KOJO NNAMDIYou're tuned in to The Kojo Nnamdi Show on WAMU 88.5, welcome. The pandemic has upended our lives including our financial lives. People across the national and in the Washington region have lost their jobs and their businesses or faced furloughs and uncertain prospects. Others continue to enjoy a steady income and the opportunity to invest and donate to favorite causes. But even as the pandemic has changed our finances, somethings haven't changed. Taxes, rent and mortgage payments are still coming due.

KOJO NNAMDIThis year's end is a good time to get your financial house in order and to set smart money goals for the coming year. It can be a daunting task, but we've got expert help today. Joining us to help improve our personal balance sheets is Sandy Block, Senior Editor at Kiplinger's Personal Finance and was previously a Reporter and Personal Finance Columnist at USA Today. Sandy, good to talk to you again. Thank you for joining us.

SANDRA BLOCKThank you for having me, Kojo.

NNAMDIAlso joining us is Michelle Singletary Syndicated Personal Finance Columnist for The Washington Post. She also shares her expertise about personal finance in her best-selling books on the radio and on television. Michelle, welcome back.

MICHELLE SINGLETARYI'm so glad to be here again.

NNAMDIMichelle Singletary, it's holiday time and some people are really suffering financially. You are always coaching, encouraging people to live within their means. What does that look like?

SINGLETARYWell, you know, whatever you earn you try to spend less. And I know that seems crazy for people right now, because they're like, I don't have a job. But when you do if you're still working, whatever you make you have to be sure that you're not spending every penny that you bring into the house. And so this year particularly for those who have less income or have lost their job, you know, it's going to be a lean Christmas or holiday whatever you celebrate. And that's okay. You have to be okay with that because otherwise you will end up spending money that you just can't afford.

NNAMDIWell, how can people celebrate without making their money situation worse?

SINGLETARYWell, you know, I actually -- for the longest time my family and I have tried to practice like less is more. And so spending time with folks, now, of course, that's more difficult with the pandemic, but you can call your family members. You can talk to them. Write them letters. Might not get there for a couple weeks with what's going on with the post office, but that's okay too. You know, for the longest time we really have gotten to this habit that the only way to show your love or affection is through buying something at a store. And that's just not true. The thing that we have that's most precious is our presence rather than the presents and our time with people.

NNAMDIMichelle, the desire to give gifts at holiday time can be very strong and many people buy for others because, well, they're ashamed not to even when they really can't afford it. What's your advice to those folks?

SINGLETARYThis is -- I've been trying to do this for years. So I have not been very successful, because we just -- we have a culture of consumerism. You know, it was so funny. I don't know if you saw it, Kojo. On SNL Live they had -- on Saturday had the skit where the wife and husband were celebrating the holidays. And she opened up the Christmas box and it was keys to a Lexus. And like you've seen these commercials all the time, right?

NNAMDIYep.

SINGLETARYAnd so she goes outside and she's like, what's wrong with you? Why would you buy me a car? You didn't even talk to me about it. And I just hooped and hollered, because that's kind of what we -- you know, buy your person a car and put a big bow on the driveway. Are you nuts? So it's really hard to fight against that marketing machine that says, this is how you express love. But you have to fight against it.

SINGLETARYAnd the way I try to tell people is what are some of your fondest memories? And most of the time it is not from a gift. It was some time someone spent to you. It's a call that you got just at your lowest moment in life. That's what you remember down the road. I mean, most of us can't even remember what we got two Christmases ago, right. And you just have to sort of dig into your heart and say, okay, I'm going to be okay and they are going to be okay if I don't buy something.

NNAMDISandy Block, you have said that there are two economies during the pandemic. One for people who kept their jobs and one for people who have lost theirs. Can you describe these different financial realities?

BLOCKYeah. It's really stark, Kojo, because what we've seen is that the American saving rate -- the percentage of money that Americans have left after they've paid their bills every month is the highest it's been in years and years. And that's reflecting people who manage to keep their jobs, because they're home. They're not doing anything. They're not, you know, traveling. They're not shopping. They're not going out to eat. So they're saving that money. And one of the interesting takeaways of that is that that is a good way as Michelle says for people to learn about what they really need. It's a good way to evaluate, how much do you really miss those things that you didn't spend money on.

BLOCKBut the other side of that obviously is we see in the news everyday people in very long food lines, people who are worried about losing their homes or being evicted, People who have been out of work for months and now are facing the prospect that their unemployment benefits are going to stop too. So we have two very starkly different economies and, obviously, people have different resolutions for how they're going to deal with these things.

