"Michael Sullivan" <michael[at]bcect.com> wrote in message
news:1gdd9lj.1nzeohd19t73jN%michael[at]bcect.com...
- quote -

I agree. I also agree with the spirit of John's post (I believe), in that
the majority of people think it's okay to spend 25k on a "reasonable" car.
Only reason people think it's "reasonable" is because the auto manufacturers
made it the median price. Truth be told, I own two Hondas, one I was dumb
enough to buy new but it was a value package Accord that, after only a year
and a half, is worth what I owe. Now I've had it for about 3 years and I'm
right-side up on the car, and I have not had to sink a dime into corrective
repairs. Same with my other Honda - a CR-V that I bought 3 years used. It's
a wonderful vehicle, and has been repair/hassle free.

Now here's where I disagree with John - I wouldn't wish a Hyundai on my
worst enemy. That $13,000 new Hyundai is worth $7500 the minute you drive it
off the lot, and 2 years later is worth $3500. Yeah, you could argue that
that only matters if you intend to sell it. But who knows when you may need
to sell that car? Not to mention that Consumer Reports (the only source for
non-anecdotal maintenance statistics, whether we like it or not) still rates
Hyundai as poor, and that 10-year warranty is there for a reason. It's not
really bumper to bumper. My Mother, bless her, was dumb enough to buy a '01
Hyundai for $9500 last year when the '92 Civic that I gave her a number of
years back finally died (no maintenance needed during its entire life). She
got the balance of the "10 year warranty" and needed it within 2 months. I
got in that car and even though it was only a couple of years old, it
sounded like garbage, rattles and all. It was the equivalent of a 1994
Detroit-based manufacturer's car: worthless, creaky, and a repair waiting to
happen.

Ed Zollars, CPA wrote:

- quote -

Well as far as the OP goes, he has a plan on when he will be able to pay
off his high interest debt. As far as CC debt goes, since his plan is to
pay off in under a year, I'd say he can apply for some 0APR for a year
card and transfer all his balances. Personally, I've used 3 0APR cards
to just accumulate the money in a savings account and pay off when the 0
APR ends.

- quote -

Yeah I save less than I could but I'd rather drive what I drive than
save that extra amount After all, happiness is what we're all after
and I'm more happy driving my car than a Hyundai or a Civic or something..

<snip> --
- quote -

Ed Zollars, CPA <ezollar[at]mindspring.com> wrote:

- quote -

If the higher used value of Hondas and Toyotas is because their average
trouble-free life expectancy is longer (and I believe it is), it might
be relevant to *any* purchaser. You can question whether the market has
priced that longevity appropriately, but I wouldn't assume that a new
Hyundai will last exactly as long with the same level of repair expense
as a new Honda.


Michael

"Ed Zollars, CPA" <ezollar[at]mindspring.com> writes:
- quote -

I thought he'd indicated, however, that his debt is currently going
down - ie. he's now spending less than he takes in.

- quote -

I like Eric Tyson's rules of thumb on that - only things that
appreciate or are _necessary_. For most folks, that leaves
purchase of a house, an education, or possibly a business as
things worth going into debt for. For _some_ - for whom the
cash is not available but who need transportation in order
to, say, keep their jobs - borrowing to buy a car - hopefully
a sensible one - is also reasonable.

- quote -

In some industries, a nice vehicle is, in fact, a substantial
asset. Real estate agents, for example, who frequently drive
their clients to houses in their cars. But there aren't all
that many other businesses I can think of where it's as big a
deal.


--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
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"Elizabeth Richardson" <erichktn[at]worldnet.att.net> writes:
- quote -

Actually, a friend of mine is driving a very recent Hyundai and,
while no lexus, it's a nice and comfortable and reliable car.

That said, there's no reason for folks *who can afford it* to
not be driving nicer cars. And, yes, while Bill Gates could
afford $380/mo for a car, so, too, could most middle to upper
middle class folks.

