Color of Money Live

Nov 21, 2013

Join Washington Post nationally syndicated personal finance columnist Michelle Singletary for an online discussion on Thursday, Nov. 21 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 chat, submit your questions early.

--Talk back on debt collection

Today's Color of Money e-newsletter: Walmart Wages

Welcome. Thanks for joining me today. 

Let's get started.

I finally paid off my first student loan, the one with the highest interest- only 2 more to go... Is it too much to frame the notice I got from the lender that I owe $0?

Frame baby frame.

It should give you a push to get the other two monkeys off your back.

Good for you!

Hi Michelle, Are there ever penalties for paying a student loan off early, or does it depend on the loan? I am starting to plan now for how to pay off my student loans (don't worry; they're small) after graduation. It looks like I'll be in a position to throw a few thousand dollars at them immediately after graduation while still keeping at least a small emergency fund. (While paying off debt aggressively, an emergency fund should be three months' living expenses, right?) Thanks!

No penalty and yup aim for at least three months worth of living expenses. But if you have a pretty secure job -- as secure as a job can be these days -- save up one month expenses in your emergency fund, another $500 to $1,000 in a life happens fund. Then stop and dump all the extra cash on the student loans. Once you've paid off the loans then go back to boosting your emergency fund and push for maybe six months of living expenses.

Michelle, I bought a car over the summer and because of some credit issues from a few years back that won't roll off for a while, my interest rate is higher than what it should be. How long should I wait to attempt to re-fi the car with my bank? The credit the car is on now is through the dealership.

Why don't you contact your banker or a credit union, if you belong to one, and find out if you can re-fi. Can't hurt to ask now if you are eligible or if the rate would be much lower.

And if you aren't, the way to get from under that is to make extra payments on the loan if you can to get rid of it sooner also savign on the interest.

My husband and I are getting a sum of approx. $66,000 and want to know the best way to handle it. I'm 54 and he's almost 60. We make about $110k a year total and owe about $165k on our 3rd home, and are considering putting a good chunk towards that. What do you think?

 I would need to know more to help you with this. Do you have any consumer debt for example? Are you comfortable with the amount you are saving for retirement? Perhaps the money is best used to boost your retirement savings. 

Do you have an emergency fund? Life Happens fund (for the things in life that happen such as an unexpected car repair).

And by third home, do you mean you have three homes, each with a mortgage? If so, how much do you owe on the other homes?  If you mean this is the third house you've purchased and you have a well funded retirement fund, $66,000 could go a long ways to getting rid of your mortgage. And I encourage people nearing retirement to make it a priority to get rid of their mortgage before they retire.

When deciding such things you should look at your entire financial situation to determine how best to use the money.

My friend's husband is really bad with money, but it would harm their marriage if she insisted he got rid of his credit card altogether. They are about to sell some stock to pay off credit card debts, and it seems like this would be a good time to make a plan about how to avoid running them up again. As a compromise, is it possible to get the credit card issuer to lower the credit limit, say to $2000 a month? That way the husband could still feel like he had credit if needed, but could not get out of control. Thoughts?

I'm not sure your solution would work if the husband hasn't changed his ways. A credit limit of $24,000 is still high when you aren't managing money well. They need help. Credit counseling or some couples counseling to get at the root cause of their spending issues. Suggest to your friend that she see if her husband will to to a credit counselor. They can go to to find one. Or seek a marriage counselor because this is so not about the money or credit.

Hi. I'm a newly single mom with a 12 year old. My divorce last year followed a discovery that my now ex-husband racked up tons of debt and pretty much decimated our finances. I have a good job, my only debt is my mortgage, and have been restoring my savings so I again have about 2 months full emergency funds. Should I take my merit increase, which I've usually devoted to 401(k) increases, and start putting it away for the next 6 years, to get as much collage savings as I can? My ex pays no child support, so I know college will be my responsibility. Thank you!

I'm so sorry for everything you are going thu. Divorce is often tough on people's finances. If you feel you are saving well for your retirement I would take the increase and start targeting college savings. You should still consider a 529 plan (for more information on that go to Keep your eyes open for every possible scholarship. And consider all the ways your can get your child in college without taking on a lot of debt. For example, going to community college for two years and then transfering to a four-year school. 

Sorry, I meant $2000 credit card limit at any one time, so that they'd have to pay that off before they could charge any more. I hear you on the credit counseling and couples counseling though too!

Glad you cleared that up. You can asked for a reduction in your credit limit but the husband could always call and get it raised if they've been paying their bills. 

By the way, even if her husband won't get help. She should. Perhaps she can get the tools that may help her deal with her husband and his inability to manage money and keep them in debt.

