Readers Ask: Pay Off Debt or Buy House

by Kevin Surbaugh

A reader recently asked me what he should do with a settlement he is expecting. He expects to get $93,000 but hopes he will be able to get that up to $125,000. He owes about $75,000 in debts. That $75k includes about $50,000 in credit card debts and $25,000 medical debt. He knows he could pay the debts off and then make a nice down payment on a house, but he doesn't want a house payment at all. This in a market where it is hard to find a house under $100,000 and extremely hard to find anything decent under $80,000. So he wants to know what I think.

My first reaction was to pay off all the debt and have those payments to start ranking up the savings to buy the house. However, after hearing that he wanted to buy a house with cash and get completely debt free I begin to think a little harder about it. Here is what I came up with. Perhaps not exactly what he wanted to hear, but something that he needs to hear.

1. Taxes - The first thing he needs to think about is taxes. He needs to remember to set aside a portion of that $93,000 to pay for the taxes it come April 15, 2012. He doesn't want to make the mistake I made and not have enough set aside. It took me 8-years to clean up that mess. The back taxes cost me more then if I had paid them when they were originally due. Don't think that you will get by and not owe Uncle Sam until after you have filed your 2011 taxes next year.
   


2. If he does go the route of buying a home with the cash, he needs to be sure to then roll his rent payment into his debt payments so that he can get those debts and high interests paid off quicker


3. I would then put the remainder in a high interest savings account, so that it can accrue compounded interest until such time as you can make that house payment.

I personally still think it would be better to get the credit cards and medical debts eliminated, but I also can't begrudge you for wanting to have a place of your own. Especially if you want to do so without incurring any debt in the process. I am completely debt free. I am currently looking at a house built by the city with a grant from the state. I meet in the income guidelines

1 person less then $41,950

2 person less then $47,950

3 person less then $53,900

4 person less then $59,900

5 person less then $64,700

6 person less then $69,500

7 person less then $74,300

8 person less then $77,950

I am attending an 8-hour home buyers class with my wife. At which time we can start the application process. The house a 3-bedroom 2-bath is $110,000 0 down 0% interest. Which the 0 down is a misnomer really, because they do want $500 earnest payment at time of application. So in reality there is something as a down payment. This could be a third option although I know he doesn't want a mortgage either. They don't want any collections over $2500 in your credit report, but they won't look at medical collections. So there are my thoughts. I guess the most important thing which ever option he chooses is to not forget about Uncle Sam's greedy hand and to get rid of those debts ASAP.  A life without debt is much better.

If you wish to ask us a question for this column please submit it by clicking here. Be sure to chose "Readers Ask," from the topic list and at least your home country in the address field. Thanks.

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Flashback Tuesday: Dream Vacation

by Kevin Surbaugh
Today's Flashback takes us back to September 30, 2009, when I talked about one of my dreams: Visiting every presidential library/museum in the country.

I wrote most of this about a year ago, although, it wasn't complete. So Once again, here is the updated post, that I originally wrote in July 2008.

One of my goals is to visit every Presidential Library and Museum. Since, not every President has one, it's really not that hard of a goal to meet. There are only 12, unless you count the duplicates. Nixon and Ford have two locations, so if you count both of those then there are 14. Fords 2 are the only ones that are in the same state. Nixon, has one in Maryland and one in California. Of course there are also other museums that include Presidential homes that aren't part of the Presidential Library and Museum System. Such Museums includes George Washington's home and also Thomas Jefferson's home, Monticello.

So far, the Presidential places I have visited:

Jimmy Carter Presidential Library, Atlanta, GA

Dwight D. Eisenhower Presidential Library, Abilene, KS

Ronald Reagan Birthplace, Tampico, IL

There is also the Ronald Reagan boyhood home, in Dixon, IL. Okay, so now the list of the remaining Presidential Libraries (and Museums) and Presidential attractions that are on my list to visit eventually. One of which is only about 75 miles from me.

1. Ronald Reagan Presidential Library and Museum, Simi Valley, CA
   
2. Richard Nixon Presidential Museum, Yorba Linda, CA
   
3. Lyndon B. Johnson Library, Austin, TX
   
4. George Bush Library, College Station, TX
   
5. Rutherford B. Hayes Presidential Museum
   
6. Harry S. Truman Library, Independence, MO
   
7. William J Clinton Library, Little Rock, AR
   
8. Calvin Coolidge, Northampton, Massachusetts
   
9. Herbert Hoover Library, West Branch, IA
   


10. Gerald Ford Library, Ann Arbor, MI
    


11. Gerald Ford Museum, Grand Rapids, MI
    


12. Richard Nixon Library, College Park, MD
    


13. Franklin D, Roosevelt Presidential Center, Hyde Park, NY
    


14. John F. Kennedy Presidential Center, Boston, MA


15. George H. W. Bush Presidential Center, College Station, TX


16. Bill Clinton Presidential Center, Little Rock, AR


17. George W. Bush Presidential Center, Dallas, TX

In addition, I would love to get to these other locations that aren't part of the National Archives.

