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Michelle Singletary
Washington Post Columnist
Thursday, May 25, 2006; 12:00 PM

Michelle Singletary hosted Amanda Walker , senior editor at Consumer Reports, for a discussion about this month's Color of Money Book Club selection -- "Consumer Reports Buying Guide 2006."

Michelle writes that if you are ever going to buy something, you need to get a subscription to Consumer Reports. She adds that if you don't have a subscription, the buying guide is the next best thing.

A transcript follows.

Read Michelle's past Color of Money columns .

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Michelle Singletary: Thanks for joining us. Our guest today is Amanda Walker from Consumer Reports. We'll be discussing this month's Color of Money Book Club selection -- "Consumer Reports Buying Guide 2006." I see lots of questions submitted so far, so let's get to them!

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Laurel: Ms. Walker,

I know you magazine has to charge for subscriptions to operate (and more than most magazines because of advertising revenue) but it concerns me that your recommendations are therefore only available to those able to afford them.

Can't remember where, but I definitely remember reading that poorer consumers are more likely to buy expensive, heavily advertised brands of products because seeing ads is the closest thing to a consumer education they get.

Does your organization have any efforts to direct your knowledge to those who can't afford to pay retail for it?

Amanda Walker: That's a really good question. You are right that we are supported by subscriptions and donations only, so that is how we are able to do the work we do. The magazine, however, should be available at most libraries, so that's a spot to get the info. for free.

Also, we never charge for information on our Web site that has any kind of safety issue connected to it, such as ratings of child guard gates that are unsafe, or cars that rollover, or bike helmets that are not up to snuff.

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Alexandria, VA: The buying guide is useful, but becomes out of date rather quickly in today's world. Another, easier way to access Consumer Reports' info without a full year's subscription is to get a one month subscription to their website - it costs around $5 and is a great deal when making a purchase of something expensive and/or reliable. You also get the benefit of past reviews that you wouldn't get in current magazines.

Michelle Singletary: This is a good idea. But as I said in my column I get a subscription because I also want to make sure the publication is around and has revenue. If we all try to do this on the cheap they won't have the revenue to continue to provide us with unbiased reviews.

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Manassas, VA: Hi Michelle and Amanda,

I am trying to decide if now is a good time to buy a new car. We have never bought a new car in our family - the newest car we own is a '98 and the oldest is a '93. My car currently gets about 24mpg, which has decreased over the past year, though I keep it tuned up and the oil changed. Recently we have spent about $2000 in car repairs since all of our cars are older ( between mine, my husband's and my daughter's cars).

I suscribe to CR, and use it as my "bible" for purchases. I've read all the recent articles on hybrids, pros and cons, etc.

With gas prices in this area now above $3.00/gal, I'm thinking now would be a good time to invest in a hybrid. I would like a new car, and I can afford the car payment.

What do you think?

Amanda Walker: I, too, was recently at the "do I keep putting more repair dollars into this old car or get a new one" stage.

If you drive more than 15,000 miles a year, and especially if you do lots of city driving, and can take advantage of the tax breaks hybrids provide, it might be a fine choice. Since you have read up on the subject, you know we recommend the Toyota and Honda models.

Keep in mind that other cars we like do great on mileage, too, such as the Civic. Why not give a variety a test drive? Might as well make it fun!

Michelle Singletary: And don't forget to test drive and consider American-made cars with good mileage!!!

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Philadelphia, PA: Not related to the Consumer Reports, but I have a question about savings accounts. There was recently an article in the NYTimes about online savings accounts that provide up to a 4.5% interest rate since they have lower overhead costs by doing business online. This sounds great! What's the catch? I read the FAQs and several of the programs don't seem to charge a fee for transferring funds to or from your home bank. Only "downside" I can find is that you are often limited to about six withdrawals a month, but if it's a savings account I can't imagine that being a huge issue. So is this too good to be true or a real bargain? Thanks!

Michelle Singletary: There is no catch. They can offer better rates because these online banks don't have the same overhead as brick and mortar banks. So fortunately for now they are passing on that savings to consumers. Just make sure the bank is FDIC insured. You can go online on the agency's website and check. Also, check around because regular banks are getting hip to the online banks advantage and many are matching if not beating those rates. To find the best rates go to www.bankrate.com

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East Lansing, MI: Love your magazine. You do a real service for the average consumer. I have purchased everything from my Subaru Forester to Norman Love chocolates based on your recommendations! My only piece of constructive criticism would be for you to place a bit more emphasis on good design. I am a design fanatic, and often I wish that was taken into account more often.

