Color of Money Live (July 11)

Jul 11, 2019

Send in your questions to Washington Post nationally syndicated personal finance columnist Michelle Singletary.

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So glad you could join me today. Already have a lot of questions so let's get started. 

P.S. Always love to her your Thursday Testimonies. Tell me something good about your finances. Did you get out of debt, save? Share. 

This is confirmation for the parents who do not want to take out a parent PLUS loan - When I got accepted to a pretty good out of state college, and my mom told me that she was not going to take out a loan for me, I was so mad and thought she didn't prioritize her child, and all sorts of nonsense! Your kids will be fine, they'll understand. That was almost 20 years ago - I am so happy that God blessed my mom with the foresight to say no to me! She could not handle that debt. Don't do it if you can't financially handle it...

Read Michelle's Column: Why you shouldn’t take on Mom’s debt even if she defaults on the Parent PLUS loan for your education

I hope you have told your mom how grateful you are for that "no." My kids aren't quite there yet but looking forward to the day when they admit that I was brilliant in not allowing them to attend schools we could not afford. We don't have student loans and neither do they!

Have taken out parent plus loans for 3 children. Unable to make payments. Any suggestions?

Please read the link I just provide for today's newsletter. I give advice on what to do if you can't pay the loans. If they are federal loans there are a number of options you can pursue. But please don't ignore them. Call the lender or collection agency if you are in default to work out something. Jut keep in mind that if you have the loans long enough the government can take part of your Social Security check to offset what you owe. 

To the parent of the high school senior who was told, "We'll see where you get in" and then, after being admitted, was told, "[Evidently my income is too much to qualify for financial aid but nevertheless I didn't save for your education and] I will stand firm on not borrowing." I trust that, forty years from now, when you are hoping your child might visit you, let alone contribute to the cost of your senior care facility: she will be nowhere to be found. To be clear: while a parent cannot "purchase" affection, a parent certainly can squander it. Just saying.

Certainly you jest. Because you cannot be suggesting that parents should not act responsibly financially and say no to taking on tremendous debt because their children won't take care of them in their old age? 

Good parents say "no" to their children all the time for their own good. And hopefully those kids understand the reasoning and not punish parents by withholding assistance. 

Don't be scared of your kids and that they will put you in a nursing home if you don't borrow hundreds of thousands of dollars for them to go to a school you and they can't afford. Do what's right. If your kid acts up later or out of malice it is not your fault. 

Just saying!

My brother died three years ago, and my eldest sister was named executor of his estate. A few days ago, Sis sent an email to me and our other sister to the effect that she had received an unclaimed property notice for brother, and asked her for information to support the claim. A LOT of information – death certificate, a copy of her SS card, HER birth certificate, her driver’s license, etc. to establish her identity. She sent all of that and got a check for $20 ($60 to be split three ways), and said we could expect a separate communication from the state to get our share. Yesterday, I received an apparently unrelated notice like this for $40, asking for the same information (but apparently I’m the first to receive it); I’d assume that once they learn that there are three of us, my share is going to be $13! While this may very well be legitimate, I’m skeptical about giving up all of this personal information for a total of $33. Are my concerns valid? Do I have an obligation to turn it around and tell them to contact the executor so my sisters can claim it? I’ve researched the unclaimed property division of the state, and the address and phone numbers match, so it’s probably OK, but geez. $33 apiece.

Read Michelle's column: Want some cash? Here are five places to look for unclaimed money.

If it had been me I would have NOT sent all that information based on an unsolicited letter, phone call or email. And definitely not for the money involved. And remember the con artist can spoof legitimate telephone numbers. 

If you reach out independently and are asked for the information, okay. But if not. Don't respond. Also see the link for legitimate places to look for unclaimed money. 

Michelle, do the credit card alert systems go off every single time you make a purchase, or do purchases made from "known" devices get exempted?

Read Michelle's column: Security alerts on credit cards work. Just be sure to set them at the lowest amount possible.

I get notification every time a purchase or debit is made on any device known or not known. And I want it that way. 

Some banks allow you to put in known devices but really the criminals have become so smart I just want to know all the time what's going on with my accounts. 

Thanks for article on CC notifications. Like many, I have mine currently set at a high amount. Will definitely review those settings.

I'm so glad you said that. I thought I was being smart with what I thought was a good threshold of setting the alerts for $25. I figured how much harm could be done with just $25. It never occurred to me that these crooks/punks can charge things or swipe money out in a rapid-fire pace that can do a lot of damage. In less than two minutes -- before I could freeze my credit card -- the scammers charges $200 worth of stuff. 

