Date: Sun, 22 Feb 2004 08:35:47 CST
Subject: Re: Home equity loan - bad move?
From: "John A. Weeks III"
Newsgroups: misc.invest.financial-plan
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In article <3a81cd7b.0402212355.37133660@posting.google.com>, Mr. Land
wrote:
> > When you
> > are having financial problems, you don't need to be driving a
> > luxury car.
>
> I don't, believe me. But we do have our twin daughters in a private
> Catholic school, which we really want to keep doing if at all
> possible. I guess that's our "luxury car".
You say that your car payment is $500 a month, and I recall it
being for at least 3 more years. That car had to have cost at
least $20,000 to have a monster car payment like that. One can
buy a nice Hyundi 4-door sedan family car that gets good gas
mileage and has a 100,000 mile warranty for around $12,000. Buying
a car that costs about double that fits my definition of a luxury
car to a tee. Car dealers and car ads on TV go to great lengths
to try to convince people that they have deserve all these expensive
cars, but the fact is that anything above basic transportation is
a luxury that is supposed to be optional, not a basic human right.
> > car when you can pay cash for it later on. To buy some time, call
> > all of your credit card companies and look for low fee/low rate
> > balance transfers. If you can get a 0% or a 2.9% for your credit
> > card debt, then do it--it makes little sense to put up your house
> > if you can do it with a balance transfer.
>
> You mean the bank issuing my VISA is going to be willing to transfer
> my $4000 @ 18% balance to a 0% account? That's amazing.
Yes. There are two scenarios.
1) call your credit card company, tell them that you have a better
offer, and that you are considering closing this account. Many
companies will sweeten the deal to keep you on board, especially
if you have a clean credit history.
2) most Americans have about a dozen credit cards. You likely
have a few that you are not using. If so, call all of these companies
and offer to transfer your balance and to use their cards if they
will cut you a nice deal on a balance transfer.
You would be amazed at what you can get just by asking.
> > If your income downturn is a long term situation, then I'd suggest
> > selling the house and moving somewhere more sensible. You have the
> > potential to make a $150,000 profit on a $30,000 investment, which
> > is making 5 times your money. I'd take that deal any day of the
> > week. Selling your house will clear up your mortgage debt, eliminate
> > your monthly $2000 hit, and get rid of the pool loan. Combine that
> > with selling the luxury car and paying off your credit cards, you
> > could live somewhere in the country in a brand new home that is
> > fully paid for and still have cash in the bank.
>
> That does sound pretty good...unfortunately, for the same reason that
> our $269,000 home is now worth $420,000, we'd have a hard time finding
> even a starter home for $150K in our area.
That is one of the reasons that U-Haul is such a successful company.
You go there, rent a truck, and haul your stuff someplace where
housing is cheaper. For example, in my home town, you can buy a
brand new 3 bedroom house complete with landscaping and applicances
in a brand new subdivision for $119,000. Why live in some bug-infested
rat hole for $500K on the west coast or near Boston when you can get
a brand new luxury home in the crime-free midwest for 1/4 the cost?
You could do the same kind of work in Kansas that you do on the
left coast. They have airplanes in Kansas, in fact, they build
lots of them there. The key to thriving in the new 3rd world
America that Bush has created is to think outside of the box.
-john-
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John A. Weeks III 952-432-2708 john@johnweeks.com
Newave Communications http://www.johnweeks.com
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