Color of Money Live (July 10, 2014)

Jul 10, 2014

Washington Post nationally syndicated personal finance columnist Michelle Singletary answered questions in an online discussion.

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Thanks so much for joining me today.

Let's get started.

I am an entertainer who works at parties. An employee of a business contacted me about doing a party for their office. I sent a quote which said that they would be responsible for paying the full cost if their event was cancelled with less than 10 days from the schedule date. They agreed to my quote and accepted my invoice for the event. I just found out that employee is no longer working there and the event was cancelled. We only have email communications and no formal contract was signed. Do I have any way to get them to pay the amount that was agreed on for the event?

Thanks for your question. You certainly can try to pursue your claim.

Contact the business. Show them the invoice and emails, which I hope say they agreed to the event. 

Can't hurt to try. Can't even hurt to go to small claims court. Even better if it's worth it get an attorney to draft a letter asking for payment. Often such communication let people know you are serious. 

And lesson learned: Get a contract sign, sealed and delivered before placing an event on your calendar. 

Dear Michelle, I work at a large local car dealership. For each of the summer holidays we hold a 9-5 cookout. We sell a few cars and make contacts who buy a few more, but mostly it's intended to be a fun community event. This year on July 4, however, we were overwhelmed with desperately hungry people who ate 3-4 hot dogs and hamburgers apiece and, even after we posted "limit 2 per person" signs kept coming back for more. Vans would unload 6-8 people who came over and cleaned us out. Children were snatching large bags of chips and running away. Cases of soda flat out dfisdappeared.. We made several emergency food runs but still had to shut down around 2:30. I would say we are located in a typical middle class neighborhood, not exactly upscale but but nice townhomes, apartments and singe family homes. I have to say this completely floored me. I am now looking into volunteering at food banks so I can help deal with this problem. -

It is sad. There are a lot of hungry people in many of our communities. Perhaps you and the dealership can look into what more you can do to feed the hungry.

Now having said that, it could just be that some folks were taking advantage of a free meal. Also, helps to have people hand out food and drinks or food tixs so others can enjoy the community event. 

Watching Reality TV shows like Auction Hunters, Storage Wars, American Picker, Shipping Wars, Gold Rush make it seem like there are many ways to strike it rich without having to hold a traditional job. Each show seems to end with a recap of how much money they made. Cool, they buy something for $500 and find out it is worth $820, for a $320 profit. But, in the effort, two people spent a day of time or more, so it is $160 each or about $20/hour. Suddenly, it doesn't seem like quite as much, and they only found out it is worth $820, they didn't actually sell it, so the money isn't there yet. I bet the stars of the various shows make more money by being paid by the network to appear on the show than they actually earn from their "job". I can't help but think that these shows get more people to try their hands at making money only to loose it in the process by not showing how much it really cost to earn a few dollars.

Your are correct. Many of the shows make it seem easy to strike it rich. 

Or there are the other realty shows that show how the rich live only for us to find out they live just like many of us -- broke and living off credit.

 

The person who called our business an "expensive hobby" is being very unkind. Myu wife and I both work 60-70 hours a week and are desperately trying to save or sell the business. We ran a similar busness outside of Edmonton that did very well. Family members are now running it for us and and it is continuing to thrive. People seem to like or concept but don't have much disposable cash. We did not realize the US small business climate was so bad. We will continue to keep trying and if anyone would like a nice cuppa, please come see us!

I hear you. You work hard. I don't doubt that. But I understand where some folks were coming from. I talk to so many people who want to own a business and give it a great try but can't make it work. But they won't give up and end up sinking their family financially. If you've been working at a business for years and you aren't making a profit it might just be a hobby. You have to know when to hold and when to fold.

My Mother will be 80 years old this month. Her house is paid for, she has a steady pension of $40,000 per year and has $150,000 in savings. I would like her to enjoy herself and spend some money on something she would enjoy, it doesn't need to be much, a dinner out, a new kitchen faucet. But she is absolutley terrified of running out of money and won't spend anything. As a result I or my sister pay for all of her repairs, vacations, etc. I say we should stop this (I am a single mom with two kids, sis is single) and she should enjoy life a little bit more on her own dime. We want her to be happy and I understand growing up she had a very hard life, but I would much rather her enjoy life than give us a inheritance. What can I do or say to help her understand this? Thanks.

Stop.

Paying.

Period.

I'm sure your mom is a lovely person but she doesn't have to use her own money because you and your sister enable her.

So stop enabling her. You don't need to say anything more than you've already said.

If she really wants to do something and has the money, she will.

If not, well it's her life and her choice to NOT spend her own money. Or have fun. 

I'm concerned you aren't taking care of yourself and saving for your senior years or to put your kids through college without debt. Stop rescuing your moms who doesn't need rescuing and save, invest and spend your own money.

