Financial curveballs can teach a lesson

  • By Michelle Singletary
  • Friday, October 5, 2007 7:13pm
  • Business

Giving advice to people in financial trouble is like throwing dust into the wind. You toss it out and, depending on the wind’s direction, it either gets carried away or thrown right back in your face.

People with money problems often want a magic solution — some instantaneous debt-reduction program that will save them. But the truth is, to make the most of what you earn you have to make hard choices. You have to listen to good advice and use it.

That’s what one participant who joined me online did. I’d like to share that person’s story and answer some other questions from that recent chat.

“Michelle, many times when someone tells you they have nothing left over at the end of the month to put into savings, you have told them they should consider moving or getting a roommate,” the person wrote. “I always thought that was extreme and kind of useless advice, until I did it.”

I love it when people listen.

In this case the person moved from what she described as a great apartment in a great neighborhood to a smaller apartment in a so-so (but not dangerous) neighborhood.

“Sure my family is now kind of crammed on top of each other in this little place, but it’s not that bad really and it is $600 a month cheaper to live here,” the person said. “We now have six months of savings in the bank and an account to save for a house down payment. We’ve started college funds for the kids, and we still had enough left over to pay in cash — that’s 100 percent cash — for a new computer. No debt at all! My life is so much less stressful now.”

I’m all teary-eyed.

Unfortunately, another online chat guest is facing lots of tears, but not from joy.

“My parents are in their mid-60s and have simply never been able to get their financial act together — ever,” that person wrote. “I am steeling myself for the eventual, ‘We are broke. You have money. We need help.’ Am I evil for not wanting to give them a dime, when I’ve warned them over the years that they’ve really got to ease up, not be so impulsive, and actually exercise a little restraint?”

Would this person be wrong to stand by and watch while financially inept elderly parents lose their home of 30 years? By the way, the parents have $34,000 in credit card debt.

Whether you preach, cry or beg, if you have parents who have spent a lifetime mismanaging their money, it’s unlikely that they will suddenly gain some financial common sense as they age. All you can do is minimize the impact it will have on your own finances.

In a report about the struggles of caregivers to the elderly, AARP found that about 23 percent said their care and assistance were creating a financial hardship for themselves.

I would advise this person to put aside some money to help her parents with essentials, such as food, utilities and medicine. You don’t have to support their every need, just help with their basic necessities as best you can. If you have siblings, organize a family meeting to see if they can contribute on a regular basis.

And yes, you might have to watch as they lose their home. Just help them find an affordable place to live, which might mean coming to live with you. Sorry.

Finally, one person wanted to know when, if ever, it was OK to stop contributing to a retirement fund when you have credit card debt.

“I am 34 years old and work for the federal government in a position I really enjoy that pays well,” the person wrote. “I have about $75,000 in my Thrift Savings Plan and I am considering stopping my contributions for about three months to pay off my $3,000 credit card bill. I want to be debt free! I can’t come up with the extra money elsewhere. What do you think?”

If this person truly can’t eke out another penny from his budget (which I doubt because there’s often something that can be cut), then it wouldn’t be a financial disaster to stop the contributions. A three-month hiatus from savings won’t be the difference between his eating cat food in retirement and having dinner out once in a while.

However, be very careful about this strategy. The better solution is to cut expenses or increase income, or both. When people stop saving they often don’t have the discipline to start again.

If you know you’re triflin’ and there’s a possibility you won’t return to saving, pay down the debt without stopping your retirement contributions. To thine own self be true.

Washington Post Writers Group

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

A closing sign hangs above the entrance of the Big Lots at Evergreen and Madison on Monday, July 22, 2024, in Everett, Washington. (Ryan Berry / The Herald)
Big Lots announces it will shutter Everett and Lynnwood stores

The Marysville store will remain open for now. The retailer reported declining sales in the first quarter of the year.

George Montemor poses for a photo in front of his office in Lynnwood, Washington on Tuesday, July 30, 2024.  (Annie Barker / The Herald)
Despite high mortgage rates, Snohomish County home market still competitive

Snohomish County homes priced from $550K to $850K are pulling in multiple offers and selling quickly.

