Color of Money Book Club

Michelle Singletary
Washington Post Personal Finance Columnist
Thursday, April 24, 2008 12:00 PM

Personal finance columnist Michelle Singletary hosts an online discussion with Jenny Offill and Elissa Schappell, editors of "Money Changes Everything" (Broadway Books) on Thursday, April 24 at Noon ET.

In her column from April 6, Michelle wrote that Offill and Schappell have put together an anthology of acclaimed authors writing on the pocketbook issues we all face: debt, poverty and wealth.

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.


Michelle Singletary: Welcome all. I know this will be an interesting chat. Let's get started.


Loved this book: None of these folks had any great, happily-ever-after stories about money. Some were very sad.

We should be grateful for what we have, and willing to share it smartly. Plus we should realize that people come always first before money.

I liked the end of Stash (Money is neither good nor bad. When you're lucky enough to have some, have the grace to be grateful), and Preexisting Condition (If this is the worse thing that ever happens to us..... My wife was right. Worse things have happened).

Elissa Schappell: We do equate money with happiness.

Money can't buy happiness, it can't buy you love and-I think this is more to the point--money can't buy safety.

Yes, it can buy you a better lawyer, and a better doctor, but it can't insulate you from fate. It can't protect you or the people you love from getting sick, or having their heart broken or dying.

Money is almost always a stand-in for some bigger issue. We've lost our imagination to deal with the deeper things this gets at. What we need to do is look at what is informing our feelings about money to see what is really biting at our heels.


Burbank, Calif.: Do any writers explore the widening gap between the rich and the poor and what this means to Americans and to our economy? If this is addressed, what do they say?

Elissa Schappell:

You're absolutely right. For many years America has seen a widening gulf between the haves and the have-nots. The minimum wage is minimum, people are being forced to work two sometimes three jobs, jobs are being shipped overseas, gas prices are sky-rocketing, record numbers of people are filing for bankruptcy, people are losing their homes. The middle-class is disappearing. A dying breed. And yet the richer are getting richer.

I'll let Michelle address the economic points, and take on what this ever-widening gap is doing to Americans psychologically.

The shrinking wallet is having a devastating effect on the American psyche. America is founded on the idea that we live in a meritocracy. The American dream has always been that anybody who is ambitious and works hard can get rich.

But we know this isn't true. This American dream is bankrupt.

The idea is that if you can't get rich there must be something wrong with you-you're stupid, or lazy, or unlucky. Who wants to be thought of that way?

Increasingly fewer and fewer of us are able to live the middle-class life, let alone the American dream of becoming rich. But given that in our culture the biggest signifier of wealth/success is material goods we are able to create the appearance of wealth.

And because of easy credit, and low-financed mortgages, ATMs, money is easily accessible. It's not that hard to give the appearance of being wealthy. We can appear to be keeping up with our neighbors the Joneses. What we don't know is that the Joneses are mortgaged to the hilt, and are about to have their BMW repossessed.

(On a smaller scale just look at the number of magazines devoted simply to shopping, to selling the fantasy that if you buy the same $100 face cream as Jennifer Aniston, you will be as happy, and successful, and beautiful as Jennifer Aniston. What we don't know is Jennifer Aniston gets her cream for free.)

Once you enter American's unique optimistic can-do spirit into the equation and what you've got is the expectation or fantasy that wealth is hovering just slightly out of reach whether it's an investment, or dumping a cup of scalding hot McDonald's coffee into your lap while driving. Even the poorest among us can, in this way, justify buying this flat screen TV, or car, or boat on credit, b/c we're pretty sure there's a bigger payday around the corner.

It's this optimism coupled with the shame of not being able to keep up with the Joneses-that he who dies with the most toys wins approach to life- and a tanking economy that is causing America to experience this transformation into a society with a caste system-rich and poor. It's really very sad.


Grand Rapids, Mich.: Michelle, What do I tell my son-in-law when he says to me, now 2 years after graduating college, "I'm in no hurry to pay off my college loans because I can make more money investing my money instead of paying the loans off." I just want him and my daughter to pay off the debt...and then they can focus on saving for a house! I just want them to see that in this economy, they should get rid of debts. How do we do this in a kind but honest way?

Michelle Singletary: Tell your son-in-law and daughter just what you told me.

And add this:"You know dear, when you are in debt you are a slave."

Bet that will get a good discussion going.