Heck, I'd guestimate that my 8 year old car, which I purchased
used about 3 years ago, depreciates by about $150 per
month. It might level off in another couple of years. All
cars, even thrifty used ones, have costs. One might be able
to minimize that, but there are often tradeoffs - the slower
a car is depreciating, the older it likely is, and the less
reliable, more repairs, etc. are involved.

That said, another big difference in costs is that a new
car with a loan, or a leased car, will mandate collision and
other expensive coverage. I don't carry that any more on
my 8 year old used car, and that, too, saves me a bit.

Anyway, yes, a guy carrying CC debt and not saving a heap of
money is probably not the guy who ought to be spending $380
per month on a car.


--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

- quote -

FWIW, it's a 2000 Jeep Cherokee. I bought it because I love to get into the
mountains for camping, and I also haul medium sized equipment for work. I
leased it for 3 years, then bought it out on a 4 year loan (which I'm a
little more than a year into). The original purchase price of the vehicle
was $23,800. Not exactly extravogant. It is just costing me more because I
leased it first. I leased it, because I didn't want a huge payment that
year (knew I would be buying a house soon). Now I see that making 7 years
of payments on it is a mistake though. This is why I will try to get it
paid off early.

SD wrote:

- quote -

That likely is relevant primarily if someone intends to sell the
vehicle at some point rather than drive it until its only value is
as scrap metal <grin> . Seriously, though, probably a more relevant
issue might be the overall cost of ownership if you are looking at
economizing, and that would focus not so much on depreciation as
expected cost of maintenance, repair and fuel, if we are principally
concerned with the most economical form of transportation.

- quote -

No question he can--the issue, though, is that if at the same time
you are complaining about living from paycheck to paycheck and not
being able to save the amount you feel you need to do, then the
question of where spending could be cut is a valid question and this
would be one such place.

As Skip points out, this really is as simple as insuring that what
goes out is less than what comes in <grin> . And, as Skip noted, the
presence of debt indicates that what has gone out is greater than
what has come in.

There is nothing necessarily unreasonable about having debt and
living with it--most homeowners have (or have had) a rather
significant debt <grin> , and yet I don't see a whole lot of advice
about why you should rent rather than buy a residence (though it
clearly would keep you out of debt).

Before someone jumps all over me on that one <grin> , I would note
that I agree that real estate generally appreciates and that it's
one of the few things that, assuming you don't continually refinance
to "take the cash out", tends to have net equity (unlike an
automobile that over much of the life the debt, has negative
equity). However, that kind of goes to my point--there are reasons
why debt is taken on, some good, some maybe arguably not so good
<grin> . And I'll also note that I've seen people get "house poor"
because they stretch in order to purchase the most upscale house
they can afford to get.

However, you do have to evaluate the totality of your spending
choices against your income and your own savings goals. In the end,
your spending choices have a direct impact on the funds available
for savings. If you "have" to have a new Lexus each year, that's a
choice you've made--but understand that choice will impact you
financially, especially if the Lexus doesn't somehow generate
additional revenue to offset its cost (the "status" of having the
Lexus might help you impress clients--but that impression be enough
to increase your income to offset the expense?).

--
Ed Zollars, CPA
Phoenix, Arizona

"HW "Skip" Weldon" <skip5700removethis[at]hotmail.com> wrote in message
news:j8fk90lmpoqaojjhmt1ktc83mjbu5clbi8[at]4ax.com...
- quote -

The OP is putting $$ into his 401k, he has started a cash account for a
future large purchase, he has significantly reduced his ccard debt, he lives
in his own home. He has recognized that he spent too much in his past and
has been working diligently for some time to change his ways. I just don't
see what the problem with his owning a reasonably priced car. It doesn't
sound like a BMW or Mercedes or Ferrari, for pete's sake.

My point was that just because John thinks no one (and I have seen his past
posts) should own a new SUV, or a comfortable Buick, doesn't mean that
purchasing such a vehicle is a bad financial decision, just because it is a
different financial decision than one John would make. My point was that
each of us makes purchases that others would find of little value. For
instance, I'll bet most of you have too much life insurance, from my point
of view (which is probably a whole new thread).

