Color of Money Live: Fired on April Fool's and it was no joke. And other termination tales.

Mar 15, 2018

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

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So glad you could join me today. There is a lot of personal finance in the news. Banking bill passed in Senate rolling back consumer protections. Trump dumping Tillerson via a tweet so I'm asking folks what's the worse way they've been dumped.

And of course it's Testimony Thursday. Tell me about your financial successes.

So let's get started.

I dutifully accumulated about 9 months of bare-bones living expenses in an "emergency fund" in case I lost my job. Happily, that never happened, and I will be retiring in a few months. What should happen now with the emergency fund? I know I still should keep it as a backup fund in case there is a bad year for my retirement investments, etc., BUT, I have had it divided between a money market and a more profitable "mostly bonds" fund. Should I keep that division, or is there a better way to manage and think about it?

Even in retirement you need an emergency fund. Let's say your roof needs work. With the rainy-day fund you don't have to take out a large sum from your retirement savings, which you might still be investing for more growth. And I like how you are keeping the savings. Safe but with the potential with enough growth to keep pace with inflation. 

Keep doing what you're doing. 

Michelle! I have officially paid off my undergrad student loans! I'll now be adding that payment towards paying off my grad school loans, which I am on track to pay off 3 years early (or more!). I also did your "Paycheck checkup" and have actually decreased my withholdings. (I received a large tax return this year). So the extra money I'll be receiving each pay period will go towards my grad student loans instead of being held by Uncle Sam! Thanks so much for the push to do this and your other great advice. I can't wait to write you back once all student loans are paid off!!

WOW!!! So happy for you. And love that you are already onto that next monkey on your back. 

I'm happy to celebrate with you now and later. 

 

If Bill Gates ever gives me any money, I will fund it.

For those who aren't sure what's this about. My dream if I ever got BIG MONEY is to build (with cash) a center where people can come and get budget, legal, financial planning help, etc. Services free to people who can't afford and a sliding scale for those who can. What would be unique is having everything in one place. And the professionals would be paid by the center so that clients don't have to worry about vetting folks. They would have no incentive to steer people in any particular product. And we would also have employed consumer advocates who could read over contracts and tell folks if it's fair. Or help the get back money from bad players, etc.

I just want to create a safe place for people to have help dealing with financial issues. I would even hire a therapist to help folks. Because a lot of money trouble is more about your backstory than lack of funds.

Anyway, my dream and so glad you would help if you got Bill Gates money. 

My Fortune 500 company fired me after almost 27 years. I got glowing reviews and promotions/salary increases through my career. I lost low seven figures due to the loss of income and pension. But it was the way that I got fired that is outrageous. I checked my work voicemail while I was out on vacation. I had 2 calls from an outplacement firm to begin my benefits. I made my manager pull over on I-95 to explain what had happened. I met with his manager when I returned to the office, and found out that no one would be suffer any repercussions (fired/docked pay/even get a letter in their personnel file) for not telling me in advance. This was a family-run business where it was common to meet people with 30-40 years of service. The family was well-known for their philanthropy, except toward their employees.

Read Michelle's newsletter: Trump dumped Secretary of State Rex Tillerson in a tweet. What’s the worst way you’ve been fired?

What a terrible way to find out you've been fired. So sorry this happened to you. 

Please read the link. Been hearing from a lot of folks with stories of how they were let go. 

You probably haven’t read Miss Manners today but one of her questions deals with giving money to friends/acquaintances to help during a difficult time. This is something I also have been struggling with after getting yet another GoFundMe request for an acquaintance with big medical issues. I like this person, although I haven’t seen them in years, but they are significantly better off than I. It seems heartless to decide I’ll be happy to contribute if they find they still need money after selling their vacation home in Cape Cod, but that’s kind of where I’m at (and yes I realize that Cape Cod house could be mortgaged to the hilt or underwater, but let’s not get lost in the weeds). I’m questioning how to know when there is genuine financial distress in a time of need or I’m just helping to protect a lifestyle I myself can’t afford. I hate being put in this position. Right now, my blanket policy is to contribute to zero online platforms. I’m actually known to be generous with family and friends, especially young people working to get through school or get themselves established, but as I get more and more online calls for money from people I know it makes me wonder if I’m as generous as I think I am.