And then you know what, you have to let it go. Daughter grown.

Son-in-law grown.

They aren't going to do what you want. They have to learn the hard way. But don't be there to lend them money when they come to you for that house if you don't feel as if they've heeded your wise advice.


Washington, D.C.: Hi Michelle -- I saw you speak the other day and you were great! I don't know if this a question you will take, but I hope you will. I have a lot of educational debt but I'm trying my best to save, pay down the debt, and contribute to my retirement fund. As well as help out my family. I need to buy a car in less than two years and I'm trying to figure out how to save now. I don't think I can save more than a couple thousand for the car alone and I do have some emergency savings put away if anything happens. What is your advice? Buy used or buy new but the cheapest thing out there? I wish I didn't need a car but I don't live by the metro. Many thanks.

Michelle Singletary: Hey. Thanks.

Keep the hoopty. Take the money you are saving for a new or used and fix up the hoopty. Seriously.

Now if the car is becoming highly, highly unreliable meaning it will break down with no notice I agree time to begin saving for a USED replacement. But if the repairs can be planned for, keep it until you can get further along in paying down your debt.

You may also have to pull back from helping family if that is straining your own finances.


Rockville, Md.: Michelle:

Hope you are enjoying the spring weather. I would like to share something that has come to me after retiring - how much is enough? My budget is close, but if I amcareful, I do have enough and it was a surprise as to how liberating that can be. I suspose others (like Dickins) have noted iut, but if you have enough, money is never a problem. One can save or help others or do social contributions (in moderation, of course) when the budget works. Otherwise, life can be a disaster.

My reference:

Charles Dickens

"Happiness and misery"

Annual income twenty pounds, annual expenditure nineteen

nineteen six, result happiness.

Annual income twenty pounds,

annual expenditure twenty pounds ought and six, result misery.

(from "David Copperfield")

I am a retired librarian.

Jenny Offill: Great quote!

I think this passage from Dickens is an excellent illustration of how easy it is to live beyond one's means even when one's fortunes improve. One thing that came up a great deal in the book was how this sense of what is "enough" can be a moving target. Many people find that as their incomes increase so do their desires for material goods and so they end up feeling just as poor despite having an objectively higher standard of living. In our anthology, we have a pair of essays by a married couple called "For Richer" and "For Poorer". Each tells his or her side of the story about when they felt rich (as graduate students living on very little a month in a foreign country) and when they felt poor (years later as the parents of two children in a booming sunbelt city). Of course, their income was much higher in the later case but then so were their needs and wants.

Learning to live within one's means without comparing oneself to those who are better off is the only key to financial happiness I've ever come across.


Washington, D.C.: Hi Michelle - I asked this last time during the tax chat but didn't get an answer so i'll try again. I have about $4,000 from my tax refund. I have about 8k in student loans, and a 14k car loan, and i'm starting school in the fall and going to have zero income and will be using money from my high yield online savings account. What should I use the 4k for? An all expense paid vaca to Bora Bora??

Michelle Singletary: If you need the $4,000 for school because you won't be working use it for that.

Until you finish school you might also ask you student loan lenders for a deferral if you're not already eligible. Now for those who know me, that may sound off. I try to encourage peopel to pay off education debt as soon as possible and car debt and credit card debt and home loans, etc.

But you need to preserve money if you won't be working. If you have enough in your savings for school and you are confident you won't run short do this:

-- make sure you still have an emergency fund. If not use part or all of the $4,000 for that fund.

-- if you have an emergeny fund, put a little of that $4,000 in a life happens fund for car repairs, teeth work anything that life may throw at you that isn't an extreme emergency.

-- If you got emergency and life happens covered, current expenses covered than throw the $4,000 at the student loan debt or at least use it to pay the monthly payments until you finish school.


Rockville, Md.: Not by the Metro? I know those who use Zip car to get by. Is this possible? They don't live by Metro either. Some very reliable cars are lower in price because they are the bottom of the lines. Good and solid, if you can take that over "sexy."

Michelle Singletary: I like the concept of Zip Cars. Look it up if you don't know what I'm talking about.

And people can definitely find good, reliable used cars that are not too pricey. For one thing lots of the knuckleheads who lease turn in good cars that need to be sold.


Washington, D.C.: We get collections calls for the person who used to have our phone number (6 and 1/2 years ago!) Mostly they are recordings and we don't call back.

