Color of Money Live

Jan 30, 2014

Join The Washington Post nationally syndicated personal finance columnist Michelle Singletary on Thurs., January 30 at noon ET for a Color of Money Live online discussion.

Singletary will be available to answer your money questions. If you've got a story about the 21-day financial fast, join the discussion and tell her about it.

Submit your questions early.

-- Today's Color of Money e-newsletter: Starter Savings Accounts: Obama's 'myRA'

IRS finds customer service taxing, Taxpayers Advocate reports

McDonnells can be a lesson to everyone who's ever wanted to live above their means

So glad you could join me today. 

Let's get started.

What is your advice regarding credit monitoring services? I currently use a service offered through one of my credit cards and it costs me $12/month and I think it's worth it.

I tried a service once. But in the end I found I didn't need it if I monitored my credit reports, which I do.

But the key thing you said was "I think it's worth it." If it gives you peace of mine and you can afford the $12 bucks a month than it is worth it for you.

Just keep in mind if you are thinking about getting this type of servcie that it informs you of things that "have" happened. So it can't prevent identity theft but it can help you detect it early.

Hi, Michelle. This is for last week's chatter who asked about athletiuc scholarships for women. My twin daughters got field hockey scholarships (who knew?) to a large State university whose football team is always ranked in the Top 10 and whose basketball team is not far behind. While you have to be a superstar to snag one of those, it turns out that they also have a ton of money for other scholarships. It stands to reason that a team that routinely sells out a 90,000 seat stadium and whose booster club raises a zillion dollars a nyear has more money for scholarships than Podunk U with a 10,000 seat stadium and a much smaller or non-existant booster club. So don't be afraid to approach the big guys. Of course, you have to know your children. The twins, now juniors, are thriving at a huge university that I would have found completely overwhelming. Their older sister, a quiet, bookish type, attended a small liberal arts college. She is now a museum curator, making almost no money nbut she's very happy. Our youngest is only 12 and seems to be more academically oriented, but it's too early to tell what path she will take. All you can do is love them and support them to the best of your ability and hope that it all works out. Good luck!


Because the odds are not in your favor that your kid will get a scholarship or if she or he does it won't cover as much as you think.

Thanks for sharing and being repeat customer and keeping the conversation going about paying for college.

Hi Michelle, Love your chats. I know you aren't a fan of going to brand name schools when taking on debt, but here's a success story. Got out of undergrad with no debt thanks to my amazing parents. Spent 5 years working and saving. Applied to the best grad schools and chose my dream brand name school. Graduated with 40k in debt (paid for my first year with savings, plus some scholarship), but got a job making over 2x what I made before. 1.5 years later, I've paid off all debt, while still maxing out my 401(k). I couldn't have made the income jump without brand name school - my company (and job function) only hires from the top. So sometimes, with lots of planning, determination, hard work and saving, brand name schools really are worth it.

I hear you and indeed yours is a success story. But for every one of you, I see 10 people who have debt they will carry into their retirement years. And I'm not sure it was the brand-name school or YOU that made the difference. 

We are a one-income (though good income) family with only mortgage debt, which we expect to finish paying in about 5 years. We have a 13-year old child and limited college savings. We have saved for retirement, life happens, and emergency savings (plus some other non-specific savings). There isn't a lot left over to put aside for college savings (though we do put aside something every month). Should we reallocate some other savings, or continue on the same path. I know that when college application and selection time comes, cost will be a factor (as it should), and we expect that there will be loans for college, and, of course, we hope for scholarships (but won't rely on that). Any suggestions or thoughts? This is one area that makes me worry. Thanks!

Don't resign yourself that you have to take loans. 

And to do that yes, I would put more of the savings toward college since you say you have emergency fund, retirement on good track etc. 

Spend the next four years, throwing everything you can into the college savings pot. Also manage your son's expectations for where he "can" go to college. For example, he could go to community college for two years and then transfer to a four-year school. Or stay in-state and commute. 

