Submitted by washingtonpost t3_10l8yv7 in IAmA

EDIT: That's all the time I have for today! I answered many questions that may be on your mind here: And if you think I need to add something, let me know! This is a living project, and we want to periodically update it to serve your needs. You can send suggestions or questions to


I write the nationally syndicated personal finance column “The Color of Money,” which appears in The Washington Post on Wednesdays and Sundays. I've also written four personal finance books, including, “What to Do With Your Money When Crisis Hits: A Survival Guide” and “The 21-Day Financial Fast: Your Path to Financial Peace and Freedom.”

I’ve received hundreds of questions over the years from all over, and I’ve compiled the most frequent ones in this guide. There’s advice for every decade of your financial life, from 20-somethings just starting out to retirees enjoying the fruits of their smart planning to advice that applies at any decade. From housing to healthcare, what do you want to know about managing your finance efficiently?  



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Togapr33 t1_j5vcnt5 wrote

Do you have an equivalent financial philosophy to Maslow's Hierarchy of Needs when it comes to saving/investing money?

akin to 1) 401k 2) IRA 3) Standard brokerage account 4) HSA/Education accounts ?


washingtonpost OP t1_j5vfh8d wrote

Great question. I do.

  1. Build a healthy emergency fund. Aim for at least 1 month if funds are tight, 3 to 6 months if you’ve got some cushion in your budget. If you are a highly compensated employee/self-employed person try for 12 months to 18 months. And I know that’s a lot of dough, but higher earners when they lose their job or income spend that much time get back to that same earnings level
  2. Life happens fund. Different from emergency fund, which I call, “I lost my job” fund. This is the pot you tap when your car breaks down, etc. This way you can leave the emergency fund for something dire
  3. Retirement account. Save as much as you can, as soon as you can.
  4. College fund if you got kids. My husband and I did this starting when our kids were wee little ones. Saved for 20 years mostly in 529 plan. Had enough to send all 3 to college with no debt, plus one to graduate school. Savings and scholarships did the job.
  5. Non-retirement investment account. Pay for our cars with cash/earnings built up by investing over the years.
  6. Fun money. So we can take vacations, etc. without building up debt

misersoze t1_j5wmmeo wrote

HSAs are good to have on that list too if people have HDHPs


Dispatcher12 t1_j5vdw1d wrote

What is the most critical thing to focus on if you find yourself in your early 50s, still working full time, but with not quite enough saved for retirement? I know I likely won't 'catch up' but I'd like to maximize my savings as much as possible.


washingtonpost OP t1_j5vhc9f wrote

First, don’t beat yourself up if you don’t have that $1 million all those articles and experts say you should have. Most folks don’t have anywhere near that much. More like a few hundred thousand. If you find yourself behind, focus on cutting expenses so that you can free up money to invest. I mean really cut to the bone. If you can start contributing the max you can in a retirement account, either workplace or traditional IRA. Then think about what you can change about the ideal retirement you envision. You may not be able to retire at 65 and travel the world. You may need to consider a shared housing situation to cut down on the biggest expense in your budget. Manage our expectations for retirement.


Unlikely-Zone21 t1_j5vekpu wrote

What's your background? How'd you get into this?

I was in the personal finance industry before I got sick and have been trying to think of different avenues where my knowledge can be useful again.


washingtonpost OP t1_j5vid39 wrote

My first training ground for financial journalism started with my grandmother Big Mama. She rescued me and my four siblings from having to be put in foster care. She was a masterful manager of her money and she never made more than $13,000 a year. I watch her care for, feed, clothe 5 grandchildren, with an alcoholic husband (sweet man) who often drank away his payment. She trained me to be a saver and hater of debt. Then I went to grad school for business, and honed my personal finance skills and knowledge writing the Post Color of Money column for 25 years. Additionally, I run a financial ministry at my church, which for decades has helped people get rid of millions of dollars in debt. I also volunteer in Maryland prisons in a reentry program. So I have lots of experience on the ground, looking at people’s real budgets.


