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.

A transcript of her latest discussion follows.

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: Good afternoon folks. So glad you could join me today. I promise to behave (mostly). And if you don't know what I mean, read last week's e-letter, which I also hope you will subsribe to if you don't already get it every week.

Well let's get started.

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Alexandria, Va.: I like your clever quip about keeping a car until you're familiar with the towtruck driver.

However, I have two problems with this advice.

1. If your car won't start and you can't get to work on time, your pay may be docked or you risk being fired if it happens often.

2. There is a terrific cost to other drivers who are sitting in traffic backed-up because your car broke down and is now waiting for your towtruck to show up.

I think these consequences should be considered when keeping that car another year. Of course, the first can have a direct financial impact on the car owner. The second with a cost to society doesn't have such a direct impact.

Thanks for your and Big Mama's advice (usually)

Michelle Singletary: Definition of a joke: It's funny.

Joke: Keep your car til you on a first name basis with the local tow truck drivers.

Definition of common sense: Know the difference between a joke and common sense.

Common sense is not keeping a car that you can't trust will start and make you late for a job you need to get another car.

Now if you have an old car and you can schedule repairs then you keep it until it rust off the road.

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San Fran, Calif: I always enjoy your column and find it very informative. Now, I need some advice.

My problem is my wife's terrible spending habit.

We are retired and living on Social Security and some pension money. We have some money saved. We are going thru it very quickly due to her spending addiction. It is just like a drug or gambling problem in many ways (dollar-wise at least).

The more we discuss it, the more serious it gets. She has gotten worse over the last few years.

She watches these QVC programs for hours every day and continues to order stuff off all these shopping channels.

We have rooms full of stuff we don'd need or can afford. How much clothes, jewelry and other stuff can one person use? I can not get her to stop it. We are not in need of all this material goods that is cluttering up our house. It looks at a warehouse, now. We have more stuff than three couples would need.

Take just last month, she charged thousands of dollars on the credit card. She won't listen to me and I can not get her name off the card. I have no ideal of what it will be this month, probably just like the past months

QVC and the others are of no help.

Any suggestions before I have to file bankruptcy? It is going to end our long term marriage at this rate.The problem is getting much worse.

When I was working, I was able to pay these bills. Now retired, it is very difficult.

signed.."ready to throw in the towel"

Michelle Singletary: You poor dear. First, don't throw in the towel. Would you do that if your wife had a heart problem or some other medical problem? NO. You would get help for her. Clearly there is something going on that is making her shop so much. It's not the money as you well now. Maybe she's bored. Perhaps she's angry. Sad? Who knows. I suggest you get counseling if she will go.

IF she won't take every single TV out the house. Cancel the cards completely. You can do that. Maybe both those actions will be the wake up call she needs. But keep trying.

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Silver Spring, Md.: Dear Michelle:

My fiancee and I are in the process of purchasing a home. We have a contract, which will (hopefully!) be ratified today. My parents have been very supportive of us purchasing, rather than renting. They are even giving us a loan for closing costs, minor repairs, etc. However, since we are now on the verge of home ownership, I believe my parents may have "buyer's remorse." For the past 2 days, they have been constantly questioning our potential purchase. My fiancee and I are quite happy with the home, and its purchase price. My parents will not be co-signing the mortgage; but we have a signed loan for the amount that they have loaned (their loan will be subordinate to the mortgage). My parents have not seen the home, only heard reports from the web. They even asked a friend to take a ride by there to ensure that it was "ok." Obviously, what a new family can afford is much different than what a middle-class Double-Income boomer generation can afford. I suppose my question is this: Can my parents prevent us from purchasing the home? Should the cooling housing market dissuade new homebuyers? Any advice you can give would be greatly appreciated. Thanks

Michelle Singletary: Well, if their loan is being used for closing cost etc. it most certainly could hold up the process otherwise how will you come up with the missing cash? Have you tried talking to them in a clear, honest way? Ask them what's the problem.

