Jewish World Review Feb. 1, 2000 /28 Shevat, 5760
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
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01/31/00: Why sell a home you love?