washingtonpost.com
Color of Money Book Club

Michelle Singletary
Washington Post Columnist
Thursday, October 23, 2008 12:00 PM

Personal finance columnist Michelle Singletary hosted an online discussion with Gary Weiss, author of "Wall Street Versus America: A Muckraking Look at the Thieves, Fakers, and Charlatans Who Are Ripping You Off," on Thursday, Oct. 23 at Noon ET.

In her last book club column, Michelle wrote: "Weiss's prophetic rant against Wall Street is eerie given what we've seen lately. He lambasted brokers who pushed microcap stocks -- low-priced stocks issued by the smallest of companies -- on novice investors. He railed against the high fees charged by mutual fund companies. He writes with rage about the inadequate oversight of Wall Street."

A transcript follows.

Read Michelle's past Color of Money columns or check out her past Book Club picks.

____________________

Michelle Singletary: Welcome all. Lots of questions already and at least in my e-mail box lots of personal attacks because of my Palin item in today's eletter on her spending $150,000 for clothes, hair, makeup, etc.

Oh boy this election is bringing out the ugly!

Anyway, let's get started.

_______________________

Gary Weiss: I just wanted to thank Michelle for inviting me to this chat. I'll do the best I can to answer as many questions as I can. But if your question isn't answered, please feel free to post it as a comment to any recent item in my blog, http://garyweiss.blogspot.com.

_______________________

Alexandria, Va.: Hello Mr. Weiss and Mrs. Singletary,

Mr. Weiss, I read your book "Born to Steal" and must say that it is one of the best books I have read about wall street. I hope you continue to write books as they provide insights on the "other side" of the markets.

Mrs. Singletary, thank you for providing these forums as well as your articles in the post. I read all of your articles regularly and recommend them to friends and family.

My question to both of you is this. As a 29-year-old, long term investor (retirement), do you think it is better to put my money in ETFs and mutual funds rather than trying to pick individual stocks on my own?

Thanks for your time.

Gary Weiss: Thanks! Glad you liked the book.

Yes, as a long term investor you should definitely stick completely with ETFs and low-cost mutual funds. ETFs -- those are stocks that mirror the stock averages -- give you exposure to the broad market as it goes up and down. Your risk is that the market will decline further, obviously, but I think it is a safe bet that the market will rise significantly by the time you need that retirement money in thirty to forty years.

ETFs that mirror the market trade under stock symbols SPY and DIA, and there are a number of mutual funds, called "index funds," that mirror the market too.

Michelle Singletary: I'm with Gary. There are those who love picking stocks and are good at it.

Most investors are not.

_______________________

Washington, DC: Michelle, you have always offered great advice, and as a result we've paid off thousands in debt. My parents, on the other hand, have not been so fortunate. They lost their house a while back (7+ years), and they have little in retirement savings. Now they want to buy a house in their rural community. Is this a sensible thing to do at 60+ years old? We're terrified that they will default (again) and end up on our doorstep. (There is no sibling with whom we can share the burden.) What would you suggest we/they do? Thank you so much.

Michelle Singletary: If I were you, I would sit down with my parents and get them to open up their financial books. Take a look at their income (whatever it is) and see if the numbers work out for them to afford a home.

Even at 60, they could live another 25 years so I woudln't shut out home ownership for them.

And frankly, with credit being so tight they may not be able to get a loan so you will have worried for naught.

_______________________

Millsboro, Del.: If the U.S. Government has to borrow $10 billion a month to wage a war in Iraq, where does it get the money to bailout Wall Street?

Gary Weiss: Right out of your pocket--your tax dollars. But it is a step the government had to do because it had previously allowed the large banks to run amok. The current problems we have are a legacy of the deregulatory fervor of not just the Bush years, but also the Clinton administration to a large extent.

Michelle Singletary: Where are they getting the funds?

DEBT!