Thanks again!

Amanda Walker: You'll be happy to hear that we are about to launch a new publication called ShopSmart that will talk more about design. It will also be less "chart-heavy", mostly down and dirty kind of shopping advice for folks with lots of demands on their time who just want to know what our top recommendations are, how to shop, and what to avoid.

Look for it at supermarkets shortly.

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Rosslyn, VA: Michelle, I am considering buying a new or leased mini cooper convertible. When I went to the dealer they said that the cars were is such demand that there was no room to negotiate the price. Is this true based on advise from Consumer Reports car buying service? What is your assessment of the Mini 2005? Thanks.

Michelle Singletary: First don't you dare LEASE a car. I'm not having that from someone who obviously is a smart buyer or you wouldn't be in this chat.

Don't know much about the Mini other than it is a popular car and if you read Consumer Reports you know that often when there is a hot car in hot demand the dealers can afford not to negotiate. You might want to try buying it online to see if you can get a better deal.

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Washington, D.C.: As I'm sure you're aware, there are a plethora of designations for financial advisors--some legitimate some not.

Have you ever considered starting your own certificate program? The BMCFA--Big Mama Certified Financial Advisor. Just a thought. Keep up the good work.

Michelle Singletary: LOL

That is such a great idea. However, the thing I like about how I go about my work is that people -- readers -- aren't paying me so much like Consumer Reports I can say what I want because I'm not selling anything, even my advice.

I do however, give speeches locally and nationally to try and impart the great financial wisdom I got from Big Mama.

And of course you can get my advice every week in my two columns, chat and weekly e-letter!

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Baltimore, MD: Today's article was an interesting take why fincances and bank accounts should be joint when you are married. However, what if you are in a situation where one spouse is obligated to pay child support? My husband and I don't want to risk that my higher income, which will show up on bank statements, will impact any support awarded.

washingtonpost.com: Joined in Marriage and Finances

Michelle Singletary: Well, according to my research, child support is based soley on the income of the parent in question. So your income (and if there are any family law attorneys out there chime in) would not be used to set child support.

Of course I'm assuming that your "joint" income is used to help raise this child far and above any child support payment should the need arise.

I say that because I hear a lot from women (mostly women) that they absolutely don't want any of "their" income used to support their potential husband's child or children. They think they shouldn't have to do anything.

In that case I typically advise them to either stay single or find a mate without children from a previous relationship. Why?

Because when you marry someone with children you get the whole package and that might mean using your joint income to send them to camp or college or whatever. If you have a problem with that than don't go there at all. It's not fair to the child and usually causes a lot of problems.

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Washington DC: Hybrids: As a hybrid owner for over two years now, I'm getting a little tired with the argument that people drive hybrids to save money on gas. It's more than that.

For most of us, the decision to purchase a hybrid (and we ran an American-made car into the ground for ten years) was a conscious choice to USE less gas and to pollute less; to reduce our ecological footprint on this planet. We had no thought about saving money on gas.

If a US-made car that used less gas and polluted less was available, we would have considered that. But Detroit missed the boat and is just now trying to catch up (starting, not so ironically, with a hybrid SUV).

If one is in the market for a new car, then yes, please consider a hybrid if you can afford it. If not, then a small car that gets great mileage would be a fine choice. American-made even better.

But owning a hybrid shouldn't be about saving money on gas.

Thank you.

Michelle Singletary: I hear you but this isn't a case where it has to be one or the other.

You are right we all should be consuming less -- me included -- because it is the right thing for our precious planet. But if I can save money doing the right thing, then baby I'm there.

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Washington, DC: Hi Michelle - I know this isn't consumer reports related, but I was wondering if you could give some advice. A couple of days ago I received a letter from a credit card company saying they planned to close my account "for business reasons." I have not used the card in 6 months and have two other cards so I don't mind that they are closing it. But I am wondering if this is unusual, and if it will have any negative impact on my credit report/score. Perhaps a vital part of the story is the reason I stopped using the card in the first place - I made a late payment and they increased my interest rate to 30%. I quickly paid off my balance and have not used the card since. Thanks for your advice.

Amanda Walker: Well, I can give you the Consumer Reports answer, and let Michelle give you her response. I'd call the company and ask them just exactly what the business reason was, and how the closure was reported to the credit reporting bureaus (Experian, Equifax, and TransUnion). You are probably right, it was likely because you weren't using the card. This must have been especially vexing for the credit card issuer, since they raised your APR and could have been making lots of money off you these past months!