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Anonymous: I feel like sometimes you come off as very defensive when someone questions or builds on your advice -- like the tow truck commenter, who thought your joke was "clever" and just wanted to add something to it.

All you had to say to that commenter is: "Absolutely! Good point. I was making a joke, but, don't wait until your car is a useless pile of metal."

I'm sure you receive a lot of critical comments that offend you but keep in mind that most of us are here because we love your advice!

Michelle Singletary: Let me see the person said "I have two problems with the advice."

I don't know seems like he or she said they had a PROBLEM.

So I addressed the problem. That my advice was not to keep your car until you may cause an accident. Now if he or she had said that's funny but remember you should xxx. then I wouldn't have had a problem with the "I have a problem" comment.

I am trying to behave. And I do appreciate any and all comments. But I answer them in my way and in my voice.

If you could here me, you would see that I said it to myself in a very light way. This is just like e-mail. The words look harsher than if you SAID them.

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re: san fran's wife: One thing you said: when I was working, I could pay these bills - obviously, then, it's been many years that you have been ignoring this - it's not just a sudden thing...

In any event, Michelle, I completely agree with you, she needs some help.

In addition, you can at least do some things with the 'junk' you have - sell it on ebay. You won't get nearly what she paid for it (or maybe you will, sometimes I'm amazed at what pepole pay for stuff!), but at least you'll get something -and- get stuff out of your house...

Michelle Singletary: Absolutely! Good point.

But I will add maybe it wasn't obvious.

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Falls Church, Va. : Michelle,

My 21 year old sister is about to get a college graduation gift of $2500 from my dad and stepmom. She currently drives a 95 Taurus, low mileage, very reliable (yes, this question is for you, not Warren Brown). She wants to take the cash, trade in the car, and get a used CRV. I am trying to figure out which high yield CD (6,9, 12 month maybe) I can recommend to her to keep her from trading in a perfectly fine car until she has a job and is on her feet, so to speak. Thanks!

Michelle Singletary: If she doesn't have a job I don't believe she will be able to get the CRV anyway.

But I see what you are trying to do. You can find good CD rates on www.bankrate.com. And keep trying to show her that it's better to use that money as the basis for her rainy day fund. If you can't, let it go. As my grandmother said, "A hard head will make for a soft behind." That is she will learn when she really needs that cash for something else.

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Alexandria, VA: Hi Michelle,

I was denied a credit card through my bank about nine months ago. I have made substantial payments on my credit cards since then (all on time) and religious ontime payments on all of my other bills, thus hopefully raising my credit rating. How quickly does your rating change? Would it be safe for me to try to get the card again (I have a nasty interest rate I want to get rid of on another card)?

Michelle Singletary: Now let me ask you this. Clearly you aren't paying off the entire bill on the first card, right? That's why you are worried about that "nasty" little interest rate. I would rather you put ALL your energy in paying off that card. I know getting a card with a lower interest rate would help but applying again and getting rejected will put another ding on your credit score (it's not the rejection but the inquiry to get the card that causes the ding). Right now concentrate on paying off that one credit card then it won't matter what the interest rate is IF you pay off the balance every month.

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DEBT: In the past month I've run up about $1700 in credit card debt. I was depressed and went on a shopping binge (which is not excuse). I was doing so good. I had knocked 8K in credit card debt down to 5K in 6 months. I'm a little discouraged now and the task of paying it down seems so hard. I now have new bills that take away from the amount that I can devote to credit cards. Will I ever be out of debt!!! Argh.

Michelle Singletary: You will get out of debt. That is the moment you decide that the ARGH feeling is worse then the high you get frm shopping.

Do this today.

Take every single credit card out of your purse or wallet. Now don't use the cards for anything. No meals, no nothin.

If you have to take a trip save it up in cash and pay with cash. You have to stop BORROWING which is what you are doing when you use credit. Then consider if you need to talk to someone. I don't mean to say you are nuts or anything but if you are prone to bouts of depression perhaps you just need someone to talk to to help you sought thu things.

Most importantly stop kicking yourself. The debt deed is done. But you can knock down that debt again. And this time let it stay down.

