Jewish World Review April 17, 2000 / 12 Nissan, 5760
Invest or repay student loans?
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
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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