The Takeaway: Our Q&A with personal finance expert Alvin Hall begins at 1 p.m. Eastern (10 a.m. Pacific). Type your questions below to add them to the queue, and we'll get to as many of them as we can. See you soon!

The Takeaway: Welcome back to another Takeaway Q&A.

The Takeaway: We're chatting now with Alvin Hall, financial educator and author. We've been collecting questions all morning, but type yours below to add them to the queue, and we'll get to as many of them as we can.

The Takeaway: Welcome, Alvin.

Alvin:Thank you. I'm glad to be here.

The Takeaway: We have lots of questions already. Let's get started. Our first question comes from Shannon:

"Before the credit crisis congealed, what did the credit situation in the U.S. look like compared to the rest of the developed world?"

Alvin: Individuals in the US had the second highest debt per capita in developed world. Only the British had more. Also individuals in the US had more credit cards per capita.

Alvin: Our government was the largest issuer of debt in the world, much of which was being bought by foreign countries.

Alvin: Corporations also embraced leverage, creating financial services division just to borrow money for their day to day operations. The entire country grew almost too comfortable with massive amounts of borrowing.

The Takeaway: Thanks, Alvin. Here's one from Ann in Staten Island, New York.

"Can you explain why the government allowed credit card companies banks to have late interest rates and rates that hit the ceiling? There's no limits to what they can charge the consumer and unfortunately what that does is compounds the debt that the consumer has already accumulated with the credit card. If somebody could explain how that happened I'd appreciate it. Thank you."

Alvin: Starting in the mid 1970s issuers of credit card started to move their business to states that had no interest limits on interest ratest. You may remember that some of Citibank first credit cards were issues from mid-Western states. At the time many states like New York had usury laws that capped the amount of interest that could be charged.

Alvin: Gradually as states watched backing business move to states with no interest cap, governments started to repeal the caps. The credit card industry jumped on this trend to get related laws changed. As a result there is no limits on what a credit company charge or what fees they assess. The government does need to step in because some of it feels like exploitation.

Alvin: Oh I meant to say the "banking business" at the beginning of my last answer.

The Takeaway: Thanks for the correction.

Alvin: You're welcome.

The Takeaway: But they must have found some sort of equilibrium to maximimize consumer credit spending with their revenues. How high are the highest rates these days?

Alvin: The highest I've seen is around 30%. A friend who got into trouble with several cards saw her interest chargest go from around 15% to 30% APR. This did not included all of the late fees and over-balance charges the bank added on every month. Add those in and the effective interest rate was probably closer to 40%!

The Takeaway: Wow, that's a lot!

Alvin: This friend was eventually forced in bankruptcy.

The Takeaway: Clearly it's hard for many Americans to save anything -- saving is a luxury. Here's a question about savings from "Loveless"...

"What is a good percentage of your salary should you place into savings? 20%? 40%? I do it sporadically and want a solid plan."

Alvin: That's a very good questions. 15% is the percentage that you'll find recommended in most investment guides. This amount should be taken directly from your pay check and placed in a saving account. However, I encourage people to start saving even small amount, say 5% of the amount they earn. It's important to always have a financial safety in case that rainy day comes along.

Alvin: If you can save 20% or 40%, then you are worthy of financial sainthood.

The Takeaway: That small amount, 5%, or the 15% number... Has that recommended percentage changed given the current economic downturn?

Alvin: As you financial fortunes increase, you should increase the amount that you put into savings. During difficult economic times like this, it may be helpful to lower that amount so that you can avoid getting in debt. Look at your individual financial situation and make the necessary adjustments to make sure your cover your basic living expenses. And if you can avoid dipping into your saving, although that may be impossible if you are unemployed for a long period as I have been in the past.

The Takeaway: Here's a follow up from Jennifer:

"my friend is seeing his mutual funds/401K savings plummet and he's tempted to pull all his money out and convert it to cash. he's scared of losing everything, because he needs the money to help him put a down payment on a home next year. is he crazy for wanting to cash out now?"