NNAMDISandy, no matter one's financial or job situation, the end of the year means we should be doing some financial house cleaning. Let's start with charitable donations. If you gave to charity, what tax benefits can you claim?

BLOCKWell, that's something special this year. And in sort of to Michelle's point about, you know, not giving gifts, maybe this is a good way to honor people by giving money to charity if you have to give. And one of the provisions in the CARES Act that was enacted last spring to stimulate the economy was to permit anybody to deduct up to $300 in cash charitable contributions. In the past you had to itemize to deduct your charitable contributions. Hardly anyone does that anymore, because the standard deduction is so large.

BLOCKSo certainly, I mean, you should give money to charity, because it's the right thing to do. But if you do it this year, definitely keep good records because you will be able to deduct up to $300 in contributions when you file your taxes next year.

NNAMDIMichelle Singletary, you and your family give a significant amount of your earnings to charity each year. Why?

SINGLETARYWell, because we want to invest in our community. My husband and I belong to a large church in Prince George's County and we tithe 10 percent of our income gross not net every year. We have for many years now. And that's because our church is the community. We have food drives. We have substance abuse programs. We have programs to help people strengthen their marriage. We have youth programs. So all of that is an investment in my community, which is, you know, directly impacts me. A healthier community, a stronger community means that it's a safer place. You know, happier people, and so I'm happy. We give before we even pay our mortgage. That's how much we prioritize our giving.

NNAMDISandy Block, what about insurance? Do we need to pay attention to our car or other insurance at this point?

BLOCKYes, and again, going back to this issue of people who have, you know, been able to save more that's a good way to put that money that you've been saving to work to make sure that you are adequately covered. And that includes everything from your homeowners to your car to your health insurance, all of those things. And if you have dependents and you haven't bought life insurance, this is a good time to do that. So, you know, you're going to want to look across the board.

BLOCKAnd the other thing you want to see is how you're insurance needs may have changed. If you're working from home, that could affect your homeowner's insurance. A lot of people got discounts this year, because they're not driving to work anymore. And if you didn't get one maybe you should ask for one. So there's definitely across the board -- not necessarily something you have to do by December 31st. But a good housekeeping thing to look at this time of year.

NNAMDIHere is Arnaldo in Herndon, Virginia. Arnaldo, you're on the air. Go ahead, please.

ARNALDOThank you, Kojo. I just wanted to make a quick note on that. I definitely was able to get a discount on my insurance by almost $1,000, and I kept begging my company to do it during the pandemic, but they wouldn't. So I switched and the discount was about $900 something and it's going to save me a lot of money especially having lost my full time job at a restaurant and my part-time job at the movie theater. You know, those are not coming back sometime soon. And definitely saving anywhere you can this season. Buying only what is necessary especially for kids during the winter over any luxury items is definitely more important. Thank you.

NNAMDIThank you very much for making that point. You must have been reading Sandy Block. Sandy, what about healthcare? Are there any end of year moves that we would be wise to make?

BLOCKThe most important one is if you have a flexible savings account for healthcare, which many people do if they're working. Depending on your employer's rules, you may have to exhaust that account by December 31st or forfeit what's left in it. Some employers let you carry over some, but some don't. So it's very important if there is a clock ticking that you spend that money. Fortunately there are many things that you can use that money for out of pocket expenses.

BLOCKAnd the CARES Act extended those. Now you can use it for non-prescription drugs. So things like Tylenol, cough medicine, things like that. And this year the CARES Act also extended it to include feminine hygiene products, which cost a lot of money. So I have done this. I have made late night trips to Walgreens with a list of things that I knew were covered by my Flex account because what you don't use you lose. So this is really something important that you should do by the end of the year. And the other thing you should look at is if you have a high deductible healthcare plan.

BLOCKAnd many people do. And you've exhausted your deductible. You're going to want to make some doctor's appointments between now and the end of the year before you start over again, because anything that you start next year will apply to your new deductible. So, you know, to the extent that you can get a doctor's appointment that your doctor is still seeing things, you might want to get those things done too, same thing with dental work.

NNAMDIMichelle, let's talk taxes. You recently wrote a column entitled "The 2020 Tax Year is Going to be a Hot Mess and the Coronavirus is Why". Why is it going to be a hot mess and what can people do to make it less messy for themselves? We only have about a minute left in this segment.

SINGLETARYOkay. Well, I think the biggest one is that lots of people will still qualify for the stimulus check and they don't know that. The IRS used peoples' 2018 and 2019 return and so many people didn't qualify based on those returns, but in 2020 they may have lost their job or had less income. And so they will be able to claim that credit. So it's going to be a challenge to get that information out to a lot of people who may not know that.

