Transfer credit debt to another card?
Dear Dave,
Is it a good idea to transfer your credit card balance to another card that has a lower interest rate? I’ve got a $2,500 balance on my current card, and I’m hoping it will help me save some money as I try to get out of debt.
Trevor
Dear Trevor,
It might save you a little money on interest for a while. The problem is it will make you feel like you really did something when you didn’t.
Lots of times people will switch to a card that has a lower interest rate then run the balance up even higher. Many of these offers also offer a lower interest rate for a while, then it shoots up to an even higher rate than you were stuck with before!
Making the switch is okay, but it’s only 2% of the plan. The other 98% is to go insane attacking this debt and NEVER use credit cards again! Get a part-time job for just a little while delivering pizzas or throwing boxes for a delivery service.
Do this, and you’ll have that debt paid off in less than a year!
- Dave
Diabetic daughter has $25,000 in medical bills!
Dear Dave,
My daughter graduated from college last year, is engaged, and has been working part-time jobs while looking for a career position. She’s also a diabetic, and she had an episode recently that put her in the hospital. The problem is she has no health insurance and is looking at a bill of $25,000. Some people have told her to file bankruptcy. What can she do?
Larry
Dear Larry,
I know it’s a scary situation – for her AND for you and mom. The good news is that medical bills are some of the most flexible to work with in terms of getting a discount for cash in the event that you have no insurance.
Get her to sit down with you or her fiancée and figure out a monthly budget to see exactly what she’s working with. Then talk to the hospital, explain the situation in detail, and ask for a little help and understanding. Let them know that she wants to be honorable and make things right, but that she’ll need them to work with her to make this happen.
Lots of people file bankruptcy in these kinds of situations, Larry. I recommend bankruptcy about as often as I recommend divorce. In other words, I don’t. There’s a good chance the hospital will agree to accept 50 cents on the dollar, so why ruin your financial life for the next 10 years by declaring bankruptcy?
Something like that could kill her chances of buying a home, finding a good job and even affect her self-esteem. She doesn’t need that kind of garbage hanging over her head when she’s just starting out in the real world.
- Dave
What kind of insurance for children?
Dear Dave,
I’m 27 years old, and my wife and I just had our first child. I was wondering what life insurance, if any, I should get for them. I’d also like to setup a retirement fund for my wife, even though she’s going to be a stay-at-home mom. What do you recommend?
John
Dear John,
I’d recommend a Roth IRA for your wife’s retirement. She definitely needs life insurance, too, and I’d suggest about $400,000 in a good level term policy. She’s going to be doing several jobs now that your baby is here, and if something happened to her it would be impossible for you to do your job AND hers.
Honestly, John, you don’t need a separate life insurance policy on a child. Stay away from things like the Gerber plan, and never buy life insurance as an investment. Sometimes people sell this junk as a way to save for your child’s college fund. Don’t buy it!
A $10,000 - $15,000 rider on your coverage or your wife’s term policy will be very inexpensive and take care of final expenses if something tragic should happen. God willing, you’ll never need it.
- Dave