A Change is Needed

Michelle Singletary
Thursday, November 6, 2008 10:15 AM

The word for this season is change. We have elected a new president and once the jubilation is over, President-elect Barack Obama will have an incredible challenge. He's tasked with leading us out of an economic downturn the likes of which many of us have never seen before.

As the Post Dan Balz wrote yesterday in Hard Choices And Challenges Follow Triumph: "Not since Franklin D. Roosevelt was inaugurated at the depths of the Great Depression in 1933 has a new president been confronted with the challenges Obama will face as he starts his presidency."

Yesterday, for example, Michael S. Rosenwald reported in Manufacturing Falls to 26-Year Low that "export orders have collapsed, and businesses appear to be struggling to sell inventories of items ranging from appliances to tobacco products."

Slate dissects how the Bureau of Labor Statistics measures the unemployment rate and finds that it may seem low, but that's because it doesn't account for all of the underemployed workers or those who have given up on trying to find a job. The bureau's measure of the number of people frustrated with their jobs rose to its highest level since 1994, when the data series was created.

And yet is was the financial crisis -- or Great Millennium Meltdown, as I've been calling it -- which largely contributed to Obama's win wrote Anne E. Kornblut in Measured Response To Financial Crisis Sealed the Election.

Now Obama has to turn his campaign promises into economic change for the better, and it doesn't look like the stock market will be much help. After gaining more than 300 points on election day, the Dow dropped almost 500 points yesterday as investors were spooked by more bad economic news.

Chat Reminder

A show of hands, how many of you are thrilled the election is finally over?

I know I am.

But that doesn't mean we are finished venting or questioning what will happen to our economy in the months and years to come.

We all need to weigh in on the plans to help our economy. For example, there's a last ditch effort by the Bush administration to implement changes that "would weaken rules aimed at protecting consumers and the environment" writes Post reporter R. Jeffrey Smith in A Last Push To Deregulate (Oct. 31).

Smith reports that as many as 90 new regulations are in the works, including new rules governing employees who take family- and medical-related leaves and a simplified process for settling real estate transactions.

If you're fuming after reading the article, come release your anger in my weekly online chat. For the last several discussions I've allowed people to vent. It's much more constructive than cussing somebody out.

Join me at noon today for a real conversation about personal finances and the latest economic news.

150 Best Recession-Proof Jobs

First, thanks to all of you who sent e-mails with your warm comments in response to the hate mail I received recently. I won't say much more than that because it will unleash more nasty notes.

Anyway, I appreciated that so many of you enjoy this weekly e-letter.

But again this week, something I wrote hit a nerve with a few readers. Why are people so quick to take offense these days? Is it the nasty election campaigning, the change of season, or the sputtering economy? All I know is people are on edge.

For example, in reviewing the latest Color of Money Book Club pick for November, "150 Best Recession-Proof Jobs," I wrote in my column that there are some recession-proof jobs that don't require a college degree.

Several dental hygienists felt I implied there was no training or licensing needed for their jobs. One reader, a registered dental hygienist, declared herself so offended she wouldn't read my columns ever again.

She was highly offended, not by what I said in my column, but what I didn't say: becoming a registered dental hygienist requires extensive training and education.

I'm sorry if I may have untentionally offended people in a wonderful profession, but as a syndicated columnist appearing in more than 120 newspapers across the country, I don't always have a lot of space, and sometimes my columns are truncated. I'm sorry for that. In fact, that's the reason why I created this e-letter, so I could have the opportunity to write at length about some of the issues I report on in the column and to highlight other personal finance stories.

Had I been writing about what it takes to be a dental hygienist -- which was not my intention -- I would have reported that according to the American Dental Hygienists' Association there is quite a bit of training and supervised clinical dental hygiene instruction required for this profession.

Had the purpose of the book club column been to focus on this one career, I would have said a dental hygiene education is completed in a minimum of two years, but can take as long as four years. Specific dental hygiene licensure requirements vary by state, but most aspiring dental hygienists typically go through a two-year program to obtain a certificate or an associate degree. In fact, many dental hygienists initially earn an associate degree or go through a certificate program, and then continue their education towards baccalaureate or advanced degrees.

ADHA provides more information about this career, as well as a list of dental hygiene programs across the country.

The reason I selected "150 Best Recession-Proof Jobs" was to help people find jobs that would keep them working during hard economic times. There are some industries and jobs that can better withstand an economic downturn, while others are battered by the uncertainty. Look at retail sales, for example.

Circuit City, the nation's second-largest consumer electronics retailer, said it was closing 155 of its stores and laying off 17 percent of its workforce. Ylan Q. Mui has the whole story in Circuit City to Close 155 Stores, Lay Off Employees (Nov. 4).

In other job-related features, employment law and human resources guru Lily Garcia gives advice to two expectant mothers on navigating a job search while pregnant. Read Expecting a Baby and Looking for Work (Nov. 2).

I Can't Ride It Out

Many financial experts are telling folks to stay calm and ride out the rough times in the stock market. But what about people who have already retired and need their funds now?

