foreign characters and entity problems

i feel like i'm getting nowhere on this ---> i would like to be able to take characters in that are not english, such as a spanish tilda or whatever and have it stored in an xml file so that i when i go to transform it or whatever it doesn't complain about entities or invalid tokens. i try htmlentities(), it doesn't work. seems to be all kinds of info on this stuff, but i don't know what is appropriate for xml? I really don't want to be utf-8 now, i'm thought i can do all this in ISO-8859-1. what's the answer? how do i get the info into xml files so that it works right? any help is apprciated. thanks, dave