Ronald Reagan boyhood home, Dixon, IL

Thomas Jefferson's Monticello, Chancellorsville, VA

George Washington's home/plantation (Mount Vernon), Mount Vernon, Virginia

Of course, I don't know how I would fund such a trip. Still it is my dream. I certainly want to get back to New York, in the near future, and during that trip visit the FDR museum. Perhaps in the near future, I can make it up the road (70 miles) to the Truman Museum for the first time in my life.

Since 2009 I never made it to the Truman Center in Independence, MO (a suburb of Kansas City, MO) and I moved to Austin, TX where I have visited the Johnson Library (the only free one in the system). Below is the updated list: One of my dreams is to visit every Presidential library/museum run by the Nationall Archives. Below is a list of all the current museums and the ones I have made it to so far.

1. ✓ Ronald Reagan Birthplace (Tampico, IL)
   
2. ✓ Jimmy Carter (Atlanta, GA)
3. ✓ Dwight D. Eisenhower (Abilene, KS)
4. ✓ Lyndon B. Johnson (Austin, TX)
5. Ronald Reagan (Simi Valley, CA)
6. Richard Nixon (Yorba Linda, CA)
7. John F. Kennedy (Boston, MA)
8. Gerald Ford (Ann Arbor, MI)
9. Franklin D. Roosevelt (Hyde Park, NY)
10. Harry S. Truman (Independence, MO)
11. Herbert Hoover (West Branch, IA)
12. William (Bill) Clinton (Little Rock, AR)
13. George H. W. Bush (College Station, TX) (under construction)
and let's not forget the
14. Ronald Reagan Boyhood Home (Dixon, IL)
    

Not sure when I will be able to visit the rest of them. Especially considering the budget. However, I will trust the Lord my God and in his timing and if it is His will, I will make it.  --- go ahead share your thoughts with me now, my ears are open. I'm always eager to hear what you think. follow me on Twitter and facebook

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Government Must Live Within Means

The Government as well as private individuals and business must learn to live with their means. Let me get to the point. Over the past few weeks, there has been much debate about raising the debt ceiling. I have planned to write this letter many times, but I kept putting it off. It is time to stop procrastinating and voice my thoughts.
It is time to get real. It is time for Congress to start living like the American citizens it serves and learn that you cannot pay debt by borrowing more. Doing so only digs the hole deeper. This is something I teach the students I teach through my Wisdom Steps 101 (Managing Finances According to the Bible) lessons.
Here are the simple cold hard facts. It is going to be extremely difficult, but we as a nation must find a way to start living within the financial means we have. If we do not do it now then we will have to do it at a later date and then it will be harder to make the necessary cuts.
As hard as it is going to be, we must do it. That is the cold hard facts. Time for our political leaders to get a backbone and make the hard decisions. Let me elaborate a little further if you will; I actually believe the first cuts is the money spent on these 3 unfunded wars. Bring our troops home. Let these three countries sort out their own problems and stop being the world's policemen. That would save millions. I have studied finances under Dave Ramsey and Larry Burkett. My teachings through Wisdom Steps 101 is very similar to theirs. Our involvement with NATO in Libya is a waste of money. That doesn't mean I don't agree with the war effort there, I wish Reagan had taken care of Kadahfi years ago when he had the chance, I am speaking purely on an financial perspective. Like grandma used to say, if you don't have the money you can't afford it.

Raising the debt ceiling is basically borrowing to pay other debt. The only problem is we increasing our debt to do so. We must make cuts NOW rather then later. We can do it without increasing taxes. If you or I had hug credit card debts or whatever debts we wouldn't be able to just increase our wages at a whim. We would have to make cuts, cuts that might hurt. Perhaps cut out the cable and/or eating out and work hard with much focus to eliminate that debt. We might even have to get a 2nd job to help speed up the process.
What are the cuts that should be made? I don't know, I am not in Congress or the White House, but as I said the 3 wars would be the first things I would choose based purely on the finances.


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Freebies Saturday - 7/16/11

It is time once again for this weeks Freebie Saturday. I make every effort to make sure that the freebies I list are real free offers. If you have to answer a survey and then go through 50 pages of ads to get the so called free item, I consider that spam. That is why I make every effort to make sure that those websites are never included in my list.

1. Since this is a family site, I am not sure how I am going to post this freebie, but here goes --- Astroglide has a free sample of their personal lubricant. Get yours before this freebie runs out.
   
   
   
2. Wet also has free samples, but only between 8am-4pm PST Monday-Friday....This appears to be a daily thing except for the weekends according to their link. Be sure to check them out also.
   
   
3. Get a free sample of Nivea Touch of Cashmere Cream Oil Body Wash. This great body wash has a scent of Orchid Blossom and cashmere proteins which will help your skin feel supremely smooth long after the shower. This product also uses the Hydra IQ technology which helps to hydrate your skin throughout the day.
   
   
4. Walmart and Garnier have teamed up to offer you a free sample of Garnier Anti-Dandruff Shampoo. This product claims to reduce or eliminate your dandruff within 48 hours of use. Try it yourself to see if it lives up to the claims. If so, maybe you should try a new bottle the next time you need shampoo.
   
