Stop Making Bad Decisions I saw the funniest sign recently. But it wasn't funny for long because I started to think about it. It read, "Everything happens for a reason, sometimes the reason is you're stupid and make bad decisions." Ouch! Those 15 words hit hard. I've made my …Read more. Your TV May be Watching YOU I took a little heat the day my son walked in and noticed the tiniest piece of Gorilla Tape I'd strategically stuck over the built-in camera on my MacBook Pro. "Paranoid much, Mom?" Ever since I'd read a news story about how identity thieves are …Read more. 25 Ways to Chop Your Grocery Bill Need a foolproof way to cut your food/grocery expenses by 25 percent this month? Announce to your family that there will be a complete ban on the consumption of food during the first week of every month. There. That should do it! Twenty-five percent …Read more. When Frugality Is Not Fun I was not born frugal. Everything in me cries out to spend, acquire, spend, achieve, amass! I am drawn to the extraordinary, the luxurious and the unique. I live with visions of grandeur and opulence. My fondest dreams include custom-tailored …Read more.more articles
Which is Worse, Bankruptcy or Repossession?
Dear Mary: Which is worse, bankruptcy or repossession? There is too much negative equity in my car to sell it, and I cannot afford the payment since my husband passed away. The life insurance is not enough to pay all the bills plus the car. The finance company won't finance the negative equity so I can sell the car. Should I borrow the $12,000 from my 401(k), sell the car and pay the difference to the finance company? I really need help with this. — Bettie, email
Dear Bettie: I am so sorry to learn of your husband's passing. I can't imagine having to face financial problems and deal with unspeakable grief at the same time.
As for your question, bankruptcy is a lot worse than a repossession, not only for your credit score but for your personal feeling of wellbeing. A bankruptcy becomes a public record and a kind of stigma for life, even though it is reported to the credit bureaus for only 10 years. Repossession would be reported to your credit file for up to seven years, and that's it. You do need to understand that if you opt for a voluntary repossession, the finance company may sell your car to the first taker, then hold you financially responsible for the deficiency amount.
If you were to take a loan from your 401(k) to pay off the debt, that could actually boost your credit score because the debt would be reported "paid as agreed." While my advice would be to take that loan, please understand that if you were to leave your job for any reason before the loan was repaid, it would become due and payable.
Dear Mary: Do you recommend gold as an investment? We hear so much about that these days. — Diane, Arizona
Dear Diane: It is always wise to diversify your investments over a wide-range of sectors. Allocating 10 percent to 15 percent of your portfolio to precious metals stocks or exchange-traded funds (ETFs) makes good sense to me. The reason you're hearing so much about gold and silver these days is that the U.S. dollar has weakened to the point of being on a collision course, while the U.S. debt has reached nation-destroying levels. Many people see owning some amount of physical gold and silver as a way to protect their net worth and to create a hedge against inflation. It's something you might want to consider, but only after you've done your own independent research and due-diligence.
Do you have a question for Mary? Email her at firstname.lastname@example.org, or write to Everyday Cheapskate, P.O. Box 2135, Paramount, CA 90723. Mary Hunt is the founder of www.DebtProofLiving.com, a personal finance member website. To find out more about Mary and read her past columns, please visit the Creators Syndicate Web page at www.creators.com.
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