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January 2008
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March 2008

Jim, Should I Hold On To A Mutual Fund To Save On Capital Gains?

Jim, I have a mutual fund that I really would like to sell since I am trying to get completely out of the stock market right now. My broker is trying to get me to hold the fund since if I sell, it will trigger capital gains taxes, is this true? First, most financial decisions should not be made solely on the basis of tax consequences. This becomes the proverbial “tail wagging the dog”. Tax consequences should be considered as an overall part of the equation when deciding to sell an investment subject to capital gains, but not the only... Read more →


Jim, Should I Pay Off And Close My Credit Card Accounts?

I have just received the proceeds from a home equity loan and have been considering paying off my credit cards and closing the accounts. I heard you on the radio suggesting that doing this might hurt a person’s credit score, what should I do? This is one of those questions that I have to be very careful to completely explain myself, so that I am not misquoted later. Yes, paying off your credit cards is not just a good thing, it is a great thing to do! The second step you are planning, closing the accounts, may not be so... Read more →


Jim, If I Am In Foreclosure Can I Just Give The House Back To The Bank?

One option in foreclosure, known as “deed in lieu of foreclosure” gives borrowers a quick way out of a foreclosure lawsuit. By agreeing to give up ownership in your home to your lender without a legal fight, you should be able to avoid owing any money if your house sells for less than your mortgage balance at auction. When a home goes into foreclosure, in most states the lender must file a lawsuit (judicial foreclosure states). The foreclosure lawsuit ends with a judgment of foreclosure and the house is then sold by the court at a public auction. By fighting... Read more →


Jim, Can I Be Forced To Move If My Landlord Is Foreclosed On?

I have been getting this question a lot lately and the answer is yes. Under the law in most states (all that I know of) a foreclosure action effectively cancels your right to occupy a property under a residential lease. In most foreclosure lawsuits, the lender will serve a foreclosure notice to the tenants as well as the owner. This puts you on notice that you will be forced out when the foreclosure goes through. In most cases, a foreclosure action will take several months. If you do become aware of a foreclosure on a property you are renting I... Read more →


Jim, Should I Answer An E Mail Asking Me For My Tax Information?

Jim, I received an e mail that was allegedly from the IRS. The e mail contained a link that took me to a page that requested all of my personal information as well as my Social Security Number. The e mail suggest that I was due a refund, could this be legitimate? To my knowledge, the IRS does not send out refund notices via e mail. It is very likely that what you received was a “phishing” e mail (a type of e mail used to steal personal information). The first tip off would be if the link contained in... Read more →


Jim, Can I Stop A Collection Agency From Calling Me At Work?

The Fair Debt Collection Practices Act gives all Americans the right to stop collectors from calling them, at work or anywhere else for that matter. Collection agencies call people at work to embarrass and harass them, plain and simple. If you want to stop the harassment, simply send a certified letter and put the collector on notice that they cease and desist all collection phone calls to you. Instruct them that they may only communicate with you in writing. After they receive this letter, they may be subject to fines of more than $10,000 PER CALL if they continue. If... Read more →


Jim, Can I Be Forced To Move If My Landlord Is Foreclosed On?

I have been getting this question a lot lately and the answer is yes. Under the law in most states (all that I know of) a foreclosure action effectively cancels your right to occupy a property under a residential lease. In most foreclosure lawsuits, the lender will serve a foreclosure notice to the tenants as well as the owner. This puts you on notice that you will be forced out when the foreclosure goes through. In most cases, a foreclosure action will take several months. If you do become aware of a foreclosure on a property you are renting I... Read more →


Jim, What Insurance Do I Need On A 10 Year Old Car?

If you have a vehicle that is worth less than $2,500 you should most likely opt to carry no collision or comprehensive coverage. Collision is the part of your auto policy that protects damage to your vehicle while you are driving. Once a vehicle reaches this minimal value, the cost of collision coverage becomes impractical. You are better off to simply save the money and take this risk on yourself. Comprehensive covers fire, theft, vandalism, and other losses that would not take place while your vehicle is being driven. For the same reasons as collision coverage, I would not suggest... Read more →


Is It Possible To Quickly Rebuild Credit After Bankruptcy?

