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 offered her advice and answered your tough questions.

A transcript 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 day everyone. Hope you all are keeping warm.

Well, lots of questions so let's get started.

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Hyattsville, Md.: Michelle,

ARGH! My husband and I try to mange our finances well - we both contribute to retirement plans at work, we have emergency savings, etc. We're looking at opening an IRA online and it's driving me batty! I don't know which mutual funds/whatever to invest in because I have so many already in my workplace plan. Is there a place online where you can list all the mutual funds you have and it will tell you what your portfolio might be missing (i.e. small caps, bonds, whatever.)? I don't want to pay a financial analyst for a roughly $4,000 investment. I'm totally lost here.

Thanks

Michelle Singletary: You are lost because it sounds like you do need to pay for help.

I know. It seems silly to pay someone when your whole point is to save money. But it might be worth it to hire a fee-only financial planner and have him or her look over your entire financial picture to see what you are missing.

Hey, I have a planner and I know a lot more than the average consumer.

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Charlottesville, Va.: Hi, Michelle. I love your column and read it religiously in the Sunday paper. I have a question about consolidating mutual funds. I have invested in seven Fidelity funds. I'm happy with the performance of them all, but wonder if, as I approach (or enter) retirement, there is any danger in consolidating these funds into one or two. I have a fear that the individual fund company might go under and I lose a substantial amount of money which I might otherwise have protected by spreading it out over more funds, even with the same family. Is this a viable concern, or am I being overly cautious? Thanks.

Michelle Singletary: First thanks so much for your comment. And just a note I have a column in the Sunday and THURSDAY paper -- like TODAY. Twice a week. Work too hard to forget that folks.

Now, I think you are mixing a lot of things in your head. When you invest in a good, solid mutual fund that in putting your money in a lot of different companies you are diversified and thus you are hedging against risk in any one area or company. The fund company or mutual fund company could have trouble but remember you are investing in company stocks or bonds. You don't need to spread your money around in several different mutual fund companies to protect yourself. In fact, what you may end up doing is hurting your returns because of all the fees. Plus you may end up investing in the same companies or asset groups unnecessarily so.

So stay calm. Look at what you have and if you are investing in a solid mutual fund company with low fees then you should be okay.

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Warrenton, Va.: Great article today about credit freezes. It amazes me that this option is not available to everyone. Do you know if Virginians can do this, or is our legislature still more concerned with big business than people?

washingtonpost.com: Better to Stop Data Thieves Cold (Feb 15) and Putting a Freeze on Identity Theft (Feb 8)

Michelle Singletary: As I wrote the legislatures in Maryland and VA are thinking about it.

If you want this right, you should let your representatives know. Because you darn well know the big business people are fighting against it. They want open and constant access to your credit files.

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Upper Marlboro, Md.: I have a great family, my husband, daughter and myself. My husband and I make a total of $130k combined. We don't spend a lot, but we still struggle with finances. At times it affects our relationship. Can you allow us to have a free consultation that will taylor a plan directly for us? Please help...

Signed,

Getting overwhelmed

Michelle Singletary: Oh my, I'm so sorry I don't do this. Here's a shameless plug for my book. Read it. "Your Money and Your Man."

And if that doesn't help you might need to pay someone (not me) to help you develop a comprehensive plan to your finances, which clearly you have a lot of.

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Landover, Md.: The old saints have said that when you marry you should have a joint account for household and family expenses; and each spouse should have their own for personal use; and have a 2nd personal account with a little secret stash of Mad $ or whatever for yourself. Does that still fit for today's times?

Michelle Singletary: Old saints were wrong.

I encourage joint accounts and full disclosure. If you want to keep so much separate and spend the way you want then this new saint says stay single. You want a roommate not a lifetime mate.

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Clinton, Md.: Hey Michelle,

My husband and I have 10,000 owed on the only card that we have. We also have 8,000 owed on a student loan. I want to take money out of savings to pay the credit card off. Wouldn't that be a good idea? But then, how to we keep from charging on the card again. We can't get rid of it because we need it for emergencies.