_______________________

Hyattsville, Md.: Michelle,

I love your columns but this past Sunday's confused me. My husband and I live below our means; we bought a house in a nice safe neighborhood that we could afford, etc. I don't believe that houses should be used as wealth generators (and I thought you agreed!). It's a home, first. If you can eventually sell it for more than you bought it for, great, but you shouldn't think of it as a piggy bank. The rescue plan you were advising people against lets people stay in their home and, yes, prevents them from treating like an atm or piggy bank. Sure, their equity might grow more slowly than if they weren't sharing it with the government, but homeowners that got into these bad loans NEED this type of discipline I think. But still, it's a net plus for the homeowners. I guess I wasn't sure why the usually frugal Michelle Singletary thought it was a bad idea.

washingtonpost.com: A Program to Keep the Roof Over Your Head -- but It Will Cost You in the Long Run

Michelle Singletary: Thanks for the compliment.

And the usual frugal Michelle is still here. But in looking over the various programs and bailouts and commenting on what's happening, I'm also bringing compassion to my cheapness.

What I was saying in Sunday's column is IF you think this is the program for you and IF you qualify and IF your lender will even do it be SURE to understand you will be in partnership with the federal government for the entire time you own the home even after there is no chance you will default.

That's a price some may not or shouldn't take. And while I agree you shouldn't view your home as an ATM the fact remains it's still an asset that is one of the biggest contributing factors to people's personal net worth. We can't ignore that even at this time when values are now.

Most people's net worth is tied up in their homes. They will have at retirement more wealth in their homes than a retirement account.

So if people sign up for this program and act responsibly and are no longer a financial burden to the gov't why should the gov't get 50 percent of the equity. In this case the gov't isn't forgiving any of the money -- lenders are. They are only backing the loan. AND they are charging people an steep upfront insurance premium and a fee EVERY year that should cover their risk.

_______________________

Laurel, MD: I was not in the stock market and did not lose money in the last few weeks. All of my money is in money funds or money markets.

Would getting into the market now that it is so low be a good idea or should I just leave well enough alone and keep my money safe?

Gary Weiss: Nobody -- not even the so-called experts -- know what the market is going to do in the next few months or years. Warren Buffett, the famous investor, says he is buying stocks, and I happen to agree with him that this may not be a bad time to buy stocks. The market may be bottoming out. However, only put in the market money you do not need to use for the next five years.

_______________________

Landover, MD: Hi Michelle & Gary--

I'm seeking your suggestions for an out of work husband who is going through the motions with all other unemployed americans. We have depleted our emergency savings, I am still employed -thank God - but my income covers our bills. I know you've heard people say 'I can't cut anything else' but I don't think I can. We are down to the basics, renting, 1 cc debt -7K - we're trying to pay off so its hard to save and pay simultaneously.

Any words of encouragement for those really feeling it right now?

Honestly, we're hoping Obama gets to remove the 401K penalties so we can tap into this resource.

I know its bad, I'm open to all suggestions! Thanks.

Gary Weiss: You just have to continue doing what you're doing -- keep your expenses low, pay the bills as best you can. Unfortunately, Congress has made things tough for people in dire straits by making it very difficult to get a fresh start through bankruptcy. That, of course, is a last resort.

Michelle Singletary: I hope at this time -- until you husband gets back on his feet with a good job -- you are only making the minimum payment on that credit card. Typically I would say aggressively pay it off but you need the cash for everyday expenses. So pull back on that.

And if things get really tough, you husband may have to take ANY job he can get working evenings or weekends to leave his days free to look for the work her really wants.

Also even if they open up the 401 (k) to allow you to tap it, please, please do this at a very last, last, last resort -- as in they are putting you out on the street or you have no money for food or lights.

It's an expensive thing to take that money out and you don't net nearly as much as you thing, giving up in some cases nearly 40 percent of the money you've saved.

But mostly hang in there. Keep looking at the positive. You have a job, you are making it although it's tight.