However, I was wondering. If we call back and tell them not to call again, are they legally obligated to stop calling?

Michelle Singletary: You can send a letter asking the companies to stop calling you. Check the FTC website about collectors for more of your rights if you are the debtor or not the debtor.


Richmond, Va.: What is really biting me in the butt is the skyrocketing cost of food. Gas is bad, but we can cut back on driving trips, etc. But I have to feed my family and that is geting to be SO much more than a year ago. It's eating into my savings.

Michelle Singletary: Ooooh so know what you are talking about. Got three growing rugrats, one a boy who is now eating particually a whole chicken by himself.

Do what my grandmother Big Mama did.




bulky healthy foods that fill them up.

Oh and make them drink lots of water before they eat. Helps fill the stomach :)


Worried in the suburbs: Michele,

Here is a quote form a Post columnist yesterday:

"Such a broad reduction in wealth and living standards will take many forms. It will come in the form of higher unemployment and stagnant wages and falling income, which take statistical form in slower or even negative economic growth. It will come in the form of inflation and its first cousin, a lower value for the dollar. And it will manifest itself in lower values for pension funds, 401(k) accounts, university endowments and house prices."

This is the kind of stuff that scares me to death.

washingtonpost.com: The Bottom Is Up Ahead (By Steven Pearlstein, April 23, 2008)

Michelle Singletary: I hear you.

I'm scared too but not to death.

This is all part of how the economy rolls. We have ups and downs.

It's why it's important to save when you are in times of plenty.

It's why you can't hold onto debt like it's a pet. Hard times are a lot easier to deal with when you don't have increasing food, gas, utitlity costs AND debt.


Alexandria, Va.: Another tip on buying a new (to you) car - some of the general car websites out there provide a "true cost of ownership" evaluation - it takes into account gas mileage, how much the car initially costs, what type of maintenance that make/model has historically needed, etc. It can be enlightening.

Michelle Singletary: Totally!!!


Gaithersburg, Md.: Hi Michelle, love your work. I need some advice with how to handle some newly freed up income. I've recently paid off 15k in credit card and car debt in the last 10 months and am only left with 22k in student loan debt at a fixed 3.12%. With the $1000 a month I was putting towards the car and credit cards, I was thinking of splitting $500 off towards the student loans and $500 into a money-market/stock investment fund. What are your thoughts?

Michelle Singletary:$1000 to pay down that debt (assuming you have an emergency and life happens funds).

Without question tackle the student loan debt.

Get rid of it. You could be done in less than two years.

Why wouldn't you want that freedom?

Why wouldn't you want to end your enslavement?


Vienna, Va.: Is the gap between the rich and the poor really an important statistic?

It seems like today most of the "poor" can afford fancy cell phones and TVs that I (not poor) can't seem to afford.

Being poor in the US would be a blessing for nearly all of the third world.

Jenny Offill: This is a very important point you are bringing up. The American standard of living is so high compared to a great majority of the world that often we lose sight of how much we have. What are in fact luxuries (cell phones, cable tv, that second car) begin to seem like necessities in a culture that prizes material success above all other kinds. Your comment about the "poor" being able to afford things that you who do not consider yourself poor is a provocative one. Many of these items are bought on credit and I know many people in early generations would argue that buying something on credit means you can't afford it, that it is only wishful thinking. Unfortunately, the credit industry has made it extremely easy for people to feel richer than they truly are and thus to spend accordingly. Credit cards don't "feel" like money (any more than those tokens they give you in Las Vegas do) and so people can blind themselves to how much debt they are accruing until it is already too late. But you are absolutely right. "Poor" in America equals "middle class" or "rich" in most of third world.


Tough question: Michelle, I was thinking about this the other day when I saw a piece on how Americans were having to give up their "extra cars" due to the economy downturn, and I wanted your view since I respect it significantly.

There are certainly lots of poor folks in this country who are hardworking and live paycheck to paycheck without the giant tv, "extra" car or giant gas guzzler, who doesn't go to the mall weekly. But when I hear about the "growing gap between rich and poor" something inside me wonders if it just is that the middle class is a lot worse off spending now than they used to. Rich people will always have extra cash to spend. But is some of this "growing gap" because the middle class is much more comfortable spending profligately than they used to? Every time I hear about the average credit card debt of an American, my eyes nearly bug out.