Alvin: Everyone is wondering exactly this. And unfortunately there is no one perfect answer for everyone. It all depends on your friend's age and how badly he or she is sleeping at night. If they are young, let's say under 40, then there's the real possibility that the market may (and I do stress may) recover by the time the need the money. If the person is older, decision is much more difficult because of the amount of time to retirement.

Alvin: I think the person really has to sit down and rationally determine if there is a point where he or she would want to get out of the market, but not look back with regret--i.e., I should have stayed the course. If there are doubt, think about Warren Buffet and his philosophy of buy and hold . . . although you friend doesn't have Mr. Buffet's money. The current markets would test anyone's resolve.

The Takeaway: That ties in well with our next question from Stephanie. She's 45, and wondering about the trade-off between funds and cash:

"I've been extremely good my entire adult life. I know the difference between want & need. But I still feel behind the retirement 8-ball. I'm 45, single, self employed and max out on my Roth IRA, Solo 401(K) and my old Simple IRA. Is saving more my only option at this point?"

Alvin: Built into most of our long-term savings plans is a reasonable return from investments. However when investments are performing as badly as they are today, it shows that we cannot always count on a bull market trend to deliver the returns we need. In the face of that reality, we have two choices: save more or work longer. I know it may sound harsh, but that's it the truth.

Alvin: There's always the option to take on more risk to make your money grow faster. However, we can see the result of that in today's economy and the losses we are all experiences. It's probably better to be conservative than sorry.

The Takeaway: Our reliance on risk, loans and debt, is based on optimism that we're going to get some financial reward for taking risk. Are we too optimistic when it comes to the debt we incur?

Alvin: Optimism is part of being American. But it did not start out being about taking big financial risks. We always believe that our earnings, lifestyle, opportunities, and financial security will improve through hard work. We believe this for ourselves and for our children. Over the year's people build wealth more conservatively using debt. They bought houses they could reasonably afford on their current incomes. That began to change, I believe, in the early 1980s when people tried to become too financially clever, using more and more borrowing to fund lifestyles before they had ever earned the money.

The Takeaway: For a lot of our listeners and readers, that debt started when they were in college. Let's try to get to some of those student loans questions now. (There are a lot of them!) Here's Rachel:

"I'm a graduate student, and I'm not in debt yet, but after running down my savings on tuition, I'm about to take out student loans to pay for the rest of school. I'm worried about getting myself into crazy debt. Is there a smart way to take out loans that won't land me in debt until I'm 70?"

Alvin: Only take out the money that you actually need--that's the secret to avoiding crazy debt. It will be tempting to use the borrowed money in other ways, especially if you need an emotional boost. You have to exercise self control. Also asl your school's financial aid office about the loans that have the lowest, long term interest rates. Get the ones that will cost you the least.

Alvin: Also the school where you went as an undergraduate may have special scholoarship for people doing graduate work in certain areas. Check this also.

Alvin: Opps, I mean "special scholarshiips"

The Takeaway: It's "scholarships"... :)

Alvin: Thanks. My fingers must be getting a bit tired.

The Takeaway: Now, Kathleen has just graduated and she has this question:

"What do you recommend to those who have both student debt from graduate school (recently graduated), along with significant credit card debt? I'm considering a graduated vs. a flat repayment plan for the student loan and calculate the additional cost over the life of the loan, compared to the additional debt I would incur in credit card interest fees. Thank you."

Alvin: Kathleen, it depends on how you feel about paying the same amount every month compared that amount changing over time. I personally would prefer the former. Having a flat reparyment plan, that you can make additional payments on strikes me as better when you're first starting out your career. Make sure you have the option to make additional payments without penality. Thus you are creating you own graduated repayment plan.

