Free Financial Advice

Financial Questions from Our Visitors - Page 3

The examples below are from some of the visitors to Free Financial Advice. The questions below mostly represent word for word the questions asked by the visitors (sometimes including bad punctuation and spelling), but occasionally the questions will be edited on this page. And even though these people have shared their personal finances with Free Financial Advice, we have stripped out any names or other personal information to protect their identity. If you see one of your questions on this page and it makes you uncomfortable, please contact us and we will remove it immediately. Also, please note that any advice or suggestions made from this site are only suggestions and should not be deemed as professional, legal advice. Please see our disclaimer for more information. I apologize for continually mentioning our disclaimer, but this is a very litigious world that we live in.

Question:

Help!!

I am in need of help any advice you may offer would be greatly appreciated. My problem is that the employer I had worked for 10 1/2 years downsized and as a result I lost my job. This was during a time when I had taken a leave of absence for personal medical reasons. My problem is that I am sinking in debt. I have approximately 25,000.00 in credit card debt. My fiancee and I purchased a home last May we since then have married. I am afraid that now the credit card companies will go after him. I think this is unfair since this was all my debt and none belongs to him. Can they do this in California? Or could they possibly put a lien on my home? I have always had spotless credit. But I am finding that the ratio is way off now and I am being denied which is the same situation my husband keeps facing. I fear telling them that I am married in fear they will do wage attachments on his wages. again this is all of my debt and under my previous name. I have heard of going on a "streamline loan" which I am not familiar with the goods and bads on those. A second mortgage is running about 10% right now and frankly not knowing when I will return to the job force because of my medical conditions (I am on disability at the present time) I fear getting deeper in debt. Can you shed some options for me on this? I have also heard of different agencies that will reduce the payment, however how will this affect the reporting on my credit? Please rush an answer as soon as possible. thank you very much

Response:

Correct me if I'm wrong, but it sounds like you are telling me that you have $25,000 in credit card debt and that you have no way to pay it off? If so, here are some of your options:

First of all, credit card companies cannot put a lien on your house.

Also, since the credit cards are under your name, they will not affect your husband's credit.

You have a few options as to ways to reduce the debt, all of them will hurt your credit for the next 5 - 10 years.

One option is to use a debt services company to help you reduce the debt by negotiating with the credit card companies. I have listed some of these companies on my site at: consolidate-debt.html These types of services will reduce your debt and will hurt your credit for 5 - 7 years.

Another option is to declare personal bankruptcy. To do this, you need to consult with a bankruptcy attorney. What happens is that you go to bankruptcy court with your credit card companies and your debt is either eliminated or vastly reduced. This will severely hurt your credit for the next 7 - 10 years. Also, I'm not sure of the laws in California as to whether you can file bankruptcy alone, or since you're married, if you have to file as a couple. You can probably get more information on this by calling your local City Hall and asking them to send you information on bankruptcy or ask them to put you in touch with someone that can help.

Question:

I have a question about college savings plans - specifically 529 plans.

My wife and I have been investing in a college savings plan (UFUND - Fidelity) for the past 3-4 years for our oldest daughter. We started when my daughter was 3. She is now 7. We have been contributing $200 per month. The "portfolio" for my daughter (2012) invests heavily in equities/stocks in my daughter's younger years, and steadily moves towards bonds and money market funds as she ages. We have been taking a beating in these early stages of the portfolio as a result of the current economic conditions, and we feel that some sort of change is necessary.

It is our understanding that The UFUND allows the shifting of money from one "portfolio" to another, w/o penalty or fee. We are considering three otpions at this point:

remain status quo

eave the money currently in Portfolio 2012 (roughly $7500), but switch our monthly contributions to a safer "portfolio" (and therefore stop monthly contributions to portfolio 2012)

take most of the money currently in portfolio 2012 and put it into a more conservative portfolio, but continue with monthly contibutions to portfoilio 2012 (and therefore not make any monthly contributions to the more conservative portfolio)

ANY TIPS/ADVICE WOULD BE GREATLY APPRECIATED!!!!!!

P.S. FYI - the UFUND 529 essentially has options in five categories at this point in the Portfolio's "career" - domestic equities (10 fund choices), international equities ( 2 fund choices), high yield fixed income funds (1 fund choice), fixed income funds ( 3 fund choices), and short term bond and money market funds ( 2 choices).

THANK YOU VERY MUCH !!!!!!!!!!

Response:

It's hard to give advice on something like this because the most important factor in your decision should come from your own feelings. If you are losing sleep at night because you feel the portfolio is too risky, then you should move it into something less risky. However, if you can handle the ups and downs of the stock market, your best bet is to leave the funds in the 2012. I know it's easy to lose faith in the stock market when it continues to slide, but the economy is growing again and eventually this will be reflected in stock prices. Another question to ask yourself is: If you moved the funds to a less risky portfolio and the stock market rebounded for the next two years, would you still be happy or would you be more upset? There are hundreds of other arguments as to what you should do, but my suggestion would be to stay the course of the original investment.

Question:

I have a question that concerns a co-worker who was laid off from his job not too long ago. Although he has not contacted any loan companies, about refinancing, would he be able to still refinance without being currently employed?

I would be interested in this myself since the chance of me getting laid off is still in the possibility range.