But you are doing the right thing by looking at all of it now and figuring out the best plan now!

How do you start a budget? Do you write down a list of things that need to be paid monthly? Do you put down all outside expense too? How do you go about it? I need help with starting a budget before I go broke.

So, start with collecting the information to do your budget.

Get your paycheck of course. Then go back over your expenses the last several months by pulling out your bank statements, credit card statements, etc. Once you've gathered all the information look at what you have been spending vs. what you have coming in. So what are you earning? What are you paying out every month? 

Is it adding up? Are you in the red or black every month.

Then depending on what you what to accomplish, more to savings, retirement, paying off debt, you set your budget. 

If for example, you have debt you want to pay off look and see if there are areas where you can cut to put more money toward the debt payoff. If you don't have an emergency fund, where can you cut to devote money to buidling one up.

Start by assessing where you are and then determine where you want to be financially.

How do you determine the amount you can deduct for student loan interest? I don't understand the magi. Can you provide an example?

You can deduct up to $2,5000 of the amount of "qualified" student loan interest. So if you only paid $900 in interest, you can only deduct $900. If you paid $3,000 in student loan interest, you can only deduct $2,500.

Here's a link with more information 

Hi Michelle, My partner is about to get a job offer in another state, and due to the distance, we will need to live apart for a year and a half (don't want to uproot our child who is in the third year of high school now and it will take me a bit of time to find a new job, sell our house, etc). Do you have any suggestions for managing our money best in this scenario? Concerns with filing state taxes in two states? Is married filing jointly still the best option? Combined, we make about $130K.

Well, you need to really look at your budgets because now you'll have two households to run and even on $130,000 that's going to be tough because you'll have double of most things now. As for the tax issue, best to consult a tax professional but you'll only deal with that for tax season next year. Still worth getting a consult to see if there is anything you need to do now.

I'm not the OP, but had a follow-up question. Would your response change if I was offered it free from Target, because I used my debit card there twice during the time their systems were hacked? Thanks.

It does change because it's free. I'm a Target customer and I signed up for the service. Why not? Doesn't cost me anything.

For me it wasn't worth the money when it came out of my pocket. But doesn't hurt to have the free monitoring.

My husband and I do not have kids. Our retirement accounts and insurance have named beneficiaries. But I am wondering, do we need a will? Do we need to go to an attorney to do that? We live in Virginia. Thanks.

If I were you, I would still get a will. What if you both die together? Who would get your stuff that's not in a bank account or from an insurance proceed -- your car, household goods, etc.?

What about decisions about your health care should both of you or either of you can't speak for yourself?

And yes, if you can afford it get an attorney to do it. Helps to have the advice of a professional to make sure you've covered all the bases. 

Michelle, what do YOU think of this proposal? I can barely stomach anything political on tv anymore. I'll be curious to read about the details. I am interest in how this differs from traditional and Roth IRAs in the first place. Will I be able to contribute some amount to this type of account in addition to my 401k and IRA? Even if you save the maximum ($17,500 and $5,500) it really seems like we need another way to earn enough interest to retire...

This new starter account is geared toward folks who aren't saving anything for retirement. It's also aimed at people who if they did contribute wouldn't put in much a paycheck -- maybe $5.

So you proabably wouldn't be interested in the new "myRa" because you are already saving AND it won't be offering much of a return. It's more like a savings bond and the interest will be like that given for the government's Thrift Savings Plan G-fund

I provide more details in my eletter today. Here's the link

What do I think?

I'm still looking at it and listening to people who might benefit. I'm writing about it for my column next week. So if you have some thoughts shoot me an email at or Tweet me @SingletaryM.



I found a good worksheet on ( It's not tremendously detailed, but it was helpful.

Thanks for sharing the link on budgeting.

I had to file bankruptcy about 5 years ago and now it is discharged. I want to refinance my home. Do you think there are any lenders that would help me. Thanks, Anna.