NNAMDIWe're talking with Michelle Singletary, Syndicated Personal Finance Columnist for The Washington Post. And Sandy Block, Senior Editor at Kiplinger's Personal Finance, previously a Reporter and Personal Finance Columnist at USA Today, and taking your calls at 800-433-8850. Have you ever met with a financial advisor? Send us a tweet @kojoshow or email to kojo@wamu.org. I'm Kojo Nnamdi.

NNAMDIWelcome back. We're talking about managing your money during a pandemic with Michelle Singletary and Sandy Block. I'm taking your calls at 800-433-8850. Here now is Laura in West Minster, Maryland. Laura, you're on the air. Go ahead, please.

LAURAHi, Kojo. I'm calling, because I have a comment and a question. My comment was about giving Christmas presents to people. And, you know, there's things you can give to people that doesn't require purchasing anything. Like you can say that you would clean their room for them or you would clean their car for them or you would bake a cake for somebody.

NNAMDISure. Makes absolute sense.

LAURAThen my question is if you're in your mid-50s and you don't really have any savings or retirement, what can you do to try to be more secure when you have to retire?

NNAMDII'm going to double team this one. I'll start with you, Michelle Singletary.

SINGLETARYYes. So are you still on the line?

NNAMDIYes, she's still there.

LAURAI am.

SINGLETARYOkay, so are you working? Do you have a company that provides a 401k or 43b or something like that?

LAURANo. I have two part-time jobs neither of which have any benefits.

SINGLETARYOkay. So you can still save for retirement in a traditional IRA up to $6,000 a year and then if you're over 50 you get to put in an extra $1,000. Now I know if you're piecing together two jobs it may not seem possible. But just try to save as much as you possibly can. And do it automatically even if right now while we're in this downturn it's just $25 a month or $100 a month. That's where you start to begin.

SINGLETARYAnd then, you know, if you don't have any savings, just rethink your retirement a little bit. Maybe you're not going to be able to retire. So you thought you might be retired at 65, maybe you'll work a little longer. Think about where you're going to live if you have a home. Perhaps you can do some shared housing arrangement where you have someone come in and live with you or you go live with someone else. So it's still possible to retire. It's not all over for you. You're just going to have to rethink your plan that might not be a traditional retirement where you have a pension and you've got a big fat, you know, investment account.

NNAMDICare to add anything, Sandy Block?

BLOCKYeah. The thing I would suggest is for a lot of folks like Laura, they're going to end up relying on Social Security for almost all of their retirement income. And what I would encourage if at all possible is to delay claiming Social Security as fast -- as much as possible. We're going to see a bunch of people filing at age 62, which is the earliest that you can do it right now, because so many people are out of work. But when you claim at 62, you get up to a permanent 30 percent reduction in your lifetime benefit. So the longer that you can keep working and postpone taking benefits, the more benefits you will receive when you do claim. And I suspect for people like Laura, Social Security is going to be a huge part of your retirement income. So you want to get the most out of it that you can.

NNAMDISandy Block, what are some things that people who have lost their incomes can do to get by?

BLOCKWell, we did a story a while back that it's still pretty current about, you know, sources of cash basically. And there's quite a few things that you can do. One thing that we have seen is going on that I hope people don't have to do is, you know, taking withdrawals from their retirement savings, because not only can that create a tax bill, but it puts a permanent dent in your security. So somethings you should look at if you're over 62 and you own a home you might be eligible for a reverse mortgage line of credit.

BLOCKIf you have a Roth IRA, again, I don't encourage this, but this is good emergency funds, you can always take out the amount that you put in, your contributions, with no taxes or penalties. So Roth IRA can sort of act as a backdoor emergency fund. If you have taxable accounts, you can take money out of that. You'll pay taxes on it, but no penalties. If you have a 401k and you're still working, you could take out a 401k loan. That's not as damaging as a 401k withdrawal and the CARES Act actually increased the amount that you can take out and gives you more time to pay it back.

BLOCKAgain, that can really, you know, hinder your savings. But if you're looking at, you know, foreclosure and need groceries, then you do what you have to do. The last thing I'll mention is a home equity line of credit. If you own your home, interest rates are very low. That can be a very attractive way to get some extra money.

NNAMDIIs it ever wise, Sandy, to tap into retirement funds?

BLOCKIt's never wise, but sometimes it's necessary. I mean, sometimes -- people I know who have done had no choice. They literally were looking at keeping their roof over their head. Now the CARES Act, this is going to end soon in December 31st. But the CARES Act actually makes it a little -- if you have to take a hardship withdrawal from your 401k or your IRA, it gives you three years to put money back in the account and avoid paying taxes on it. So, you know, as a break glass emergency this isn't as bad as it used to be. So I would say, you don't do it for a vacation, you do it because you have no other options.

