Color of Money Live

Need advice about how to handle your personal finances? Whether the struggle is saving for retirement, organizing your bank files, talking about money responsibility with your spouse or loved one, Post personal finance columnist Michelle Singletary offers her advice and answers your tough questions.

Michelle hosted a free-for-all discussion on money matters on Thursday at Noon ET . A transcript follows.

In today's column , Michelle examines the repair-or-replace debate for broken appliances and electronics.

Read Michelle's latest columns , check out her Color of Money Book Club selection archive or sign up for her weekly e-mail newsletter.

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Michelle Singletary: Hey folks. I'm here. Just slow computer today. Anyway, let's get started.

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Charlotte Hall, MD: My fiance is terrible with money. How do I get him to understand the value of money and that the bills should be paid first then extra money is for other things.

Michelle Singletary: Seriously, don't get married until the two of you go through a premartial counseling program. If you can't get your honey to see the value of money and the importance of paying bills on time and first perhaps having a mediator (i.e. counselor) may help.

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Hyattsville, MD: Hey Michelle,

I hope you are doing well!

I am currently renting a one bed room condo that the owner would like to sell. We have talked about the possibility of me purchasing the unit directly for $110K (the market value of the unit is $130-140K). I think this is a great deal because the price is very reasonable and I lived in the unit for more than a year with minimal complaints. I just have one dilemma, I just recently applied to school which may take me out of the area for a couple of years. If I do get accepted into a program, my options would be to buy the property and possibly rent it out or defer my program admission for another year

provided that a particular school gives me this option. Are these reasonable options or am I moving too hastily? The property won't be up for sale until April/May and I won't find out if I'll be accepted into a program or not until March/April.

Michelle Singletary: Well, if you're sure you're going to move back to the area and this is too good a deal to pass up why not try to buy.

But consider everything. It's not easy being a landlord. Check around to see if your place can rent for your mortgage. How will you find a renter? Who will watch over the place while you're gone.

Just do the research to make sure buying now and renting now or later is a good idea. But in this market if you can get a place (again that you know you're coming back to) for a discount you should investigate it further.

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Washington D.C.: What do you think about getting the equity out of your home?

Michelle Singletary: Depends on why you want to get the equity out of your home.

I think lots of folks are using their home as a piggy bank and to cover up some bad spending habits. For example, they get a home equity loan to pay off credit cards and then run those credit cards right back up. Now they've put their home on the line.

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Falls Church, VA: Michelle, you do a great service to the public; I send out hozannahs! Now, let me ask you to weigh into the debate about now being a bad or good time to buy a home in the Washington area. Do you think prices will decline further as rates rise and seasonal demand drops? Thank you!

Michelle Singletary: Ah, thanks.

And nope don't have a crystal ball. Just checked and I can't see into the future.

I have no idea what the housing market will do and really no one does. All you can do it make the decision on when to buy based on your personal situation. Are you ready to buy? Well, do you have the money for the downpayment and or closing costs? Can you afford the mortgage on your current income? Will buying now really put you in a financial bind?

I do suspect that rising rates may cool the market down a bit. At least I hope so cuz people have lost their everlasting mind and are paying prices that are sure to make their financial life a living hell. Yes, it's important to own a home but if you're got to work 80 hours a week to pay that house note or if ANY thing goes wrong -- you lose a job etc.-- it might be worth it to wait.

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Washington, DC: Hi !

I have $100,000 from a recently sold home. I will be using that money for a partial down-payment in 3 years (est.). I would obviously not want to lose any money, but would tolerate a loss somewhere in the $5k range (over a 3 year period).

My question is: where is the best place for this money to go? I was thinking half total stock market fund and half money market . . . too risky? Thanks.

Michelle Singletary: Too risky. Most financial experts say if you don't have five years or more to invest don't invest. Three years is really a short time. But if I were you I would hire a fee-only financial planner and get some advice based on your total financial picture of what to do with that large sum of money. But if you only can tolerate a $5,000 loss play it safe.

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Frederick County, MD: I bought a townhouse about two and a half years ago. Since then, the value has increased about $85,000. I want to redecorate but I don't got the money to do what I want to do. Can I somehow get the value in order to redecorate? Thanks.