You may be surprised at lenders who will work with you.

So start contacting a few and see what you find. It doesn't hurt to ask.

So surprised to read your column and see that the unauthorized charge i found in December on my MC is COMMON. I cancelled it immediately and bank was very helpful. I mostly shop online - (except for groceries) so i have no idea where or when my card was compromised. What's the answer? Several of my recurring bills are charged to the card monthly. i know you don't like credit cards... is there a specific action i should take other than just cancelling credit cards? (They do have uses-- travel for one).

Man the crooks make me so mad. 

I use credit. I just tell folks it's hard not to spend when you use credit. So I'm not telling you not to use credit. You just have to be careful.

But to your point, if you feel your card has been compromised and it appears it has, you might want to cancel it. Otherwise you'll have to keep watching out for the fraud. I know it's a pain to change the recurring bills but best at this point. Otherwise, the crooks will keep trying to slip charges pass you.

I'm confused about whether you have to declare the money that is disbursed from a 529 plan on your state taxes. Do you know if I do? Money went straight from the 529 plan to the college without stopping at my house.

Any earnings from your Md. 529 plan are tax-free when used toward eligible college expenses. By the way that would be true even if they sent you the check and you took the money to the school to pay the bill. As long as the money was used for school it's tax-free.

I just wanted to thank you for putting together your 21-day money fast. I am shocked to report that I have not spent any money (except monthly bills) during teh fast except for one frugal run to the grocery store. Just the basics, no wine or expensive junk or convenience foods. Even with two visitors during the fast I've held firm and they have both completely understood what I was doing. We easily found free things to do. After gorging on Christmas and birthday presents through the end of last year I feel so much lighter and better about my consuming habits with the fast. I will start spending again on Monday, but with a much better perspective and discipline.

Thank you so much for your testimony. Warms my heart.

And if you don't know what the fast is go to It's a 21-day financial fast I created in my church to help people become debt-free and find financial peace. You get the book "The 21 Day Financial Fast" and follow along for the 21 days reading a chapter a day. It's biblically based but even if you're not religious it can help you do better with the money you have.

Anyway thanks and I wish you continued success with your finances.

If the family is serious about wanting their already-in-high-school daughter to get an athletic scholarship, they should probably skip popular sports (gymnastics, field hockey, basketball, soccer, softball, swimming, etc) because she'll have only one or two seasons to compete against girls who've been doing those sports since they were 5, or even younger. Less popular events like pole vaulting may be a good place to focus on, since those are sports kids (usually) don't pick up when they're young. She's likely better off, though, spending the next two years focusing on what she enjoys doing and seeing if she can get scholarships for that - if in sports, that's fine, but not something to bank on.

Good points.

But again folks, most kids don't get scholarhips althletic or academic even the really good and smart kids. Or they don't get nearly enough to cover all their college expenses. 

So yes, apply. To everything but save too. Please. Hoping your kid gets a scholarship is not a college savings plan. 

Oh and by the way, many kid lose their scholarships because they get hurt or don't want to play anymore or are cut or can't keep up the grade requirement.

Just wanted to thank you for holding these online discussions (time well spent!). I always learn something new. And last week your chat inspired me to throw an extra two percent into my TSP. Much appreciated!

You are so very welcome. 

My passion and mission is to help people with their finances. And even those who are good stewards can do better. I know I can. 

