Color of Money Live

Michelle Singletary
Washington Post Personal Finance Columnist
Wednesday, July 15, 2009; 12:00 PM

Need advice about how to handle your personal finances? Whether the struggle is saving for retirement, organizing your bank files, or talking about money responsibility with your spouse or loved one, Post personal finance columnist Michelle Singletary offered her advice and answered your questions on Wednesday, July 15 at 12 p.m. ET.

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: Good afternoon everyone. Lovely day where I am.

Well let's get started.


Richmond, Va.: Hi Michelle,

I recently inherited my late mother's house. It has been on the market for 3 months and it's not selling (Its assessed at $1.3M). The carrying costs (mortgage, utilities mostly) are getting to the point where I will have to use my 401K money. I am 62 so I won't have a penalty but I am getting stressed over the fact that I may need to do this for a long time. Any thoughts on what to do financially or emotionally? Thanks.

Michelle Singletary: First, so sorry you mother passed away.

Have you thought about renting the home?

Or maybe you need to reconsider what you have the house on the market for. This isn't your mother's real estate market anymore. You probably have the house priced too high.

Talk to your real estate agent to rethink your strategy.

I would not use the 401 (k) money for now even if you aren't subject to the penalty.


Money-making Lanham, Md.: Michelle,

My house has a $160k mortgage. The balance is about $145k. I saw on several websites that the value of my home has dropped to $201k. If I sell it for for $190k, have I lost money on the sale due to interest on the original mortgage? Would keeping the house & renting it out be a better deal? The equity from the current house would not affect me buying a new house.

Michelle Singletary: And why do you want/need a new home?

Plus, if you actually can sell your home for more than the mortgage in current conditions, count your blessings.

Additionally you can't go by what you see on web sites. You need to talk to a real estate person.

What you lost depends on your all your costs (down payment, what you've put in the house, etc.)


Greenbelt, Md.: Michelle,

I need some help or encouragement or something. When housing prices were going up so much, people paid incredible prices for houses in our neighborhood. The new residents have housekeepers, landscapers, and have organic groceries and milk delivered. They hire people for just about everything. At my house, my partner and I do our own housework, yard work, and as much of the other stuff as we can. Right now my partner is painting the trim on our house and a number of the neighbors think it is hilarious.

We're just starting to feel inferior to these neighbors who have so much more money.


Michelle Singletary: And you KNOW they have "so much money" how?

You have no idea what their finances are like. They could be in debt up to their eyeballs.

The problem with thinking the grass is greener is you don't appreciate your own grass (even if it has a few bare spots here and there).

Don't be concerned about how good you think your neighbors have it. One NEVER knows.

Just be content on how good you KNOW you have it.


Laurel, Md.: We received a mailing Monday from a group called Modify Law Group, Inc. from Santa Ana, Calif. Says they have reviewed property info and said we are in a severely declining market (true). Offers to modify our current mortgage terms that could "reduce your monthly payments by 30% - 50%. No equity is needed. No minimum credit scores. Late payments are not a problem and no appraisal is needed. Rates as low as 2.5%". Also says we are prequalified for a modification to a 30 yr fixed rate with a payment of $843.03 a month. CYBERHOMES had our house value at around $407k in March 2007; currently around $259k. We earn about $6300 a month after taxes, and currently pay $2444.15 on an ARM, currently at 6.44% that goes up in August '10, and $632.82 on a fixed at 13.14%. The property value dropping makes it impossible to refinance to reduce the interest rates that we have. We also know "if it sounds too good to be true..." You may also want to know that the NACA folks have promised to help us out last February, but no results from them yet. Thanks for your help and advice.

Michelle Singletary: It's too good to be true.

No credit min. credit score, late payments okay, no appraisal (in this market, in this economy??).

Now seriously, use the God-given common sense you have.

If you are working with NACA sounds like you are having mortgage problems. If so, don't be scammed too.

Keep working with your mortgage company and a legit organization such as NACA.


