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November 17, 2011

12:04
P.M.

Color of Money Live

Total Responses: 25

About the hosts

About the host

Host: Michelle Singletary

Michelle Singletary

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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About the topic

Need advice about how to handle your personal finances? Whether the struggle is saving for retirement, organizing your bank files, or talking about money responsibility with your spouse or loved one, Post personal finance columnist Michelle Singletary offers her advice and answers your questions on Thursday, November 17 at 12 p.m. ET.
Q.

Michelle Singletary :

Just finished my crazy video chat. Now ready for your text questions.

So let's get started.

Q.

PG a good deal?

Are you able to convince someone that buying a home in PG is a good deal? Sure, the homes are a lot cheaper, but the property taxes are astronomical relative to home price, the schools are bad, the government is inefficient, there's high crime, and the insurance rates are much higher.
A.
Michelle Singletary :

Really? Nothing good about Prince George's in Md.

Well, I beg to differ. I live in the county. I love it. I live in a great neighborhood with wondeful neighbors. My oldest in public school (high school) taking AP classes from some top notch teachers. She's doing as well as if not better than some of her friends who are in private school.

Are there some rough, tough bad areas. Yes. But there are also many great things about PG.

– November 17, 2011 12:04 PM
Q.

Banks

I always thought that banks made their money from the loans, but today, it seems that they are trying to make all of their money on their deposits. With interest rates at such a low and bank fees everywhere, it really seems like it would be cheaper to keep my money in an old mattress. Whenver I go to the bank to deposit a check, they hand me a slip with details about the presents that I can get if I convince my friends to open an account. How can they be giving out gifts if they need to charge so many fees?
A.
Michelle Singletary :

Indeed how could they. But my friend banks earn billions (with a b) from the fees they charge customers while paying pitiful desposit rates. The bums!

– November 17, 2011 12:05 PM
Q.

Life DOES Happen!

Just had to give you a shout out for encouraging a robust life happens fund in addition to emergency savings. This year, I've had flood damage, a new (to me) car when the old one died, and other home expenses. The bonus I got last week went entirely to refund my life happens fund, even though I really want to take a vacation trip at Christmas. I'll sit in my newly safe house and count my blessings instead.

A.
Michelle Singletary :

Here's a shout out right back at you. LOVE IT!

LOVE the LIfe Happens Fund. It's an idea that I created years ago when I saw so many people raiding their emergency fund so that when a true emergency happened they were broke.

The life happens fund for those who don't know is seperate from your emergency fund. You build it up with a $1,000 or two to take care of the things in life that happen -- flood damage, new/used car, car repairs, other home expenses. As you use the money from the fund you replace it. It's just another great safety net. 

– November 17, 2011 12:08 PM
Q.

An opposing view

Hi, Michelle. I know you don't like anyone's spending money at any time, but you do like making it, right? My husband and I are doing OK, but we both take every holiday shift we can manage. I'm a flight attendant and he manages a sporting goods store. We add thousands of dollars to our income each year. Who cares if we don't celebrate holidays on the given day? Even our kids go along with this as they understand the extra cash is going towards their future education, not to mention the occasional extra goodie for being such a good sport about it all.
A.
Michelle Singletary :

First, while I understand why you think I don't like spending money (well cuz I don't) I DO spend money on some things I want such as family vacations and books, etc.

Something else, I try to set aside time for my family on the special days -- on the exact day. Making money is good but often the kids, hubby, family want  you there on Thanksgiving, Christmas, Easter, etc. Don't let the pursuit of money or building up savings make you miss out on the fun of celebrating on the actual days. Skip them if nobody really cares but make sure they don't really care. Sometimes people say they don't care and they do. My kids want me there on their birthday. They want Christmas to be Christmas.

– November 17, 2011 12:11 PM
Q.

