EXCLUSIVE: Michelle Singletary On Emergency Financial Planning, Investing, Crypto And Housing

Michelle Singletary is one of the most respected and influential personal finance columnists in today’s media. Her award-winning nationally syndicated Washington Post column “The Color of Money” appears twice a week, and she has been a frequent guest expert on “PBS NewsHour,” “Today” and “CNN Newsroom.”

Her new book “What To Do With Your Money When Crisis Hits: A Survival Guide,” published by Houghton Mifflin Harcourt HMHC, addresses how to respond to financial issues that occur when money becomes tight. In this interview with Benzinga, Singletary offers her view on the depth and scope of the current economic landscape and addresses topics including investing, cryptocurrency, housing and savings.

How confident are you about the U.S. economy over the next 12 months? Are we on the road to recovery, or are we on a road where we shouldn't be?

I wish I knew how things would shake out, but like so many others as I look at various forecasts there’s two tracks.

Things will get better for a lot of people who held on to their jobs and even prospered during the pandemic because they could save more, pay down debt, or both. Then there are the millions still out of work, and those who may have returned to their jobs but need to play catch-up with their bills. They are the ones I’m worried about and for whom inflation will hit hard.

Still, overall I am confident about the economy. Retail sales are up. People are returning to their jobs, and the New York Federal Reserve reported in May that there was a steep decline in the people with credit card balances.

You have a fascinating quote at the start of your book: "I manage my finances as if I’m in a perpetual recession." Why do you take that approach to financial management?

I knew that quote might be controversial because some might interpret that it means I live in fear. But I don’t. I look at it as firemen or firewomen who keep their equipment and trucks ready to respond to a fire at a moment’s notice — they hope that there won’t be a fire, but they know eventually there will be one and they need to always stand ready.

So, that’s what I do with my finances. I live well below my means so that when a financial fire happens, I'll be ready. Now, just as with a house fire, could be something small (an unexpected but high vet bill for my small dog), or something major (a child getting sick and going through all your sick leave and having to take time off without pay — this nearly happened to me with one of my children).

It’s all about that old expression, “Hope for the best, prepare for the worst.”

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During the pandemic, there have been moratoria placed on evictions and foreclosures. Also, during this time, home sales and home prices have soared. What happens when the moratoria are lifted, both to the people who were protected by it and to the overall state of housing?

I’m more concerned about renters because many of them face a more immediate removal from their homes through evictions. With a home, the foreclosure process can be long and so they have more time to work things out. There is going to be a great amount of panic and family displacement once the eviction moratoriums are lifted, and that worries me greatly.

During the pandemic period, many people have begun to tap into brokerage apps and began trading online. Are you encouraged by this new wave of investing activity, or do you fear people are using these apps for get-rich-quick action rather than long-term investing?

I worry that people are treating investing like it’s a game — many are really gambling. As I wrote in a column, investing should be boring, and for most people a long-term endeavor. I am not encouraged about the investing fervor that seems more akin to people huddled around a blackjack table at a casino, hoping luck and skill will make them wealthy.

What is your opinion of cryptocurrency as an investment asset? And do you feel that cryptocurrencies will eventually fall under some form of government regulation?

I’m not a fan of speculative investing and that is what cryptocurrency is right now. It’s very volatile and not appropriate for the average investor. If you have some mad money and want to invest in cryptocurrency, fine, but recognize it’s very risky.

And eventually, there will need to be some regulation, if nothing else to provide robust consumer protections for investors.

In your view, has the pandemic crisis encouraged people to start saving money with new vigor?

Don’t take my word for it. Look at the latest data from the Federal Reserve Bank of New York, which reported a steep decline in credit card balances. And the American Bankers Association found for the fourth quarter of 2020 revolving accounts were down, while the number of accounts where people pay the balances in full each month were up. So, yes, being shut in and shut out of spending has helped millions of Americans save and pay down debt. And that’s very encouraging.

Ultimately, what is the message that you want readers to gain from your book?

I want people to realize that the economic downturn ushered in by the pandemic will pass. But right behind it will someday be another crisis. Don’t live in fear, but you must position yourself financially for the next financial crisis. And that means, paying down your debts now. It means saving whatever you can when times are good.

It means becoming better informed about your personal finances because it’s not a matter of if a crisis will happen, it’s when.

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(Photo courtesy of Houghton Mifflin Harcourt.)