Color of Money Live (October 8)

Oct 08, 2020

Welcome to a weekly discussion about your money hosted by Michelle Singletary, nationally syndicated personal finance columnist for The Washington Post.

Michelle will be away the week of October 1st. Please join her again on October 8.

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I want to thank you for joining me today. And for coming at a later hour. Typically the chat it from noon to 1 p.m. but I had a meeting to talk about my 10-part series, "Sincerely, Michelle."

Also, on a personal note. I won't be doing the weekly chats after this one and the one next week on Oct. 15. 

I have loved taking your questions live on a weekly basis. I hope I've helped you. I hope I've inspired you, and I know I've made you mad at times (Yes, pay off your house before you retire.). Your questions help inform me and have led to numerous columns - some of my best. 

However, as my work expands I'm finding I need to trim some of my responsibilities.

Please know, it's not you. It's me. 

So, today and next week will end my weekly Live Chats. But I'm not gone completely. I'll be doing chat periodically. 

For example, I want to have a chat when the Sincerely, Michelle series is over. I really want to hear what you think about it. I'll have chats around tax time and next year is going to be wild. (The 2020 tax year is going to be a hot mess, and the coronavirus is why).

Please know, I'm always, always happy to get questions sent directly to me at colorofmoney@washpost.com. Please take down the email and write to me. I can't answer you all but I do my best to answer as many people as possible. And, just like with this chat, I may use your question and situation for a column to help others. 

The Thursday chats and testimonies are and have been the highlight of my week. It's just you and me and that means a lot to me. 

But like I said, I'm still here. I'll still we writing the Color of Money column and you and email me anytime either at colorofmoney@washpost.com or click my byline at washingtonpost.com and you are sent to my Post email. Either will work. 

I look forward to hearing from you.

So, for today, let's get started. 

We paid off our mortgage and are completely debt-free! (Those payments now go to finance kids' college educations, so we're not going to start living large, but it's such a relief to know that bill is gone.) I literally came straight home from the bank and to my computer to tell you this news because I know you'll celebrate it with me. Thanks for all your advice over the years!

Wow! So you are not making me cry because it's testimonies like this that I'm got to miss the most. 

I'm so proud of you and I can feel your job, freedom. Good for you for getting that monkey off your back!

Michelle, I listened to your On-point interview over lunch today. You spoke so eloquently! Thank you for all the good work you do.

Thank you! If I could just get through one of these interviews without crying!

Listen here after the chat: Confronting Misconceptions Around Race With Michelle Singletary

 

I know I’ve posted before but I’m excited. my car is officially paid off which only leaves student loans and a mortgage as my debt. The other exciting thing thanks to working my way out of credit card debt, personal loan, car loan, divorce and more. I am now able to budget a month in advance instead of using one paycheck to only pay things that are now due before the next paycheck! I’m also putting enough in my 401(k) to get the company match, putting a small amount in a 529 for my son each month which will be increased a little now that other debt is gone. (Also increasing the student loan payments). And my father just let me know he’s going to open a 529 for my son. I made sure to have the conversation with my dad that it is very appreciated and obviously not an obligation. And of course it is my dad’s to use for for my son or split between his younger cousins. My son is 5 and all of his cousins currently live overseas. It is such a relief to be digging myself out of the debt. Student loans are next to go then the mortgage! And if all works as planned, my boyfriend is buying a house that my son and I will live in with him of course helping with our share of bills but I will keep my house and rent it, thus having tenants pay the mortgage and any extra going towards paying down the debt! Thank you for all your solid advice over the years.

Wow! You are killing it! What a great example you are setting for our son by attacking this debt and working to save so he won't end up with any or very little student loans. 

Keep up the good work!

Hi, Michelle. Relatively new reader (last three-ish years) here, she/her, MD, 46. I spent a lot of my 30s paying my bills - not accruing more debt, but struggling to pay down student debt. I finally paid the student debt off two years ago. Tomorrow I'm paying off my car note online - three years early! The only debt left is my mortgage, which is reasonably sized for my salary and not underwater; after reading your advice about the running the numbers and comparing to plans, I've decided to increase my extra principal rather than refinance. My death book is in progress. Next on my list is visiting a fee-only planner to talk about my savings. Thank you so much for your practical financial advice!

