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Michelle Singletary
Washington Post Columnist
Thursday, August 30, 2007; 12:00 PM

Personal finance columnist Michelle Singletary hosted an online discussion with Randal Pinkett,the winner of a job with Donald Trump on the fourth season of NBC's "The Apprentice," on Thursday, Aug. 30 at Noon ET.

His new book, "Campus CEO: The Student Entrepreneur's Guide to Launching a Multimillion-Dollar Business" (Kaplan Publishing, $16.95), is the Color of Money Book Club selection for August.

In her column from July 29, Michelle writes if you have dreams of running your own business, then this book provides good advice without being boring.

A transcript follows.

Read Michelle's past Color of Money columns.

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Michelle Singletary: Good afternoon all. Talk about a busy news cycle for financial news. Hope you all read my Sunday's columm and have been following all the great mortgage meltdown coverage in the Post.

Well today we get a little break from that. So let's get started.

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Adams Morgan: Michelle,

I think I know how you are going to respond to my question but it doesn't hurt to ask. I am going to have my bathroom redone (the budget is 10-15k) and am trying to decide whether to pay in cash or get a home equity line of credit. I could pay in cash. The money is sitting in a savings account earning about 5% interest. The cash would not be coming from my emergency fund which has enough to cover expenses for 3-6 months. My only debt right now is my mortgage.

Some people suggest the HELOC because of I could deduct the interest paid. Personally, I'm not sure that's worth it.

Which would you recommend, cash or the HELOC?

Thanks.

Michelle Singletary: Ah, such an easy question.

You knew and yet you asked anyway.

Your deduction for the equity line never fully recovers all the interest you pay.

So pay cash.

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Randal Pinkett: Greetings everyone and thank you for joining this live chat courtesy of Michelle Singletary and the Washington Post! I appreciate your interest in Campus CEO: The Student Entrepreneur's Guide to Launching a Multimillion Dollar Company!

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Southern Maryland: Where can I buy the book???

Thank you!!!

Randal Pinkett: You can purchase Campus CEO at: http://www.campusceo.com or you can order it from Amazon.com or BarnesandNoble.com. You can learn more about me at: http://www.randalpinkett.com.

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Seattle, Wash.: I'm sorry this isn't related to the book, but I have a question about credit cards and credit reports. My husband and I are buying a house. We have several credit cards that we don't use, but we haven't closed because we didn't want the ding to our report. Instead, it looks like we've gotten dinged for having so much open credit. Is there a solution to this? Which is better, tens of thousands of dollars in open credit or recently canceled cards?

Thank you!

Michelle Singletary: The only way you get dinged for having those open lines is if the lender takes that into account separately from your credit scores.

You should ask the lender what to do or if you are working with a mortgage broker. Otherwise if you have no balance on those cards that should not impact negatively your credit scores.

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Harrisburg, Pa.: In your future business life, which of your fellow Apprentice contestants would you consider hiring in your company?

Randal Pinkett: I would consider hiring quite a few of my fellow Apprentice contestants. In fact, Josh Shaw and I are working together right now. My company, BCT Partners, is helping him launch his next entrepreneurial venture. I would also be excited to work with Alla, Felisha, Mark, Marcus, Marshawn, Chris, Kristi, Jennifer and Clay, as I have kept in touch with all of them.

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Potential ID Theft?: You might not be the right person to ask, but I thought I'd give it a shot because you seem knowledgeable on this topic:

Over the past nine months or so, I have, out of the blue, started receiving at my home mail directed to someone else, but at my correct address. Absolutely all of these letters are commercial bulk mail, like credit card applications, etc. One or two of them, I'm reasonably certain, are collections letters.

I have lived at my address for over 6 years now and I know (from the spatterings of mail from when I first moved in) the names of at least the two occupants immediately before me. This can't possibly be an accident.

What, if anything, should I do in this case? Is there a potential that MY credit will be ruined or my identity stolen? Should I contact someone or another about this situation in order to help the named person? (For all I know, this person lives in Alaska or something.)

Any advice you can give would be greatly appreciated. Thanks!

Michelle Singletary: As soon as this chat is over you need to get copies of your credit reports -- all three. Go to www.annualcreditreport.com. ONLY use that web address.

Sometimes it is a challenge to get them online but try anyway.

You have have spotted ID fraud in the making. Also, if you do see something out of place put a fraud alert on your reports right away.