Elizabeth Richardson

On 6 May 2004 12:55:02 GMT, mes[at]panix.com (Michael Sullivan) wrote:

- quote -

I agree with Michael, and I don't sense that John was against luxury
cars. Rather, my read was that he was questioning the purchase of any
luxury while already so much in debt that it precluded saving.

My first rule of personal finance is that financial security comes
from spending less than our income, then saving that unspent amount
regularly over a career. Debt is evidence (to me) that the consumer
is not doing that.

No question - John gets in poster's faces about this <grin> , but in my
opinion it's occasionally necessary. Too many folks think that debt
is perfectly acceptable because everyone does it. Many do, to be
sure, but that is the reason most never achieve financial security.

-HW "Skip" Weldon
Columbia, SC

- quote -

Do you know how fast your Hyundai will depreciate compared to a
Honda/Toyota/other Japanese car? If he can afford to pay 380$ a month,
why not? We earn money to own the things we want, or we'd all live in
the jungle and live on fruits. He's earning 50k a year, he's not even
married yet, why shouldn;t he buy the car of his dreams?

In article <E6imc.23813$Ut1.697708[at]bgtnsc05-news.ops.worldnet.att.net> ,
Elizabeth Richardson <erichktn[at]worldnet.att.net> wrote:
- quote -

Nothing by itself is wrong with owning a car that cost more than 25K,
but if a person is having trouble paying off credit card debt, owning
an expensive car may be part of the problem.

Elizabeth Richardson <erichktn[at]worldnet.att.net> wrote:

- quote -

Note that I'm not really in John's camp here, but I have some issues
with what you're saying.

A new Hyundai or Saturn is hardly "third-world transportation". Neither
is a 2-3 year old Honda, or wagon. Those look like they fit John's
sense of a reasonable car for a middle-class US income.

While Bill Gates certainly could afford to spend 100 times $380/month on
a car if he really wanted to, why would he? He'd have to think the car
was worth more than the money, and he clearly values money highly. If
he doesn't also value fancy cars highly, I wouldn't expect him to spend
much more than $30-40K on a car no matter how much money he has.

I agree with your general principle that what is reasonable depends on
what is important to you. I think it's worth pointing out that cars
most people don't think of as hugely expensive, are luxuries. It isn't
necessary to spend that kind of money to have reliable and comfortable
transportation, and plenty of people who could easily afford fancy cars,
choose to eschew them in favor of other expenditures or savings. Anyone
who has such a car and isn't saving as much as they want to (or to
support a reasonable retirement), should take a long hard look at why
they have that car.


Michael

"John A. Weeks III" <john[at]johnweeks.com> wrote in message
news:050520041609233076%john[at]johnweeks.com...
- quote -

I don't understand why you want everyone to have third world transportation.
What's wrong with driving and owning a car that cost more than $25,000? Each
of us makes decisions on how we spend our own money. I'm sure you spend
money on things I think are a waste of money. (And get with it -- Bill Gates
doesn't make car payments and if he did it would be for a heck of a lot more
car than $380 month would buy.)

Elizabeth Richardson

- quote -

Point taken

- quote -

I guess that's where I differ a little. I made a conscious decision last
year that by this fall I wanted to have all unsecured debt paid off, in
order to begin saving for the wedding. I am currently on pace to achieve
this goal without having to make any huge changes in my life (ie... selling
car, selling house, selling other stuff...), all I had to do was be more
responsible with my spending. I'm sure there are still more things I could
give up, but so far I am meeting the goals I set. Anyway, after saving and
paying for the wedding (without incurring any other debt!), I have three
main objectives:

1. Payoff vehicle loan early. Without any CC debt, I can start making
double or triple payments and pay it off in a matter of months.

2. At this point I will no longer have CC debt or a car payment..... so I
can start putting $$ into savings. I want to start with enough for 3 months
of expenses.