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Herndon, Va.: I feel silly asking this, but can you explain how a CD works?

Michelle Singletary: Don't feel silly. With a CD you give the bank some money say $1,000. In exchange the banks says if you let us keep it for three months or six or 9 or 12 or five years we promise to pay you xx about of interest during that time. The longer we get to keep it the more interest we pay you. If you find you need that money before the time is up we have to penalize you (a certain amount of interest you would have earned). Your principal is protected however.

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QVC: QVC and HSC make viewers feel special, valued, and part of a "club". The sales people take "testimonies" from people on products.

Michelle Singletary: I totally agree. I mean I find myself watching and laughing and identifying and before I know it I'm thinking, sure I need that really ugly sweater with all those birds on it.

Or I most certainly do need that special bread slicer for the homemade bread I never make.

So I don't watch.

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Washington, D.C.: What type of life insurance and in what amount do you suggest i buy due to my having a developmentally disabled child?

Michelle Singletary: If I were you I would first consider all my assets. Do you have a retirement fund, savings. Will the child and or disable adult live in the home you have and if so how will the mortage be paid,

You might want to talk to a financial advisor to help you figure out how much insurance you will need depending on how long the child will need care. Is it possible he or she will ever be able to work and live on his or her own. If not the amount of insurance should be enough that a trustee could invest the principal and the child could live off the earnings otherwise she or he might go thu the money fairly quickly.

In other words your situation is so complicated you need a professional to help you work out a comprehensive plan with not just insurance but how will he or she health needs be taken care of. Who will be entrusted with the proceeds of any insurance money etc.

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CD again: So, what are the benifits of a CD, other than the protected principle? For example, my bank currently offers a 6 month CD at 4.25%. I have a money market account that offers me 4%. Is there any reason I should switch? With the MM account I can access the money without penalty and add to it. Can you continually make deposits (i.e. add to the principle) on a CD?

Michelle Singletary: Well, 4.25 is more than 4 percent and with a CD your money is FDIC insured. A money market account is not. Typically with a CD you buy for a certain amount. You don't add to it although you can certainly buy another CD. Now if you need to get to the money then the MM sounds better even tho it means you aren't earning as much.

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Re: QVC: my poor grandmother, as she was in her decline with alzheimers but spending days on her own, spent thousands and thousands of dollars on junk from QVC. it broke my mother's heart to clean out her house after her death and find all that cheap, ugly jewelry that seemed to be the only thing that made her happy during those years. These companies really ought to be ashamed of the way they take advantage of elderly, lonely people-- it's as bad as dance lessons used to be.

Michelle Singletary: Well I wouldn't say they are taking any more advantage of folks than department stores and other retailers. Was anybody checking on your grandmother? Didn't they notice all these boxes coming to the house? As my grandmother got older I often checked her mail and things just to make sure such things weren't happening. Now it could be that your grandmother, even in her mental state, wouldn't let anybody see her statements but always try.

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Somerville, NJ: Not only don't I watch the shopping channels, I deleted the channels from the TV

Michelle Singletary: Good idea!

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Alexandria, Va.: I just wanted to thank you for all of your no-nosense, direct advice. It seems that people who save, live within their means, and don't join the herds at the mall, shopping 'till they drop, are somehow suspicious, and treated with caution, if not distain. We own a small house, share one car, and save save save by not buying what we want, but what we need, and splurging on the occasional treat. Our friends and family treat us like we're stingy, crazy or both. But we will not adopt their spend spend spend lifestyle to make them feel better. So girlfriend- keep up the good work!

Michelle Singletary: Thank you. I appreciate the support. And believe me many of my family members and some friends think the same thing. But I don't care. They will be working til they are 85 asking somebody "Do you want a shake with those fries."

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Alexandria, Va.: Re: Credit Card through bank:

Hi Michelle, thanks for taking the first question. The credit card with the bad rate will be paid off this month. I'd just rather have a lower rate on my card and was really wondering about how long it would take my credit score to go up so I could get the card with the lower rate (just in case)

Thanks!