Go to this link for more information on how to protect yourself:

http://www.privacyrights.org/fs/fs17a.htm

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Washington, D.C.: My question is how do you get motivated. For example I have my business plan together - which took a long time - and I had three partners. One partner backed out while the other is just waiting to see what's next. How do you get motivated because the moneny and success won't come over night I'm sure. But since the other partner left and since it is my idea, I kind of got discouraged but I don't want to settle for my 9-5. Thanks

Randal Pinkett: I get motivated based on my passion for what it is that I am trying to accomplish and the difference I believe it will make in the lives of others. Stated differently, I get motivated by the mission, vision, and values of the venture I am pursuing. You should ask yourself: Why am I doing this? What do I hope to accomplish? What impact or change would I like to see in the world because of my business? These, I believe, are the fundamental questions any entrepreneur must ask. And this is particularly true because it is only when you have solid and meaningful answers to these questions that you will have the perseverance to overcome the inevitable challenges you will face. I hope this is helpful. Stay strong!

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Adams Morgan, Washington, D.C.: Michelle, submitting way early, but I did want to get this question to you. One of the things that really rankled me from your Sunday column was the promoter's "aw shucks, I'm just a colored boy trying to make a living". This business of pulling the race card seems to be a lot of why promoters can get away with this - all an argument that the big guys (e.g., federal or state regulators, legitimate mortgage brokers) don't want the little guy to get ahead - and you are challenging their "little" status if you ask questions, and also are doing them wrong if you ask the big guys about what they are doing. In this case the "race card" seems to be just that, as the promoter is self-described as colored (did he use a whiney, psuedo-accented voice as well?) but more generically there seems to be a posture of "us" vs "them".

washingtonpost.com: A 400 Percent Return In 7 Days? Riiiight. (Color of Money, Aug. 26)

Michelle Singletary: You are so on the money. A lot of what was said was something like, "The white man don't want you to be rich or doesn't want you to know this stuff."

Look, we can't ignore this country's history of racism, which continues today in some areas. But to promote a product or business venture that appears to take advantage of the very people you are claiming to help is just wrong and evil. It's called affinity fraud and it's growing folks.

So the moral is, just because your friend, pastor, co-worker, fellow member of church, Frat brothe or sister, mother, father, sister or honey says something is legit don't take their word for it. Check out every fact. And if anything seems amiss pay attention to that red flag because friends and family have and do pull their own into scams!

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Washington, D.C.: Randal, greetings from a fellow Highstown High School alum! I didn't graduate with you, but we were all certainly aware of who you were. Congratulations on all your successes!

Randal Pinkett: Thank you very much!

I am a proud graduate of Hightstown High School and a proud product of the educational system and the Hightstown/East Windsor, New Jersey community.

Go Hightstown High Rams!

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Philadelphia, Pa.: When I was in college, I recall that some of the entrepreneurs of small campus businesses indeed went on to organize and run their own companies. How should students best organize and use their campus experiences to prepare themselves for the outside world: is it best to get a feel for business, learn to deal with people, or what?

Randal Pinkett: The best way for students to use their campus experience is threefold: 1) network with other students, 2) build meaningful relationships with mentors (i.e professors and alumni, etc., with entrepreneurial experience, and 3) gain experience, either through launching your own venture or working and/or even volunteering in another venture. Campuses are great environments for feeding the entrepreneurial spirit these days. Also look out for business plan competitions, courses, and student clubs/organizations focused on entrepreneurship.

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The only way you get dinged for having those open lines is if the lender takes that into account separately from your credit scores. : well, you're wrong. When I read my free copy of my credit report when I refinanced it clearing said my score was based on my "potential debt" ie: my credit limit.

Michelle Singletary: I'm not wrong. If you have great scores, you still get that message. It may say it have the potential because it does if you access more than 50 percent of your credit line on individual cards and collectively. But the fact is if you have no debt outstanding that does pull your credit score down, which is what the person was asking. But having open lines of credit can be taken into account by the lender.

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Washington, D.C.: This is a question for Randal. I started a magazine in college that received raves and I appeared on several TV shows, but after 2 years of minor celebrity, I was 21, not really a wunderkind, and the company barely made $10k profit per year. I had no knowledge of who to get financing from or how to get professional advertising without doing all the work myself. 10 years later I've got a great corporate jobt hat I loved, until a friend sold her dotcom for millions. Any suggestions for recapturing entrepreneurship? 90% of the online groups and forums are swarming with scammers.

