Bruce Williams
http://www.jewishworldreview.com --
DEAR BRUCE: My wife and I are having a dispute on how to pay off our debts. We owe $15,000 and own a small janitorial business that is doing well.
I say that we should get a home-equity loan and pay them off as soon as possible. She says that we should keep the credit cards and pay more than the minimum payments. She is afraid of getting the loan because she thinks that if we ever need the money for an emergency it will not be available. -- N.N. (e-mail)
DEAR N.N.: I am somewhere in between you and your wife.
I am not happy with a home-equity loan that stretches the payments of credit-card debt over five, 10, 15 or more years. On the other hand, if you have the discipline to retire your obligations within, at the most, a 36-month period, then it is obvious that taking the home-equity loan, which is deductible if you itemize your taxes, will cost a whole lot less than the credit-card debt interest rate.
The critical factor here is the discipline. If you take the loan and just continue to make the regular payments, you are paying time and time again for clothing, meals, trips and so forth, which should never be stretched over a long period of time.
DEAR BRUCE: I will make it short and sweet. We will be building our home in approximately four years. We want to invest the money that we have saved in either a money-market account or an index mutual fund. Which would you recommend? Is there another alternative? J.K. E-mail
DEAR J.K.: Given the two choices, money market or index fund for a four-year period, I would go with the index fund.
I would also suggest that you at least consider an investment that is considerably more aggressive. It would be a shame to not take advantage of the successful returns that the market has shown over a period of time. It has to be pointed out, however, that nothing is guaranteed, and not only could you not make money, you could take a hit. But doing it the way you are considering doing it now is only a tiny step ahead of inflation, and that, to me, is a huge waste of a resource.
DEAR BRUCE: My father died and left money for our two children for their college education, and he appointed my aunt as custodian of their accounts. The money was set up in a living trust invested mostly in bank instruments.
Because we don't like the way she is handling the accounts, we have asked her to move the money over to us so that we can be in control of our children's investments. After all, these are our kids.
Would it be a lot of trouble to have the custodianship switched to us legally? Originally, they had to be 25 to get their money, but now some statements say 18. The issue seems to be getting more and more complex. -- D.W. (e-mail)
DEAR D.W.: If the trust was set up with your aunt as a custodian, it might be very difficult to have it removed unless there is cause. And while you may disagree with her investment strategies, that is hardly cause to have her removed as custodian.
Why the age discrepancy of 18 and 25? I have no way of knowing. It would seem that if the money were to be used to pay for college, 25 would be an inappropriate
Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).
01/31/00: Why sell a home you love?
01/26/00: Everyone needs a will
01/25/00: Will splitting stocks affect rollover?
01/24/00: Should early retirees contribute to SEP?
01/21/00: Strategies for paying off debt
01/20/00: Is 15-percent growth achievable?
01/19/00: Selling a second home
01/18/00: Running from a time-share
01/14/00: Don't be a spendthrift!
01/13/00: Who gets the house?
01/11/00: It all depends on size of estate
01/06/00: Check references before hiring an advisor
01/04/00: Savings bonds a bad investment
12/31/99: Out of state ain't that great
12/29/99: Warranty rip-offs
12/27/99: Checking up on investment handlers
12/23/99: Options good only when company's strong
12/20/99: Capital gains tax sometimes best
12/17/99: Don't give up your nest egg
12/15/99: Small-claims court no panacea
12/13/99: Termite company not liable for termites?
12/10/99: Services provided must be paid for
12/06/99: How do we minimize house-sale gain?
12/06/99: Maximize your tax shelter!
12/02/99: My neighbor won't maintain even a modicum of civility
12/01/99: Long-distance rentals a bad idea
11/29/99: Mortgage strategy A-OK
11/18/99: Students can work and learn
11/16/99: Value is what will sell
11/11/99: Y2K: No big deal for real estate
11/08/99: Real life is tough luck
11/03/99: The right time to cash a savings bond
11/01/99: Slow road for savings accounts
10/29/99: What do you want from insurance?
10/27/99: You have a right to see your tax forms!
10/25/99: Why own a house at 65?
10/22/99: Online fine, but CDs?
10/20/99: Love, honor -- and separate credit
10/18/99: Find the value of your stocks
10/15/99: Property lien prevents trade
10/13/99: Clear up debt, only then tie the knot
10/11/99: If it ain't broke...
10/04/99: Should I stick with the company IRA?
10/04/99: Get a financial education!
10/01/99: Insurance: Not much one person can do
09/30/99: Lost tickets are lost cash
09/29/99: Trusting only one financial planner
09/27/99: Adult children should help out
09/24/99: Tips for first-time home buyers
09/21/99: Use the rule of 72s!
09/17/99: Legal strategy can be a pain
09/15/99: Teen drivers drive up insurance
09/13/99: Always use an attorney!
09/10/99: Whose taxes are they, anyway?
09/08/99: How do I roll over my 401(k)?
09/03/99: How can I work out my IRS payments?
09/01/99: When your company can't pay you
08/30/99: Beware of shady viatical investments
08/26/99: Landlords vary on security deposits
08/25/99: Educational IRAs must be spent on education
08/23/99: Finding out the value of old stocks
08/20/99: How to get an FHA refund
08/19/99: 100 percent financing is a scam
08/16/99: Will I have to pay a capital gains tax?
08/16/99: Thinking about PMI
08/13/99: Short-term mutual funds a-OK
08/11/99: It's your job to shop around
08/10/99: Sometimes, roots need to be uprooted
08/09/99: 'Pre-approved' doesn't mean a thing
08/06/99: Only you can determine your investments
08/04/99: Bank IRA the lowest-risk option
08/03/99: Reverse mortgages good for the elderly
08/02/99: Get the survey BEFORE you buy the house!
07/28/99: Get a lawyer -- it's worth it!
07/27/99: If it ain't broke...