By Michelle Singletary
Thursday, May 6, 2010; A15
Every now and then, I answer questions culled from my e-mail or left over from my regular online discussions. I do this to let you know I'm concerned about your financial issues even if I can't reply to all inquiries personally.
It also gives me an idea of the day-to-day financial issues many of you face. The questions typically have nothing to do with what the Dow is doing on any given day.
People want to know how to deal with financially irresponsible relatives. Seniors want to know how to stretch their retirement funds. Spouses want to figure out how to merge their financial lives.
So, let me start with family finances.
Money matters in a family aren't just complicated, they can be painfully expensive, as this reader noted: "How do you say no to family when they are constantly asking for help? My sister is a single parent with three children, and my other sister is having trouble with her children and is asking for financial assistance. I am the oldest of nine kids and I am just tired of giving out money."
It's definitely okay to say no and probably is the best thing for your sisters. When you are the Plan B for financially reckless family members, they often don't pursue a Plan A. If they know that when they are in a jam they can tap you, why should they grow up and be responsible for their own actions and money mistakes?
I believe that family members should help one another, but there are ways to help that are a hand up and not a handout: Show them how to budget, give them the name of a reliable nonprofit consumer-counseling agency (they can find one in their local area at http://www.debtadvice.org), and most important, learn to say no. Let them fall. You might be surprised at how resourceful they become while trying to stand on their own.
From another reader: "Even if there's not a legal requirement to pay off a deceased relative's debt, isn't there still a moral obligation?" If you follow the logic of this question, then why aren't relatives obligated to pay the debts of their living family members? Why would death elevate this obligation?
Unless you co-signed on a debt, you have no moral obligation to pay off debts belonging to a deceased relative. You never promised to pay anything. It's the legal and moral obligation of the estate to pay the debts if there is any money available.
One reader who hates debt asked: "We need to update and upgrade our home significantly, about $100,000 worth. We have significant retirement funds, and we are old enough to take that money out (we are in our 60s). My husband wants to get a home equity line of credit. Where would be the reasonable middle ground between our positions?"
First, be sure that you want to stay in the home for years to come and that you really need to do $100,000 worth of work. Get multiple bids to see if you can cut costs or eliminate some upgrades, concentrating on needed repairs.
In my senior years, I wouldn't take on debt if I had cash to pay for the things I want. It's hard for many seniors to manage debt. The rate of bankruptcy filings among those 65 and older has more than doubled since 1991, according to a 2008 study by AARP.
With possible decades to live, don't pile on debt. Who knows what the future holds? You may need your money for medical care.
I'll wrap up with a question from a couple starting out their financial life together: "My husband of two years and I are ready to finally merge our accounts. He has checking accounts with a national bank and local credit union. I have a checking account at a community bank. Should we keep the multiple accounts? We really want to stop living like roommates."
Keep the national bank account for your joint checking to handle day-to-day bills because it probably has a large ATM network. Use your husband's credit union account to stash your emergency fund money (three to six months' worth of living expenses).
Keep your community checking account and make it what I've dubbed a "life happens" account. This is where you keep the money you save for future car repairs or vacations or to splurge on a yearly theater subscription. Make sure you both are listed on all the accounts.
So, you see, you don't have to end all your banking relationships to become one financially.
Readers can write to Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.
Comments and questions are welcome, but because of the volume of mail, personal responses are not always possible. Please note that comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.