Northern Virginia: When visiting an elderly relative at the hospital (she lives in a nursing home and was taken to hospital after a fall), I was asked to sign a form on her behalf - she has dementia.

When reading the form, there was a sentence saying, in a round-about way, that the signer would be responsible for those payments that Medicare rejected.

So, I said I would consider signing the form, but would like to take it to my attorney for review first.

I was told that I would get a copy of the form only if I signed it; and an unsigned form could not leave the hospital. Naturally, I don't sign things unless I have the option of legal review.

How can hospitals be so corrupt as to take advantage of people (for money) when they are emotionally drained as a loved one is suffering?

Michelle Singletary: I'm so hopping mad right now.

See, you used some good common sense.

That place was TOTALLY trying to get you to basically co-sign for your relative's debt.

Please report this hospital. This is a bad, bad, bad practice. And you should always be able to take forms home to review.

You are right. They are trying anyway possible to make sure they are paid. But this isn't the right way.


Bethesda, Md.: Hi Michelle, Thanks for all that you do to keep us informed and on track!

My question: I have about $13K in credit card debt (various cards) with balances from a low of $200 to a high of $2000. I will be getting a small lump sum of money. What's the best strategy to pay these off? Should I also consider doing a loan on my 401K? Thanks.

Michelle Singletary: First, thank you. I do try my best to help folks.

So as for this debt. Here's what I would do (if you haven't already):

-- take those cards out of your wallet, freeze them, cut them up but don't use them again until ALL the debt on ALL the cards are paid off. You may have already done this and, if so, great.

-- If you don't have an emergency fund and you don't have a federal job take some of the lump sum money and put it away for a rainy day. Yes, even if you have debt. Put away at least one month's living expenses (the goal in this economy should be 6 months to a year).

-- If you already have an emergency fund then list the debts from the lowest balance to the highest balance. So at the top of the list should be the card with $200 (speaking of which, why is that still there? Is it a pet? Why haven't you paid that off by now).

Why lowest balance first -- because you will get so charged by clearing cards that you'll get excited and quickly pay off the rest.

And NO, NO, NO, NO, NO don't take money out of your 401 (k). If you are younger than 55 1/2 you will pay a huge penalty.

So compound one mistake (letting your cards get to $13,000) with another (robbing your retirement account).

That's what I would do or as one of my church members says, (WWMD).


Herndon, Va.: I am 23, rent my own apartment, and recently co-signed on my mom's mortgage. (She needed a co-signer b/c she is currently on disability). I don't live there but do I technically get a tax credit for 2009 because I co-signed?

Michelle Singletary: Seriously, you are asking me about the tax credit?

My dear, and I say this knowing you were trying to be a good daughter and help your mom, you should have NEVER co-signed on that mortgage.

By co-signing you have put your young self in the position of being responsible for the ENTIRE mortgage. If your mom ever can't pay or pays late that all goes on your credit history. If she defaults they come after you!

No use I guess asking why the two of you didn't buy the house together and live together.

You are a renter and a mortgage holder right now. And that mortgage WILL affect your ability to get your own home for as long as that mortgage is outstanding.

Now as for your question. I would double check with the IRS.

I'm betting you wouldn't since you aren't living in the home and you aren't paying the mortgage (I'm assuming).

The credit was intended for the first-time home owner, which technically isn't you since you since this isn't your principal residence. That's key to this credit.

The following is on the IRS Web site:

Q. Who cannot take the credit?

A. If any of the following describe you, you cannot take the credit, even if you buy a new home:

* Your income exceeds the phase-out range. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above.

* You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.

* You do not use the home as your principal residence.

* You sell your home before the end of the year.

* You are a nonresident alien.

* You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)


Anywhere, USA: Hi Michelle,

I got myself into a bit of trouble while traveling last week: I forgot about a scheduled transfer of funds from checking to savings and overdrew my checking account. My bank (BOA) allowed me to make 5 purchases using my debit card AFTER the overdraft occurred, which meant I incurred 5 additional overdraft fees.