Then I'd get those annual free credit reports from those three bureaus (the Web sites are simply their names plus.com, i.e. www.experian.com, etc) and make sure the closure is not listed negatively (there is a section which notes what might be viewed negatively).

Because the card firm raised your rate, any other credit card with what's called a universal default clause may also raise your rate, even though the payment was for another card, so check that out. In the future if you have a card you are not using, go ahead and call the company, close the account, and make sure they note on your file that it was "closed at customer's request" so it won't negatively impact your reports. You may ask for a follow-up letter that will say just that.

Michelle Singletary: Can't really add because Amanda is right on the money especially when she says check to see how they reported the closed account. And definitely keep an eye on your other cards because that high rate on that one card could impact your rate on others.

But of course if you are paying off your balance every month, as you should be, then the interest rate doesn't matter, right?

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love your new photo: you look great!

Michelle Singletary: Ah, aren't you sweet!

I much cuter in person tho.:)

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Midwest: My partner and I live together. (Before you ask: We can't get married because we are both women.) She has 50/50 custody of a daughter from a previous relationship. We're both in our early 30s.

I'm employed full-time; she's employed half-time and a student full-time. I'm about to quit my job and become a student full-time. No loans -- I'm on scholarship, and she has a small trust fund.

I've got about $50,000 available for living expenses over the next three years (plus whatever I make during the summer -- it's law school so I can't work during my first year). I have about $30,000 in a 401(k) and she's got $90,000 in a retirement fund of some sort -- and barring catastrophe, we're not going to touch it. She's covered by the trust but doesn't want to tap it out (it's low six figures). Her regular income's about $15,000 a year, and she neither pays nor receives child support (her ex has similar income). The child does have a 529 with a few thousand in it (she's 5).

Our rent's $900 including all utilities except phone and cable (we wouldn't be able to do much better in this area), and we have no consumer or car debt.

What should we be doing to ensure we stay on a good financial path during school? I'll be graduating in '09, she in '08.

Michelle Singletary: Wow. You got a lot going on but clearly you've paid attention to your savings. Before you go to school be sure to really budget out your needs during the next several years. Since your income will be limited and your ability to earn more hampered by your studies, it's critical that you stick to a budget. Also, really look at all your expenses and start cutting where you can. And keep in mind operating under this strict budget isn't going to have to be done forever.

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Alexandria, VA: I love the Consumer Reports Buying Guide. It helped me make good decisions about appliances. I will consult it when I look into buying my husband's Christmas present, a plasma tv.

Michelle, I also want to thank you for the chats. I have learned so much. I am currently reading Debt Proof Living and Living Life for Half the Price by Mary Hunt. I am trying to apply some of her principles to my life. I do not belong to a church so I do not want to tithe to a church I am not familiar with. In the interim, would giving my 5-10% to So Others Might Eat be a good charitable contribution?

Again, thank you for everything. I appreciate your no nonsense approach. You are the way you are because you care.

Michelle Singletary: Thank you so much for your wonderful comments.

And I think it's wonderful you want to tithe to a chartiable group until you find a church home. So yes, I would support that.

Also once you find a church home if you budget right I'm sure you will still be able to give to charitable causes.

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Today's column: I so agree with your advice on joint finances. If you can't trust someone, why are you marrying them? People think 'love' is enough, but that's why we have such a high divorce rate. Money is one large issue in marriages, so why would you marry someone with a different idea of how it should be handled? I wouldn't have married someone who I didn't think had ethics that i liked, or life ideas that i didn't like or whatever - why would i have married someone who couldn't handle their finances? It is another thing that shows you how a person is, and you have to live with them (hopefully) forever. It never made sense to me...

Michelle Singletary: Doesn't make sense to me either!

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Hybrid Cars: I don't see why that person is so up in arms about people buying hybrids in order to save some gas money (which the higher cost of a hybrid usually offsets anyway.) If they truly care about the environment, they should be happy that people are supporting that technology regardless if the motive is to save gas money or get in carpool lanes. In the end, they are all still consuming less.

Michelle Singletary: Maybe he or she had too much coffee.

But I do understand the frustration about how we sometimes make decisions that don't support consuming less unless it saves us money.

Still you too have a point.

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Laurel: Two related questions:

1. Does your guide compare businesses as well as products? Many medium-ticket items today (say, $50-500) are sold under some kind of rebate, and since they must be expensive to administer, the only reason for their proliferation must be that many people will fail to cash them in through negligence or confusion. Does your guide compare on-line or physical retailers about their "gotcha" ratio?