And you got a honey to help you get through it.

_______________________

Frederick: Thank you for taking my question.

I'm trying really hard not to panic, but my bank is Wachovia. After posting their record loss, are they still up for sale? I believe Wells Fargo is the intended buyer. I want to leave my checking and savings there, but if they closed, how long would it take the federal reserves to replenish my money? I also have another savings account at ING as a back up. Is there a point where I give up and move my accounts to another bank?

Thank you for your advice.

Gary Weiss: Your account is perfectly safe, and is fully insured by the Federal Deposit Insurance Corp. up to $250,000 per account. So don't worry about that or any FDIC insured bank being sold or having trouble.

_______________________

Falls Church, Va.: Michelle, I apologize that this does not have to do with the book club, but you are the only person I can think to ask. My in-laws will only be able to pay their mortgage for another month or two. His brother is barely scraping by. We have a 3 month emergency fund and just a tad of debt but that's about it, and my husband's job appears to be shaky. Where do we go to request assistance for his parents with regards to their mortgage? I read vague reports in your paper about help being out there, but I haven't seen specifics. Thank you for your help. Love your chats.

Michelle Singletary: You poor dear. First, be sure you don't give any money you don't need to help bail anyone out. If your husband's job is shaky hold on to your money, even if relatives are put out. At least they could come live with you.

And for help with housing issues go to www.hud.gov. Look for a HUD approved housing counseling agency your in-laws can talk to to help assistance. But just know the lines are long right now but keep trying.

_______________________

Fort Washington - What is the Panic?: OK, I understand people being upset about losing their jobs because of the recent economic downturn. But why are people so worried about losing their RETIREMENT money??

If you are close (within 5 years) of retirement, then you should not have all (or even most) of your money in the stock market. It should be in a safer, less-risky place. Am I the only one that has been told that?? The stock market is for LONG TERM investors, not for people retiring or who may otherwise need that money in the next few years.

Michelle Singletary: You are not the only one that was told to. But people were well people.

They didn't diversify. They didn't save. They didn't get rid of debt.

So here they are in a panic.

_______________________

Bethesda, MD: What if I don't want another costly/borrowed stimulus check but I'd rather tax incentives be given to employers to HIRE people!???

This is absolute nonsense, and NO ONE is being held accountable, including our "LEADER".

Michelle Singletary: Vent baby vent.

_______________________

Jerusalem, Israel: While there are certainly degrees of responsibility for the present economic crisis with those at the top most responsible, isn't it also true that a lot of ordinary Americans are responsible? There are those who bought properties they knew they would never be able to pay for. But more generally the whole mentality of people was in thinking that they would be able to buy now and pay later on the basis of the ever- increasing value of their homes? In other words, isn't the fault in ourselves and not just the big shots who are responsible/

Gary Weiss: Yes but I think it is a mistake to blame ordinary consumers, after the fact, for buying the financial services products that were offered to them by major institutions -- sometimes aggressively marketed. People are not always educated about their finances. That is not a sin of great magnitude, and it is much different than the practices of the predatory lenders, subprime mortgage companies and such who knew exactly what they were doing.

Michelle Singletary: Amen Gary.

And, while certainly many people should have known better, not one borrower I've interviewed or personally helped at there saying to themselves, "Yippie, I'm getting a mortgage I won't be able to pay in one or two years."

People "thought" they could handle the debt. They were told they could handle the debt.

They were wrong.

_______________________

Rockville: Hi Michelle. I'd like to set up a 529 plan for my seven-month old with money given to him for his birth. Right now it's sitting in my checking account. Given the current market situation, should I open the 529 now or wait? Thanks.

Michelle Singletary: I would still open the account because you have so long to go.

Go to www.savingforcollege.com for more information.

P.S. I'm still contributing to my kids' 529 plans. But also saving cash.