I really understand where you are. I get a lot of requests for financial help. 

Just keep in mind it's a request not a demand or shouldn't be. You can with no guilt say no, if you don't want to contribute. You don't have to explain yourself. Just, "I'm so sorry, I cannot help at this time."

And the way I stay guilt-free is to have a giving plan, as you do. I tithe to my local church. My husband and I put aside money to help close relatives (sister, nieces, etc.) with needs we know for sure they have. On a case-by-case situation we will review the needs of extended family. But that help comes with some rules. We don't give to reckless people. You have to show us your budget and how our money may help and not contribute to an already downward spiral situation. For example, makes no sense for us to pay your rent if next month you'll be in the same situation. Instead, we help you find another place to live or help you find a roommate. Se where I'm going.

You get to decide your level of generosity. 

I believe to whom much is given much is required but that doesn't mean you have to respond to every request. 

Michelle, Last year I spent about $3000 in car repairs. This year my total so far is $2000. The car is 13 and has been paid off for years. I just went car shopping the other day and was uninspired by the weak offers I received for new cars. I'm trying to determine how much longer to keep my car. I love it, but I'm in the repair shop once a month (not an exaggeration). When does one call it quits?

I'm right where you are. My husband keeps whispering it's time to put my 2006 sweet van to rest. But I'm holding on. Trying to get another few years out of her. Here's the thing, $3,000 a year is $250 a month. If you are not going to pay cash for your car could you get another car -- used or new -- for $250 a month? 

My rule once the car/van becomes so unreliable that I get stranded, it's gone. (I have a three strikes and you're out rule)

But if I can plan repairs and a way to get to where I need to go while it's in the shop, I'm hanging on. And of course it has to remain safe. 

So perhaps you do have some more life in the car. 

Now, if you have the cash and you're tired of the hassle, you could put the car to rest. You got it like that.

Woke up to an email this morning saying my last day would be April 1 (and no, not an April Fool's email) - my first ever layoff, so... hooray milestones?? Thankfully I have my emergency fund at the ready, some supplies I'd prepared for a situation like this (think some cheap canned food - easy meals for a few weeks) and I'm in an area where my skills are in high demand. But man, I'm looking forward to a bounce-back weekend now!

That is so crass. An email? Horrible and with an April 1 date to boot. Really mean or stupid if someone didn't realize it was April's Fool. [The fool].

Anyway, I do hope you land well. And love your attitude. 

Hi Michelle - hope you can answer a discussion some friends and I had the other day. How much should you keep in your checking account for day-to-day? Take this example: Rent is $1400 a month and goes out around the 3rd of the month, student loans ($210) goes out on the 3rd, everything else goes on a rewards credit card that gets paid in full every month on the 17th (around $700 a month). Should the person have enough to cover a full month's of expenses? Just the biggest expense? Some combination of that?

Personally, I like to have some cushion in my day-to-day checking in case of some error on my part, creditors, lender, utilities, etc. So maybe not a full month's of expenses but enough to cover something that may go wrong while you fix it. 

Are you ever ok with making financial decisions when you aren't ready? 4 years ago I bought a home with a $10k loan from my grandmother b/c I saw a great opportunity in a home and my mortgage would be $200 less than my rent was. Fast forward 4 years and that rent would now be $500 more than my mortage. I wasn't ready then, but I saw that saving money on renting beat out trying to wait another couple years to save the money. I paid back my grandmother in 15 months with rental money from the great find of the home I now love. I brag about this, but should I brag about jumping into home ownership?

Really good questions. I'm so glad this worked out for you. But no, I wouldn't brag. Because it might encourage others who aren't ready and don't have a grandmother with $10,000 to be reckless. It's like saying, I walked against the light and wasn't hit by a car. Sure some folks will make it across just fine. But others will get hit. 

What if you had lost your job. Now you owe a mortgage and your grandma, who I hope didn't need the money back. 

You didn't get hit. But you might have. 

On top of 9-month emergency funds, please advise how best to invest $25,000 in cash. Other 401 (k) and individual IRA is on autopilot.

Without knowing more, I couldn't tell you what to do with that much money. 

I would ask,

-- Do you have any debt -- student loans, credit cards, auto loan?