Unruly5peasant t1_j5veroc wrote

Probably okay for retirement but is it worth $1000 to have someone review my finances?


washingtonpost OP t1_j5vjbdi wrote

Here’s how I typically answer this question. If you have a painful problem with your gums or teeth, would you try to fix it yourself? Or would you hire a professional/dentist to treat you?

Same with your money. If you are unsure of what to do, or you need a second opinion or guidance pay the money to get help. I have and it has made a world of difference. A few years ago, I found an old folder with advice from a financial planner. She had made a number of recommendations – term life insurance in addition to what my husband and I carried at work, disability insurance, stop being so conservative in our workplace retirement accounts, start those 529 plans, create a non-retirement investment account. We followed all the advice and I’m so grateful. We are doing very well because of her guidance. I would have never done that one my own in my 30s because I was too scared of risk. So, yes, pay the money for someone to look over your financial plan.


washingtonpost OP t1_j5vjxby wrote

Wanted to add something. So, if you are hiring a fee-only planner paying $1,000 to $1,500 is about right if the person is doing a comprehensive look at your financial situation and making recommendations. And you will want that to to include an assessment of whether you are on track for certain goals, such as saving for retirement.


WholeDragonfruit89 t1_j5vkzri wrote

Hi Michelle,

Do you recommend paying down debt before saving? Or can you work on both simultaneously. And what about tithing when you have debt to pay off?


washingtonpost OP t1_j5vn1fn wrote

I get this question a lot. Here’s my philosophy based on working with hundreds of folks in debt. Yes, your priority should be to get rid of debt. But if you focus all your extra cash on debt reduction and fail to save for an emergency – and there will be one because life happens – you may end up adding to your debt to handle that emergency. So save some – perhaps up to $1,000 – then stop and concentrate on the debt. If you have an old car that’s giving you some issues, err on the side of a large “life happens fund” (see earlier answer about this fund).

So for example, if you have an extra $100 a month, use say $50 to boost your life happens fund until you reach a safe savings pot. Then stop saving and put all the extra cash toward the debt. For instance, I was working with a woman who had like $25,000 in credit card debt, and about $30,000 in savings. Her credit card was charging close to 20% interest. Her savings was getting less than 1 percent. But she was scared to let go of that money. She had a fairly secure job, no other debt, etc. I told her to pay off the credit card in full. She did, and she built back her savings in no time.

As for tithing. If you believe this religious principle then, yes, you should tithe while paying off debt. For those who are not believers, I know this sounds, well, financially unsound. But faith is a personal thing and if you believe you follow your faith. Because there are always going to be something to pull you away from your beliefs. Now, if you are going to follow this advice, you must, and I mean must, have a plan that will help you get rid of that debt.


jaimmo2 t1_j5vncew wrote

What are your thoughts on long term care insurance? I am 47 and my husband is 50 and are getting more serious about preparing for retirement.

I love your work by the way! I was a Color of Money chat fan for many years and miss them!


washingtonpost OP t1_j5vpo3a wrote

The long-term care insurance market is a hot mess. Early on they got the pricing wrong. The thought was people would only need it for a few years or pass away before needing it. WRONG. Not only were early long-term care policy holders using the insurance, they lived for years and years. So the insurance companies had huge payouts they had not anticipated. Here we are now and many people are experiencing steep hikes as the market tries to correct the pricing. I’ve talked to seniors who have policies and got notices for price hikes of 20%, 30% and even 50%. If they cancel they lose all that money. If they keep the policy they are paying out the nose. Many end up reducing the benefits, so that they can afford the price increases. There are some hybrid policies that make it more affordable but the coverage periods are limited.

At your age, you may be too early for it, assuming you stay healthy. I would go over this with a financial planner to determine if it’s right for you.


evangael t1_j5vdoq2 wrote

What is the best part of working for the Washington Post?


washingtonpost OP t1_j5vfrch wrote

I love working with some of the most talented writers, editors, copy editors, SEO folks, designers, etc. It’s like a room full of the smartest kids in your class. They inspire me to bring my “A” game. It can be stressful, but I like be pushed to be a better columnist, writer, reporter. And, not hype, but we want to serve readers. The conversations aren’t what journalism prize can we win, but how better can we inform regular folks to improve their lives. I truly mean that. There is so much misinformation out there, and we want to be a trusted source. Do we get stuff wrong? Sure we do, but we try to deliver the best journalism that we can.