_______________________

Silver Spring, Md.: Thanks for having this discussion, it's very timely. My question is, how much of this pain could we avoid by simply not panicking? It seems to me that mass layoffs have replaced bank runs as boneheaded maneuvers that bring about the very consequences that companies were trying to avoid. If everyone tries to stave off collapse by dumping their employees, who is left to buy the products, stocks, etc? If deposits are worth insuring to prevent bank runs (FDIC), aren't jobs worth insuring to prevent employment runs?

Michelle Singletary: Very good questions, points.

I agree. But honestly some companies are do in debt they can't afford to keep people. But they are in debt because of their boneheaded management.

It's a sad, sad time for all.

_______________________

Boise, Idaho: My credit score is pretty good (high 800s). My wife though co-signed for a cell phone for our now adult son, and he quit paying last year. We didn't find out about it until just recently when a collection notice showed up in the mail and we found out that her credit score had taken a hit. If we pay that debt, is it reasonable to expect her credit report to be cleared?

Gary Weiss: It will help a great deal, but unfortunately credit reporting agencies keep delinquencies on their records for a long time, even if paid off. It might not affect your rating tremendously. You may want to write the cell phone company to ask that the delinquency not be reported or that it be removed. That sometimes works.

Michelle Singletary: The bad debt stays on your wife's record for 7 years.

And this folks is why I say NEVER EVER co-sign for anyone other than your spouse.

But hey if you aren't going to borrow anytime soon, don't worry. With time the scores should go back up.

_______________________

Annapolis, MD: Michelle Singletary: Where are they getting the funds?

DEBT! &;

Michelle, you obviously think that deficit financing is immoral, and I am inclined to agree. Do you also think it's immoral for governments (or companies, I guess) to float bonds? Would that be a better way to raise cash? Or is that just another form of indebtedness?

Gary Weiss: I don't think there's anything wrong with debt. The problem is when debt is issued to cure the mistakes made through bad policy, which is what is going to happen with the Wall Street bailout. The government is going to pay for the bailout with taxpayer dollars, ultimately reflected in the national debt.

Michelle Singletary: I agree except I still think bad is bad. Hate it, even when it's necessary.

And before I get hate mail I say that because if you keep saying that, then you will take a long pause before obligating yourself to debt. That is what I'm always trying to do. I say to myself credit is evil so I put a mental brake if and when I do use debt.

_______________________

Baltimore, Md.: Hi Michelle and Gary,

An "expert" on TV this morning said that the 500 point drop is considered the bottom of the stock market drop. Do you believe this to be so? If you do, what is your theory behind it?

Gary Weiss: I hope he's right. I don't know who that expert is, but anyone who says he *knows* the market is bottoming is seriously mistaken. Nobody knows for sure.

_______________________

Rockville, Md.: Many know this without my comment, but others should note that had they followed your advice, they would be in very good financial shape and ready for the future. You have done very good and I hope to read you for many years to come.

Michelle Singletary: Thank you so very much.

I did say so...for years to shun debt. Save. Invest wisely by diversifying.

_______________________

Catonsville, Md.: Hi Michelle, I want to piggyback on the college savings question. What if you are just starting a fund for a 10th grader? Is the 529 plan still the way to go?

Michelle Singletary: That's a bit different. You have just two years before you need the first part of that money. And three to four years for the rest (4 or 5 years of college I'm assuming)

I would be reluctant to risk that in this market right now. It may take that long to see any decent gains.

I probably wouldn't open a 529 with the short horizon.

_______________________

Los Angeles, CA: Hey Michelle, I work at a company that just announced it will be laying off a good percentage of its workforce. Luckily, I have a large amount of cash saved up, mainly because I was saving for buying a new house for my expanding family, which my wife and I have decided against doing for now. Now, though, I am trying to figure out what I should do financially at this point. Would you recommend that I continue to hold onto my cash reserves, which are enough for us to live off of for a long time (years), or should I invest a good chunk of that cash, on the theory that stocks and investment real estate are pretty cheap right now, and I could always sell investments if things got really bad?

