Color of Money Live

Mar 07, 2013

Join Washington Post nationally syndicated personal finance columnist Michelle Singletary for an online discussion on Thursday, March 7 at noon ET. Michelle will be available to answer your personal finance questions or get your take on this week's Color of Money question. If you can't make the live discussion, submit your questions early.

- Paying to pee - This week's e-newsletter
- Everyday worries on their minds
- It's only a man's world if you yield to that notion

So glad you could join me today for my weekly online chat. Lots of questions already so let's get started.

Not a question, just wanted to share that I have been so scared of my debt that, while I knew roughly how much I owed and how much I was paying per month, I never sat down and really crunched numbers. Well, yesterday I did just that and am floored at how much better I feel! I can see a solid amount deducted from the total debt owed each month, and to my surprise if I keep doing what I'm doing, I'll be completely debt-free in only 5 years. Understand, in my head I was telling myself it would take at *least* 10, if not 20+, and surely I'd be paying student loans until my grave...not true! My husband's and my goal is to start looking at buying a home in 10 years, and I'm floored that we can start that process not only debt free, but having socked away 5 years worth of savings after that. Who knew? Knowledge is Power!

I love testimonies and thought this was a great one to start off the chat.

Indeed, the "right" knowledge is power. Good for you.

Keep plugging away to get that monkey off your back!

I will be getting a incentive when I retire. I have some debt I will like to pay off. What is the best way to pay off the debt? Start with the ones with the highest interest rate or the one that account that has already been closed out?

I would start paying on the debt with the lowest balance.

There are of course many ways to pay down debt but in my experience and with the folks I work with when they can quickly remove debt off their list it engerizes them and they then double, trible efforts to get out of debt. That in turn reduces the amount of interest they would pay on higher interest debt.

Good luck.

I am thinking of re-financing my mortgage, balance is less than $60,000. I want to do it to get a lower rate and to have more residual income. I am retired and 61-years-old. Is this a good decision?

Bankrate has some great calculators to help you figure out if it's worth refinancing. Work the numbers. Would you truly benefit from a refin and lower interest rate when you add in any fees to refinance. And if you plan on staying in the home long-term.

It's important to back the numbers out. Also if you only have $60,000 left from a 30 year mortage, you are probably paying more on prinicpal now. Getting another mortgage will reset you to 30 year. Of course you should consider a 15 year too.

See what I mean, work thu all the numbers. Getting a 30-year, 15-year. Will you recoop the fees to make it worth refinancing if you are close to paying off the house.

Do the math.

My husband has been unemployed for a year, where we've barely stayed afloat and took a serious hit on savings. We are so grateful he got a well-paying job recently and we have about $3,000 leftover every month. We're wondering if he should max out his match program right away or if we should throw that back money into our e,=mergency fund first, and then when we get back to where we should be, then focus on retirement. FWIW, I am maxing out my match program at 15% even through the unemployed year, although I make about half of what he does. There is also a conversation about if/can we take a few days and go on a vacation! We have the money now but we also want to be responsible. Should we continue to put that off?

First -- and this might surprise some of my long-time readers -- take some of the cash and go on vacation. It's been a hard year and you deserve a break. I've been working with people who had a job loss and it's hard. Go have fun -- but not too much expensive fun :)

Then I would concentrate on building back the savings first. Definitely invest in the retirement fund to get teh full match because that's free money you can't afford not to capture. But beyond that build up both your emergency fund and what I call the "life happens" fund for the things in life that happen such as a car repair, etc.

Once you've pack both those funds again, then you can become aggressive with your retirement savings.

Because keep in mind it was your savings that was your savings grace during the unemployment.

The issue isn't that the restaurant charged for using the restroom, it's that they did so after the fact. If they had posted this as a policy, or told the woman ahead of time, then fine. But to use a sheriff to track her down? That's like giving someone a parking ticket, in an area that didn't post parking rules and sending the police to deliver it. And that sheriff really has no right to track her down over something like this anyway.


Paying to pee - Today's e-newsletter

I agree about the tracking her down. That was just wrong.

Now the restaurant claims it did post about the charge but the woman admits she didn't see it. Nonetheless, really, charging her $5 after the fact. I get that there's a cost to having facilities -- water, bathroom tissue, etc.

But as Flay said in the posting in my eletter, that's the cost of doing business. And look at the poor publicity that policy generated.

