Color of Money Live with guest Anthony ONeal, author of 'Debt Free Degree' (December 12)

Dec 12, 2019

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

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Thanks so much for joining me today. I'm super excited to have Anthony ONeal as my guest. He's the author of the Color of Money Book Club pick for last month, "Debt Free Degree." Please make him feel welcome with lots of good questions. 

And, as usual, love those Thursday Testimonies. 

So, let's get started. 

Hi Michelle! In the last several chats/articles about college, there are always folks that argue that the prestigious colleges pay for themselves in “connections” and career placement, an argument I believe you’ve stated is fairly exaggerated . I went to a very well respected public school - not Ivy obviously, but think UNC/UVA. Low acceptance rate, great reputation, lots of alumni around who presumably want to hire from their old stomping ground. Despite being a well rounded and successful student, I personally found my school was utterly useless when it came to actually helping students find jobs or even how to translate their skills into a resume. (Definitely wrote an earful when selected for the career services review). I could write essays now about the versatility and resiliency of liberal arts studies and how well the skills they build translate to the corporate world, but I couldn’t get any information on that from the ivory tower when I was starting out. Do you have any advice for prospective college students on how to find a school that’s going to help them transition into a career? Especially when they’re 18 and don’t really know what that career might be while on the college tour circuit?

Absolutely. The first step is to take debt off of the table completely. Debt isn't an option - whether you want to go to a public or private school. It's also important to figure out what career path you want to pursue before spending a ton of money on your education. Do the research, and one thing that will help you do this is Ken Coleman's book The Proximity Principle. I also recommend visiting Find Your Calling, which will help you identify your skills and match them to a career you love. You got this!

I completely agree with Anthony on first taking debt off the table. Also, we have got to stop pressuring 18-year-olds to know absolutely what they want to do at such a young age. If we do this then the it doesn't matter what school they attend. Because, for the most part, its the internships and work experience that's going to make more of a difference. When I went for orientation for my eldest, the schools officials said that on average students change their mind about majors about three times before graduating. If this is true across the board picking a school known for engineering and paying a premium because it's select won't be worth the money and decades of debt if your kid decides he or she wants to teach instead. Start with affordability and then do all that you can to encourage and push your child to get some work experience, which will help them land a job. 

Hi Michelle, to make a long story short, I have been struggling with credit card debt for YEARS. Every time I got close to paying off the balance, something would happen: car needed brakes, child needed stitches, furnace didn't work in the middle of January, in-laws became ill and passed away necessitating travel to where they lived, and on and on. In the midst of the bad luck, I also had two unexpected increases in income that really helped, and today I FINALLY have a zero credit card balance. It's been such a long road and it's a big relief. Now I can work on my other financial goals, including rebuilding my savings which have long been depleted by these large and small emergencies. I'm also taking some of the money I would have used on debt repayment and replacing little things that I was stretching out to save money - holey socks, chipped coffee mugs and so on.

I know it's such a relief when you get that debt monkey off your back. So good for you. Thank you for sharing your journey. I know it will encourage others. 

There are many parents who don't believe it's possible to send their child to college without debt. Are you selling them a pipe dream? Is your advice merely for the well-off? 

Heck no. It's not a pipe dream. Plenty of students have started from the ground up, and your child can too, regardless of your financial background. My story is proof of this. Whether you start with community college and then transfer, go to a trade school, or get scholarships and grants, there are a lot of ways to go college without racking up debt. 

I am single with no children and recently retired. I find informative financial articles, blogs, and books *really* hard to come by. It feels like my demographic is just not adequately considered anywhere. Are you aware of any resources that would be helpful?

Can you tell me what specific advice you are looking for that only applies to folks who are single with no children? 

I ask because really basic personal advice applies to just about everyone. 

-- Have an emergency fund.

-- Have a life happens fund -- for the things in life that happen (major car repair, etc.) so that you don't deplete your emergency fund, which I consider the "I've lost my job" fund.

-- Save as much as you can for retirement. Set a goal of 15% of your pay, including any company match. If that's too high, which it is for a lot of folks, save whatever you can and increase it a little each year.

-- Get out of debt and stay out of debt. Yes, this includes trying to pay off that mortgage before you retire. Housing is the biggest expense in most people's budget so good to have that done when you retire.

-- Get a will. Even if you are single with no kids you may have extended family you want to leave things to or a charity or your church.