But the parent DIDN'T SAY NO. She encouraged the daughter to apply wherever she wanted! The parent didn't say "I will pay up to XX dollars so keep that in mind." I think the parent is pretty close to being a liar and I don't foresee any happy relationship for quite a while.

I disagree. She did what we did. Told our kids to apply wherever they want so as not to limit the choices. What the parent hadn't anticipated is the strong push from the kid to go to the school they couldn't afford. Perhaps she should have followed up with what we said to our kids, which was "You can go AS LONG AS you get enough scholarships and grants to pay in full or to add to what we have saved so that you don't have to borrow and we don't have to borrow."

But even if the parent wasn't clear she's not a liar for saying, "I'm so proud you got in but it's not affordable so you have to choose another school." 

That's being a parent. 

That's not being a punk.

That's being responsible even if it will disappoint your CHILD, caps only to emphasize the kid is a child with no money and experience with paying household bills, etc. 

You answered my question a few months ago about my divorce and high student loans. You advised me not to try for a house right now because of how high those loans are. Now I'm considering remaining in the marital home (home prices are too high, even apartments that would fit us all are more than my current mortgage). My credit score is poor although it's ticking up as I pay my few credit cards off. What is the likelihood I can refinance with poor credit? (There isn't much equity because of water damage. Is any weight given to my being the one who pays the mortgage and it isn't behind?)

You probably will have trouble refinancing at a reasonable rate if you have a poor credit history. But check anyway. But if you can't even afford the marital home, sell and find a place that is more affordable, even if that means checking around to see if you can move in with someone. Or, rent out a room to help you stay put. 

I guess what I'm saying is don't get so caught up on have a "home" as in a mortgage that you can't make progress in becoming more financially stable. 

You are not a financial failure if you rent. Or if you never own a home. 

I read recently that the actuaries who compute the payouts have set it up such that on average, retirees will collect the same amount over the course of their retirement whether they file at age 62 or age 70. If that's really the case, why wouldn't you file early? Lots of people die between the ages of 62 and 70, and those who chose to wait for the bigger monthly check would get nothing.

Read Michelle's column: Early or late: One senior says ignore the conventional wisdom of waiting to take Social Security. Take it at 62.

When to take Social Security is such a complicated question and has to be done on an individual basis. My husband and I are in disagreement about when to collect. He has done the break-even analysis and like you point out figures over a long retirement it won't matter. And frankly for many people the debate of early or late is moot. They can't afford to wait. 

Yes, it would be nice to wait and get the maximum payment at 70. But what if by then you can't do the things you would have done at 62 or at full retirement age (even though for many of us that darn near 70). 

I'm somewhere now between waiting for full retirement and 70. I'll see how my health holds out, what other financial pots I might tapped, etc. 

In the end you have to do what's best for you and that may mean taking Social Security early. 

Our company is losing a very large contract at the end of 2019. This will most likely mean large scale layoffs early in 2020. I have already started limiting expenses as much as possible. Spouse and I disagree as to whether we should also stop contributing to charities and church. Any advice?

I'm bias on this one. My husband and I tithe so we would not stop our contributions as a matter of faith. That's how I think you should look at this decision. Other financial experts would differ of course. 

But this is where faith comes in and makes this a personal decision. 

If you decide to keep giving, it may mean giving up other things to try and save more like cutting cable, greatly reducing or cutting out totally eating out, etc. 

That's what I would do.

The parent should never have encouraged the child to apply to any school and only after acceptance told the child they couldn't/wouldn't pay for it. It is very easy to filter colleges based on curriculum/major and costs. My daughter did that in 2008 using the college board website. We told her how much tuition we could cover and she used that as a guide.

I disagree. Because depending on the school even some brand name schools could end up being cheaper than a state school because of generous endowments or scholarships for families with certain incomes.  So you open the door to all the possibilities not to limit your child. My husband and I saved enough for state school -- tuition, room and board. But we didn't say we only have X so any school that cost more than that you can't go. We said apply. See what's out there based on where you think you may want to go. BUT...if you don't get enough free money to avoid debt you can't go. 

By the way, our kids ended up selecting out schools without us telling them. 

True story.

My youngest wants to be a special education teacher (so proud of her). She came to me and said she wanted to apply to a school in Florida. Very pricey. 

Me: Sure, honey. But remember the rule. No debt. So if the school financial aid package doesn't give you enough along with our money for no loans you can't go.

Her (after thinking about it a day or two): Mom, I don't think I'll apply. I can go to a good school in Maryland to become a teacher for so much less. Why even stress myself out trying to apply."

Me: Smart kid. Who raised you? 

Do you have any suggestions (or pull) to get the 3 CNN moderators to bring up questions on Social Security reform in the 2019/2020 presidential election cycle? George Jones Winter Haven FL

Read Michelle's column: Dear 2020 Democratic presidential candidates: Fixing Social Security should be one of your top priorities, too

Once you hear who will be moderating email the journalist or his or her producer. 

