Michelle Singletary

Washington, D.C.

 Michelle Singletary writes the nationally syndicated personal finance column The Color of Money, which appears in The Washington Post on Wednesdays and Sundays. Her award-winning column is syndicated by The Washington Post Writers Group and is carried in dozens of newspapers nationwide. She has written three personal finance books, including her latest, “The 21-Day Financial Fast: Your Path to Financial Peace and Freedom.” Singletary was the financial expert for “The Revolution,” a daytime program on ABC. For two years, she was host of her own national television program, “Singletary Says,” on TV One. She is a frequent contributor to various NPR programs and has appeared on national talk shows and television networks, including “Oprah,” NBC’s “Today,” “The Early Show on CBS” and CNN.

In her spare time, Singletary is the director of a ministry she founded at her church, in which women and men volunteer to mentor others who are having financial challenges. As part of this ministry, she and her husband also volunteer to teach financial literacy to prison inmates. She is a graduate of the University of Maryland at College Park. She has received the Distinguished Alumni Award from Johns Hopkins University, where she earned a master’s degree in business and management.

To stay informed about various money issues subscribe to Michelle’s weekly retirement and personal finance newsletters, which will be delivered to your inbox every Monday and Thursday.

Archives

Books by Michelle Singletary:  

"The 21 Day Financial Fast: Your Path to Financial Peace and Freedom"

Buy it from Amazon

"Spend Well, Live Rich: How to Get What You Want with the Money You Have"

Buy it from Amazon
Recent Articles

THE COLOR OF MONEY COLUMN

(Advance for Wednesday, Sept. 18, 2019, and thereafter. Web release Tuesday, Sept. 17, 2019, at 8 p.m. Eastern time.)

(For Singletary clients only)

By MICHELLE SINGLETARY

WASHINGTON -- Whenever I talk to students and parents who have taken on college debt that will choke their budget for decades, they say this: College is an investment.

But is it, though?

In their defense, they've heard over and over again that the debt won't matter because the degree is going to pay off with a higher-paying job.

When compared with people who have a high school diploma, graduates of four-year colleges believe they earn, on average, $20,000 more each year as a result of their degree, according to a 2011 report from the Pew Research Center. Their estimate closely matches census data, Pew said.

Yet a degree doesn't always pay off. In fact, some folks don't out-earn high school graduates and they end up dragging staggering amounts of debt all the way into retirement.

This is why the debate about the $1.6 trillion in outstanding student loans should include discussion about a trend that is forcing people to go into debt when perhaps they don't need to.

Increasingly, employers -- private and public -- are screening out experienced job applicants just because they don't have a college degree. Researchers call this "degree inflation."

During a recent online discussion with readers, this topic came up.

A leading cause of high student loans is "requiring a bachelor's degree for jobs that really don't require one," a reader wrote. "For example, almost all of the new administrative assistants at my job have a B.A. You really don't need one to answer phones, coordinate schedules and file papers. But because most people now require it, the folks who would do well with those jobs without a degree have to spend the money to get a degree to get the job. It is so maddening."

Now, before you dash off an email arguing that many administrative assistants have a great deal of responsibility that might require a degree, read the following from another online-chat participant.

"At a lot of smaller companies, the administrative assistant job is more like that of an office manager or an executive assistant," the reader wrote. "Not only are you going to be in charge of all of the minor clerical duties, but you'll be working with higher-up executives and taking care of the human resource needs of the company. This means you're doing everything necessary to keep employers and employees sane. That said, does the position require a B.A.? Maybe. Maybe not."

Let's talk about the maybe not.

A 2017 joint report by Harvard Business School, Accenture and Grads of Life discussed the costs of degree inflation for families and businesses. Employers are more often using automated tools that may weed out good job candidates simply because they don't have a college degree.

"The rising demand for a four-year college degree for jobs that previously did not require one … is a substantive and widespread phenomenon that is making the U.S. labor market more inefficient," the report said. "Companies that insist only on a college degree deny themselves the untapped potential of eager to work young adults as well as experienced, older workers as pools of affordable talent."

