Live Web Chat

The stock market volatility got you and your portfolio down?

Then chat with me and author Gary Weiss today at Noon ET. Weiss shares your outrage in his book "Wall Street Versus America: A Muckraking Look at the Thieves, Fakers, and Charlatans Who Are Ripping You Off" (Portfolio, $14.95). Weiss' book is the October pick for the Color of Money Book Club.

As Weiss wrote: "It doesn't matter if you view yourself as an investor or not. It doesn't matter whether you love or hate Wall Street or whether you own any stocks or bonds or money market funds. Chances are Wall Street is a part of your life whether you like it or not, even if you keep your money in a passbook savings account or a tin box in the backyard."

Boy, don't we know that now.

So come chat. You can ask a question or just vent.

Looking Good While The Economy is Looking Bad

So Alaska Gov. Sarah Palin is just one of us, huh?

Don't know about you, but I've never dropped $150,000 on a wardrobe, hair and makeup in less than two months. Heck, I've never spent that much on clothes in my entire adult career.

Yet, the Republican National Committee spent about $150,000 on clothing, hair styling, makeup in August and September for the McCain campaign after Palin joined the ticket as his running mate, according to The Politico.

Now, it's true I've never run for vice president of the United States, but still that is an obscene amount of money to spend on clothes while you're running for office during one of the worst economic downturns since the Great Depression.

Post staffer Robin Givhan thinks the wardrobe tab goes against the McCain-Palin story line. Givhan asks: "How do you sell someone as a no-frills hockey mom who sold the state plane, fired the official cook and turned down travel per diems for her family and then try to explain wardrobing her in clothes from Neiman Marcus -- a store occasionally referred to by aggrieved, frugal shoppers as Needless Markup? How do you, in barely two months, lavish her with fashion swag worthy of a starlet and valued at more than her annual governor's salary of $125,000?" Post editorial writer Ruth Marcus tries to calculate just how the RNC could have spent $150,000 on Palin's outfits.

What do you think? Send an e-mail with your thoughts on Palin's high fashion spending spree to colorofmoney@washpost.com. Put "Looking Good" in the subject line.

Read more about the cost of keeping the vice presidential candidate looking good in Palin's Make-Up Costs Add to Extreme Makeover Woes.

Oh, and by the way, the McCain campaign says the clothing will go to a "charitable purpose" after the campaign. I'm sure we'd all like the inside scoop on which charity will be reselling her high-end castoffs. With the economy's continued decline an increasing number of us will be shopping in secondhand stores.

Market Volatility Hits The Young

The economic turmoil is now affecting students looking for internships.

In Economy Slices Into Internship Programs (Oct. 21), Philip Rucker reports that several Washington-based companies are unable to hire students this fall, as part of the District after-school internship program. Their reason for cutting the opportunity is the turbulent economy.

D.C. isn't the only area experiencing cutbacks in their internship and after school programs. Minnesota, Florida, Georgia, New York and other states have all been affected.

Bah, Humbug: Christmas Gifts May Be Scant

There's more bad news for the kids.

Two of the largest toy makers, Mattel and Hasbro, are pumping up their prices to compensate for increasing costs of labor and materials.

To stay within budget, experts said some parents may purchase one big gift for the entire family or buy several less expensive gifts.

Retailers will be fighting each other for business this holiday season says retail reporter Ylan Q. Mui in Retailers Hoping for a Holiday Shopping Miracle (Oct. 21): "Wal-Mart threw the first punch early this month when it announced that it was selling 10 popular toys for $10, including a butterfly Barbie, the Clue board game and the FurReal newborn animals."

There's more bad news for retailers from Linda Stern of Newsweek who discusses how lower credit card limits could severely affect consumer holiday shopping in Bah, Humbug! (Oct. 15).

Retirement Worries

I thought it was quite telling that Gregory T. Long, executive director for the government's Thrift Savings Plan, had to go online and try and calm down people worried that their retirement savings might be tapped to pay some of the debt the federal government is taking on to fix the economy, as reported by Federal Diary columnist Joe Davidson reported in Retirement Fund Director Seeks to Calm Workers' Nerves (Oct. 21).

I use the word telling because it shows that many investors don't know the rules governing their money. Specifically those worried were contributing to the "G Fund" which is invested in short-term U.S. Treasury securities specially issued to the TSP. Investments in the G Fund, including principal and interest, are guaranteed by the U.S. Government.

"Some of our participants have asked whether the government can use the assets in the G Fund to help pay for the credit recovery plan," Long wrote in his letter. "By law, the assets in the TSP are held in trust for each individual participant. So, you don't have to worry about anyone 'tapping' your retirement investments for another purpose."

Federal workers didn't understand that their money isn't up for grabs. That's also true for people investing in workplace retirement plans. The company doesn't own your money nor by law can it tap it.

Perhaps one good outcome of the financial disaster is that people are thinking more about their investments and asking questions about the safety and soundness of their nest eggs.

