Jewish World Review May 3, 2000 / 28 Nissan, 5760
The binding nature of contracts
DEAR BRUCE: I leased a car a little over a year ago with payments to be made over a period of five years. While the payments were a little high, I could handle it with my overtime pay. The problem is, as you have probably guessed, the overtime pay has gone away and now there is no way that I can make these payments.
I took the car back to the dealer and told them they could have the car back because I couldn't handle it. They said that I was obliged to make these payments, and if I turned the car in, it would be sold and they would sue me for the money they lost. Is this possible? -- P.L. Boise, Idaho
DEAR P.L.: It is not only possible, it is very likely. You signed a contract agreeing to pay for this car.
First of all, financing or leasing a car for five years is a huge mistake, because you will always be upside down by doing the entire loan of the lease period. For example, if you had a very serious accident, your collision insurance would not cover what you owe.
But that aside, you have absolutely no leverage. You can allow the car to be repossessed then sold and then you would be responsible for the balance, called the short fall. Unfortunately, many people go into these things only marginally able to pay. They think "If the bank will finance it, it must be OK." Nothing can be further from the truth when it comes to financing anything -- including homes. The fact that a lender would loan you the money does not mean that you have the ability to repay it.
I sympathize with you, but I suggest that you find a part-time job and keep up your payments. Anything else will put you further in the hole.
DEAR BRUCE: Why are you so down on establishing accounts either under the Uniform Gifts to Minors Act or in children's names? My parents want to establish an account for each of my children, but they are leery of doing so because they say that you say it's a bad idea. We could certainly use the help, and my parents can certainly afford to do this. -- O.R., Canton, Ohio
DEAR O.R.: The reason that I am uncomfortable with money in children's names is that when they reach their maturity, unless very specific directions are left to the contrary, that money will be given to the kids.
This is all very well if you have good solid children, but even the best of families produce kids who go through rough periods. Giving them a lot of money during these periods is the most harmful thing you could do.
I would much prefer to see the money remain in your name, knowing full well that this money is earmarked for the children's education but that they will have no right to it if they are not going to school or are otherwise incapable of handling money. If the money is in your name you would not be required by law to give it to them.
DEAR BRUCE: I would like to purchase treasury instruments. How does one make this purchase? -- R.T., Las Vegas
DEAR R.T.: They can be purchased through your bank, any stock broker, or if you prefer, directly from the U.S. Federal Reserve
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).
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05/01/00: Can primary residence be rented out?
04/28/00: A full refund after five years?
04/25/00: Get a homeowner's title policy!
04/24/00: Beware of errors in your favor
04/18/00: $10,000 limit on gifts
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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...