BOA notifies you of overdrafts by MAILING a postcard to you, which I just received 5 days after I returned from my business trip and had already found the overdrafts when I checked my balance online.

My question: is there anything I can do to get any of this money back? 6 overdraft fees of $35 each, plus an extra $35 fee for allowing 5 days to pass before I added additional funds to the account (I did this as soon as I saw what had happened) means I just paid $245 for a very stupid mistake. Should I just chalk it up to learning an expensive lesson, or is there something else I can do to plead my case with my bank?

Thanks for any advice you can give!

Michelle Singletary: Wow. That's a big hit.

If you've been a good bank customer I would call and plead my case. In the past something similar happened to me -- left for a trip, mistake, yadda, yadda, yadda.

Because my husband and I are good customers the bank refunded the fee. Now granted, it was just the one $35 fee, but go for it.

Call customer service. If you get a no...go up the food chain until you can't go anymore.

And folks, this is why debit cards are NOT the same as cash.

The banks have been trying to promote them as same as cash but they are not if they institutions ALLOW charges to go through. And I say allow because they darn well know when the account is overdrawn.

Good luck!


Bethesda, Md.: Thanks, Michelle! Love the humor (especially WWMD!) No need to reply...just wanted to say thanks. - Susan

Michelle Singletary: Oh I have to reply to this.

Love the love!

Right back at ya!


Washington, D.C.: Hi Michelle,

I'm thinking about buying a home closer to work. I have no credit card debt, over 20% to put down, no car debt and make enough to cover a new mortgage with my steady job. And I'm contributing a lot to my retirement. I "only" have student loans, and the only reason I haven't paid them off is that my employer is currently paying them (but I could pay them off if my employer stopped).

All that said, why do I feel guilty about wanting to spend money on a home that is more convenient to my life now that I can afford it. Or should I feel guilty because my current home is just fine, just far from work (and any work I would do in the future)? I am so confused.

Michelle Singletary: So you have ALL that going on and you feel guilty?


You are blessed. If you've done your homework and all your financial ducks are in a row...make your life better.

Isn't that what you are working for?


Washington, D.C.: For Greenbelt: Good for you! If you know how to do home fixes you'll be able to take care of breaks that your neighbors will be spending big money for someone to come in and fix for them. With all you're doing around your home you're saving yourself money, getting exercise, and are doing work to your specifications. Speaking from experience in the painting department, while there are many painters out there who do a good job, when you get a bad apple who has to be watched like a hawk in order to get them to do what you're paying them to do, it's no fun at all.

Michelle Singletary: Totally agree.

But it's okay to hire professionals if you have the dough.

However if you can do the chores yourself, great.

By the way, remind me one day to tell you the story of how I ended up marrying the fine, great man that I did.

The short story: He fixed my toilet while we were dating (I was a young homeowner just out of college).

Thought to myself at the time, this man is a catch. Think of all the money I could save on home repairs with a handy man.


South Riding, Va.: Hi Michelle, We're going to be adding a second daycare tuition to the monthly budget soon, and unfortunately, we'll have to scale back on the 401(k) contributions to help come up with the extra $$. My salary is less than 1/3 of my husband's; is there any benefit to taking more or less from a certain salary, or is it all a wash as long as we come up with the extra money we need?

Michelle Singletary: Good question. Love that you are thinking through this.

Do the math and see which paycheck would get the bigger tax break by continuing the retirement contributions.


Federal employee: Michelle, I am a federal employee. I noticed in a previous answer, you said that if you are not a Fed, then you need x money in your emergency fund. What is the number for a Fed, i.e. how many months of living expenses should a Fed have set aside. Thanks - love your chats and money philosophy!

Michelle Singletary: Hee, hee, hee.

I was joking really. Guess you didn't get it. I was playing around meaning that with the economy the way it is, the only secure job seems to be with the federal government.

I had sense enough to marry well (got me a man with a federal job)

But humor aside, we know the feds can have RIPs too (reduction in personnel).

