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Jewish World Review Sept. 15, 1999 /5 Tishrei, 5760

Bruce Williams

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Teen drivers drive up insurance -- DEAR BRUCE: My son just turned driving age. I expected the insurance rates to go up, but they went right through the roof! On an old car (a 1989 Chevrolet), the premium went from a little over $200 to $940. I realize that young drivers are a bigger risk, but is there something I can do to bring this down to size? He is too young to legally own an automobile, so I can't even push him off on his own. We have three cars, all of which are covered completely with liability insurance and collision. What, if anything, can you suggest? -- T.M., via e-mail

DEAR T.M.: I know full well the difference in premiums for young male drivers, having raised three sons. There is little that you can do about it, other than encourage your youngster not to have any violations and ask your insurance company if there would be a reduction if he completed a driver's-education program. Often there is. It would seem to me that carrying collision and comprehensive coverage on an old automobile is not the wisest investment. After you subtract the deductible, there is very little left in the event that you have a loss.

Given that you are probably paying a substantial premium for those particular coverages, I'd let them go. Liability, uninsured and under-insured motorists, etc. have the same priority -- whether it is an old car or a new one, young driver or old.

DEAR BRUCE: I have recently purchased a (used) 182 Skylane airplane. The airport manager has asked me to lease the plane back to them when they have a student who wishes to take instruction in a complex aircraft that the school cannot provide. They only pay if the airplane is used. Looks like a pretty good deal to me, but I would like to know your thoughts, since you own an airplane. -- R.L., Iowa City, Iowa

DEAR R.L.: A lot of folks go into these lease-back arrangements to cut down the costs of owning an airplane. I have been approached with my airplane as well with the same scenario -- the airport needs a complex aircraft to do instruction in. I rejected this arrangement because I am not comfortable with strangers flying my plane. Right now, I know who made the last landing; I wouldn't if the plane had been used as a training vehicle. It is a very lopsided affair in favor of the school. Oftentimes people are persuaded to invest in planes on this basis, and seldom does the investment pay. Only if entering into an arrangement of this kind would make a difference in your ability to own a plane would I consider it.

DEAR BRUCE: Talk about extremes! I am currently employed and live in the state of Mississippi. We have one of the lowest costs of housing in the nation. My company has proposed transferring me to California, which has some of the highest housing costs in the country. My current home is worth about $150,000, and it has all of the amenities that one could want: four bedrooms, an in-ground Jacuzzi, a beautifully landscaped lot, etc. It's at about the top of the line in its size and class. I visited California last week and found what I would call a "starter home" valued at over $300,000 -- a home such as the one we currently live in would easily be $450,000. We are willing to make the move, as we are not native to Mississippi, but we can't figure out how to compare the cost-of-living. Aside from state and local taxes, how do you get a handle on the differences in cost? -- T.A., Biloxi, Miss.

DEAR T.A.: Talk about culture shock -- you have found the ultimate! You can figure, in raw numbers, that for every $100,000 you have tied up in a house, you will have to come up with $1,000, or 1 percent a month. This is not a hard-and-fast rule, but it's a good barometer. Just for the cost of housing, you will need $36,000 a year to enjoy the lifestyle you currently have in the California area. In addition, you will find that gasoline is considerably higher in California -- as are new cars, because of pollution laws. The other staples of life probably won't vary much from what you are paying now. You will need an increase of $40,000, plus the tax consequences of the increase. The cost of real estate in that part of the world boggles my mind -- I suppose it's great for the person who bought a house for $15,000 several years ago, but how growing families can afford homes in the $400,000 range is a mystery to me.

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).


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...

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