And I submit this NOT as a rich person.

Michelle Singletary: If we talk about just the middle, you are right. The middle is highly leveraged and had taken on WAY too much debt.


Baltimore, Md.: You mention a life happens account.

I understand its purpose but I have a question. How much should you have in your life happens account. Is it an account that you deposit funds on a regular basis or just when you have used any of the funds.


Michelle Singletary: Good question.

This is a concept I developed so that people wouldn't always be tapping their emergency funds for things like car repairs. if you do that when you lose your job or get sick or whatever the emergency fund is depleted.

Once I've reached the amount I want in my emergency fund anywhere from three months to 1 year...extra money not designated for retirement, college fund, etc. gets put in the life happens fund.

You can keep a modest amount in there or a lot depending on the time up unplanned for expenses that pop up. For example if you have an old car you might want to keep anywhere from $500 to $2,000 for repairs. If you have kids witih lots of ttrips and stuff that comes up, put cash in the life happens.

how much you keep in there depends on your own spending habits, expenses, age of car, home, etc.


Arlington, Va.: Michelle,

I think it's great that you were able to become a homeowner at a young age (and I'm sure you bought within your means), but let's remind your young readers that buying a house before you've really settled in an area and career isn't always the wisest move.

Even in a good market, taxes and buying/selling fees can wipe out any appreciation in the house if someone buys and then moves for a new job. In a more uncertain time like this, renting is not necessarily a bad call.

washingtonpost.com: Study Up on College Loans Before Learning About Debt the Hard Way

Michelle Singletary: You have to read the column today to fully understand this question.

yes, one should take into account if you plan on staying in an area for awhile before you buy.

BUT for many young people it is possible to buy early.


Alexandria, Va.: Thanks for the great chat. I just have to get a pet peeve off my chest - when we talk about how poor in the US is rich elsewhere, I always want to add the caveat that these elsewhere folk would have heart attacks at the costs of housing, food, etc. in the U.S. Poor is poor. If my family (thankfully not true!) can't eat here it doesn't matter if I make $20,000 that would make me a rich woman in Mumbai.

Michelle Singletary: You are right. It's all about perspective. I spent time time in West and South Africa and that experience made me so appreciate what I have.


Oviedo, Fla.: I loved the book and welcome a chance to chat about it. I was struck by the bad neo-natal experience a writer had with a sub-par HMO. It is a bit depressing to think that something so basic as our survival in a medical crisis is based on which hospital out plan approves.

How can we fortify ourselves and our families against bad health coverage. (I buy my own bad coverage now while I job hunt.)

Jenny Offill: I'm glad you enjoyed the book. The essays by the married couple, Fred Leebron and Kathryn Rhett, do bring up the question of whether or not money is a fortress than can keep terrible things away. When Fred discusses the sub-par care they received at a lower cost hospital, he is very direct about how this drove him to reorganize his life so that it was less about making art and more about making money.

In terms of the practical issue of how to avoid such healthcare disasters, I can say only that being an informed consumer before you find yourself in an emergency situation may help you understand the pluses and minuses of your plan so that you can act accordingly.


Rice Shortage: Sorry, Michelle, there is a rice shortage. I just read Sam's and Costco are actually rationing. Coupons, coupons, coupons.

Michelle Singletary: Seriously, did you see those bags of rice?

The average person isn't going to eat that much.

I do think most families could get away with a minimum buy of 4 large bags of rice.


Re: Washington D.C. & collector's calls: I had this happen. For 5 years I got calls for the guy before me. They are legally obligated not to call you after they know you are not that person (make sure to keep a log of which companies are calling - sometimes it's hard to get them to tell you so you don't know if they are calling again). However, once they lose track of the person (i.e. know you're phone # isn't good for him/her), they will sell the debt and another collection agent will start calling you. I finally had to get rid of my phone # for it to stop.

It's also possible he/she is still giving out your phone # - I got one collection agent telling me he didn't believe I've had the phone # for 5 years b/c the debt was only 2 years old...

Also - google your phone # (and check the white pages online sites) and make sure its not listed with his/her name. Sometimes the collection agents get their information that way. A lot of the phone book web pages will allow you to send them a message that the phone # is listed to the wrong name or will let you take your # off.

Michelle Singletary: Good tips.


