Can you tell me how to get your budgeting spreadsheets? I'm having trouble finding them since the redesign of the website. Thank you!
Look below. Here's the link.
...it's personal responsibility, stupid. You implied that blacks and Hispanics might be victims of racist lenders because they're charged higher rates or denied credit. The most successful and prosperous racial group, Asians, are also a minority. Does that mean there's some conspiracy against blacks and Hispanics to favor Asians?
It's personal responsibility AND a matter of discrimination.
Why is there such an effort to still deny that blacks and Latinos are subject to financial discrimination?
Just because Asians overall are doing better doesn't mean institutions aren't preying on blacks and Hispanics.
Michelle - We bought some furniture during a 24-month, same as cash sale at Macy's -- about $3,000. We have enough savings in the bank for 3 months or so. My question -- do we pay off the furniture over the life of the loan as there's no interest, or do we pay it off now just to be done with it? Many thanks.
I like being done with it.
That way you don't have to worry about missing the cutoff and being hit with all the accumulated interest. Believe me if you are one minute, one hour, one day late you get hit.
I have a life happens account (a couple thousand) and I'm about to finally reach my emergency fund goal. Then I'm going to even more aggressively pay down a student loan. However, I keep feeling I should save more, but it's because I'm not sure what the emergency fund is for. Losing my job, obviously. But what if I need a major repair on my home? Should I have a different account for that? A guideline on emergency money would help me sleep better at night, Michelle. Thanks for your great advice.
I understand so here's my take on emergency money
EM -- use for job lost, disability, or a MAJOR and needed repair that isn't covered by the money in your life happens fund.
Life Happens Fund -- use for car repairs, things you want (deck, patio, vacation, home improvements that are a necessity), etc.
Once you reach your emergency fund goal. Stop.
And go after that student loan like it's nobody's business!
I have an ING account that I use as a life happens/yearly bills fund. $300 a month goes in a month. What I do is charge auto repairs, summer camp, etc. to the credit card when those bills come up and then transfer the money from ING to pay off the card. Should I transfer the money over into checking and then write a check instead of charging it first? We pay off the card, usually out of checking, unless it's a bigger expense - then we use the ING account to cover it.
Either way works for me.
Personal responsibility was the cry during the subprime boom, never mind the fact that financial institutions were begging people who could never have been approved before to borrow money from them. How do people who've never had the chance to own a home deal with the pressure to buy, from lenders who should have known better?
Amen. Amen. Amen.
Look, if you follow me or know even a little about me you have to know I'm a huge kick-people-in-the-butt to get rid of debt and do the right thing with their money. People do need to act financially responsible.
But there are predators out there looking and aiming for people who don't do what they should. So should we stand by and say, "Sorry, bud you should have known better?"
I don't care if a woman is walking down the street buck naked (or butt naked) she should not be raped. No one has the right to rape her. Stare, throw her some clothes but not abuse her.
Same with predatory lending and all the other financial nasty things companies to do consumers -- black, white, brown or whatever.
Michelle, are you going to do a column on the federal employees Long Term Care Insurance open season? I'm in my early 40's, my wife is in her late 40's, we're both in decent to good health, and I'm thinking I'll pass on this open season and hope they have another one in five years or so. Thanks!
I've been saying I have to do this column and it is on my to-do list. And hopefully before the open enrollment ends.
To be honest it's such a complicated insurance with so many unknowns. It's expensive insurance but if you have it when you need, it's a financial life saver. I'm in the process of reading the information the Federal gov't has about it. My husband works for the gov't as well.
I'll do my best to at least write a column about the questions you need to ask yourself before buying this insurance.
I got married last weekend and the day before the wedding, my husband's car died. Motor gone, time to go car shopping. Well, thanks to your firm wisdom, not only did we not borrow a penny to pay for our $1,500 wedding, we also had $3,000 to put down on the $11,000 car. Sure, I had hoped to have time to build up the savings and pay in cash, but we got more than a few weird looks when we told dealers we were paying almost a full third of the cost in cash (and that we did not want the $15,000 option, thank you). I cherish those weird looks, Michelle, and indulged in a bit of a smug smile when we showed the "new" car to our friends. I won't lie, my husband was sad not to be able to get a hybrid, but he's thrilled with his Jeep and even repeated your line that we don't want to keep debt around like a pet. :) Thank you for your columns and chats, which gave me the strength to sock away money when I *really* wanted to buy stuff and to be strong when my man (rightly) nominated me as the financial gatekeeper. Oh, and a hint for Virginia brides; I got my $200 traditional white dress at the Lynchburg YWCA . And I didn't have to stress when I got mud all over the hem!
I love your testimony!
Just warms my cheap heart to know I could help you in this way. And girl, I'm so feeling you on the smug thing. One of the best feelings EVER!
