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Jewish World Review April 17, 2000 / 12 Nissan, 5760

Bruce Williams

Bruce Williams
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Invest or repay student loans?


http://www.jewishworldreview.com -- DEAR BRUCE: I am a young physician and am doing very nicely for someone so recently in practice; I'm earning almost $150,000 a year. However, I incurred $120,000 in student loans to get where I am.

I hate to have this amount of money hanging over me, but my gut reaction is that paying off these loans early is foolish. I could invest the money in reasonably conservative areas and still outperform the 8 percent that I am currently paying the lenders.

Is my thinking in some way flawed or am I on the right track? -- T.S. (e-mail)

DEAR T.S.: I am with you. While I know that it is hard to sit there and look at these huge balances, 8 percent is cheap money, and why pay it off a day early? But be sure to invest the extra money in decent investments, not highly speculative ones. For a young person, it seems to me an aggressive stance over the long pull will be beneficial.

If, however, you are not disciplined, and you find yourself tempted to spend that money elsewhere rather than investing it, then by all means you should reduce your indebtedness.

DEAR BRUCE: I have always been proud of my 19-year-old son. He has been very responsible, and he worked after school when he was in high school. Now he is a freshman in our local community college, and he works part-time -- a substantial number of hours -- as well as maintaining decent grades at school. But recently he came home and told me that he is going to buy a mini-truck for over $17,000. When I was his age I was driving junkers and was glad to have them.

I do not charge him rent at home because he is a full-time student, but I have to believe that if he can afford a better car than the one I am driving, then by all means he ought to help out at home. -- N.C., Cincinnati DEAR N.C.: Absolutely! If a kid is working and can afford luxuries like a new car, there's absolutely no reason why he shouldn't be asked to contribute at home. Even if it isn't needed, why should he get a free ride?

On the other hand, he has done well in school and he is managing his money, but I hardly think that it is necessary in any way, shape or form for a 19-year-old to be driving a brand-new truck under any circumstances. If he is to exercise his rights as an adult, which he has a right to do, he should also be required to exercise adult responsibilities, which include paying a fair rent for his bed and board.

DEAR BRUCE: We moved into a deed-restricted community, fully understanding that there were some things that we couldn't do. One of those is to park a motor home on our property. We understand the reason why this is objectionable, and we concur.

Now after living here, we find that the association is very, very generous in allowing people to stay, up to a week, parked in their friends' driveways when they visit from the north.

We feel this diminishes the value of our home and certainly diminishes the ambiance that we paid a great deal of money to enjoy.

What do you suggest? -- T.S., Bradenton, Florida

DEAR T.S.: I understand precisely where you are coming from. I too live in a deed-restricted community. I moved here deliberately because I didn't want boats, motor homes and work vehicles parked in the front yard.

I am confident that you will find in your documents that you, as an individual or homeowner, can file a complaint with the court against these folks and require them to move their vehicles. I am sure that they were told specifically what these restrictions were before they moved in. You might wish to discuss it with them prior to filing a complaint, but it takes somebody with a hard nose in these situations to get the area cleaned up.

It is to everybody's benefit to have the deed restrictions enforced. It can do nothing but increase property values and improve the quality of life.

If you don't like these restrictions you shouldn't buy into a deed-restricted community. It's that simple.



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).

Up

04/13/00: Beware of Internet auctions
04/11/00: Six percent is a pittance
04/10/00: Married couples should share windfall
04/07/00: How not to blow an inheritance
04/06/00: Get genetic screening for Tay-Sachs
04/05/00: Beating the look-back period
04/04/00: Providing for retirement
04/03/00: Readers disagree on time shares
03/30/00: The road back to good credit
03/29/00: Pre-tax dollars in IRA taxed later
03/27/00: Gambling on business ventures
03/22/00: Old cars as hobby, not investment
03/20/00: Tax on foreign gifts?
03/16/00: How to buy government bonds
03/13/00: Buying treasury instruments
03/09/00: Subcontractors must pay S.S.
03/08/00: Real-estate lawyers are essential
03/07/00: Don't expect compensation for ideas
03/06/00: Too rich for a Roth IRA?
03/01/00: Is time-sharing a scam?
02/29/00: Paying for nursing-home care
02/28/00: Rely on a real-estate lawyer
02/23/00: Keeping child's money safe from divorce
02/16/00: Just how important is a 401(k)?
02/14/00: Shaky partnership buying house
02/11/00: Protection by residential zoning
02/09/00: Benefiting from a reverse mortgage
02/07/00: Ensure your insurability
02/04/00: Absurd community zoning laws
02/02/00: Money or securities?
02/01/00: Can we KO a custodian?
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...

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