3. After that, getting rid of any balance on our HELOC will be next.

4. After that, maybe a seperate savings for things like trips or stuff for
the house (basically things we used to use a CC for). Also I want to start
an IRA with payroll deductions, and possibly bump up my 401k contributions.
But accomplishing goals 1-3 will be a great start.

But, I am DONE with CC debt. Not sure why it took me so long to realize I
was getting in over my head. Thank god, I didn't lose my job or something
else.

In the next two weeks, I should have my card under $4000 (still on pace to
pay it off in Nov). Not bad considering I had almost $11,000 in various
cards last summer.

John A. Weeks III wrote:

- quote -

Well, I wouldn't necessarily be as dogmatic about it. But I do
think it's important to realize that having debt is, generally, a
choice you have made and once you are in debt you have to realize
that discretionary spending is part of what keeps you in debt longer.

The problem most people have is recognizing what is discretionary
spending (which goes to cover preferences) vs. required spending
(which covers needs). If you want to be stark about it, almost all
of your spending likely is arguably discretionary if you look
strictly at purely a survival existence. Most of us decide to go
for something more than that <grin> , so we make the choice to incur
a certain level of expense to cover our preferences.

That's not really a problem--so long as you realize it for what it
is. Almost no one "has" to live in a place that costs as much as
they one they are living in right now--but a large proportion of the
population would still phrase it in the "have to" spending category
at exactly what they are spending today. It may be couched in the
view that living somewhere less expensive is unsafe--which may be
true. But I also recall studies that made it rather clear that if
the "safe" location is significantly further away from your work and
adds to your commute, the danger you face from driving quickly
outstrips even the "worst" locations for danger of being killed.

So does that mean we should all abandon our homes and move into the
least expensive place we can find right next to where we work? No,
that's not my point. But my point is that emotional choices are
going to be part of the equation and you can't totally look at
purely quantitative factors in this matter. But neither do you
overlook them.

To me the key question for this person is this--are you making
progress at a fast enough pace on your debt to satisfy you? If you
had to remove $100 a month in spending, where would you take it--and
then compare your "marginal emotional benefit" from that $100 of
spending last month (and all future months) vs. the peace of mind
you would get from being able to be out of debt that much sooner.
If you look at it that way, I suspect you may be able to find $100
to get rid of <grin> .

The real mistake I think most people make is spending without
thinking about what they are really getting for that spending until
they hit their "limit" determined however it may be. That tends to
create the stress when an unexpected event happens that requires
spending (perhaps a car repair) which then immediately takes them
below their "comfort" level.

That's also the reason I suspect why most people perceive a used car
to be a worse proposition than a new car--the unexpected expenditure
is, to them, a much bigger problem than a certain expenditure.
That's true even when it's clear the certain expenditure is going to
be many times any reasonably possible level of actual, but
unexpected, expenditures.

But if you want to help someone get their finances under control,
you have to respect these emotional issues and even bring them out
into the open.

--
Ed Zollars, CPA
Phoenix, Arizona

In article <wU7mc.97$ki5.9050[at]news.uswest.net> , ks
<co_big_cheese[at]yahoo.com> wrote:

- quote -

Nowhere in the stuff you read does it say that debt and paying all
that high interest is healthy. I wasn't on your case for paying off
the debt, I was on your case since you seem to think that spending
is a god given right, and everything be damned. When you are in debt,
you need to shut off everything, and not spend so much as a nickle
on anything other than debt repayment. If you don't attack the debt
like a mortal enemy, you are going to be in the paycheck to paycheck
mode for the rest of your life. If you don't get it, it will get you.

- quote -

You still way overspent. You can get a brand new Hyundia with a
100,000 mile warranty for less than $250 a month. $380 a month is
what Bill Gates can spend on a car, not Joe Six-Pack.

