Posted 03/04/2010
How to Dig Out of Debt, Part 2
Paying only with cash changes your outlook
By Deborah Hoskins, JD, CFP
Have you lived without your credit cards for the last week? Has it seemed rather mid-20th century, or even un-American, to go “cash only” for all of your purchases?
If it feels odd, just remember that your ancestors lived this way for all of history; consumer debt is a recent luxury. You may also feel like a little kid again, carrying your weekly allowance around in your pocket for purchases. Trying anything new is bound to feel strange until it becomes a new habit. Read More >>
If it feels odd, just remember that your ancestors lived this way for all of history; consumer debt is a recent luxury. You may also feel like a little kid again, carrying your weekly allowance around in your pocket for purchases. Trying anything new is bound to feel strange until it becomes a new habit. Read More >>
Posted
How to Dig Out of Debt, Part 1
Overspending and income levels are not necessarily correlated
By Deborah Hoskins, JD, CFP
At the end of 2008, the total credit card debt of Americans exceeded $972 billion. For those households that had a credit card, the average outstanding credit card debt was $10,679. Uninsured medical expenses, lost jobs, and other emergencies no doubt contribute to many Americans falling behind. However, overspending—otherwise known as deliberately living beyond your means—is a significant cause as well. Read More >>
Posted 02/18/2010
Credit Card Rules Are Changing, Part 2
You’ll see the true cost of making minimum payments
By Deborah Hoskins, JD, CFP
The Credit CARD Act of 2009 will be the law of the land on February 22. It gives consumers greater protection from the abusive practices of credit card companies, as well as better education on responsible credit use. I know that the word responsible implies a values-laden judgment on credit usage. My goal, however, is not to chastise or shame, but to nudge you toward better financial planning practices. I define better as that which saves you money. Read More >>
Posted 02/12/2010
Credit Card Rules Are Changing, Part 1
Some new features are worth paying attention to
By Deborah Hoskins, JD, CFP
Have you noticed a flurry of mailings from your credit card account providers lately? Since the first of the year, I’ve received many letters that all start the same way: “Important Notice of Changes to Your Credit Card Account Ending in xxxx.” Almost all of them are notifying me of higher rates on any balances I might carry. Since I never carry balances, I just briefly scan the brochure and duly file it away without a second thought. Read More >>
Posted 02/05/2010
Charitable Giving to Haiti
Do your due diligence online
By Deborah Hoskins, JD, CFP
Since the January 12 earthquake that devastated Port-au-Prince, Haiti, Americans have opened their hearts and wallets to aid the survivors. Compassion and generosity have surged. Unfortunately, so have scams. But there are a few simple things you can do to ensure that your charitable intent is honored and carried out by reputable organizations. Read More >>
Posted 01/29/2010
Should I Pay Off My Mortgage? Part 5
We can make educated guesses based on history
By Deborah Hoskins, JD, CFP
Before we leave the story of Jim and Sue, there is one more angle to consider in any mortgage payoff analysis. The bane of most investors, especially retirees, is the increase in the cost of living, also known as the reduction in purchasing power, or inflation, for short. Over the last 80 or so years, inflation has averaged 3%. What might inflation be over the next 35 years, which is Jim and Sue’s combined life expectancy? Read More >>
Posted 01/23/2010
Should I Pay Off My Mortgage? Part 4
What does history tell us?
By Deborah Hoskins, JD, CFP
There are two more reasons for couples in their 50s and 60s to seriously consider carrying a mortgage. If Jim and Sue were to invest the $200,000 they inherited, what kind of returns could they realistically expect? I never try to guess future interest rates, stock market values, or inflation rates, and I don’t believe in market timing as a consistently successful enterprise. I can, however, point to historical facts. Read More >>
Posted 01/18/2010
Should I Pay Off My Mortgage? Part 3
The higher the tax rate, the more valuable the deductions
By Deborah Hoskins, JD, CFP
So far, I’ve only partly convinced Jim and Sue, our 56-year-old couple, to consider refinancing to a low-cost 15-year mortgage. They’re still leery of taking on debt yet again at their age, and are inclined to use their “extra” $200,000 to pay off their current mortgage and be done with debt forever. But is there a better use for the money, one that will make them come out ahead financially in the end? Read More >>
Posted 01/12/2010
Should I Pay Off My Mortgage? Part 2
Not a simple decision
By Deborah Hoskins, JD, CFP
Let’s return to Jim and Sue, our profoundly fortunate and financially savvy couple with the $200,000 windfall. Should they get rid of their monthly mortgage payment once and for all? They’ve never liked being in debt and feel that the moral high ground leads to a debt-free existence. “Neither a borrower nor a lender be” is their credo, and now is their big chance to truly live it. Besides, think of the interest they’ll save! Read More >>
Posted 01/05/2010
Should I Pay Off My Mortgage? Part 1
Financial advisors disagree
By Deborah Hoskins, JD, CFP
Many people think that the Holy Grail of financial fitness is to be debt free as soon as possible. They’ve paid off all their credit card debt (bravo!), and they buy new cars with cash (excellent idea!). The last thing to go is the mortgage. They have some extra cash from an inheritance or another windfall and are tempted to just pay the thing off and be done with debt forever. But is this the best use of extra cash? Read More >>