So keep to the same formula as everyone else. Just if you have a good federal job with seniority you probably don't need six months of living expenses.


D.C.: Bethesda won't pay a penalty if she BORROWS from her 401K (which was what she proposes). She'd have to pay herself back with interest. But right now it's a BAD IDEA because (unless she was a financial genius during 2008), to raise the cash she'll be selling shares for far less than what she paid for them.

Unless she loses her job and can't pay back the loan within the required period.

Michelle Singletary: Right. I read over "borrow" but the advice still applies regardless of the state of the stock market.

Keep your hands off your 401 (k) money whether you are cashing out or borrowing form it.

Silly notion you are paying yourself back. Technically yes, but when you remove that money you lose any return it could have earned.

Bottom line stop robbing Peter to pay Paul.

If you have a lot of credit card debt, suffer and pay it off without tapping retirement money. That way you may learn your lesson.


For Greenbelt: Will you be my neighbor instead? I can't imagine paying someone for home repairs and yard work, even though I can easily afford it. I enjoy working on my house! Your neighbors are snobs and not every wealthy person is like that.

Michelle Singletary: You are not by definition a "snob" if you pay someone for house work.


Not everyone is handy or has the time or wants to paint. If you have the money its fine with me. Just like I don't criticize people for buying expensive coffee. Not my cup of tea but as long as you are managing your money well, you have the right.


Am Feeling Unhappy: Hi, Michelle,

My husband and I bought a house in 2004. We've lived there happily since then. Now, we discovered that we have to move out of the area for my husband's job at the end of the summer.

With the market the way it is, we can't sell the house for what we paid for it. I'm feeling really miserable about the idea of losing lots of money. Renting it out may be an option, but the rent is unlikely to cover the expenses.

Then, there's the issue of needing a place to live in the new area. The rental market there is terrible, and it's a great time to buy.

What would you do???

Michelle Singletary: WWMD?

I would cut the house price as much as possible to sell. It's called priced to sell -- to at least get enough to cover the mortgage. If you don't walk away with any money that's the chance you took.

If you can't sell even with deep price cuts and you don't want to do a short sell (meaning taking less than what would cover paying off the mortgage), then rent and cover the difference until things get better in the market.

As for the new place, I would rent for at least a year just to get a feel of the area. It's hard to know an area until you've lived there for awhile.

That's what I would do.


Babyville: How do you save money when expensive purchases MUST be made. I'm expecting a baby in a few months and have always been a savvy shopper, but some of these things are overwhelming. I can only go to yard sales and craigslist for so many things (clothes, sheets, etc). Cribs, carseats, mattresses, and breast pumps must be purchased new (for safety reasons). And yes, I need the latter because it is either formula ($$$) or expressed breast milk for a working mom. I'm a savvy shopper, but this is getting out of hand. And no, I can't count on gifts from family or borrow from friends as I just moved to a new area of the country.

Michelle Singletary: Well, you cut your expenses someplace else to make do.

I was able to keep baby costs down (for three kids) by getting only what was really needed. And stay out of baby stores cuz the wants tend to grow to needs.


Snobby neighbors: Greenbelt's neighbors aren't snobs for hiring people to do yardwork, etc. They are snobs because they are laughing at him/her for doing the work him/herself.

Michelle Singletary: That's right!


Washington, D.C.: Hi Michelle. My husband and I bring home about $6K a month after taxes. Our mortgage is $3K, student loans are $1K, we have no other debt, and we are living well within our means, the remaining $2K. We have $30K in savings and contribute to a 401K (although it has lost a ton of money over the last year). We would like to refinish our basement before starting a family next summer, which we estimate will cost about $10-15K. Do you have any general suggestions for how best to accomplish these goals?

Michelle Singletary: Me, I would knock out the remaining student loan debt, which without knowing the total is probably a lot if your payments are $1,000 a month.

I would do this before the baby and before finishing a basement.

I would definitely save and pay cash for finishing the basement.