- quote -

Now you know why they call this a "car fleece"--you ended up paying $380
a month on a car that has 72K on it. 10 to 15 year old cars are not
trouble free. Had you bought a resonable used car, you could have
had it paid off by now, and be putting away money for the next resonable
used car. Studies have shown that by doing this, you will never spend
more on monthly car repairs than what a new car payment is, so you
will always come out ahead in both the short run and the long run.

-john-

--
================================================== ==================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ==================

Let me clarify something.....

John seemed to jump all over me when I said I was living paycheck to
paycheck. The reason I said I was living paycheck to paycheck is because
all of my income (after expenses) is going towards paying off my credit card
debt. I think he took it to mean I was struggling to pay minimums on stuff.
If my minimum due is $100, I'm trying to pay off at least $600-$800 per
month.

I have done a budget I found on the internet, and it says a healthy
disposable income is 5% - 10%, I am acutally over that (around 13%), it's
just that I'm trying to get all the debt paid off before I start saving.

- quote -

It's been hard to change my spending patterns, but getting rid of the debt
is important to me before we start saving for the wedding. In fact, I'm
getting ready to call and cancel my gym membership that I rarely use but pay
$37/month for. Every little bit helps.

- quote -

The $13,000 number I threw out there is kind of a worst case scenario. I do
feel we can pay for it all ourselves, but with a little help from the
families, I think we will be funding less of that amount. If that's the
case, we'll still have some $$ in savings.

- quote -

Tell me about it, but I decided to get the 'new' car I wanted. I need a
dependable vehicle for work and I was sick of driving used cars that seemed
to give me problems.

- quote -

It's a 2000, but I leased it and then purchased it when the lease was up.
Probably not something I would do again, but live and learn. I already have
72,000 miles on it. I plan on driving this vehicle LONG past the date when
it is paid off.

Thanks for the advice.

HW "Skip" Weldon <skip5700removethis[at]hotmail.com> wrote:

- quote -

[no savings, credit card debt, large car payment and house payment.]

It seems like you are making real improvements and that is excellent.

The biggest thing I would seriously consider in your place is scaling
back the wedding plans. It's wonderful to have a big fancy wedding, but
it's not absolutely necessary to spend a huge amount of money. Fewer
people, and catering from little ethnic delis instead of big fancy
restaturants can get your cost down and still make for a very nice
party. Yes, I've known people to spend $25000 or more, but we did ours
(5 years ago) for around $5K, and didn't skimp on what we provided for
65 people. I've gone to a number of weddings that didn't cost more than
a couple thousand for 100 people and everyone had a good time.

It can be done, you just have to relinquish the fairy tale expectations.

The key thing to know about weddings is that the costs start to rise
exponentially as you get past "functional", and the price graph goes
vertical when you start getting anywhere near "perfect".

anyway, if I were you, I would feel uncomfortable about spending every
last dollar on the wedding and not leaving anything in savings at the
end.

- quote -

A larger place? You'll be making more money then? It sounds like you
can only just afford the place you currently live in.

The banks will top out a loan size to you based on the mortgage payment
being somewhere between 28 and 32% of monthly income. Maintaining this
level of payment for your whole life, will usually make you house poor.
Stay under 25%, unless you are willing to give something up for your
nicer house. (the exception to these percentages would be if you are in
a really crazy housing market like NYC or SF, where it's hard to find
room to lie down without mortgaging your first born, and this fact is
built into typical salaries).

I would be leery of an ARM, unless you are sure to move in 5 years for
other reasons. You could be in for a *rude* surprise if interest rates
go up and housing prices go down (which tend to happen together -- on
thing driving the recent housing boom is very low interest rates).

Getting an ARM when you are close to the line of being able to make your
mortgage payment is bad news. Fixed rate mortgages are essentially a
kind of insurance against rising interest rates.

An ARM means you are waiving that insurance and taking on interest rate
risk -- In general, you avoid insurance when two things are true. 1)
the worst case is manageable -- i.e. the size of the payment if interest
rates were to reach some historically normal high level (like 9-10%)
will not break you and force you to sell the house. 2) The cost of
insurance is noticeably greater than the expected cost of taking on the
risk.