I'm almost 54. Within the next year I'll have a net worth of $1M. Last student loan was paid off just before I turned 30. I got another degree after that, but paid with a combination of "employer paid" and I paid in cash. I'll have a pension in addition to Social Security in addition to savings when I eventually retire. I have long term care insurance. I rent. There was a nice condo for sale in my neighborhood a few months ago. I could have made it work, but just the taxes and condo fees would have been about the same as my current rent and that is before the mortgage and paying out the downpayment. So I'm still renting. That might change. It might not. But I hardly count myself as a financial failure.

Amen!

The error was not being straight with the kid from the beginning. My kids (one a college senior and the other a HS senior), have heard (ad nauseum) that we have already paid for their state college educations via a VA prepaid college fund. They are welcome to apply to non-VA schools in hopes of getting in-state tuition or other financial offsets. But if not, its going to be a VA college with no loans. No surprises! Also, can we stop talking about dream schools? For the vast majority of us, there are multiple schools where we can thrive and get a wonderful education. Hyping the notion that there is one magical place where everything will be perfect....I don't see how that helps young people make smart decisions about college.

You are right. Some parents in discussing the issue aren't always clear about what they will/can do. But even if you aren't, please don't let that guilt you into doing more because you weren't clear. Be the parent. Apologize for not being clear and then stick to the plan. 

And ditto on the dream school thing. As I've said in this forum before. I went to a state school -University of Maryland. A dear friend and colleague went to Harvard. We both ended up at The Washington Post at the same time. We both have had great careers. 

It's about the person, not the college. 

Time to start looking for a new job. Just because the contract ends at the end of this year, doesn't mean you have to be there for it. Unless there is going to be a truly huge bonus paid out to people who stick with the company until the end (doesn't sound like it from your post) there is no reason to stay. This is a job, not a family.

Good point. Thanks.

My sister and her family don't reliably have enough income to match their expenditure - I've been watching for years. They have been subsidized by all of us at various times, not huge amounts but just enough to keep them afloat. They pay off their debt, then get more debt. She says she wants to address the issue, but doesn't seem to be willing to go radical to do it. How do you help people who know they need to do something and are stressed about money but can't get started changing their habits?

You stop subsidizing their poor choices. As you indicate you give enough to keep them afloat. 

So let them drown. 

And I don't mean that in a mean way. 

I've found after working with hundreds of people over the years that often people won't do right financially until they fall and hard. 

So let your sister and her family fall. Be loving and supportive but stop bailing them out -- all of you. 

 

Hi Michelle, I recently found out that an account for which I thought was being paid in full each month had actually not been paid and was accruing interest. While we were able to pay if off once I knew about it, I find myself struggling with trust in more areas of our relationship. I don't want to be the "parent" to my husband, constantly asking for proof of everything he tells me. Do you have any suggestions or resources to recommend? Thanks!

If you are the better treasurer than be the accountant for the relationship and ask for proof of everything. And that's okay. We all have our gifts. His might not be money management. 

You aren't being a "parent" you are being the treasurer making sure all things are covered. 

Now if this is about hiding something from you than perhaps you need to get some counseling to figure out why that's happening. 

As I understand it, according to an AARP posting, once you reach 67, you can receive your full social security benefits and there are no limits to the amount of money you can make in addition without affecting your benefits. Do I understand this correctly? Could I keep on working at my job beyond 67 and start accepting full social security benefits in addition to my salary?

You are right. Once you reach full retirement age there are not offsets by Social Security for income you receive from working. 

When our two children applied to college we told them apply wherever you want, But we will only pay what we would pay for an in state university. They would be responsible for the rest. They applied and accepted to their dream college looked at the price and decided that it would be their nightmare college. Went in state graduated debt free and thanked us as they saw others who were now saddled with debt while they went to Europe for two weeks as our graduation present. My sister and parents did the opposite. Now she has lost her house, the stress killed my parents and niece did not graduate on time and ended up with a degree from the school she turned her nose up at to start with a large debt of her own. Parents DON'T borrow and do not cosign.

Read Michelle's column: How we sent our children to college debt-free

Related video: An $80,000 college education. No student debt. Here's what that feels like. 

Yes, please don't borrow. 

Watch the video of my kid talking about what it's like to graduate with no debt. She had never shared how she felt with us (Kids!) She was talking to couples in a marriage and money class my husband and I teach at our church. 

And by the way, we saved enough to pay for graduate school as well because she got a very generous scholarship from University of Maryland. 