We would like your opinion or a reference on splitting household costs. 4 adults are going to share living expenses in one single family home and we are torn between equal shares, shares based on income or shares based on use. The adults are 1) full time retired, income $40 K, 2) full time retired income $80K, 3)full time working, income $40 K, 4) full time student, no income. I am the full time working with my 20 year old son, the full time student. My son is only home every other week (he is at his Dad's house the off weeks). We have done a comparison with what all of us pay now and what we would pay with different options and with equal shares I will be paying more than my current expenses. I don't want to be the "temperature" police to keep utilites down or fuss about pay for view shows on the cable bill or who ate what in the fridge. Is there a more equitable way to split costs so that I don't resent the stay at home members while I am work all day? We have agreed to the shares for the home purchase (which will be paid in full), insurance and taxes are being paid in 3 equal parts (the student doesn't pay a share), and repairs will also be in 3 equal shares unless one person just wants something in their specific area (like tile in the bath only they use). Buying this house is going to take eveyone's reserves so it isn't like any one of us can just walk away if it doesn't work out. I very much want this to be a success and don't want to get tripped up by little resentments like the heating bill. The other two adults are my Mom and older sister. My sister is a retired accountant and is the most strict about budgets. Any advice you can offer to make this work would be appreciated.

Wow. Buying a house with relatives. 

You are right to want to work this out in every fine detail you can before any papers are signed. 

I fear that trying to police what people pay based on income can be too tricky. What if someone loses a job or income or gets sick? She or you would pay nothing?

I would just do a straight split based on who will be living in the house (I wouldn't count your son as an paying occupant). Same with utilities because you don't want to try policing people other than to encourage everyone to cut out lights not in use, keep the heat at a reasonable tempature, etc.

With food, you could do the same but agree that certain favorite stuff is off limits or ask people not to eat something you want.

So if after all that, this deal doesn't work for you because it's not a cost saver than perhaps this isn't the right living situation for you.

Hi, Michelle. My husband and I are both 68. We had modest jobs and modest lifestyles, but are now extremely wealthy thanks to real estate appreciation. I think many people our age are in the same situation. We bought our house in Chevy Chase in 1970 for $40,000 and paid it off in 1981. It's now appraised for $1.2 million. Our biggest expense is the property taxes. Even with conservative investments we have more money than we know what to do with. We've taken nice vacations, put our chudren and grandchildren through college ad grad school, helped out other relatives, and routinely double-tithe (20%) to our church and other charities. Without our help our children would be struggling. We feel very blessesd that we were able to benefit from escalating home prices and worry about our grandchildren in particular who are unlikely to ever be able to do this.

How wonderful to be in your position with little money worries. But keep in mind you're still a young 68. Be careful you don't spend too much of your resources in case you need long-term care. You don't want to have to sell your house to pay for it.

As for your kids and grandkids. Also be careful you aren't enabling bad money habits. Are they struggling because they haven't been as wise with thier money as you? if so, you won't teach them to do better by bailing them out.

Help by teaching not giving if they aren't practicing what you did.

Hi Michelle, We're about to start the house-buying process. My credit is good except for one late payment to a credit card that I missed in the flurry and stress of having our first baby. Completely my fault. I called the credit card company to see if I could get some sort of "goodwill" absolution, but instead what wound up happening is that they filed a dispute on my behalf with all three credit bureaus. I didn't really understand what was happening on the phone, and when I called back after googling and realizing that was NOT what I wanted, they said it had already been filed and there was nothing they could do. Now I'm worried I've screwed everything up. Is this something I need to worry about? Can I stop the dispute? I fear I've made a big mess of a mountain out of what was originally a molehill. Thanks!

You may be worried for nothing. One late payment in an otherwise good credit report won't ruin your changes to get a good loan. Just start looking, talk to the lender or lenders and they will let you know if you need to do anything else.

Hi Michelle, I wanted to know could you please recommend a book on investing. I have a 403b with my job, but I'm not sure if I am allocating my funds correctly. I'm eager to learn about investing.

Actually, call the company managing the fund. Many fund managers have software or online help to guide you to the right allocation. 