Michelle Singletary: Now see it may made sense to get a home equity loan for home improvements. But by decorate you mean getting a flat screen television or new couches I would save up for those items. My redecorate you mean adding a bathroom, upgrading your kitchen then perhaps you could pull out some of that equity because those changes can add more value to your home.

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Arlington, VA: Having trouble sending in a question, I'll try again. Your column today was very informative. For me, its the landfill issue more than money when it comes to throwing out big appliances. It seems like such a waste. On a side note and not appliance related, your column reminding me of my backpack. I've had it since 1993. It has a lifetime warranty by the manufacturer. So everytime, something's wrong with it, I send it in and they fix it and send it back!

Michelle Singletary: Good for you. And I totally agree about the landfill thing. It's why I try to recycle, repair, reuse, give away any and everything before I EVER consider throwing it out. We are such a nation of wasters.

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Alexandria, Va.: First time poster long time reader....

Hope you're enjoying the great weather.

My husband and I have been married for 6 months and I'm trying to get us out of credit card debt. We rent an apartment (1800/month) and can't move until the lease is up. We make decent money but can't seem to get out of the debt. Any suggestions? I've completely stopped my spending at the mall and we only go out to eat 1 night a week (our date night). We don't have kids but yet I can't seem to get us ahead?

Any suggestions?

Thanks

Michelle Singletary: Wow. Love first timers. I hope you join me again.

First, take a breathe. Know that you are not alone and that every day is a new day to control your spending and get out of debt. But also realize it's going to take time.

Take a look at my arhive Color of Money Book Club page. There are a number of books I've recommended about getting control of your debt.

But to start, make a list of all your debts and then focus first on paying down the smaller ones, even if it means just making the minimum payment (for a while) on some of the larger bills. If you can make more the minimum great but the point of this exercise is to get rid of one bill at a time so you feel like you've accomplished something. Often people tackle all the bills and because they only see small movement they get discouraged.

Second, take your time with buying a house (and I KNOW I'll get a ton of people asking me if I'm CRAZY).

But if you're struggling with paying debt and your current rent you're be struggling even harder with a mortgage and ALL the costs with owning a home. So take your time to get on sound financial footing.

Also give another look at your expenses. Try to find some more cuts and direct that money toward the bill paying strategy I just laid out.

You may also want to check out this Website: Choosetosave.org. Lots of good tips and calculators.

Good luck.

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Atlanta: Seriously, why is it people talk about how to raise kids, religion, etc etc (well, sometimes) but think that money problems will work themselves out when they get married? People don't change - you love all of them, how they are. They don't change for YOU they change if they want to. However, you said you'd marry your fiance the way he (she?) is, that's that. You get what you get. You can stress about it for the rest of your life, you can move on, or you can accept. You cannot change others. Love is NOT NOT NOT enough to make a great marriage. It is only a piece of the pie. I love many people in this world, but that does not mean it would be wise to marry them. I have a loving husband and we have similar life visions (and two kids). That's what you need to look for. Don't make a leap unless and until you can see yourself dealing with it - you CANNOT change anyone else. Have I said that enough?

Michelle Singletary: You have said it enough. What, trying to take my job?

But the central point of your message is right. What you date is what you get as a spouse. People don't change unless something HUGE happens or they get lots of therapy.

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washingtonpost.com: Color of Money Book Club

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Alexandria VA: I have been reading a lot of financial advice that lays out specific steps or guidelines for achieving financial stability. My situation is this, my husband and I have no debt other than our home which includes a mortgage and our home equity line of credit. The line of credit has only about 1/3 used but more will be added as we update our kitchen. According to some of these steps, I should only be putting 15% into my retirement and then using any "extra" or non-budgeted money to prepay my mortgage. I feel like I should be maxing my retirement options before prepaying towards a mortgage. What is your take on this situation? By the way, I really only desire the HELOC to go away. I am okay with letting the mortgage sit at its regular payment. Do you suggest that I prepay that as well, if you recommend prepaying at all? Thanks!