Gary Weiss: I think that, since you need the cash, you should not invest it. Just put it in the bank. Only invest cash you won't be needing in at least five years!

Michelle Singletary: I TOTALLY agree with Gary.

That's why so many people are in a panic. They forgot that when you risk you risk the principal. So unless you can afford to lose that money, don't invest what you may need to live off.

_______________________

New York, NY: I have a question about credit scores. A few times I have paid my utility or credit card bills a few days late due to problems with e-billing and paying online and moving. Does this severely affect my credit score? If so, is there anything I can do about it?

Michelle Singletary: You have to check your credit report to see if the creditors reported you late. Often if you are a good-paying customer and pay a few days late they don't report you.

BUT you can't count on that.

So check. And if you find they have, you may be able to get them to remove it.

_______________________

20002: I'm 26 and just now putting money in my first 401(k) due to being in grad school all these years. I figure I shouldn't worry because I don't want this money for 35 years. Is that stupid? I'm putting my 401 k money in equity and mid-caps. Does this make sense to do now? I'm just not worried but feel like I should be. (I don't have any debt). Thanks!

Gary Weiss: Yes, what you are doing is *very* sensible. You are investing for the long term with cash you don't need right away. My only suggestion is that you put this money into an index fund, if possible. Unfortunately, lots of 401Ks don't have good investment choices.

Michelle Singletary: I would also recommend you use whatever asset allocation calculator your fund plan has online (most have something like that) which can help you allocate your contributions. You want a broad base of assets that include mid-cap but also large cap, small cap, international, bonds, etc.

_______________________

Minneapolis: Well, after months of scorning your advice I have started paying extra toward my car loan each month. I can only afford between $20-$50 extra each month (sometimes more, hopefully), but that will still save me around $700 in the end. Thank you for continually reminding people of the benefits of paying off debt early. If I didn't hear it the first or second time, I finally caught on around the twentieth time!

My parents thank you for pestering me when they can't!

Michelle Singletary: You are welcome and good for you!

_______________________

Lexington, KY: One economist suggested that the government offer 5- 1/4%, 30-year loans to the public who qualify, something like the VA loan program. Wouldn't this make a level playing field for all homeowners and perhaps allow more people to keep their homes? If the lender about to foreclose didn't want to meet these terms the buyer could find another house, assuming the buyer qualifies. Also, it would allow those homeowners who have less favorable mortgage terms to refinance.

Gary Weiss: I think that's a great idea. Unfortunately, no consideration is being given to homeowners in the bailout packages.

_______________________

Gaffney, S.C.: I heard you on the Yolanda Adams morning show. I would to have your website. I am in the process of divorce, have lost my car, about to lose my house. I need some advice in what direction to go in. I am very interested in talking with you.

Thanks, Rebekkah

Michelle Singletary: Thank you so much.

But rather than talking to me try this. Go to www.debtadvice.org. There you will find a link to a local credit counselor to help you get on a budget and perhaps a debt payment plan.

As for your house if you are trying to hang on to it, go to HUD's website to look for a housing counseling agency that may be able to help you.

As you might expect I can't help every individual reader. Wish I could but here are other resources out there.

_______________________

Rockville, MD: Hi Michelle. My husband thinks we should pull money from our emergency fund to buy stocks since it's so low right now. He thinks it'll bring us profit a few years down the road. I'm a bit hesitant because I don't know what will happen in the future with the current economy and we may need that money later. What's your take? Should we or shouldn't we?? Thanks.

Michelle Singletary: Please don't agree to take your emergency money and gamble.

Because that is what you would be doing on guessing that any one stock, stocks or fund will go up in the next few years.

Nobody knows for sure what will happen in the short run.

Further your emergency money is supposed to stay put for well an emergency. Read earlier postings in this very chat and you will see people losing their jobs, etc. You need to keep a safe stash of cash.

