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Advice | Q&A: Michelle Singletary on love and money and debt consolidation

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There’s so much misinformation out there about money management.

Every month, I open the DMs on my Twitter, now called X, and Instagram accounts to help readers who need advice about their finances. The following is a transcript of the questions submitted in August, along with my answers. It has been edited for clarity, and Twitter and Instagram handles have been removed.

Q: I feel like I am still not reaching my financial goals, even though I do not have any car payment or student debt. Could the issue really be that my husband is a spender, while I am a saver?

A: Think of your financial life as akin to taking a road trip in which you need GPS. You put in your coordinates (financial goals) and your GPS (budget) helps guide you to your destination. Would you travel somewhere you have never been before without guidance? Without a financial plan, you may wander and worry and fret about not reaching your financial goals. Now add in a relationship, and the trip gets harder (think back seat driver who might be a spender and who wants to take detours all the time).

So, yes, it could be you are financially aimless because you don’t have a plan, and you and your husband are money opposites. So what to do? Make a financial date. This is not a budget session. Instead, this is a “let’s plan some things for our future where money is concerned” conversation. In this first meeting, bring up your concerns. Make it about how you feel. Don’t accuse or blame. Share. Listen. Talk.

Once you start, make the dates a regular thing at the same day and time. Next meeting, set one or two goals. You don’t want to overwhelm the spender. For example, you could start with your emergency fund. Is it where you want it to be? If not, map out (keeping with the GPS analogy) how to get to the recommended three to six months of living expenses saved up. Got debt? Make a plan to pay it off.

Read: Rules to make talking about money with your honey easier

Q: When are debt consolidation loans ever good to take out?

A: Debt consolidation loans can be a good thing as long as the terms, including the interest rate, don’t stretch out the debt so far that you end up paying more in interest payments. I also worry people use such loans to wipe debt off their credit cards, and then once the cards have no balance, they run them back up. As a result, they have new credit card debt and also a consolidation loan. I’ve seen this happen time after time.

Read: Are you plagued by the serial get-out-of-debt disorder?

Also: Four reasons a credit balance transfer will be a bad idea

Q: What is a healthy amount of credit card availability for someone who makes $80,000 per year?

A: If you are asking how much available credit you should have, it all depends. Why have a credit card with a $20,000 limit if you can’t pay it off before the due date? With that income and a good credit score, you could probably get a lot of credit. But do you need it? So this is not about your income, but how much you can handle at one time and not become one of millions of consumers who revolve credit card debt month to month.

Read: Delinquencies on the rise for credit cards and auto loans

Order Money Milestones for more timeless personal finance advice

Q: I am 58 and plan to retire in nine years. I do not have access to a pension. How can I be certain that I will have enough saved in my 401(k) to meet my retirement needs?

A: It can be so hard to know whether you have enough saved for retirement because the key to knowing is predicting how long you will live. But you can get a good idea of your retirement needs by doing a budget for when you are no longer working.

Look at all the income that will be available to you from Social Security, as well as from cash savings and retirement investments. AARP is also a great resource and has a good retirement calculator to help you figure out if you are saving enough.

Read: Retirement planning is guessing game we need to get right

Q: I am 52, and due to circumstances when I left my job to care for an ailing parent, I had to use all of my retirement funds. I now have very few bills and no savings for retirement. How do I start to rebuild?

A: What a wonderful thing you did to help your parent. Caregiving is one of the top reasons many people don’t have enough saved for their own retirement, particularly if they had to quit working like you. Do what you can to start saving again for retirement. If your company has a workplace retirement account, contribute to it. You may also need to readjust your retirement plans, which may include working longer than you planned.

Q: The Post had an article titled “Moody’s downgrades 10 regional banks and warns bigger Wall Street names.” My husband and I have accounts at one of the biggest lenders. Should we be concerned about the negative outlook for this bank?

A: If your funds are in an institution insured by the FDIC and you are at or below the amount that is insured, you need not worry.

Read: Is your money safe? Here is what deposit insurance covers.

Michelle Singletary advice on money pots and life after bankruptcy

Q: I have inherited a pretty big burden. My dad passed away in June. He left my mom in a pretty bad financial situation. I discovered that she is $60,000 in credit card debt and they mortgaged the house to pay off previous debt. There is not much equity there, maybe $20,000 left. She is now down a Social Security check and needs to downsize to a smaller place with less maintenance (no yard, no upkeep, etc.). Something like a small senior efficiency apartment would do.

She pays $1,500 per month in credit card minimum payments. After all is said and done, she will get around $4,500 per month in income from a pension and Social Security. She is 72 and will never be able to pay off the credit cards in her lifetime. What is the best course of action? She has about $14,000 in the bank after we sold stuff around the house in addition to the small emergency fund she had. Oh, and her car is on its last legs, so she will need a reliable used car. She is totally overwhelmed.

A: I’m so sorry you have to deal with a problem that clearly needed addressing long ago. I suggest you make an appointment with a nonprofit credit counseling agency. Meet with a budget specialist who can help you formulate a plan for your mother. And that plan may include her filing for bankruptcy protection with either Chapter 7 or Chapter 13. I have advised some seniors in this situation to file for bankruptcy to free up much needed funds for their living expenses.

I spent several years of my career reporting on bankruptcy. And this I know: For most, this is not an easy decision. I never saw people skipping out after a bankruptcy hearing elated that they had their debts wiped out. I saw people ashamed and beaten down, who felt in the end that filing for bankruptcy protection was their last resort. But bankruptcy is there to help folks like your mother. The National Foundation for Credit Counseling has information to find an agency. Visit its website or call 800-388-2227.

B.O.M. — The best of Michelle Singletary on personal finance

If you have a personal finance question for Washington Post columnist Michelle Singletary, please call 1-855-ASK-POST (1-855-275-7678).

My mortgage payoff story: My husband and I paid off the house in the spring of 2023 thanks to making extra payments and taking advantage of a mortgage recast. Even though it lowered my perfect 850 credit score and my column about it sparked some serious debate with readers, it was one of the best financial decisions I’ve made.

Credit card debt: If you’re in the habit of carrying credit card debt, stop. It’s just a myth that it will boost your credit score. For those looking to get out of credit card debt, see if a balance transfer is right for you.

Money moves for life: For a more sweeping overview of my timeless money advice, see Michelle Singletary’s Money Milestones. The interactive package offers guidance for every life stage, whether you’re just starting out in your career or planning for retirement.

Test yourself: Do you know where you stand financially? Take our quiz and read more personal finance advice.

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