For more than 25 years, Michelle Singletary has penned the nationally syndicated column "The Color of Money." Between her column and her books, she doesn't hold back when it comes to helping people be smarter about budgeting and personal finances.
In this podcast, Motley Fool analyst Deidre Woollard caught up with her to talk about:
- How our financial habits changed during the pandemic.
- One significant way to take control of your budget.
- Why she suggests not buying a home right now.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
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Michelle Singletary: [MUSIC] Really when I look at people's budget, it's housing, maybe transportation like the card loan and then eating out. It starts before retiring, savings, and saving for college. It starts with so much money on food and eating out. [MUSIC]
Chris Hill: I'm Chris Hill and that was Michelle Singletary, writer of the nationally syndicated column, The Color of Money. In 2021, she won that Gerald Loeb award for commentary. In 2022, she's named investing author of the year in The Motley Fool's women in investing awards. Recently, Deidre Woollard talked with her about how our financial habits changed during the pandemic, budgeting, housing, and a lot more. I've been reading her column for more than 20 years. One thing I like about Michelle Singletary, she doesn't hold back. You may not always agree with our ideas. That's exactly why we wanted to have around the podcast. [MUSIC]
Deidre Woollard: I'm here today with our women and investing award winner for best investing author, Michelle Singletary. Michelle's 2021 book, What To Do With Your Money When Crisis Hits: A Survival Guide is a practical road map for managing money through tough times. She also writes a nationally syndicated column, The Color of Money, which appears in Washington Post twice weekly. Welcome, Michelle.
Michelle Singletary: Thank you. Thank you for having me.
Deidre Woollard: I want to start off by congratulating you on 25 years of writing your column. What a great gift that is, I think, to people. I loved that you've recently wrote about saying if debt were a person you'd slap it. I just love that. So can you explain what you meant by that?
Michelle Singletary: Yeah. That's my mantra. So it really is my way to say how much I hate debt and how I want so many other people to hate debt. Recognizing that we are obviously using debt, I took out a loan to buy my home way back when I took out loans to buy cars, no longer do that. So just recognizing that it is something that people have to do, but I want you to hate it. If you sign the papers I want you to curse so that by the time you finish, you're either going to take on less debt or you got to get rid of that debt sooner.
Deidre Woollard: I love that. Do you feel like right now with interest rates rising it's a time when people are particularly feeling a little bit more of that debt pinch?
Michelle Singletary: I think so. As interest rates rise, people pay attention to the interest rates and debt they are taking on. The thing is you got to pay attention to it even in a low-interest rate environment. Because people will say why you buy a car with cash when you could take the zero percent interest rate, and I said, it's still debt. If I lost my job and that payment came due, didn't matter to me that there is an interest rates on it, I can't pay that loan. So that's how I tell people. I don't want that on my books so that if something happens to me or my husband, we'd lose out income or income disruption. We don't have loans on our books and we can weather that storm a little bit longer if we don't have that debt.
Deidre Woollard: Interesting and that relates to your book as well. Did your book come from the COVID crisis or were you writing it before that?
Michelle Singletary: No. It was definitely precipitated by the pandemic. We had greatest recession, and we have economic debt downturns. Then people think this is going to be over, and they go right back to their old habits. So I wanted to write a book that said, listen, there's always going to be an economic crisis. It's the pandemic now, it was the great recession. It's going to be something in the future. So you need to position yourself all the time to be prepared. At the beginning of the book in the introduction of talking about, I live like I'm always in a recession. People are like, well, that sounds depressing, but no, it's a way to plan. So when things are great, I don't lose perspective. The hardest time I have is getting people to save and reduce debt when things are going well. It's when things aren't going well, you don't have a choice but to handle your money well. But I want you in your times of plenty to know that there is going to be another pandemic-like economic issue coming down the road.
Deidre Woollard: So I wanted to talk to you about another flavor of the month, I think, which is inflation. It's on everybody's mind. We've got at 8.5%, it's hard. It's really increasing what people have to spend. What advice you giving people right now who are wondering how to cope?
