The Washington Post

Color of Money Live

Jul 18, 2013

Do you have money questions?

If so, join Washington Post nationally syndicated personal finance columnist Michelle Singletary Thursday, July 18 at noon ET for an online discussion.

If you can't make the live discussion, submit your questions early.

-- A wise investment: Pay off those student loans

-- Why college has become so costly

Welcome. Been away on vacation but back now and ready to take your personal finance questions or comment about any of the various money stories making news. 

Let's get started.

What's your thought on whether it's better to replace the transmission on an 8 year old car - with a $5k pricetag that equals the market value of the vehicle - vs. looking for a replacment car? I'm concerned with throwing significant good money after bad, for a vehicle that is not aging all that well.

I get this question often. I hold on to cars for more than 10 years so very familiar with the feeling of throwing good money into a hoopty. 

First, make sure you are getting a good and fair quote on the replacing the transmission. If so, then consider how much longer you might drive the car. If it's got another 2, 3 or even 4 years in it, I think it's worth fixing. IF...and that's a big if you aren't being stranded by unexpected breakdowns. If you think you can get a good price for the car to add to CASH you have to buy another used or new car (again without a loan) I might consider getting rid of it.

But generally, because I take care of my cars, even a large repair may still be cheaper than replacing the car.

After many years of having "excellent credit - 720+" I was faced with two years of unemployment in a single household (tough to say the least). After two years of which I exhausted my savings, I finally landed a great job!. However, my mortgages (primary and rental) lasped 6 months and I faced foreclosure. I "landed on my feet" and received modifications (same bank for each) for both but my credit tanked from 700+ to 600. These mortgage accounts are the only blemish on my credit. Understanding the importance of credit any guidance would be helpful.

I'm so glad you got another job. It's so tough out there.

Right now the best way to restore your credit to the stellar ground you had before is to pay your bills on time. Really that is the biggest factor that goes into the credit score formulas. 

And don't worry so much right now about it being 600. You have a job, you have a place to live so your credit doesn't matter as much. Just continue to regain your financial footing.

Did anybody actually defend the ungrateful gift recipient? Thnx.

Not one person! Because really how do you defend someone who says $100 is not a good enough wedding gift?

It's shameful behavior.

What are your general thoughts about reverse mortgages? Thanks.

The fees are high. Make it a last resort. 

Look, I know a lot of seniors of house rich and cash poor meaning they've got a paid for house but little cash for their everyday expenses. So for some of them a reverse mortgage can seem a financial savior. Depending on your age, you can qualify for this mortgage that doesn't have monthly payments unless or until the homeowner passes away, moves or sells.

Here's a link from HUD about the top things to know about this type of mortgage:

First, it's the lingerie party. I'm expected to bring a dish and a gift. Now the bridal shower, another gift (I am not in the bridal party). Next the wedding and I'm sure my gift of $100 will not be appreciated since it's been clearly stated that the price per plate is more than that. Now they are talking a bonvoyage party! Enough already, I don't even like these kids, their parents are friends and all I hear is how much money they are spending on the wedding!

I know the feeling. So many people have parties to hit up their friends and family for gifts or money. It's less and less about their presence at the special events and more about the "presents" especially the cash.

It's crass. So stand your ground. 

I would buy a shower gift and a wedding gift and that's it.

Dear Michelle, cases like this drive me crazy! Why on earth would you lend someone $30,000 and then sign a statement, under penalty of perjury, that the loan was a gift? However, it also sounds as if this wife needed a better divorce lawyer. Even if she comngled the funds, at least half of them were hers. Especially if the split occurred shortly after the purchase, I would push for all of them. Unless she was egregiously at fault, and virtually all States are "no fault" today, he should not have been able to get the house without buying out her share. It's probably too late for her but others in similar situations should take note.

I agree. So many mistakes made in this case. For those who didn't read the posting click through for the link. Parents loaned daughter and husband (who later became ex-husband)$30,000 for downpayment on a home. The couple didn't pay the money back as promised. But then the parents signed a "gift letter" saying that the loan was a gift although it really wasn't. 

So many lessons here. 

