Chances are, you’ve read at least one of Liz Pulliam Weston’s personal finance columns on MSN.

At a glance
Name: Liz Pulliam Weston

Hometown: Los Angeles, Cali.

Education: B.A. from Pacific Lutheran University in economics and communications and a graduate of the Certified Financial Planners training program.

Career highlights:
  • Award-winning nationally syndicated personal finance columnist.
  • Most-read personal finance columnist on the Internet, according to Nielsen/NetRatings. Columns run twice a week on MSN Money.
  • Author of “Easy Money: How to Simplify Your Finances and Get What You Want Out of Life” (2007) and “Deal with Your Debt: The Right Way to Manage Your Bills and Pay Off What You Owe” (2005).
  • Appears regularly on numerous television and radio programs, including NPR’s “Talk of the Nation” and “All Things Considered,” American Public Media’s “Marketplace Money” and NBC’s “Today.”

Every month about 12 million people do. That’s a lot of readers, and her simple, straightforward writing style invites them back for more.

In her books, her column on MSN Money and her syndicated newspaper column, Pulliam Weston regularly exhorts her readers to take control of their finances and work toward financial independence. Bankrate recently caught up with her to learn what she had to say about how to build wealth and get out of debt.



People sometimes assume that personal finance experts such as yourself never struggle with money because they have all the answers. Did you ever struggle?

Yeah. If you are a reporter, you are making not a heck of a lot of money. I’ve been living in southern California since ’92 so …

The one thing I did right was start saving for retirement early. I didn’t know what I was doing, but thank God I did. And my mother taught me not to get into credit card debt. You always paid your credit card bills in full.

But I did a couple of stupid things. I bought land in Alaska, raw land with no road to it. I mean — dumb!



Do you remember the best advice you ever received on how to be financially successful?

There are so many good ones, but again I go back to my mom: Pay yourself first. You always put some money aside from every dollar you get and then stay out of credit card debt.

She was very leery of any kind of debt. She wanted to get the mortgage paid off as soon as possible. She really had a hard time with people who lived beyond their means, so I got that inculcated pretty early.

But your parents can only teach you so much because they grew up in a different time and things change.

What I learned since then is that not all debt is bad. If you have a low-cost deductible mortgage like we have, why in the world would you be in a hurry to pay it off?

And student loans: A lot of times it is worthwhile to take out a moderate amount of student loan debt so you can get a good education that can increase your income.



If someone wants to get rich, how would you tell them to begin?

The first thing I tell them is understand, or try to understand, the power of compounding.

And the example I always give is: If I give you a penny on the first day of the month and promise to double it every day, how much would you have at the end of the month? And some people might say, $500 or $5,000. The answer is $10,000,000.

Compounding doesn’t actually work that fast. Nobody is going to double your money everyday. But it gets across the point that once you’ve got that money set aside and you give it time to grow for you, it can really add up.

But you have to put it aside and keep your hands off it.

My advice would be just start. Especially if you are in your 20s, there is no better time to start saving for retirement than when you are young because within a few decades you will have a ton of financial freedom. You can take time off if you want, you can retire early. You’ll have so many more options than somebody who waits.



How do people sabotage their wealth-building efforts?

Every which way. People don’t really understand how radically the credit card world in general has changed just in the last 15 years. The credit availability has exploded. Since 1990, we’ve got more than quadruple the amount of credit extended on credit cards than we did back then.

And creditors’ standards have really loosened quite a bit, so we had this huge change in the way credit is given to people. But we didn’t have an increase in consumer education with how to deal with all this credit.

So, credit card debt, not saving for retirement, cashing out when they leave a job — I forget what the exact percentage is, but 40 (percent) to 50 percent of people who leave a job cash out their retirement account, which is just insane.

Every $1,000 you take out of your retirement is going to cost you $10,000 in retirement income, and the younger you are when you do it, the more it’s going to cost you.



It’s a tough time for our economy. People are losing their jobs, their homes. What can Americans do to empower themselves when facing such a crisis?

There is so much going on that is beyond our control — the economy, housing prices, inflation, fuel costs — all of those things are beyond our control and they’re all scary.

But we still have control over the most important things in building wealth, and that is how we spend and how we save. The difference between those who have money and those who don’t is, people who have the habit of saving and investing just do it no matter what.

When I was working up in Anchorage, I was working for a newspaper that shut down and gave us less than 12 hours’ notice. I went home that night and I added up savings and expenses — this was before I really started writing personal finance — but I realized I had enough money to live exactly how I had been living for six months.

I didn’t have to cut back at all, and that’s without tapping a retirement fund. But if I really cut back and got a roommate, I could last for a year. And I have to tell you, that feeling of freedom was amazing.



It’s well known that our savings rate is negligible, and that Americans like to spend. Are consumers at fault for being in a financial bind or are we internalizing external messages about spending and saving?

I think consumers are really facing headwinds. We have to take responsibility for ourselves and our actions, but I also wouldn’t dismiss how hard it is to save these days.