I vote no to this plan. Show the transcript of this chat to your husband.

_______________________

For the parent of the 10th grader...: FYI, they can still open a 529 and enjoy the tax benefits, just make sure to invest in very very conservative investments. Some funds have bond funds, for example. I agree with Michelle, though, that you should not put the savings into stock-based investments in a 529.

Michelle Singletary: Bonds have risk too.

But my point is don't "invest" any money you need in less than five years. Not worth the risk.

_______________________

Baltimore Md.: Good Afternoon,

Gary and Michelle, I am interested in what extra steps you are taking during this financial crisis.

Gary Weiss: Personally? Well, I am suffering, that is what I am doing! Seriously, a major portion of my nest egg is tied up in the index funds I just mentioned. Just suffering through it, like everyone else.

Michelle Singletary: Me, watching my household expenses.

Staying in contact with my financial advisor although nothing we can really do since we were very diversified.

Staying away from debt as usual.

Praying.

_______________________

Market Bottom: "Gary Weiss: I hope he's right."

Why do you, and most media, root for stocks to be expensive? (I.e. a "good day on Wall Street" in one in which the market goes up)

While the 50-somethings in my office agree; the 20's don't. Same with home prices. Why should we want them to be high?

Gary Weiss: Interesting question! I think that people root for the market going high because we bought stocks or funds when they were lower, and we want to make money. However, if you are not in the market, you may be happy the market is lower so you can buy. Remember that "high" and "low" are relative concepts when you are talking about stock market indexes.

_______________________

Alexandria, VA: I was truly shocked by a radio ad from a car dealer -- they were basically promising no payments for 9 months, but the kick-line was along the lines of "don't worry about your mortgage now - we're doing our part so you can have a new car." I know car dealers are having a hard time, but it seems immoral to be pushing more debt, particularly at those who are having trouble keeping their houses.

Michelle Singletary: Salesmen (and women) do what they do.

We have to look out for debt baits like this.

_______________________

Galloway, Ohio: Please comment on buying savings bonds for retirement. I'm 51 and thought if I purchased 1 $25 bond/month, it might be an extra way for me to assure myself of having some extra cash later.

Gary Weiss: I think it makes more sense to put money in stocks -- IF, that is, you don't expect to retire in at least ten to twenty years. The potential returns are likely to be better than savings bonds.

_______________________

Washington, DC: I recently found out my sister is pregnant. I would like to gift the baby with some investment funds for eventual college tuition.

What's the best way to go about that?

Michelle Singletary: Set up a 529 plan and then put money it in.

For more information go to www.savingforcollege.com

_______________________

Alexandria, VA: What is the difference between a ETF that mirrors the market like DIA, and a ETF with a target date for 2040 like TDV? Is one better than the other, or dare I say the word, safer?

Thanks!

Gary Weiss: Not all ETFs are created equal. SPY and DIA are designed quite simply, to mirror the indexes, and do a good job of doing that. My suggestion is that you stick with them and avoid products such as TDV, which may have their virtues but, in my view, cannot compete with SPY or DIA in terms of sheer simplicity of concept.

_______________________

Atlanta, Ga.: What many fail to realize is that while homeownership is a great goal for many, some just should be renters. The idea of 'keeping people in their homes' doesn't necessarily make sense. Many of these people are not homeowners. They did not save for a down payment, and even if they are making payments on a loan, they don't have much (if any) equity (maybe have interest only loans). So many of them are renters, without a real stake in their home, and they should be renters if they didn't understand what they were doing, and they should be renters if they didn't have the wherewithal to save for a down payment, etc. Some people shouldn't or don't want to be homeowners, and that is OKAY. It should be okay. Why is the idea that everyone should be a homeowner? Of course, it is a great way to build wealth, but is not for everyone.

Gary Weiss: You raise a good point. However, remember that when you rent, you are paying money down a black hole, and not building up equity in a property.

