washingtonpost.com
Color of Money Book Club

Michelle Singletary
Washington Post Columnist
Thursday, July 20, 2006 12:00 PM

Michelle Singletary hosted Dr. Judy Goldstein, co-author of the July Color of Money Book Club selection -- "24 Karat Kids."

Michelle writes that this delightful book deliciously dishes on rich, overindulgent parents.

A transcript follows.

Read Michelle's past Color of Money columns .

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Michelle Singletary: Good afternoon all. Hope many of you are returning. Hope I have some new guests. Aside from love and money, this is one of my favorite topics. I've got three rugrats and trying my best to raise them with some money smarts. Anyway let's get started because there are quite a lot of questions.

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Washington, DC: There's a difference between being spoiled rotten and being raised with privilege. I grew up in a family with wealth, and thus, unlike my friends, I wasn't working minimum-wage jobs to earn money in the summers or after school. (If anything, my parents felt that me taking one of those jobs would take away an opportunity from a kid who really needed it.) But in order to earn my allowance, I was expected to do the equivalent of that in non-paid volunteer work - hundreds of hours of it by the time I graduated high school. That same wealth (aka, the hard work and generosity of my parents) is what allowed me to go immediately into public service once I finished graduate school. (i.e., since I didn't have to worry about loans, I wasn't forced to take a miserable-but-high-paying law-firm job to get out of debt.) These are just two examples... but it goes to my point: it's not the wealth but the attitude and outlook instilled by the parents.

Michelle Singletary: I think this reader's comments are a great way to start off this chat.

You get a big "Amen" from me...especially about not having to have a lot of debt to go to school and your "wealthy" parents realizing that by not forcing you to take on college debt you get to live a better life after college. Good for them!

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Hickory, NC: Is there an amount that is "ok" to spend on your kids before they become overindulged? We can afford to do more for our kids than our parents but I don't want them to be spoiled and unappreciative. I see all of these kids wearing designer clothes and having the latest toys--where does it end?

Thanks in advance,

Shannon

Dr. Judy Goldstein: There is a difference between indulging and overindulging your children. They should certainly benefit from your improved financial position as compared to that of your own parents, but they should not be offered too much too soon.

Whatever you do, always evalutate your actions. Ask yourself: will this be beneficial to my child as he or she grows up? Am I being not just generous but overindulgent, am I offering my child that which I consider to be the best for his or her benefit and self-esteem in comparison with their peers, or am I offering them excesses that have no moral or ethical value.Is my child equipped with the tools to lead a successful life, not only financially, but also morally? What can I do that this child does not grow up with a sense of entitlement, and then give up when faced with difficulty as an adult. By doing too much for their children parents could also make them believe that they are unable to do for themselves if faced with hardship as they grow up.

So, don't restrict sharing the wealth too much, but find the balance and walk the line. More is not more and less is not necessarily more, it is all about balance.

Michelle Singletary: I so agree. I'm not doing bad for myself but I purposely hold back on giving my kids certain things. Drives some of my family members nuts but I know what the line is and I refuse to cross it no matter what my kids' friends are getting or what others say I should be doing based on my economic status (which by the way they have no real idea about anyway).

Walk the line. That's the line for the day.

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Smith Center, KS: Any news on when you will pick your Penny Pincher of the Year winners?

Michelle Singletary: Hey thanks. Child I got so many entries it's taken weeks to go thu them. But the plan is to announce winners on Sunday Aug. 30.

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Baton Rouge, LA: Hi Michelle,

My grandfather is 86 and suffers for Alzheimer's. And his elderly wife has heart problems. He has a house, saving account, retirement account and petition check. What is he responsible for with her financially? He is now in a home and she moved back with her sister in Florida. They got married in their 70s and been married over 10 years. Could you possibly recommend any lawyer in this area or any type of lawyer that we will need?

Michelle Singletary: I'm so sorry to hear about this situation. I'm afraid I don't have a referral for an attorney but I suggest you contact AARP (www.aarp.org) On the site there are a great many resources that can help you with this situation. You might also try the local bar in your area and ask for a recommendation for someone experienced in elder care law. I wish you the best.

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Detroit, Michigan: Until recently I was on active duty military and could not afford many "extras" for my kids. Now that I have a larger salary, I can do so and have. Is it wrong to give things to your kids if you can afford them? I am not talking about cars but PCs and video games. Shouldn't they share some of my good fortune?