Randal Pinkett: I definitely think you should recapture your entrepreneurial spirit. The challenge, of course, is how to do this while working a corporate job. First, do not get too comfortable! Spend your evenings and weekends planning for your next venture. Second, look at how you can ramp up your company's activities while you are working (i.e. build the website, marketing materials, attend networking events, etc.). Third and finally, try to identify a strong team and solid partners so you and spread the workload. I have a great chapter in Campus CEO on how to do this. Good luck and just do it!

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Washington, DC: Hi Michelle. I am getting married in 6 months. I have excellent credit, my fiance has fair credit. Would it be better loan-wise if I bought a condo on my own before we get married? Or would our combined incomes get us a better loan/mortgage rate to buy after we get married?

Michelle Singletary: Me, I would wait until I was married, spend some time helping your honey get his credit better and then get the home together.

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Washington, D.C.: Thanks so much for the columns and chats. Your advice is always helpful.

My wife and I have been aggressively paying down debt for the last two years and are probably 1 to 1.5 years from paying off all college/grad school loans and related debt. We have paid off our car. We are in our early thirties and expecting our first child. We want to buy a condo or townhouse by next summer that will give us a bit more room for the kid. We have enough savings for a decent first-time homebuyer down payment, but we could have a bit more of a cushion if we took a year off from aggressively paying down debt (paid closer to minimums) and put more into savings in anticipation of buying a home.

The kid is due in a couple of weeks, and already our small apartment is feeling smaller just with the stuff, without the baby yet. Is it worth slowing down the debt payments a bit to get us into a bigger home and homeownership a little sooner?

Michelle Singletary: I would say get rid of the stuff to make room for baby and keep paying down that debt.

Look as the mother of THREE I understand the "want" for more space. But think about it, the baby doesn't really "need" a lot of space. You "want" the space for the baby stuff.

You will be so much better off with that debt gone. For example, what if one of you wants to stay home with the baby longer than your planned leave. That's what happened to me. Without a lot of debt, I could do that.

Besides you could sell the stuff and use the money for the baby's college fund.

Most important, many blessings on your new arrival.

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Silver Spring, Md.: I have an idea for a small business after I retire in 3 years(currently I work for the feds so I don't know much about business). The idea is based more on being able to live in a certain place part time and create something from an underutilized resource there(merchandising to the US as well as visitors to the foreign country)- however, this is not in the US so I am wondering how to learn about setting up a small business overseas. I know here in the US we have the SBA but any suggestions on issues related to foreign countries?

Randal Pinkett: I would recommendation contacting the Office of Commercial and Business Affairs (CBA) in the Bureau of Economic and Business Affairs under the U.S. State Department. They can provide some excellent information on doing business in international markets. You can learn more at: http://www.state.gov/e/eeb/cba/

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Hometown, USA: Dear Michelle,

I moved back to my hometown about a year ago, where I landed the dream job. At least it seemed so. I am making substantially more money, which made it possible for me to buy a home several months ago. The job is not working out, and I am miserable. I have started looking for a new one. Because of my field, any new job is likely to take me to someplace like DC or New York, where I expect to earn less money and have high living expenses. I will probably need to sell my newly acquired house. Can you give me any advice on how to manage the impact this will have on my finances? This is my first home, so I am not sure whether there are penalties for turning it around so soon. Should I consider the option of renting the house, even if it strains me financially in my new job?

Michelle Singletary: First get more information. I understand and endorse doing a job you love or at least like.

So start searching and see where you might land. At the same time contact a realtor to see what your house might fetch, especially in this market. Are you upside down, meaning you owe more than you could get for it. If so that makes selling a problem and you might consider renting. But keep in mind you might not be able to charge enough in rent to cover the mortgage. Talk to the realtor about that as well.

If you do have some equity, start looking around where you might move. Could you afford with the equity to get another home in the new location? If not you might want to park the money and rent awhile. Renting is good anyway because you get to see if you like the new job and new location before you sink money into another home.

So do some research before you do anything.

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Yonkers, N.Y.: Hello Mr. Pinkett,

Starting my own business requires a significant financial repository. I am considering owning a franchise (say, frozen desert, or fast food).

What are the benefits and drawbacks of franchising, compared to those of owning my own business?

Also, would owning a franchise require filing under Sub Chapter S, as would owning a small business?

Thank you.

- KEM

Randal Pinkett: Greetings Kem.

Some of the advantages of franchising are the ability to expand your customer base quickly and minimize reliance on your own financial capital to fuel growth. Some of the disadvantages are the need to put extra measures in place for training, quality control, and legal considerations. I would check out: www.entrepreneur.com/franchises and www.franchise.org.