What a great testimony. Keep striving to be debt-free! 

Michelle, After years of scoffing at Holiday fund accounts at my credit union, we had a sky-high January credit card bill three years ago. So my wife and I enrolled in one. We’ve been putting in $200 a month to cover Christmas and it did fine, but guess what? With (local) travel and food and drinks and college kids back in the house (did I mention food?) and presents, last year we exceeded our $2400 allotment. When I saw the 52 week challenge I decided to take it up ON TOP OF our regular payment. I put any extra money I could into the Holiday account with the hope of reaching the $1378 mark. I didn’t follow the week by week rule but crossed off weeks or months on my “challenge calendar” as I made payments. I knew there was no way I’d have an extra $50 week in December. Due to the pandemic I’ve stopped these extra payments. Nope, we didn’t reach the full amount but I am happy to say that we did save up an extra $1000 and will (fingers crossed) have no worries when it comes to paying for Christmas this year. I love thinking about $3400 already in the bank come December. Thanks for showing this strategy last January.

Just loving the testimonies today. 

Good for you for working hard to save more. Love it. 

For those who missed that column, here it is. Make it a goal for 2021.

Struggling to save? Try this 52-week challenge for 2020.

I’m not sure who to go to .... my dear friend of color just began a teaching job in this school district .. She was initially subjected to a student with a confederate flag in the backdrop on online classes - she complained to higher ups and was told nothing could be done — her colleagues then provided her a gift card to Bojangles in support . This racism is subtle but profound. Please send to any reporter who may be interested in following up. Thank you!!

Try to encourage your friend to contact a reporter. If she's willing to talk email me at colorofmoney@washpost.com 

I'll put her in touch with a reporter at the Post.

Sometimes it takes highlighting these incidents to get the administration's attention. 

In your column, you state that "historians overwhelmingly agree that these groups did not experience the same degree of institutional discrimination reserved for Blacks . . ." I took an "Economics of Discrimination" class in college. My professor's theory was that these groups were allowed into the U.S. to fill a vast amount of newly-created jobs (such as building the railroads and industrial revolution factory jobs) that could easily have been filled by the Black population, had the discrimination against Blacks in housing, employment, etc. not been so severe. Basically, the U.S. pulled in workers from other countries rather than hire the available Black population (almost 4 million slaves were freed by the Emancipation Proclamation)(although of course not all were of working age). I'm not trying to downplay discrimination against Asian, Irish, Jews, etc.: it was, and in some cases continues to be, severe. But a lot of us with ancestors who emigrated to the U.S. (at least from the 1860s through 1924) wouldn't even _be_ here if the institutional discrimination against Blacks had not been so strong (according to the professor, anyway; I can't prove she was right or wrong, but it's something to consider).

Your professor is absolutely right. And it's what I'm writing this series. We must, must, put this all in context. That's what your professor was doing. It's like the discussion about reparations. It's often seen by Whites as being unfair to them, those who didn't own slaves. But the South, this country benefited from FREE labor and then shut out the enslaved people who were free from trying to advance. How is that not worth trying to figure out how to make things right financially? 

Your testimony is so great. You obviously have a good head on your shoulders, but make sure you talk through everything about the finances living in your boyfriends house - from bills to any rent to any equity to who pays for upgrades / life happens. How much is he like a landlord so that if the washing machine breaks he pays to replace it. Assumptions can be rife in this sort of situation!

Really good advice. I agree on every, single point!

 

I came over to the computer to tell you that, even though we had a 0% interest rate on a car loan, I just paid the whole balance off anyway. I thought you'd rejoice with me, and to be honest, I think you still will even if you're not online every week! You're a national treasure, Michelle. I'm glad you're so successful but still able to take care of yourself.