Michelle Singletary: Great. So it will be paid off. Then as I said, you don't need to worry about the rate, right.

I do understand what you want but hear what I'm saying.

Stop worrying about the rate and concentrate on not charging an amount you can't pay off the next month. Having that higher rate card may force you to keep that in mind.

There shouldn't be a just in case. Just in case what? Once you pay off that card take the savings and save that money for any "just in case" emergency that might lead you to charge up that card.

All I'm saying is take this time to recondition how you think and use credit.

But I will answer your question. HOw long it takes for your credit score to rise depends on a lot of factors. How much debt you have compared to the various credit limits you have. Your on time payments. The time since you last paid a bill late. However, if you've been paying bills on time and you aren't maxing out on any credit cards you should see a jump in your credit score in a matter of months.

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Washington, D.C.: Money Market and FDIC insurance... Michelle, if the chatter was talking about a MMDA account at a bank, it is ABSOLUTELY insured to the FDIC limit of $100,000. Only Money Market Funds sold through a brokerage are not.

Michelle Singletary: You are right but he or she said just "money market" not money market "deposit" account, which as you point out is FDIC insured. And alluded to the fact that it was not at his or her bank.

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Working forever: Actaully, you commenting on working 'til 85 made me think how hard it is for "savers" to retire, thinking that they have "enough". I was watching Suzie Orman a while back, and she commented that $850,000 in a savings account with $450,000 in an IRA wasn't enough for this almost 50 year old lady with no kids or hubby to retire on. My hubby and I disagreed, but I do think that's a scary step to take--to stop working and enjoy the fruits of your savings.

Michelle Singletary: You and your hubby are right. I think that was a lousy answer. You telling me a 50-year old with no kids or husband can't live on more than $1 millon. Please. It can be done and is being done by millions of retirees.

A comment like that just serves to scare people.

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bankrate.com: WOW! Thanks for reccomending bankrate.com. What a great tool. Wish I had heard of it sooner.

Michelle Singletary: YOu are welcome.

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Alexandria, VA: Michelle, the person last time who chided you for giving moral, in addition to legal advice, is indeed nuts! My husband and I love your books, columns and chats even though, from your perspective, we did everything wrong. We lived together for years before we married, although (our moral judgment) we did marry before I got pregnant. We have a 13 page pre-nup, and yours, mind and ours checking account -- and "ours" has the smallest balance! Nevertheless we have been marred many years, are happy and solvent (no credit card debt at all!) You are never mean, just well meaning. You also acknowledge, I hope, that there is no one-size-fits-all and everyone has to make his, her or their decisions on these matters. So we say, keep up the good work and don't ever change!

Love, Rhonda and Henry

Michelle Singletary: Ah shucks! Thanks.

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Tallil Air Force Base, Iraq: Hi Michelle,

I have been working in Iraq for the last two years and have been able to pay off all my bill (except the mortgage). And have about 100k in my savings account. I would like to invest this in something. Do you have any suggestions?

Kind regards,

Kevin

Michelle Singletary: First, I pray that you remain safe.

And I wouldn't dare tell you how to invest that much money. What I will say is perhaps it's time for you to get a financial planner. If you are concerned about bias, get a fee-only planner. They are planners that typically charge by the hour and are trying to sell you products but a comprehensive plan to handle your money.

The National Association of Personal Financial Advisors is the nation's leading organization of Fee-Only comprehensive financial planning professionals. Try this group's Web site to find a planner.

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Re: QVC and my grandma: No, of course nobody checked on her-- we just locked her in her house by herself and pretended she was already dead. What an awful question to ask someone! Because of her mental state, she hid the boxes in the back of all the closets. She didn't get several every day, but maybe a couple a week. she lived with my uncle who worked and by the time he got home it was already hidden away. They didn't see it as a big problem because it happened over a long period of time, and it was 20 bucks a few times a month. In the midst of medical problems and everything else, these things weren't apparent-- it was only when the junk could all be seen in a pile that it was obvious. and i think that it's a whole lot worse than a department store, because it preys on shut ins who can't get out of their homes and exploits their loneliness of being in the house. It harms much more vulnerable people than those who are mobile.

