How to Buy a New Car with All Cash I wouldn't walk across hot coals for the fun of it. But if I could be shown how a short, painful walk would do away with a lifetime of worry, frustration and the fear that comes with constantly being broke, I'd do it. While the method that follows …Read more. Tricks Retailers Use to Get Us to Spend More Who knew that the male brain is hot-wired to believe if a price tag is printed in red, it's a bargain — even if that item's not on sale and it's just the regular price? I didn't, but I don't doubt the Oxford University study that found men …Read more. Letters From my Readers Dear Mary: I wanted to tell you the secret of sticking to a budget on our family vacation — something we've had a hard time achieving in the past. This year, we let our teenage daughter plan the vacation. Seems too simple. We told her the …Read more. The Truth About Extended Warranties Recently I stopped into Toys "R" Us to get a little something for Eli. Yes; I am one of those grandmothers. We found the cutest toy shaving kit, just perfect for bath time. The price was under $10. At check out, and without missing a beat, the sales …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.
COPYRIGHT 2011 CREATORS.COM