Atlanta, Ga.: Credit cards don't "feel" like money, and debit cards don't either. I have a dear friend with an MBA who takes pride in not carrying cash. She admits she often spends more than she intended to using the debit card and has had to argue with her bank about charges. I've tried to convince her cash and a spending budget would make her more aware of her spending but she refuses to listen. What can I do when she gives me the "side eye" for not having her type of spending problems?

Michelle Singletary: Give her the side eye right back and say:

"Oh well, I won't be 85 at a fast-food place asking someone if they want a shake with thier fries."


Washington D.C.: Good day. I make a decent income, but have $30K+ in debts that piled up and I struggled to pay them back. I'm about to join a debt management plan with a reputable counseling agency (not one of those sleazy operations).

Can you please give me any advice or words of wisdom, as I try to get myself out of this hole? This hole that, by the way, only I am responsible for having dug!!!

Michelle Singletary: It will end.

Don't be so hard on yourself. You made a mistake you are taking steps to fix it. Just give yourself time. You didn't get into debt overnight.

And just keep looking at the balances as they go down.


Rockville, Md.:" and a tanking economy .."

Really? I get the idea that many think recessions are unexpected catastrophes. I see them as cyclical and manageable, especially for those who anticipate them - as I did.

What is different about this one - other than the fact it is not yet official as a drop in GDP for two quarters?

Michelle Singletary: You are so right.

But memory fades.


Gap between rich and poor: I would argue that the growing income inequality IS important, even though our poor are a lot better off than most people across the globe. I've read about a number of studies that say happiness is based much more on how you compare yourself to your neighbors than on any kind of objective review. So if you don't live across the street from horrendous poverty, you're not as aware of your comparative wealth on a daily basis -- but you sure are aware of all the BMWs and Mercedes you drive by on your way to work.

Then you have to add the research that says we acclimate to whatever our current level is after a year or so -- so even if you're a lot better off than you were 5 years ago, that rapidly becomes your new "normal." Which means when we have downturns, all we feel is the pain of the current loss, and we forget that we may still be better off than we were 2, 5, 10 years ago.

Why does it matter? Capitalism depends on people being willing to work hard at the lower rungs, because they believe that brass ring is out there if they work hard enough and are smart enough. That's the American dream, right? I worry about the long-term health of our country when more and more people lose faith that they will ever have a chance to succeed, as we see example after example of the fat cats rigging the system so they win whatever happens.

Michelle Singletary: Wow. You people are really deep today.


Arlington, Va.: Am I wrong to want to know the "how" of how people got into debt before deciding about possible relief? I know a lot of innocent people have been caught up in the subprime mortgage crisis, but as someone who has always lived within my means when I see people defaulting on houses that cost more than my townhouse or that just STOP paying car loans on $20,000 used jeeps they bought WHILE IN COLLEGE, I'm not inclined to want to help them. I think they should pay the debts they took on.

Michelle Singletary: More on the we spend too much debate.


M Street NW, Washington, D.C.: The American Dream isn't bankrupt. The Middle Class isn't dead. It's just that marketing has screwed up consumers' aspirations so much that they can't appreciate what they have and want what they don't need.

Luxury is being marketed to those who cannot afford it. It's okay not to be rich. This message needs to be out there more.

Jenny Offill: I think that many people find themselves tripped up by the way the American Dream is often marketed, the idea that anyone regardless of sex, race or creed can succeed here if only they work hard enough. The problem comes when "succeed" is translated as "make it rich" rather than as make a modest but comfortable living. There is an essay in our book by the writer Brett Martin that talks about his parents' understanding of what it meant to be middle class which was that you are comfortable but still forced to make choices. You may travel but choose to live in a small house to afford it. You may economize on clothes but buy steak for dinner. An understanding of that give and take is what living within one's means means.


Rockville, Md.: Hi Michelle,

What is the best strategy to tackle debt when I have extra money to allocate? No credit card debt, but I do have a mortgage, student loans and an auto loan. Should I put the extra money towards the debt with the highest interest rate, or the highest remaining prinicipal, or should I try to eliminate some the smaller debt first? Thanks for any advice you can offer.

Michelle Singletary: Start with the smaller debts first. Getting rid of them first will pump you up to get rid of the rest of the debt.


