Color of Money Live

May 15, 2014

Join Washington Post nationally syndicated personal finance columnist Michelle Singletary for an online discussion.

Send your money questions in early.

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So glad you could join me today. 

Let's get started.

My daughter has found herself in a situation where she has to move. Her credit is bad and is having difficulty getting approved for an appartment. Should I co-sign? Moving back 'home' is not an option.

I'm so sorry to hear about your daughter's situation.


I know you want to help, but unless you are truly prepared to make her monthly rent payments, don't do it. If her credit is bad that suggests some financial issues were there already. Maybe it's because she was irresponsible, maybe not (like she's lost a job) but in either case, don't link your finances with hers. Instead help her explore her options.

Perhaps she can move in with a friend or someone who already has an apt. 

And why isn't moving home an option? Just asking since you brought it up.


Our 28 year old daughter is entering a MS program this fall and we anticipate she will require education loans. My wife and I are in our early 60's and expect to retire in 3- 5 years. Should we co-sign an educational loan for our daughter if we are asked?

Read the previous answer and while that was about an apt, my advice is the same.

Do not co-sign.

Co-signing means you are borrowing too. And I would definitely not recommend it since you are so close to retiring UNLESS you have the money to pay the loans. And if you have the money to pay the loans then just give it to her. 

Or encourage her to work and save up to pay the cost of the MS program. 

Hi Michelle, I'm newly married. We are very lucky and doing well - living off one salary, contributing full amount to our 401ks, no debt, saving a ton. What would you recommend should be our first financial goals? We have over a year in living expenses saved and are thinking house down payment should be our next goal, but we don't really know. College and future potential costs scare us. When should we seek professional financial advice and what would you say your first goals would be as a married couple?

I would say right about now is a good time to seek the help of a financial planner. Clearly you are doing well (a year's worth of living expenses BRAVO) but know you need the help to put it all in order. Maybe's building up for the house or maybe you still need to boost your retirement. I'm not sure without more info. That's what a good planner will do. 

Michelle, I hope you take my question! I'm getting married next week, and already we have received some generous (1k+) cash gifts. I know we will likely receive a tidy sum of money. Our savings is not as big as I would like (life happens, but no emergency fund) and we also have less than 10k in credit card debt. What would you do with the money? I want to split it among the debt and savings, but my fiance wants to put it all to the card, and then start saving heavily. Thoughts?

Actually, I would put it all in savings. That would be a nice way to start your marriage with a partially funded emergency fund. Typically, I advise people to have three to six months of living expenses. If you get nice chunk of money that would be a good start.

At that point, you wouldn't have to worry about saving anymore until you get rid of the credit card debt. 

I keep all of my old IRA documents, and I realize there's value in keeping a lot of records (for figuring out cost basis of mutual funds, etc.), but I should be fine to recycle (via shredding) IRA documents from 10 years ago when I no longer own any of the funds listed on that IRA, correct? Thanks

Unless, you might need anything for taxes, I would say yes you can shed. And if you aren't sure, just scan the documents and keep a file online.

Hi Michelle - I would like to start investing - with small but consistent contributions - for my very young niece and nephew who live in a different state from me. I'd like the funds to be available to them in 16-18 years for whatever purpose they would like (i.e., not exclusively for school, in case that is not something they are interested in pursuing). I have only invested in TSP for myself and don't know about any other investment options. How would I go about doing this? Thank you.

How nice. You could open a index mutual fund in your name and save for your niece and nephew. Be sure to update your will to indicate the money in the fund is for them. 

Once they become of age and you think the time is right, you can cash out and give them the money or turn the account over to them. You might also talk to a tax person about your plan.

hi Michelle, I'm a big fan & hope you can give me some advice. As part of the effort to spread my payments out during the month, I paid 1/2 my mortgage early. I hoped it would reduce the interest paid. However, the mortgage company holds the partial payment until the entire amount is received & then credits my account. How can I make the most of paying bills early? Should I just suck it up & pay the whole mortgage early? thanks!

If you can pay early, sure. But if the overall goal is to reduce your interest long term and pay off the whole principal early, just make extra mortgage payments. Even one a year will knock off several years of the mortgage. That's what my husband and I do. We are saving a ton in interest and slated to pay off our mortgage early. Trying to pay it off before we retire.