Dr. Judy Goldstein: There is no question that children should benefit from their parents' good fortune and share in it. The only problem with parents who have excess wealth, or great wealth

is that they'll offer their children too much too soon.

Certainly buying a child video game is fun and can also be educational. What is important though is some limit setting: set a limit to the amount of time that the child is allowed to play with the video game, ascertain that it does not limit the child's physical activity, i.e. outdoor play or sports, because in fact one of the most contributory factors to childhood obesity is the increased amount of time these children spend in front of the TV or with their videogames, thus cutting down on physical activity.

Enjoy your increased financial means, share the joys they provide with your child or children, but do set limits.

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Reston: Mid length investments: I max out the 401K and Roth IRA, my only debt is my mortgage, and I've got 5-6 months of cash in Money Markets and CDs.

Do have some ideas for investing $100-200 a month for unspecified medium lengths of time? My concern is getting hit by fees &/or commissions on such a low amount.

Thanks much!

Michelle Singletary: You might try some low-cost index funds. I hate recommending any one financial company but check out Vanguard.

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Bowie, MD: Hello,

I guess I just want to make a comment. I have a 26 year old step-son who bought his 6 year old son a $399.00 X-Box for his birthday. Not to mention the $50.00 controller and $60.00 game. Now there is anything wrong with purchasing this machine, but this child is not in any camp activities this summer. This money of course would have put his son in a program that would have enriched his life in some kind of way. I ask where are his priorities. My husband and I spent a total of $40.00 on his birthday and he is just as happy with his action figures. Michelle I know you have a big issue with this. If my stepson was going to spend that kind of money, why not put it in a college savings or better yet take some and save for a home. Just venting.

N in Bowie

Michelle Singletary: It's okay to vent. But you might have to vent privately. Because the 6-year's dad might be saving for his kid's college. If you're not sure hold off in being so hard.

And you right. I'm not a fan of this video craze. My kids have none partly because of the cost and partly because I just object to all this spending on little people who are not bringing in an income. But that's me.

I do say to parents when I speak at forums, churches etc. that if you aren't taking care of business -- have an emergency fund, saving for your retirement like you should, debt-free (except perhaps your home and a car), saving for the kid's college..then he or she or they shouldn't be getting cell phones, X-boxes, iPods or whatever.

But if you're taking care of business do what you want with your money.

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Burke, VA: Could you address the issue of children having sleepovers and slumber parties? This is a popular thing for teen girls to do, but my friend says her pediatrician recommends against them because the children tend to stay up all night and talk about inappropriate topics. What's your take on this? Thanks!

Dr. Judy Goldstein: I do believe that slumber parties are a wonderful way for children to develop a sense of independence and to bond with their peers. Surely, as they are entering adolescence, there will be a lot of sexual talk, but again that is just part of their growing up experience and part of normal development--sharing with their peers who have similar feelings to them, that which they may not always want to share with their parents.

What is most important is though, that an adult be present and supervise these slumberparties, so that nothing inappropriate happens, that these children not loose control, and that hopefully some hours of sleep are being implemented.

Certainly sleepovers should not happen on weekdays during schoolyears, since these children need to be rested to function the next day.

Michelle Singletary: When I was growing up my grandmother refused to allow me to go on any sleepover. She was always saying that person's house was going to catch on fire.

I'm a bit better. I do allow my children to go on "some" sleepovers. But as Dr. Goldstein points out, I have rules. I have to meet the parents and visit their homes. There has to be supervision. No inappropriate movie watching (all my kids are under 11 so no movie above PG13 unless I've investigated the movie contents). In other words I just don't say yes to every sleepover invitation they get. Sometimes they get an invitation from a friend at school, who I don't really know nor his or her parents). The answer is always no. Got to check the kid out. Check the parents out. Check the house out.

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Laurel: In most American families, the parent's finances are kept pretty secret from the children. When a major purchase like a new appliance or automobile is bought, the fact that a period of savings when on beforehand is pretty much a black box to the children.

In this kind of environment, how do you let kids participate in long term savings?