Thank you. And so glad you told me about paying off that loan. Debt is like a weight and the sooner you and lift if off the better. No debt gives you more choices. Having no debt helps you weather a financial storm. I'll still be around so keep sending me your debt-free testimonies at colorofmoney@washpost.com 

Michelle, totally understand you need to take care of yourself - that is so important. Just want you to know how much I've appreciated these chats over the years. I love hearing people's testimonies and I follow and share so much of your advice. I appreciate that you bring so much love and care - along with candor and toughness - to this work. Please be sure to trumpet your own testimony when you pay off your mortgage and retire! Your grandmother is surely so proud of you.

Thank you!

And I'm still having that virtual party when I pay off my mortgage. Or maybe, when we can, I'll have a real old fashioned mortgage-burning party. 

You cut back on your chats, the Post didn't?

Lol!

I love it. You looking out for me.

Yes, my decision.

Although I will be honest I was more than a little salty about the decision not to promote the chats on the homepage so people can find the chats - my chats. 

It just helped me make the decision to pull back.  

Michelle, I love your chats and am sad they'll be less regular. Are there one or two things you wish your younger self knew about money and if so, what are they?

What a great question and actually the topic for the third installment of Sincerely, Michelle coming out tomorrow morning.

I wish I could go back and tell my younger self not to be so scared of investing. When I first started investing in my 401(k), in my 20s I would only put my money in bonds. I miss so many gains being afraid. But I was afraid of the stock market because my grandmother was afraid. And for the next column I tell you why. 

The younger you are the more risk you can take because you have more time. I wish I knew that way back when. I finally changed up and expanded to equites and I still have a really fat retirement account but I would have more. And the more I would use to help my family out even more than I do now. The more may have helped me still not worry so much about having enough should I need long-term care. 

Anyway, I would also tell my younger self to chill and enjoy life a little more. I hate spending money. A habit that started way too young. Now it's hard to spend even after meeting my goals of sending the kids to college without debt, close to paying off my mortgage before retirement, etc. 

 

She/Her/DC. First off, thank you. I've followed for several years and have managed to pay off all of our debts (car note, credit cards, student loan) by following your advice of living below our means. It's hard to want to keep up with others, but the peace of mind from all of our little pots brings us joy! My question is... is there such a thing as too much cash? We just finished our refi and went down by 1% to 2.25%. By the time the first payment is due, we'll be able to send in 3! We're in our mid 40s, no kids, and no debt other than the mortgage; however, if we should be doing more with the "cash." We max out TSPs and Roth IRAs and contribute a bit to an investment account, but are a smidge skittish about the market. That being said, I worry we may be missing an opportunity...? Thoughts?

If by contributing the max you mean the yearly max of $19,500 then you are doing GREAT. If you have a really fat emergency fund (6 months to one year), solid life happens fund (a couple thousand , if not more) than I would attack the mortgage. Get rid of it as soon as you can by making principal payments. Think about it. If you can become mortgage-free by your 50s or at the very least by retirement that's a financial game changer.  

There is a significant chance of a partial government shut down starting on December 12th. I was talking to a friend who is a retired fed and he agreed completely. It doesn't matter what will have happened with the election. Feds could be out of work starting December 12th (that would mean approximately a 1/2 paycheck on the 21st and nothing after that) and going on until after January 20th or even later depending on what happens with Congress. Please plan accordingly.

I agree with you. And if Trump loses he will have no incentive to keep the government open.

If you are a federal employee...

Save. Save. Save.

Cut. Cut. Cut. 

Hi Michelle, Thank you for these chats. I have a little testimony -- we just refinanced our house, and due to the date we closed, we don't have a mortgage payment for October or November. Rather than blow the money, we're using it to make two extra payments on the new loan this year. Plus, we're going to continue to make our old, higher payment even though the new loan has a much lower payment. If we hadn't read your work, we wouldn't have even thought about doing this. Now, we're gonna pay off this house before we retire! Thank you!

Wow. Thank you for sharing this. 

