Color of Money Live: Sharing your financial goals for the new year

Dec 19, 2019

Michelle Singletary, nationally syndicated personal finance columnist for The Washington Post, answered reader questions about setting financial goals for the new year. She was joined by Maria Bruno, the head of U.S. wealth planning research at Vanguard.

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So glad you could join me today. This is the last chat for 2019. 

As a treat, I've asked Maria Bruno, head of U.S. wealth planning research at Vanguard to join me to take your questions. 

To end the year, in addition to your financial resolutions for 2020, I would love to hear any and all of your financial accomplishments as part of the regular Thursday Testimony feature.

So, let's get started. 

Hello! My spouse and I have a joint ten WROS brokerage account (happens to be Vanguard) that we treat as an off limits retirement savings in addition to our 401ks. My question is, in an emergency if we needed to access these funds, what is the tax or penalty to do so? Thank you.

Thanks for investing with Vanguard!  If you have specific questions on your account, don't hesitate to call us.  But you should be make withdrawals from the brokerage account without any type of penalty.  When you sell shares from the account, keep in mind that any growth will likely be subject to capital gains taxation.  Conversely, if you sell at a loss you'll use that on your tax return as well.  You can see what your gain/loss estimate for each account is on our website before you transact, or simply call us and we can provide the estimates.  The actual gain/loss amounts will factor into your tax return.

Save, save, save!! I live in a fairly expensive housing market, and saving up is the only way to get there!

Good for you. And I love that you have a goal. For me that's the way to stay on track. Save for a purpose. 

I want to tilt more toward minimalism. I realized that I was dreading the Christmas presents that my kids were going to get because of the clutter and little tiny pieces of stuff that will be added to our house. We have generous relatives, but their love language seems to be craft kits and beads. But I'm no better: I have enough soap and shampoo and conditioner to last a year. I have enough towels for 10 houseguest all at once. And I have enough in the freezer to feed them all, too! I know there's a financial benefit to minimalism, but I really just want more peace.

Love this. I've been trying to do the same. I'm a natural born hoarder and it's been a battle letting go. But I need to get rid of stuff. So been going through and giving away things. 

Hi Michelle, Thank you for all that you do. I am a big fan of what you do, and between you and Dave Ramsey, you've really helped me out! I have a question about Emergency Funds versus Life Happens versus Regular Savings: What is what? I am thinking the Life Happens would be a couple hundred (less than 5) dollars for something that needs to be taken care of (leaking roof, vet bill, car repair). I think of an Emergency Fund as being something bigger - but trying to differentiate the two makes my head spin. Also, should I factor in regular savings, or would that essentially be the same thing as an Emergency Fund? Are there good guidelines for how much to keep in the funds? Thanks!

It's great that you're proactively thinking about this.  I like to approach emergency savings in a tiered approach.  Consider "Tier 1" to be money parked in cash and cash-like instruments such as money market funds.  Targeting about half-month to one month's of living expenses is a good start.  This should leave ample set a side for an unexpected car expense or expensive vet bill.  Then consider "Tier 2" as money you can access if you need it in case of a temporary job loss.  These are non-retirement accounts such as a brokerage account or even Roth IRA contributions if you have one since you tap the contribution income tax free and penalty-free.  Target 3-6 month's worth of living expenses here.  Approaching emergency savings with this type of framework should allow you to have a rainy day fund but also feel comfortable that you're invested and can meet some type of unanticipated change in income flow. 

I really loved Maria's answer. I would only add this

Emergency fund: For job loss, extended sick leave in which may not be getting paid anymore (My husband and I nearly had this happen when our eldest became gravely ill. Nearly three months in the hospital. We were down to our last week of pay because we never left her alone.)

Life happens fund: For the things in life that happen or the things you want to happen such as a vacation. Having this account keeps you from robbing the dire emergency raining day fund. 

Now if you like a lot of pots -- and I do -- you could also have separate accounts for big things such as saving for a home or car. Actually, we keep our car replacement money in an investment account because we keep our cars for like a decade, which gives us time for the money to grow even with the ups and downs of the stock market. 

Hi Michelle! My resolution this year is to pay off the remain $40,000 on my student loan. I'm a new mom so have more expenses now, but am committed to getting this monkey off my back, as you would say! Then we will be debt free except the mortgage. We are going to focus on every extra dollar going towards this debt. I started with $45,000 at the beginning of this month, but put my year-end bonus and overtime wages towards the debt and now am fired up to finish before 2021! Thanks for your encouragement in this chat every week!