NNAMDIAnd I wish Mariette in Virginia would calls us back, because my next question to Michelle Singletary might be of assistance to you. I think Mariette dropped off the line. Please call us back at 800-433-8850. Michelle, there's another way to get access to money quickly and that's by using your credit card. Readers of your column know you have some very strong feelings about this. What do you think about using credit cards to get through lean times?

SINGLETARYWell, yeah, people who know me know that I hate debt with a passion. I always joke that if debt was a person I'd slap it. So it is not a friend no matter what kind of debt it is whether it's a credit card or a home loan. But here's the thing, and I think Sandy talked about it in terms of the order of how you should look for money. Payday loans and credit cards are sort of at the bottom, because the thing is when you take that money that off your credit card it's going to be at a high interest most likely seventeen percent on average, and certainly don't do a cash advance. That's just crazy.

SINGLETARYBut I understand that if you've got to buy groceries that you might use your credit card. These are extraordinary times. And I'm not wagging my finger at anybody right now if that's what you feel you have to do. But just take or charge only what need. So if you're using it at the grocery store just barely what you need to support and feed your family. Don't take any extra cushion. Just step by step each month. Even if you're taking money out of your retirement account only take what you need at that moment to get by. And then if you can still make the minimum payments do that.

SINGLETARYAnd then when we come out of this pandemic related recession, you know, both the Kiplinger Magazine and Washington Post, all of our articles, we're going to be helping people rebuild after this is over. So in a crisis mode, you got to do what you have to do. And then worry about the impact later. And there are ways to recover from overusing credit.

NNAMDIWell, Michelle, Mariette who I asked to call back from Virginia called, but couldn't stay on the line. However, she says, I went to school in my 30s. I ran up some debt. I rolled it from credit card to credit card until I paid it all off without interest. How do you do that?

SINGLETARYWell, she probably rolled cards. You know, you can do balance transfers. So she probably did that quite a bit. If you have good credit, you can do that. So you roll it over and there's no interest and gives you a time, 18 months, sometimes two years. Though, I haven't seen any for that long. But a year to 18 months is typical where you don't have to pay the interest and that means that everything you pay goes towards the principle. That is a strategy that I recommended for some people to use.

NNAMDIOkay. Here now is Susan in Washington D.C. Susan, you're on the air. Go ahead, please.

SUSANYeah. I have wondered what type of financial advisor should someone use? So someone who takes a flat fee, someone who takes no fee if that exists, someone who takes more money when you make more money? I've just been so dubious to sign up on anyone, because I don't know what's proper.

NNAMDISandy Block, what would you advise?

BLOCKWell, it's interesting. I did a story about this not too long ago. And financial planning groups say that they've had a huge increase in people inquiring about financial planning during this pandemic. I would say what we like are fee only advisors. Advisors who basically either charge you -- for most people it works better by the hour when it's the percentage of your assets. You have to have a lot of assets for that to work.

BLOCKWhat's questionable is an advisor who claims he's free or she's free, but basically takes a commission, because basically that individual has a huge incentive to recommend products that will pay them not necessarily benefit you. So you want to look for a fee based advisor. They're not always easy to find, but there are more models out there. There are planners who are actually offering sort of Netflix-type services, where you get a subscription.

NNAMDIGot to take a short break. When we come back, we'll continue this conversation. Still taking your calls at 800-433-8850. Have you ever met with a financial advisor? I'm Kojo Nnamdi.

NNAMDIWelcome back. We're talking about managing your money during a pandemic with Sandy Block and Michelle Singletary. And just before we took that break, I read a note from Mariette in Virginia who couldn't stay on the line, but somehow, Mariette has managed to call us to speak for herself about how she did that using credit card-to-credit card. Mariette, you're on the air. Go ahead, please. What did you exactly do?

MARIETTEHi. Good morning. So, I went back to nursing school as an adult, and I had a child, and I got in some debt while I was finishing my nursing degree. And zero percent credit cards were offered at the time. So, I -- but they only give you three months or six months. And then before that time period would run out, I would move it to another zero percent credit card. And I did that for about two-and-a-half years until I paid off my debt.

NNAMDIWell, that's exactly what Michelle Singletary figured that you had done, and apparently, you were able to do it successfully. So, thanks for sharing your story with us. Sandy Block, you recently participated in a discussion with other personal finance experts where you suggested fun and useful things you can do without spending a dime. Can you share some of those with us?