Having finished in May at University of Maryland Baltimore, she's a licensed Social Worker. She's heading to Houston at the end of the summer for a year-long internship to work in a residential home where the state places small children taken from their homes because of abuse and neglect. 

She can take that job with a tiny monthly stipend because she had no student loan debt. It increases her experience and she gets to help the most vulnerable children. 

Apply to the company that won the contract - selling point: you already know the client!

Really good point. And in fact, many new contractors do retain the previous staff. 

Same thing with my sister-in-law. She had a good income, but no amount of earnings was ever going to keep pace with her shopping habits. My in-laws subsidized her through her 40s, then they passed away. After that, she went to another family member for "loans" until that person began to understand that the loans would never be repaid. We never gave her money, and after the bad loans, neither did anyone else. It was sink or swim. She sank--for several years. But finally she is swimming! If only her parents had cut her off after college! Sometimes the kindest thing you can do is say no--and mean it!

Yes, "no" is a powerfully empowering word. 

Michelle, what happens if you don't get the credit card alert in time to freeze the card? For example, if you're on a plane or can't check your phone at work? Do the credit cards then hold you responsible? Thanks!

Good question. By law, you are only liable for $50. But even that typically never happens. Most of the credit card lenders will reverse the charges for any fraudulent activity. However, you need to act fast. The law says 60 days.

I report theft as soon as I see it. With so many data breaches the crooks have a drove of our information that allows them to get to our credit card information. So stay vigilant. Even when traveling, I'm checking my accounts. Just a tip. Don't check on public computers or wifi however.  

Hi Michelle! I left the federal service a few months ago and am trying to figure out what to do with my contributions to FERS that I am owed. I'm 26 and have $28,000 in the L2050 fund of my TSP. I am contributing 9% (4% interest yearly compounded) of my income to a pension plan and will be eligible for SS when I retire (eons from now). My employer contributes 20% to the pension. I would like to use that money from FERS and use it for IVF, but I am unsure of how much I should be saving for my retirement. Is there a calculator built for a case like this that involves TSP, a pension and potentially a 401(k)?

I think you mean you have $28,000 in TSP and you wonder what to do with that money?

If so, let it be. If you take it out you will incur a 10% penalty because you are not yet 591/2. Plus you will have to pay income tax on the withdrawal.

To get a ballpark on how much to save for retirement go to choosetosave.org and search for the retirement calculator. 

As for IVF I would save up for what you need for the procedure. 

I went to a pricey private university, but one with really generous all-grant financial aid so my parents (who had saved well but weren't in high-income careers) were able to afford it with no debt. Graduating debt-free remains the best gift my parents - and my university - gave me. It's allowed me to take lower-salary jobs in the nonprofit sector, and pursue a PhD (where I get a small stipend, but one that would be hard to live on if I was also paying off loans). But I could have done these things from my state school as well. So while I have the big-name school on my resume thanks to parents who saved and donors who gave, it's the graduating debt-free that really opened doors for me.

Thanks for sharing. 

If you, parent, don't financially ruin yourself to pay for my dream school, I'll withhold elder-care. Wow. Just wow.

Yup, wow. 

But good reason to save for your own retirement and long term care needs.

Speaking as someone whose parents were willing and able to save enough to send me to college debt-free: there is no greater material gift they could have ever given me. I definitely didn't understand the implications of debt at 17; now, I am overwhelmingly grateful.

Tell your folks. All. The. Time. 

Three kids in college here. One at a SUPER pricey ($72K) NE school and two in state in VA. Guess which college is by far the cheapest? Yup. Super pricey school. PLEASE look at school endowments when you are looking at schools. For example, on in-state school has practically nothing, and is our most expensive school. Super pricey school has 1.5B - that's billion. So this past year, after my daughter had taken out and agreed to max federal loans (a reasonable amount annually), school said they had extra money and completely took away her debt. I started crying (her dad passed last year, so it really meant more than I could say). State schools never do this. Never ever. No one tells you to look at endowments, but you should. And even without this debt removal, my daughter will graduate with less than $20K in loans, which I think is a reasonable amount for a college student to pay back.

Hate all debt but so glad this worked for you daughter. Doesn't always, which is why you can't plan for such generosity. 

But you make a good point.

Also so sorry for your loss. 

So sorry I have to leave but more work to be done.

Thank you so much for joining me today. I read everything and often turn questions into a column. 

I'm off next week but will be back on July 25th with the author of the Color of Money Book Club pick for July.

Take care. 

In This Chat
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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Jean Chatzky
Jean Chatzky launched HerMoney Media and HerMoney.com in 2018. The award-winning financial editor of NBC Today, Jean has also appeared on Oprah, MSNBC, CNN, The View, The Talk and many others.
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