Minivans a good family-car buy?
Minivans aren't cheap, but they may be worth it for your family (Question #4). Also in today's Reader's Mailbag: saving for school (#1), splitting mortgage payments (#6), and finding a credit union (#8).
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The amount you would save by splitting your payment is roughly what you would earn on $600 at 5.25% interest over 15 days. This adds up to $1.31 per payment – in other words, not too much to worry about.
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The Simple Dollar is a blog for those of us who need both cents and sense: people fighting debt and bad spending habits while building a financially secure future and still affording a latte or two. Our busy lives are crazy enough without having to compare five hundred mutual funds – we just want simple ways to manage our finances and save a little money.
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Over a long period, that extra $1.31 will add up, but it will at most add up to a partial single payment at the end of your loan.
My suggestion to you is that if you can automate all of this, go ahead and do it. It will amount to a small bit of savings along the way, particularly if that early payment causes no cash flow issues for you right now.
Q7: Walking away
I am 53 years old. I was married for 34 years and have two grown children, both gainfully employed with retirement plans in place and health insurance coverage. For the most part, my work is done. Just as my husband i were looking toward the future, he was diagnosed with terminal cancer on January 1, 2009 and died in March of this year. Prior to his death, he worked for the same company for 31+ years with good benefits. I work, but it was more to keep me busy than a need for the income. Prior to his death, Jerry and I managed to get out of debt with the exception of our house and start saving. Fast forward 8 months later. When Jerry died, I believed I had life insurance benefits and did not worry overly much. Most of our “emergency” funds were used up during his illness. I took FMLA leave the last four months of his life and took care of him full time. While he had life insurance benefits through his job, I didn’t realize until he was on disability that once you’re on disability, those benefits are substantially reduced. Also, while you’re on disability because of a terminal illness, it’s impossible to get life insurance. It’s like chasing your tail.
Now the situation has changed. Upon his passing, I learned that I have a huge mortgage payment and very little insurance to cover it. I make about $50,000.00 per year. I have collectively $110,000.00 in a 401(k); I have $70,000.00 in savings and except for the house, no debt. I have two cars, both free and clear. That’s it. In a perfect world, I make enough to pay my expenses and to save something every month and enjoy my life; however, the mortgage payment of $1,300.00 on the first and $300.00 on the second is killing me. I have to take money out of savings every month to make ends meet. While the house is (was) in both our names, the mortgage was in his name only. I have not told the mortgage company about Jerry’s passing, I simply make the payments every month and they leave me alone. I could and will put the house on the market, but I owe approximately $170,000.00 on the house and cannot hope to cover that in this market, but I will try. With winter fast approaching in northeast Ohio, it is not the optimal time to list your house. Not only do I need to sell the house because I cannot afford it, but it’s a large, 5-bedroom, 4 bathroom house and I’m the only occupant. The energy bills alone are monumental. Also, my commute is approximately one hour each way to work. I need to live closer to my work and in a smaller house.
Here’s my question and it’s twofold. I would like to stay in the house over the winter because now is not the time to list it. I would like to put the house on the market in the spring when everything looks better. If, after a reasonable period of time, I cannot sell the house, I would like to call the bank and tell them they can have it. How badly will this hurt my credit? I never worried about it before because everything was in his name but now that I’m on my own, my credit score is (obviously) more important to me. Secondly, if I do manage to sell the house, it will be, I’m sure, at a shortfall. Will I be responsible for any leftover debt? I feel like I’ve been merely existing these last 8 months but I’m ready to at least start looking ahead so any information you can provide me would be sincerely appreciated. While I do not want to “beat” anybody out of money, I’m not so naive as to believe that a lending company will care overly much about my future. If, after reading this, you have other ideas that I haven’t thought about, by all means, please tell me. Any advice you can give me is appreciated. Thank you.
- Jo
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