Bethesda, Md.: I recently agreed to help a friend do bookkeeping for her small business. I am shocked to find out how much time I spend on the phone trying to get her clients to pay her. I often have to send multiple invoices and follow up multiple times to get payment--not just from other small business, but from large firms as well. I guess it shouldn't surprise me that the country's poor financial habits travel up. What is also disturbing is the number of times we have been paid improper amounts even though it's spelled out clearly on the invoices. Then I spend more time issues credits or explaining why the check doesn't cover the costs to supposed accounting professionals. No wonder our economy is in such poor shape.

Michelle Singletary: True that!


Md.: The American dream isn't bankrupt. Being successful financially still can be achieved through hard work and smart decisions. There are choices to be made sometimes, though. You can be passionate about a job that is a field that doesn't pay well. You can obtain fulfillment, but not necessarily financial security. And you may find a job that pays well but you don't love, but that allows you to fund other passions in your spare time.

Elissa Schappell:

You can absolutely obtain fulfillment from a job you are passionate about but doesn't pay well. As a writer I know this firsthand.

It's also true that hard work and smart decisions can lead to financial success.

But it is also true that a lack of financial stability can be devastating to many people.

If one loses their home, can't pay bills (no matter how many jobs they take on) it is very difficult to stay afloat. Difficult to parent children, and given that the number one reason people get divorced is money--difficult to sustain a good realtionship with a partner.

When you look at the costs inherent in raising children--food, clothing, books, school supplies--or caring for elderly relatives--medical insurance, in-home or hospital care--loss of a job, or having to work a job that pays little, can spell tragedy.

Many Americans today don't have the luxury of doing a job they love. I'd imagine the woman or man who comes home from a ten hour shift in a grease factory or working the night shift in a convenience store is too tired when they come home to fully pursue interests that they might found fulfilling.

I do agree heartily that what brings us happiness in life isn't money but our families, the people who love us and whom we love. Being able to do work we love and find fulfilling is a great gift.


Richmond, Va.: Hello Michelle,

Recently discovered your column, and I'm loving it! I could REALLY use your help with this one... there is little advice for non-traditional students who don't have parents helping them with school costs. I'm going to law school in the fall. Currently I have no student debt. I have about $6,000 in a money market savings account, about $5,000 in a mutual fund.

I'm trying to decide between a more expensive school that is ideal for my career goals, and a cheaper, but less suitable (though still good) school. The smaller school costs half as much ($48,000 to $24,000 for the first year, incl. living expenses).

I'm leaning reluctantly toward the cheaper school, but either way, in the big picture, $11,000 is not going to make much of a dent in my costs. My question is how should I use my limited financial resources to help cover the cost of school?

Michelle Singletary: For me if the other school is good and has the program you want why spend the extra money, really?

And $11,000 (if that really is the only difference) can be a lot of money if you get out of law school and decide not to work for a large pay me big bucks firm.

It's still $11,000 more than you have for the total cost of your school.


Gap between rich and poor: Let's remember, as we criticize "poor" people for having color TVs, that technology has made a lot of what used to be luxuries so cheap that they are affordable.

The fact is, there are way more WORKING people who can't make ends meet with their wages, and without basics like health care or dental care, are one medical crisis away from bankruptcy and losing their home. And going without a cell phone (could be a $20 tracphone) is not going to affect that.

Jenny Offill: I think you are absolutely right that the problem goes far beyond what are considered necessities and what are considered luxuries. Until wages are raised to keep up with the rising cost of living and our health system is revamped to serve all Americans equally, many workers in America will find that no amount of hard work will buy them a secure financial life.


Pittsburgh, Penn.: I feel like I'm bleeding money. I've really been trying to be frugal; I bring my lunch to work every day and cook every week to eliminate takeout. I put $200/month into savings. Yet lately, I feel like I'm absolutely hemorrhaging money. I take $60 out of the ATM and it's gone in a couple of days. Yesterday, it was milk, cheese, and more Tylenol for my baby. Today, I have to buy batteries for one of her toys. It's never-ending, and I feel like I'm never going to be able to stop hitting the ATM multiple times a week! Any advice? Thank you!

Michelle Singletary: Stop hitting the ATM, which really stands for ALWAYS TAKING MONEY.

Sounds like you may not have a budget. You need one. Take the batteries for example. You can't tell me that baby couldn't live without that toy. Give the tot a pot to play with.

You are overwhelmed and I understand but if you limit your ATM money if something comes up you just don't buy it. I'm not saying don't buy food but perhaps there are ways you can stretch your food to last until your nexted budgeted trip. It's really quite easy to go over budget when you don't have a plan.