Of course, there are jobs where an advanced degree and specific training are necessary. But think about how you learned to do your job. Experience may have mattered more than the philosophy or biology class you took in college.

Far too often, we are devaluing work experience in favor of a degree that, for many, doesn't adequately prepare them for a job anyway.

In the Pew report, 57% of Americans said the higher-education system in the United States fails to provide students with good value for the money they and their families spend.

Other Pew research found that one-third of Americans who lack a four-year college degree report that they didn't apply for a job they felt they were qualified for because the position required a bachelor's degree.

Obtaining a diploma doesn't alone make you more qualified.

Another reader wrote: "At our union convention recently, we heard from a labor leader -- decorated combat veteran who served in Iraq -- being denied a mid-level management job when he returned because he didn't have a degree. He led platoons, managed personnel, protected his fellow soldiers, took military leadership training, and more. He joined a program called 'Helmets to Hardhats' and, after training, was placed in a solid union job. A degree isn't everything."

The nonprofit program the reader mentioned helps military service members transition to a career in the construction industry.

With the cost of college crippling so many borrowers, it's time to concede that, for many jobs in America, experience should matter just as much as a college degree.

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Readers can write to Michelle Singletary c/o The Washington Post, 1301 K St., N.W., Washington, D.C. 20071. Her email address is michelle.singletary@washpost.com. Follow her on Twitter (@SingletaryM) or Facebook (www.facebook.com/MichelleSingletary). Comments and questions are welcome, but due to the volume of mail, personal responses may not be possible. Please also note comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.

(c) 2019, Washington Post Writers Group

THE COLOR OF MONEY COLUMN

(Advance for Sunday, Sept. 15, 2019, and thereafter. Web release Saturday, Sept. 14, 2019, at 8 p.m. Eastern time.)

(For Singletary clients only)

By MICHELLE SINGLETARY

WASHINGTON -- You don't have to retire.

Maybe you don't want to be the on-call babysitter for your grandchildren. You have no desire to play golf or travel the world.

What if your retirement meant finally pursuing your lifelong passion of becoming an entrepreneur?

After all, you have a wealth of work experience you can apply to your new venture as you enter the next season of your life.

And you would have plenty of company.

Self-employment is increasing among seniors. In 2015, people 65 and older had the highest self-employment rate (15.5%) of any age group, according to a report by the Bureau of Labor Statistics.

You can retire to a rich life of self-employment, according to Kerry Hannon, author of this month's Color of Money Book Club pick, "Never Too Old to Get Rich: The Entrepreneur's Guide to Starting a Business Mid-Life."

The title is a bit of a tease, Hannon admits. Yes, it's great to make money, but the entrepreneurs she interviewed -- there are 20 profiled in the book -- talk about something more priceless than what money can buy.

"The title refers in many ways to the inner richness of doing work you love, with people you care about and making a difference with your work," she says.

Hannon lives what she preaches. She started her own company at 42. She's the author of a dozen books. She writes a column for Forbes on second acts and retirement, and she is the entrepreneurship and personal-finance expert for NextAvenue.org.

Her guide is as much an explainer of how to become an entrepreneur as it is a pep rally encouraging you to take the risk.

"It's about fearlessly creating something new regardless of your age," Hannon writes. "It's scary. It's risky. It's hard work, and most entrepreneurs I have interviewed have told me that their only regret is that they didn't do it sooner."

This senior entrepreneurship movement makes sense. People are living longer, and many worry about outliving their savings. Some seasoned workers are also victims of ageism.

"The frustrating reality of ageism bias by employers is alive and well, which is why being your own boss has become the default for droves of older workers who are shut out of the workforce by employers who see their expiration date and view them as lacking stamina, up-to-date skills, or perhaps simply being too expensive in terms of salary demands," Hannon writes.

Not sure what business is right for you?