-- Do you have children? If so, are you saving enough for their college funds?

-- Do you own a home? Perhaps you can make an extra mortgage payment?

-- Do you have a life happens fund? This separate from the emergency fund in case you lose your job. From this account you would pay for the things in life that happen such as a major car repair bill or for home improvements.

-- Do you have a car that is near the end of its life? If so, you might hold on to that cash so that you can pay cash for the next car. 

-- Are you truly on track to save enough for retirement? If not, you might use the money to boost your retirement. 

With my last paycheck, I made the milestone of completing my Life Happens fund of $4,000 (I rent, am single, fully insured, don't think I'll need more for a sh$t happens moment than that). The last year was dedicated to finishing off a separate emergency fund and this life happens account, and now I feel like I can start looking at other goals, like purchasing a condo/home one day. I know you say to not invest any cash you may want in 5 years, which is about the time frame in which I'd LOVE to be able to purchase, but the real time frame will be whenever I have enough saved for a down payment. With that in mind, should I aim for some combination of savings account/investing to build up a down payment faster?

I would not invest emergency money and life happens fund. The most I would recommend for life happens is a CD. 

If you are willing to take the risk that your downpayment fund could take a hit and you'll be okay and you think it might take more than five years than sure, put some in savings and invest the rest. It's all about your risk tolerance. 

Me, I wouldn't want to take the risk since I know for sure I'm going to want it for the home. 

This philosophy ignores the real sacrifices and struggles that people have gone through to get where they are and achieve what they have achieved. I came from a poor, blue collar, single parent family and had to fight and save and struggle through my entire life to get where I am. No one GAVE me anything.

So I came from

-- Parents abandoned me

-- Taken in by low-earning grandmother who was great with money but still didn't make much.

-- Alcoholic grandfather

And yes, I did a lot to get where I am. I won an academic scholarship to college.

But I did NOT do it by myself. Someone did give you something. I was awarded a scholarship.

I was given some wisdom to get ahead. Someone took a chance and gave me my first job.

 If you work, there are people who support what you do be it a secretary, janitor, manager, etc.

We are not an island. We all have help in one way or the other.

But let's say you did do everything on your own with NO help from anyone, still I believe you help others up. I'm not talking about a handout but a hand up. 

Had it not been for my grandmother taking me in I would not be where I am today. Even though my grandfather was a drunk, he still allowed me to stay in his home and supported me with the money he did bring home when he didn't disappear. 

When we see the world as, "I got mine, they need to get theirs," it's a sad day for our society. 

Many people need help because they don't know how to do what you did. Don't lose sight of that. 

 

Some other factors: are you single or do you have a backup spouse who can pick you up from your stranded vehicle or give you a ride? Do you just drive in an area where you can be rescued easily or are you in remote and/or dangerous superhighway areas? And finally, do you have either a backup vehicle or access to enough money to rent a backup vehicle for a month? I feel I did not get the best deal on a new car that I could have in part because I NEEDED that car asap (Old car had died), and I could not afford to wait and look over deals. In such cases, better to get the new vehicle before the last minute.

Or...as you see that your vehicle is becoming unreliable or the repairs are adding up you begin your search for a good deal so that you aren't rushed into a bad deal. 

By the way, long before you "need" a car, I hope you are saving up for when that time comes you don't have to get an auto loan. If you keep your car for more than 4 years and when you had a car payment you keep making it to yourself after the loan is paid off you shouldn't ever have to get a auto loan again. 

I work for a small company that I love. There are five employees. Three of us are HCEs and we were just alerted that we can't invest because there wasn't enough participation by nonHCEs. Any suggestions on where to look to invest my money?

You can still open and fund a retirement account on your own. You can still invest albeit you might not get the favorable tax treatment. 

I am friends with a couple of young families who have just moved to the US from a country that has been at war for years. They're smart, educated people, but starting life over in a place that is completely different to where they grew up. Credit cards, 401K plans and even health insurance are all new to them. I'd like to point them in the direction of some good resources to learn how to manage their finances and am hoping you can recommend a good book that would be a good starting point for them.

Here's a good book: "Get a Financial Life" by Beth Kobliner. It's written for young adults staring out. 