In addition to the original post, the shows never show the many many lockers that are sold and have no value. In addition, here's an artice from Business Week about how the show is rigged http://www.businessweek.com/articles/2013-05-23/the-reality-tv-dissident-dave-hester-of-storage-wars

Totally!

Thanks.

How should you weigh your options when deciding to stay at a job or act on leaving a job? Pragmatically and looking at the personal fiscal implications, strength of the organization, leadership, etc., current and future employers? What are the reasons to stay and reasons to leave? I am at a crossroad. Thanks so much!!

When deciding to change jobs look at everything you listed already -- Is the new company a better fit? Is the job just as secure? 

Then do this:

-Talk to current employees. Are they happy?

-- Do the math? Will any expenses increase by taking the new job (longer commute, more expensive parking, etc.)

-- If you stay put, what's the future hold for movement up if that's what you want? Have you talk to any mentors on the job? What do they think? 

But in the end you may never know all the answers or get all the answers. You have to trust yourself after you've collected as much data as possible.

My 74 year old mother bought a condo about 10 years ago at the top of the market. With her pension, she earns just enough to pay her bills with nothing left over for food and other things. We thought that if she could reduce the payments or restructure her mortgage, things would be a little easier for her. Unfortunately, because she has no/little equity, no one seems to be able to help her. Her credit is OK, not great but OK. (low 600's) and she's being told that the only way to get help is to stop making her mortgage payments which would sort of force the mortgage company to make some kind of deal with her. This would only further damage her credit and could put her at risk of foreclosure, so it seems too scary to do that. Any suggestions?

I wrote about getting mortgage modification help in my column yesterday. Click on the link and you will find some resources. But don't believe people telling your mother to stop paying her mortgage. Help her get help from a HUD-approved housing agency. 

With the right help your mother may very well be eligible for help reducing her mortgage. 

But be prepared that your mother may not be able to afford the condo even if a mortgage adjustment is made. There is only so much the lender may do even with a modification.

If that doesn't work, perhaps she can get a roommate. Or look at other housing options. Can she live with you? Another relative, etc.

The thing is don't help her hold onto a home she may not be able to afford. 

Michelle! I love the book, and I am enjoying the #financialfast. I have a question about debt subject you talked about Tuesday night. We owe $8500 on a line of credit at the credit union. We have $8500 in a money market account (Emergency Fund) at the credit union. Should we use the $8500 to pay off the line of credit in full, or just make the monthly payments on the line of credit until it is paid off? Should we not take a vacation until we pay off the line of credit - even if we have a savings account for the vacation? Thanks for your feedback!

So glad you could join live at First Baptist Church of Glenarden. 

Let's see:

- I wouldn't deplete my emergency savings but I would take a hefty amount out to pay down the line of credit. Perhaps half. You need emergency money even while you are paying off debt. So take about $4,000 and reduce the debt.

-- Take the money for the vacation and add to what you are taking from the emergency pot.

-- Now work hard to throw as much money on that debt as possible until you pay it all off.

--No you will not take a vacation until the debt is paid off. You can't afford the vacation if you have debt like that.

Hope that helps.

Just a comment-- as a CPA, I've seen more than one small business take a family's finances completely down the tubes, including into backruptcy, losing the family home, tax foreclosures, etc. Please do not bury your head in the sand and think that working more, more, more is going to change your outcome, if after several years your outcome so far has not been a positive one. Use your head as well as your heart.

Spot on!

And from someone on the front lines. 

Thank you.

To be clear: I intended it mostly as "tough love," with a twist of calling [cow pie] where I see it. To the former: when you have two people working that hard, and you still can't turn a profit, then you need to think seriously whether the business is viable. Don't care how successful it might have been somewhere else in the past -- you need to make money in THIS location, in THIS economy. Your customers have *some* money; if they are not choosing to spend it on your product/service, that's a sign. On the second point: the OP used the business' lack of profit to justify opposing a livable wage. That's bass-ackwards. Any sensible business plan starts with figuring out if your revenue can exceed your expenses by a sufficient amount. IMO, a reasonable wage is a mandatory component of the expense calculations. So if you can't make a profit under those circumstances, that is a fundamental flaw in the business plan, and the business isn't viable. Period.

Well, thank you so much for clearing up your points.

Except for the almost cussing part, I totally agree :)

I'm a graphic designer, owning a small business and alway put in a clause making e-mail binding. I send a quote outlining price and process in the body of the e-mail and writing 'I'm attaching a standard agreement, which for ease can be agreed to electronically. '

Good point. 

I would still want a contract, contract in addition to the email confirmation. Because how can you prove someone saw the email or agreed to it? 

 

Good Afternoon! My husband and I are looking to start the process of pre-qualifying for a mortgage. We are first time home buyers and plan on getting our documents together and applying in the next 60 days or so. However, we purchased a car in February (had a new baby, so needed a second car) which I would like to refinance through our credit union. Will refinancing so close to when we apply for the mortgage be an issue? Is there one we should do first? Also, I am just returning from disability (see above baby news)- will this present a problem in the qualification process? Thanks!