Hello Michelle, I currently own a 2 bedroom 1 bath condo with my Husband. We've lived here for 6 years and we now have two small children. We had no clue that our condo would only be worth 68k 6 years later. We desperately need to move as the walls are closing in on us however HOW is it possible to move on with live when I just got a notice in the mail saying that our condo is only worth 68k. This hurts and I feel like this should be against the LAW! LOL. My husband and I have a plan to move out of the condo…move in with my mother and her husband for a minimal fee. Save up money for a down payment and pay off debt. THEN try to move into a bigger home. My question for you is…do you think there is another option? I'm not sure if moving in with my mom is the right move.

And what would you do with th condo? Sell it? Rent it?

Is it paid off?

You need to address those questions before moving to your mom's house. Perhaps you can sell the condo if you don't want to be a landlord. But that may mean bringing money to the table if it's not paid off or asking the lender to forgive the rest of the debt, which could hurt your credit and generate a large tax bill.

Also, would moving with mom and dad give you more room and privacy than the condo?

Just things to think about.

I hope you'll take a minute to promote the IRS' VITA program, where taxpayers with income up to $52,000 can have their taxes prepared by trained volunteers for free. Visit for locations. This is a great way to avoid the outrageous fees charged by the tax prep companies. Most programs run late January through April, although lines are generally shorter earlier in the season. So as soon as you get your tax papers, please consider it.

Consider it promoted.

Hi Michelle, Regular reader and love your advice - it has worked well for me (and many times convinced my husband the financial plan was sound), so thank you! I had an idea late last year for a way to boost our emergency fund (it's not where I want it to be). It was open season time, so I had to make my elections for the Dependent care and Health care expense accounts. I suddenly realized that if I re-directed those deposits to our emergency fund savings account (rather than our every day checking account), it was a fairly painless way to save $6000. We've learned to live on the lower paychecks, since the paycheck contributions are withheld. I realize some people rely on the reimbursements to pay the bills, but if you have learned to live without that money, it would be a pretty painless way to save some extra cash! Just a thought - and one I wish I'd had a few years ago! ;-)

As long as you can still pay the medical bills, I can see this as a way to "trick" yourself into saving.

Michelle: My parents had five kids, and taking care of aging parents after four tuitions meant that I spent two years at our local community college before I went to State U. My parents tried to give me more freedom (no curfew, for example) but I had better friends, smaller classes and more faculty contact than my siblings experienced. I graduated with NO DEBT, and oh yes, I have a better career, too. Sure I missed a few football games, but I wouldn't trade the experience or the cost savings.



Just another thank you -- My mother who is almost 84 decided to go on the fast with me and we are each other's accountability partners. She is so impressed with your perspectives and your book that she wants to get it for all of the "grown up" grandchildren, whether they are working yet or not. Thanks.

Give your mom a hug from me :)

I'm so honored.

Why are folks so afraid of expecting adult children to be adults? I was an adult at 18 - not because I was so smart or mature (the opposite, in fact) but because I was on my own. It is character-building. Adult kids who live at home are perfectly capable of contributing to a household. In my experience, they rise to the occasion as you require them to. It is mind-boggling to read about people paying bills for grown children; I am 28, save the max in all retirement accounts, put myself through undergrad including study abroad - paying cash, no scholarships and WORKING, and now take my folks on vacation every few years as a gift. Why is this so unusual? It is interesting that our culture does not realize you raise a child to be a grown up, not to be a child...

I think it's okay to help a young adult who comes out of school with debt or has had a setback. But you are right, we should expect more from grown folks. People often act the way you treat them. And far too many parents are standing in the way of adult children from being adults capable of handling their own business.

I am curious about how the commenter who says he/she is wealthy because of their house value has gotten the money. Did they borrow against the value of the house? I wouldn't call that "wealthy" exactly, because they will have to pay that money back eventually, right?

Good question but I assume and bet they are good savers too. 

I'm already over time but thank you for hanging around too.

And thanks for your questions and comments. I read them all even if I can't answer or respond to them all. 

I hope you return next week, keep reading my columns, follow me on Twitter (@SingletaryM) or get my eletter.

Til next time.

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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