Michelle Singletary: Interesting question. Let me walk you thu this. First having $10,000 owed in a credit card is not good. Not saying you are a bad person, just saying that means you are in credit card trouble.

So your plan:

-- Look at your budget. Cut deeply.

-- Take some of the savings and begin to build up an emergency fund (three to six months of living expenses)

-- At the same time -- like today -- after this chat both of you should march to your benefits office and have a set amount of money taken out of your check every payday to set aside to also help build up that emergency fund.

-- Take money from cutting expenses and anywhere else you can get your hands on and beging to aggressively pay off that credit card debt.

-- Take that ONE card out of your wallet or purse and freeze it. Say after me "A credit card is not your emergency savior."

You can get rid of the card and you should. I don't mean cancelling the card but you can't use it at ALL. You can't afford to charge another thing.

Then, after the card is paid off attack that student loan debt.

THEN you will know financial freedom. Trust me, it's WONDERFUL.

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Wilmington, N.C.: Michelle,

Do the pre-approved credit offers hurt my credit score? I get at least 4 a week and have wondered if I need to have them stop.

Michelle Singletary: Nope, don't hurt. You have the ability to opt out of credit card offers that you receive in the mail or over the phone.

Call 1-888-5-OPTOUT (1-888-567-8688) to have your name removed from direct marketing lists. You can do this online at www.OptOutPreScreen.com, which is the official consumer credit reporting industry opt-out website.

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Indianapolis, Ind.: We were only able to consolidate some of the student loans last June - the government backed ones - a cheap rate. The private loans, more than $20K, are still at about 14 percent interest. Lenders only want to sell us a home equity loan to consolidate. I don't want to do that. I refinanced 2 years ago at a really good rate. The student loan debt is in my husband's name; the mortgage is in my name. We married 2 years ago and I'm in no hurry to put the home in his name. I love him but I bought it before he was in the family. Also, why tie him up with $200K in debt (the mortgage) to consolidate $20K? Any advice on how to get those private loans at a lower rate? Lenders are NO help.

Michelle Singletary: Um, you don't want to tie your husband up in the mortgage of the house you both live in because he wasn't in the "family" when you bought it? Isn't he family now?

Anyway, I agree I wouldn't refinance to pay off the student loan but I would figure out a way for you and your husband to be on the title and be responsible for the mortgage.

You didn't ask that, but offering it anyway.

And the lenders are no help because they aren't your friends. Why would they want to help you? They are getting 14 percent interest. Good deal for them.

So instead of trying to find more borrowed money to pay off borrowed money try something revoluntary. Pay it off with real money. Cut where you can and you and your husband aggressively pay off the student loan.

And remember not that you two are married, all debt and paychecks and savings should belong to both of you.

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Bryn Mawr, Pa: Michelle:

I need some guidance on what to do with an upcoming $21K bonus. I can put up to half in my 401K.

We have saved $370K in our retirement accounts, and another 8 months living expenses in a money market account.

We have no credit card debt, but $10K remains on our mortgage, $13K in car loans (at 5.25%).

We make the final payment for college for our oldest child in 2 weeks, and our youngest child has free tuition for all 4 years.

Any advice is appreciated.

Michelle Singletary: Pay off the mortgage and take $2,000 out of saving to finish paying off the car.

Then stand in front of your house and yell, "WE ARE DEBT FREE!"

Inspire others!!!!

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D.C.: Hey Michelle,

Sometimes having separate accounts is the best way to go. For example, my husband has an ex-wife and two children. She is always taking my husband to court for more child support and he has to show up with salary, bank account information, etc. For us, since I make significantly more money than he does, we keep our finances separate so that all of our financial business is not out there for her and her lawyers to see every time she wants more. BTW, we have the children 50/50 and we live very well which really bothers her.

Thanks!

Michelle Singletary: So you purposely hide money to keep from having his ex spend it on HIS kids?

Perhaps the ex wants the kids to live very well the other 50 percent of the time.