How to do all this. Whatever you have left over after all your expenses, I would throw it madly at the student loan debt. If it's that $2,000, get rid of that debt.

And I don't care if the interest rate is low.

If you got rid of that debt before baby, you would have that money available for the extra baby costs, plus to save for the kid's college so he or she won't go into student loan debt.

And what if one of you wants to stay home with the new bundle of joy? With the debt you have more choices.


I had sense enough to marry well (got me a man with a federal job) : Michelle, you did quite well. A Fed who can also fix toilets!

Michelle Singletary: Amen!

He can fix a lot of other things too!


B of A fees: Call the bank! The same thing happened to me, I called and said I understood one fee, because the overdraft was an oversight on my part, but not multiple fees. They were kind enough to waive ALL the fees. But you have to call. ggrrr - bank fees burn me up like credit card debt. I know people who think the bank is doing them a FAVOR by covering their overdrafts! They don't even consider that the bank is charging them a lot of money to do that!

Michelle Singletary: Good testimony.


RE: BOA OVER DRAFT FEES: I can't believe the fees banks charge, I guess that's why I use a credit union.

Michelle Singletary: All about having more choices.

I use both.


part-time teacher: Hi Michelle,

I have a full-time job, but I'm also an adjunct instructor at a local community college. The amount of money I receive from teaching fluctuates based on the number of classes I'm assigned. How should I adjust my saving and spending based on this "extra" income? Thanks.

Michelle Singletary: Can you live on the one full-time salary and just save the extra?

Make it what I call your life happens fund. Use that money for major or big expenses, such as car repairs, etc.


Arlington, Va. -- for babyville: I agree with Michelle - stay out of the baby stores! I confess that we went against the grain and bought a used crib from Craigslist. It's fine. Just make sure you know the make/model and double check that bolts are secure.

Michelle Singletary: Good advice.


Maryland: We took in a young relative and put her through two years of local college. Now she's about to transfer to a four-year school. We made a mistake in the beginning - giving her a credit card (authorized user) and not monitoring it closely enough. At first it was fine - then she overspent and wasted $2k.

As "punishment" we required that she work this summer and every summer until she paid it back - no interest, but 50% of her earnings go into an IRA (so she ends up having to "pay" twice as much, though half is to herself), and enrolled in a financial literacy class and reviewed it with me.

She has a job, and she says she took the class, but has no books/etc. So I'm basically planning to put her into mini financial boot camp. Looked at your book club picks - but do you have specific suggestions for a 20 year-old who is absolutely clueless about money?

I made a spreadsheet to show her how much her life costs - housing, health insurance, car insurance, tuition, food, etc. Unfortunately, she's just not getting it, and is getting a small amount of money from social security (late parents), which she is completely blowing. Right now, I'm between a rock and a hard place - I don't want to cut her off, but she's not learning.

Michelle Singletary: If you've done all you can and she's not learning, you may have to do some tough love and stop giving her money.

Make her pay more of her expenses, even for school. Bet she will learn then.

Good book: "Spend Well, Live Rich" by yours truly.

Lots of personal testimony, easy to read.


babyville: A NEW breast pump is NOT a necessity. you buy the new tubes and valkeryie breast attachments is all you need - and borrow a pump if you have friends who have one (or get a used one, as long as it works, it's fine). I used a used pump borrowed from a friend. I was something like the 6th user of said pump. I spent I forget now, $10? $15 for new tubes, breast doohickies and a couple of breast milk bottles. No one died. All children are healthy as can be, seriously. Do not buy new if you can find used or a loaner from a friend!

Michelle Singletary: I agree that the poster may be limiting herself.

But I think if I remember, she's a new mom.

You guys know how new moms are?

But please do your research. As many people have said the things you think you have to buy, you may not have to buy new.