Michele, How do you proposing budgeting for reasonable, but unusually large expenses? For example, I recently had a car repair bill that was 1/5 of my monthly take home pay. The bill was reasonable and part of normal repairs for my car. I feel like expenses like this happen every couple months, and are making it difficult to budget. It would be one thing if it was consistently a car repair bill, but it could be other things like a large medical expense, a new computer because mine died, etc. I don't want to just write expenses like this off as "emergency fund expenses", but I can't figure out how to work that kind of large expense into my monthly budget! It is not so much that I can't pay for it, as much as I feel like I'm consistently cheating my budget by not accounting for these types of expenses. It is very tempting to start labeling any large expense as "unusual".

Really good question. I help people solve this but suggesting they have a "life happens fund." So you budget every month however you want to put regular amounts into this regular bank account. You build it up to say $1,000 or $2,000 or $3,000 and then stop if you like. Then when a major expense comes about you pull the money from the life happens account. 

Or you can continuously fund the account, building it up and then taking from it for large expenses, like a car repair or family vacation. That's what I do. From every paycheck I divert money to the "life happens fund." And that's the pot we pull from. So for example, when we bought our higher school daughter a car (used), we paid cash for it from the life happens fund. The fund went down significantly of course but since then we've built it back up. So it's take out. Built up. Take out. Build up. This fund prevents you from taking money from your emergency fund, which you build up and leave alone.

Hi, Michelle. We moved to the DC area from Nebraska last summer and are delighted to have discovered your columns nd chats. My husband has a high-paying government job and I work part time. We are careful with our money so are managing all right. We knew housing, transporation and taxes would be higher, but the costs of attending high school have been a major surprise. In NE students pay for sports equipment, band instruments, and cheerleading outfits, but but they don't pay to play sports, play in the band or join the cheerleading squad. They certainly don't pay $800 for a prom dress and chip in to hire a $1200 limo. Girls wear party dresses (our daughter's cost under $50), boys wear suit and ties, and their parents provide trasportation. The yearbook costs $15 and yoyu can get a nice assortment of student phbotos for $25. We are constantly being asked to buy candy or gift wrap or attend pancake breakfasts so that less well off students can participate in these activities. We live in one of the most affluent counties in the country. I think this is ridiculous.

I agree. It is ridiculous.

But you do what you did. Say no to some things or most of it. That's what we do. Our daughter did not go in with friends for a limo (I was constantly in her ear about not doing it). And she ended up driving herself and friends to the prom. Her dress was under $100 I think. We give generously to school fundraisers but we don't sell anything. 

I just tell folks to do what they can afford. Because running a volunteer financial ministry I know that a lot of those folks in this high cost area earning high salaries are broke trying to live the high life!

If I have the money saved, worth it for a private college? Daughter accepted to Maryland and Dartmouth. We could finance without debt, but that goes against the Singletary Doctrine? Your daughter's article made it seem that she "settled" for Maryland.

First, she didn't settle for Maryland. Maryland is a GREAT school. I graduated from there and look where I ended. Plus my husband found me at Maryland and he's a GREAT catch! My daughter  wanted to go out of state to get away from her crazy mama. My daughter's article and the one I wrote wasn't about "settling." It was about doing what you can afford. If you can't afford a select school, find another one that will give you a good education that you can afford. It was about recognizing that you can succeed and do well at less selective schools. If you have the money for Maryland or Dartmouth -- all of it in cash -- then your daughter should choose the school that fits her needs and wants. Although, I can't say enough good things about the University of Maryland. Good education for the money. Plus, if she decides to go to grad school, the savings could pay for that. That is what we have found. Our daughter now has money leftover in her Md. 529 plan to pay for grad school too!

I was audited by the IRS on my 2007 return. Can I shred those documents as being over the 7-year-hold mark or did the 7-year clock start ticking again when they looked at that year?

If I were you, I would hold on the documents.  Not sure about the clock. You could call IRS and ask them.

But again, you could just scan them and keep on computer.