Michelle Singletary: I think you are right. My feeling is if you're not nearing retirement and you still have a ways to go to fully fund your retirement direct extra funds to that rather than paying down your mortgage.

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Alexandria, VA: Hi Michelle:

I'm a 56-year-old woman who is trying to figure out what steps I should take next in my financial life.

After recovering from some serious health problems and associated debt and job loss, I now have a job that pays well (90K) and about 30K in cash. I also have about 250K in a TIAA-CREF retirement fund, allocated into a fixed-rate annuity, stocks, bonds, and real estate. And, aside from about four more car payments, I have no debts.

So I am wondering what I should do next. Buy a place to live? (I'm currently renting.) Keep renting and do something else w/the cash on hand? Should be saving more, but am not quite sure whether to save more in cash to invest in a house or condo or save more to invest in something else.

Would appreciate any help you can offer. Given my age, I am behind where I should be in terms of retirement savings, so I'd appreciate any advice you can offer.

I'd also be interested in any advice you might have re finding a financial advisor who could talk about this with me in detail. A friend referred me to a financial advisor, but he turned out to be someone who typically works w/people who have more to invest. I think I need someone who is more accustomed to dealing w/"ground floor" investors, even though I am well past the age for a "starter" retirement plan.

Thanks. Your columns and your chat are terrific.

washingtonpost.com: You can read Michelle's past columns online here . Transcripts of her past discussions are also available online .

Michelle Singletary: First, I don't believe it's ever too late to be a homeowner. Look at 56 you've still got a lot of living to do if you look at the average life span of a woman, which is about 85 I think.

So why don't you look into home ownership if that's what you want. See what you can afford.

And if you're worried you are not saving enough for retirement I recommend you use the Ballpark retirement savings calculator at www.choosetosave.org. It's not perfect but will help you figure out if you're on track. With $250,000 in a retirement fund I would say you're in the right road.

And keep looking for a financial planner. You might try a fee-only planner and let him or her know you just need a plan. Getting such a plan might cost you about $1,000 to $1,500 but if you don't have a clue I think it's well worth the money.

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Upper Marlboro, MD: Hi Michelle,

My wife wants to stop working her 9 to 5 and come home to take care of the children. We have an 11 and 2 yr old. We also have a new home and two cars. I make twice as much as she does but we use both incomes to live on.

Do you have any suggests or know where we can get information about how to make this transition?

Michelle Singletary: I think it's great your wife wants to be a stay-at-home mom. But you're righ to make sure it makes financial sense given the fact that you're using both incomes to make do. But it could work since you might significantly cut costs now associated with her working. Go to Kiplinger's website for a good calculator on whether she can afford to say home. Here's the site: http://www.kiplinger.com/personalfinance/tools/managing/afford.html

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Denver, Co: People do change! Thanks to my beau and to Michelle, I have turned from a spender into a saver. I now put 15% into my 401(k), have saved up cash to buy a used car this year, and am currently putting about 1/3 of my paycheck into a savings account for a house down payment. I figure that by the end of this year I will have saved about 50% of my income. WOW.

Michelle Singletary: Great for you. So specifically how did you make the change other than listening to the wise woman that I am :)

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Alexandria, VA: I am trying to pay off debt, too. I have your book and really enjoyed it.

I lost a job last year and lived off of savings until I started a new job. The new job, which is so much better for me mental-health wise, was almost a 20% pay decrease over the previous job. Which sounded fine as I was reasoning it out, but has not worked out practically.

I've gotten discouraged and fallen into some bad habits. I am starting to pull myself out of this new mess now, and know that I have a lot to look forward to (I'm getting married, my car note will soon be paid off, etc.). I guess I just need some encouragement.

My fiance is out of town this weekend -- perhaps I'll stay in with the cat and re-read your book.

Michelle Singletary: Definitely read my book (Spend Well, Live Rich).

But most importantly remind yourself how it felt to not be in debt. Remind yourself how it felt that you HAD some savings to fall back on. Also keep in mind that if your unhappy making more money won't make you happy. Yes, it's tough to scale back your life once you're used to making and spending a certain amount of money. But boy oh boy it is better when you've got a job you enjoy a man that loves you and some savings to tide you over.