Personal finance reporter Nancy Trejos sought help for retiree Elizabeth Small of Charlottesville, Va., who wrote to the Post to say: "Everyone says ride it out. There's not much riding I can do." Read what Trejos found out in Well Into Retirement and Caught Short on Income (Nov. 2).

Got a Job, But Lack Coverage

Freelancer and physician Manoj Jain examines our diseased health care system and its treatment of the uninsured. In one horrific story, a diabetic 19-year-old develops a chronic infection of the pelvis after losing her health care at 18, which had paid for her insulin. She worked two jobs, but neither offered insurance.

Forty seven million uninsured Americans probably have similar stories. And don't think you're safe from this fate. Many people lose their health care coverage when they lose their jobs.

Read what can happen when you are uninsured in Equal Treatment for the Uninsured? Don't Count on It. (Oct. 14).

A Bailout For Homeowners?

Congress is considering a proposal by the FDIC that would require the Treasury Department to guarantee mortgages.

The proposal would require extra funding separate from the $700 billion rescue plan already implemented. Only a fraction of homeowners facing foreclosure have received help, according to several reports. To date, there were 765,558 foreclosure filings in the third quarter, according to RealtyTrac.

Check out Treasury, FDIC Near Deal on Mortgage Aid (Oct. 30) by Peter Whoriskey, David Cho and Zachary A. Goldfarb.

The FDIC has had success reworking IndyMac's mortgages. The agency's effort to save homeowners has been extensive. According to real estate reporter Renae Merle, "The FDIC is skipping the traditional but time-consuming approach of making customized modifications to individual mortgages. Instead, regulators are plugging homeowners' incomes into a formula to determine how much they can afford to pay -- usually 38 percent of their gross monthly income. Regulators first try to reach that payment level by lowering the interest rate.

Find out more about this effort in New Model Is Forged In Bank's Wreckage (Nov. 1).

What to Pay First?

With limited funds, many people are wondering which bills to pay first.

One reader asks AllBusiness writer Miranda Marquit whether you should pay your credit card bill or your mortgage.

Read her answer.

You Asked

Here some additional questions left over from my last online discussion:

Q: My employer automatically gives 9 percent of my salary to my 401(k). I don't need to contribute anything. Should I add anything, ever?

A: Wow, you have an amazing benefit. Consider yourself blessed. General Motors recently said it was stopping its match to its nonunion employees' contributions to their 401(k) retirement savings plans beginning Nov. 1. The company usually matches contributions of up to 4 percent of an employee's salary.

But without knowing how much you make each year or what other retirement income you are expecting, I can't answer your question. However, you can go to www.choosetosave.com and work through the ballpark retirement calculator to see if you may still need to add to what your employer is putting into your 401(k) plan.

Q: Michelle, thanks for all of the advice and support over these trying months. I'm trying to pay off my debts, increase savings for emergencies, and still contribute modest amounts to charities/church. I've reduced my costs by cooking meals instead of take out, driving less, changing phone companies, and reducing cable channels. Any suggestions where to cut next?

A: You've hit all the big expense categories. Here are some more cost cutting tips.

Q: I am "almost" debt free. I owe $15,000 on my 5.5% mortgage. I have $23,000 in my passbook savings account earning almost zero interest. I want to pay off the mortgage. My husband says no, we've already paid the interest on it so let it ride out. I disagree, I think we are still paying some interest, but I don't know how much. I don't know how to figure that out either. What would you do? p.s. I do have an emergency fund and the $23,000 savings is my "life happens" fund.

A: I agree with you. If paying off the mortgage won't affect your emergency fund or cash reserves, I say go for getting rid of that bondage. I would welcome freedom as early as I could.

To help make your argument with your husband, call the mortgage company or the loan servicer to find out how much more in interest you owe on the loan. You can also use Bankrate's mortgage calculator to see how much you can save by paying off your mortgage early whether you are just $15,000 away or $150,000 away.

Q: I recently read your book ("Spend Well, Live Rich") and have been following your chats. In your chats you say to pay down loans before making a big purchase, such as a house. But how is this even possible? My husband and I are in the market to buy our first house, but we both have student loans. We are maxing out both our work and personal retirement accounts, and saving about 29 percent of our monthly income split into various savings accounts (long-term, short term, etc), and currently paying down my student loan as my husband is in school and his loans are deferred, plus his interest rate is really low. I am just curious how people who want to buy a house are expected to pay off upwards of $70,000 in loans before buying a house?

A: Well, it sounds like you have the means to pay down the student loan debt by reducing how much you have going in the various savings accounts. I suggest that even if you have student loan debt, save up enough money to cover a few months of living expenses. Stop saving at that point and use any extra money to pay down the student loans, even if the interest rate is low.

Temporarily you could also reduce how much you have going into your workplace retirement plans. At least put in enough to get a match and then use the extra funds to pay down the student loan debt. When that debt is paid off, you can go right back to maxing out your retirement and building up a savings cushion.

For me, I just wouldn't want to buy a home with $70,000 in debt. What if one of you loses your job? What if one of you gets sick? It's better to get rid of the student loans before taking on the largest debt in your life. And from what you say, you can do 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.

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