Loved the article that began with your son's first job. My folks always expected us to save at least half of what we made.. I was inspired by seeing that number grow, and when I was 18 and got a scholarship to live overseas for a year, my savings paid for a lot of discretionary travel and experiences that changed my life. Much better than buying a car at 16 I think. One of the best pieces of advice I ever read was to look at the financial well-being of people trying to give you money advice; if they aren't doing well financially, don't do what they do! I think that is so fantastic that your kids can look at you and see a comfortable, debt-free life, and you can model all of the luxuries that you DO have. Every time I feel the "wanty" part of me looking at something shiny and new, I think about the paid-in-cash car I have, the retirement I will be done saving for at 32!, the fact that I can help my folks out and take vacations with them - priceless memories, the AC we enjoy through Virginia's summers, the heat above 68 in the winter, and delicious food cooked in the miracle of our kitchen. I really believe that emulating gratitude teaches kids so much!


What you describe is contentment! And that is priceless.

She won't need a co-signer for federal loans. While saving up for school is best in a lot of cases (and I would highly encourage her to work while in school to cover the cost), you can borrow quite a bit from the government without a co-signer or credit.

That last part. Sad.

That so many people can borrow so much.

I recommend cash for graduate school.

And I know that puts me far, far away from most financial experts. But I see the sad results of so many borrowing so much for undergraduate and graduate. 

Hi Michelle: I need your advice. I make a lot of money, but for some reason, I just can't seem to save money. It seems that something is always coming up; car repairs, house repairs, etc. But I have decided that I'm going to pay myself first and then pay everybody else, but the question is, how much do I pay myself? Thanks for all you do and your great advice. Marcus


You are welcome. Another person asked me something similar. So yes, save first. Save for your emergency fund and save for your life happens fund -- for the things in life that happen, the stuff that comes up. 

Treat your savings like a bill. Make it mandatory. 

I am curious to know your thoughts on spending money for home upgrades. I'm talking about the ones where everything works (e.g. bathroom), but the look is outdated and worn. When do you think it's okay to spend savings for these types of projects? In my case, my husband and I are already handily saving for retirement and the only debt we have is our home mortgage.

My husband and I are constantly ungrading things in our home. It's time when you do just what you have done, saved, become debt free except for the mortgage. And you have the cash to do it.

Do you have any suggestions for software that tracks spending. I want to cut on spending but I need a better picture of where the discretionary money is going. I don't want to compromise privacy by using the software.

I use Quicken. But I've heard good things about


Given how bad most people are about backing up their computer's contents, I would concerned about recommending that they ditch financial paper records once they're scanned. If your computer crashes and you can't recover the hard drive, you're really stuck.

I didn't say scan current important documents and throw them away. I said scan old documents you weren't sure you need.

But your point is well taken. If you scan people, please be sure to back up your computers. Or you can put the scanned documents on a flash drive.

My husband had a similar choice (MIT or Maryland) and choose Maryland on scholarship, but cost was not an issue. He had a fantastic time, worked really hard, and has a great job. He does not regret his decision and for his field it made since-- Maryland was a top program and saved his parents over a hundred thousand dollars. I made the opposite choice when I went to grad school-- more expensive and more prestigious. For me and my field, it was worth it too. However, I would have never paid full price for a private undergraduate degree. I found that the payoff between a Maryland and an Ivy at the undergrad level isn't worth it if you need a graduate degree (but is at the grad level in my field!)

Thanks for sharing.

But I would add this. People from non pricey/Ivy/Selective grad programs get hired and have great careers. Sure, are their employers who snub folks from non pricey/Ivy/Selective programs? But that's their lost. 

Hi Michelle, I love your chats--hope your mom is doing better. Do you have any suggestions regarding books or websites that would be helpful to teach young adults about investing in mutual funds? I mentor both at work and in my community and would love to help these young people out. Thank you.

Thank you for asking about my mother. She's still in critical condition but breathing more on her own!

Go to You will find helpful articles and links to other sources on mutual fund investing.