Yes, getting a new loan, even one to lower your car payment, could lower your credit scores.

But please be sure you are ready for the home. Do you have:

-- an emergency fund

-- life happens fund

-- saving for your retirement

-- will have enough money to put funds in college fund for new baby.

-- Is the other car paid off? I hope so. 

-- Do you have money for downpayment and closing cost? If so, why not just pay off the card and any other consumer debt and go into your new home debt free.

See where I'm going?

Hi Michelle, My husband and I are recovering from a rough patch, mostly caused by credit card debt and his obtaining a master's degree just when jobs in that field dried up due to the economy. Five years later, we will pay off the last of the credit cards this month. We have 19k in student loan debt, and we pay double the monthly payment towards that. Our emergency fund contains almost three months' expenses, and we are currently adding $500/month to it. My question is, what to do with the money we've been paying towards the credit cards? Should we put it in the emergency fund, add it to the student loan payment, or increase our retirement savings? We are in our 50s and have saved nearly 300k. My worry is that it won't be enough (although we will each receive a partial pension and social security).

Stop saving in the emergency fund for now.

Take the $500 you are adding to the emergency fund and put it on the debt.

Or, and here's something that will make you uncomfortable. Take money from the $300,000 you've saved (as long as it's not from tax advantaged retirement accounts) and pay off the entire $19,000.

Then all the money you were putting toward the debt aggressive put toward retirement.

The job I've loved for 8 years has gone downhill for the last two for a whole host of reasons. I don't sleep, I eat too much and have come to despise a co-worker to the point of walking around with a knot in my stomach for 40 hours a week. Boss knows it hasn't been great but I've reached the point where I'm going to leave. Trying to find a job while working is near impossible with my schedule and responsibilities. I'm single, mid-forties and have solid savings and retirement accounts. Only debt is reasonable mortgage. After much soul searching and numbers crunching, I can do it. I can get by for a year on one account alone without touching retirement and still have other savings intact, too. I'm in a field that lends itself to temp work and I can do that while looking for permanent work and helping to care for rapidly declining parents. I know it's not what Michelle would recommend but I think for my self-esteem and well being, I need to do it.

I hear you.

But I wouldn't leave until I found something else.

It's really, really hard out here and perhaps there are other things you can still do while you are looking for another job.

A year can go by pretty fast in this awful job market.

Have you tried to get someone, anyone at the company to help you with the co-worke besides your boss? How about human resources? 

Can you take vacation time to spend full days looking and interviewing?

In the end you may decided your mental health is worth the risk and I get that. But please keep trying to find other alternatives and exhaust every other avenue.

You do such a good job of getting the word out about ways to help people become financially responsible that I thought you might be able to help inform first time homebuyers about Housing Finance Agencies. These organizations, one of which I work at, assist first time homebuyers responsibly get into their first homes which then help these people build equity and wealth. They are generally state or quasi-state agency that use federal funding to assist people with lower than market interest rates and down payment assistance. That means that people can buy a home with no money down and can even get assistance with closing costs. They provide free financial counseling for homebuyers using down payment assistance so that they learn how to manage their money in order to pay their mortgage. There are income limits and limits on the price of the home but the limits are much higher than most people think. These agencies have been doing responsible lending for more than 40 years and do not offer sub-prime or interest only loans. Just regular 30 year fixed mortgages that have no pre-payment penalties. There is a housing finance organization in every state and in DC, Puerto Rico and the US Virgin Islands. So if anyone is thinking about buying their first home, these are a great place to start. Thanks for getting the word out and all that you do. I'm a big fan of yours.

Passing this along.

Thanks.

THANKS! That helps a lot!!!

You are welcome.

The clause says this: 9. Acceptance of terms The action of the sending and receipt of this agreement via electronic method will hold both parties in acceptance of these terms. The Designer as sender and the client as recipient will acknowledge acceptance of these terms either through an e-mail noting acceptance or acceptance is acknowledged at the beginning of any work on said project. Electronic signatures shall be considered legal and binding.

As long as the recipient receives and acknowledges.

Works for me.

I'm so sorry but I have to go. I have all the comments and questions you sent and will read. Just want you to know that your efforts are never in vain. I often use your leftover questions for columns. Or you can try again next week or tweet me your question.

Again, thank you for joining me today.

In This Chat
Michelle Singletary
Michelle Singletary writes the nationally syndicated personal finance column, "The Color of Money," which appears in The Post on Thursday and Sunday. Her award-winning column is also carried in more than 120 newspapers. In her spare time, Singletary is the director of a ministry she founded at her church, in which women and men volunteer to mentor others who are having financial challenges.

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