For most insurance (life/health/auto/etc.), point 2 is a given, because
the person/company selling you the insurance is making all their profit
on that difference. For ARMs this is not always the case. ARMs are
attractive to a lot of people who are stretching to meet the bank's loan
requirements (the lower rate your initial payment allowing you to get a
bigger loan). Because there's a large market of people buying ARMs for
reasons who are not considering the cost of interest rate insurance,
there's no guarantee that the market will set a reasonable rate for
that. Sometimes an ARM will avoid some cost associated with a fixed
rate, and sometimes a realistic estimate of expected cost makes the ARM
*more* expensive than a fixed rate mortgage in the long term. In fact,
because of refinancing and home sales, a typical ARM is structured to
cost more than a competing (higher rate) fixed rate loan if you hold it
for the full term, even if rates stay even! You have to look at what
determines the float rate. It's usually some index + 2-3 points. Look
at what the number would be if you were floating today. Guaranteed it's
higher than what you could get in a fixed rate mortgage.

ARMs tend to be *best* from a cost standpoint when interest rates are
scariest. They have more risk of course, but they scare away some of
the people who aren't accounting for risk, which means that the risk is
discounted more appropriately. With interest rates so low for so long,
ARMs aren't that great a deal right now, and won't be until the whole
mortgage market takes the risk of rising interest rates seriously again.

In any case, whatever the current situation is with ARMs (maybe their
pricing is getting better with Greenspan mumbling about rates lately,
I'm not paying close attention), it doesn't matter because you clearly
don't satisfy point 1. If your mortgage payment went up 20-30% you'd be
up feces creek based on what you've told us so far. that means you
*need* the insurance of a fixed rate mortgage, and should only eschew it
if the cost of that insurance is totally out of line with the expected
risk. It won't be.

Chew on that before refinancing with an ARM.

Cars are an easy thing to spend a lot of money on. $380 a month for a
car is a lot to spend. The fact is, a new car is a bit of a luxury.
I've never owned one. The difference in cost between new and used isn't
as dramatic as it used to be, and I'm not sure you should immediately
sell you car as John Weeks suggested -- but it's something to consider.
At a minimum, you want to keep that car well past the loan expiration
and run it to the end of it's mostly trouble free life, which should be
10-15 years and 150,000 miles on a good car these days.

If you paid $20K or more for a car where you can't expect that length of
service, or you intend to trade it in much earlier than that anyway,
then you really would be spending extravagantly on transportation. Of
course, a lot of people do that but those are people who either

a) make a lot of money (at least 6 figures),
b) really care about their car and are willing to skimp elsewhere to
support having an expensive new car all the time

or

c) live paycheck to paycheck like you've been doing in spite of a
comfortable middle-class income.


Good luck. It looks like you are headed in the right direction.


Michael

"HW \"Skip\" Weldon" <skip5700removethis[at]hotmail.com> wrote in message news:<6eu990pmeqjkmm9cpjjeihmllc1r605mau[at]4ax.com> ...
- quote -


I think the right way would to stop living paycheck to paycheck first
and foremost, pay cash for the wedding as much as possible, and
increase the savings third.

reasons
9% to 401k sound like enough "for now"
living pay check to paycheck is a habit which will be tough to break,
and spending habits between your fiance and yourself will need some
modifications. Set up a budget (see ideas below) to make this
spending known.
Lastly- paying cash for the wedding is a great goal, but if spending
habits do not change now, your financial problems may get worse.