"doing as well as if not better than" kids at private school

I am loathe to wade into this, but having had kids at both private and public, my feeling is that school is about more than just grades and AP classes. My kids are pretty shy, but when moved from public to private school, they made varsity sports teams, got jazzed up about their interest in art, etc. It really depends on the kid, and it's way too easy (and inaccurate) to say "my kid is doing better in public" than private school kids. Some kids need a smaller atmosphere, and it is well worth the money -- if you have it.
A.
Michelle Singletary :

You missed the point entirely to make your point, which is valid. My comment wasn't about private vs. public. It was in direct response to the assumption that public schools in PG are all bad. They are not. 

When we decided to send my daughter to the public high school many of her friends and ours thought we were doing her a disservice. They said things like: "Are you sure? Is she going to be okay?" She's not in a war zone. She's just fine. Better than fine.  

So having said that, I agree that how well your kid does often comes down to the kid. But I also believe you have to do what you can afford. I know parents going broke trying to send their kids to a private school or to a certain college. 

– November 17, 2011 12:16 PM
Q.

Thanks for the love for PG...

We bought there in 2005 and while yes, we are now underwater due to the market, we're staying and love it. A similar house in Montgomery County would have been at least twice the price, and there are so many positive changes!
A.
Michelle Singletary :

That's my point. In most cases you can make do and love it whereever you live. I lived in inner city Baltimore with its crime, craziness. But there are many pockets where families raise great kids going to public (and yes private schools).

I'm just not into brand name to say it's always better. That's all.

– November 17, 2011 12:17 PM
Q.

people who chose wrong - constantly

Michelle, maybe you are familiar with this since you counsel people through your program at your church. Perhaps it is more a question for psychologists and sociologists to debate, but why do you think so many people continue to make poor financial decisions? I have my share of mistakes because I chose not to be informed. Then I got informed. Learned my lessons. I make over $80,000 in DC and it is not enough to blow money on expensive gadgets, yet people who make far far less do this all around me. Why do you think this is? I don't even own a TV and yet the neighbors taking welfare handouts have two flat screens. Where is the logic?

A.
Michelle Singletary :

Yup this is one for the counselors. People make bad decisions at all income levels, race, age, etc.

Often it goes back to their childhood. Something was missing. Someone not there to give them love, pour some common sense in them. As for the old welfare example, it's not just people living in povety that make bad decisions. They are doing what the rest of America is doing. Overspending. Just seems more silly when they do but it's just as dangerous for higher earners many of whom are a paycheck and job loss away from being on welfare. 

Let's why I try to be part of the solution to help people understand why they make bad financial decisions and then give them the tools once they come to their senses to do better.

– November 17, 2011 12:21 PM
Q.

Emergency Savings Fund

Hi - I wanted to ask a question about our emergency savings fund (the 6-9 month reserve we have in case someone loses a job, etc). Is it necessary to keep it in cash? I know you want it to be readily accessible, but it seems like kind of a waste to have such a significant amount of money sitting around in a savings account earning basically nothing. Thanks for your reply!
A.
Michelle Singletary :

Yes, keep it in cash. You just have to say this is my cash stash and be okay with it. This is the pot of money that needs to be ready at hand. And trust me bet you won't think it's such a bad idea if you invested it and lost 10 or 20 or 30 percent when or if you lose a job. You wish you had every penny of that money. So don't worry that it's not earning money. You set it up for a specific purpose and that's not a waste.

– November 17, 2011 12:22 PM
Q.

Full account access

What is one of the best ways to convince your spouse that both need full access to all family accounts?
A.
Michelle Singletary :

Go to marriage counseling. Find out why there are some trust or lack of trust issues there.

Now I know there are some that believe married people should have separate accounts that the other doesn't have access to.

I'm not one of those people. 

I think married means one. That means sharing and being fully transparent and with access to everything. Otherwise stay single.

There are of course extreme exceptions in the case of abuse, addiction, etc. But those should be the exception not the rule.

– November 17, 2011 12:24 PM
Q.

Defeating My Debt

Michelle, Thanks so much for your consistently good advice. My husband and I are one paycheck away from paying off our credit card and my car; I'm so excited! We are having a tough time deciding how to allocate the higher net income we'll have each month after that-- we only have about one month's worth of savings in an emergency fund, and we have a combined $200,000 in graduate student loan debt (at interest rates under 4 percent, thankfully). How would you recommend splitting our extra money? 50/50 towards emergency fund and student loan debt? All towards an emergency fund except for the minimum student debt?