PeanutSalsa t1_j5vdp3b wrote

Why do you think credit card interchange fees are as high as they are? What are the advantages and disadvantages of high credit card interchanges fees and what are your views on credit cards in general and in relation to interchange fees?


washingtonpost OP t1_j5vgfei wrote

We have become a society that loves plastic. Cash is frowned upon, and the merchants and credit providers know that because that’s what they’ve been pushing for decades. So, they can charge high interchange fees because folks want the ease of swiping for what they want. The disadvantage is the cost of goods is higher because you better believe they pass along those fees to consumers. The advantage is we do get some pretty good consumer protections when goods and services aren’t delivered. Credit card companies go to bat for you because they don’t want a lot of chargebacks.


bash_and_smash t1_j5ve2hc wrote

How did you get such excellent penmanship?


washingtonpost OP t1_j5vhgzu wrote

Lol! I wish I could write so well, Found a great font on Word. If I had to handwrite that note, you might have thought the AMA was months away. I have horrible, horrible handwriting.


andyveee t1_j5vlatn wrote

What would you recommend to someone who's retirement age but never saved anything outside of social security for retirement? Let's assume HCOL area.


washingtonpost OP t1_j5vo0pe wrote

This is always a hard question for me. I know many people struggle to make ends meet, so perhaps they didn’t have much left to save for retirement. Or, let’s be real, they had the money and made poor decisions. Or, just didn’t know how to save. If you face living just off Social Security, and that’s not a lot (about $1,700 a month as of Dec. 2022), you have to rethink your retirement. First look for ways to reduce your biggest expense – housing. Can you live with someone or get a roommate? Can you move to a less expensive area? If you are able, can you work full-time or part-time? Or, if you can, can you delay retiring until you’ve been able to save a little bit more. Look at all your expenses and see where you can cut. Be sure to tap all the state and federal resources available.


IAmAModBot t1_j5vfkn4 wrote

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OkDirection2434 t1_j5vmx5p wrote

If you're in your 20/30s, should you forget about owning bonds in your 401k and go 100% with equities? My concern is that bonds do not provide higher returns over time.


washingtonpost OP t1_j5vof0a wrote

It’s all about your risk tolerance. Being in all equities right now will try your patience and sanity. Can you sleep during periods when the market bounces in and out of bear territory?

Most experts, suggest you still have some bonds even in your younger years. You want balance. And what that balance will be will depend on how much risk you can stomach.


TylerJWhit t1_j5vqse4 wrote

I have two questions:

  1. Are there any critiques you can provide regarding common advice given on r/personalfinance r/povertyfinance, r/financialindependence, r/fatFIRE, r/leanfire r/r//FinancialPlanning, r/Fire, etc? A more pointed question would be what do you think of this chart:
  2. Have you had experience dealing with notable fraud within the financial industry.? Banking seems to be a common industry for fraud according to SEON:

MajorTransition9878 t1_j5vrlvn wrote

Hi, I just turned 40. For retirement I have state pension and a 403(b). Is there anything else I should be looking into? I've looked into Roth IRA, but it's a little intimidating to navigate on my own. Thanks


DaniChicago t1_j5wgea6 wrote

Other than buying apartment buildings or even homes to rent or flip, what are the best ways to invest in real estate?


DaniChicago t1_j5wgfu9 wrote

What are the three top alternative investments?


headphones_J t1_j5yktk7 wrote

Yo, Samurai, what's your most memorable moment of the '85 championship season?


krpa-d-em t1_j6f0phi wrote

If you have 10K to invest, what should you do?


Ok-Feedback5604 t1_j6flpii wrote

Do you think another recession is inevitable in near future as post covid effects?


airzonesama t1_j5xl7gm wrote

Do you like beetroot on a burger, or are you an uncultured heathen?