Jewish World Review May 11, 2001 / 18 Iyar, 5761
Gift money for children
DEAR BRUCE: I have two children, ages 4 and 8. Their grandparents have given them $5,000 each. What should I do with this money? We have money put away for them for college, so this money could be set aside for a car or whatever they choose. -- S.W., via e-mail
DEAR SW.: Your children are fortunate that their college is paid for. This $5,000 should equal at least $10,000 for your older child and probably more than $20,000 for the younger one when the money matures.
The issue is whose name the money will be invested in. I think it should be in the parent's name. You can then give them whatever amount of this money you choose, considering their maturity. If it's OK for them to buy a car, then so be it. The parent should be in a position to oversee how the money is spent, and that can only be accomplished by keeping the money in one of the parent's names.
DEAR BRUCE: If I get a loan on a credit card in the amount of $5,000 or more, what steps would the company take to collect if I default? Can they force me to give up my rental property, which supplements my income? -- C.M., via e-mail
DEAR C.M.: No one can tell you specifically what a creditor will do in this instance. They will make strong efforts to collect. Failing that, they would sell the account to a collection agency, which will make even stronger efforts. They may get a court judgment against you, then a judgment against any property you own. While they may not be able to force you to sell, they will be there with their hands out when you do choose to sell it. It cannot be sold without satisfying a lien plus interest. Of course when you pass away, they will collect their money.
DEAR BRUCE: We just got an e-mail from a friend who wants to buy a house because he doesn't want to keep throwing away all of his cash in rent. He lives in Buffalo, N.Y., and pays about $700 a month. I know that you have said many times that renting is not throwing money away. What can I tell him? -- M.A., Loveland, Ohio
DEAR M.A.: To buy a house so you don't "throw money away on rent" is a mistake. The likelihood is that your friend could not own a home for $700 a month plus the lost investment return on his down payment. If most young people took the rental route and invested the difference between home-ownership and rental costs, after five years their investment account would very likely exceed whatever equity they might have in a home. Buying a home should be a lifestyle choice, not an investment choice. If they have children and need a backyard, I have no quarrel. To make the statement strictly on the basis of dollars, the equation falls very strongly in favor of the
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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Yes, a contract means something
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