The answer is yes. Bankruptcy was at one time considered a 10 year curse and something that would cause a person to face serious problems borrowing for a very long time. In recent years, mortgages were made available to people just one day after the discharge of their bankruptcy. Of course, we all know that these easy to get subprime mortgages are no longer around. Despite the problems in the mortgage market, credit card companies and banks will still work with you to rebuild your credit after bankruptcy. The first thing that should be done after you have received your... Read more →


Should I Buy Mortgage Life Insurance To Protect My Family?

When buying a home many people rightly consider purchasing life insurance. The problem with buying life insurance through your mortgage company is that it will cost you much more than purchasing a simple term life insurance policy. This question has come up for years, the idea of buying an insurance policy associated with a car loan, a mortgage, a credit card, or other installment agreement. This is a huge profit center for financial institutions and many of them put a great deal of pressure on consumers to take this coverage. Rather than having multiple insurance policies, and over-paying for them,... Read more →


Should I Pay Off My Old Debts From 10 Years Ago

Jim, As a Christian I feel that I should go back and pay my creditors that were included in my bankruptcy from ten years ago. What do you think and how should I go about it? Practically speaking, this may not be as easy to do as you might think. First, if these were large corporations that you owed money to, they may not even have any record of the debt at this point. Secondly, they may have already written off the debt on their taxes and may not want to deal with the accounting that would be involved. If,... Read more →


Jim, We Just Sold Our Home. We Lived In It For 7 Years, But Then We Rented It Out For One Year Prior To Selling. Is Our Gain Of $100,000 Subject To Capital Gains Taxes or Not? I Can't Seem To Get A Straight Answer From Anyone.

I am not sure why you would be having such a difficult time getting an answer to this question. Quoting from IRS Publication 523: “To exclude gain under the rules in this publication, you generally must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale.” If you lived in the property for 2 of the most recent five years, your gain would not be subject to taxes. If you have taken depreciation for the one year you rented out the home, you would... Read more →


Jim, My Wife And I Need For You To Settle A Disagreement. I Want To Use Only A Debit Card And Online Bill Pay and Discontinue Using Checks. She Wants To Keep Using Checks. Which Is Better?

I hope I don’t upset my women readers, but I have to side with the husband on this one. In fact, I don’t see checks even being around for more than five years. In an electronic banking economy, why write a check? Almost everything can be paid for using a debit card or alternatively online bill pay through your bank account. Banks love checking accounts because they generate massive amounts of fees. Have a single check bounce, and you may end up owing $50 to $100 or more. Yes, I know some may insist this would never happen to them,... Read more →


Jim, I Am Considering Investing In Bonds. What Would Be The Advantage or Disadvantage Of Buying Bonds vs. A Bond Mutual Fund?

If you have a substantial amount of money to invest ($250,000 or more), you may find some small benefit in purchasing bonds directly as opposed to investing in bond funds. The same arguments for stock mutual funds can be made for bond mutual funds. Bond funds allow investors to own a small percentage of a very large portfolio, which offers a level of diversification that can not be achieved investing as an individual. In addition to having your money diversified, bond funds can create a blended portfolio that is simply difficult to replicate as an individual. The blending of bonds... Read more →


What Is Your Opinion of The 'Fair Tax' That Is Being Promoted By Mike Huckabee and Neil Boortz. Is It True That It Would Add 23% To Everything We Buy?

There have been a lot of tax reform ideas floated over the years, but none have excited me as much as the Fair Tax. The Fair Tax would completely eliminate income taxes for individuals and corporations and would be replaced by a national sales tax of 23%. For those that don’t want to get the details, they go around talking about this as a 23% tax increase and do not understand all of the offsetting savings. First, if corporations are no longer paying any taxes the cost of goods and services will drop dramatically. This means that even though 23%... Read more →