Worried about your retirement prospects? The Post just published its annual retirement guide which is chock full of information for future retirees. Check out Fifty Plus: A Guide to Retirement online.

Here are two stories from the special report:

-- Will You Retire? (Oct. 15)

-- Adjusting Your Investment Mix Near Retirement Makes Sense -- If You Don't Overreact (Oct. 19)

College Financing Tap Turned Off

With credit tight, many students and parents are finding it hard to come up with the money to pay for college reports Nancy Trejos in The Strain To Pay for College (Oct. 19).

Trejos reports that a survey by MeritAid.com, which tracks merit scholarships, found that 48 percent of prospective college students were more concerned than ever about being able to afford college.

Some students said they were choosing schools close to home to save on fuel and housing costs, or going to two-year rather than four-year colleges, the survey found.

I think the fact that parents and college-bound students are making cost a core part of where they go to school is a good outcome of this crisis. That's how it should be. In her story, Trejos reports one student said she would be devastated if she had to attend an in-state school. Really, devastated?

I went to my state school and it was a good education for a good price.

Parents and prospective college students have weighed themselves down with debt for decades in order to send their baby to the school of his or her dreams. Isn't the goal of going to college to get a good job? If a less expensive school has what you need academically to get you that good job post-graduation shouldn't more students consider them as an alternative to an expensive, name-brand school that requires lots of loans?

You Asked

I'm so sorry when my online discussion ends and I see that there are dozens of questions left unanswered. So again, here are my answers to some questions I couldn't get to. And if you missed my last chat, here's the transcript:

Q: We pay our mortgage on time and are up to date with the payments. But things are just really tight. We currently have a 30-year, fixed-interest rate mortgage at 6.25%. Our lender offered to stretch the mortgage out for another 10 years to decrease the payments by about $300. Do you think this would be a wise move?

A: I know it's tough for a lot of people right now. However, I wouldn't agree to this deal until I did the math. And when you do, you'll see that with a 40-year mortgage you will build equity at a slower pace. Additionally, you need to weigh that $300 a month savings against how much more you will pay in interest for those extra 10 years.

A 40-year mortgage will typically carry a higher interest rate -- 0.25 to 0.375 percentage points more than an equivalent 30-year mortgage.

So let's say you have a $300,000 mortgage. With a traditional 30-year mortgage at 6.25 percent you would pay a total of $364,974 in interest. Over 40 years, you would pay a total of $543,057 in interest at 6.525 percent (remember the rate is higher for a 40-year loan). That's a difference of $178,083.

You may argue that you don't plan on having that mortgage for 40 years, but you never know.

If I were you, rather than stretching my mortgage payments out, I would do everything I could to cut my household expenses. In just about every case when I've sat down with someone to go over their budget, I've found places where they could cut. The other alternative is to get a part-time job.

Q: I don't understand your advice regarding student loan debt that is locked in at a low interest rate (for example, the writer who had student loan debt at 2%). It seems the person would be better off putting the money they would use to pay off the debt into savings that earns a higher rate. Could you please explain your logic?

A: My logic is debt = bondage.

Before the current economic crisis people argued with me that they should hang on to low-interest student loan debt and instead take whatever extra payments they would make and invest it in the stock market. But now we see you can't count on a bull market forever. You can't count on making money. If the markets go bad, you end up with the debt and no returns.

Even knowing how much debt individuals, companies and our government have taken on, many will still argue that people shouldn't pay off the low-interest student loan debt and instead "save" the extra payments.

Two things they don't consider are taxes and risk. You have to pay taxes on whatever return you get in a savings account. So is that return minus the tax worth holding on to the debt?

I don't think so.

People don't consider the risk of having debt when things go bad financially for them.

Right now there are a lot of people whose investment portfolios are losing money. There are people who have lost their jobs or are about to lose their homes who wish that on top of those struggles they didn't have the additional weight of student loan debt. They wish they had paid it off when they had the chance.

If you have the means to get rid of student loan debt, do it. You are far better off in an economic downturn when you have little to no debt and cash squirreled away somewhere. My standard advice is to aggressively get rid of debt and save for emergencies.

Q: I have about $12,000 in credit card debt with varying interest rates from 9.99% to 22.15% and I am trying to pay them off. I have started with paying the smallest card first but my question is, would it be better to get a debt consolidation loan to pay off the remaining cards if I could get an interest rate of around 7 to 10%?

A: These days credit is so tight you may have trouble getting an unsecured consolidation loan. But if you can get a loan and the rate is lower than the total average for all the credit card debt, yes I would consider it.

However, I need to warn you that many people who do this end up running up the credit cards after clearing them off. Sometimes slowly paying off debt and suffering while you do it helps keep you from getting into debt again.

But if you have truly learned your lesson and this will help you pay off the debts sooner, go for it.

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

Charity Brown contributed to this e-letter.