With respect to Sub Chapter S, to my knowledge, you do not have to file under Sub Chapter S to own a franchise necessarily. However, certain franchisors may have certain requirements that do require you to create a S-corp.

Michelle Singletary: Before you buy a franchise do lots of research. There are so many and some operate as you can expect much better than others. Also talk to lots of franchise owners. I used to cover small business and I talked to a lot of franchise owners, some who loved it and others who thought it was the biggest mistake of their life (they ended up working an amazing amount of hours for not much more than they would have gotten at a job).

Also check out the FTC's "A Consumer Guide to Buying a Franchise" Here's the link:

http://www.ftc.gov/bcp/conline/pubs/invest/buyfran.shtm

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Tiffany - Richmond, Va.: Randal,

I currently work full-time and have two fairly profitable small businesses out of my home. I started them believing they were good business ideas, I had experience in both disciplines and that I could launch them "on the cheap".

My true dream however is to open up a daycare - clearly a more demanding and costly business to launch.

When starting a business that you can't operate while maintaining a full-time career, when/what is the rule of thumb that let's you know when to step out on faith.

I've done the research, am primed for the necessarly loans and have a little cushion, but obviously this isn't enough to know when I'll be making the money I'd like to make with this business.

Any thoughts?

Randal Pinkett: Hi Tiffany,

This is a classic challenge for all entrepreneurs. The best advice I can give you is that you have to trust your gut. Entrepreneurship is not just about taking risk, or even calculated risk, it is also about trusting your intuition. Of course, there are no guarantees, but some of the most successful entrepreneurs have been people who were uniquely able to see an opportunity that nobody else believed could be accomplished. They had to trust -their- intuition, just as you need to trust yours.

Sorrow looks down, and worry looks around, but faith looks up. Being entrepreneur means you should -always- look up!

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Washington, DC: Michelle--

I completely agree with you about paying off debt and paying in cash, it's how I was raised and how I live. However, I have an ongoing argument with a co-worker who insists that my discomfort with debt is just psychological, and that economically, if I had, say, $60k in investments and $90k in (eg) student debt, I might as well leave the $60k to keep earning interest, since paying off the $90k will still leave me with $30k in debt and nothing earning interest at all. I say I don't want to take the risk that I might not be able to work, but he says either way, I'd still have debt, so I should keep my money working for me while I can. What's my response? Thanks!

Michelle Singletary: Well, there's only a little bit of sense in what your co-worker says.

I would change one thing. Put aside some of that $60,000 in savings (cash) to cover three to six months of living expenses. And if the investments are in tax deferred accounts, don't cash them out. Otherwise I would get rid of the debt as fast as I can because as you correctly point peopel who say what your co-worker is saying do not take into account the risk of the debt. And you know it's okay if you have a psychological adversion to debt. Because my friend all those folks telling you you can invest and make more are talking about the best case scenario. Unfortunately life happens (job layoff, divorce, illness, market downturn for years).

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Washington, D.C.: Good afternoon, Ms. Singletary and Mr. Pinkett!

First, Mr. Pinkett, congratulations on your success! I am in the process of starting a catering business with a niche market. I am also in the process of getting the training I need to fulfill licensing requirements. However, other than obtaining a EIN and getting the business incorporated and legally registered with the necessary regulatory agencies, I don't know where to begin. I have the contacts, as well as people who have offered their services (publicists, potential clients, accountants, etc.). However, I don't have the working capital or credit yet to obtain financing. And for the time being, I will be keeping my day job.

Do you have any advice for someone like me? Thanks in advance for your answer!

Randal Pinkett: Greetings Ms. Singletary. It sounds like you need to develop a full-blown and complete business plan. With respect to organizations that can assist you, I would recommend any of the following organizations: SBA, SCORE, Small Business Development Centers (SBDCs), and Women's Business Centers (WBCs). With respect to other resources, I will shamelessly recommend that you get a copy of my book, Campus CEO. Or you can check out Business Plans the Work by Timmons, The Book on Business Planning by Berry, Palo Alto's Business Plan Pro software, or visit: Business.gov or BPlan.com, where you can obtain example, free, business plans.

Michelle Singletary: Great advice.

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NEPA: Randal,

What has been the most rewarding aspect of penning your book?

Randal Pinkett: Hi Nepa!

Undoubtedly, the most rewarding aspect of penning my book has been both the opportunity to engage with aspiring entrepreneurs and offer my advice through book signings, speaking engagements, etc., as well as the positive feedback I continue to receive from people who purchased it and found that it made a difference in their lives. It has been incredibly rewarding. Look out for my upcoming audio book, No-Money Down CEO: How to Start Your Dream Business with Little or No Cash. You can learn more at: http://www.randalpinkett.com/books/

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ID Theft again: Thanks for your response to my last question!