Michelle Singletary: This is such a great question. Personally I keep everybody out of my finer details of my finances except my husband, financial adviser and CPA. I don't think you should tell you children what you make or involve them in the details of where the money is going. I mean if you tell them you make say $75,000 what does that mean to them? They don't pay bills, or taxes or whatever. They have no idea to judge. And often they hear this large amount and go buck wild thinking you're rich or become resentful that you won't buy them something because they think you make a lot of money.

But what you should do is involve them in your priorities. Tell them you are saving to make sure they have a roof over their heads. Tell them you are saving because you don't want to be in debt. Tell them you are saving so they can go to college and not be burden with debt. Let them know that you can't stop at a fast food place all the time or buy them something everytime you go to the store because some of that money is used to save up for the family vacation. And which would they prefer more a Big Mac or a two-week vacation in Hilton Head or whereever (now if they get smart and say the burger, just ignore them).

So let your kids know why you are making money and what you hope to do with it as a family. That they will understand, even at a young age. Even my 5-year-old knows about her college fund -- even if she's not quite clear on what college is.

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Falls Church, VA: For Baton Rouge re elderly grandfather with Alzheimer's--

I work for a law firm that practices this kind of law, and it can get tricky. Check out the National Academy of Elder Law Attorneys, as well as the Alzheimer's Association for referrals. They have great ideas and resources.

www.naela.com and www.alz.org

Act quickly, if you can, because these situations can deteriorate quickly; I've seen it first hand. Good luck!

Michelle Singletary: Thank you so much for sharing this advice!

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Washington, DC: On cars... Parents, if your kid has to have their own car, make your kid pay for it, or at least their share of insurance. And gas. On a USED car. Don't lease one for them, and don't lease them for yourself - you're teaching them it's ok to lease - and it's not! Car leases are evil!

Michelle Singletary: Yup...leasing is EVIL!!

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For Baton Rouge: You need an estate attorney for long-term planning. My mom had Alzheimer's and our estate attorney was invaluable for short-and-long term planning.

Michelle Singletary: More good advice on this issue.

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Dallas, TX: I'd be interested to know what types of emotional or physical "symptoms" the Doctor on today's chat sees that raises red flags for her.

Thanks!

Jessica

Dr. Judy Goldstein: Overindulgence and the associated sense of entitlement in young children seems to produce mostly "bad behaviour".

Being constantly told by their parents how wonderful they are, without ever even so vaguely mentioning any criticism for fear of affecting their self-esteem, these children don't have any limits set to their behaviour. And yet, we all need limit setting. Instead these children are treated like Gods, and thus they have frequent temper tantrums, an inability to deal with frustration, and no concept of delayed gratification. They must have what they want to have immediately and without any delay. And if they can't have it, they simply throw a fit! These are also the kinds of children whose sense of entitlement and lack of limit setting shows up in total lack of respect for adults or authority figures, because their parents are boosting their egos to the skies, letting them believe that they're the "tops."

When these children grow into adolescents and young adults, they may be the ones who when meeting with obstacles or realizing that they may not be the "best", develop anxiety and depression , which are now on the rise among children at an earlier and earlier age.There have also been a steady increase in eating disorders, alcohol abuse and other problems related to stress among teenagers who cannot deal with frustration, because they have never been exposed to it.

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Washington, DC: Michelle, I know this is off-topic to today's chat, but I hope you'll answer anyway, because I really need some advice.

I have substantial credit card debit ($10K, and substantial primarily in that it limits what I can do and I also have lots of grad student debt). I want to combine all of that credit card debt onto one new credit card (with a 0% interest rate) and cancel the other 3 or 4 cards. Since I've had these cards a while, I know I'll probably take a hit on my credit rating. But, since I have no interest in buying a car, home or going back to school for the next several years, would that matter? By the time I want any of those things, I think I can also have the credit card debt mostly paid off. Thanks for the advice - I love your chat!

Michelle Singletary: I don't mind taking questions off topic. First stop beating yourself up. I've seen worse in terms of credt card debt.

Couple of things. You mention having that debt limits what you can do. I hope you mean you don't have CASH to do what you want to do. Because at this point you need to get all those credit cards out of your wallet. Carry just a debit card that acts like credit for emergencies if you have to but you can't and shouldn't put any more debt on any credit cards.

If you are trying to pay off the debt there's nothing wrong with consolidating it on that zero interest rate card. However, realize your credit score will take a hit if the combined debt is near the max of the one card. Since you say you won't be buying anything major on credit that shouldn't be a problem.