Ms. Mayer can make all of the rules she wants, but you can't force innovation. She has two immediate problems - first, her employees aren't doing the work they are supposed to and second, the work that is being done isn't innovative. Her middle managers aren't doing their job if people get away with not doing theirs. My company (that I own) has a completely virtual workforce. We use skype, google hangouts and other tools to work together. We are plenty innovative. My guess is that Ms. Mayer is one of those managers that is only comfortable when she micro-manages. And that's the quickest way to stifle innovation.


Sequestration primer

Well tell us what you really think :)

I have no idea how well the managers of Yahoo are managing but I agree with your premise that creativity can happen in all kinds of ways. Ask anyone who works in an office how all those darn meetings can have the opposite affect on creativity. Heck some people can't get their job done for all the  creative meetings.

Is it possible to refinance without a lot of closing costs? I am in year 11 of a 30 year at 6% and want to refinance to a 15 year (planning to pay that off early). House is worth 450,000, owe 102,000. Thanks.

Check around. Ask your current lender and get quotes from others. The competition is good if you have good credit. But as I said work the numbers.

I am driving a car that I bought 12 years ago,; maintenance is getting expensive. How can I decide if it is time to buy a new car? is leasing a good option?

Okay, the easy part first. Don't lease. Seriously don't lease. I rarely if ever see the upside in a lease. You pay all that money and then what? You have to pay a lot more money to keep the car or get another car.

My test for when it's time to get another car is how often does your hoopty leave you stranded. If you can plan for repairs and get more years off a car I say keep it as long as you can. The repairs rarely over several years amount to the cost of a new or used car. But once the costs do start to get extremely high AND you are constantly being left by the side of the road, time to look at the numbers for another car.

Ms. Singletary good afternoon:) Jus wanted to say I learned the 4things we do with Money from you:) 1)Spend 2)Save 3)Invest 4 Donate Right?! Lol, thank you so much and I'm one of your FBF. Keep WINning :)

You are so sweet. Thanks.

Michelle, I wonder if anybody's written a book or study about seniors retiring overseas. Many folks over 50 who lost jobs in the recession have been burning through savings that were for their old age. My mom watches a lot of those Househunter shows where people seem to be moving to Central American or South American countries where their remaining money can go farther. Is this really going to be a phenomenon and if so, it will have a big impact on where we think our society's going - we're afraid of too many oldsters and they may all take off for Ecuador! Or is it just my mom's perception?

You have given me a good idea for my monthly Color of Money Book Club. I'll look for a book about this topic. I will say I have seen reports of seniors moving overseas to save. But as with lots of things involving money there are plenty of caveats. Can you own the properity as a foreigner? What about the political strife in the country? Don't forget the cost of flying home to see children and grandchildren. Is the healthcare system good enough for what you need?

Lots to consider.


My husband and I got married a little over a year ago, and have finally combined our income and bank accounts. We'd been working together on budgeting and paying bills, vacations etc. even before we got hitched, but putting it all together is new. We have about $23,000 sitting our savings account, which is waaay more than either of us have ever had. We're employed in stable jobs, rent our apartment, own a car, have no kids and have health insurance through his work (though as we learned when we filed taxes, we get hit for that since we're a gay couple and it counts as his income). The only debt we have is $13,000 in his student loans (they have 5-6% interest, depending on the loan). I think we should pay it off entirely now, but he only wants to pay the minimum each month so we have a good amount of savings in case of an emergency. What do you think we should do?

Given what you've told me, I would pay off the student loans. I know it's hard to let go of money you've saved but if the money is parked in a savings account, which it should be since it's your emergency money, you are actually losing by paying interest on the student loans.

If your jobs are safe and all else is fine financially, get that money off your backs. Then you can take the money you were applying to the student loan debt and quickly build back up your emergency fund.

Hi, Michelle. I was widowed with 3 young children last fall when my 28 year old husband died 6 weeks after being diagnosed with melanoma. Fortunately he had a $2 million term life insurance policy (everyone should do that) which, if handled right, should allow me to buy a house, attend college, pursue a career, establish college funds for the children,and more. But how do I do that? I'm a high school drop-out who never even wrote a check until my husband fell ill. All sorts of well-meaning, and not so well-meaning friends and relatives are offering me advice. Some family members who are struggling expect me to bail them out. I'm still reeling from my huband's death and trying to do right by my kids. How do I get started in sorting this out?