Gaithersburg, Md.: Food prices are what worries me the most. That's one thing you cannot cut.

Rice & Beans is a great idea; except rice is one of the commodities raising in cost the fastest.

Even at our very good income, we are starting to cut out steak; buying pork on sale, etc... Certainly not claiming poverty, but I never thought the price at the grocery store would be something I think about.

We've cut out a lot of recurring expenses: Cable TV, one of our cell phones, and have found very little, if any, loss of 'happiness'.

Michelle Singletary: I guess we all have to go back to our budgets. I'm telling you 99.9 percent of the time when I sit down with people and look at their budget there is some expense that can be reduced or cut out.


Washington, D.C.: Here's a suggestion for the father in today's college. I was in the same boat - had a basically free education at a state school but had my heart set on going far away for college. My parents told me to start out at the state school for 2 years, take all my core classes and do well. If after 2 years I still felt like I needed to go to the expensive school, they'd help me pay for it/take out loans, but it would be cheaper than going for all 4 years. Guess what? After 2 years at the state school, I had fallen into good activities, liked my major and didn't want to leave. And had very little debt (that financed unpaid internships in the summer) upon graduation.

Michelle Singletary: Good for you. And you've got some smart parents.

They knew it all the long (hee, hee, hee)


Va. resident: In this week's paper, there was a young woman who stopped paying on her broken-down Jeep so she could save money to get it fixed, and in the meantime bought another car. I can't see how this is good logic. Did I miss something in that article?

Michelle Singletary: Missed that. But dumb.


Money Lesson: The lack of money destroyed my parents' marriage and is still a huge issue throughout my extended family. My brothers and I fought our way out and are doing well and are able to help my mother live a comfortable lifestyle in retirement. I just recently realized that I will have panic about money (i.e. enough will never feel like enough and it can all disappear when I'm not looking) in my sub-conscious and I guess that's not a bad thing. I save and spend very carefully.

Jenny Offill: In our book, we have an essay called "Pre-existing Condition" by Jonathan Dee that addresses many of these difficult issues.

He talks about how his family's worries and pathologies about money continue to affect him today and weaves back and forth between the past and the present to show these connections. There's a great line when he's talking about how he saw money as a child and how he continues to see it as an adult that I think speaks to this idea of panic. "The real agent of decay in our lives was always, and unmistakably, money. It did the one thing it knew how to do--it ran out--and with it, gradually, went our ability to stand being around one another."

The essay goes on to show how Jonathan eventually learned a less ominous, more tempered way of looking at money from his wife.

Michelle Singletary: Although I don't know the specifics of your parents situation I'm willing to bet the marriage didn't get destroyed because of the lack of money.

It's really, deep down about the money. It's about control or the lack of it, about depression or childhood issues, etc.


re: Law School: Just my .02 - I made the choice to go to a cheaper state law school instead of the ivy that accepted me - VERY VERY reluctantly made that choice. Now I'm out and am SO happy I did. I have the choice to work for a non-profit, the government, another lower paying law gig or a big firm. So many of my friends are stuck at jobs they loathe just to pay off the $100K in law school debt! If you have a good #2 choice, I say go for it.

Michelle Singletary: Oh I'm so glad you wrote this note. Thank you.

I hear this ALL the time!!!!


Arlington, Va.: When I paid off my first car and the AC broke, it was 400 dollars to fix it. I mentioned to my dad about getting a new car and he said "Where are you going to get a new car for 400 dollars?" meaning "fix the AC and get on with it." Because of him and his preaching of regular car maintenance taking you farther (no pun intended)in the long run, I have kept my cars 12 and 14 years before they were destined for nothing other than the big car graveyard in the sky. Cheers to dad!

Michelle Singletary: Yes, cheers to dad.

Hope you told him this lately.


Coach purse story: I was on a college tour with my son a couple weeks ago. I was sporting a Coach purse that I got as a gift from my husband for a very special b-day. There were 3 16/17 year-old girls in the tour group -- 2 of them carrying Coach purses as big as mine!

Obviously I know nothing about the financial status of these girls and their families, but I couldn't help be struck by these kids walking around with an item that I didn't get until I was very grown up.

I'll tell you -- I'm not sure I'd want my son dating one of these girls. What are their expectations going to be?