Yes, the DC area is on of the more affluent areas (eg montgomery county) but not all of the county is as well off as certain areas. We live in the down county area of MC and our schools struggle to fund a lot of activities to include all the students, those who can afford it or not. All kids should be able to participate in activities in schools and we engage in these fundraisers so they can, regardless of financial situation. We just make a donation so all the funds go to support the school but fundraisers are how many of the schools get the funds to support all the students

That's what do, give the money rather than buy goods, especially after I found out that a lot of the money ends up going to the company for the goods and the schools get just a small percentage of the money raised. So if I was going to spend $50 on pizza and only about $10 goes to the school, I just give the $50 directly to the school.

I work for an institution that is up for sale-hospital.Recently they sent the staff a letter offering us our pension while we continue to work. We are a unionized facility and jobs are based on seniority. Some are worried about their funds based on what happened in Chicago. I was told our funds are protected by PBGC. What is your take on this? I believe if the pension is taken you will loose your seniority.

Your questions are so complicated that I don't want to give you the wrong advice. So please talk to the folks in your benefits department to get answers. They know the details. Find out how much of your company's pension would be protected by PBGC. You say you believe if you take your pension, you lose seniority. Find out for sure. And if that is the case, how does that affect future raises if you stay with a company that buys the business. 


A tip for Marcus - I set up an automatic transfer in my bank's online site to transfer money every week from checking to savings. Why every week? When I was making less money, the idea of saving $160 a month was a lot, but I could swing $40 a week. As I made more money, I increased the amount and have never missed it.

Thanks for reminding me of this tip.

Automate your savings.

Works for me too.

That's what we do. Assuming you keep your email relatively secure, its a safe place, and you can access those documents from anywhere by logging in.

Good tip.


U Maryland and Dartmouth are totally different experiences. Comepletely. Dartmouth is a small school in a small town and the students create their own culture - social, intellectual, etc. At Maryland, you are very close to a huge city with a cultural and social life all its own and you can choose to stay with other students or venture out. There are benefits to both. I went with a smaller school - Dartmouth actually. I loved it, but there are downsides to being hours from a big city. Benefits too. But if there won't be any loans, let your daughter decide based on where she thinks she would be better able to finish growing up. The first time I got really sick (freshman fall) and I was too far away for my mom to come take care of me, I grew up a lot.

Really good points. With appropriate caveat of affordability!

Our mortgage is our only debt, and when I see the number I sometimes panic! We pay a little extra every month towards our mortgage and occasionally make an extra payment on top of that. But sometimes I wonder if I the money should be going into retirement or a mutual fund instead. Many articles say there are better ways to use your money than to pay off a mortgage early. Our interest rate is 3.5%

And many of those articles quote financial people to say there are better ways to use your money.

I say one of the best things going into retirement is being completely debt-free and free of a mortgage!

As long as you also have savings and investments.

This question has probably already been asked before. If so, sorry for the repeat! A few years ago, I signed up for a store card while I was in college (bad move, I know). It's one of three that I have (the other two are from banks/credit unions). I always pay my balances in full and on time. I don't often use the store card. Is it better for my credit rating to keep the unused store card or to cancel it?

If you have no outstanding credit card debt on that card or any other cards, you can cancel it. You may see a small dip in your score but it will come right back up. So cancel if you like and if you don't use it. 

My younger sister is convinced she needs a "big name" law school. Based on what I've read, her GPA/LSAT combination might get her into one or two of the top schools, but she would need to pull full freight, which would mean six-figures of debt. She would also probably qualify for a full ride at a lesser school (still accredited, with decent bar passage rates). She sees this as "settling." Other than maybe being a Supreme Court clerk (a goal she has never articulated), is there ever a good reason to take on what is basically a mortgage to go to a top law school when you can get an adequate education at a lesser school for free?

Nope. No. Nada.

I hear from A LOT of attorneys suffering under a lot of law school debt. They aren't making what they thought and many by choice because they didn't want to slave for a big law firm for the big dollars, which by the way are jobs that are harder to get. 

I also hear from A LOT of people who went to law school, amasses A LOT of debt and regret it and some don't even use the degree.

So sorry, but my time is up. Thank you al for participating in the chat and for your questions, comments and tips. Even if I didn't post yours I've read it. And I may answer your question in a future column.

Take care and enjoy your 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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