Congratulations -- both on becoming a new mom and paying off your student loans!  These are both big steps.  Debt can be a 'monkey on our back' for sure, but make sure you consider balancing the decisions between investing and paying down debt.  Essentially, how to direct your next marginal household dollar.  Specifically, make sure you that you are not missing out on tax-advantaged investing opportunities such as an employer match on a 401(k) as you could be leaving money on the table.  Or consider investing in other tax-incentivized accounts such as a Roth IRA or Health Savings Account (if you're in a high deductible health care plan).  These types of accounts offer tax-benefits that should be considered alongside debt.  It's admittedly a bit of a seesaw, but doing so allows you to make small and steady steps toward investing while paying down debt. 

Congrats on the baby.

So, I agree with Maria to make sure you are getting every dollar your employer may be offering for free. 

And after that I'm totally for getting that monkey off your back. 

One thing to consider. Please make sure your emergency and life happens funds are well stocked. I don't want you to have an emergency and have to use debt. 

But if those are covered I applaud your commitment to getting rid of the student loan debt. 

I've been really happy to see that we're finally waking up to the huge household budget, human and environmental cost of fast fashion. I buy mostly good quality clothes that are fashionable or classic - but never trendy, so they don't date. I take good care of them - wash colors separately in my front loader and never put them in the drier. I have many 10/15 even 20 year old clothes - and my wardrobe is amply but not huge so I wear them quite often. I'm also interested in style - mum was in fashion and that got me hooked on style so it's not all sweatsuits!

Really good point. And I'm not ashamed to duplicate clothes, jewelry etc. I was recently on CNN and as I was heading out that morning my husband asked, "Didn't you wear that necklace already on air?" 

I had, when I was on CBS Sunday Morning show. 

I laughed and said, "Don't care if someone notices." 

They will not be sending my kids to college, paying our mortgage, etc. 

Besides, as you point out, I don't want to contribute to over consuming. 

So if you see me in the same outfit on TV, don't criticize, not that I would care!

What do you think about donor advised funds? What are the pros and cons?

I'm a fan of donor advised funds, for those who are charitable inclined.  These types of programs offer a lot of flexibility in charitable planning. 

Check out Vanguard Charitable's website.  We provide some very good educational information on donor-advised funds in general.


Pay down the mortgage! My spouse makes three times what I do, but is in a field that has frequent lay-offs and job switches; it is also highly demanding of their time and wearing them down. As we approach 50, we've decided that this is only sustainable for another year or two. We've currently happy with where are savings are, both for the emergency fund and the college fund, so every extra bit of money is going to the mortgage as long as my spouse's pay remains at its current level. Our hope is to pay it down enough that we can refinance to a lower payment and be able to live off of my teacher's salary with my spouse's earnings from their next venture (likely some combination of consulting for non-profits and special education needs) going towards the extras.

Great resolution. My husband and I are on the same path, although not for the same reason. We just don't want to retire with a mortgage. We pay on the principal every month. I can't wait to get that HUGE monkey off our backs. Seriously, they will hear me on the International Space Station when we pay it off. 

Hello, I have a basic question on retirement savings. I max out on my 401(k) each year, but don't do anything else for my retirement, and I don't have enough saved. I'm in my mid-40s and only have about $300k saved. What is the easiest way to further save for retirement? Opening an IRA with the same company that holds my rollover 401(ks) and in a similar retirement year account (e.g. Freedom 2040)? Or are there other no-brainer things to do? Thanks so much. My New Year's resolution is to finally take the next step with retirement savings.

First, congratulations on maxing your 401(k) each year.  Definitely consider an IRA, if you're able to do so.  IRAs offer tax-advantaged growth opportunities, plus flexibility in picking your investments.  A target retirement date fund or balanced fund, could be a good start.  From there you can also save in taxable accounts -- these are non-retirement accounts held in your name (or can be joint).  You can set all of this up electronically, so you can invest regularly. 

Another thing you can do is pay off your mortgage before retirement is you have one. On average people spend between 30% and 35% on housing (It's higher in high-cost areas). Getting rid of this debt means less to spend from your retirement account. 

I'm trying to do a little of both. Should I be prioritizing one over the other?