Michelle Singletary: I actually agree somewhat with this poster.

It's okay to rent. You are not "throwing money away."

I often tell renters to think about what's above their head in the rented apartment or home.

A roof.

So you are getting something for your money.

And you are right, not everyone should be a homeowner or for that matter some of the folks in the homes facing foreclosure should give the place up.

However, some people who ran into temporary disruptions in their income or an illness or whatever but are not better should be helped to save their home.

And some with loan modifications who can pay a reasonable mortgage should be helped so that tax-basis and other homeowners don't suffer.

_______________________

Arlington: Mr Weiss, I haven't' read your book yet but I will. In the meantime, how do you recommend selecting mutual funds so I can avoid the scams and rip-offs? I've never worked for anyone who offered a 401K plan so I have only IRA and non-tax-deferred options.

Gary Weiss: Actually it is easy to select mutual funds: stick to index funds, of the kind marketed by Vanguard and other no-load fund companies. That way you invest in the overall market and don't have to worry about bad decisions by investment managers.

_______________________

Washington, DC: re: Parents buying a house. Follow up question - how do we know if they can/cannot afford it? They can't afford to retire and they both are in low paying jobs in a small state where economists have already forecasted a deep recession. They won't be able to work forever, and we also fear the inevitable aging/illness expenses being too much for them. For the purchase, they are considering a (first time) homebuyer program that would pay for the land (they would buy just the house) but then limits the value of the house when they sold it. Can we tell them they need to consider the burden their decisions put on us?

Michelle Singletary: Yes, definitely tell them.

But even in their old age they have to live somewhere. If the mortgage is "affordable" meaning it doesn't take up more than 36 percent of their "net" pay they could help keep the cost of housing constant.

However, as I said before they have to crunch the numbers and also look at their health and how long they may stay in the home.

I would suggest you find a HUD housing counseling agency in your area and have someone sit down with you and your parents to work through this.

_______________________

Baltimore, Md.: Hello Michelle and Gary,

Greenspan just testified that he is shocked over the severity of our financial crises. Are you?

Gary Weiss: Totally. Just about everyone was, including the experts and the heads of Wall Street firms I've interviewed for Portfolio.

_______________________

Columbus, Ohio: Michelle & Gary,

Which makes more sense considering the "current" market - investing another 1% of my income into my 403K which is matched .50 to the dollar, or waiting awhile? In the meantime, would purchasing government backed savings bonds be an alternative? I realize I'm using taxed dollars to do so & won't see the bond mature for a very long time - which is fine as I'm thinking for retirement.

Gary Weiss: Personally I would invest in my retirement fund to the max, particularly if it is matched! You won't be accessing that money in a while, so fluctuations won't hurt you.

_______________________

Re: Fort Washington: Amen to your statement. When people were "shocked" at Jim Kramer's statement telling people to pull out if they needed the funds in 5 years, I was wondering why they had the money in the market in the first place.

Sigh, all of this panic just makes me grateful for my low mortgage and my ability to increase what I put in my brokerage account each month. I like buying into my funds low!

Michelle Singletary: That's seeing the bright side of things.

_______________________

Washington, DC: After an extended period of being a single income home (due to school and unemployment) we finally have two incomes and are really pulling ourselves out of a load of accrued debt. We have already paid off one bank-held personal loan that had the highest interest rate of all our debt (and was for the smallest amount) and have brought our credit card interest down by $2.5 K (now at $9K). We also have been able to put about $1K in savings. But now we are struggling with how to prioritize our future payments. Should we dedicate our efforts to the credit card, or savings, or perhaps a little of both? Suggestions?

Gary Weiss: Usually credit card interest rates are terribly high, so the usual rule of thumb is to pay that off as soon as possible, before adding to savings. You want to reduce any credit card balances to zero.

Michelle Singletary: Well, I would argue that you need to save too while paying down debt.

If you don't save, if you have a crisis you will have to borrow again.

