home."

Newlyweds Cheryl and Paul Nee to Merge Finances

Cheryl and Paul Nee got married recently, and have two homes and three kids between them. They're looking to merge their finances, a move Mellody said is important, especially because of the housing situation.

"You're going to have so much more financial freedom when you're down to one mortgage," she told the pair.

Also, Mellody reminded the couple about basic things newlyweds need to take care of to make sure they're properly taking care of each other.

First, she said, always have emergency money "squirreled away" — three to six months worth of living expenses in case you can't work. Also, "make sure you do a will, particularly when you're blending families."

Dennis Farkas Needs to Finance His Retirement

Dennis Farkas is one of the millions of Americans near retirement who are rethinking their savings.

After 33 years in communications, Dennis is not quite sure that what he's been saving will be enough.

"At this particular time, I'm a little worried," he said.

It's a problem Mellody has seen before.

"Most retired people are saying, 'I thought I did a good job of saving, and last year's financial crisis cut my savings down dramatically,'" she said. "In that situation, what I'm advising to most retirees is if they haven't' yet drawn down their Social Security, if they can, wait, wait. Because the longer they wait, the higher the monthly check will be."

Hector and Adrienne Garza Have Eight Credit Cards and a Lot of Debt

Hector and Adrienne Garza said they've been in and out of debt three times and have most recently run up a $22,000 debt spread over eight different credit cards.

"We didn't have a kid, we just liked to spend money," Adrienne said.

For this one, Mellody's advice was simple: get rid of the extra cards even if the cancellations ding the credit score.

"You have to get those eight cards down to one," she said. "Because you're going to do this all over again. So some people will tell you when you cancel it hurts your credit, but I will tell you that what hurts your credit more is having $22,000 in credit card debt. If I were choosing, I'd rather have people who have one card so they can't repeat the cycle or get themselves into trouble."

After a long day in the hot Chicago sun with American financial issues on the front burner, Mellody was tired, but hopeful.

"If there is one silver lining, is this reality, hopefully, will lead to better behavior," she said.