BLOCKSure. There's a ton of things. We had a story. There are things, like one was yoga with Adrian, which offers free online yoga classes. One of my favorite ones, and I double-checked to make sure these were still available before we got on the air. The Metropolitan Opera offers a Live in HD series. You can stream entire operas every night, which I think is a really cool thing to do if you're sitting home and that's your thing.

BLOCKAnd then there are a bunch of -- now, you've got to be careful with these, because oftentimes, they're introductory offers, and then you have to pay. But as long as you mark on your calendar, you can get, you know, Peloton offers 90 days of free access to its exercise app, which usually costs $13 a month. There's a bunch of sports ones. And there's a lot of really interesting books. You can join Barnes and Noble's book club. There's free content on Kindle's reading app. And also, some free audio books on Audible. So, there's a lot of free stuff out there to do.

NNAMDIMichelle, can you add any free things to that list?

SINGLETARYWalking in the park, you know, sitting down talking to your people. I mean, seriously, think about what's happened to this pandemic, and all of a sudden, we had to hit pause. And people had to actually talk to the people within their house. You know, you're not walking past each other or rushing to some event or some sporting outing or all the things that kept us busy. But the simple act of talking, playing board games. My family and I love playing games, so we have a closet full of games, and we just pull out. And we play cards, and we play Pictionary. I mean, just the things that help bond you with folks.

SINGLETARYYou know, again, time is the most precious thing that we have, and it's really priceless. And those are the memories, folks, that you will take to your grave. You know, when you're gasping for your last breath, you're not going to be thinking about that Apple Watch. You're going to think about your kids brought the grandkids over and you made cookies in the kitchen, and they just were giggling and laughing. That is what is important.

SINGLETARYAnd I'm not saying don't buy people -- I'm not a giver. That's not my love language. If you invite me to a wedding, I ain't bringing anything. My presence is your present. (laugh) So, yeah, you have to understand that about me. But what I'm trying to tell you is someone who didn't grow up with her parents, who was raised by her grandmother, who didn't have a lot of those bonds, that is the memories that I try to create with my children.

SINGLETARYAnd my husband and I still work. We still can afford stuff, but we intentionally did not do that, because we wanted our children to know that you can celebrate life's moments -- Christmas, Hanukkah, Kwanzaa -- without gifts. We still give, but we wanted to set a situation in which they knew that just being in the presence of other people is a gift.

NNAMDIAnd I'd like to say that if you didn't invite me to your wedding or anniversary celebration, I know it's because you forgot, so I'm showing up, anyway. (laugh) So, here is Ruth, in Friendship Heights. Ruth, you're on the air. Go ahead, please.

RUTHHi. You guys wanted an example of someone who paid off a lot of debt? Well, it was a while ago, but when I graduated from law school, I had $70,000 of student loans, and it was a lot. But it was a school where I knew I was going to have access to a lot of very, very well-paying jobs. And I just decided to attack it 100 percent. And the main thing that I did was pretend that I didn't have that job.

RUTHA lot of my colleagues were, like, well, hey, I'm this really impressive associate at a big New York law firm. I should be able to go on really fancy vacations and buy all these clothes and buy myself jewelry and stuff like that. And I was, like, I can't do that. I've got this, like, friend next to me that just have to be tackled first. So, I took -- it took three years of being really, really, really disciplined, but I got rid of all of it.

NNAMDIYou sound like Michelle Singletary's kind of person. Correct, Michelle?

SINGLETARYOh, yeah, I'm loving you, Ruth. I'm telling you, you're a member of my family, now. (laugh)

NNAMDI(laugh) Exactly right. Ruth, thank you for sharing your story with us. Lashonda emails: My husband and I are older parents in our late 40s with a six-year-old. What would you suggest for those who will hit retirement age when their children start college? How do we save for both? Sandy Block?

BLOCKWell, first of all, you want to put saving for retirement first. And this is something we say all the time, and I'm sure Michelle says, too, you can borrow for college, you can't borrow for retirement. So, I hear so many people saying, you know, putting retirement saving on pause so they can put their kids through a great school. And it's just a terrible mistake, because you wind up living with your kids, if you do that.

BLOCKSo, first of all, prioritize saving for retirement. Second, even if you're in your 40s, you have time -- you know, you've got a good 10, 15, 20 years. Start putting money in a 529 college savings plan now. Even if you put in $100 a month, you've got time for that money to grow.

BLOCKAnd then, basically, you're going to have to have -- and Michelle has talked about this a lot -- you have to have a tough conversation with your child when college comes. This is what we can afford. You know, you don't go to your dream college. You go to the college that we can afford, and here's how much we can afford to pay, and this is basically how we'll make it work. I think that's -- it can be done, and people do do it all the time. What they do wrong is let the child pick the college and then borrow to make it happen. And I think that's what causes people to get into a lot of trouble.