HI Michelle! Thanks in advance for your help and sharing your wisdom! I retired from my career job and am now permanently laid off (due to COVID) from my post career part time job. I have a 457 funded with pre tax $. Should I convert it into my Roth IRA since tax rates are so low now? Also, if I have no income from working next year, please confirm that I can not put $ in my Roth IRA. But can I still invest in my HSA? Many thanks to you! You will be sorely missed. Thank you for sharing your wisdom, time and talent with us!!!

You do need earned income to contribute to the Roth.

About converting, keep in mind you have to pay the taxes now. Do you have the money for that? 

Also keep in mind, with no or low income, you wouldn't be paying much in taxes on the withdrawal of the 457 anyway. 

So, I'm not sure you have a need to convert. 

I would also encourage the new teacher to go to her/his union if they have not done so.

Good point. Thanks.

No, I'm not sitting here crying along with you on WBUR while monitoring the chat. Not. At. All. The only debt I carry today is the one I owe you, Michelle, for your counsel, your persistence, your honesty and so much more. When I read the first installment of Sincerely, Michelle, I felt the gut punch of being told you were hired because you were Black. But then to hear everything else that your boss told you: essentially he hired the totality of you. If only all of us could see the totality of one another, we wouldn't be facing the divisiveness we are now. I'll miss the chats but will continue to read and follow you as religiously as I have for the last 15 years. I'm glad you are speaking up and speaking out for those who can't. Thank you.

See, why you go and make me cry again!

Thank you. All of you -- the regulars and newcomers. I love, love this forum. 

And as I've said, please keep reading my columns. Please keep reaching out. Even if I can't get to your email because I get so much correspondence, your situation informs me and makes me a better columnists. 

Again, the email for your testimonies and questions is colorofmoney@washpost.com. 

Up to five years ago, when a chat ended, the Post used to find successors to carry on on similar topics. Hank Stuever succeeded Lisa de Moraes; Robert Thomson succeeded Ron Shaffer; Warren Brown's friend (blanking on the name) carried on his car chat for a while. But now, the chats just go away. There is no one chatting about TV or traffic or cars now, and I fear that no one will chat about money either. Please ask your editors to find someone else to talk about money topics. If we can't have you, we need someone like you. Is there someone we can write to?

At this point, no one is in the wings.

Write to the Post editorial leadership. 

I was always one of those 'debt is a tool' arguing people, until I started reading your columns and these chats, and saw how many people were not able to use debt well. That revised my thinking, to debt is a dangerous tool, like a shotgun, and can easily blow your head off. You may not want that around. Now, for a question. Do you have any opinions on high yield savings accounts versus money market bank accounts? Right now, the interest rates are about the same. I've got a large chunk of cash that I'll need in the next year or two, and I want to get a better rate than 0.01% in my checking account.

Really it doesn't matter. With the rates so low, you're not talking about a lot of money. And unless you plan on making a lot of withdrawals either will work. I split my savings between regular checking (for life happens spending), regular checking (where I keep the overflow life happens money), and money market to eke out a tiny bit more money and keep another pot that I vow not to touch. 

After years reading about your recommendation about meeting with a fee only CFP I did it! I did the 4 meeting package, which wasn't cheap but was worth it (and also more like 6 meetings) For those that are wondering if it is worth it, for me it was. Not because I had huge investments to manage... basically it was 4 different 401k's and an IRA. The conversations about goals, current priorities etc, helped me firm up in my mind what EXACTLY what my goals are. In addition, she helped me break through my decision paralysis so that I could get stuff done that I knew I should done but couldn't decide on A vs B. And for those wondering 'how much it costs' - her package rate for the 4 meeting is $3k. Paying for it with cash did hurt my meager cash savings, but I think it was worth the short term hit...

Thank you for sharing this. Maybe others can find a planner and get a plan for cheaper but the most important thing is you  got value out of the meetings, which will increase your wealth long term.  

