Jewish World Review August 25, 2000 /24 Menachem-Av, 5760
When to buy a home
DEAR BRUCE: My wife and I are in a position to buy our first home, but we are concerned about overpaying for an asset in an overheated market. How would you recommend approaching this decision? How do we avoid overpaying? -- J.T., via e-mail
DEAR J.T.: How in the world does anyone anticipate a market? Real estate does go up and occasionally goes down. There was a time when purchasing a home was strictly a matter of investment dollars, but today, given the marketplace, you are purchasing a lifestyle as much as you are making an investment.
What is overpaying? Today's high price is tomorrow's bargain. On the other hand, there have been situations where an overheated real estate market softened considerably, and those people that bought at the top of the curve are hurt when and if they try to sell. Understand that there is no blood or victory until you try to sell the property.
The problem with trying to hit the lows when buying and the highs when selling is simple. It's generally impossible to figure out the precise time at which to purchase or sell. The reality is that no one can buy perfectly, but what you should do is get a feel for the market in the area where you are looking. That way you will at least know that the property you are considering is priced fairly in relation to similar properties.
Beyond that no one can guarantee the future. At the risk of being repetitious, remember you are buying a lifestyle; the dollar investment in the house should be secondary.
DEAR BRUCE: I am 18 years old, and graduated from high school this past June. I have a good job and am making almost $18,000 a year. My dad says that you will agree with him and not with me, so we decided that you can make the call.
I want to buy a new car. The car costs $27,000, but it is a neat car and should last for a long time. My father tells me that it's way more than I can afford, but if I finance it for five years I can handle the payments.
My dad says that I should be buying a used car for a couple thousand dollars and building up a little bit of a nest egg. Furthermore, who knows if this job is going to last?
I think that I can handle this. After all I'm 18 now and a full-fledged adult. My father said that if I go out and do this, he thinks I should get a place of my own. It seems to me that it would be smart to stay at home, where I don't have to pay any rent. What do you think? -- L.C., via e-mail
DEAR L.C.: You have got to be kidding! Son, you are spending over a year's take home pay on an automobile. Nothing could be further from a rational act. Sure it looks nice, the wheels look shiny, but let's face it, it won't get you there any quicker or any more reliably then a previously owned car for a few thousand dollars.
Furthermore the insurance, meaning the physical damage insurance, would be so much more because of your age.
And as a practical matter your dad is right, the job may go away. Until you get your feet in the ground, this would be very, very foolish. One of the ways to prove that you are really an adult is to start acting like one. Good Luck!
DEAR BRUCE: We own about four acres of property, on which our house is situated. Three acres of that is kept in pretty much a rough condition. However, the property around the house is landscaped and maintained.
Some of the neighbor kids have taken to riding their mini bikes on the property that we have left in a natural state. Frankly, I really don't object to that, but my wife is going ballistic. She said that if one of those kids gets injured, we're on the hook.
It seems to me that their parents know what they are doing and there shouldn't be any problem in this respect, but we've come to such an impasse over this that we decided to discuss it with you. -- R.M., via e-mail
DEAR R.M.: Score one for your wife. Letting kids run mini bikes, dirt bikes or whatever on your property is just an invitation for trouble. There is not a question about it.
If one of those kids is injured, even if they built up a hill and are doing bike jumps, you are very much on the hook. It isn't just a matter of getting permission from their parents either, because they have no ability to waive their rights.
If I were you, I would do everything in my power to get them off my property.
It's not that you want to be such an ogre, but you are flirting with losing everything you have if a serious accident were to
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).
08/24/00: More 'interest' to live on
08/22/00: Paying for private school
08/18/00: Don't make huge down payments
08/16/00: IRAs for people with pensions
08/15/00: She doesn't deserve a break
08/11/00: Her shopping will ruin us
Yes, a contract means something
08/10/00: Her shopping will ruin us
08/09/00: A $1,500 car ... for $3,000
08/04/00: Time to take on the airlines
08/02/00: How can I retire at 62?
08/01/00: Cash in your savings bonds
07/28/00: Hold onto a mortgage under 7 percent
07/26/00: I want my partner to buy me out
07/25/00: Negotiate with your neighbor
07/21/00: How can I finally start saving soundly?
07/20/00: Where's my prize?
07/18/00: Getting out of an upside-down loan
07/13/00: Death is no escape
07/12/00: Multiplying dollars
07/10/00: Making sense of retirement investing
07/07/00: 'Bankruptcy does follow us around'
07/06/00: In which state should I file my income tax?
07/03/00: When to diversify assets
06/30/00: I'm buying my dad's house
06/29/00: How social security seniors should invest
06/27/00: Waiting before re-establishing credit
06/21/00: Insuring an older car
06/19/00: Take the money and run!
06/16/00: Utility company incursion
06/15/00: Insurance settlement is no bargain
06/13/00: A straightforward form of bankruptcy
06/08/00: In the computer's clutches
06/07/00: The trouble with tenants
06/05/00: Do I really need title insurance?
06/01/00: The truth about nursing home insurance
05/30/00: Keep mother-daughter loan simple
05/25/00: CDs for security, not investment
05/24/00: Battling with collection agency
05/22/00: Are callable CDs a waste of time?
05/18/00: Building a college fund
05/16/00: Even death brings no relief
05/15/00: House is 'worth' what's offered
05/12/00: Borrow from Mom and Dad?
05/11/00: Your heirs, your choice
05/09/00: Mutual-fund investigations
05/05/00: Credit cards vs. debit cards
05/04/00: Lawyer are good for something
05/03/00: The binding nature of contracts
05/02/00: You know you are in trouble when ...
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
04/17/00: Invest or repay student loans?
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...