It happens that I ran my FICO scores on 8/17, and they look fine... the scores are pretty healthy (lowest one is 780) and I don't see any credit that's not mine or credit inquiries affecting my score. And even though the person whose name appears above my address has apparently undergone some collection(s?), my three reports are clear of those.

Any next steps I should take?.... Thanks again.

Michelle Singletary: Well check with the Post Office. It may be that the person is just "using" your address to avoid detection.

Other than that you might have to keep checking your credit reports. If you want to be super proactive, I might still put a fraud alert on the reports.

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Baltimore, Md.: Michelle, loved your column today on paying off the mortgage. The thing that gets me is that the people who are most likely to fall for this argument are the people who are least likely to be sophisticated and disciplined enough to come out ahead. Not paying down the mortgage only works if you diligently invest the difference into a solid, balanced portfolio. But how many people are just going to spend the difference? Or buy some huckster's spiel that they can make soooo much more if they just invest that money in the latest sure-fire whatever? Then 30 years later you end up with a big mortgage AND no investments to pay that debt with.

My test: look at "The Millionaire Next Door." If you look like one of those guys -- no debt, cheap house and cars, prodigious savings for your age and income, not blowing the paycheck on clothes, cars, etc. -- then you might be one of the few people who is disciplined and savvy enough to come out financially ahead (of course, you're also not likely to be seduced by the lure of "higher returns" in the first place -- right, Michelle??). But if you're in the other 99% of the population, well, be smart enough to recognize that. Not everybody can be Warren Buffett -- it takes a lot of knowledge, skill, and education. But paying down debt's simple -- it's a guaranteed return, a sure thing. And when you can't guarantee that you'll win big, you better at least make sure you won't lose.

Michelle Singletary: See, this is what I'm saying. People act like people don't act well like well the average "consumer."

This advice of keep debt ONLY works for those who really don't have to keep the debt. So it's my job to preach the extreme so that those who "think" they can do this but really can't might be saved.

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Arlington, Va.: Michelle- what did you think of the article in last Saturday's Post written by your colleague, where he discussed how he and his doctor wife regret their interest-only loan? The most interesting part (to me) was how after they bought the house, they bought a TV, went on vacation, got a dog, etc. I'm about to buy a house and the last thing I plan on doing is going on vacation! I totally thought of you when I read the article.

washingtonpost.com: Was the Mortgage a Mistake? by Michael S. Rosenwald (Post, Aug. 19, 2007)

Michelle Singletary: Honestly I thought it very brave to admit they may not have made the right decision. Look I don't always do the right thing with my money. And frankly my advice is hard for many people to accept given all the counter advice about "use other people's money" to get ahead.

Overall I thought it was a good admission that we all need to really consider the financial choices we make. You should always, always expect the best but plan for the worse.

If you watch Boston Legal, it's the tried and true "Plan B."

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Ashburn, Va.: Hello Michelle and Randall!

Thanks for taking my question. A colleague of mine is developing a skin care line. Her and her partner have been focuse on developing the product line and have invested a great deal of their personal funds into the business. They need capital and possibly investors. I'm interested in helping out and interested in the "nuts and bolts" of starting and running a business, and would like to help out. Besides Randal's new book, what other resources are available on approaching investors and getting capital for a new business?

Thanks!

Budding Entreprenuer!

Randal Pinkett: Here are some resources regarding investors and obtaining capital:

Angel Capital Association (www.angelcapitalassociation.org)

National Venture Capital Association (www.nvca.org)

CircleLending (www.circlending.com)

Prosper.com (www.prosper.com)

US SBA (www.sba.gov/services/financialassistance/)

Michelle Singletary: Can I add just one thing. Do not invest money you need back!

As good as any small business is, startups are still very, very risky. Just make sure as an investor you go over their business plan.

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Before you buy a franchise do lots of research. : Including the NEED for additional stores. You can pay your local chamber to do a short market analysis. For example, if there are 3 pizza joints in your community and all are operating at full, but not overwhelmed capacity, there may not be demand for more pizzas. We can only eat a finite number of pizzas and if another joint opens, there'd be no unmet demand to buy those pizzas. You can build it, but what will compel them to come?

Michelle Singletary: Glad to pass this along.

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Vienna VA: Michelle,

You're really the only person that can help me with this. I don't want to talk to my friends or family because everyone thinks I'm doing just fine. I need some of your common sense Big Mama's advice.