Yes, do both. Depending on the security of your employment, save enough for an emergency maybe $1,000 to $2,000 then stop saving. Take the rest of the extra month above necessary expenses and pay down the debt. 

Michelle, You forgot to mention one thing in your column that people can do right now! Since they've collected, tallied, and assessed their savings/debt etc. It's a great time to sit down and set some realistic financial goals for the NEXT year. My husband and I do this and find it helpful when our financial year has been a difficult one to look forward. Our goals vary: they can be small and related directly to money (put X amount from paycheck into savings every month, pay off Y amount of debt, etc) -- or go to forming a positive financial habit (check in on networth quarterly/start a budget/set up that direct deposit you've been meaning to do, etc), but year after year they do build up and I recommend that everyone take that step of setting a financial goal while you have all of that information at your fingertips.

Good suggestion. I held back on that point because thinking of writing an entire column on setting goals and what that looks like. So would love help from all of you. How do you set financial goals? How do you keep to them? What has derailed you from your goals? What advice would you give to others trying to stay on track?

When you send your comments tell me your preferred pronoun and where you live. 

If you missed the column here it is: Seven money moves you can actually make before the end of the year


Hi Michelle, What is the yearly limit that one can put into a Roth IRA? Is there a higher limit for 50+ year olds? I have a lump sum that I'd like to put into a retirement fund but can't do it through my work's 403(b). I do contribute to that, so does that affect the amount that can go into a Roth? THANKS!

The 2019 limit for an IRA contribution is $6,000 plus an extra $1,000 if you're 50 or older (assuming you have the earned income).  The 2020 limits are the same.  There are income phaseouts for Roth (the amount varies if you're single or married filing jointly).   If you're eligible to participate in an employer-sponsored plan, it could impact whether or not (or how much of) a Traditional IRA contribution would be tax-deductible. 

Check out to learn more about what those phaseouts are.


Thanks for this question. It's a good one to ask and a good position to be if you can save up to the limits. 

I know I look 29 but this year I finally started catch up contributions now that the kids are good for college -- with no debt. It was one of the goals my husband and I set at the beginning of the year as part of our New year resolutions. 

I mention this because if you can't max out because you have other financial priorities -- getting out debt, saving for college, etc. that's okay. You have to do the best with the money you have and this may mean taking a slow route to maxing out retirement. Do it as soon as you can but don't feel bad it you can't. 

Next year I want to plan better for year-end expenses. I have personal property taxes, professional licensure fees, and a couple of other yearly fees all due between October and December. Add in holiday travel and Christmas gifts and that's a number of significant, irregular expenses that always feels like a crunch. But since it's more or less the same expenses every year, I really could plan for it better. (she/her, Alexandria, VA)

This is such a good resolution. Even though we have the money, this is what was happening to me and my hubby. Okay, it was really bothering me. So at the beginning of last year, I set up separate accounts for these kinds of expenses. I divided the previous year's expense for whatever it was by 12 and each month made a deposit into an account  for the amount that would come due at the end of the year. I stress less when I can look at once and see these lump sum amounts in one place ready to be paid. 

I have vowed to go through filing cabinets and get rid of papers I don't need and better organize those I do (or might). I am also planning on setting all of my accounts up behind one secure password. And of course, figure out ways to trim the budget and make sure we're saving as much as we can so we can retire in the next few years. Oh - and also continue to read your column and chats because there is always great information and motivation here. Thank you and have a wonderful holiday season.

Happy holiday to you as well. I wrote a column about spring cleaning your finances around tax time on what paperwork to toss or keep that I think will help you with the resolution to get more organized.

Read: In financial spring cleaning, here’s what to keep


Hi Michelle, I’m just celebrating this Thursday. My husband and I don’t make much money but we are serious about saving and having no debt. We officially as of this month have 0 debt!!!! No car payments, student loans or credit card debt! I’m currently earning my doctorate but am able to do payments. We have saved over 6 months of salary plus an emergency fund, life happens and we are contributing to our retirements as much as possible. We are also saving money to eventually build on a few acres of land we bought. No hurry there though. We have a fantastic rental at the moment and are comfy with that. My husband is army so I don’t want to buy (plus repair costs! Whew!!) as we don’t know where they may send him next. Is there anything else that we should be doing? I’m also starting to save as we may start a family in about two years. We are early 30s. Thanks for all of your sage advice! You help calm me down about money and make sensible decisions with knowledge

Is there anything else you should be doing?