1. Don't lend money you need back. 

2. Don't lie about money you are lending that you need back.

3. Get good legal counsel especially if your ex is a bum.

Many graduates are making the next big leap into adulthood, e.g, job, military, college. Some of us may not have gotten around to giving gifts to relatives or other graduates. Now is the time to give a much appreciated gift. Often I get college students' addresses if they are on-campus. I send them cash money throughout the year. Graduates with their first jobs will appreciate Metro Fare cards. Graduates joining the military can use Visa and other type gift cards for purchases.

Love this idea. I got busy and forgot to give a gift I wanted to give to a graduate so thanks!

I have multiple accounts with my bank: checking, savings, CD, etc. My checking account is most active and most of the CD terms roll over every year. My bank sent me a notice saying that I hadn't had any activity with my savings account for the past year and to return to letter to keep the account active. I really don't get it... I would think that having one active account with a bank would qualify as a active customer. Why do I need to make deposits or withdrawls from all of my accounts to keep them active. I have known parents who had college funds for their kids have the acounts go inactive and have the funds turned over to the State to be reclaimed. I could understand if I didn't have other accounts there, but why are we living in the dark ages?

What banks not customer friendly anymore?


Seriously I agree with you. But with banks assigning cost centers to just about every transaction doesn't surprise me at all. So if you aren't happy shop around. There are other institutions who will meet your needs, including credit unions.

My daughter will be getting married in March 2014 and we are in wedding mode say the least. I am very cautious with everything, the price of the dress, the expense of the food and venue especially that my husband and I are paying for the event. However, we want to keep to our budget and not be broke come 3/2014. My daughter is wonderful and understands but I do not want to burst her wedding dreams bubble by analyzing every dime spent . And we do not want to come off as cheap. Is there a budget protocol for spending? What exactly do the bride (parents) are to pay for?. I want to be frugal but not to the expense of agitation. Help!!

Such good and generous parents. My husband and I paid for everything for our wedding.

So, set a exact budget figure to the penny. Then tell your daughter and hubby-to-be that's all there is. You can then let them make most if not all the arrangements. If they go over they make up the difference. This is a good teaching moment for the new couple on how to stay within a budget. That way, you aren't questioning every napkins, cake, dress purchase.  

And if you want to keep some control, they make the plan, arrangement and you pay the vendors up to the amount you set aside.

My niece, a very bright, hard-working girl, is starting college this fall at a large Midwestern university (in her home state, so she gets the lowest rates). She has scrambled around to get as many scholarships as possible, but they won't cover the complete cost. Her dad (my brother) had scrimped and saved for years to build up her college fund, but due to a recent divorce, has lost most of that money. He will contribute what he can, the niece is working this summer to earn and save as much as possible, but it won't be quite enough and he will take out loans for the rest. I hate to see that and could easily help out with a few thousand dollars. However, as I understand it, if I give her that money (or pay the university directly for room and board) then it counts as "family assistance" and her need-based scholarships will be cut. Net result: she is no better off, would still need loans, and I will have taken money out of my retirement accounts for nothing, essentially. Am I understanding the rules correctly? How can I give her enough to avoid loans without affecting her scholarship money?

I don't believe you are correct but double check with the financial aid office. If she's starting in the fall her financial aid has already been determined. Your help at this point shouldn't affect any scholarships, grants.

When the bill comes for say room and board, you can just sent the check. Or you can give her money for books.

But I suspect the financial aid is mostly in the form of loans so your financial aid does help if it means she takes out fewer loans. So help the girl.

I did for two nieces. 

While I agree that banks are penny-pinching and the customer is losing, the letter writer was told by his/her bank that due to inactivity, he/she needed to return a letter (provided by the bank). The bank wasn't saying he/she had to make a deposit or withdrawl. The bank wasn't saying a fee was being charged. It was returning a letter. This is also a way for the bank to gentle "remind" a depositor that an account exists (which some people might easly forget).

You may be right. I read it as that she had to do something with the account or it would be closed.

So if you're still on the chat. Call the bank. Perhaps this is much to do about nothing. Or maybe you need to link your savings with your checking or other accounts so that you don't have any problems.