Don't get discouraged. Everytime you think you want to go shopping or spend what you don't have remember the feeling of financial security. Seriously for me beats getting one great pair of shoes on sale.

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Alexandria, VA: RE: fix or buy new. I was horrified last year when my 12 year old clothes dryer died and was going to go the route of buying new - but then I thought I needed to get a matched set and it was going to be expensive. Called Sears, and it only cost $60 to fix! YEA!

Michelle Singletary: Yeah back.

My first reaction is to ALWAYS ALWAYS see if something can be fixed first.

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Re: one card at a time: You are SOOOOO right to tell Alexandria to pay off her credit cards one at a time. Because of poor health insurance, I had to run up a lot of credit card debt. Just like you advised, concentrate on one card at a time while making minimum payments on the others. Yes, interest will run up, but so will it anyway by making smaller payments on all of the cards.

Michelle Singletary: Thanks. I love these testimonies. Keep them coming!

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Rockville, MD: Hi Michelle, You offer great advice for people in this area making the big bucks and spending themselves silly. I am on the other end of the spectrum - decent job (in my field), no debts, but really, no money pouring in either. What words of wisdom would you have for those of us who do everything right yet just don't seem to make enough, and won't? Thanks!

Michelle Singletary: Child my advice is always intended for the well off and the "man I don't know how I'm making it" crowd.

If you're income challenged then you have to just be more creative. Get a roommate. If you're done that get another one. If done that maybe just maybe you might need to move to a lower cost area. I really do wish I had some sage advice for folks just getting by and who have cut to the bone. I just know that we all HAVE to make it somehow and if your income is low you have to be willing to do just about everything to stretch your dollars.

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For the wife/mother who wants to be a SAHM: One suggestion is to try to use only the income from the working spouse and put the future SAHM's income in savings account (you will need to scale back to a more stringent budget if you are using both now). This will allow you to explore whether you will be able to live on only one income as well as let you save up a few months of the 'extra' income as a cushion for the future.

Michelle Singletary: Great idea. Sort of trial run. Of course this could be difficult if you can't cut some major expenses such as child care during the dry run.

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Denver, Co: How I made the change: Read Michelle's book, which I borrowed from the library. Took to heart the mantra: "if it's not on your a$$, it's not an asset". I severely cut back on my shopping. I now take my lunch to work and treat myself on Fridays. I make a menu on Sundays so that we make dinner at home and don't use the excuse "I don't know what to make for dinner" to go out to eat. I stopped going out to bars and spending so much $ on drinks (my liver thanks me). I stopped going to Target for something to do on my lunch hour and walk out $100 lighter. I started going on walks on my lunch hour instead. I cancelled digital cable.

I could go on and on, but the little expenses truly do add up. And I really don't miss anything I gave up. Thanks, Michelle!

Michelle Singletary: Thank you. And it's "If it's on your ass, it's not an asset."

But you are right you've got to sweat the small stuff (mantra no. three)

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Temple Hills, MD : I recently married someone (three months) I lived with for three years without going through financial/marital counseling. How can we find this "help" in our area after the fact?

Michelle Singletary: Try your church if you belong to one. Try the benefits office at your job. They may be able to refer you to a couples therapist. In a recent column I listed a number of places to look for a counselor. The column was titled "Little Green Lies."

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Ellicott City, MD: I loved your article about repairing or replacing appliances. However, I never have understood the economic formulas behind that decision. Take your TV. It cost you $900. Even if it cost you $700, wouldn't that be cheaper than buying new, especially if the repair makes the TV last another 10 years.

Michelle Singletary: But a 10-year-old TV doesn't have all the cool stuff the current ones have. And in many cases the current appliances etc. are more energy efficient. But basically you're right.

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washingtonpost.com: Little Green Lies (October 23, 2005)

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Rockville: "If it's on your ass, it's not an asset."

Um, what does this mean?

Michelle Singletary: When you buy stuff to wear, drive etc. you are not building wealth. You should strive to acquire assets that have the potential appreciate in value -- home, stocks, bonds, savings account.