2. There are a lot of on-line shopping sites that allow consumers to rate businesses for their shopping experience, as well as the products themselves. How well do the product ratings on Amazon, Epinions and similar correspond with Consumer Reports'?

Amanda Walker: The Buying Guide contains information on more than 950 products, including tips on shopping for individual items, how to shop retail vs. online vs. catalog, info. on warranties and repairs, and some tips on how to protect yourself from ID theft when you shop. We also give the results of our readers shopping experiences/satisfaction at different retailers. And certainly CR has covered the nasty pitfalls of rebates.

I don't have a head to head comparison of what consumers say on the sites you mention and what they tell us, so I'm afraid I can't answer that.

Michelle Singletary: As far as rebates this is what my husband does so he doesn't forget to claim them (he's our treasurer by the way cuz yours truly hates spending money so much she can't stand writing checks and seeing money go out for anything)

anyway he tapes the rebate info and receipt and such to his computer so the next time he does the bills he can send it right out.

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Atlanta, GA: My husband and i bought some rental property last week and included in our closing papers were our credit scores. Just thought you might want to know someone who's score is -797- (that's right!). My husband's is only 783, but I'll keep him...(oh, and it's not cause we have different finances, he had to get a credit card for work, it's in his own name, and it's only been open a few months - at least that's why we think there's a discrepancy).

Michelle Singletary: Are we bragging :)

Well I have a credit score in the 800s :)Still trying to hit the perfect 850 tho.

And interesting my husband's was lower than mines too. But I'm definitely keeping him as well. He's oh so fine so I don't mind if his credit score is a wee bit lower than mine. He makes up for it in other ways!!!

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Oakton, VA: Good morning Michelle and Amanda,

My wife and I have been CR subscribers for almost all of our 37-year marriage. Like your husband, Michelle, we always check CR.

About 30 years ago, we needed a new clock radio, and CR had rated them. I brought the magazine into the store, pointed to the page and told the man "That's what I want." He replied: "Armed with Consumer Reports, he makes the right choice!" That's been a mantra ever since, for everything from cars to deck stain. (And thanks for recommending the Acura TL -- we love it.)

What I'd like to tell the folks out there is how great ConsumerReports.org is. For $26 a year (less than a latte a month!) you get 4 years of searchable articles and ratings. Outstanding value.

(I may sound like a PR person for CR, but my only connection with them is as subscriber and donor.)

Amanda and Michelle, thank you both for all the good work you do.

Michelle Singletary: Amen. And we aren't paying him, honest!

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E-85: If you are going to consider American made and American fueled economy cars- the Chevrolet Impala is a flex fuel vehicle that can run on ethanol or gasoline(where available-the gas I mean) and gets over 25mpg.

Michelle Singletary: Thanks for the tip.

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New car: The Chevy Colbalt is just as gas-economical as the Corolla and is more comfortable and more fun to drive. Buy American!

Michelle Singletary: Well, I say research and buy what's right for you and all the better if it is American.

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Alexandria, VA: What is a good book for a late 20's TRENDY single mom to help me manage my money?

One that would offer money management and budget calculation tips!

Michelle Singletary: I would suggest you visit the Color of Money Book Club page on the Post site. I've been reviewing personal finance books for the last several years. I think you will find one that fits you.

And if you don't mind a plug for my own book I would suggest "Spend Well, Live Rich." It's a basic book on personal finance with lots of my own personal stories to keep your from getting bored.

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Falls Church: For Manassas, VA - Make sure you run the numbers on the hybrid. The extra sales price may not make up for the difference in the gas prices. Consider a flex fuel car with higher mpg. They are the same price as a gas-only vehicle. If ethanol takes off, you are already set to take adfvantage of lower gas prices.

Michelle Singletary: Another good tip. Thanks.

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Chicago, IL: Michelle,

I just read your column on money and marriage and had a question. What is your take on prenuptial agreements? Let's say for 2 people in their 30s, first marriage, no kids, both own homes, have 401ks, equal debt (car loans) and both make a decent salary. Wise financial decision or document that declares mistrust between the couple--in which case you shouldn't be getting married in the first place?

Michelle Singletary: I vote for the latter of your question. Prenuptial agreement is a plan to fail. If you do your homework, get premarital counseling with a good financial component no need to tell the person you love, "Hey baby if you don't work here's what I think you should have."