   
5. General Mills has free samples of their great Honey Nut Cheerios cereal for those who are interested. You will also get a $0.75 coupon with the free samples. This is a product that you and your family will enjoy and it will help you save on an everyday household product. Get your free samples of Honey Nut Cheerios while they are still available.
   
   
   
6. ID Lubricants also has a free sample of their personal lubricant just for answering a few questions.
   
   
7. Play™ is also offering a free sample of their Play Time personal lubricant
   
   
8. Tasters Choice has free samples available to everyone who is interested. Simply join their club to get your free sample. You can get one (1) sample pack per person and maximum two (2) samples per household or address. Their website states that is will take around 6-8 weeks for delivery. Hurry in and get yours while it is still available.
   
   
   
9. Click here to view and save an Emeril Cookbook. Emeril is celebrating 20 years of cooking and is giving this great cookbook away for free. Some sample recipes are Banana Cream Pie with Caramel Drizzles and Chocolate Sauce; Double Cut Pork Chop with Caramelized Sweet Potatoes, Tamarind Glaze and Green Chile Molé Sauce. Hurry and save a copy today!
   
   

--- go ahead share your thoughts with me now, my ears are open. I'm always eager to hear what you think. follow me on Twitter and facebook

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Financial Shutdown Report - July 15, 2011

Three banks were seized and one credit union was closed and liquidated this week.

Ameris Bank, Moultrie, Georgia, acquired the banking operations, including all the deposits, of High Trust Bank, Stockbridge, Georgia, and One Georgia Bank, Atlanta, Georgia. The two banks were closed today by the Georgia Department of Banking and Finance, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver for each institution. To protect depositors, the FDIC entered into purchase and assumption agreements with Ameris Bank.

All three branches of the two closed banks will reopen during their normal business hours beginning Saturday as branches of Ameris Bank. Depositors of the two failed banks automatically will become depositors of Ameris Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits. High Trust Bank had two branches, and One Georgia Bank had one branch.

First Peoples Bank, Port Saint Lucie, Florida, was closed today by the Florida Office of Financial Regulation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Premier American Bank, National Association, Miami, Florida, to assume all of the deposits of First Peoples Bank.

The six branches of First Peoples Bank will reopen during their normal business hours beginning Saturday as branches of Premier American Bank. Depositors of First Peoples Bank will automatically become depositors of Premier American Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits. Customers of First Peoples Bank should continue to use their existing branch until they receive notice from Premier American Bank that it has completed systems changes to allow other Premier American Bank branches to process their accounts as well.

The National Credit Union Administration (NCUA) liquidated Vensure Federal Credit Union of Mesa, AZ., on Monday July 11, 2011.



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Forget the Little Black Dress, Try the “Black Card” from American Express

By: Jason Collazo

Despite the nation’s current economic struggles, super-wealthy American consumers are still spending and using their American Express “Black Card”, the most exclusive credit card in the world. The card, available by invitation only to consumers with extremely high incomes, nearly perfect credit, and a year’s history as a card holder of American Express, is shielded in great secrecy by the company but information about it is starting to leak out.

Even the card’s official name, the Centurion Card, commands respect. A centurion is the term for an officer in the ancient Roman Army, specifically one who was in charge of commanding a century, or a group of 100 men. The “Black Card,” as it is referred to colloquially, is made of titanium and is, in fact, all black. It is a technically a ‘charge card’ and not a ‘credit card,’ which means that Centurion cardholders cannot carry a balance from month to month but must pay everything off in full each billing cycle. First introduced in 1999, it represents an elite club accessible to only a handful of American Express customers on an invite-only basis and, as they say in the commercials, membership really does have its privileges.

What are the requirements an individual must meet in order to be summoned to the ranks of the Centurion? As might be expected, American Express is vague about dishing the exact details, but it’s safe to assume that all Centurion carriers can boast an impeccable credit rating, a serious net worth, spending habits that inspire them to charge at least a quarter of a million dollars annually, and at least one year of being an American Express card member.

So what makes having the Centurion Card worth the pricey one-time $5000 initiation charge and the $2500 annual fee thereafter? Again, specifics have not been disclosed but aside from the obvious travel upgrades it seems that, ultimately, the most appealing perk of being a Centurion carrier is the 24-hour concierge service available. “It provides a rich suite of benefits that one could not replicate on their own," says Elizabeth Crosta, director of public affairs at American Express, who notes that cardholders are increasing spending.

“We’re actually seeing a rise in luxury spending.” Additionally, she states that premium customers are spending and traveling more than ever before.

If you are looking to get invited, Ms. Crosta said "it's decided person by person. I haven't been invited. I know that...People will call us and ask to be invited. We cannot provide the exact numbers but I can tell you the demand for the Centurion Card continues to be high."

With the American Express Centurion card not losing any of its appeal as a status symbol it seems that, at least for the wealthy, “Black” will always be the new black.

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go ahead share your thoughts with me now, my ears are open. I'm always eager to hear what you think.

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