Start with your passion, Hannon recommends. However, make sure it's bankable. I get so frustrated when I meet folks who have wasted a lot of time and money trying to monetize a dream.

I loved this example in the book: One avid gardener decided to open up a landscape-design business after taking an early-retirement package from her law firm.

"She soon realized when her garden time was every day and the long hours were mostly spent alone, she had made a big mistake," Hannon writes. "Her garden was her respite from her hectic life. When it (BEG ITAL)was(END ITAL)her life, she missed the people connection."

The best entrepreneurs have a higher level of "human, social and financial capital," according to Cal J. Halvorsen, a retirement researcher and assistant professor at the Boston College School of Social Work, who is quoted in the book.

"Human capital might be, for example, education and work experience," he says. "Social capital would be their social network. Financial capital would be their financial assets and wealth."

Before you take the entrepreneurship leap, know your limits. Do some research and line up the money, Hannon suggests. Set goals. Get help. (The Small Business Administration is a good start.) It takes more than grit to succeed as a self-employed individual. You want a profit-making business, not a hobby.

Here's Hannon's three-part business-fitness program.

-- (BEG ITAL)Get financially fit(END ITAL). Create a lean budget. Save as much as you can. Pay down any loans. "Debt is a dream killer," she writes. "The biggest stumbling block for many midlife entrepreneurs is money."

-- (BEG ITAL)Get physically fit(END ITAL). Your health is connected to your wealth. "When you're fit, you bring positivity to your work and your life."

-- (BEG ITAL)Get spiritually fit(END ITAL). "Find a place to center yourself, and de-stress."

You may not be hardwired to be your own boss, but if you think you could make self-employment work, you'll find some useful and inspiring advice in this guide.

I'm hosting an online chat about "Never Too Old to Get Rich" at noon Eastern on Sept. 26 at washingtonpost.com/discussions. Hannon will join me to answer questions about starting a business after 50 -- or before.

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Readers can write to Michelle Singletary c/o The Washington Post, 1301 K St., N.W., Washington, D.C. 20071. Her email address is michelle.singletary@washpost.com. Follow her on Twitter (@SingletaryM) or Facebook (www.facebook.com/MichelleSingletary). Comments and questions are welcome, but due to the volume of mail, personal responses may not be possible. Please also note comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.

(c) 2019, Washington Post Writers Group

THE COLOR OF MONEY COLUMN

(Advance for Wednesday, Sept. 11, 2019, and thereafter. Web release Tuesday, Sept. 10, 2019, at 8 p.m. Eastern time.)

(For Singletary clients only)

By MICHELLE SINGLETARY

WASHINGTON -- I've had a perfect 850 credit score for more than a year.

How has my life changed?

Not one little bit.

I've been getting about the same number of credit card offers as when I had scores in the 700s. And I haven't received any preferential treatment, like when you board an airplane and your elite status gives you the right to slide past passengers with regular boarding passes.

The most I've gotten from having a perfect credit score is being able to kid my husband that my score is higher than his. His hovers around 830.

"After a certain point, it doesn't matter anyway," he quipped.

He's right. The widely used FICO credit score ranges from a low of 300 to a high of 850. A high score -- along with other financial factors -- can place you in a tier that results in the best lending deals. But high scores beyond a certain threshold are pretty much equal.

So it's noteworthy that the national average credit score has hit an all-time high of 706, according to FICO, the company that created the scoring model used by most lenders.

"That's a big milestone," said Ethan Dornhelm, vice president of scores and predictive analytics at FICO. "It's worth celebrating when you can improve your score to the point that it starts with a seven."

Since reaching a bottom of 686 in October 2009 during the Great Recession, the national average FICO score has been steadily increasing.

Dornhelm said the key drivers of the improvement in scores have been the U.S. economic recovery, consumer credit educational efforts, and an initiative by the credit bureaus that has led to certain accounts in collections being removed from people's credit files.