I would not cancel the other cards unless you have to pay an annual fee. Just take them out of your wallet, cut them up. You benefit from the long history even down the road so don't get rid of them from your files -- just your wallet.

Finally do not put that student loan debt on the credit card. Keep in mind that at any time the credit card company can change the terms and that zero interest rate can jump significantly.

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DC: More on cars... my dad used to charge me 15 cents a mile to drive his car. I had to track the milage, and when my use reached a certain point, I had to buy gas for the car. He told me I was getting a better rate than he got when he drove the car for work!

And me? I walked a lot.

Michelle Singletary: Funny!!!

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Silver Spring, Md.: It is hard to strike the right balance. I'm pregnant now; my husband and I started saving for college when we started trying to get pregnant.

Why? Because I had to put myself thru school. I know how unbelievably stressful it can be to know you must work the week before finals because if you don't, you can't make your monthly payment. How scary it is to sign those loan papers (and I'm still paying them off but they are our only debt aside from our mortgage).

We agreed before we were married that we would save the maximum amount we could, after saving for retirement, for our kids. We just didn't want their college experience to be so stressful. We will expect them to work if they want extras like a cell phone. And we will expect them to volunteer since it is a large part of our humanistic outlook.

Michelle Singletary: And you haven't even had the baby yet???

Girl you and your hubby are WAY WAY ahead of most experience parents I know. Good for you.

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Alexandria: A word of caution to those who overindulge their children. My aunt and uncle paid for EVERYTHING for my cousins. Cars (even after totalling), gas, insurance, everything. And guess what - they are now 33 and 26 and their parents are STILL paying for everything. Including rent. I asked my cousin why the other day and they said because they deserved it and why not, as their parents had always done it, there was no need to change.

And I thought this would make you smile - a friend was told by his mother recently to have his girlfriend sign a pre-nup before they rented a place together. Not only did I laugh, I also told him any girl worth her salt would walk away from him if asked to sign a pre-nup to just co-habitate.

Michelle Singletary: I'm smiling and pumping my fist in the air.

That's right. Except I would have advised against the shacking up in the first place.

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Bowie: Dr., have you had personal experience observing a non-custodial, divorced parent who buys expensive toys for their child to use only while visiting?

This is one of my divorced friends top money complaints.

Dr. Judy Goldstein: This is extremely common, if not a universal occurrence.

Parents who are divorced, especially those who have lost custody over the child or children, are extremely guilt-ridden. They will therefore resort to any amount of bribery to assuage their own guilt and win the child's affection. It also may be a way of getting back at the other ex-spouse, by trying to sway the child's affection and love towards the non-custodial parent.

It is extremely important that divorced parents be on the same page when it comes to the parenting of their children, whether they are the custodial parent or not, for the simple reason that anything else, number one--confuses the child and does not teach it right from wrong--, and number two gives the child an opportunity to play one parent against another.

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DC: My brother and sister-in-law are in a precarious financial situation right now due to overspending. They have two children--6 & 8 and I am trying to help out with the kids' needs. Thus far, I have purchased their summer reading materials. I would also like to help out with clothing purchases--but here's the kicker. My sister-in-law is totally into name brand stuff and now has her kids into it. They want expensive sports jerseys, etc.

Michelle Singletary: Then tell them they can go naked then!

Seriously, they are in a bind and they are requesting name brand.

Please. Send them to me. I would have those kids wearing high waters (as my own do).

Don't get insulted. Don't even fuss. Offer what you want to get them and if that's not good enough oh well tell them to buy matching socks for their pants so the high waters don't look so bad (that's what I do).

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Newark, Delaware: I've seen the symptoms the doctor described first-hand when I've taught at colleges. I've dealt with students who, when faced with a tough exam question, have said to me, "just tell me the answer." I'm probably overgeneralizing, but these kids also seem to be the ones with the nicest clothes, the newest cell phones, and a standing appointment at the tanning shop.

I really worry about whats going to happen when these kids enter the work force. They have trouble dealing with challenges and thinking on their own.

Dr. Judy Goldstein: These children have a kind of spiritual bankruptcy.

They're only value in life is financial success, and they don't want to climb the ladder but rather to have it by hopefully omitting all the effort it takes to get there. After all, their parents had it all, why should not they?