Now, the one thing that you may need to prepare for is how you will take care of yourself if you need long term care. Parents often rely on their children. And should, even if they have the money because somebody needs to manage your care and money when you can't. If you're single you need to develop relationships with perhaps extended family or friends -- or a professional -- who can help you when you can't help yourself. 

I have three children, with my oldest going off to college in a year and a half. I do not have a 529 for any of them. Is it possible/advisable to move some of the funds I have in my retirement portfolio into a 529? I have a rollover IRS, a 403(b), and a defined contribution retirement plan. Are any of these 'allowed' to be used for tuition, or converted to a 529? Thank you

Great question, and I love the fact that you're thinking about your three children's futures. But under no circumstances should you touch your retirement accounts to fund their education. There's a 100% chance that you'll retire one day, but there's no guarantee that your child will graduate from college. Plus, your kids can absolutely graduate debt-free without tapping into retirement funds. I would encourage you to start having the conversation with your kids about paying for college so they can start taking ownership of it and taking some of the weight off your shoulders. Your contribution to their college fund is just icing on the cake. 

I would also discourage using the retirement money, especially if you are not over 591/2 because you will likely incur a 10% penalty for early withdrawal. 

Here's some columns that may help with starting late to college savings

Even if your child is just a few years away from college, it’s not too late to fund a 529 plan

Community college should be a first choice, not a last resort

Don’t be embarrassed about going to community college. Put it on your résumé.



Following up on your column on RMDs, how does the government know how much in assets I have to use in the RMD calculation? It seems like this is just based on trust. If I have my money invested with different companies, they don't know about each other. Thanks.

The financial companies that administer your retirement account have to report what your RMDs are to the IRS. So, the IRS knows what you should have taken. 

You need to take RMDs seriously. If you don’t take any distributions, or you fall short of what’s required, you’ll face a whopping 50 percent penalty on the amount not withdrawn as required.

For more on this topic read: 

If you turned 70.5 last year you can’t afford to miss this April 1 tax deadline

Roth IRA vs. 401(k): Why one may be better for you than the other

My son is a C student at best. He definitely wants to go to college, so I'm wondering what alternatives to merit scholarships you might suggest we pursue in order to avoid college debt.

Your son reminds me of me. I was a C/D student at best, but I was still able to go to college debt-free (but I still made the mistake of taking on student loan debt anyway). Depending on where you live, the average community college is going to be anywhere from $3-5,000/year, and in some states it might even be free. That's definitely an amount that he could cash flow and still get a great education. Trade school may also be an option, depending on what he wants to do. No matter what, take debt off the table!

Our family (2 kids) could only do it by saving since the day they were born. Anything is possible if you save for it 216 months in a row.

I'm with you. That's what we did. Started saving when our kids were wee little people. Once we started we save every month - EVERY SINGLE MONTH. And we are still saving because we pay for graduate school too. 

Read: How we sent our children to college debt-free

I would also recommend you read the following article, written by my daughter, who graduated debt free for both undergraduate and graduate school.

The best education your money can buy


My daughter wants to be a speech pathologist. Examining various college programs and looking at minimum wage jobs for her, we are concerned about college debt. As a result of college visits, we have learned that only one year of community college would actually save money - otherwise she will have to spend an extra year at University. She has 1 year of University in a 529 savings in addition to the 1 year community college. Do you have other ideas that we may not have considered to help her achieve her goals?

That's great that the first two years are covered. Stay committed to not racking up debt! Here are some other ideas: Do the research for some other universities that could possibly be cheaper. Depending on your income, she may qualify for scholarships and grants at other schools. Apply for scholarships like it's a job. I also wouldn't settle for minimum wage - there are plenty of jobs that will pay more than that for part-time, and she could work full-time and live at home over the summer. 

Not the OP, but will eventually be in their shoes. Yes to everything in the last paragraph of your answer! These are the questions I have! How to find trustworthy caretakers when you don't have younger family to advocate for you? How much/what kind of long term care and health insurance to have? There is so much elder abuse, and some guidance in avoiding it specifically for those of us without children there to help would be greatly appreciated. Thanks for all you do!

I hear you. But frankly even people who have kids and relatives face the same challenge - whom to trust. There are some trifling adult children out there who steal and abuse their parents too. 