Response:

Each loan program varies and there are definitely some programs that would allow you to refinance without a job, especially if you have good credit and if you have a lot of equity in the house you are refinancing. However, generally speaking, the interest rates on these types of loans will likely be higher, so it may not make sense to go forward with the loan. The reason the interest rates would generally be higher without a job is because interest rates are inversely related to risk. The higher the risk that you will not pay the loan back (based on your credit history, whether you have a job, your equity to debt ratios, etc), the higher the interest rate the lender will need to compensate for this risk. You may be able to find an underwriter / lender that doesn't put as much priority on having a job, in which case you may still be able to get a good rate.

If you are really interested in refinancing and still have a job, it would make sense to refinance before you lose your job. If you're interested in refinancing, there are many sites that you can submit your information to for free and they will send your application to hundreds or even thousands of mortgage companies and banks, looking for a program that will meet your needs. Also, you don't have to worry about these companies giving away your personal information (because if they did, then the mortgage companies could call you directly). I have some of these sites listed on my website at the following location: loans.html

Question:

I am not sure if you can help me or not? I have a question if you can not give me this advice could you tell me where I could get a good answer from?

I have about 15K in credit card debt. I want to know if I take 15K out of my stock to pay this off would this be a better plan to get me debt free or take out a low interest loan to pay it off over five years. If I was going to cash out on the stock I am going to take the money I was paying on credit card debt and reinvest it back into the stock market until I reach what every I take out. So, what do you think is the best way for me to go?

Thanks for your help.

Response:

Either approach makes sense. The decision is a very personal one to make, but if I had the choice between the two options, I would hold onto my stock and take out a low interest rate loan to pay off the debt. The reason I say this is because 1) interest rates are at an all time low and 2) stock prices are also at an historic low. Chances are that if you hold onto your stock it will add more to your long term asset value than the interest you would save by selling your stock and paying your credit card debt.

Another option that may apply to you would be to withdraw the $15k from the margin equity in your stock account and pay off your debt. This is a risky alternative and would only make sense if you have a rather large portfolio (> $100k). The benefit is that you can pay off your debt and keep your stock investment. Although you'll still pay interest on the margin portion of your stock account, the interest you pay can be deducted as an investment expense. Even though this is an option, it is a very risky method that I wouldn't recommend using unless you are very knowledgeable with respect to using leverage in association with stocks. Another similar alternative, if you have a 401K, would be to borrow against the 401K to pay down the debt. The benefit here is that you get to keep your stock and the interest that you pay actually gets paid to your 401K account, so it's a win-win situation.

Best of luck, you can't go wrong with either of the first two decisions

Question:

I have a question regarding buying a home. I have extremely good credit, but my husband has extremely bad credit back from when he was in college (5 years ago) How will this affect us going into the loan process. Between the two of us we make about $70K. Is it possible to get a loan in my name only? If so, my worry is that we will not be able to get a mortgage loan for enough money to purchase a house on my salary alone. Any suggestions on how we should go about purchasing a home, or how to make it possible for us to better his credit rating?

Response:

It's always hard to tell what is going to happen after you apply for a loan, as your application will be looked at differently by each lender. Here are some suggestions that may help you find a decent loan:

First of all, do you know that your husband's credit is still bad? Unless he had a bankruptcy, late payments on a credit report are supposed to fade off a credit report after 5 years. If it's been more than five years since any penalties, your husband's credit should be getting better. If you're close to the five year cutoff, then you may want to wait until then to apply.

There are three options that I can think of that could help you get the loan you desire. The first option would be to apply on a joint basis for your loan. If you are questioned about your husband's credit, respond to them with a good explanation as to why the penalties are on the credit report. If you applied for a loan like this through one of the online applications that sends out requests to many lenders, you'd probably find that even if the credit was a problem, someone would probably offer to lend you the money at a slightly higher rate. You could take an offer at a higher interest rate and then use it to improve your credit and then refinance in a year or two.

A second option would be for you to apply for a mortgage independently, but then on your application, when they ask you for other sources of income, list your husband's salary.

A final option would be to apply to a program that offers loans for people that have flawed credit. I have links to these lenders on my site. The only problem here is that you'll surely have to pay a higher interest rate than others. The good news is that, since interest rates are at all time lows right now, that rate could still be a relatively low rate for the long term. I would suggest trying the first option (above) before going directly to a sub prime lender.

Question:

I HAVE LOOKED THROUGH YOUR ADVICE FOR YOUR THOUGHTS ON ANNUITIES. MY HUSBAND MAKES ABOUT $500,000 A YEAR AND IS 37. WE HAVE PUT SOME MONEY IN STOCKS, PAID OFF SOME OF OUR MORTGAGE AND PUT SOME IN ANNUITIES. IS THIS A WISE INVESTMENT OR DID WE GET SWAYED BY OUR INSURANCE AGENT?

Response:

Annuities have their pros and cons. Their pros are that they take away a lot of the risk that you deal with in the stock market and other volatile investments and they also diversify your portfolio. The cons (in my opinion) are that you often pay high, hidden fees to the insurance agent/company and the investments are less flexible than other investments. It is all a matter of preference, but I wouldn't recommend putting a large percentage in insurance annuities.