These young adults are essentially unprepared for the challenges of real life. Real life as defined by thriving in areas where social status and wealth won't help them. Thriving in areas of life that are more dependent on values and hard work.

Children who have not been raised to develop their own moral, social and ehtical codes, may have a harder time controlling their destiny, because they were never given the opportunity to do so.

Michelle Singletary: Bascially these are the folks on your job you want to smack!

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Washington, DC: When I was first driving (borrowing the car) I had a fender bender in a parking lot. With a parked car. I called my dad, and he paid the guy $500 cash to get it fixed. Rather then letting me think I could just buy my way out of my mess, he said I then had to pay him back, by ironing his clothes. I was credited 10 cents for a pair of pants and 25 cents for a shirt. I think he forgave the debt that was left when I moved out, but I will forever remember how long it takes to earn $500.

Michelle Singletary: Wow. What a lesson. And gives me an idea :)

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Arlington, VA: Michelle,

Where can I get a credit card with 0% interest? I've never heard of that - I've only heard of 0% interest for 5 or 6 months. It didn't seem like the poster understood that the 0% rate would probably go up before she/he paid off the card in several years.

Michelle Singletary: Not sure if the poster understood but you are right that most -- if not all -- of these cards do have a set time for the 0% although I have seen some for longer than six months. Some as long as a year.

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Washington, D.C.: Michelle,

Another off-topic question about credit cards.

I have no debt (no car payment, no loans, no nothing), and plenty of assets. But I have no credit, since my only revolving payment is my cell phone and I'm not on any of my group house utility bills or anything.

I know how you feel about cards (and I largely agree), but I want to get a credit card for emergencies and to build up my credit, but the only cards I seem to be eligible for have a miniscule limit (several hundred dollars) and a high annual fee. I don't want to pay for the privilege of having a limit so small as to be useless just to get a better score. Or is that short-sighted? Would it help if I get added to one of my parents' accounts? Any suggestions?

Michelle Singletary: Getting added to your parents credit card would help you but I wouldn't advise them to do it.

Get a secured credit card. Try your credit union or bank. If you search well the fees are low because you secure the credit line with cash you have to deposit in an account. Use the secure card and buy something small say $20 and pay off the balance EVERY month and on time. In no time you will start to get offers for regular credit cards. Go to www.bankrate.com to look for some of the best secured credit card offers.

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Fairfax, VA: "Except I would have advised against the shacking up in the first place."

I know you frequently give this advice, but how else do you think people can afford to live in this overpriced area? We have a one-bedroom condo, and there's no place to put a roommate -- except maybe on the fold-out couch.

Michelle Singletary: Stay home with your mama, daddy...live with a relative. Rent a two-bedroom and get a roommate.

Trust me study after study shows the high cost of co-habitation. It's not cheap.

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Arlington, VA: I think it's okay to indulge your children A LITTLE if you have the means, but I also think you should teach your child that there are people out there who aren't indulged in that way. I am close friends with someone (fresh out of college but with a great job, still living at home) who seems to have no concept of money. Whereas I am wallowing in student loan debt, even after working full time while going to school full time (both of these facts she knows well), she once told me she was angry with her parents because they just bought her brother a brand new Acura, and the car they bought her was a used (2 years old) Acura. For some reason, the other 3 girls she was telling this to agreed and told their own "sob stories" about their parents buying them used (mostly expensive) cars. When they looked at me, I responded that I did not know their pain, because I paid for my first car on my own. Sorry to rant, but it's pretty sad when people don't realize how blessed they are. I'm glad my parents couldn't afford to buy me "stuff" because earning that "stuff" made me stronger and ended up being a great experience.

Dr. Judy Goldstein: I agree, that where there is no pain there is also no pleasure.

I will refer you to a paragraph in my book on page285: "There's something you don't understand about having all the money and all the time and all the crisp, capable staff you've always wanted. It's one big bore. I mean, when you can snap your fingers and just buy whatever you want, none of it means anything".

That is the ultimate outcome of overindulgence.

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Re Private School for Kids: How important is private, parochial school for kids vs. public school? If the parents' financial situation has changed (for the worse), should the parents get a second job to make sure the kids get to stay in private school? (Kids do have college tuition funds and summer camp activities every summer.)