I'd like to hear from folks who are in this situation. What have you done or plan to do? 


Hi Michelle, I am 45, the kid is done with college and I will be debt free at the end of this year! I currently max out my TSP (19K) and according to several retirement calculators, I am on track to having enough money (TSP, Pension and SS) to last through 90 if I continue my maxing my TSP. Starting in January I will have an extra $850 a month to save but not sure where I should put it. My income phases me out of contributing to an IRA. Any suggestions on where to stash these extra funds?

What a great problem to have. If you don't have any other debt except a mortgage why not get rid of that monkey on your back?

You may also just save outside of a retirement fund to help with health care costs. Few people could withstand financially a prolonged stay in an assisted living facility. 

Aside from housing, the biggest expense in your budget in your older years will likely be health care costs. So save for that. 

In anticipation of reading Mr. O’Neal’s book, Debt-Free Degree, what are 3 key tasks recommended for a high school senior (and divorced parent(s)) planning for a fine arts (non-teaching) education? FAFSA is done.

I love the fact that your FAFSA is already done! That's huge. 3 key tasks:

1. Make sure that's the degree your child really wants to pursue for their career path.

2. Make sure they're maximizing their scores on the ACT or SAT.

3. Look at in-state schools and community colleges while continuing to apply for scholarships. They can still apply for scholarships even after they've already started college!

Michelle, I was happy to see today's article referencing your son with autism having slightly different needs (extra year of college). I also have a son with autism and dyslexia, who is a sophomore in a private high school now. He will go to college, though will need additional supports so our selection of schools might look different (no large state schools on our list). I find some of the college planning advice out there not helpful -- lock in tuition at state school when we are only now putting together his needs? Fund 529? He's got one but I'm basically already spending a college tuition annually in private high school tuition, supports, therapy, tutoring, etc. Community college? Maybe, but he so badly wants to live away. And CC may or may not be able to provide ASD-specific supports; their programs seem geared towards lower-functioning kids (MC Graduate Transitions, for example). So what advice do you give to kids with differing abilities and needs?

My son graduated with a BA debt free and decided to get an MBA. He turned down a partial scholarship at a good school to go to one of the top schools in the country. Graduated with a significant amount of debt, but ... just landed his dream job with the top organization in the field. The degree from the top school along with contacts in the organization who went through the same program helped him get the interviews. While I wouldn't take on his debt for myself, he had a plan and it worked out the way he thought it would. Just saying, one size does not fit all.

Congrats on securing the job! I still firmly disagree with taking on student loans for any education. Ivy League schools don't necessarily equal success. I've mentored a few Ivy League students who have not landed their dream jobs and are drowning in six figures of debt. That's not what I want for anyone! 

Union members have access to 'free college' through, a nonprofit consumer benefit organization for union members. They've also just announced a bachelors completion program at little or no cost. Also, the Federal Employee Education & Assistance fund ( offers scholarships to federal employees and their dependents. Never hurts to look outside the box! –– proud union member & federal worker

Love this! This goes back to doing your research. 

If you are worried that you will just spend it you could move some of your TSP contribution to the ROTH TSP. You will pay more in taxes now and have a lot more flexibility with withdrawals and pay less in taxes later on. Also, you need to have money saved to live past 90. And you can contribute to a non-deductible IRA and then convert it to a ROTH every year.

Good point, especially above the ROTH since you have to have more money to fund it since taxes are taken out. 

I've been paying off the Fed student loans for my girls hoping this will help them build credit instead of getting a credit card. I was wondering if this is the better way to have them build credit?

Here's the truth: no matter what you've heard, you really don't need a credit score. (This is coming from someone who does not have one!) I believe a credit score is an "I love debt" score because it just shows how well you handle debt and not whether you're financially successful. What they need to do is start taking ownership of their lives and helping you pay off their own student loans.

I totally agree with Anthony. But should you want to help you kid get a credit score read one of my most recent columns:

My adult child built a good credit score in just three months. Here’s how she did it.

You will notice in the column, she got a score to establish it but is not using credit. 

I've been so blessed in that both my children are getting their undergraduate degrees essentially debt-free. One is at a military academy, the other received a full ride (room, board, tuition, book stipend) scholarship to an in-state school. I know the 529 accounts can be used to pay for graduate school, but are there any time or other restrictions as to usage of the funds?