Michelle Singletary: I'm with you mom.

Picking my son's wife. Want her to be like me.


New York, N.Y.: Ms. Singletary,

Does closing a bank account have the same negative effect on your credit score as closing a credit card account?

As background, I had an account with Bank 1 while living in DC. Upon my move to N.Y., I opened an account with Bank 2. I rarely use Bank 1 and don't see the need for maintaining that account, but I have had the account maintained with Bank 1 for several years.

Thank you.

Michelle Singletary: No. You are okay.


Gap between rich and poor: I agree with Vienna. I work in a nonprofit and my husband is a full-time student. We live in a low-cost city (Pittsburgh, Pa.) in a two-bedroom apartment. We do not own a second car, we walk to work/school, we do not have the internet, or cable TV at home. We don't have kids. We live well considering our combined earned income is $45,000. I don't think we are poor, but we clearly live more modestly than many in the U.S..

Jenny Offill: It really is about the choices you make and you and your husband sound like you've made a lot of smart ones that help you lead the life you want to leave. But for those of us in overpriced cities like New York, it can be a challenge to figure out how to economize, but I, for one, am finding out that every little bit counts. Not buying that magazine or cup of coffee, walking on a sunny day instead of taking the subway, all these mean that the occasional dinner out with friends becomes affordable again.


Never too young: Michelle,

Hubby & I were explaining to our 7-year-old daughter about money, spending, expenses, etc. In the course of the conversation, the concept of an emergency fund came up. She asked how do you know how much to put in it (great question!), and how do you know when to do it.

We explained some more.

Later that day, she came to us and told us she had taken money from her piggy bank and put it in a separate piggy bank for her emergency fund!

Love it when it all clicks!

Elissa Schappell: I think it's great that you are talking to your daughter about money. Money has always been a taboo issue--it's ironic that we talk about our addictions, our sex lives etc. but we don't talk about money. My grandmother used to say, Only no money and new money talk about money.

The price we pay for not talking about money is enormous. In my family's case it meant when my grandfather died we realized that he had mismanaged his estate and lost a good deal of money.

Perhaps more importantly, since the roots of our feelings about money are sowed in childhood, you're teaching by example. It's great that your daughter knows you have a plan, that you're serious about her financial security. Hopefully this is instilling in her the importance of saving, and being prepared for whatever fate deals you.

And by all accounts she also sounds like a very sensitive sweet kid..


RE: Alexandria, Va.: Michelle, I think you misunderstood the comments from the person in Alexandria regarding 'poor here is rich some place else.' While yes, we do enjoy a MUCH greater standard of living here, than folks in other parts of the world, being poor here is in many ways just as difficult -- with the cost of childcare, gas, food, housing, medical care (or the cost when you can't afford health insurance). It doesn't matter that $20,000 "makes you rich in Mumbai", here you and your family are going to suffer in very real, very painful, and very difficult ways. Outrageous housing costs mean you have to live in an area that 9-times-out-of-10 has poorly performing schools with difficult environments (hard for your children, not as good an education as someone living in an expensive area), good food is often more expensive if you can find it, housing conditions are often not good, neighborhoods may have much higher levels of crime, and the list goes on and on. Being poor in this country is extremely tough and extremely hard and many people are suffering. Poor is poor, no matter where you live in the world.

Michelle Singletary: I got it. Just hard to respond lengthly to all postings.


Cambridge, Mass.: Could I make one pro-college debt argument? You can definitely be successful without going to a "brand name" college, but my experience may be helpful for others. I come from a lower middle class household and got into "brand name" schools. I took on debt, then got a high paying job in an industry I didn't necessarily LOVE, and was able to pay off all of my debts before I was 26. So I got to go to a great school I loved, paid off my debt and have a great resume on which I can now do nearly anything in my field. I guess I'd say it's OK to take on college debt for an ivy league school if you know what you're getting into and what you're going to need to do to pay it off.

Michelle Singletary: The problem is you don't know. You were fortunate but you didn't really know that when you took on that debt.

For everyone of you I get hundreds of letters from others who can't make it with that debt.


Michelle Singletary: Well folks, I have got to run. Thanks for all who joined me.

And if you get a chance get this month's book. Very interesting essays that cover a lot of what we were talking about today.

If I didn't get to your question so sorry but keep an eye out it may get answered in my eletter or print column.


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