Oh my dear, I'm so so sorry for your loss.

Please, please don't listen to any of the relatives, friends, etc. And certainly with three children you are not in the position to bail anyone out. Period. So don't feel guilty about that.

You need a fee-only financial adviser to help you come up with a big-picture plan. I know $2 million is a lot. It really is. But it can go so quickly if not managed properly.

I really need you to find a professional who won't try to "sell" you but help you put together a long-range plan.

Go to this website to start your search

Ask around for any friends that may be using a planner. Interview a few -- I mean it. I want yo uto be very, very careful so that you don't get into the hands of someone who will push financial products you don't need.

If you need more help please e-mail me.

For all the folks who are amused at federal employees being furloughed, what do you think federal employeees do with that money? Sibling is losing pay and will not shop at Kohl, Target, Macy, KMart, CVS, etc. due to a lost of 21 days of pay between May and October 2013. Losing over 4 weeks of pay is a major pay cut. Federal employees are located throughout all 50 states. This is a major hit to the economy that will trickle down to small businesses. I hope people remember that when federal firearm licenses, passports, social security cards, IRS refund checks are slow, employees are not at work. Imagine your workforce is going to be out for 21 workdays, how will this reduction in staff affect your operations and production? Federal employees are not elected officials, they are working people with bills to pay. Remember FBI agents, astronauts, scientists, and VA staff are all taking a hit in their pockets. All Americans are taking a hit in the services that will not be be done.


Michelle, you should know that "Refi" might actually find it really hard to do so, because (i) he/she's retired, and (ii) the debt is under $100K. A lot of lenders require ongoing employment and won't give loans under $100K -- or if they do, the interest rate and fees will be higher. We actually had to increase the amount we borrowed from $97,500 to $100K -- just to get a decent loan! And we were "well qualified" in lender parlance (two jobs, good income, 800+ credit scores) -- I guess the lenders just didn't think it was worth their while to make loans that small.

Good points. Thanks.

They will look for income and the person may still have some good retirement income coming in.

However, your point taken. Shop around.

Anyone who used the rest rooms in a fast food restaurant knows the main reason that most restaurants limit their rest rooms to their customers: if you don't, the homeless use them for cleaning up, etc. and your patrons then complain to you. I am sympathetic toward homeless people who need to use bathrooms, but I do understand why there are bathroom restrictions in place.

Actually, I understand too. If customers and noncustomers use the restrooms more cleaning, etc.

I just think owners have to use good judgment.

Hi Michelle, This year my father passed and my two sisters and I decided to keep one of his houses as a vacation home available to the family. Sister A plans to make that her residence for the time being, Sister B and I are fine with that and appreciate that someone will be able to look after and maintain the property. Sister B is willing to pay rent, but we're not sure how to set the rent amount beyond utilities she uses. Any suggestions?

When you say Sister B, do you really mean Sister A, the one who will be living in the house?

If there is a mortgage on the home, the sister living in it should pay enough to pay the montly mortgage note. However during the months, it's being used as a vacation place for sister a, b or c, they should pay a fare share of the rent/mortgage for that weeks, months they use the home. And I would get all this in writing between all sisters.

If the home is paid off, then I agree the sister living there should pay utilities, something toward taxes, upkeep, etc.

If you are still now sure about this, ask a real estate professional or get advice from an estate attorney. Situations like this can turn ugly when one relative later feels he or she has been taken advantage of.

I understand that life insurance is for my children, not for me to personally "get the money". That said, I try to get it, but nobody will insure me. When I find a company that will, the cost of the policy is HUGE!!!!! I am 43 years old, insulin-dependent diabetic (terrific numbers; tightly controlled; great doctor). I also have three very young children who will be in a world of hurt when I pass away, esp. if they are still minors. I tried to get a policy for 5-10X my annual salary (they are 4, 4 and 7). Please recommend a reasonable policy. Nobody lives forever. Why am I having such a hard time getting a policy? I have great health insurance. I am blessed to have these children. How do I provide for them after I am gone? Thanks!

I'm not sure I have any more information for you. You can just keep checking around for the best policy possible. If you can't afford a huge policy get as much as you can afford given your health concerns.

Thank you so much for joining me today. Got to run but I have all your questions. So sorry if i didnt' get to yours but keep an eye out for my print column. I often answer leftover questions in my column. You can also join me again next week. Same time. Same place.

Stay financially safe.

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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