P.S. Wore a used dress for my wedding too. I figured the bride who wore it first wasn't going to be at my wedding!
I am perfectly willing to admit I made a mess of my life. Severe depression made it hard to get to work although I felt when I did make it I did a good job. However most of the jobs have gone overseas, so I did retraining in the computer field. Still, since I am in my 60s, finding a good job is hard. I am working at less than 1/4 my previous salary. I really don't have enough in my 401k to retire and I know that I can't depend on social security. I make about 20k a year and can barely survive, let alone try saving. Do you have any advice? My thoughts are to cash out my 401k and have one year of pleasure before killing myself. I don't see any alternatives. There are probably a lot of people with my problem. What do you suggest for baby boomers who can't retire?
First, I like life even if it means eating beans and rice as Dave Ramsey always says.
Please don't be in such despair. You did the best you could with what you had. And you are NOT alone. People who have made good money and are still making good money aren't saving as they should.
So look. I don't believe Social Security will go away. So count on it for now.
And maybe you will have to work longer than you like but if you like your job and you're in good healthy, why not? I don't plan to ever retire. By that I mean I want to always be working at something. Hopefully not the long days I put in now but doing some work.
As for trying to live on $20,000 you may have to do some things differently if you aren't already doing it. For example, get a roommate or find someone who needs to share the expenses of his or her house. Look into food bank programs.
Don't cash out your retirement account. You know better now. So you know that pleasuring yourself now can and will have negative consequences.
Well, "everyone knows" Asians are hardworking. They benefit from certain racial stereotypes. That doesn't mean Hispanics and Blacks aren't victims of it.
Hi Michelle, My husband and I both have several 401(k)s from past jobs with a combined worth of about $80k. Should we roll them into our current plans? If so, do we have to roll them into our individual plans (his into his current plan, mine into mine) or can we combine them into one new one? Also, what are the tax implications? Any reason to do one into an IRA instead of a 401(k)? Thanks!
Lots of questions. The bottom line:
-- If you can keep track of all those plans AND you are happy at how the money in the plans are invested and performing, no reason to move the money.
-- If you can't keep track and you are not happy with the investment choices then yes open a Rollover IRA. You will each have to open one to roll over your individual retirement money. You can't join them into one IRA.
-- If you do a rollover be sure the money is sent directly to the investment company you are opening the rollover with. Don't let them cut a check to you. If you are working with a financial company (or bank or credit union) you like talk to a sales person about the pros and cons of a 401 (k) rolloever.
Nope. Unless they've been fooled twice. I think a lot of people who fell to the predatory lending really did not understand what they were getting into. It is hard for some to understand the legal mumbo jumbo in contracts.
Given the severity of our current economic situation, it's probably not a bad idea to plan on building that emergency fund to cover a job loss that lasts a little longer than you might think. Whereas I think 3 month's expenses used to be the norm, I'd say that 6 month's may be a better guideline right now. Just a thought. It's still rough out there.
I agree. I even suggest for some with high-paying jobs that would be hard to replace in a short time to save up a year's worth of expenses.
Hello Michelle-I have a question about consolidation companies. I am sinking in debt and need assistance. I don't want to file bankruptcy. I have heard of consolidation companies, but I don't know much about them. Would you suggest I go to a consolidation company for help? Thanks.
A consolidation company is only likely going to increase your debt. Your payments may be lower but you will be paying them off longer and thus adding more debt to the picture.
And don't waste money in companies that promise to chop your debt in half or some other crazy promise.
Go to www.debtadvice.org. There you will find a link to find a local non-profit credit counseling agency. The agency can help you set up a debt management plan. You might pay say $50 to set it up (don't pay too much more than that) and a small fee every month for them to help you repay your debts. Most plans take three to five years.
My husband and I are looking to adopt a child (can't have a family the old fashioned way). BUT our house is about $40,000 under water (we can still make the payments comfortably) and we have approximately $75,000 in student loans between the two of us. Facing a $30,000+ adoption expense, I would feel more comfortable paying down a chunk of either the mortgage or student loans to give us some breathing room for a child. Do you have a suggestion as to which we should tackle first? The mortgage has a much higher interest rate, if that factors into the equation. And, for what it's worth, we're talking five years or so down the road ... not anytime soon.
I would definitely pay off the student loans. Bringing a baby into the home even after adoption expenses will be a major financial undertaking (especially if you need daycare). So get that student loan monkey off your back first. Then take what you were paying on the loans and save for the adoption. If you are handling your mortgage just fine and you aren't planning or need to move or refinance soon, don't worry about paying that down or off right now.
