Financial Questions and Answers

Should we save or pay down our debt? We don't have a lot of extra income and feel tight the way it is. There is no way we can save and add extra payments to our debt.
 

A: Good for you for trying to save something each month. The question is, what's going to happen when your credit card interest rate pops up to what it should be, at maybe 7 to 15 percent?

That's going to cause a notable pop in your budget. If you think things are tight now, watch out.

What you should be doing is put as much cash toward paying off that debt as possible. If you put your $100 per month toward the debt, you'll cut it in half by the time the interest rate adjusts.

But I also think it's a good idea to have some cash reserves handy. Either you’ll have to cut a number of expenses out of your life, or you and your spouse might want to discuss getting an additional part-time job. Then you can devote all of the income toward paying off your debt as quickly as possible, and building up an emergency reserve of savings. Once you’ve done that, you can start saving for the purchase of a home.

Although you may feel like you can't work any more hours, there are a lot of positives that can come from taking a second part-time job. At the top of the list is relieving the financial stress you and your spouse are currently feeling.

Q: I gave a house to some relatives but I have not been able to get the loan into their name.

Now the mortgage company tells me the loan I have is not assumable. What am I supposed to do? The deed is registered in their name and I need the loan to be in their name as well.

This has been going on for almost a year. Can you help?

A: You've gotten yourself into quite a pickle: You've signed away ownership to your home, but you're actually still on the hook for the mortgage.

What you should have done was to have your relatives apply for a mortgage first (or found out if your loan was assumable) and then transfer the deed to your relatives after they secured financing.

I’m not surprised your relatives haven’t been exactly helpful. They have no incentive to do anything. They own a house and could sell it at a moment's notice. You, on the other hand, owe thousands of dollars but have no ownership in the asset.

What you need to do now is work with your relatives to either refinance the mortgage, so it goes in their name, or transfer back ownership of the house into your name

Consulting with an experienced real estate attorney would be a good idea. You've got a lot at stake right now.

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