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washingtonpost.com: The Color of Money Book Club page is online here .

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Falls Church, Va. : Michelle,

Can you explain why you are so against leasing a car? I prefer to have a car under warranty, and leasing gives me the option to have a new car under warranty.

Amanda Walker: Here's the CR answer about why leasing can be trouble. The ads you'll see for leasing probably don't include the total cost, which typically include extra fees at the front end, fees at the back end, and higher finance charges along the way. If you decide a lease is not for you a year or so later, you can't get out of the deal. You'll still have to buy or return the car at the end of the lease.

You might want to consider buying a car we give a top reliability rating to instead. You then should hopefully be able to drive the car beyond the standard warranty without incurring too many nasty repair bills, and aviod all the extra costs of leasing in the meantime. We never recommend an extended warranty because it is an expensive form of insurance, but if paying for it helps you sleep at night, it still might save you over a leasing deal. You'll have to crunch the numbers.

If you are still determined to lease, however, we have some free tips online ree at www.consumerreports.org. Search for "leasing".

Michelle Singletary: What she said . . .

AND what do you have at the end of a lease?

Nada. Nothing. Nyet.

And typically in a year what would you spend on car repairs? Let's say at the most $2,000, maybe $3,000 if you haven't been taking care of the car.

How much does it cost to lease another car and begin another round of payments at the end of which you have NO CAR.

That's why I'm against leasing. People with good common financial sense don't lease. Don't believe me read "The Millionaire Next Door."

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re: Cars: Can you define what you mean by "American" cars since some models of the big 3 largely are built (but maybe not assembled) outside the country and some "foreign" cars are built (usually at least assembled) in the US.

Michelle Singletary: Good question. I look for products where the labor is here in the states which hopefully helps keep jobs here.

Although I certainly buy non-American goods.

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Bethesda: If my Honda is built in Ohio (or a Nissan or Toyota built in Kentucky or Tennessee), and someone else's GM is built in Mexico, then which of us is really "buying American"?

Anyway, I'm a long-time CR subscriber (and fan!) who keeps the last few years of issues handy and always has the ratings in hand when buying electronics, appliances, you-name-it. I love the car ratings, but I do have a question about the new and used car reports that are separately sold. I'm in the process of new car shopping (and valuing my trade-in) and I was a bit disappointed with the reports I got, compared with the information that is provided free at other sites, particularly Edmunds. Aside from the wonderfully detailed information we already get from the magazine, what can you do to make the individually sold reports worth the charge?

Michelle Singletary: You guys are really challenging today.

I love it!

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Bowie, Md.: Does the Consumer Reports guide have any advice about how or where to buy a desktop PC without having to send in four rebates?

There's no excuse for it, except to confuse us out of our savings.

Amanda Walker: Well, it certainly sounds as if you, like so many others, have had some trouble with rebates.

There's no reason you can't compare prices that do not include rebates, and go with the best (non-rebate) deal. Sad to say, so many times you have to jump through a ton of hoops before you even send in your documents, and then you are told you don't qualify for the rebate.

I'd also let the retailers you talk to know just exactly what you think about rebates.

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Laurel, MD: Hi Michelle! I love your column, great advice. I have a 9 year old and I want to put more money away for her college. I am interested to know which of the 529 plans would be the most beneficial, or is there another option that is better than 529 plans? Thanks

Michelle Singletary: Good parent!

Try going to www.savingforcollege.com. The site has a great tool to compare various 529 plans. And since you live in Maryland definitely consider Md.'s plan since you get up to $2,500 tax deduction per year.

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Credit scores: I have a high credit card balance ($20K) but I pay more than double the minimum every month and have never paid my bill late. I have no other debts. Would I still have a terrible fico score because of the high debt or does paying on time count for anything?

Amanda Walker: First, I hope you have stopped charging while you are paying off your debt, because otherwise it is like trying to pay down you debt in a pocket with a hole in it.

Paying on time is certainly one of the most important bits of data used to calculate your score, but how much of your available credit limit you owe is part of the mix, too. If you owe a high percent of the amount you have available, it probably negatively impacts your score. Why not find out? You can check your FICO score online at www.myfico.com. Good luck!

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Michelle Singletary: Well folks that hour certainly flew by. I am so, so sorry if we didn't get to your quesion. But Amanda has agreed to answer more questions, which I'll print in either my column or weekly e-letter. So look for both.

Thanks again for joining me today I so appreciate that in all you have to do you stopped by to chat with me and my guest.

Take care and please come back.

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