Michelle Singletary: So inflation is a tough thing, because there's starting baskets of things that we have to buy. Got to pay for the roof over your head. So if you're renting, and your rent's going up, there's not much you can do about that. You got to put food on your table even if you take out steak or lobster, most people aren't buying it anyway, lots of areas. So you've got to rethink how you buy your groceries. So it is something that you have to deal with no matter what. This means that you've got to have a better handle over your budget. If you're living paycheck to paycheck, you've got to really look at your budget and see what can you just cut to make up for the increases in the staples, things that you need like groceries, gas, the roof over your head. If you are middle income or up income is an annoyance, but it's not going to really change or impact your life that much but paycheck to paycheck and people living in poverty those are the ones that this inflationary environment is going to really take them over the edge, unfortunately.
Deidre Woollard: Yeah. I worry about that too. I study real estate and one of the things I'm concerned about is the impact on rents and things like that and people being able to afford. I've studied this for a long time and that unequal levels of homeownership. What factors do you think play a role there, and how can we think about adjusting that a bit?
Michelle Singletary: I approach that question two ways, so the practical way. So rents are going up, people are say, we can't afford to buy the house, or maybe we're in a house that can't afford to upgrade. So what I'd say to you is, so if you're a homeowner and you're tying to upgrade, you might just stay where you are. If you're not moving for job or there's no reason we just wanted to get a bigger house then just stay where you are. Let the keys stay in the same room. [laughs] Take the dog for a walk if you don't have a yard because this is not the time you're trying to buy a house, is still a seller's market and the interest rates are going up.
If you're renting, you don't have control over that. If you move, you got to move to another situation where the rate is high, so you have to cut elsewhere. It's not else anything that I can tell you to do. If you can't move in with parents, relatives, grandparents, sisters, brothers, do it and do it now. I am a huge believer in multi-generational housing and shared housing. If you're a single parent and another single parent and your rent is gone up 20% then more together. Come together so that you can handle that cost of housing. Now, people do not like when I say that, I don't want to live with anybody, or I need my own space. Right now, what you need is to secure your finances. If you're coming out of college or you thinking that maybe you move back home with your parents and now that things don't have to wear mask. If this year you're thinking, I want to get out, stay, stay, stay, stay, stay so that money and total rent and housing stabilizes.
Deidre Woollard: Really solid advice. I like what you said they're about multi-generational housing. That's something I think a lot about, too. Makes me think about retirement, the aging of America. We've got baby boomers. They're in their 70s, they are headed toward their 80s there at that age where they're going to need more care. Multi-generational housing seems like one answer. What else are you thinking about with regard to that and how it's really going to change our country as a whole.
Michelle Singletary: Yeah. As I get closer to that age, I was thinking people want to stay independent. They want to stay in their homes and I'm talking about people who find that they need more help. I'm going to need you to be open-minded that you might not be able to age in place. You've got a lot of stairs. You don't have help, you're far away from your kids or people who can assist you. But you say, I want to stay there, and I know what I'm talking about. My father-in-law lived on his own for many years, and when we realized he could not live on his own. It was very difficult. It was a difficult conversation. He didn't move right away. He eventually did move in with me and my husband, and after he moved in, the first month or two, he was surly, he was dark. I had to get therapy.
I'm just going to be honest with you all. I had to get therapy because he was so angry. We could not leave him in his house. He was diabetic, he wasn't taking this medicine, he wasn't eating properly. We wouldn't have been good children to leave him in that house. He came to live with us dark, mad, after about two months, the light started to come. I was talking to a minister and I was saying how depressed I was becoming because he was so depressed. He said, you just have to have the most cheery perspective that you could possibly have. He gave me a recommendation that worked for me.