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Northern Virginia: I can't agree with you more about freezing the credit card. I don't have CC debt, but I was definately using it too much. To save for a vacation, I pulled out a tupperware container, filled it with water & put the card in. The tupperware/water/card went into my freezer. Anytime I need to use it, i have to thaw it, which makes me think about if I need to use it - which I really only have for my plane tickets for my trip (I had the cash, but cc is more secure to use on-line) and hotels for the trip. I have spent SO much less money by just using cash on hand (I also limit myself to $X/week in cash).

Michelle Singletary: LOVE THIS IDEA.

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Washington, D.C.: Michelle,

I'm a single woman living alone. Recently, I've started receiving "junk" mail (credit card apps, etc.) addressed to a man's version of my name (for example, let's say my name is Julia Woodmark--I've started getting mail for Mark Woodmark). I normally just tear it up and throw it away, but some of the mail is from a collection agency, and there was recently a message on my answering machine, for "Mark", from a collection agency. Do I need to be concerned about my credit, if in fact someone were using a fictional name with my address? Or could my credit only be impacted if someone were using MY full name?

Michelle Singletary: You definitely should be concerned.

PULL YOUR CREDIT REPORTS right away. Today.

See what is going on. Sounds like you may be the victim of identity theft.

Go to this site for more information

http://www.consumer.gov/idtheft/

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Fairfax, Va.: I was recently featured on CNN Money.com and the one thing I was criticized for was wanting to pay my house off early. I was told by financial planners that it was the worst financial mistake I could make. I explained to them that "to owe no man" was biblical. Also, my mom and my grandmother own their homes outright. They don't work so therefore there's no need for tax breaks. Please let me know if I'm making the right decision about paying my house off early. I had a 30 year loan that was reduced to 15 years and I'm trying to pay it off 5 years early.

Michelle Singletary: You are definitely right. They are fools, and probably fools in debt.

Of course bankers and financial types want us to be in debt. That's because they make money off us being debt slaves.

Think of how much money you will save and then have to invest if you don't have a mortgage payment for 30 years!!!!

As long as you have a savings cushion, keep paying off that mortgage.

Don't listen to their nonsense. The idiots!

I'm debt free except for my home and I can't wait to me in your position -- just years way from being completely FREE!

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Landover, Md.: I need to change the witholding exemptions on my W4 so that I keep more of my money through the year rather than getting more back at refund time. Is there a better time in the tax year to make that change?

Michelle Singletary: If you know now that your tax situation is likely to be the same next year, then change it now. Go to www.irs.gov and the agency has a really good withholding calculator.

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Alexandria, Va.: Michelle, I just love you lady, and enjoy your show as well as the columns! I donate a good portion of my income to my church directly and indirectly (I purchase supplies for many of the events and activities). How can I maximize the tax benefit of these cash and in-kind donations? (P.S. - keep up the great work)

Michelle Singletary: You should ask your church for reciepts for your cash donations and the items you donate. Can't get a deduction for your time however.

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Capitol Heights, Md.: Hi Michelle,

Identity theft is awful! I was a victim of this this year and I just found out yesterday that my checks are not being accepted anywhere. How can I find out how to clear this up. This is awful. My checks were stolen and my checkcard was stolen. My bank has been very good and I filed the required police report and affidavit but now this is happening on my new account.

washingtonpost.com: For more information on Identity Theft, click on the Identity Theft Special Report

Michelle Singletary: You need to contact the company or companies that clear checks for the merchants you write them to. Send them all the information about your situation.

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Richmond: Michelle, I understand your aversion to debt, but I have had good luck taking advantage of extended financing offers with 0 percent interest on purchases from computers to furniture to appliances. It is an easy way to manage cash flow and meet needs (broken computer and dying oven.) Just be sure one is disciplined about making payments during the "free" period.

Michelle Singletary: Ah and therein lies the problem. Most people are not disciplined. I too have in the past taken advantage of such offers and paid off the goods well before the time when the interest rate kicked in. But then I thought what if I lost my job or got disabled? The best intentions, right?

But if I wait to pay for what I want I don't have to worry that I won't have the money at a later date. Remember nothing is promised in the future -- even your paycheck.