Michelle, I am financing a car. I know - it's better to pay in cash and I would have preferred this too but unfortunately the car I drive now is hanging on by a thread and I don't have the savings to pay for decent car at the moment -- well, I do kinda but it would literally be every dollar I have to my name. I recently graduated and paid off my loans (in 18 months, i wrote in about it a while ago!) and was hoping my car would last me another 1.5-2 years, but it's not to be. SO, in light of this, what's the best way to go about getting a loan? Credit unions seem to have to lowest rate for a used at least 36 month term loan (though any car I get I am aiming to pay it off in two years or less, preferably 18). Should I get gap insurance? I've never bought a car before and my family couldn't offer sound advice (they're made some terrible mistakes and actually insist that I buy a car that is twice the amount of what I am willing to pay because "I deserve something nice." I deserve to live debt free but I want to be smart about the way I go about it since I have to get debt. Thanks for taking my questions. Online only please.

You did just what I would have recommended. Shop for the best loan rate. And I find credit unions tend to have the best rates. Also, you might be able to get an even lower rate if you agree to have the payments taken automatically out of your bank account.

Do not listen to your family. Get the car you can afford should you need to get a loan. Because I want you to finance as little as possible. There are some really good used cars out there. By the way, Consumer Reports latest issue is the auto issue and they have a great section on the best used cars at various price points. 

Gap insurance. Unless you plan on borrowing more than the car is worth (people roll old auto loans into new loan) I don't think you need gap insurance. 

I hang on to my car longer than most people. My rule of thumb is when monthly car repairs are more than a monthly car payment would be, then it is time to get a new car. I figure if I have to get a car loan (which I had to do when I was much younger), I'm already paying that much it into a car that doesn't run; might as well be spending the money on a car that works. I don't want to worry about breaking down on long trips or just I495 during rush hour.

I can get behind this rule. 

If everyone in this country had adequate health care insurance, at a reasonable cost, there would be very little need to ask your friends and family for money for a necessary procedure. But until elected officials wake up and realize that Obamacare, while flawed, was a step in the right direction. Unfortunately, Big Pharma and the insurance companies are only in it for the money, and not for health care. Sigh.

Amen!

We are becoming a society of grasshoppers, who rely on the goodwill of the ants to get by. There is only so much the ants can give before it collapses for everyone.

I'm not sure I totally agree. 

I don't believe the vast majority of people in need want to rely on the ant, as you are suggesting without really saying it.

The poor don't want to just sit back and take from others. They want to be able to feed, cloth and put a roof over their heads. 

But as on poster just pointed out health care costs can knock folks down. Many schools don't have the resources to fully help kids succeed. Poverty brings on all kinds of issues that keep people down.

Yes, the burden is heavy for those of us who have done well. But what kind of society would we be if we didn't ask of those who have more to be kind, generous and reach down to lift up? 

I could easily say, I got mine. Because I was poor. I literally at one point was hungry. But I chose not to look at what I've gained as a reason not to share what I've gained. 

 

I knew how lucky I was when a friend of mine in high school had won a full tuition scholarship to a good university. His family couldn't afford the room and board so he had to forego the scholarship and work in his parent's restaurant 40 hours a week until his sibling was old enough to take over in the restaurant. Conversely, I didn't get a scholarship but still got to go to the same university that he couldn't go to. Why do I get lucky and he doesn't? There but for the grace of God go I.

Yes indeed!

By the way, I got a full scholarship and I still had to work and send money back home to help with my siblings. And I was glad to help. And still do. 

Not for a moment that I could be in a very different place financially. I'm definitely a penny pincher but my husband and I give generously and happily so of of time and money. 

I was head of PR for an agency. Once day I get a call from a reporter asking for a certain person. I said the name wasn’t familiar and what did the person do. The reporter said the person was head of PR. I said I was that was my job. The reporter mumbled a bit, thanked me and hung up. I called the agency head and was told to come right up where, as you guessed, I got the news. Seems the new PR head was spreading word before I was notified. So much for professional courtesy.

Horrible. So, so sorry. 

Years ago I got an email on Wednesday saying that Friday would be my last day. They didn't have the decency to do it face-to-face. I got a new job quickly, but that feeling stayed with me.