That's what's up. The 529 can be used for anything related to education and there's no time limit. But for anything outside of education, you will have taxes and penalties if you use the 529.

Just so you know, if you saved in a 529 plan and your kid gets a scholarship/free ride you are not penalized for the amount you withdraw equal to the free ride. You will however have to pay income taxes on the growth but not your contributions. Or, you could allow the funds to stay in the plans and use for other kids in the family, grandchildren, etc. 

Not sure if this is relevant to the conversation, but it might help those with upcoming college students who have higher grades/test scores and are thinking that merit scholarships are in their future to help with college costs. Don't plan on it or expect much - my son was ranked 5th in his class of over 400 students with a tough class load (at least 6 AP classes, in an advanced degree program) with decent SAT scores. His only B in high school was a B+ in a science class in his freshman year, including 2 high school classes he took in eighth grade, and yet he got $0 in any scholarship and financial help throughout his college years. He applied to multiple (20+) scholarships and still didn't get anything. Fortunately, we were still able to make college work out even if he did have to take out some loans, but they will be paid off by next summer (one year after masters' degree graduation). So don't get your hopes up on any merit scholarship help, and try to save as much as you can. If something does come through, you get a nice windfall.

I'm so glad you said this because so MANY parents think their smart kid or athlete child will get a full ride. Not so. Not even close.

Read: Your child probably won’t get a full ride to college


My daughter is 3 and we are thinking about sending her to a private school when she starts kindergarten in a couple of years. We also want to save for her college. How do you suggest we use a 529 for those two goals? Should we put part of the savings in a 529 money market account, and part in a 529 target date fund?

Love that you're starting early! I'm not a huge fan of sending kids to private school for early education, but if you want to start her out at a private school and you can afford to do that, great. The most important thing is to invest for the future (as long as you're debt-free, minus the mortgage, and putting money toward your retirement). Personally, I would just put all the money into the 529 money market account, but you can't really go wrong with either. 

If you can afford to send your kid to private school before college AND save for college so NO loans are need, go for it.

If not, I recommend you save for college and do so in an age-based investment account. Again, read my newsletter from today for more on what "aged-base" means.

Look, it makes no sense to me to send a 3-year-old to private school at the risk of not saving for college. Most of us went to public schools and we are doing just fine. 

You must do what you can afford and this means choosing between private school now and paying for college later without decades of debt, please choose the latter. 


My specific questions relate to whether annuities are a good idea, what about long-term care insurance, considerations for choosing the best asset mix that doesn't rely on having anything at the end.

All those questions apply to just about everyone. 

On annuities read: This investment guarantees monthly checks for the rest of your life. But there’s a downside.

On preparing for long term care read: There’s a looming long-term care crisis. Are you prepared?

On choosing the best asset mix read: Asset allocation: Key to your investment climate

By the way next week my guest will be an expert from Vanguard who will be available to answer your retirement investment questions. 


My son just started working part time at Starbucks. He was excited to see they offer free tuition at an online school as well as a 401k, even for part time workers. He's been attending a local community college, but we'll be looking into the online one!

Good plan. 

I 100% agree with Michelle on avoiding ALL debt for college. Do The Math. Taking out a 150K loan with a starting salary around 30K, uh, no. No bank would lend you that kind of money to buy a house, right? Why? RISK. The reason the higher ed lenders do it is NO RISK. You can't get away from it. It follows you to SSA age. Rant over. I'm an early 50s multimillionaire wage slave who started at community college.

Amen to this!

Isn't it a bit of a fairy tale to think there are enough scholarships for every student? Lower cost community colleges and in-state colleges I understand, but scholarships for all?

True - not everyone is going to get a full ride to their dream school. But the facts are that billions of dollars in scholarship and grant money goes unclaimed every year. So what does this mean? If you put in the work, live intentionally and have a plan, you can find scholarships to help pay for school. 

Thank you so much for joining me today. Great conversation.

Next week is my last chat of the year. Hope you come back and let's talk about your financial resolutions for the New year. 

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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Anthony ONeal
Since 2003, Anthony has helped hundreds of thousands of students make smart decisions with their money, relationships, and education. He’s a national best-selling author and travels the country spreading his encouraging message to help teens and young adults start their lives off right. His latest book, Debt Free Degree, launches October 2019. You can follow Anthony on YouTube and Instagram @AnthonyONeal and online at or
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