We get this idea that previous generations were more frugal and more virtuous, and in a lot of ways they were. But in a lot of ways they didn’t have a choice. In 1977, fewer than 40 percent of households had even one credit card. They had layaway, but that is not the same as a revolving line of credit. It’s incredibly easy to get in over your head with credit.

With layaway, they would go into a store and say, I want this certain item and then they brought in $5 or $10 dollars every week until they paid for it and could take it home. That is an installment loan; that’s very different from paying with a piece of plastic and saying, well, I’ll figure out how to pay this off in the future.

I am heartened though, because I am hearing more interest in being frugal and learning how to live on less and put some money aside. Everything going wrong at once was what it took to wake people up and say, “Maybe it would be nice to live not so close to the edge.”



With prices for almost everything going up, where can consumers cut back on expenses to deal with them and save at the same time?

It’s going to be different for everyone, but the main thing I suggest that people do is get out of the mindset that they have to do something, that they have to live a certain way that they have to spend a certain amount.

I’ve been writing about how much you should be spending on your shelter. I wrote, if you spend more than 30 percent of your gross income on shelter, you’re going to be having a very difficult time making ends meet. You’re going to have trouble having enough money left over to save for retirement and put money into an emergency fund and be able to do other things you want to do. And people just came unglued.

Because I live in Los Angeles, and the Los Angeles Times is my biggest client in newspapers, I got all these letters saying, “You just don’t understand how expensive it is to live in Los Angeles!”

And I wrote back saying, “No, it’s just the math. I’m not saying you can’t spend 50 percent of your income (on housing). I’m saying if you do, you want be able to do these other things like retire.”

It’s kind of ingrained in people that they are required to spend a certain amount. So what I suggest people do is let go of that.

Nothing should be off limits. You should be looking at everything about your life to save money. Some people are set up so that all they need to do is eat out a bit less, maybe carpool once a week, bring their lunch to work and they can save enough from doing that. They will be able to make themselves comfortable.

Other people have over-committed so that they are spending too much on their car payment, maybe they have a child care situation that is too much for their budget, but it’s big stuff.

Nobody likes to take a step down in their lifestyle, but in order to make ends meet, that might be exactly what they have to do. If you’re really serious about financial freedom, you have to look at everything.



This is the prototypical personal finance question and the answer always varies depending on who you ask, so what do you say? Should be people save money and pay down debt at the same time or tackle debt first?

I’m one of the both-at-the-same-time people, and the reason is because of the value of time.

When you’re saving for retirement, some things are obvious — you don’t want to give up free money. If you’re getting a match at work, you should be putting in enough to get the match at least.

Retirement is so important and it is so hard to catch up if you get behind. And you should have a small amount of savings, $500 is enough to start. And then you can start on your toxic debt: credit cards.

Once you get the toxic debt paid off, then you can look at building up your emergency fund. I can’t agree with the folks who say focus on paying off your credit cards before you do anything else because they are only looking at one thing — the interest rate you’re paying on that one card — not at the damage you’re doing to your overall finances.

It’s hard for people because once they realize how destructive that debt is, they want to get rid of it right now. But it’s that impatience that got them in trouble. They need to hold off and breathe and look at the bigger situation and maybe take a little longer to pay off that debt to make sure that they’ve got their future secured.



When people think about building wealth, they think about investing in the stock market in a lot of cases. The stock market has generated good returns over time. But lately the market has been very volatile. Do investors take a leap in faith by continuing to invest in the stock market in an attempt to get higher returns?

The stock market is always volatile.

They frequently go through periods like this where they go sideways and they go down and all that — but the people who manage to build wealth are the ones who invest anyway, that just stay the course.

It’s really impossible to time the market accurately. You could pull out all your money and stuff it under your mattress, but then you’re going to miss the big rally when it happens. By the time you get back in you’ll have missed most of those gains. It’s hard to do for some people.

For me, we’ve always had it on automatic, we invest no matter what and our net worth just keeps growing. Even in bad times, if the market doesn’t do well, we just put more in, buy those stocks on sale.

If you have a diversified portfolio and you don’t fiddle with it all the time, eventually you’re going to do fine. You’re going to come out ahead.

Our brain tells us that whatever happened in the recent past is what is going to happen forever, and that’s what leads to these bubbles. Because people think that dot-com stocks will go to the sky or real estate will never lose value, and they all pile in and they forget that everything is cyclical.

Then when things go bad our little reptile brain tells us that everything will always be bad. Things will never get better and I have to take my money out now.

If you can resist that and put everything on automatic and go on with your life, eventually, you will come out much richer than if you run around chasing hot investments or try to save yourself from some risk.



What final piece of advice would you like to impart to Bankrate’s readers?

I think the best piece of advice I can give folks is that it is in their power to be financially independent.

Whatever their circumstances now — if they want it enough, they can create the wealth that they need to stop work at some point. It may not happen as fast as they want, it may not happen in the way that they predicted, but the fact is that these principles of paying yourself first, avoiding toxic debt, staying in the market — all those things will eventually add up to wealth.

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