I am a single mom of a 3 year old. I live with my daughter and just moved in with my best friend. We split everything 50-50. I make in the mid $40's plus I have a PT job working about 11 hours a week. There's no way to increase those hours. I work overtime at my FT as much as possible but it's difficult to do any more hours bc of my daughter.

The problem is that between rent, food, gas, utilities, debt ($2500 at 11%) sometimes I have $5 left over for the remainder of the week. I have no savings, no "life happens" fund. I've tried using mvelopes, I've tried just not spending money unless absolutely necessary, nothing's helping. I'm not due for another raise until at least the end of the year and changing jobs is not an option. They're paying my way through school and if I quit I'll owe the money back. Plus this is a great stepping stone for my career and even if I don't stay here I at least need to get all of the knowledge that I can get while I'm here. I have a Roth and a 40lk and I've thought about raiding my Roth and using the money to get on my feet.

Please please help me! I always trust what you say as The Gospel According to Michelle.

Michelle Singletary: I'm really so sorry you are still struggling after two jobs.

So look you know the only way to address this problem is cut expenses or earn more. You've got the last covered so perhaps you need to go back to the budget. Maybe, you are still living in a place you can't afford. If you're local, could you move in with relatives perhaps? Maybe you are still spending too much for food. I know you're thinking right about now, I've cut to the bone.

But every single time I meet with people to counsel them on their finances --every single time-- they claim there is nothing else to cut. And yet I find some cuts.

There is a budget worksheet on the Post site that I've created. Go find it, download it and start from scratch with your budget.

Other than that maybe your part-time job isn't bringing in enough and you might need to get a different one making more.

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Alexandria, Va.: Michelle,

How much is enough available credit? I'm 30 and thinking about buying a house. I have the normal 20% down ready but I only have 2 credit cards with a limit of $7,500. I have never, ever come close to using even half of that limit so I've never really thought about asking to increase it. I usually buy everything with cash so while I've got a good credit history it's not all that extensive. Should I ask to have my credit limits increased? I've had these cards for years and never had a late payment so I can't imagine they would say no.

Michelle Singletary: You should be fine don't worry. You could have a line of $500 and as long as you've had the card a long time and aren't using more than 50 percent of the available balance you should generate good credit scores.

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RE: Address mistake: The guy who is getting other people's mail in his mailbox should also make sure that somebody else isn't using his mailbox (if it isn't one of those locked boxes, anyway). If you have a trusted neighbor with a kid in school, see if the kid can go directly and get your mail right when it gets there. Otherwise someone else might be using your mailbox and picking up whatever mail he can get. Sounds weird, but it happens.

Michelle Singletary: Good point. Hadn't thought of that. Thanks.

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Brooklyn, N.Y.: My friend has a great talent that I think could make a good business for her: she is the best I know at straightening out problems with health insurance or other bureaucratic nightmares. Has done it for her mother and other elderly people. But I have not seen a model for that kind of business, being an advocate or consultant to help with red tape. Where could she go to learn about how to exploit this, i.e. how to price her service, how to find customers, etc?

Randal Pinkett: Your friend should look into the industries known as:

1) Personal assistants/personal executive assistants/personal concierge

2) Personal organization consultants

I think these are the most comparable industries for what she is proposing. These folks help with red tape, from among a host of other issues. I currently work with a firm that does this work called Shared Demands (www.shareddemands.com)

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16th and M streets NW: Thank you so much for the info on credit reports. I am on hold with Experian as I type to see why there is a second SSN on my credit report!! Needless to say, I only have one SSN so need to get to the bottom of this fast.

Michelle Singletary: Definitely stay on top of that! Also use the link I mentioned earlier to get other tips.

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Legitimate multi-level marketing: In your article you mentioned that there are some legitimate multi level marketing companies - how does one go about identifying the legitimate ones? Am asking this because I have been trying to convince a friend of mine who has been roped into this that it does not sound credible and even if it is, it will not earn her enough money and is a waste of her time.

Thanks

Michelle Singletary: The FTC and SEC has lots of information about multi-level marketing.

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Oreland, Pa.: Hi Michelle and Randal,

I continue to struggle with all the manufacturing jobs that are being transferred to China and other offshore countries.

When I graduated from undergraduate school in the late 1960s, manufacturing represented about 35% of the workforce--today more like 11 percent.

How can we empower our next generation of entrepreneurs to not be discouraged about those opportunities leaving the US. Furniture manufacturing is a great example, moving offshore for profit reasons, yet the environmental regulations and laws are essentially non-existent.