A few months ago I asked what to do about my 2019 tax refund which had yet to show up. I had filed in February and was expecting a really large refund due to a big change in income. I just wanted to follow up and share some info. The tax people I contacted (per your suggestion) told me I'd see a direct deposit of the interest accrued on the refund - separately - deposited before my refund, and not to expect to see the refund until December. Luckily, they were wrong. I received the refund AND interest accrued combined in one direct deposit yesterday.

Wonderful! I know a lot of people are still waiting for their stimulus payments and refunds. It's been a difficult year and hard to wait if you are in need. But wait is all you may be able to do. 

Hi, Michelle! I love your chats and am going to miss them!!! DH and I have established a college fund for our infant son, but we've discovered that we have some different opinions on how much to try to provide. My parents paid for my college and first car, reasoning that both equipped me to begin supporting myself without debt. Husband's parents paid for neither, and husband is concerned that son won't learn financial responsibility if he doesn't have "skin in the game." Question: do you have advice or resources on how to teach kids to be financially responsible? I know you paid for your kids' college, so how did you balance those things? Thank you for all that you do.

This such a great question and I need to write a column again about this notion of "skin in the game."

Yes, we paid all the college expenses. They mostly kicked in for their books and personal expenses. We also paid cash for their first "beater" cars for the same reasons our parents gave. What was their "skin." They had to keep their grades up. They have to become involved on campus. They had to volunteer in the community. They had to be good people. And what we have are great young adults who appreciate NOT graduating with a boat load of debt.

And because of that our first kid went to Houston for a year to earn about $600 month taking care of children removed from their homes by child protection services. She was supposed to be back by August. She's still there taking care of two kids she feel in love with. She's waiting for the mother to finish getting herself together to get her kids back. But my kid couldn't be there for that mother's kids if she had a lot of student loan debt. 

That commitment, service is having "skin in the game."

Since Christmas isn't a huge expense for my husband and me, and our January income is more likely this year to remain stable than later in the year if the economy craters, I think I will do a reverse 52 week challenge - starting in the first week witih $52 and counting down. I will let you know how that goes.

That's a good plan.

That last paycheck, which will be for one week out of a two week pay period, will be MUCH smaller than half your normal paycheck. It will only have income and FICA taxes for the one week taken out, but other payments will be for the full amount of the pay period. So, if you have your TSP taken out as $x per pay period (not x%), the whole amount will come out despite the check being for only one week. Same thing for health insurance payments, union dues, contributions to flexible spending accounts, etc. So if you have any "fixed amounts per pay period" taken out of your check, the whole amount will be taken out. You could end up with a very, very small last check before the first missed check. On the other hand, if you have significant savings and can handle it, you won't miss being able to fund your TSP up to the maximum amount for the year, so a small consolation for those that are well set.

The point of course is to think ahead given these very uncertain times. 

Thank you!

to help another when the time presents itself. So, I was in CVS stocking up on a sale item, and a man who was almost certainly homeless came up and asked if I would buy him a can of antibacterial/pain relief spray. He had a burn and said that "they" told him to get the product he had in his hand. It was a little pricey for small can, but I had enough with me (I pay for food and sundries with cash) and a 40% off coupon. Done. I hope he is OK.

Well done!

Every time I think I know my US history I realize how much I didn't know. Just to add: the requirements were pretty stiff for people entering the country during the late 1800s early 1900s: they had to be sponsored by someone already here who was could guarantee housing, work, and pretty much had to vouch for the immigrant's character. I don't know as much of the stories of the Irish or Asian populations, but as for the Jews, they were ususally fleeing Russia/eastern europe due to one of the various pograms, uprisings, mass-killing, anti-semitic incidents. It often took years to bring over one's family. Not sure if that adds anything.......

It does add because context, perspective, history matters. Thank you.

We have absolutely talked all this through. He currently lives in the house I own that we will rent out so we’re basically going to flip that on its head as far as percentage and everything else. Thanks to Michelle‘s sound financial advice, before he moved in to my house, we sat down and discussed everything about finances and even have a budgeting app that combines our budget so we see where each other stands with debt, expenses, and more!