Dr. Judy Goldstein: This depends entirely upon the caliber of the private versus public school in the community you are living in.

It also depends what age and grade level we are talking about.

Elementary school in a public school is probably not much different in terms of the teaching and learning the child is exposed to. If however you believe, having done some research on the different schools' college acceptance statistics, that the private schools in your area have much higher college acceptance rates, that would certainly imply that their academic teaching is of a much higher level.

In that case it may be worthwhile to make the added effort to offer the child a better opportunity to have a higher chance at one of the better colleges, because of the job market being more competitive among young graduates these days.

On the other hand, I do firmly believe, that it is ultimately the individual's capabilities and hard work that will shine through, whether in school or on the job , and will be the pathway towards success.

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Atlanta, GA: Michelle the first time I saw your show I was blown away. Thanks for keeping things on a level where the average joe can understand how to overcome their debt situation and get finanical help.

Michelle Singletary: Thank you so much. And the show is "Singletary Says" on TV One. And hey folks still looking for guests for my second season. You can go to the Post website to find out what guests but looking for any parents out there who have an adult child mooching off you and you want them out. Also looking for anyone who has gotten into trouble with payday loans or a man or woman trying to recover financially after a divorce. Unfortunately I'm only taping in the DC area so you have to live in the metro area.

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High waters: Michelle, please re-consider your stance on high-water pants. My parents felt the same way, and to this day I still remember the shame of wearing clothes that did not fit and the teasing from my classmates. Pants don't have to be new or name brand -- consignment shops have great deals! -- but forcing children to wear clothes that don't fit just to save a few dollars can be cruel.

Michelle Singletary: Take it easy.

I wouldn't let my kids be teased. But if they are just playing outside or we're just bumming around the house or out and about..it's high water city especially during the years they grow ever week.

I also use the high water pants for the "just in case" clothes they keep at school. You know just in case they have an accident.

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Benicia, CA: Hi Dr, Goldstein,

I'm enjoying learning about the Upper East Side in your book and Wendy Wasserstein's Elements of Style. Did you know Ms. Wasserstein?

Dr. Judy Goldstein: No, I did not Wendy Wasserstein personally, but have seen everyone of her plays and have as well read her book "Elements of Style". She was a brilliant woman, had a sharp mind, clever wit and was a social satirist.

It is so sad that she died and left a young child behind!

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North Carolina: Thanks for the book, Dr. G (& Michelle) I was one of the lucky winners. Regarding not sharing financial info with your children...perhaps you could discuss the appropriateness of sharing your financial information with your ADULT children (at least one of them!) My husband and I have both experienced having parents who in their 80s hadn't shared this info. When my MIL was diagnosed with Alzheimer's and my husband became her guardian, it was an excruciating nightmare trying to figure out where her money was. She had a good amount but it was all over the place, literally, much cash laying around her house and accounts in numerous banks. Now I am facing the same thing with my father. There's no excuse for it. My husband an I have resolved to never put our son or ourselves in this situation. Not that I intend to share this information with him until he is probably in his 30s, but if we don't trust him by then we need to make sure we have someone we trust with the info.

Thanks.

Michelle Singletary: You are right. The advice doesn't apply with adult children. Once you are getting up there in years it is important to let your responsible adult children know about your business. Maybe not how much you have but where everything is.

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Pasadena, MD: To follow up on the slumber party question -- my daughter was invited to a sleep over birthday party for her friend turning 6 (my daughter will be 6 in August) -- of course I let her go for the "party" part but picked her up at 8:00 pm (her bedtime, but the girls didn't "go to bed" until 9:00). I just think it is too young. What do you think is about the right age (range) to start this kind of 'independence training'? Thanks.

Dr. Judy Goldstein: I do think that the right time to start slumber parties is when the child is ready to separate and spend an evening or night away from the parents. Most children are not ready by the age of 6 years. As with sleep-away camp, the youngest we recommend and the youngest that children are usually ready is at about 9-10 years of age. Slumber parties can be started with limited hours, such as your child's at 8-9years, but certainly only on weekends or during vacation.

This should however not be confused with "Sleep-overs", where one child is invited to another's house to spend the night just the two of them together--that would be appropriate at the age of 6 years, once again, provided that an adult monitors and enforces appropriate bedtime.