Hi. My husband just found out he is laid off as of the end of this month. We cannot pay our bills on my salary alone and are worried that if he doesn't find something soon we'll end up losing our home. As far as looking for something new, he is doing what he can on that front - updating the resume, contacting references and former supervisors, looking at all avenues we can think of for job searching. We're looking at all our expenses and cutting out what we can. What else should we be doing? Our daughter is in daycare, but I hate to pull her out since we'll have to put her back in (possibly at a different place we don't like nearly as much) as soon as he gets a job. If we take her out before the contract is over, we also have to pay a penalty ($1500). We can pay our mortgage for 3 more months. Do I need to contact our bank to let them know what is happening? I hate to just let it go and stop paying if we run out of money, but I'm not sure if it will matter at all to them that I'm letting them know in advance that we might be having a problem. Or might not, depending on how quickly he could find something. Thank you for any advice.
Do you live in Md? If so The Maryland Department of Housing and Community Development has a program that you might qualify for that is lending folks money who have lost their job to help make their mortgage payment. Here's a link for it www.mdhope.org/EMA
Whether you live in Maryland or not, definitely contact all your creditors -- mortgage company, credit card companies and even the day care center. Explain what's happened and see what relieve they may offer. You may have to pull your daughter out but perhaps the center could hold your spot, especially if you've been a good paying family.
Just talk to everyone. And be ready to make some hard decisions, such as having your husband watch your daughter to cut that cost.
I'm not sure that rape analogy works. At some point, the preyed-on financial victims still had to sign a dotted line to "let" the bank assault them. A rape victim doesn't just open her legs after the rapist targets her for dressing badly. If you can't afford it, you were greedy. If I know my take-home pay is less than I can pay the bank, I am trying to get away with something scot-free and hope it doesn't catch up with me.
It's a victims' analogy and it does work. Not all rape victims can or do fight their attacker.
The point is we love blaming victims. I think it makes us feel as if we could never be taken advantage of because we are too smart. So we say to victims, "They should have known better. She shouldn't have been out that late or gone to that guy's place."
"They should have anticipated that some low-down dirty dog was going to take advantage of them."
People are trusting. Many trusted the financial institutions promises, numbers etc. that said they could afford the loans or whatever.
Can you avoid being a victim. Often. But if you don't, does that make you less of a victim?
I'd add one more factor to your list: fees. It can be very hard to parse out exactly what account fees you are being charged, but that information is available somewhere. Fees, as well as fund performance, were what finally motivated me to roll my 401(k) from a previous job into an IRA with Vanguard. (Not that I intend this to be an advertisement for Vanguard -- there are others, such as Fidelity, I think, who are known for very low fees/expense ratios -- but my former employer's fund manager charged several times more than I now pay. That was eating up my returns!)
Thank you . Really good point.
And in reverse your 401 (k) plan could have lower fees than the rollover fund.
And FYI AARP has a new 401 (k) fee calculator. The calculator can be found at www.aarp.org/401kfees.
No, we live in Virginia, but thank you for the advice. I will start calling our creditors.
Great. Call the Virginia department of housing as well.
Also check with the federal Hope for homeowners program.
My wife and I currently have a mortgage, but no other debt, an emergency fund, regularly add to our retirement savings, small college funds that we are adding to, and the money saved to pay cash for the replacements to both our cars (both currently over 150K miles). We also have three kids and currently live in a two bedroom townhouse. We really need to get a bigger house! But the question is how much bigger. Basically we are divided between buying a bigger house that we will be able to pay off in 15 years, or buying a much bigger house that will take us 30 years to pay off.
Buy the house if you can afford it that will let you life comfortably. If the issue is the difference between a 15-year mortgage and a 30-year mortgage than get a 30. After the kids are off to college and your expenses are lower, you can always make that 30 year into a 15 year by making extra principal payments.
Hi Michelle! I've been reading your column for years and trying to take it to heart, though my husband and I have made some major mistakes over the years and our financial position is extremely precarious right now. ($1K in the bank, major bills coming due soon, new baby, etc.) My husband is hardly a spendthrift, but he has trouble with delayed gratification (wants things now) and he doesn't like to talk about budgeting and saving. He thinks budgeting is boring and finds it hard to get interested in saving when he needs a new computer and is desperate to travel. I want a plan, he's more of a day-at-a-time kind of guy. Any suggestions for getting him onboard--without nagging?
See if you can find a budgeting program or class in your area. I direct a financial ministry at my church and we have tons of fun talking about money. My husband and I teach the class and we (including a great leadership team) have done skits, role playing and once I even did a skit acting like Judge Judy (robe, wig and all).
Your husband needs to see that with the right budgeting, he can still have fun.
And, if I may be so bold, try my 21-day financial fast. Challenge him. Tell him you want the family to fast.
Get my book on it and see if your husband will work with you day by day to try the fast. The book is "The Power to Prosper." For 21 days you only buy what is absolutely necessary (food, medicine, etc.) and you don't use any plastic cards (no credit or debit).
To be sure it's a tough fast but it might open his eyes.