We have health insurance (through my employer), but it does not cover everything. This week, I attended a seminar at my workplace that is offering the employees the opportunity to get supplemental dental and vision care (I wear glasses, plus our dental plan is woefully inadequate for our family of 5 - incl three young children). The additional insurance will come out of my biweekly paychecks. I am definitely going to get in on the life insurance, as I am difficult (read: expensive) to insure and I want my children to be taken care of. Is this a good idea? (Our union negotiated the plans and they are reasonably affordable.)

If you see a short fall in your insurance needs then definitely bridge that gap if you can afford to do it. Just check to see whether the insurance is portable should you leave your position. If not, you will know and should the time come for you to be separated from your job start looking for insurance before you leave so you can maintain coverage as best  you can.

I'm looking to take your advice, I have a car in excellent condition (knock on wood) that is now 8 years old. I've been squirrelling money away every month for the past year in saving for the new car and hope at least to be able to pay for the new car in cash.

Cash is king.

If you keep the car for 10,12 or more years by the time you want or need a car you can pay for it in cash. It's what I do. Even though I don't have a car payment, I make a car payment to myself for the time in the future when I need to replace the car I'm driving. Learned that from my grandmother, Big Mama.

Dear Michelle, We have 3 children in their 20s. Our daughters both went to private colleges. They worked summers and part time during the school year, but we paid the bulk of their expenses and they graduated with no student debt.We are now helping one dauighter pursue her Masters part-time. The problem is, neither has been able to find a job in her field. They are both living at home and working in retail whle continuing to job hunt. Our son, while bright, is not academically inclined. He took a nine month course at a local career college to become a certified auto mechanic onhigh end cars and isnow doing much betteer than either of his sisters. We've been giving him the maximum allowed by law to avoid gift tax, around $25,000 per year, to reflect what we would have spent had he gone to college. He is careful with his money and has used our gifts to buy a downtown condo, save and invest. This drives our daughters crazy. They claim we have always preferred him and they need the money more than he does. I know "fair" does not necessarily mean "equal" but in this case I think we are being fair. We are not charging our daughters rent but expect them to save 1/3 of their earnings so they can eventually move out on their own.

I want to give this so much more time. So I'm going to give you a rather short answer but stay tune for an upcoming column about your situation.

So basically you are right and wrong. 

You have every right to dole our YOUR money any way you wish. If you want to help your son and you can afford to help your son. Help him. What a great gift to help him become a homeowner and invest for his future.

You are wrong I think to have thought you "owed" him the same about you would have paid had he gone to college. He didnt' go and found a different path to a good career. Good for him But he wasn't "entitled" to $25,000 a year just because. 

Stay tune for more about your daugthers. For now I'll say they are being bratty!

I probably already know your answer, but I thought I would just check. My youngest daughter graduated from college a year ago, debt free, and now has a good job making about $40K/year. Since she lived a home for the last two years of college, we bought her a car, now paid for and in her name. She is carrying the insurance herself. About two months after she graduated, her father was laid off. His unemployment income is about to end and despite diligent searching, has been unable to find another job. To help make ends meet, I would like my daughter, who is still living at home (her sisters are already out and on their own), to start paying us $250/mo. to help cover our household expenses. I don't think it is too much to ask, but my husband is unhappy about doing it. I feel like it would help us and it will help her take on more responsibility. Your thoughts?

First you husband is probably feeling proud right now. He's the man of the house and may need help from his child. I get that. Just be sensitve to his feelings right now. It's hard not ot have a job when you want to work and support your family.

As for your request of your daughter, I think $250 is too little to ask of her. And I don't mean that in a mean way. 

You gave her a good start in life. Now she's grown and should be paying more of her fair share of living expenses. It's not a punishment but out of necessity. You need the money and you are doing the right thing by asking her to contribute as you might if she had roommates, which she does. They just happen to be her parents.

Sit her down. Lovingly tell her you need help now. Figure out her share of expenses including a fair rent, food, utilities, etc. I would even go as far as to ask her to stay put until you guys get back on better financial footing. 

You would also be helping her realize the true cost of what it takes to be independent.