Michelle Singletary: See what I mean. Now when I said was someone checking on her meant her FINANCES. Was someone looking at her bank statements, credit card statements, etc. If you know a relative is suffering from alzheimers you need to check on these things because they can become victims to all kinds of things. Older folks do get lonely for company and a con artist calling can see so friendly they just talk to him or her. Or they watch televsion.

I had a disbable brother and I had a copy of all his banking statements sent to me. I noticed a few months he had ATM fees. It was $20 here and there but on a fixed income that kind of money adds up. Same with your grandmother. I wasn't blaming anyone but hopefully pointing out to others that if you have someone in this position you do have to become more observant.

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Laurel, MD: Hey Michelle,

I have finally found a way to start saving money. I have consolidated all my bills with this credit counseling agency, and I have started putting away some money each paycheck. Well, the now unfortunate circumstance is that I have to move desperately at the end of my lease, due to other circumstances. My sister is moving to MD (she just graduated) so we can be roommates, but I know that the cost of this move os going to cause me to dip into my mini savings. I am not happy about it, but is there any other way. Also, I still have to pay off a cell phone payment that my friend signed for me. I know this move is going to cause me more money monthly than before, but it is necessary. How do I go about all of this?

Michelle Singletary: Use your savings. That's what it's for. And aren't you glad you have it!

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Forestville Maryland: Hi Michelle

I am almost afraid to ask this question....my boyfriend and I recently married in November of last year. Since then we have been cleaning up our credit by paying off old debts. We have managed to save money for a home and have about six to eight more months to go before are debt free. A new housing development has broken ground and the first deliverables are not scheduled until early next year. We would like to go ahead and put down a contract on our home within the next month or so. Should we wait until we get all of our bills paid off in order to raise our credit score before putting down the contract? Or can we put down the contract now? We have been in contact with the lender and they know our situation and gave us the necessary steps in order to obtain a loan at the lower rate (cleaning up our score and not obtaining any new credit). We make over 106K combined. What do you think?

Michelle Singletary: Sounds like you are doing all the right things -- cleaning up your credit, checking with the lender. If you do all that you plan and you get get the lower rate you have my blessings :)

Seriously, always keep an eye out on the numbers. If you do pay down your debts and qualify for the rate that makes this affordable you are doing the right thing.

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Upper Marlboro, Md.: I have about $4000 in my savings account now. Every now and again when my checking account gets low, I take a little out of my savings. This mainly happens because I often buy things I don't need. I know that I'm an impulser shopper and am wondering if I should put my money in a 1 year CD to stop myself from spending it. If not, do you have any suggestions for what I can do? I stay away from the mall and major shopping outlets, but it's impossible not to go into any stores. I find myself constantly thinking about what to buy with my savings, but I know I just need to leave it put.

Michelle Singletary: Do this. Open up an account at a credit union or bank that doesn't charge or charge much for a savings account. Now have your saving automatically transfered to that account. Don't get an ATM with the account. Now when you need money you have to go down to the bank or credit union.

This is what I do. My savings goes to a credit union that have limited branches and hours. I don't carry the ATM card (don't even know where it is and I couldn't tell you the PIN if my life depended on it).

And then find something else to do with your time. Volunteer.

Also, envision what you want to do with that savings (aside from the emergency money you should always keep 3 to 6 months). do you own a home? If not dream about home ownership.

If you own a home, how about things you want to do around the home (with case of course). If that's not a problem then how about dreamign about sending your kids to college or helping a relative go to college. Think about those things instead of shopping.

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Poor Michelle!: why are people being so mean to you today?!

Forget them, Michelle, and keep doing like you're doing.

You're the best!

Michelle Singletary: I know. I might have to cry.

Am I hard sometimes. I can be. But people you just see the few questions I post. In my inbox are dozens more of people who are in debt because they shop too much. Or are hardheaded and then want me to tell them how to get out of situations it's taken them years to get into.