So he said, every time you go in his room and he's like, how your day? I said, dad what's one thing that you can look forward to today. What's just one thing? He was like, oh nothing. That went on for a week or two, and finally, after doing this every single day, I said, so what's one thing? He said, the sun is out, and I like that it is warm. I thought, yes, then every day after that, it became our little thing. That I'd ask him and he'd go, oh I like that food that you fixed me last night, and I saw a change in his disposition and mine. At the end, we thought he'd live with us for a while, but he ended up getting lung cancer and his time with us was much shorter than we thought it would be. But I remember taking a trip, I had to go on a speaking engagement and I had to leave for a day or two. I remember at that point we had an in-home healthcare aid come in to help me, and my husband. I said I'm leaving, but I'm coming right back, and at that point he was in hospice, and he opened his eyes and he looked at me, he really couldn't talk. He looked at me, and he blinked and I said I'm coming right back, I'm coming as soon as I can.
I got back from my trip and I had my travel clothes on, and my suitcase, and I didn't even go change my clothes, I went right to his room and I said I'm back, I'm here. The aid said he had not opened his eyes for most of the time I was gone, and he heard my voice and he opened his eyes, and he died shortly after that. It's like he waited for me to come home. So it was the best thing for him to come. We had to take him in, kick in and screaming. If you are that senior adult listening and you're like, I'm not leaving no matter what. You can't do that because you are going to stress out your caregivers. It may come with time that you have to go live with your kids or your niece or nephew or someone. Then if you are that person taking them in, you got to prepare for that and be ready for it. When my husband asking we take his father in, I didn't hesitate. Absolutely, dear. Because that's your dad. That's how we're going to have to handle it, and he had money to help with the aid. We figured that out. We couldn't afford an aid 24/7, but we have someone come in the morning to help with breakfast and get him dressed. I took care of lunch, then we had an evening person come in and help him prepare for dinner and wash him up to go to bed, and that's how we make the money work for the time that he was living with us.
Deidre Woollard: Thank you so much for sharing that. I think that's really powerful because so many of us are dealing with what they call the sandwich generation. I know with my mother as well, and she does not want to move and she does not want to have people move in with her, and just it's hard on both sides and it's going to require a lot of really tough conversations.
Michelle Singletary: You have to keep having the conversation. There will be a point where she will just have no choice and you have to make the move. But you just keep talking. Therapy helped. We had a family intervention. I wasn't part of that conversation. But yet, a couple of sons and daughter, and they all had an intervention is said you can't live here anymore. He fussed, and he yelled and he cussed, but in the end, he came that day with my husband to move in with us. We treated him so well, even though he was at mad and dark and eventually, he came out of that darkness.
So I just hope that people who are listening, if you're listening and you're like, I'm not leaving, that you take a different attitude because you need to listen to your adult children, and how they need to help you, and what they need to help you. This is part of that financial conversation. This is a time where we don't want to have these conversations. They are difficult. We put our head in the sand, both the caregivers and the person who needs care until it hits the crisis, and then it costs you more. So we believe that if had my father-in-law, come live with those earlier, we would've been able to catch the cancer sooner, because we would've made sure he went to the doctors when he was supposed to. So if I could just say that to both the caregivers and the person who might be receiving care is be open to a different living situation. Be open to having someone come in and care for you. Be open, because the longer you wait, the more it can cost you, and your caregiver.
Deidre Woollard: Yeah. Absolutely another aspect of that is power of Attorney, the healthcare directives, all the paperwork there that older people often don't want to sign because they feel like they're losing control. All of that plays a role as well. In terms of the pandemic and the lessons we learned at some of them relating to having people moving together, what good habits do you think we picked up and what's bad ones do you think are still with us?