A.
Michelle Singletary :

First a big congrats. Must feel nice to be so close to getting the credit card and car paid off.

So down to that $200,000 in student loans. 

Do this:

-- Build up another month's of emergency money while making the minimum payments on the student loans. Then stop.

-- Put about $1,000 to $2,000 in a life happens fund while making minimum on student loans. Then stop.

-- Then dump every penny of the money you were paying toward the other debts to get that student loan monkey off your back. 

-- Find more ways to cut to put even more money toward that student loan monkey on your back.

– November 17, 2011 12:28 PM
Q.

holidays are almost here . . .

My husband's extended family does a "secret santa" gift swap with a limit of $50. It's been great at cutting down expenses and time wasted in malls, but everyone in the family now sends out gift requests intended for their secret santa. I think ideas are okay (e.g., I like cooking, flowers, wine, etc.) But anything more specific than that, to me, takes it out of the gift category and is more of a fulfilled request. Am I just too old-fashioned and impractical??!
A.
Michelle Singletary :

I don't think you are too old-fashioned. But I bet people just want to help you pick something in case you aren't sure what to get. So don't be too hard.

Take the suggestions and then buy what you would like him or her to have. 

– November 17, 2011 12:29 PM
Q.

More support for life happens

True story: We had just closed on our new house (a move up made possible by totally underbuying on the 1st house and having it half paid off in 5 years = nice downpayment). The transmission on our old car went out within one week of our move, luckily we had the life happens fund to fix the car and not have to buy a new one The new transition = a couple thousand bucks. That old car is still a daily driver four years later. Anyway my point is, you need that life happens fund even after a major "other" financial event. Life happens at the most inopportune times!

A.
Michelle Singletary :

Yes it does. Life always happens.

Thanks for your testimony.

– November 17, 2011 12:30 PM
Q.

Savings vs Paying Off Car

Hi Michelle, So we've finally, through months of saving, have amassed a nice chunk of savings $11,000 for our emergency fund. I've got one year left on car payments of $416 per month or I can pay it off for $5,500. So, should I use the savings to pay off the car or just wait for another year? Other factors to consider: 1) we probably are moving across the country next year; 2) I'll likely be receiving a bonus in March that could cover the car loan. Thanks!

A.
Michelle Singletary :

Hey just get that monkey done with. Make it a Christmas gift to yourself.

Then take those $416 payments and pay yourself making sure the emergency fund is at least six months of living expenses. Then put some in a life happens fund if you don't have one. Then take the bonus and put in the life happens for moving expenses you might not have planned for.  

But I would pay off the car.

There is just something about being debt free as soon as you can be!

 

– November 17, 2011 12:33 PM
Q.

She's doing as well as if not better than some of her friends who are in private school.

This is what Michelle said. She did NOT say her kids in public school were better off than all kids in private school.
A.
Michelle Singletary :

Right.

Honestly wasn't trying to start a riff between private and public. Just that despite all the hype in the DC area and other areas like it around the country, kids in public schools can do well and have done well. 

– November 17, 2011 12:35 PM
Q.

Celebrating a holiday on a different day

My dad worked shift work and there were a number of years when he had to work Christmas because the vacation days were eaten up by long summer road trips. One year we celebrated December 22 because he was going on shift for 5 days starting the 23rd. But when my siblings and I got older he would intentionally work a day shift (7-7) on Christmas. He got paid extra, of course, for working on a holiday. But here's why he did it: Months in advance he would look at the schedule to see who was working the day shift, and offer to take the place of a guy with young children so he could be at home Christmas morning. No one ever turned him down, and they loved him for it.

A.
Michelle Singletary :

How very, very sweet. 

I used to do the same thing before I was married and had kids. I would take the holiday shifts at the Baltimore Evening Sun so more senior reporters could be home with their families. I was single and I could still make it home for dinner. Besides it was nice being in the office when it was quite and sometimes big stories broke on the holiday.