Patting yourself on the back. Bravo to you both for what you've done so far. 

Just keep staying calm because you totally got this!

Can't I just keep my money in an old-fashioned savings account that earns me a little interest?

Well, you could but why?  It's important to differentiate saving from investing.  Saving is really more short-term in nature and is where savings account or money market accounts are prudent.  These accounts offer access and principal protection, in case you need to tap in case of an emergency.  They aren't so suitable for investing, on the other hand, because the account doesn't offer any type of growth.  Over the long run, your money may not keep up with inflation.  So while you think you may be playing it safe by not investing in the market, there's an opportunity cost to sitting on the sidelines because the account isn't growing.

Hello! Fed here. I currently contribute 5% to my TSP (my contribution goes to the Roth) and then do a max annual contribution to a Roth IRA. I started the IRA before TSP offered a Roth option; now I'm wondering if there's a benefit to the IRA vs. just putting my dollars in the Roth TSP.

Both are excellent options, offering tax-free growth. I am a fan of the Roth IRA for a few reasons.  The big one is that you can access the contributions income-tax free and penalty free. This makes a Roth IRA an attractive 'multi-tasking' type of account in case you need to tap it.   The account also isn't subject to lifetime RMDs.  Last, you have flexibility to pick your investment provider and options. 

So both are good, but the Roth IRA may offer a bit more flexibility if that's important to you.

I will have the opportunity to contribute to the TSP catch-up in 2020 since I will be turning 50 that calendar year. I currently max out on contributions. At the same time, we pay extra on our mortgage principal so that we can (hopefully) pay off the mortgage 10-15 years early. In order to fund the catch-up amount for TSP, I would contribute less to extra principal payments. We are in good shape with pensions and investments, so I would be very interested in your take on whether you would contribute more to TSP or focus on the mortgage principal payments. We have no other debt and kids are out of college. Thanks!!

Why not do both? We do. 

The benefit doing the catch-up is that you reduce your taxable income. And you don't have to do the full catch-up amount. Inside a workplace retirement account it's $6,000 this year and $6,500 in 2020. 

I just want you to stay on track to get rid of that mortgage before you retire. 


I love hearing other peoples goals. I've added pairing down possessions to my list. My one goal is to save for a "big" vacation. I'm in my 30s and I'd love to go with our family overseas for a week or so. But, I won't rationalize putting these expenses on credit.

Love it. I'm cheap but we take a nice vacation every year. Go enjoy yourself as long as you aren't accumulating debt and you've met all the other major goals -- emergency and life happens fund, on track for saving for retirement, etc. 

I'm a federal employee and we're supposed to get a raise of more than 3% this year. My goal is to save that PLUS another 7% for a full 10% savings, in addition to the amount I put in TSP. (I max out on TSP). I'll be retiring in a few years so I need a larger nest egg so that I can ease into that transition.

Great goal. Put that raise away before you start getting used to the extra money. 

You guys really need to address this statement that one of the posters made. As far as I know, that isn't the way tax advantaged retirement accounts work. You can't say, "Oh, I have $100K from an inheritance. I'll put it in a ROTH IRA." You aren't allowed. You can use that money to fund ROTH contributions for the next 13 years or so (depending on your age and income), but you can't just put the lump sum in an advantaged account. You CAN use the money to pay the taxes on a conversion of a regular IRA to a ROTH IRA, but that is fairly complicated and may not even be desirable depending on you current tax rate and the one you expect to have in retirement.

Thanks, allow me to clarify.  You do need earned income to be able to contribute to an IRA (unless you're married and open a spousal IRA if he/she has earned income).  You are correct that you can't simply put money from an inheritance into an IRA. 


Hi Michelle - I am self employed, and have always been charged high life and disability insurance premiums because my father died quite young of a heart attack. Except I recently learned that he actually passed from drug use. I'm grappling with this on multiple levels, but practically speaking, should I tell my insurance companies? I'd love a lower rate, but would not want to do anything to jeopardize my coverage.

I'm not sure how telling them your father didn't die from a heart problem would negatively impact your rates? It's health history that is important not the lifestyle choice of your parent. I'm sorry about your dad but I think you should be okay updating the medical history. 