"It's been a pretty stable and growing economy over the last 10 years, driving things like lower unemployment, which in turn drives consumers being in stronger financial health," Dornhelm points out.

Increasingly, lenders have been providing free credit scores to consumers. I've found that when people know their score isn't good, they want to work on improving it. The two biggest factors that will boost your score are paying your bills on time and reducing the amount you owe.

Some consumers may have seen a boost in their scores because negative information has been removed. In a report last year, the New York Federal Reserve said collections accounts -- which are unpaid debts sent to collection agencies -- became more prevalent between 2008 and 2012 as Americans went through financial hardships stemming from the Great Recession.

The data showed the percent of consumers with a collections account dropped from over 14% to 12% between 2013 and 2017, according to the Federal Reserve. In the fourth quarter of 2017, that share declined to just 9%.

The Federal Reserve noted that the decline in collections accounts was the result of an initiative launched by the three major credit bureaus -- Equifax, Experian and TransUnion. Under the plan, which is part of a settlement with more than 30 state attorneys general, the credit bureaus agreed to remove certain debt information from consumer files -- including civil judgments, tax liens and traffic and parking tickets or fines. The initiative also called for the deletion of previously reported medical collections that had been paid or eventually covered by insurance.

Following implementation of the initiative, the number of individuals with a collections account on their credit report fell from 33 million down to 25 million between June 2017 and June 2018, according to the Fed report. There was an average credit-score increase of 11 points during the quarter the collections accounts were removed. Some individuals saw their credit scores increase by more than 30 points.

People with FICO credit scores in the 800s often wonder why they haven't achieved perfection. But you don't need an exceptional score to be considered a premier borrower.

Here's why you shouldn't fret that you don't have a perfect credit score.

Let's say you want to purchase a car. Your lender reserves its most favorable auto interest rates for consumers with certain lending criteria that include a credit score of 720 or higher. Anything above this benchmark doesn't give you any extra leverage.

"The 'beautiful' FICO score is really in the eye of the lender," Dornhelm said. "Every lender has their own risk appetite. But I will say, once you're looking at FICO scores over 700, consumers should be qualifying for most any credit they're applying for, and at pretty favorable terms."

So, if your credit score number starts with a 7, you're in good company.

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Readers can write to Michelle Singletary c/o The Washington Post, 1301 K St., N.W., Washington, D.C. 20071. Her email address is michelle.singletary@washpost.com. Follow her on Twitter (@SingletaryM) or Facebook (www.facebook.com/MichelleSingletary). Comments and questions are welcome, but due to the volume of mail, personal responses may not be possible. Please also note comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.

(c) 2019, Washington Post Writers Group

About
Michelle Singletary writes the nationally syndicated personal finance column The Color of Money, which appears in The Washington Post on Wednesdays and Sundays. Her award-winning column is syndicated by The Washington Post Writers Group and is carried in dozens of newspapers nationwide. She has written three personal finance books, including her latest, “The 21-Day Financial Fast: Your Path to Financial Peace and Freedom.” Singletary was the financial expert for “The Revolution,” a daytime program on ABC. For two years, she was host of her own national television program, “Singletary Says,” on TV One. She is a frequent contributor to various NPR programs and has appeared on national talk shows and television networks, including “Oprah,” NBC’s “Today,” “The Early Show on CBS” and CNN. In her spare time, Singletary is the director of a ministry she founded at her church, in which women and men volunteer to mentor others who are having financial challenges. As part of this ministry, she and her husband also volunteer to teach financial literacy to prison inmates. She is a graduate of the University of Maryland at College Park. She has received the Distinguished Alumni Award from Johns Hopkins University, where she earned a master’s degree in business and management. To stay informed about various money issues subscribe to Michelle’s weekly retirement and personal finance newsletters, which will be delivered to your inbox every Monday and Thursday.

Archives

Books
  • "The 21 Day Financial Fast: Your Path to Financial Peace and Freedom"
  • "Spend Well, Live Rich: How to Get What You Want with the Money You Have"
Links