The Takeaway: Another question about the lasting effects of a student loan. From Elena:

"I'm contributing $300 a month to my pension plan, and yet I am some 15 grand in debt with student loans, lines of credit, and a tiny bit of credit card debt. Should I cancel my payments to the pension until my debt is taken care of?"

Alvin: My first question would be what interest rates are you paying on your student loans, line of credit, and credit card debt? In the current economic condition, it would proabaly be wiser for you to get out of debt. As things get worse, interest rates on your line of credit and credit card may go up. Pay them off as soon as you can.

Alvin: As for the student loan, if it is a low-interest loan, I would probably hold to the repayment schedule and reinstate my $300 pension plan contribution after I've paid off the higher interest debt.

The Takeaway: Elena is following up:

"I'm not sure where the interest rates are right now, but I'm sure they're much higher than what I'm gaining. Do you know if there's usually a penalty for opting out and then opting back into a pension? "

Alvin: Typically there is no penality for opting leaving and coming back into a pension. Check with your pension administrator to make sure. However, you should realized that pension contribution are made with before-tax dollars. As soon as it becomes part of the money you take home, taxes will be deducted from it and you won't net $300. Think carefully.

The Takeaway: Thanks, Alvin. Let's move on from the student loans questions...

The Takeaway: You've said, "Americans have a magical notion of money?" What did you mean by that?

Alvin: By magical notion I mean that many American have this intuitive belief that money will somehow take care of itself over the long run regardless of what they do day-to-day. Something will always miraculously happen to correct or stabilize their financial problems and deliver the rosy future they dream of. This is indeed magical thinking . . . somewhat impractical . . . but it feels good.

The Takeaway: Alvin, we have a magical notion of you!

Alvin: I'll go back to my Starship now!

The Takeaway: Shannon writes this:

"What challenges can an economy like the U.S. expect to face now in its changing relationship with credit and debt?"

Alvin: This is a very good question and anything I say will be totally hypothetical. I think it will be difficult for business to produce the growth rates they have in the past. Without the ability to borrow the large sums of money they have historically, they will be more dependant on the business' profits to grow the company throug reinvestment. They won't be able to use credit to smooth out the invariable ups and downs that happen in business. More and more of us well feel directly the business swings through periodic layoff that the use of credit has provided some cushion against.

The Takeaway: A final question comes from Rich Snow:

Alvin: Are you saving the best for last?

"What if the result of this economic mess is that this generation decides to live within its means? Not to buy on credit. To buy only what we need? Is it possible to change the entire system to one that is not built on growth, in developed nations?"

Alvin: Good question! Growth is what business, economies, and individual aspirations are all about. Stagnation would led to individual asking why do we have to do the same job as our fathers/mothers for the same pay? Why is there no possibility for change? Growth gives people hope for a better day, for better wages, for self improvement, for better living standards. The human will is reflected in the economies of successful nations. It would be impossible to keep suppress growth.

Alvin: One thing that may limit growth is natural resources. As they run out growth slows. But the human spirit is always look for the next growth areas.

Alvin: Sorry, I mean the human spirit will always look for the next growth area to replace one that is being depleted. The successful of this search is what is unpredictable.

Alvin: Opps again. The success of this search is what is unpredictable.

Alvin: I think we all have to view debt as a useful tool, but one that we must be in control of. As many of your questions have revealed, more and more people are realizing that the key to maintaining this control is knowing yourself. The better you know yourself the more you can use your money and credit in ways that do not damage you or others.

The Takeaway: We'll have to leave it on that note, Alvin. Thanks all for your participation. We love chatting with you. And Alvin, thanks for your insights.

Alvin: Thanks everyone for your questions. I sincerely enjoyed this and hope my answers were useful to you . . . and your mone. Goodbye.

Alvin: I must be tired! I mean "you . . . and your money." Ciao

The Takeaway: Bye, Alvin.

The Takeaway: There's more from Alvin Hall on The Takeaway here. And the conversation continues at thetakeaway.org.