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Bethesda,MD: I must object to Dr. Goldstein's prejudicial remark about the "near universal" tendency of divorced parents to buy their children expensive things. This isn't true of me or my ex-husband, nor of my current husband and his ex-wife. And perpetuating bad stereotypes about divorced people should be beneath discussions such as this.

Dr. Judy Goldstein: I am sorry about my generalizing on a topic that cannot be generalized. My only excuse may be the fact that my practice is on the Upper East Side of Manhattan and that this is my experience within this demographic area, therefore a limited experience. However, the book does refer to overindulgences in this area and thus my response was generally based on personal experience. I agree that the word "universal" does not apply, not even here. There are many divorced parents who have wonderful parenting habits and great relationships amongst themselves and who are on the same page with relationship to their children, or at least try to compromise on any differences.

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Fort Washington, MD: Husband stated $900 is in the checking account and our 13 yr old child overheard and said, "Oh! That is a lot of money!!!" I responded the car insurance bill is $800. She answers "Then $900 is not really a lot of money. "

Michelle Singletary: Just my point about telling kids about your money.

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Cary, NC: Just a thought about the car thing with kids. When our kids got their licenses we let them use older, but reliable, cars that we owned (no car payments). The stipulation was that they had to pay their own car insurance and gas. They met with our insurance agent who explained what would happen to their rates if they had tickets or accidents. We told them that if their rates went up and they couldn't pay it - Surrender your license. They never had either a ticket or an accident (Thank God!) Their friends whose parents paid everything had multiple car "issues" and still the parents continued to pay their car bills. Of course, my kids whined about having to pay then, but recently thanked us for placing that responsibility on them. They are now on their own and financially responsible 20 somethings.

Michelle Singletary: Good plan.

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Columbus, Ohio: Over indulgent parents do not seem to figure out early on that babies, children, eventually become adults. These adults need to be emotionally and mentally secure productive units of our society. If children have had everything handed to them, they cannot function adequately in any society. When and from whom should parents get this information so that they will take it to heart and parent from that viewpoint (producing a productive adult)? What yardstick, so to speak, could they use to measure the child's "adult" growth? thanks

Dr. Judy Goldstein: There is no question that parents have a tendency to indulge their children in an outlandish way, that leads them to a sense of total entitlement in life. These parents reward their children for any minor accomplishment or for no accomplishment at all not just with love but with unlimited praise. Such parents frequently believe that in giving unlimited material goods and unlimited praise , they build up the child's self-esteem and thus give them wings to achieve financial success in turn. However, more often the opposite holds true. When children are continually the center of attention and are exposed to continuous coddling and cheerleading of their abilities, these children may end up with weakened self-esteem as they grow up and realize that perhaps they are not "the best", or that success is not always guaranteed , and that life is full of stresses from which they were so carefully protected and thus they become incapable to deal with even minor failures.

I would refer you to a wonderful book: "Perfect Madness" by Judith Warner, in which she addresses some of these issues.

But ultimately, use your own good judgement, set limits, have your child perform for its rewards, do not give them a sense of entitlement.

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Bowie, MD: Michelle,

This is not a book question, but I hope you can fit it in.

I have just started a new job after two painful years of unemployment. We survived because we (a) had a good cash cushion, (b) tightened our belts, (c) took unemployment and welfare benefits for which we didn't even know we were eligible (lesson: always apply for benefits, because you never know), (d) had a wonderful grandmother who passed away during this time and left us a small inheritance that tided us over for several months, and (e) sold our house and lived off the proceeds for a while. We never missed a mortgage payment or a utility bill or a payment to our kids' college savings accounts, although we did stop contributing to retirement. As a result, we retain our excellent credit ratings (over 800 for both of us, thank you) and have bought a new house. However, all of our reserves are gone, and since houses are three times as expensive in Maryland than in Kentucky (what, are the houses made out of gold here?) we won't have a lot of cash left over at the end of the month. (We've already given up basic cable TV, and we may even give up the print Post if we can't also afford DSL -my wife works from home].) My question is, how should we rank our savings priorities? Should we work on rebuilding our cash cushion first? Re-start retirement savings? Skip the 529 plan for a couple of years? I work for a private university that offers good pension contributions and has a handsome tuition benefit that my kids will start using in about ten years; should those benefits change our priorities?