Budget ideas:
make a list of all bills and categorize. My categories are "consumer
loans, debt and transient payments", house and living expenses,
recurring cash expenses and retirement savings.

examples- house and living expenses include the car, house and
utilities, I opened a savings account for these bills and direct
deposit my wifes whole paycheck into this account. The budget is set
up to allow for high payments (let's say a $175 electric Bill), when
in reality ourt highest bill is about $150 and average bill is $111.
Our cell phone, satellite bill, electric and local phone are all part
of this. Every month we have about $100 left which was budgeted for
bills but not spent. We started with a $100 extra in this account and
today this account sits at $6000 cash balance.

transient expenses represent payments which will one day go away.
Credit card debt, student loan debt. Pay more on this as needed. My
wife and I started with about $1700/month in 7 different student loads
and 1 credit card. We are now down to 2 student loans and 1 credit
card payment. The $1700/month is still spent here, but is now used to
pay off the debt in same category. Once all the debt is gone, we will
use this money for a larger house.

recurring cash expenses are gas, grocery, perscriptions and hair .
Each time I get paid, we take out $240 CASH which much last the next
15 days. We pay cash at grocery store, gas pump and hair stylist. It
gets tight sometimes at the 14th or 15th of the month, but it curtails
our spending considerably.

retirement- I put $500 into an IRA for me each month. When I cap out
my IRA in October, the $500 for Novemeber and December are gift money
for x-mas.

FYI, I am 31, save 10% to my 401k and my wife saves 10% to hers as
well.

best of luck with wedding. I've been married for about 18 months and
am still having lots of fun...

In article <6eu990pmeqjkmm9cpjjeihmllc1r605mau[at]4ax.com> , HW \"Skip\"
Weldon <skip5700removethis[at]hotmail.com> wrote:

- quote -

A few observations here:

1) owning a home while living in sin is a bad idea. She doesn't
have any ownership despite contributing to the house. If you die
or leave, she is simply out in the cold. No one should leave them-
selves unprotected like this.

2) your re-fi plan could blow up in your face. Interest rates
are on the rise, and Greenspan has indicated that they will go up
considerably in the next 18 months. With two variable lines of
mortgage credit, you could see your payments go way up. You should
be looking at a fixed rate loan.

3) you cannot even afford the place you have right now, let alone
buying something new in 5 years. You are in over your head, as
indicated by having debt and not being able to save. If anything,
you should plan to sell this house and buy something that is more
in your price range.

4) if you are broke and living in sin, why spend thousands on an
extravagent wedding? How about taking a weekend flyer to Las Vegas
and doing it for $1000, and not going an additional $12K in debt.
Later on, when you are back on your financial feet, then have some
kind of 2nd wedding.

- quote -

OK, you have a $4700 debt at 10%, which is an extremely high rate
of interest, and you have $5500 sitting earning almost nothing.
Do you see a problem in search of a solution here? Pay off the
$4700, and you will save $500 a year in interest. That is like
free money.

- quote -

You have just identified the crux of your problem. You are spending
far more than you earn. You have a house that you cannot afford.
You have a very expensive luxury car that you cannot afford. You
are planning a social event (wedding) that you cannot afford. You
have all these hobbies that you cannot afford. All you are doing
is spend, spend, spend, spend, and you do not have the earnings
to do that. Something has to give here, and if you keep going
this way, it is going to be either bankruptcy or foreclosure.

- quote -

Spend, spend, spend, spend. Wake up dude...you cannot afford to
take a honeymoon right now! You are broke! You are in debt,
and don't even have any life insurance, emergency fund, and
only a pitance in retirment savings. Your priorities are all
screwed up. Wake up and get with the program.

- quote -

Like I said earlier, you have a spending problem. You are a money
drunk. You cannot help spending every dime you have. That needs
to change. You need to go on a money diet. You need to get busy
on E-bay and sell of some of your junk. You need to sell that
car and get something reasonable. You need to call a realtor and
see about selling your house and getting one that you all can
afford. You need to throttle back your extravagant wedding plans.

Finally, you need to get married to that woman and stop living in
sin. How about going down to the justice of the peace and doing
it on Monday? Get it done. Make her a legal part of the family
so she can share in all of the legal benefits of being married
and not be left out in the cold in the event that something happens
to you. If you really care for her, that would be your first move.

-john-

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John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
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