– November 17, 2011 12:37 PM
Q.

PG County

I grew up in PG County. I now have a daughter who is a senior in a high school in Fairfax County. I can guarantee you that the schools in Fairfax have definite issues also. Students are very small fish in a huge pond here. Don't discount the schools in PG. It is what your student makes of it.
A.
Michelle Singletary :

It is what you and your student makes of it.

Exactly!

Just like life.

It is what you make of it. I grew up in a low-income house but I don't have a broke mentality.

 

– November 17, 2011 12:38 PM
Q.

Homeowners insurance

Michelle, love the chats. I'm buying a house (yay!) and have been shopping for homeowners insurance. Do you have any guidelines for finding adequate coverage without throwing money away? For example, I know I need to have enough to rebuild the house, but is coverage for sewer backup (when you have a finished basement) money well spent? Any advice would be greatly appreciated.
A.
Michelle Singletary :

Talk to a few agents and get a list of what they think you should have. For example, if you live in a flood plane you want to get flood insurance. Be sure you get enough to cover any special and expensive personal items. 

Here's a good link from the gov't on what to consider when getting homeowners insurance

http://publications.usa.gov/epublications/12ways/12ways.htm

– November 17, 2011 12:41 PM
Q.

Re: full account access - your response

Hmmm. I have always agreed with you Michelle. Married means one. But then I am now dating someone with significantly greater means than I have. I can see why someone with millions in assets versus my pitiful $75,000, would want to protect that going into a marriage. He earned it. Just something to think about.

A.
Michelle Singletary :

But if you become his married honey why wouldn't he want to share it all with you?

I'm just saying if he doesn't then he should not get married.

And my dear I'm sure you are worth it for him to share his life and his money. Don't sell yourself short because you don't have the millions. 

My love is priceless. 

– November 17, 2011 12:43 PM
Q.

Paying off the morgage

My husband and I are in the position to pay off our morgage and have money left in our savings. While it is kind of nice to have money in the bank, we know it is really not working for us and that we would save on interest. Do you think paying off the mortgage in this economic climate is wise?
A.
Michelle Singletary :

If you have all your financial ducks in a row and paying off the house won't make you house rich and cash poor (meaning you won't have a good pot of money for retirement, then I would pay off the house. I can't wait to pay off my house. But I'm also saving, investing, staying debt-free (aside from the house).

 

– November 17, 2011 12:44 PM
Q.

Re: People Who Chose Wrong

A recent study about decision making and will-power made an interesting point: the more decisions we have to make that require us to carefully balance a lot of trade-offs, the worse decisions we will make. The cure for our brains appears to be glucose to some extent, as decision-making improves again after eating. This impacts the poor disproportionately because the less money you have the more ALL of your decisions are about hard trade-offs (pay the electric bill or the day care provider? etc.). It's not an excuse, but it is a reason for compassion.
A.
Michelle Singletary :

Absolutely. I'm all for compassion. Always.

– November 17, 2011 12:45 PM
Q.

crazy year

Hi Michelle, It was a crazy year for our family..lots of stress, emergencies, health issues (thankfully resolved now) and tons of money spent on problems. Thank goodness we had enough saved to cover those expenses. However, I'm struggling not to feel like now we're somehow entitled to stuff. I know how fortunate we are (jobs, house are all safe) but I'm still feeling like I just want to buy something nice to make up for all the crap that happened.

A.
Michelle Singletary :

Buy something nice.

OR do something nice for yourself. Visit friends. Take inventory of how you got out of the crap. 

Just remember what the Grinch finally realized

Grinch:

"How could it be so?
It came without ribbons! It came without tags!
It came without packages boxes, or bags!

And he puzzled and puzzed, till his puzzler was sore.
Then the Grinch thought of something he hadn't before!
"Maybe Christmas," he thought, "doesn't come from a store.
Maybe Christmas… perhaps… means a little bit more."

Meaning you can feel good that you came though the crazy year without spending money.

It's okay if you do, but you don't have to to still feel grateful you survived.

 

– November 17, 2011 12:52 PM
Q.