NNAMDIThank you for your call. Here is James in Beltsville, Maryland. James, you're on the air. Go ahead, please.

JAMESMerry Christmas.

NNAMDIHappy Holidays to you, too.

JAMESWell, you were asking about saving and paying credit cards off. The way I got my credit cards paid off was, I could always scrape up money to make a payment, but then when I got my bill, I was always more in debt. And I stopped and I was like, wait a minute, I got to pay attention to what I'm spending on the credit card.

JAMESSo, I created an Excel spreadsheet that looks like a register in a checkbook. And I started keeping up with every penny that I was spending. And then I saw that I would make a payment for 400 and spend 700. (laugh) So, keeping up with what I was spending on the credit cards held me down for, you know, spending more money on them, and it allowed me to pay them off.

JAMESAs far as savings goes, I started with the lowest amount that I could contribute to a 401K. And every year that I got a pay raise, I would either put the entire pay raise in the 401K or a portion of it in the 401K. And before you knew it, I was at 10 percent.

NNAMDIYep, Michelle Singletary, care to comment?

SINGLETARYNo, I think that's great. Two things he said, paying attention. I would say that if you're trying to pay off credit card debt, you shouldn't be using that credit card at all, period. Put it away until you get rid of that debt. If you're rolling debt from month to month, then you're in trouble. And I loved his strategy for, you know, increasing his retirement savings.

SINGLETARYIf you do it incrementally like that, 1 percent or 2 percent, it doesn't have as much impact in your daily spending, because you're already used to your old salary without the raise or, you know, you get a new job, you get a raise. Just keep spending as if you don't have that money. And I think Ruth mentioned that when she said she was paying off the student loan debt.

SINGLETARYAnd one thing, when Sandy was talking about saving for retirement versus college, be sure you do not just hear part of what she said. Because people hear, you know, prioritize retirement over college savings, and then they only do one. You must do both. And in order to do both, that means that you're going to have to downsize your lifestyle. But it is a game-changer for your children if you can send them to college without any debt.

SINGLETARYMy husband and I did that. We downsized our life for most of our career, and we saved for all three of our children to go to college debt-free -- and graduate school, I might add, at least for one of them so far. And we put it all in 529 plan, and we did just what Sandy said. When they came with those crazy schools that they wanted to go to, I'm like, unh-unh. We don't have money for that school. This is the money we have for it. We did not let them pick their school. They're 18 years old. They don't know anything.

NNAMDI(laugh) Michelle writes: In a panic, back in April, when the stock market was going down as a result of COVID, I withdrew $200,000. I realized that was not a wise move the next day and returned $100,000 that was allowed. Is it possible to return the other $100,000 without tax implications? My husband and I are over 60. Sandy Block?

BLOCKI assume she's talking about -- it depends on -- she didn't say specifically where she took that money out of. If she took it out of her retirement, like her 401K, if it was a hardship withdrawal, under these new rules, she might be able to put it back. But if she just took a withdrawal under the old rules, I don't think she can do that. And I think what's she's just going to have to do is increase her contributions. But this is someone I think needs to talk to a tax pro, because if she took $100,000 out of her 401K plan, she's going to have a very big tax bill come this spring, and she needs to be prepared for that.

NNAMDIHere now is Jamal in Alexandria, Virginia. Jamal, your turn.

JAMALThank you so much. Great discussion, and I love the articles Michelle has been doing recently in the Washington Post. Just great articles. But as a source of funds, we use cash value from our whole life insurance policies for big-ticket items. So, before someone taps -- goes into their 401K or their retirement funds, don't forget about whole life insurance policies they might have.

NNAMDIWhat do you say, Michelle?

SINGLETARYI'll ask Sandy to jump in on this, as well, because I know that Kiplinger does a lot of this reporting. I'm not a fan of those type of insurance policies. I think they work for some people, people who have a lot of money. But they tend to be very expensive, and I personally don't like mixing insurance needs with investment needs. So, I keep those things separate. And the way to have a cash pot is to save. It's the same thing without having to pay all those fees for a cash, whole-life policy. That's just my opinion. Sandy?

NNAMDISandy.

BLOCKWe're not fans of them, either, but what we've discovered through the years that a lot of our readers really do have these policies. And if you have one, it is a really good source. If you've got cash value, you can take that money out, and it is a good source of cash. And it's a lot less -- you know, you're not going to have a big tax bill. You're not going to put a permanent debt in your 401K plan.