When my husband and I were both working, we started making extra payments toward the mortgage. Then he decided to quit his job and follow me in mine (we both worked in jobs involving international assignments and it was time for one or the other of us to quit. For various reasons, it was better for me to work and him to quit.) At that point we decided it was better to invest that extra money against any possibility of me being laid off. So we did that, and finally, when I retired, we had a big pot of money in investments that we could easily use to pay off the final $50,000 or so of the mortgage and have a lot still left over. Nice thing about being retired: no one can fire you! For us, it made more sense to have let our investments grow, so we could have cash in hand as needed, and when life circumstances change, no more possibility of losing a job, pay off the mortgage then. Something to consider if people are weighing pay off the mortgage vs investing. Run the numbers and you might find long-term investing works out in your favor. It did for us.

Thanks for this perspective. 

Most financial guides advise dramatically reducing the percentage of stocks in a retiree's investment accounts. But reducing risk means giving up potential gains, which have been substantial over the last 10 years. Does your guest have any thoughts about smart asset allocation in retirement? And is the 4% rule still valid?

It's important to have a balanced allocation between stocks and bonds in retirement, particularly as life expectancies are increasing.   It is also important to consider the impact of inflation.  Someone who is retiring today at age 65 should generally plan for a 30+ year retirement horizon.  In fact, the proverbial "4% spending rule" is based on a balanced allocation (about 40%-60% in diversified stock) and a 30 year time horizon.  It's rule of thumb that's a good start, but should be evaluated on your personal situation.  And you also want to revisit your goals and asset allocation at least once a year to make sure you're on track. 

Michelle, thank you for taking my question last week regarding my son with autism and college planning. I wanted to follow up on what you said, regarding staying on the school system. We did. We actually have two kids with special needs, and fought an extensive (and expensive) fight with MCPS regarding our older son's education. He's finally in a good place in public school and will be there until 22. But it took years and lots of legal fees. When we threw up our hands and pulled our younger son to private school, it was after 4 years of lawyered up IEP meetings where we were told he's fine since he's got decent grades and is on grade level ... even though he was struggling to read (subsequently diagnosed with dyslexia), starting to stutter (dyslexia can cause that, as can stress), and bullied to the point that he had suicidal feelings as a 5TH GRADER. He's now a thriving sophomore. Sometimes, finances take a back seat and you do that which is important, then figure out the money later. (I left my gov't job to rejoin a law firm to finance all this and we're still recovering. But we will recover). Sadly, from what I hear, our story isn't unique, except for my ability to increase my salary quickly if needed.

Thank you for providing more context. Although, I would never tell people to do something and figure out how to pay for it later, I hear you that you do sometimes have to make sacrifices for what matters. 

Ok. I'm asking the question I always want to ask but am too embarrassed to. Am I allowed to open an account like this with like, 500 bucks or will I be exposed as the clueless poor person I am? Can i make contributions from my paycheck or do I transfer the money myself?

This is a good question!  I am sharing a link to Vanguard's mutual fund fees and minimums.  We offer funds with different minimums, depending on share classes -- namely mutual fund and exchange-traded funds.

Regardless which option you select, you can have an automatic investment program set up from your bank account, so it makes it easy to invest in a low-cost fund.  Please feel free to call us to learn more.   



You are not clueless at all. This stuff is complicated. And a lot of folks think you have to have several thousand dollars to start investing. You don't. Check around with various investment companies for how to invest starting with $500. You should also check with your bank and credit union. And we have it set up so that the money for the investment account is taken out of our bank account automatically every month. We invest in low-cost index funds.  

I reached my two comma day for my retirement/brokerage accounts! Thank you for all you do & your constant inspiration!

WOW! That's terrific! 

I'm so sorry but have to run. Wish I had time to answer all your questions. Hey senior at West Virginia University. saw your question too. Love it when young adults join me.

I've asked Maria to answer some questions offline. She agreed. So look for an upcoming column with her answers. 

Finally, it's been a great year. Thank you all for joining me today and all other times. If you are new to the chat,welcome, and I hope you come back in 2020.

Happy Holidays to however you celebrate this season. 

Take care and see you in the New Year. 

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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Maria Bruno
Maria Bruno, CFP® is the Head of U.S. wealth planning research at Vanguard, leading a team responsible for conducting research and analysis on a wide range of retirement, wealth planning, and portfolio construction topics. In this role, she also contributes to the oversight of the investment philosophy, methodology, and wealth management strategies supporting Vanguard's advisory products and services.
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