Henry M. Jackson High School’s robotic team, Jack in the Bot, shake hands at the 2024 Indiana Robotics Invitational.(Henry M. Jackson High School)
Mill Creek robotics team — Jack in the Bot — wins big

Henry M. Jackson High School students took first place at the Indiana Robotic Invitational for the second year in a row.

The computer science and robotics and artificial intelligence department faculty includes (left to right) faculty department head Allison Obourn; Dean Carey Schroyer; Ishaani Priyadarshini; ROBAI department head Sirine Maalej and Charlene Lugli. PHOTO: Arutyun Sargsyan / Edmonds College.
Edmonds College to offer 2 new four-year degree programs

The college is accepting applications for bachelor programs in computer science as well as robotics and artificial intelligence.

FILE — Boeing 737 MAX8 airplanes on the assembly line at the Boeing plant in Renton, Wash., on March 27, 2019. Boeing said on Wednesday, Feb. 21, 2024, that it was shaking up the leadership in its commercial airplanes unit after a harrowing incident last month during which a piece fell off a 737 Max 9 jet in flight. (Ruth Fremson/The New York Times)
Federal judge rejects Boeing’s guilty plea related to 737 Max crashes

The plea agreement included a fine of up to $487 million and three years of probation.

Neetha Hsu practices a command with Marley, left, and Andie Holsten practices with Oshie, right, during a puppy training class at The Everett Zoom Room in Everett, Washington on Wednesday, July 3, 2024. (Annie Barker / The Herald)
Tricks of the trade: New Everett dog training gym is a people-pleaser

Everett Zoom Room offers training for puppies, dogs and their owners: “We don’t train dogs, we train the people who love them.”

Andy Bronson/ The Herald 

Everett mayor Ray Stephenson looks over the city on Tuesday, Jan. 5, 2015 in Everett, Wa. Stephanson sees  Utah’s “housing first” model – dealing with homelessness first before tackling related issues – is one Everett and Snohomish County should adopt.

Local:issuesStephanson

Shot on: 1/5/16
Economic Alliance taps former Everett mayor as CEO

Ray Stephanson will serve as the interim leader of the Snohomish County group.

Molbak's Garden + Home in Woodinville, Washington will close on Jan. 28. (Photo courtesy of Molbak's)
After tumultuous year, Molbak’s is being demolished in Woodinville

The beloved garden store closed in January. And a fundraising initiative to revitalize the space fell short.

Everett Mayor Cassie Franklin, Advanced Manufacturing Skills Center executive director Larry Cluphf, Boeing Director of manufacturing and safety Cameron Myers, Edmonds College President Amit Singh, U.S. Rep. Rick Larsen, and Snohomish County Executive Dave Somers participate in a ribbon-cutting ceremony on Tuesday, July 2 celebrating the opening of a new fuselage training lab at Paine Field. Credit: Arutyun Sargsyan / Edmonds College
‘Magic happens’: Paine Field aerospace center dedicates new hands-on lab

Last month, Edmonds College officials cut the ribbon on a new training lab — a section of a 12-ton Boeing 767 tanker.

Gov. Jay Inslee presents CEO Fredrik Hellstrom with the Swedish flag during a grand opening ceremony for Sweden-based Echandia on Tuesday, July 30, 2024, in Marysville, Washington. (Ryan Berry / The Herald)
Swedish battery maker opens first U.S. facility in Marysville

Echandia’s marine battery systems power everything from tug boats to passenger and car ferries.

Helion Energy CEO and co-founder David Kirtley talks to Governor Jay Inslee about Trenta, Helion’s 6th fusion prototype, during a tour of their facility on Tuesday, July 9, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
State grants Everett-based Helion a fusion energy license

The permit allows Helion to use radioactive materials to operate the company’s fusion generator.

People walk past the new J.sweets storefront in Alderwood Mall on Thursday, July 25, 2024, in Lynnwood, Washington. (Olivia Vanni / The Herald)
New Japanese-style sweets shop to open in Lynnwood

J. Sweets, offering traditional Japanese and western style treats opens, could open by early August at the Alderwood mall.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.