Re: BabyVille: Of that list, only car seats may really needed to be bought new. But even there, the recommended usage is 2 years per car seat. So if you know of someone who had a baby, then didn't use the baby seat again, and it's a good make. You could reuse. The breast pump - you need to buy the attachments. But you could easily buy a used baby pump and use your own attachments. (What do you think women do when they use breast pumps supplied at work?) Or rent a breast pump. In other words - there are options. And so none of these are truly 'needs', just wants. I think the baby market convinces the inexperienced to think that they need way more than they truly do.

Michelle Singletary: Another baby view.


To Babyville: I don't know who told this poor woman she needs new stuff for safety, but that's nuts. You can figure out the model number on a crib or carseat and determine if it is new enough to be safe--babies grow up so fast that lots of baby gear on craigslist is still on the shelves in the stores for 10 times the price. Or ask around at your church/gym/office if folks have two year-olds who have outgrown their infant car seats/strollers. This stuff is perfectly fine!

Michelle Singletary: More baby advice.

Thanks you guys.


Washington, D.C.: RE: the grass is (maybe?) greener/rich neighbors

I always find comfort/solace knowing that a person may be driving a BMW or have someone cleaning their house for them, but for all you know they don't have one penny saved for their kids' college education and very little (or nothing!!) saved for retirement! Don't worry about them. And if they do think that it's hilarious you two are painting your own trim, then just ignore them. They're totally out of touch with reality!

Thanks for pointing this out, Michelle!!!

Michelle Singletary: You are welcome!


Boston, Mass.: My fiance shares a name with his father, with whom he is not in contact. However, fiance occasionally gets collection letters from creditors who believe he is his father. Is just telling them he's not his father enough to keep them off our backs and not affecting his credit report? One company just keeps coming back with one letter annually. We haven't seen anything funny in the fiance's credit report yet and they aren't harassing us, so I may be overreacting. Should I be concerned?

Michelle Singletary: Concerned, yes.

Just keep checking the credit reports to make sure the dad's info doesn't end up on the son's reports.

And you may have to just continue informing creditors they have the wrong man.


Silver Spring, Md.: Love your sense of humor in these days of doom and gloom!

Please continue to teach us all and especially the YOUTH that being thrify and careful with your $$$$ is $mart!!!

Michelle Singletary: I definitely will continue. Keeps me in a job. And hey, these days when folks ask me how I'm doing my answer is: "I have a job!"


Alexandria, VA: Thanks for your advice, Michelle. To the woman in need of baby items, I feel your pain. I received Baby Bargains as a gift and I would recommend you go get a copy from a store or the library! They give you the low down on what you need, what you don't and rate for quality. In fact, IKEA makes a crib that is highly rated for safety and quality. Might be spartan looking, but it is safe. On another note, some couples fight about money and others cleaning. Hiring a cleaning woman saved me from many fights and is worth every penny.

Michelle Singletary: I do appreciate all the feedback for the new mom.

We parents have to stick together to save (hee, hee) others from spending too much.


Upstate, NY: Michelle, thank you so much for your columns and chats. You are an inspiration!

To follow up on the chatter whose relative has dementia and the hospital tried to get them to cosign -- be aware that MANY hospitals try stunts like this. Also, hospitals are not above contacting surviving relatives to "encourage" them to pay the deceased's bills. Unless you cosign, you are NOT obligated to pay those! They should be paid by the estate! Hospitals try to phrase it like "do the right thing and pay off Aunt Mildred's bills" but you are under NO obligation to do so.

I used to work in hospital collections and I saw this behavior daily.

Michelle Singletary: Thank you so much for the insight.

Perhaps this is why we need universal health care?


Fairfax, Va.: Hi Michelle. I am getting laid off next week. My husband and I are going through our budget and cutting out all unnecessary expenses, but even with that we cannot get by on his salary alone. If I cannot find a job I don't know what we're going to do. When I lamented that we may end up losing our home if I can't find a job, someone suggested to me that losing our house would actually be a good thing since we currently owe more on it than it's now worth. The suggestion was we should just let that happen and move on. I can't imagine anything worse financially than losing our home and having a foreclosure on our credit report. We have only owned the home for 1 year. We didn't even buy the most expensive home we could afford, and I could make less money than I do now and be able to pay the mortgage.