BLOCKSo, if you happen to have one of these and you've had one for a long time -- where I've seen this really work is people in their 50s and 60s -- it is a good source of, basically, you know, cash without regrets. So, I don't recommend that people buy them. But if they've got them and they need the money, I say go for it.

NNAMDISandy, for those who have lost their jobs or, for other reasons, are having trouble making ends meet, can they count on relief from the federal government in the near future?

BLOCKWe are waiting to see that. That's being -- I think that's probably being negotiated as we speak, Kojo. My understanding is the bill that was being discussed last night would extend unemployment benefits, add $300 and push it forward. So, I think that that's still being talked about. Obviously, it's very critical. A lot of people are, you know, coming up against a very hard deadline the end of this year.

BLOCKThe other thing that's being discussed is extending a moratorium on evictions, and possibly even extending the -- basically giving people a break on federal student loan payments, extending that maybe until next year, maybe next May or something like that. So, there is relief being discussed, but it is, you know -- it's tough to say -- I'm not a political reporter. It's tough to say how that's going to come out.

NNAMDIMichelle Singletary, let's talk rainy day funds. As it became clear that this pandemic and its economic fallout would linger, many people wish they had more savings. Ideally, how much should people set aside for a rainy day?

SINGLETARYYeah, let me talk about that in two groups of people. There are people who are living paycheck-to-paycheck. And so, I get that you can't have a huge emergency fund set aside. Just try to have something, even if it's just a couple of hundred dollars that can buy you groceries for a couple weeks. So, that's those folks. And when they earn more, let's talk about them as I'm going to talk about the second group.

SINGLETARYThe second group of people, and this is the hardest group of people to get to save. They have income coming in, they have plenty to save, but they aren't. It is harder for me to get people to save when they are doing well, because they think the times are always going to be good. But you need to have saved at least three-to-six months' worth of living expenses in an emergency fund. And that's all the money it takes to run your household for three, at a minimum, months.

SINGLETARYThat's not just rent or mortgage and the car payment and utilities. That's everything, cable, gas, food, everything. Because experience has shown me that it usually takes people a couple of months before they start to cut expenses, if they have a disruption in their income. So, that's why it's the three months because you're in denial, and you're not going to really cut the way you should. Most people don't.

SINGLETARYIf you are a highly paid individual, you should err on the side of six months to a year. During the Great Recession, when you look at some of the data, it took highly compensated people up to 18 months to two years to find a job that had that same income level. And so, at that income level, you've got expenses at that income level. Your house is probably based -- your mortgage is based on what you were making before. So, you want to err on the side of having more rather than less.

SINGLETARYThat's a lot of money sitting in a bank account. I know people are like, what? And you need to let it sit there. You don't invest that money. That money's role is to be there when the storm comes. And the storm can come quickly or it could come slowly, but it's going to come This pandemic has been extraordinary and bad, but guess what, folks? There's going to be another economic downturn. And we don't know when, but there will be one.

SINGLETARYAnd this is the time, once you get past this, if you had a disruption income. But if you didn't, you need to be saving and paying down debt. Those are the two things that are saving a lot of people right now. They didn't carry a lot of debt into this pandemic, and they had savings.

NNAMDIHere now is Amy in Washington, D.C. Amy, your turn.

AMYHi. Thanks so much. I really appreciate this. I have a question, actually, somewhat for me, somewhat for someone else who's asked me for assistance. She has about $40,000 of debt on two credit cards, and she's been paying $1,000 a month, but cannot get the amount down. She's not a high-paid worker. She is a home health worker. And I was thinking about trying to help her get something with debt consolidation, because I think that they can decrease the amount of the loan. But those places kind of scare me, and I don't know what might be the best option for her. Thanks.

NNAMDISandy Block, debt consolidation?

BLOCKYeah, I see her reluctance is valid, because there are a lot of really sketchy outfits out there that claim they can make your debt go away, or something like that. What she should do is meet with an accredited credit counselor. National Foundation of Credit Counseling could sit her down with somebody who -- you know, these are nonprofits who basically help people restructure their debt and work with their creditors to come up with payment plans that they can afford.

BLOCKAnd possibly even consider, you know, if this woman is making, you know, a very low wage and has this much debt, you know, whether she would want to consider even filing for bankruptcy. I think the credit counseling could help her work through that. But these are -- you know, you can go to NFCC.org to find someone. Don't call someone you hear advertising on late night TV, because oftentimes, those places will just take a big fee and leave you worse off than you started.

NNAMDIThank you for your call and good luck to you, Amy. Steve emails: I have heard that keeping a large mortgage balance immunizes you from foreclosure. Is this correct, Michelle Singletary?