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Baltimore, Md.: Here is my husband and my situation - we have a decent income (about $135K annually combined - probably increasing soon), less than $20K combined debt including cars, but almost no $$ for a down payment on a home. We are paying around $2K a month for rent and would like to buy. I have heard of loan where you do not have to put a lot, or no, money down for a mortgage. What is the ballpark credit score that one needs to have to get a good rate on these types of loans? We have decent credit but not great. thanks

Michelle Singletary: To get the best mortgage rates out there you probably need credit scores in the 720 or better range.

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Northern Va.: How do you (or how do you advise others to) handle monetary jealousy? My husband and I own a small condo with a lot of hand me down and ikea furniture. We make about 110K combined a year. We owe on both of our cars, plus a little cc debt plus 8K in student loans. I know that we live pretty comfortably and don't want for much. But friends of ours are much better off - a lot of upgrades to their homes, newer, bigger homes, bigger savings and retirement accounts etc. Sometimes I get really down about our situation and really emotional. How do you recommend I deal with this?

Michelle Singletary: Trust me, those friends that seem like they are living large are probably living large in BIG DEBT.

You just never know about people's personal finances. So stop comparing. Sounds like you might need to spend a little time looking at your own situation. No money for a home, credit card debt (even a little), car loans and student loans should be enough to keep you grounded and focused on improving.

Again, not saying you are in bad shape but with an income of more than $100,000 you should not be carrying any credit card debt and why don't you pay off that student loan of just $8,000? Then save for a home, even if you put nothing down. Then you can upgrade to better stuff if you want.

The problem with looking at other's people's grass is that from your side of the fence you can only see so much.

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re: D.C. hiding money: Michelle, why should the ex be privy to what Mrs. is making? Her income is not ex's concern or business. His is.

Generously, she -is- contributing to the childen since they stay with her 50% of the time. Presumably she feeds and houses them when they are there. I bet she takes them to the mall and outings sometimes, too. Sorry, I disagree on this.

Michelle Singletary: You can disgree and still be WRONG.

Those kids are her kids now. And if she doesn't think that way then I feel sorry for the kids.

She's not doing those kids a favor by allowing them to live with her for 50 percent of the time or take them to the mall. They are 100 percent hers as the wife of that man. She's supposed to feed them and do for them with all the resources available in that house!

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Alexandria, Va.: About paying off the mortgage early, I could not agree with you more. My husband and I are in our mid 30's and a couple years with the interest rate so low that we refinanced to 15 years term instead of the traditional 30 years. We are really making dents to the mortgage. Wish we had done it even earlier. We figure in about 10 years when we pay off our mortgage (I also sneak in a couple hundreds extra a month), we could have a second home or a rental home if we really want that "mortgage interest deduction."

Michelle Singletary: Totally agree. Somebody with some sense!

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Brooklyn, N.Y.: I agree with you Michelle. I have been married for 9 years, and in the begining it was wonderful to receive gifts, but now it does not matter. My husband's actions demonstrates his love for me and our children, more than any gift could. I gave him a card, and he gave me a pack of SOURPATCH KIDS, my one guilty pleasure.

Michelle Singletary: Read my e-letter today (and subscribe) and you will know what she is talking about.

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Charlottesville, Va.: Thanks for the advice, Michelle. If I didn't live so far out in the boondocks that I don't get home delivery, I'd read your column on Thursday as well. I have to drive 10 miles to get the Sunday paper. I understand the overlap issue with funds, and I'm comfortable having funds in one family (Fidelity). Are you saying that it's just as safe to have even seven figures invested in, say, a single balanced fund rather than have it in more than one fund? Thanks again. Sorry to be dense.

washingtonpost.com: Michelle's columns in the paper are updated every Thursday and Sunday online here: Michelle's Column Archive

Michelle Singletary: Yes, that's what I'm saying.

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Michelle Singletary: Well got to go, especially before all the hate mail comes in from people yelling at me that I shouldn't tell people to get out of debt --even their mortgage.

Look do what you what with your money, you're grown. But what the world says will keep you in a world of debt.

I know how to do the math and in my bank book, I say being debt free is a peace that is priceless.

Have a wonderful day.

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