G4 O


ne ofmy favorite movie quotes comes from “A Few GoodMen,” when Jack


Nicholson, playing aMarine colonel, shouts, “You can’t handle the truth.” And when it comes to money,


people often fail at keeping their NewYear’s resolutions because they don’t honestly assess their financial situation. I was answering listener


questions recently on “The Audrey Chapman Show” on Washington’sWHUR(96.3 FM) when two callers found themselves caught in some money untruths. I asked the first caller whether


she had a budget. She paused and then gave a hesitant yes. But when you get a brief silence or a pause followed by an “um” or “uh,” it can indicate that the truth may be otherwise. Experience told me to press


her. Turns out, the woman didn’t have a budget. She was, however, trying to pay off debt. Budgeting will help you identify expenses you can cut and, as a result, the savings you’ll need to devote to reducing your debt. Another caller was fretting


because she couldn’t keep up with her bills and was losing hope. She earned a good salary. She said she had cut out every possible luxury—cellphone, cable, dining out. Then I asked her what percentage of her monthly take-home pay was going toward her mortgage (many experts suggest it should be no more than 36 percent). She quickly answered 30 percent. But something


didn’t add up. If her expenses were low and she didn’t have any debt except her mortgage, then why was she still broke? I asked again. “Are


you sure your mortgage is just 30 percent of your take- home pay?” She confidently answered yes again. But with additional probing, I found out she had lost the part-time income that was used to help her qualify for the mortgage.


CHRIS


MICHELLE SINGLETARY The Color of Money


I pointed out that if her


income had dropped, then the percentage of her current pay going toward the monthly mortgage couldn’t still be 30 percent. It was obvious to me that the woman wanted to cling to the belief that she could still afford her house. By facing the reality, she could put more effort into finding another part-time job, take in a boarder or move to a more affordable home or apartment. Here are five ofmy favorite


financial fibs: lI have a budget.Having a


budget in your head doesn’t count. You have to write it down, which also leaves a paper trail or computer record of how you are doing financially. lI have an emergency fund.


People will swear they have an emergency fund. But they raid it so regularly that it’s really just a backup checking account. I call this the emergency fund fallacy. lI can managemy spending


better with a credit or debit card. People love to think the monthly credit card or debit account statements that track their spending are great tools to


“You can’t handle the truth.”


Jack Nicholson “A Few Good Men”


EZ


EE


KLMNO Five financial fibswe tell ourselves—and howto come clean in 2011


manage their money. But that’s simply not the case.Not only can credit and debit use increase how much you spend, but it also can result in unhealthy food purchases, according to a new study in the Journal of Consumer Research. The authors conducted an analysis of the shopping behavior of 1,000 households over a six-month period. They found that the participating shoppers made more impulsive and unhealthy food choices when using credit or debit cards. “Paying by a card does not feel


the same as paying in cash; card payments are emotionally more inert than cash payments,” one of the authors,Manoj Thomas of CornellUniversity, told me. “Our behaviors are often influenced by non-conscious factors. I believe that mode of payment is one such factor; it can affect our consumption behavior without our awareness.” lI ownmy home.Unless


you’re mortgage-free, you don’t own your home. The institution holding your mortgage does. Housing is typically the largest household expense. If you would see this debt for what it is, maybe you’d work harder to pay it off sooner. lI don’t understand why I’m


always broke. This is the biggest lie. You could figure this fib out if you really thought about it. It’s about needs versus wants. Be honest: You’ve moved too many of your wants to the needs side of your budget. So when you look at your budget, you don’t see what should or could be cut. So before you make your


financialNewYear’s resolution for 2011, take a truth test. If you can handle the truth, you stand a better chance of becoming the better money manager you want to be.


CARLSON/ ASSOCIATED PRESS


Readers can write to Michelle Singletary c/o TheWashington Post, 1150 15th St.,NW,Washington, D.C. 20071. Her e-mail address is singletarym@washpost.com. Comments and questions are welcome, but because of the volume of mail, personal responses may not be possible. Please also note that comments or questions may be used in a future column, with the writer’s name, unless a specific request to do otherwise is indicated.


