Economic Earthquake

There are days I can't stand watching the local news. The constant bad news -- shootings, theft, etc. -- just depresses me. But now the business reports are troubling me. Just look at some of the recent business news stories:

New York's attorney general, Andrew M. Cuomo is going after the mortgage industry. Earlier this month, he sued a subsidiary of First American Corp. for allegedly caving into demands from mortgage lender Washington Mutual to inflate mortgage appraisals. That move inflated home values, the attorney general said.

The probe is now expanding to lenders Freddie Mac and Fannie Mae.

"If the appraisal process is broken, the loans and investments on which they are based may not be worth what investors have been led to believe they're worth," said Eric Corngold, an economic justice deputy who is leading the investigation for Cuomo.

Think this doesn't involve you? It does if you've bought a house in the last several years. It may also explain why so many homeowners can't refinance or sell their homes. Loans have become higher than what the house is worth. If you are a homeowner or in the market for a home you need to keep up with this probe.

As The Post's Carrie Johnson reports today, already the investigations are pressuring companies to find paperwork that would justify years-old appraisals. What about your appraisal? Think it was right?

Also, this week, Morgan Stanley reported that it suffered a $3.7 billion loss stemming from the U.S. subprime mortgage mess. That's 3.7 BILLION, folks. That loss is expected to reduce the company's fourth-quarter earnings by about $2.5 billion, which corporate officials partly attribute to the thousands of homeowners who are struggling to make their mortgage payments.

Here's what you should note in that story: The company forecasted that this trouble may keep going for several quarters. Think this doesn't affect you because you're paying your mortgage on time? Think again. Read this column I wrote last April. You will see why other people's foreclosures do affect you.

Morgan Stanley is just one of a number of companies that recently announced major losses because of the mortgage mess we are in. Citigroup Inc. and Merrill Lynch & Co. have also reported billions of dollars in losses.

Have you been watching the value of our dollar drop? Yesterday, it did it again. The dollar fell to an all-time low relative to the euro and other foreign currencies. That means if you are traveling overseas you won't get as much for your money.

Depressed yet? I am.

But don't stop reading about all this. As I've said, it directly affects your personal finances.

Chat With Me Today

If all this news has you worried, come commiserate with me today. I'll be online taking your basic personal finance questions at noon.

If you can't join me, read the transcript. Perhaps someone's questions may have addressed your financial concern.

What Do You Owe Your Kids

During a recent presentation at my church, I mentioned that my children don't have any high-priced video game systems such as the Xbox, Playstation, etc. They also don't have cellphones, iPods or televisions in their rooms.

One woman asked what I had against video games. "Do you have any children," I replied.

"Yes, three," she said.

"Do you have a college fund for any of them," I asked.

"No, I don't," she answered. Then she quickly followed up with this: "My husband and I believe they should work and pay for their own college education so that they appreciate it more."

While I have to respect how you want to raise your children, I disagree that college-bound children automatically won't appreciate their higher education unless they go deep into debt by taking out student loans or work themselves to death while they are in school -- or both.

Why assume your kid won't appreciate the money you pay for them to get an education?

Further, if that logic made sense, then you should forbid your children from applying for any grants or scholarships. That's free money and often free of any obligation other than getting good grades. So if they win a scholarship wouldn't that mean they wouldn't/couldn't appreciate their college education?

Of, course not.

Now, if you foot the bill for your kid's education and he shows signs of not appreciating the effort -- partying too much, getting poor grades, talking back to you (just kidding) -- then pull the money. It is at that point you should make him pay for school, however best he can.

I won a full academic scholarship to college and to this day -- decades after getting my degree -- I'm so grateful for that opportunity. I'm grateful that receiving the money allowed me to work on the college newspaper. It allowed me to volunteer for various campus groups including for the Black Student Union at the University of Maryland. I eventually became the first female president of that organization. It gave me free time to go to poetry readings, campus rallies or just sit on the grass and contemplate the meaning of life. I did work part-time but only to pay for necessities.

I also decided that since someone gave me an education, I would do the same. So my husband and I helped one young lady -- who had no relation to us -- go to college. We have helped two nieces with their college costs.

In last week's e-letter I asked parents what they owed their children. The question was prompted by a letter to advice columnist Carolyn Hax. One reader certainly summed up what it means to help your kid pay for college - however best you can.

"My parents paid for my college, back when it cost $240 a semester (instead of $240 a semester hour) for tuition" wrote Steve Abney in Eldridge, Iowa. "What I owe my parents is to pay for my children's college so they don't start their careers with massive debt and so they don't base career decision on salary alone."

I've with you, Steve.

Look, if you can spare even a small amount each month to save for your children's education, it's worth it. Anything you can save will decrease the need for them to go into debt and start their life off in bondage.

Credit Card Rewards

Can you win playing the credit card reward game?

Some consumers think so as The Post's Nancy Trejos reported last Sunday.

As for me, I'm inclined to believe this is a game consumers can never win.

As Trejos summed up in her article (a very interesting read, by the way): In the end, "someone is paying... card companies make money off the rewards cards by charging merchants fees" and the merchants raise prices for everyone.

Remember the credit card issuers control the game and its rules.

Read more: "Winning at Cards: Some Spenders Think They Have the Discipline to Play the Risky Rewards Game" (Nov. 4).

XM Show

You can still join me on the radio if you have a personal finance question and haven't been able to participate in my online discussions. I host "Singletary Says" every Sunday on XM Satellite Radio, Channel 169 The Power. The show airs from 8 p.m. to 10 p.m. ET.

Call in with your comments or questions. The number is (866) 801-TALK or (866) 801-8255. You can also e-mail your question, which I may read it on the air, at michelle@xm169thepower.com or at singletarym@washpost.com. Be sure to put "XM" in the subject line.

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