_______________________

Washington, DC: Please help me understand a bit of Wall Street. If I'm losing money in my 401K why NOT take what little I have left out?? I don't seem to be making huge - cheap - stock purchases, I'm only losing money..

Gary Weiss: Bad idea! If you take money out of a 401K you have to pay a penalty. But even if there wasn't a penalty, you would in effect be betting that the market is going to continue to go down. It could rebound. Nobody knows. Only withdraw from a 401K before retirement if you are totally desperate and have no other choice.

_______________________

Washington, D.C.: Hi Michelle -- I love your columns and, as a result, just paid off the last of my student loans ($8000 worth). That leaves me 23, making 50k/year in a stable job, with about 5,000 in savings.

I am currently putting 15 percent into my 401k (no employer match) and since I started contributing so recently, I have less money than I even put in! Is it worth reducing my contribution, especially if I'm anticipating some major expenses, like a car that might go kaput?

Michelle Singletary: Good for you for paying off that debt.

If there is an expense you know you will incur shortly then yes, I might pull back to make sure I have that money and wouldn't have to borrow much if any money.

_______________________

Carlsbad, Calif.: Good morning Ms. Singletary, thanks for taking the question. In taking a "macro" and long-term look at our current problem, I think we get insight into how we need to address the current financial "crisis." Our strengths to build on in nano and bio-technologies, robotics, information systems, and management. It is on that core that we need to enhance our export capability in agriculture/commodities, minerals, and manufacturing, if we are to retain a comparative advantage to grow our way out of this. We need to dismiss the idea that we can export "financials" (of whatever stripe) and recognize that the accumulation of capital is simply a means to a strong economy and not an end in itself. Education, energy policy, innovation, and leadership are the tools, but the fundamentals are still the reality. e.g. we must continue to apply the advantage we have in nano-technology, bio-chemistry, and management to enhance core export capability. If we put too much energy into "restoring" our capability to export "financials" we will be once again rushing to the Titanic. Your view?

Michelle Singletary: Whew. A lot here in what you say.

But overall I think you are right.

_______________________

DC: I don't know...I have to disagree that not knowing your finances isn't a sin of great magnitude. Obviously it is, since you then get taken advantage of like the situation now. Why are people so trusting with their money?? The only person who can fully protect your money is yourself. EVERYONE else (lawyers, realtors, car salespeople, lenders, hairstylists) has an interest in your money- they make their own living off your money. Assume that everyone does NOT have your best interests at heart- only you do, and if you don't believe that...a fool and his/her money will soon be parted.

Not to say that I have no sympathy for people in tough situations- I do. But don't be so trusting people!

Gary Weiss: I see your point, but I think that there are various degrees of culpability for the current crisis. Though consumer greed was a factor, I think that the rapacious practices of lenders, and deregulation and poor regulation, are far more significant as villains.

_______________________

NYC again: Thanks for your answer about credit scores. As a follow up, does that mean I should check my credit report or my credit score? I've recently realized these are different... Thanks!

Michelle Singletary: You should check both although you don't have to check your credit scores as often as credit reports since it cost to get your credit score.

To get your credit reports every 12 months go to www.annualcreditreport.com (that is the only official site for the free credit reports).

For credit scores go to www.myfico.com.

_______________________

Michelle Singletary: Well folks the time is up.

I'm so, so sorry if we didn't get to your question. But please keep a look out for my print column and definitely my weekly eletter. Gary said he will answer some leftover questions.

If you don't subscribe to the eletter please do. Go to the biz section and look for my link.

Thanks again for joining me today. And thanks to Gary. Hope you do get his book. It's a very interesting read.

Take care.

_______________________

Editor's Note: washingtonpost.com moderators retain editorial control over Discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions. washingtonpost.com is not responsible for any content posted by third parties.

View all comments that have been posted about this article.

© 2008 Washingtonpost.Newsweek Interactive