Glad you rebounded. And shame on them. 

I had written in a month or so ago that my employer was being bought by a large company. I had worked for the guy that ran the office that we will be moving to and it didn't end well last time. I will refrain from telling you how I feel about him. I fully expected to get laid off and I was actually happy that I can take a sabbatical and spend some quality time with my husband who is ill. Then they offered me a position. So I'm like ok, I'll think about it. Well fast forward a month or so. My current employer, where I have worked for 13+ years told me that the new place was offering me a job at 30 hours/week. I'm like ok I'm cool with that. But then I found out from their HR Department, not my boss, that they were reducing my hourly wage by almost 30% so in fact my pay was being cut about 46% total and I would be going from a Manager to an accounting clerk. I'm like no thanks, I don't need that kind of handout.... The part that stings is no one told me and I'm working 60-70 hours/week at this point for the transition. I packed up my office and was ready to walk and they came back at the 11th hour letting me know I could stay through the transition at my current pay level. And I got it writing that my position would be terminated :) Here I come unemployment office.

Just shaking my head. Where is the decency? 

I worked for a lawyer who was incredibly conflict-averse and mealy-mouthed. It took five minutes of him rambling about nonsense for me to figure out I was being let go. Having to guess what he was trying to tell me made everything all the more awkward and painful. Though now I refer to it as the Lassie Layoff, because halfway through his ramble I wanted to yell, "What is it, girl? Is Timmy in a well?"

Lol.

And, ah man. 

Had both feelings reading about your firing.

But you know what, at least he wasn't a coward. At least he was trying to tell you to your face. 

If someone is saving $ in a 529 plan and the child is very young (say 5 years old) - is there a rough estimate of how much you should put into the plan to ensure college is mostly paid for? With the fund growing for about 13 more years - if someone has $20K, do they still need to keep saving, or can they cut back and let the funds continue to grow for the 13 years? I'm guessing since you never know what college costs continue to save and if you have extra $ use it for something else?

When we were planning the 529 plans for our kids we used the college planning calculator at Vanguard. It pretty much got it right for us. And we also dump into the plans any lump sum money we got.

Trust me folks you can't over save for college. In fact, the two kids we have in college, we are still saving in their 529 plan. One because we are going to pay for grad school. And we are finding the kids need to ease the semester load by taking classed in the summer, which added to the cost. 

My son as autism so we expect he'll need another year and we are totally ok with that. 

Just consider state school with tuition, room and board is about $20,000 a year. A YEAR! Times 4. 

Michelle, you covered 529 College Savings before and briefly touched upon Prepaid Tuition. However, the situation I will describe is something you NEVER discussed before. Both VA and MD offer prepaid tuition. I am in a situation where I have to decide between using up the savings for a downpayment for a home or use up that savings for a lumpsum 8-semester payment for prepaid. I am inclined for the latter given the significant tuition increase. If you were to compare home price appreciation versus tuition growth (or appreciation, if you will), over a 15 year period, I believe my money is better of invested in a prepaid for my child. With a prepaid, the market risk is passed on to VA state. I will continue renting until such a time I am able to afford a home. Thoughts? Comments?

If you are pretty sure your child will go to a VA school and you can ALSO save for room and board, than prepaid makes sense.

I didn't opt for that because I wanted more growth and I wasn't sure my kids would stay in-state. They all will but I don't regret doing the investment option, which I believe helped also increase the funds we needed for them to live on campus. 

If you don't think you can save much more for college and renting is okay with you AND your kid will go in-state, the prepaid is a good option.

Society changes around us. Once, health care was basically irrelevant because it didn't work. You didn't need to expend much. Once, child care was provided by a village. Now people are encouraged to follow the "good jobs." Once, education was provided by a few lessons and then some kind of trade. Now, that has been replaced by automation. We are simply more interconnected and require more interconnected support.

Such a great observation. Thank you.

I'm so sorry I have to go. But I see all your questions and comments. I may answer some of the questions leftover in a column or please come back next week.

Thanks for joining me today. 

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Michelle Singletary
Michelle Singletary writes the nationally syndicated personal finance column, "The Color of Money," which appears in The Post on Wednesday and Sunday and is carried in more than 120 newspapers.

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