By Katherine Stump
April 23, 2008
|Macroeconomics: When the US Sneezes, the world turns to China|
|Terms: The 411 on credit terms, concepts and problems|
Debt vignettes from society
Millionaire gives practical advice for a debt-free life
| Post guru speaks:
Post’s debt-free guru preaches a brown-bag lifestyle
|Counseling: Non-Profit Credit Counseling Services; Friend or Foe?|
| A drastic solution:
Cutting up cards may not be the best solution
|Faith: Christian Debt Relief: Stewards of God?|
If you want to eat lunch with Michelle Singletary, offer to buy or she will likely say no.
But don’t take it personally. She has been turning down lunch invitations since 1992, when she joined The Washington Post as a bankruptcy reporter.
“I was appalled by how much money my colleagues spent on lunch,” she said.
Dubbed the “resident cheapskate” at the Post, Singletary preaches the frugality she practices thanks to her penny-pinching grandmother. After Singletary finished her first day at the Baltimore Sun, “Big Mama” called to see if her progeny had gone to the benefits office to have part of her paycheck set aside each month for savings.
“There was no, ‘Hey, how was your day?’” Singletary said.
But that’s just how it was for a woman who raised five kids debt-free on $13 thousand a year. So it makes sense that when Singletary considers the biggest financial problem facing people today, she did not hesitate in her answer: debt. Singletary is straightforward, and her shot-from-the-hip advice never sugarcoats anyone’s financial failings.
“We confuse wealth and income,” she said. “Not everyone is going to be a millionaire, and that’s okay.”
In that case, would you allow your child to move home after college so they can live cheaply for a time?
“Most people look at me like I’m crazy when I suggest that,” Singletary said.
Michelle Singletary preaches thrifty living.
But many students graduate with tens of thousands in loan debt. Added to that is the more recent problem of credit card spending. The average credit card debt of a graduating senior is $3,000, according to the latest college rankings from U.S. News and World Report. For a grad student, it tops eight thousand.
That is exactly why Singletary unapologetically tells indebted students to go home after they graduate and work on paying off their debt.
“You have to be careful,” she said. “You have steady money coming in for the first time and you end up spending because the sense of what you have is warped.”
Singletary also recommends living below your means. That goes for you, too, Mom and Dad, because Singletary is placing some of the blame on you. She said many parents aren’t raising their kids to understand the values of money and saving, because they can’t do it themselves.
Parents aren’t the only group Singletary takes to task. In her piece, A Tax Rebate? Feed Piggy, she chastised the government for setting a “horrible example” by borrowing money to pay for the upcoming rebate. She chastised individuals making personal loans to family members in If You Lend, Be Prepared to Lose.
“Chances are you will never see much, if any, of it [your money] again,” she wrote.
Having spent the past 11 years writing the personal finance column, “The Color of Money,” Singletary has seen and heard it all from her readers. She estimates that at least 70 percent of the emails and phone calls she receives – 30 calls on a slow day – are related to debt.
It’s not unusual that someone making $30,000 a year has more saved than someone making $300,000 a year, she said. People are living way beyond their means, overspending and accumulating too much stuff with no value.
It gets worse. Singletary receives queries from people that she and a master’s degree in business and management cannot help. The example she gave was a person with $50,000 in debt and a $20,000 annual income.
“There’s not much you can say to them,” she said with a sigh.
Singletary’s intimate knowledge of individual finances has offered a front-row seat to changes in the economy over the past decade. She said she was talking about the recession long before it happened.
Personal overspending tipped her off. Singletary thinks that individual financial situations have gotten worse since she started her column, because people are so heavily leveraged with debt, loans and mortgages.
“Most people are trying to live Cadillac lives with a Chevy budget,” she said.
It was these outrageous spending practices that partly inspired her to become an author. She wrote her second book, “Your Money and Your Man,” when she grew tired of hearing the same, heart-wrenching stories about women taking money out of their retirement funds to lend to their boyfriends, only to find that those “boyfriends” had suddenly skipped town.
Critics of Singletary’s strict methods are hard to find. Some in the newsroom say she is a bit despotic in her views about living debt-free, but it was her stories and her practices that got her the column in the first place.
It is also hard to argue with a person that advocates appreciating what you already have and finding ways to do more with less.
One example of practicing what she preaches is re-gifting. Singletary appeared on the Tavis Smiley show in 2004 and suggested wrapping up a child’s own neglected toys and putting them under the tree on Christmas morning.
“Half them toys those kids don’t never play with…they won’t know the difference,” she told Smiley, who was aghast. “Tell me if I did not do it? I sure did.”