I just replaced a 12 year old honda accord for a 2010 gently used honda civic for my daughter. The final straw was after figuring out that we had put $3000 into in the last six months just to keep it running, kind of. She is driving up and down I95 every other weekend to be with her soon to be marine husband stationed at Camp LeJeune. The thought of her being broken down in the middle of nowhere was the determining factor, as it was happening around town. For safety reasons it was time...

And time it was. Would have probably done the same thing.

I'm in the middle of planning my wedding right now, and I thank God my mother raised me well. Every time I worry that maybe I'm asking too much of my bridesmaids (which I'm not - I've asked that they a) show up b) in a dress close to what I've asked that they wear - and I gave them no guidance but length, color, and designer c) sober enough to walk down the aisle, stand there, and be able to look nice in pictures) I will refer back to that column you posted to reassure myself... Good Lord...

Love it. Good bride. And your family and friends thank you I'm sure. I did the same thing. 

Hi, I have a nephew who will turn 25 in August. I sent him a Christmas check but never received a thank you. Even an email...... My philosophy has been if you can't bother to send a quick email to say thank you, that's the end of the gift giving. However, it is his 25th birthday. He also is expected to graduate from college in December. Any ideas?

Stand your ground. Time for him to learn a lesson.

But to make sure there are no hard feelings you might gently say, "Hhey I didn't know whether you got my check from Christmas. Did you? 

You may find that he intended to say thanks but got busy, etc. Then say with love, it's expected that you acknowledge a gift with a thank you note or at least a call.

Don't write him off completey if you want to give. Just test to see what gives. He may indeed be grateful.

Hi Michelle, My husband and I are in our late 20s. When I finished grad school a few years ago, I had student loans totaling 70K. Since then, we have aggressively been paying them down and now have about 38K left to tackle. I plan to pay off 4K in the next few months, so lets say we're working with an amount of 34K, at 6.8%. Unfortunately, my husband, a teacher, needs to attend grad school in order to keep his job (and the county will likely not cover any of it). His degree will cost 16K, spread out over three years. I'm struggling with deciding how to budget for his tuition (the amount will vary each semester, including summer semester, from $1500 to $4500). We have enough money socked away now, independently of our emergency fund, to pay for his first two semesters, but I'm considering putting later semesters on loans so we can focus on paying off my much larger loan (it is too late to apply for FAFSA for his first year). Both of our jobs are very safe so our biggest likely area of emergency would be our house, which we own. What are your thoughts on balancing these competing priorities? We already live frugally, which is how we've been able to pay down my loans.

If you have the cash to pay for your husband's degree, pay cash. Don't take out any more loans. Because you say he can't delay getting the degree that has become your priority. Go back to making the minimum payments on the other loans until he's done and then go back to your plan of aggressively paying them off. 

Years ago, when I lived in DC and was about to move, I learned that DC had a law on the books that inactive accounts would be claimed by the state. That may be one reason for reminders from banks.

May be. Thanks.

I agree about setting a budget and letting the bride and groom bear the consequences of going over budget. I just did this with my daughter with an added twist. I told her that to the extent she stayed under budget, I'd write her a check for the difference after the wedding. She managed to come under budget by a couple of thousand dollars! And used the extra money for their honeymoon.

You are one smart cookie. Great idea and incentive. 


I might do that with my daughters.

Wow. In my opinion, the original LW's daughters seem just as entitled as some of the brides we've been discussing. Their parents paid for their college educations, are helping at least one with a graduate degree, and are providing rent-free accommodations and they are upset about...what exactly? I am eternally grateful to my mom for paying my (relatively low) in-state tuition for undergrad. I paid my own way through law school, never expecting a penny. These ladies leave a bad taste in my mouth. How about, "thanks, mom, for everything you've given to me."?

True that. 

Rats. You just stole my follow-up :)

Just kidding...but hour is just not long enough!

I know right. I could do this all day. I love helping this way directly. 

And before you know it's time to go.

So sorry. I've got all your questions. Saving them and will try to get to some in my column on in my online mailbag, which is up online on Mondays.

Thank you so much for joining me today. Come back next week. If you send in a question early,  make it a priority.

Have a wonderful and financially safe weekend.

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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