Leave It to the Pros: Q&A with Financial Author Carmen Wong Ulrich

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Q&A with Financial Experts

Q&A with Financial Experts

Over the last five weeks, we’ve been sitting down with the top financial experts in the country, asking them the important finance questions we all want (and need!) to know. This series, “Leave it to the Pros”, is up to round #6 today as we sit down with Carmen Wong Ulrich, CBS contributor and author of The Real Cost of Living.

Q: Hi, Carmen. Thanks for being here. You have quite an extensive resume: CBS contributor, book author, contributing columnist at some of the country’s top magazines. What’s a normal day like for you?

A: I usually have morning TV, which starts with a 5 am wake up call. From there, it’s meetings to print deadlines; I write for Good Housekeeping, too. I answer 100 to 150 emails a day… I’m always on. I do make time for my daughter in the evenings, so I end up going back to work after she’s in bed. It’s a good place to be. A lot of people don’t have the ability to be busy, so it’s a privilege. Pressure is a privilege.

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Q: That’s a very positive way to see it! How’d you get started in personal finance?

A: I started out for Money magazine, I was an editor there. That’s how this all started. I went from print to TV to promoting my first book, Generation Debt. Then, I got my own show on TV on CNBC that ran from 2008 to 2009. It was a giant accomplishment for me, but it was when the whole crisis happened. So I was there everyday responding to people losing everything in a day. It was a really intense time, but it was an absolute privilege to be there. I heard so many compelling stories from people that served as the inspiration for my second book.

Q: So The Real Costs of Living came from this time? Can you give us an example?

A: Yep. The story that starts the housing chapter was about how devasting the housing bubble burst was – the scope of it. This guy called me and had put his life savings down in Nevada for a house for him and his mother. He put $400,000 cash down and the house cost $800,000. Less than a year later, the value went down to $400,000. It was awful.

We were told, and have been told for generations, that owning your home outright is what everyone should do. So, I learned a lesson there about how the housing market works and then how all the rules we’ve always learned were just done with, gone. All new rules needed to apply. And that was the huge learning experience for me and the country.

And also that when you buy a home, you’re part of a market. It illustrates in a crazy way how markets behave and where risk is. For me, the second book illustrates how things have changed and how to understand how things work in this new world.

Q: So, what are some of the real costs of living that most readers may not be aware of?

I talk about the real cost of college. And this is a timely topic. Understanding the effects of basically putting your life savings into your kid’s college and the cost of doing that to yourself, as someone who’s closer to retirement. I mean, you can’t borrow to retire.

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One of the biggest ways to lower the cost is to actually graduate on time. Most people don’t graduate within four years; half take up to six and the other half never graduates. That’s a huge cost. So, get a degree and get it done as soon as possible is one the biggest ways to reduce cost.

The other cost with that is the longer you take, the more catch up you have to do, so you’re behind in earnings. If you can graduate in four years and start working right away, you cut down on the cost… it’s like a race.

Q: What about the cost of going to grad school? How can people determine whether that cost is worth it for them?

A: Too many folks go to grad school because they can’t find a job. It’s not the best sentiment, because you’re not focused on why you need this degree. You really have to think about why you’re doing it, how you’ll pay off loans when you get out, what are your odds of graduating top of class and getting a good job to pay off your loans. Having focus means you’re much more likely to earn the money you’ll need to pay it off.

Q: Great point. What are some of the most common mistakes young people make with regard to their finances?

A: I just got an email from a page that I mentor. She’s juggling three credit cards and two student loans. That’s the most common mistake. It’s so easy to fall behind and then just dig your head in the sand and let things go by and fees build up. When you’re young, time is on your side, and you need to stay on top of it. Don’t waste the time and have it cost you a lot. Get the help you need, whether it’s a nonprofit credit counselor, talking with your family, whatever. Don’t get ahead of yourself. Don’t get the apartment, the furniture, the car, until you have some kind of financial plan.

Q: What is the most important piece of financial advice you’ve ever received?

A: Maybe not one lesson in particular, but passing down the idea that this, personal finance, is important. My dad took me to get my first savings passbook at 12. That communicated to me that this is important, because I was part of the process. He took me to the bank, gave me the responsibility and told me: this is something you need to pay attention to. It was just communicating the responsibility part of it. Making it part of your daily life, managing your money – just like brushing your teeth. It made me very aware right away how money works and what you can and can’t do with it. Communicating with action to me was so important.

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Q: If readers could do one thing to improve their financial lives, what would you tell them to do?

A: Pay attention. It sounds simple, but basically, pay attention to everything. Fees. Statements. What’s being sold to you. What you think is important with money. It’s the hardest thing to communicate to people, it just doesn’t come naturally. It’s not always normal for them and it’s really important to realize that in your day to day life you’ve got to pay attention to all this.

Learn more about Carmen at www.carmenwongulrich.com.

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