Michelle Singletary: We had some false habits, some not eating out as much. So we talk so much about how people can save money. We talked about Starbucks and coffee and little things like that, but honestly, it's the big things that made the difference. Is housing and transportation. Can I use a double negative? [laughs] That coffee is not keeping you from being a millionaire. The numbers just don't work out that way. But paying so much for housing that you can't say is keeping you from being a millionaire. So during the pandemic, we have people moving, giving up their apartments. We had people welcoming folks into their homes and they were saving and paying off debt and I just hope that we don't know as things open up and people say, Oh, I want to get back on my own weeks. Stick to that habit particularly if you had debt or you don't have enough savings in and out. Really, when
I look at people's budget, it's housing, may be transportation like the car loan and then eating out. Before retirement savings, saving for college, it's hard. We saw much money on food and eating out. I mean, a couple of hundred to a thousand dollars. Seriously, I mean, I run a ministry at my church and I do this financial facile. People can spend on anything that is not a necessity for 21 days, three weeks. Do you know the number 1 area where they say is eating out and you know, the average amount that people say is about $5-$600 a month. Imagine if that was going into retirement account. Some families as much as $1500 a month, so when they fast for those three weeks, not eating out and eating out of their homes. By that I mean, I challenge them not to go to the grocery store except for perishables like milk and bread and just eat whatever is in their house. All those can be and the rice and the chicken in the back of the freezer pull it out, cook it and they save that hand of money which then they didn't redirect it to saving or paying off debt or both or boosted their retirement account.
Deidre Woollard: We heard a lot last year about what they were calling revenge spending. I think this summer is the first real test of how much people are going to spend on vacations and everything else. Because now with mask mandates lifted, it seems like everyone is going everywhere and I hope we don't undo some of the good savings rates that we've had in recent years.
Michelle Singletary: Well, the numbers I've already showed that we are already. Credit card [inaudible], savings is going down. People have short memories when it comes to their money that you'll [laughs] never forget that guy [laughs] that dumped you, but you don't remember the things that happened where you could spend money. Unfortunately, when things get better people forget. If you got credit card debt, I would even say a car loan or soon loan day, there is no way you should be going on vacation right now. That is just financially reckless. You got to be taking that money and put in toward that or if you don't have a decent emergency fund, you need to get a basket and go to the local park and have yourself a little picnic instead of going on a vacation. [laughs].
Deidre Woollard: Yeah. That brings me to this question of, we don't do that because we feel like we want to reward ourselves and things like that. I think that part of this is because we're not taught this stuff at home. If you don't get great financial lessons from your parents and honestly, most of us don't, we don't really get it in school. What aspects of personal finance do you wish we learned in school?
Michelle Singletary: Well actually, you started it off right. The things that we learned at home, so the default should be teaching your children how to handle money and modeling your own financial values. It's not going to stick otherwise. But since it doesn't happen at home, the backup is school. Because that's where the kids are, that's where the skilled professionals or interest of how to teach them. But that's a lots of put on teachers in addition to what they already have to do. So as we build financials' progress into the school system, we need to build it into the current curriculum. So if you're teaching math and you are teaching percentages, you could add in, what is the mean to be 50 percent off a 35 percent off? Add that to your lesson plan. If you're talking about a civics class or so, I'm trying to think of a class where you'd see financial stuff, but if you talking on history, talk more about The Great Recession or The Great Depression.
Add all those lessons in and within those lessons you talk about the importance of saving and investing. Because, if your investment diversify, then you've got to be OK over the long haul. I think that since we know that last when people don't get it at home, the second choice is to incorporate it from kindergarten to when they graduate from college. I think every year there had to be some mini course on personal finance, so make sure they get the basics, and not necessarily maybe talk the values like on my house or my value, is there anybody in my house said that, my kid said it.
They didn't get credit cards in college. They only got a credit card to establish credit and then they don't use it. So that's the value that we teach see in my home, we teach timing in our home, we teach giving in our home, as part of your budget, not extra you give because that's what you supposed to do. Because too who much has given much is required and so they've been given much and we say give. So that can't necessarily be taught in the school because is my value, is my house's value. Parents are listening and you're not a good money manager, I get it. [MUSIC] This stuff is really hard. I'm going to need you to take some courses. I'm going to need you to sign up for program where they teach you how to budget. Then you turn around and teach it to your kids just in case they aren't getting it in school.
Chris Hill: As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Chris Hill, thanks for listening. We'll see you tomorrow.