If it comes down to it, I would start selling extraneous household items to pay for groceries each month and use all our income to make sure we do not lose the home. Just hoping to buy time every month until I can get a job. What do you think?

Michelle Singletary: I think the people who just say walk away and don't feel bad about it are wrong.

What your home is worth is not important unless you have to move or sell. How immoral to think it's okay to walk away because the value has dropped.

You may end up losing the home. I pray not. But I like that you are willing to do whatever you can to keep your home and fulfill your obligation to pay your mortgage.

I do wish you the best and hope you find a job soon.


Instead of something: We are feeling the effects of economy. Fortunately, we have our jobs and a financial cushion. We have cut back a lot on eating out, etc. However, we continue donating to charities and fundraising. Economy/survivor guilt is from not doing anything. I challenge people who are ok, do something for others who are not as fortunate.

Michelle Singletary: Amen!


Baltimore, Md.: Hi Michelle,

What is the publication date for your new book?

Michelle Singletary: Well thanks for asking.

My new book, "The Power to Prosper: 21 Days to Financial Freedom" is due out in Jan. 2010.

Keep checking the Post site, my site and my Post eletter.

I'll be doing a lot of exciting things around the book which is based on a 21-day financial fast.

I just love this book and the fast (which I've been doing with folks via my church for years). People have gotten out of debt, saved their marriages and saved for the first time in their lives.

You can sign up as a fan on Facebook. Just search for "The Power to Prosper."


dumb question: Michelle, what does "living expensives" mean exactly? And by saving 6 months of this money, is that separate from emergency money? Sorry for dumb question, but I hope you can help!!

Michelle Singletary: Not a dumb question at all.

Six months of living expenses means saving up enough money to cover everything it costs to run your household -- rent/mortgage, utilities, food, car loan, student loan, cable, etc.

This is your emergency fund. It's there in case you get sick and can't work and run out of leave or don't have disability insurance. Or if you lose your job.

A life happens fund is separate and in that you save for the things in life that happen-- major car repairs, rugrats damaging your washing machine, etc.

You keep this money liquid in the highest yielding savings account you can find. Keep the money separate from your regular checking and savings account.

Hope this explains.


Washington, D.C.: "Please continue to teach us all and especially the YOUTH that being thrify and careful with your $$$$ is $mart!!!"

Hey, some of us youths are better than our parents! My folks keep pressuring me to get a credit card and buy a car (I live in the middle of D.C.) even though I can't afford one, or the parking for it. Meanwhile, I'm completely debt free and banking serious cash in my savings and retirement funds. Every time they chastise me for not being "money smart" in their eyes, I just smile and nod, smile and nod, and think about the hundreds of thousands of dollars of debt they have.

Michelle Singletary: I don't think any insult was intended.

But you are right I've definitely met some young people who are wiser about their money than their parents.


layoffs - : the person who is being laid off next week should remember to factor in unemployment. I know it's not a lot, but it's certainly better than nothing.

Michelle Singletary: True that.


Universal Health Care: We printed HOW much money for the stimulus, and now you think we should print more AND raise taxes for universal health care?

Who are you and what have you done with Michelle Singletary???

Michelle Singletary: I'm still here.

But I also recognize that we have to figure out how to provide affordable health care so people don't lose it if they lose their job.

You don't see what I see, people financially ruined because a kid gets sick. Or people lose their job and can't afford to get medical attention for themselves.

Lose your job and I bet you will be right on that boat.

I'm just saying we need change from the system we have now which leaves too many people without proper medical help.


Michelle Singletary: I'm well over my time folks.

Thanks for all your questions. And I'm really sorry if I didn't get to yours. But keep checking my eletter. You may see your question answered there or in my print column.

And for those who are STILL writing about used car seats.

I hear you. If there's a reason you don't think a used one might be safe, splurge for a new one.

My goodness.


See you guys in two weeks.


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