But no matter I know where my heart is.

I know that hearing what you don't want to hear is hard. So I joke, and tease and fuss because some of you NEED it.

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Loudoun County, Va.: Michelle, congrats on your new segment which will air on TV One. I watched your first show and truly feel this is an extention of your blessing.

Two questions where do you start when you know you're in debt and living paycheck to paycheck. No bill collectors are calling...yet but it could be around the corner.

Second question 1st and 2nd mortages both interest only, should we try to get a fixed?

Thanks for your advice and continue doing what you do.

Michelle Singletary: Thanks and you start by writing down your priorities. I say start there because then you have a goal, a place to go.

Then do a budget. Not so much to limit yourself but to get a grasp on what's coming in and what's going out.

Then set some goals - save up that three to six months living expenses, pay off debt.

Next, go to your benefits office and have a certain percentage of your pay automatically transfered to a savings account (not checking). Make it 10 percent. If you can't do that do 5 or 2 percent what DO IT.

As for the morgage well that's a hard question given that rates are way up. If you have debt you might not want to add on to your monthly expenses right not by refinancing until you get a handle on that. But realize with interest only you are not building up any equity.

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Laurel, MD: Thanks Michelle. No one has ever answered my questions

before.

I heard you on the Donnie Simpson show once and wanted

to come to your Financial session, but was unable to make

it. Are there anymore coming up anytime soon?

Michelle Singletary: You are welcome. And if you want to come see me speak here are two places I'll bee soon:

May 13

I'll be speaking from 10 a.m. to noon at The Sanctuary at Kingdom Square, 9171 Central Ave., Capitol Heights, Md. The program is hosted by the Young Adult Ministry For more information contact Penelope Knox at 301-333-9033

Thursday, May 25

I'll be speaking on behalf of the Young Adult Ministry at Greater Mount Calvary Holy Church, 610 Rhode Island Ave. NE in Washington. Again, I'll be reading from "Your Money and Your Man" on how to balance love and money.

The event starts 7:30 p.m. in the Kristal Room. For more information call 202-529-4547 ext. 216. You can also e-mail info@calvaryelect.org.

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Oprah: Hey Michelle,

Have you followed Oprah's show recently where she puts people on a debt diet. She's been following three families. Its pretty interesting. Just wondering if you saw it.

Michelle Singletary: I have and I think it's interesting. Those families were always fussing at the people helping them too.

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Rockville, MD: Hi Michelle,

Yours is the first column I read every weekend and I love it no matter what you write about.

I am a penny-pincher in several ways for financial and environmental reasons(reuse ziplock bags and plastic spoons! People might think I'm nuts) and I believe teaching kids fiscal responsibility at a very young age will help get them off to a good start when they become grown-ups.

I have an almost-5 year old. How do I teach her money-smartness without being pedagogue-ish? Any simple small ideas you can think of would be great.

Thanks, Kavitha

Michelle Singletary: Keep doing what you are doing. They are watching and learning. They will fuss but trust me they will follow. My oldest, Olivia is always shaking her head at my penny pinching ways. But you know what she's becoming as frugal as me. That girl can hold onto a dollar!

I'm so proud. I also use lots of humor. But mostly I also put my arms around the kids and tell them why I'm frugal. I tell them that I want them to go to college without taking on debt. I tell them that when they finish college I want to help them with the downpaymen on their first home. I remind them that we tithe. I remind them of the nice family vacations we take EVERY year and that if we waste money thu the year we can't go on these vacations (debt-free). When you talk them them about why you are saving it helps them see that you aren't being cheap just to be cheap but you are choosing to use your money for things that you value.

Read my column on Sunday. I'll be announcing the start of the Penny Pincher of the Year Contest. Hope you enter.

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Michelle Singletary: Well, got to go. I'm way over already. Thanks for all your questions. I did try not to offend anyone this week but alas I failed.

Still I enjoy the back and forth. I'm sorry if I didn't get to your question but keep reading the column and my weekly e-letter because you are likely to see an answer to your question there.

Take care.

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