Maternity leave when Mom is breadwinner

Hi Michelle, here is something I have never seen addressed either from a personal finance or family planning standpoint. I am the main wage earner in my family, making more than twice as much as my husband. We would like to have a second child, but my job offers no paid leave and we cannot live on my husband's salary (our mortgage is more than he makes each month). For medical reasons, a short leave is out of the question for me and I would need to take a minimum of eight weeks off. We have started saving for a second child as much as we can, but we spent most of of our savings on my maternity leave for our first child. I am in my mid-30's and we cannot put off having more children for much longer. My dilemma is that I wholeheartedly agree with you that debt=evil, but at the same time, I don't want to limit my family to one child just because I don't have the cash on hand to be out of work for two or three months. Due to my age, it would mean a permanent decsion on the size of our family was based on (what I see as) a temporary cash flow problem. We have planned how we would pay for the expenses of a second child, if we have one. It's just the loss of income during maternity leave that concerns me. How would you advise us, and other couples in this situation?

A.
Michelle Singletary :

Talk to your doctor. You may be surprise to find you stil have time to plan and save for the second baby. I had kids until almost 40. It can be done even past 40. Just talk to your doctor.

But if you already know you are going to be stressed finanically then save first. Because what if something goes wrong and you have to stay out of work longer. Did for me. But I was grateful we had the extra money saved.

The thing is you decide your life style which dictates how much money you need. If you want a larger family you might have to move to a smaller house or downsize your lifestyle. 

 

– November 17, 2011 12:59 PM
Q.

Bad Decisions

I think for some people it is lack of knowledge; for some it is lack of discipline. They know that they can get buy a $12,000 car but when the bank approves the loan for a $30,000 car with all the bells and whistles, they don't have the discipline to say "no." I know several extremely smart people who fall into this category.

A.
Michelle Singletary :

You are so right.

– November 17, 2011 12:59 PM
Q.

Mortgage debt and credit scores

Hi Michelle, As always thank you for the great work you do. You really make a difference! My question is - I just refinanced our mortgage and to get a better rate we did it just in my husband's name. I had a disputed bill that the company reported to collections while we were still resolving it and it affected my score. I had a perfect record other than that and am frustrated this has created a problem, but didn't want to miss out on good rates while I work through getting this removed from my record. My question is now that my name isn't on the mortgage, will my score get worse as I won't have the good payment history of paying a mortgage debt on time. My name is on other credit and the loan officer says I have a solid history, but I'm still worried. Thanks.
A.
Michelle Singletary :

Wow. If  I were your hubby I would have waited so that you both were on the mortgage and title. Because now he's the only one legally responsible for the mortgage. Just saying.

At any rate, not having the mortgage shouldn't affect your credit score one way or the other. If you are have other debt obligations you scores will rise or fall depending on how you handle (pay) those bills. The scoring system doesn't give you brownie points for having debt. Quite the opposite. Getting the mortgage at least initially probably lowered your husband's credit scores.

– November 17, 2011 1:03 PM
Q.

insurance

My husband and I are nearing 50 and are in good health. We have three teenagers headed to college and we have the money to fund their education. I have been out of work (paid work, at least!) for a few years but my husband has a more than ample salary. We have sufficient life insurance coverage, but we do not have long term care insurance. I also suspect we do not have enough disability insurance. Your thoughts on purchasing either or both of these? And do you have any idea what is "enough" coverage? Thanks, love the chats!
A.
Michelle Singletary :

Definitely go talk to an independent insurance agent about making sure you have first enough disability insurance. Then start asking questions and doing homework on long term care insurane. You are right at the age at which experts say you should start thinking about your long term care needs.

– November 17, 2011 1:05 PM
Q.

Michelle Singletary :

My goodness looked up and it was after 1 p.m.

So so sorry if I didn't get to your question or comment. I so very much appreciate your participation in the chats. 

Keep an eye out for my columns or eletter or live video chat because you might see your question answered in one of those forums. 

Thanks again for joining me and I wish you all a very wonderful and financially safe Thanksgiving.

Q.

 

A.
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