EZRA KLEIN Economic and Domestic Policy to save the Senate R


emember “TheCommittee to Save theWorld”?That wasTime’smemorable


sobriquet forLarry Summers, BobRubinandAlanGreenspan, who, in1999,had beenfighting to dodge, containor end a series of financial crises across the globe thatwere threatening the Americaneconomy. Thenext decadewasn’t as kind


to the committee’s reputation— or to the economy.Theworst threats,wenowrealize,had been here athome, and policymakers hadn’t donenearly enoughabout them.Medianwageswere stagnant evenas the incomes of the richrocketed upward.Agiant credit bubble fueled a giant housing bubble,whichinturn fueled a giant buildup of risk at the center of theAmerican financial system.The economic collapse revealed a dysfunctional political systemincapable of mounting a sustained policy response to joblessness andweak demand. Andwe’renot done:Debt,


health-care costs, an underperforming education system, awarming planet and crumbling infrastructure all threatenour long-termprospects. The goodnews is that all of these problems canbe solved.The questioniswhether our political systemis capable of doing so. OnTuesday, SenateMinority


LeaderMitchMcConnell (Ky.) gave aninterviewtoPolitico in whichhe soundedmore like a Bond villainthana legislator. “There’smuchfor themto be angst-riddenabout,”McConnell said of theDemocrats. “If they think it’s badnow,wait tillnext year.”Politiconoted thathe said all this “witha chuckle,” and for good reason:McConnellwill returninJanuarywith47 Republicans,making it even easier forhimto grind the Senate to ahalt. We sawwhat thatmight look


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like thisweekwhenSenate Republicans effectively filibustered the federal government’s 2011 budget.To avoid a government shutdownon the eve of thenewyear, the Democratshastily passed a “continuing resolution,” one that just extends the 2010 budget. Thatmeans it doesn’t include the changesneeded to implement the financial regulationbill, the health-care bill or any other accomplishment of the past year. It’snoway to runa government. Enter Sens.TomUdall (D-


N.M.) and JeffMerkley (D-Ore.). Bothwere elected in2008,which meant bothentered themodern Senatewithouthaving spent years slowly getting used to its absurdities and dysfunction.And bothhavemade the unusual decisionto do something about it. Together, they are theCommittee to Save the Senate. Their partnership is a tag-team


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effort.Udall is first inthe ring. His argument is simple:The Senatemust be able to decide, and continually revise, its rule book. Ithas the power to do this: Onthe first day of anewsession ofCongress—whichfor the 112th Congresswill fall onJan. 5—a simplemajority canvote in whatever rules it chooses.Udall wants to see that power exerted. Rules that arenever changed


are abused,he argues.That’swhy we’vehadmore filibusters inthe last sessionofCongress thanin the 1950s and ’60s combined. That’swhy Sen.Richard Shelby (R-Ala.) felt comfortable putting a hold onallnominations simultaneously becausehewas upset over some pork that Alabamawasn’t getting.Udall


The committee


SUNDAY, DECEMBER 26, 2010


BRENDAN SMIALOWSKI/GETTY IMAGES


Sen. JeffMerkley says abuse of the filibuster is the Senate’s most pressing problem.


wants that to end. “If you look at rules every two years,”he says, “you bring accountability to the process.” Merkley,whoworked onthe


Hill inthe 1970s and ’80s, sees the filibuster as themost pressing problemfacing the Senate. “The social contract is broken,”he says, “the contract that said, ‘I understand that only under the most pressing, important circumstanceswill I utilizemy privilege to delay the Senate and demand a supermajority vote.’ If that social contract is gone, then weneed to adjust the rules.” WhenMerkley says “adjust,”he


means it.He doesn’twant to get rid of the filibuster.He justwants to bring it closer inlinewithwhat Americans believe the filibuster is there to do: protectminority viewpoints and encourage debate. UnderMerkley’s proposal, you


couldno longer filibuster the “motionto proceed to debate,” as thatmeans you’re filibustering the debate itself. Similarly, amendmentswould be protected. You could only beginfilibustering whena billwas complete and the Senatewas considering a final vote onit. Inthat case, the filibuster


wouldhave to bewhatmost Americans think the filibuster is: anongoing debate.Currently, filibusters are usually private communications betweenthe leadership offices of the two parties.UnderMerkley’s bill, a sustained filibusterwouldneed 20 filibusteringmembers onthe floor at all times and continued discussion. If thenumbers fell or the talking stopped, the filibuster would end. Would this fix the Senate?Not


necessarily.AlthoughMerkley’s proposalwould be an improvement, itwouldn’t reverse the Senate’s transformationinto a supermajoritarianbody inwhich theminorityhas boththe procedural power and the electoral incentives tomake the majority fail.More promising is Udall’s proposal,whichwould institute a process formaking future changes andmightmake theminority a littlemore cautious about a relentless campaignof obstruction. SomaybeUdall andMerkley


aremerely theCommittee to Start Saving the Senate.The real question—the one thatwill matter Jan. 5—ishowmany of their colleagues are ready to join them.Andwemay already know the answer.Thisweek, every returning SenateDemocrat signed a letter toMajorityLeader HarryReid (Nev.) calling for filibuster reform. TheCommittee to Start Saving


the Senate, it seems, isnowin session.


kleine@washpost.com


J709 2x10.5


MATTHEW STAVER/BLOOMBERG NEWS Sen. TomUdall says the Senate has the means to revise its rules.


P534 2x6


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