Michelle’s Mailbag: traffic tickets, windows and a grad’s scary debt

This new online feature allows me to answer the questions I couldn’t get to during the live chat and to respond to questions you send by e-mail (colorofmoney@washpost.com), Twitter (@SingletaryM) or Facebook (www.facebook.com/MichelleSingletary.com).

Traffic tickets and insurance

One reader sent an e-mail referring to my column about a new calculator from Insurance.com that allows you to see how certain traffic tickets would affect your auto insurance.

Q: Fortunately, neither my wife nor I have run afoul of tickets and their insurance costs. But I looked in vain in your very informative column to learn how the insurance companies learn about the insured drivers’ tickets. Does it depend upon the insured informing the insurance companies, or do the companies receive information from the states’ DMVs and enforcement agencies?

Michelle: I asked Michelle Megna, managing editor of Insurance.com, to help answer the question.

Megna: Auto insurers can only find out about your tickets from your motor vehicle record (MVR), but when they check it is likely more random than you would think. Plus, not all insurers check at the same times, and they may look back a different number of years. Most check at renewal time, and most look back three years for minor violations, such as speeding tickets, and five years for major infractions like DUIs.

In general, a driving record will include the current status of the license, endorsements and restrictions, suspensions and revocations, moving violation convictions (either listed by the date of the citation or conviction), points accrued and accidents (some states report only at-fault accidents, while others just that there was an accident with no fault assigned).

Insurance companies typically pay private vendors to pull your driver’s license record. That means they will avoid doing so if they can. Having said that, insurers will typically pull your record: when you apply for initial coverage, when you add a driver, when you change coverage, when you change cars and at renewal

From a recent online discussion:

Paying down a mortgage

Q: Should I pay down my mortgage or use the extra money to invest towards retirement?

Michelle: Can you do both? One of the largest expenses you’ll have in retirement -- if you drag your mortgage into retirement -- is housing. So, get rid of that drag.

Now I say that and also caution that you don’t want to be house rich and cash poor, meaning all your money is tied up in your home. To get at that cash you would have to sell or take out a loan, and I don’t want you to have to do that.

So get on two tracks. Aim to pay off your mortgage before you retire AND save well for retirement.

New windows

Q: We need to replace our windows. They are as old as the house, about 40 years old. They are leaky, aluminum, and breezy. Should we get a home-equity loan (the credit union’s choice) or finance them through the window retailer? We definitely need to get started on this project before this year’s cold weather arrives. I have thought of doing it in stages (buy three to four windows, pay for them, repeat) until they are all done.

Michelle: This is a hard one. There are few things I would say you should use your home equity to pay for. But using your home equity for such a home improvement isn’t reckless.

I still favor the option of saving and paying as you go. Get some quotes, and see if a company will work with you in stages so that you don’t incur extra labor costs.

New grad

Q: I’m 33 years old and just landed my first job post graduation. I will be making $95,000. I have about $263,000 in student loan debt. I don’t really have any other debt, nor do I have any savings. I’m hoping to be accepted for loan repayment program that will take care of 60 percent of my loan by working in an underserved medical area. Is it okay for me to pay the minimum on my loans for a year until I find out if I am accepted for this loan repayment program? I don’t come from a family with financial means, so I feel very lost as to what to do with my new income. My monthly bills will be about $2,000. Please help!

Michelle: I nearly choked when I read the debt figure but was less scared when I saw that you’re in the medical field, which has high salaries.

So, yes, I would make just the minimum payments on the loans until you know if you’ve been accepted for the loan repayment program. But if you aren’t accepted, keep living like you did when you were a grad student and aggressively pay down the debt. Get that debt monkey off your back.

You are welcome to e-mail comments and questions to colorofmoney@washpost.com. Please include your name and hometown; your comments may be used in a future column or newsletter unless otherwise requested.

Follow me on Twitter at @SingletaryM, or connect with me on Facebook at www.facebook.com/MichelleSingletary.com.

Michelle Singletary writes the nationally syndicated personal finance column, “The Color of Money.”
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