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Virginia Beach, Virginia: Hi Michelle!

I love your column and read it religiously. I handle most of our financial affairs, and have been wondering recently just how much homeowner's insurance we need to have. Do I need to insure it for the assessed value, the retail value, or at the value our insurance company places on our home? These numbers vary widely, so confusion reigns. Help!

Michelle Singletary: Man, would take me longer than I have to answer this. But you should talk to your insurance agent. But basically you want enough coverage so that if the worse happens -- your house burns down-- you have as much coverage as you can get to rebuild your home and replace the contents.

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Laurel, Md.: I'll never forget the time I got my VCR (replaceable for about $175 at the time) repaired for only $85, and got six more months of life out of it. As a GENERAL rule, it's not worth repairing anything that you expect to replace for technological updating. If you buy a computer every three years, and one conks out after two, just move your cycle up. OTOH, large household appliances and cars that you expect to use until they die usually are worth repairing until one year's bills equal one year's payments.

On the same subject, have you written any recent columns about add-on warranties? You can't buy anything over $100 without your salesperson trying to get an extra 20-50% out of your purchase. I usually react to these pitches the same way as to phone calls offering trips to Las Vegas or Orlando. They obviously sell them with the expectation of making a profit. But their cost of DOING a repair is a lot less than my retail price to BUY a repair; so conceivably some aren't terrible.

washingtonpost.com: Today's Column: When It Pays to Nix Instead of Fix

Michelle Singletary: Totally agree. And haven't addressed warranties lately but check with Consumer Reports

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Baltimore: Hello Michelle,

First let me say that I love your column. My husband actually turned me on to you and now I think I am driving him crazy because I always start off sentences with, "Michelle would say..." At any rate, I know today's column is about repairing electronics, but I am wondering how to determine when to get rid of an old car. We have two 10 year old cars. One (the more reliable one) my husband drives regularly and puts a lot of miles on. The other one is less reliable, and I generally do not drive it more than 40 miles per week. However, when ever we need to have it serviced --- which can be quite often --- it costs a pretty penny. I am wondering how do we know when enough is enough? Are there any guidelines? Do you have any advice?

Thanks in advance.

Michelle Singletary: Well, thank you. You're get a hundred opinions on this but my rule is if the car has become totaly unreliable and is likely to break down at any time or has done so quite often recently it's time to replace. However, if the repairs can be planned for and the costs are just a few thousand a year, hang on to it. Keep in mind a new car these days is SOOO expensive. So on the one hand you have let's say $2,000 in car repairs for basically still a good car vs. $20,000 car price plus interest. I'll take the $2,000 any day -- again as long as the car isn't constantly breaking down and has elevated your stress level or you're praying it will start up every time you get in it.

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Potomac, Maryland: Hi Michelle - love your column. My financial planner is recommending that we go to an attorney to do our will, as well as all our other will related documents such as advanced directives, guardianship, etc. (we have one son, 15 years old). Is there a good reason to use an attorney rather than the many Legal Document Software programs that are out there. Since an attorney can cost us well into the thousands for this, would appreciate knowing your view on this. We do have many assets (home, vacation home, two jobs) -- which could make a difference. Thanks!

Michelle Singletary: If your financial life is very complicated than I would take the advice of your planner. Certainly many people go the do-it-yourself route and are fine but their life tends to be simple. The thing with a will and such is you don't know if you've done everything right until it's too late and your dead and your family is trying to sort things out.

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Baltimore, MD: Is it a good idea to tap into your home's equity to make home updates/repairs when you plan to sell (hopefully) in a year?

We could use our savings and income to pay for the updates/repairs but it would deplete our savings.

Thank you.

Michelle Singletary: I think if the updates and repairs are going to increase the value of your home or make it more appealing to buyers than yes. If not, don't bother because you will be borrowing money you have to pay back from the equtiy of your house to get the same money back in the sale.

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Michelle Singletary: Well the time did fly. I'm so grateful for all who joined me today. Great questions, testimonies and tips. There were loads of questions left over and I'll try to answer some in my column. Take care and for those strugglign with debt keep up the good fight. Trust me with time you can dig yourself out.

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