Entrepreneurial opportunities to help commerce and the environment seem to be mispalced in this lower tech area of manufacturing.. Your thoughts would be appreciated. Thank you

Randal Pinkett: You make some great observations. I believe that we empower the next generation by doing everything we can to make sure they regard entrepreneurship as a viable -choice- and one that they can indeed succeed at. Earlier this year, I participated in the first-ever EntrepreneurshipWeekUSA, which was targeted at youth ages 14 to 25. The initiative is designed to serve as an inspiration for young people to think creatively and to turn their ideas into action - whether that means starting a new business, developing an innovation for an existing company or solving a problem that makes society better. Of course, we hope this will lead to ventures that can grow our economy, promote a health environment, and other financial and social returns to our society. Next year we are going global! You can learn more at: http://www.entrepreneurshipweekusa.com/index.asp

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Can I add just one thing. Do not invest money you need back! : and make sure there is a demand for that product. Do we really need another face cream? Will I pay $20? Seems like the market is saturated already with great products available at low prices. What do you have that would make me stop buying what I like and start paying you more for an unknown quality?

Michelle Singletary: Yes, you can add.

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Washington, D.C.: I have a similar question. I've had the same phone number for almost 10 years. For last 5-6 years, debt collectors call me on almost a daily basis looking for someone who doesn't live with me----someone I have never heard of, never met, etc. This person did not live at my residence before me. When I happen to answer the phone when they call (I'm usually at work), I tell them this and ask them to stop calling---they don't. What are my options short of changing my number?

Randal Pinkett: You should look into the Do Not Call registry:

https://www.donotcall.gov/

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To new parent:: You don't have any idea what you'll need once the baby is born. Yes, it's overwhelming, and yes, everyone has an opinion. But don't buy too much until AFTER the baby's born. Really. You need a crib/pack n play and a car seat, and some clothes. That's IT. You're not going to be going out too much in the first few weeks.

Maybe buy a stroller. But there's so much stuff out there that everyone tells you you -need- that you don't really need. Then you'll end up with all this stuff you aren't using (cause you'll figure out what you need after a while). Go to Craig's list/Ebay, people sell all sorts of 'used' stuff with the saying: barely used. Or used once.

Cause they bought this stuff and it didn't help them. Take advantage of that and buy used or gently used....

washingtonpost.com: You might also check out our classified section - http://www.washingtonpost.com/wp-adv/merchandise/

Michelle Singletary: I so agree. We had so much baby stuff that we didn't use. And as for toys, my oldest ended up playing with the boxes the toys came in.

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Washington, DC: Michelle - I love your work. Keep it up.

My wife and I are generally doing OK. But, I would like to run a few questions across you to get your wise opinion.

I listed the questions first. Then, I will give you some background data.

1. Do you think I should start a brand new 529 plan for a second child or utilize one plan for both children (and change the beneficiary when necessary)?

2. What is your opinion on umbrella insurance policies? We are having a hard time deciding if we should get one.

3. Do you think it would be wise to use a little of our emergency fund to help prepare for private school tuition for our second child?

OK, here is some data for you:

1. Age 35. Married. One 2 year old child. Another on the way. Wife is stay at home Mom.

2. Annual salary: $126K

3. House: $900 mortgage; principal balance - $120K; home value - $400K

4. Consumer debt: none

5. Retirement plan balance: $220K. contribute 10%.

6. College savings balance: $18K

7. Savings for private school: $29K (tuition will be about $6500 per year).

8. Cash in bank/money market: about 10 months worth of expenses.

Thank You!

Michelle Singletary: Talk about doing OK!

So first, you can't combine 529 plans. You have to open a separate account for each kid. I think an umbrella policy is a good idea. I have one. And it's not very costly.

Don't use any of your emergency money for private school. Save for that. Cuz you might need all of that rainy-day fund and then some (especially with two kids).

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Annapolis, Md.: Advice to Vienna: It may not seem like it now, but I think you're doing great. You are going to school, you are climbing a career ladder, and you are taking care of your daughter. Yes, it's hard now and it's going to stay hard for a while yet. But in a couple of years, when you are done with school, when you have a better job, and when your debt is paid off, then you will be able to afford to treat yourself to the things you find yourself missing now.

I've been where you are, and I know it is hard. But this is the hard part. A better day is coming. You can be strong.

Michelle Singletary: Had to pass this along. Stay strong my sister. This too shall pass as long as you keep trying.

