Free Financial Advice

Financial Questions from Our Visitors - Page 14

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:

I like your site. It makes sense and seems honest. I have just found out about online services like passport and Checkfree.  I started to enroll but balked when I realized I would have to give my passwords to every account to them. What is your opinion of this?

Response:

Personally, I'm not too worried about giving out my passwords to sites like Checkfree and Passport. They have good reputations and, in my opinion, there isn't much risk that someone will steal your information.

If you are only interested in paying and receiving your bills online, this should be easily attainable at your bank. Almost every bank offers online banking, where you can receive and pay e-bills online (like Checkfree).  If your bank doesn't offer these services, try switching banks.

Question:

I have a $7,200 bonus coming due October 1. I don't know if I should pay off my car (6%) or 4 other little loans, that will leave me with money left over. All of the little loans have a higher finance charge. Either way, I will reduce my bills by $400 a month. Which is better?

Response:

I'd recommend paying off the loans with higher finance charges first. You may even consider investing any money you have left rather than spending the rest of the money paying off your car loan. That way you can withdraw the money if you need it for something else, and chances are, you'll earn more than 6% on the investments.

Question:

My wife and I currently make $60K a year combined. We have a mortgage payment of $650, a home equity loan payment of $120, but we have been paying $325 a month, $10K in credit card debt, and other bills.

From our home we drive 2 hours round trip back and forth to work. We want to move closer to work, but the cost of living in the city is much higher. Also, we feel strapped with paying bills because of the $10K credit card debt. We have little savings and are stretched thin each month with bills. We were thinking of selling the stock investments we have in order to pay off the credit card debt and possibly move closer to work. The sale of the stocks will deplete our portfolio and we will have to start over.

I am 30 and my wife is 26. We feel we are still young enough to save and invest if we deplete our stock portfolio, but on the other hand, it is hard for us to let go of this investment. What do you recommend?

PLEASE give us your advice in this matter. Thank you!

Response:

I'll answer your question with a few questions that youll need to truthfully answer before making your decision:

- If you are so stretched paying bills right now, will you be able to afford living in a higher cost area? Even if you pay off the credit card debt, are you sure you'll be able to stay out of credit card debt and save money when you move? Surely your mortgage will increase if you move to the city. Can you sell a car and take public transportation to offset the higher cost?

- Also, if you pay off the credit card debt, will you be able to put the money you were paying on your credit card back into a savings or investment account? If not, it may be better to keep your investment and continue feeling stretched until your debt is paid. That way you are more likely to save money.

Overall, paying off your debt with savings isn't a bad idea, especially at your age. Just make sure that you don't go back into credit card debt and that you can continue to save something each month.

Question:

MY WIFE AND I EARN ABOUT 45,000 - 50000 A YEAR, WE HAVE 30,000 IN MY 401K AND 10,000 IN IRA'S, 5,000 IN SAVINGS WE CONSIDER AN EMERGENCY FUND AND 1,200 IN A SAVINGS WE USE FOR INCIDENTALS. WE HAVE VERY LITTLE CREDIT CARD DEBT, UNDER 1,000 WE OWE 14,000 ON OUR HOUSE AT 7.5% SHOULD HAVE IT PAID OFF IN LESS THEN 4YRS. WE OWE 4,000 ON A HOME EQUITY LOAN AT 4.5%. I HAVE A 20,000 LINE OF CREDIT ON THE HOME EQUITY LOAN AND HAVE BEEN THINKING OF USING IT TO PAY OF THE HOUSE AND USE THE MONEY WE NOW PAY ON THE HOUSE MONTHLY TO INVEST FOR SHORT TERM EXPENSES WE HAVE COMING UP SUCH AS DAUGHTERS WEDDINGS FOR 2 OF THEM IN THE NEST 5 YRS AND COLLEGE FOR A THIRD WHO WILL BE STARTING IN ABOUT 4 YRS( WE ARE ALREADY IN THE PRE PAID TUITION PLAN IN OUR STATE)

THE HOUSE PAYMENT IS ABOUT 350.00 MONTHLY AND WE PAY AT LEAST 200.00 A MONTH ON THE HOME EQUITY LOAN THAT WOULDN'T HAVE TO CHANGE. DOES THIS SOUND LIKE A SOUND PLAN?

Response:

Your plan sounds fine to me. It makes sense to use your line of credit to pay off your higher interest rate loan. However, if you don't plan on paying off the line of credit soon (the next few years), and the rate is adjustable, you face the risk that the interest rate increases to more than the fixed rate you were paying for the original loan.

Question:

I have a question regarding prioritizing my debt. I would like to pay off my car loan with in the next year by paying large amounts on the principal (i.e., tripling my payments). However, a friend told me that it's not best to pay off loans on depreciating items (e.g., car). I have a limited income and currently my credit card and car payments consume most of my income making it difficult to save. I am hoping that if I pay off my loan and credit card I can use the freed income for savings. Any advice you could offer would be helpful. Thank you.

Response:

I think it is a great idea to pay off your car loan quickly, especially if you are paying a higher interest rate. However, if you have credit card debt at higher rates than the car loan, you should make the extra payments to pay those off first.