SINGLETARYI've never heard that before. (laugh)

NNAMDI(laugh) Nor have I.

SINGLETARYI mean, I guess the premise is that the more you owe the bank, the more likely they're going to work with you. Well, that didn't work in the Great Recession. So, no. I think that you borrow just how much that you need to pay, that is within your budget.

SINGLETARYI recommend -- because I work with a lot of people through my church -- about 30 to 36 percent of your net pay for housing, including taxes and stuff. Once you get beyond that, it becomes difficult to save for retirement or send your kids to college. And so, how big your mortgage should be determined on what you can afford, not some theory that the banks are going to work with you. That has not been my experience in dealing with people.

NNAMDIHere is Eileen, in Alexandria, Virginia. Eileen, your turn.

EILEENThanks for taking my call. I have a question about long-term health insurance. I'm 76. I've had it for about 20 years. I'm in good health at this point, but my premiums are now $3,600 a year, and I'm finding it difficult to pay them. I hate giving it up, because I lose all the money I've put in and protection, but I don’t' know what to do.

NNAMDIThe eternal dilemma of long-term care insurance. Sandy Block?

BLOCKYeah, this is a very common problem and, actually, the insurance companies almost bank on a certain number of people backing out. You don't want to do that. What you want to look at is whether you can negotiate maybe a lower benefit.

BLOCKMaybe if your coverage is for a certain amount per day, you might be able to lower the premium by lowering the amount per day that it covers, or increasing the period until it kicks in. Maybe it kicks in after 30 days. See what happens if you increase it to 90 days or more, so you can keep that policy and continue to afford it. Because you don't -- I mean, if you're in your 70s, you may be using it in a few years. And if you stop paying it, all that money is lost. So, that's your last, worst-case scenario.

NNAMDIChar is back and sounding better, I understand, this time. Char, go ahead, please.

CHAROkay. One, any advice for refinancing? I am shopping around. Two, I have four different retirement accounts. Only one is a Roth, and that's a Roth IRA. So, I have three or so others from different employers. One is really good, and it's from TIAA-CREF, and they've told me don't do anything with it. This is a really good, you know, whole situation.

CHARBut what I want to do is avoid paying taxes when I retire and take out the funds. So, how -- what's best in terms of -- especially since they're from different companies across the board? My current -- and then my current one is a -- so it's a fourth or fifth retirement account, and that is a tax-deferred annuity, and I've never had one of those before. So, how can I best convert them to basically like a Roth 401K, a Roth 403B from different companies? Yeah, and then any advice for refinancing?

CHARAnd then just a quick comment, in terms of savings or paying down debt, I'd really like to automate. I really appreciate the other callers' comments, too. And then one thing I did was get a loan from Lending Club, because I have good credit, and was able to pay down some credit card debt that I went into really quickly in like, two years. And then, right now, I've paid off that amount of the loan, which was a lower interest rate than my credit cards. And I just pretend as though I'm still making that payment and, you know, just save it.

NNAMDIThere's a lot there, Sandy Block and Michelle Singletary. What strikes you about it first, Sandy?

BLOCKWell, I think for the various retirement accounts, your choice is to either convert to a Roth now and pay taxes, or wait until you retire and pay taxes later. There's no -- you will pay taxes. You can't avoid paying taxes. It's just now or later. At some point, you may want to consolidate them, because it just makes things easier. I worry about people with a lot of orphan 401K plans out there that they're not keeping track of.

BLOCKBut you might want to talk to a planner about this. Just convert enough -- remember, when you convert, you have to pay taxes on it. So, you don't want to convert so much that you push yourself into a higher tax bracket.

NNAMDIOkay.

BLOCKYou know, this takes a lot of planning.

NNAMDII'm afraid that's all the time we have. Sandy Block is senior editor at Kiplinger's Personal Finance. Sandy Block, always a pleasure. Thank you for joining us.

BLOCKThank you for having me.

NNAMDIMichelle Singletary is the syndicated personal finance columnist for The Washington Post. Michelle, same, always a pleasure. Thank you.

SINGLETARYThank you.

NNAMDIToday's show about managing your money during a pandemic was produced by Lauren Markoe. Coming up tomorrow, doing virtually anything these days is different and challenging. So, what does it mean to sing together in the age of COVID-19? We'll hear from the Washington Chorus and the Children of the Gospel Choir on how they've adapted both practice and performance through virtual and physically distanced settings, and how they're finding joy this holiday season, in spite of it all. That all starts at noon tomorrow. Until then, thank you for listening and stay safe. I'm Kojo Nnamdi.