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Interest-only mortgage: But the thing is, the person saying it was a mistake made ALL the mistakes - why didn't he pay off the principal? Who in their right mind takes out this kind of loan and doesn't ALSO pay off the principal? You get more leeway (we put principal in differently, not according to the bank's schedule, because our income can be spotty, but we have paid off a HUGE renovation of over $200k AND one third of our principal in 7 years), but you have to do it. Who owns a house and thinks it's going to be easy?

The thing that gets me is that people don't realize that real estate only really returns about 2-3% a year - even when it's doing SO WELL. People forget about the money they put into the house, the taxes, the repairs, that a certain dollar amount return, over, say, 10 years, only -does- amount to 2-3%. Of course you have to live somewhere and you're earning that on someone else's money (the bank's), but even in the last few years, when we've made a fortune (on paper) on our house, it hasn't been more than 4% per year.

Michelle Singletary: Why didn't they pay on the principal?

Hello...read the news lately. Because people think they will do better with their money and they don't. They don't plan the worse. They listen to experts and money handlers who tell them they can refinance and shift other people's money around without really explaining all the risks.

And your points about owning a home...now that is right on the money.

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Alexandria, VA: What is your opinion of online savings accounts? I am looking for something a bit more liquid than a CD with a higher interest rate than my savings account (1% at a brick and mortar bank) for my rainy day account. I just can't seem to get over not having an actual physical bank.

Michelle Singletary: As long as they are FDIC insured you should be okay. And don't know about you but I rarely go to a physical branch anymore. Do just about all my banking online, including sending money to a niece in Atlanta going to Spelman. Online is fine.

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Silver Spring, Md.: My family, in particular my grandmother, always advised me while in college to focus on getting out of college. Shouldn't college students focus on graduating from college and not on becoming an entrepreneur and starting businesses? After all students and their families are investing a lot in a college education. Not everyone will become Donald Trump, but everyone needs a job and a college degree is their best chance at getting a good job.

Speaking of grandmothers, my African American grandmother banned me from using the term "Big Mama" to refer to her. I know you use it as a term of endearment, but I inherited my grandmother's aversion for the name and it bothers me to see it in print. It doesn't bother me quite as much as seeing Martin Lawrence in a fat suit. But it really has become a demeaning stereotype for black women.

Randal Pinkett: I believe that college students can success in college and entrepreneurship at the same time. Yes, graduation and good grades should be a top priority, but the best college experience is one that is well-rounded and that should necessarily involve activities that take place outside of the classroom. I believe that all students, whether they desire to go into business or not, can benefit from learning more about how entrepreneurs think and act. This is particularly true in the 21st century when you it can be just as risky to work for someone else, and get laid off, as opposed to working for yourself. In Campus CEO I have an entire chapter on balancing a good education and business. It can be done and it is being done by students across the country. I graduate with a 3.9 GPA in Electrical Engineering -and- launched a business at the same time. I wouldn't be where I am today if I had waited until later in my career. No, not everyone will become Donald Trump, but, everyone stands a better chance if they start early. That was the case for me. (Lastly, I don't really use "Big Mamma" expect when I am referring to the movie or the character in the movie Soul Food, so you may be confusing me with someone else. I stay away from it because it can be a loaded stereotype, which you alluded to).

Be blessed.

Michelle Singletary: I agree with Randal that college should be the time that young people try lots of things. So why not becoming an entrepreneur.

And as far as Big Mama, well you can just close your eyes when you see me write that. Because my Big Mama and what I called her has meant a lot to me and what I've become. Big Mama saved me from foster care.

I wont' give up what has been for generations a term of endearment. Yes, that stupid Martin movie has tainted it but not my memory or why many of us should remember and why we should honor the Big Mamas who with little education handled their money better than all the folks with their fancy degrees, big houses with big debts, credit cards, leased cars, student loan debt to choke a horse, spoiled rotten kids....well you get the picture.

And most importantly is was Big Mama, a black woman, granddaugher of slaves, who has been the financial example I set for myself and my readers.

See you made me cry.

Rock on to all the Big Mamas out there.

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Randal Pinkett: Thank you to everyone and to Michelle Singletary and the Washington Post for hosting this chat. Great questions!

You can learn more about me or contact me by visiting: http://www.randalpinkett.com

Thanks again!

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Michelle Singletary: Well, got to run. Need a hankie.

Thanks again to all who participated. I so hate not getting to all your questions. I will, as I promise every time I do this chat, to answer the leftovers in either my column or my eletter, which I hope you all subscribe to.

Have a wonderful day -- saving!

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