We own the other 2 homes, have retirement savings and some savings (maybe not enough) and owe $9k on a car loan - which will be paid off with this windfall. Thanks for your thoughts!

Thanks for the follow up. So look at your savings overall, including any you may need to put away for the other two homes, for repairs, etc.


Last week someone wrote in and said things are tight now that they bought a home, and they can't save like they used to. My husband and I went through the same things and wondered if we were in over our heads. Looking back, that first year of homeownership is the toughest. We had to buy new furniture and window coverings, pay installation fees for utilities, transportation costs went up a little bit due to location, etc. But 1) we got a higher than expected tax refund the next year, since we did not adjust our tax withholding (which we did after getting such a high refund), and 2) we did not have any more high expenses for furnishings, etc., for a long long time. Ended up paying off our 30 year mortgage in 22 years, despite those early jitters. If this couple were in the habit of saving, they already have a better foundation than many. I hope they take heart from their previous habits, and looking down the road see if their salaries are likely to go up while some big-ticket items are maybe done for, for the time being. It does get easier for most people as time goes on.

Thank you for your comments. All true. All wise.

Is it better to give more money to several charities to less to more?

A good question. The answer is it depends.

I'm sure all charities welcome whatever you can give. So if you have a few favorite you can certainly divide what you have among them. There will be impact no matter what you give because your $10 or $20 added to other gifts add up.

If you want a bigger impact for your dollar you could decide to concentrate on one charity. If so, call and find out what is their most pressing need and give to that. 

But really whatever you give and to whatever group, if it's run well (checck BBB and Charity Navigator to see) I'm sure your gift will be appreciated.

Hi! My husband and I both drive 10-year-old cars, which we've paid off. We realize they're both going to need to be replaced in the near future, maybe even within the next couple of years. (However, we did just put ~$1,000 into one of them.) My in-laws have generously offered to sell us one of their cars at a great price; it's about the same age as ours but has far fewer miles on it. The catch is that my husband is tall and doesn't fit it well, so it would probably replace my car, even though his is likely to need to go first. Also, it's not the type of car we would have bought, considering we're starting a family soon--it's a sedan, and we think we'd like a wagon or a crossover. I can see buying it because it's a great deal from a reputable source, and so that we don't have to buy two new (to us) cars at the same time. But I'm hesitant to spend the money (we can pay outright) when we don't yet need to and we might have wanted something else. Thank you!

I would wait. You've pretty much laid out why. It's not the car you want OR need. 

So until you need another car that will suit your family, save all that you can to get what you want and need in the future. 

Just because it's a good deal doesn't mean it's a good deal for you. 

Hi Michelle! Our home is 40+ years old. We have owned it for the past 12. Everything is now older (as are we), and starting to need replacement. Our utility bills are outrageous each month. We recently had an Energy Audit done and it was told to us that our appliances are all pretty near the end of their lives. We will need a new furnace, water heater, A/C, fridge. All are currently working. All are 12-25 years old. The fridge is the "baby" of the bunch. Every serviceman has told us that "back in the day, these things were designed to live 25-30 years!" The new ones: about 10-15 years. I question if we should replace them in the coming year (we were warned that it creates a big mess if a water heater dies on its own - water, flood, etc.); or just wait for them to die a natural death and replace them at that time. We live in Ohio, so going without a furnace is not a possiblilty whatsoever. We already know that we need to replace the windows and have plans to do so soon. We would also like to boost the insulation, since in the 70s apparently, people did not do much of that kind of thing, we are learning. Oh, the "upside" of being a homeowner!!!! Please offer advice. (1) What should we do? (2) In what order should these old appliances be put out to pasture? THANK YOU!!!!!

I like to plan. So sit down and come up with a home improvement plan for repairs and applances. Once you've got the master list then start to arrange them by the things that absolutely "need" fixing adn the things you want to fix or that can wait. On that list of "needs" start with the items that cost the least and for which you have savings. Go through it until all is done. Then start on the list of things that you want done, again starting with the lowest cost items. 

If while you are doing this something breaks down that again needs to get fix, it goes to the top of the list.

Just remember you can't do everything all at once. Just just take it slow. 

a deserving family you know who really needs a car that has been well maintained for a good price. References like that are hard to find.

You are so right. Good suggestion. Thanks.

Man, looked up and it was past 1p.m.

So great questions today. Thoughtful comments. 

There are a few questions I definitely want to answer but didn't get to. So I'll answer them in an upcoming column. In particular I would love to get more details from the person who wrote in about the sister jealous of money you got from a God parent. Please email me at I really want to tackle your issue.

Until next week. Again thanks for joing 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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