Thanks for any advice you can offer.

Michelle Singletary: Savings ranking:

Build back up your emergency money AND try to put something away for your retirement.

Once you get back on your feet then you can start contributing to the college fund.

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Washington, DC: What can you say to a family member, who doesn't earn that much, but spends much more than is reasonable on the kids?

Dr. Judy Goldstein: This is a typical example of overindulgence, especially in light of the fact that the parent sets the wrong example and thus does not give the child the tools to deal with possible financial hardship as he or she grows up.

If a rich parent overindulges the child, though as a grown-up there may be problems and issues, such as fear of failure, because they were never taught how to control their lives, since everything was being done for them, nevertheless they can count most likely on their "trust fund". A parent of lesser means, by overindulging his child, will allow this child to grow up with expectations that may be unrealistic and then really feel as a failure, if things do not work out.

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Savannah, GA: How do you handle two sets of grandparents - one overindulges the other cannot afford to. How do you help younger children understand the difference in what they receive from each set of grands?

Michelle Singletary: This is a hard one. You might advise the more sensible grandmother (the one not trying to buy love) to spend more time with the kids. Call them if she doen't live close. Her attention will show them that her love isn't measured in the gifts she can buy. And you know what. Talk to your kids about it. You will be surprised how much kids do understand even younger ones.

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Alexandria, VA: Hi Michelle and Dr. Goldstein.

Do you favor the concept of allowance? I came from a comfortable but not a wealthy family. My parents did not gave us allowance. We simply asked for things when we needed them. I have a 5 years old daughter who will be going to kindergarten. She has some concept of money that mommy and daddy go to work to make money so we can save and buy things. Unless I see the need to introduce the concept of allowance, I figure I will just give her what she needed for lunch money etc. Your thought?

Dr. Judy Goldstein: I agree that allowance is a concept not so much for young children as for adolescents who are more mature and need to learn about the value of money. As long as the 5 year old gets her needs satisfied and is not being showered with gifts for no reason other than overindulgence, this will give the child a sense of nurturing , love and self-esteem in the knowledge of this love and security that the parents convey.

It is in the older children and adolescents, that the concept of allowance has to be introduced, at a time when they personally handle money and go out on their own, where they may spend on the vending machine, or buying their own videogames, or going to the movies or eating out. They are the ones who will learn to manage their money so that they a) don't grow up with the sense that the sky is the limit and that they are entitled to unlimited funds, and

b) so that they don't overspend without any rules and limit=setting, which would certainly not be conducive to live a financially responsible life as a grown-up.

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Gaithersburg, MD: As a single mom who has gotten herself into too much debt and is now tightening the purse strings to fix it, how much do you let your child know? at what point do you tell them we'll have to do that activity later or are you always honest and say its not in the budget right now?

Michelle Singletary: Here's something we all should practice. TTT

Tell The Truth.

You kid can take it and really you have no choice. Be honest let him or her know the situation. You don't have to go into great detail but this can be a teaching moment for you and your child. Perhaps he or she can learn what happens when you get into debt trouble and the trouble it is getting out. And don't let being a single parent (and sometimes all the guilt that goes along with that) make you feel you have to make up for the kid.

The best way to parent is to do what you can afford even if it disappoints your child. Trust me he or she will get over not being able to go to Mickey Ds or the movies or whatever. I don't have to tell you your love, support, humor etc. is all they really need -- even if they are begging your for stuff.

I often joke about making my kids wear high waters (which I actually do) or that I don't buy them a lot of stuff (no X-boxes, cell phones, iPods) but it's not to deny them. I want our time, energy and money spent on the things we really value and what they will remember when they get older.

I'm not a perfect parent and sometimes my husband (hi BOO) has to remind me to let go of the money but I'm be donegotit if I raise ungrateful brats and then send them out on the world to get on the nerves of other people.

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Michelle Singletary: Gotta go. I do hope you get the book. It was a fun, quick read. And please sign up for my weekly e-letter, which keeps you up to date on lots personal finance issues. Watch my show "Singletary Says" in which I visit people in their homes and do what I do on the chat only up close and personal.

Most important come back. Even if I pissed you off. I mean well and even if you disagree with me you will learn something or at least get some information you can pass along to somebody who needs it.

Be well and save!

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