Great. Thanks for letting us know. 

Everyone else is patting themselves on the back today, so I'll join the party. My wife and I are catching up on the financial items we've been putting off while teleworking full time and saving money with no day care. We both now have $500K life insurance policies, and we recently re-financed our house from 25 years left on a 30 year mortgage to a 20 year mortgage. We have been setting aside extra money for retirement, 529s, and savings; and we are getting our will and trust set up now. We are 38 years old with a 3 year and a 1 year old, and we have been putting things like this off for awhile. We are state employees, and we now see a clear path to being able to retire around 60.

You get a BIG pat on the back from me, too.

Ugh. All my favorites are going away. After Lisa de Moraes left, you were my beacon of light on Thursdays. We may not like the decision, but we respect it and more importantly, respect you for all the great work you've done. You've helped countless numbers of people get their financial life in gear, including me. This isn't goodbye, but see ya' later, friend.

Yes, see you later!

The Washington Post is slowly taking away the chats one by one. I just renewed my subscription and am tempted to cancel. The chats are my favorite thing about this news source. I always looked forward to yours and learned a lot. I know you will still write columns but it will not be the same. Alyssa Rosenberg and Hank Stuever said the same things but I hardly ever see their columns. I am very disappointed and will miss this chat!

Please don't cancel. I'm still here, just not as much with the chats. We need subscribers. I need you. 

And as I've said you can still reach me and I'll still do the occasional chats. 

Booo hiss. I'm going to miss your chat. It was nice to get feedback, learn from others, and expand my financial knowledge in this way.

Thank you for being a faithful chat participant. 

Thanks Michelle for your advice over the years. We have recently become completely debt free. Hubby wanted the mortgage gone before he retires and that’s done. It also frees up money to do some things that we want to do around the house. It feels great t9 have that monkey off of our backs.

Congrats!

Michelle, thank you so much for your advice over the years; we will miss you when the live chats end! Because of these chats, I started a life happens fund and have the beginnings of an account with 3-6 months of expenses. I've also raised my credit score to 798. It has been a long road to get here but it feels SO GOOD to get rid of debt and to save. Very grateful to you and I love the Sincerely, Michelle series.

Thank you. 

Say it isn’t so! I submitted a testimonial early and all I was thinking after I paid off my car was I can’t wait to tell Michelle other piece of death paid off

You can always still tell me - colorofmoney@washpost.com

First of all, I will miss these chats SO MUCH! Thank you for doing them! I got the most beautiful email from one of my credit cards today - my payment was received and my new balance is ZERO! I paid off my car in July, now this card is gone and I'm on track to pay off two more by December. I've been extremely fortunate to keep both my full time and part time jobs (got a raise even from my part time job!) during this mess and not going out much allowed me to focus on paying off the credit cards that have been killing my budget. Thank you for the time and effort you've put into these chats. she/her, Pittsburgh, PA

Wow! Good for you. So happy for you.

Hi Michelle - so sad to hear your chats are ending, you've been a ray of sunshine for me whenever I get really down about my financial situation. I've written in before, paying off over $150K of medical debt, considered bankruptcy but took your advice, sold my house, been renting & throwing everything at the debt. It's under 40K now - and I was really looking forward to sharing my testimonial when it's all gone.

Keep going. And I'm still here for you -- all of you. 

With all the changes, I can't help but wonder if you are simply putting a nice spin on a decision made above your head? If so, I'm going to release the kraken against those decision makers! Your chat is the highlight of my week, especially this year!!

Still complain but about the lack of promotion of the chat.

It really was my decision. I promise. Those who know me know I would tell the truth. 

I have a number of questions left that I want to answer but I need to go to finish editing the next installment in the Sincerely, Michelle series. 

I've captured your questions and will answer them first next week. 

I'm here one more week. So come back.

It's been an absolute pleasure to be in your lives. Thank you for trusting me with your questions. 

See you next week. 

Sincerely,

Michelle 

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. 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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