News from the Tennessee Valley Columnists

Dave Ramsey

Is special offer on treadmill worth it?

Dear Dave: Iím trying to get in shape this year, and Iím looking at treadmills. I found an offer for a $999 machine with 10-month payment plan and no interest. Is it OK to go ahead and buy it on this plan rather than waiting to save up the money? —Clive

Dear Clive: No! Chances are that plan has a catch that includes interest or some other fee tacked on if youíre late with a payment or go past the 10-month payment schedule.

The best way to buy a treadmill or any other piece of workout equipment is to get it used from the person who didnít use it. There are tons of folks out there who make the resolution to get in shape, and buy these big, expensive contraptions with the best intentions. Then, they fall off the wagon and it sits there gathering dust.

Just save up the money, Clive. Then go to a used sports store or check out the local newspaper for a good, inexpensive machine someoneís trying to sell.

If you canít afford to buy something outright, you canít afford it — period! — Dave

Diversify among brokers?

Dear Dave: Is it a good idea not only to diversify among various mutual funds, but also among different companies that sell mutual funds? —Brian

Dear Brian: Thereís no need to do that. Find one good broker youíre comfortable with and who has the heart of a teacher. You want to know whatís going on with your money, and finding someone who can explain it well and help you understand the details is a must!

Just make sure your broker is not directly connected to the mutual fund. You donít want someone with a vested interest. What youíre looking for here is someone who can objectively connect you to a good mutual fund with a solid five- to 10-year track record. — Dave

What are points?

Dear Dave: My wife and I are looking to buy our first home, but we donít know a lot about the home buying process. My question is what are ďpoints,Ē and when is it a good idea to pay them? — Gary

Dear Gary: Points are just pre-paid interest. One point equals 1 percent of the loan amount. For instance, if youíre borrowing $130,000 one point would equal $1,300.

Paying points or ďoriginationĒ — which is another kind of point — is not a good idea. The average homeowner refinances every 5.6 years. And because it takes seven to 12 years to reach the break-even point and get your money back, it really doesnít make sense.

Always go for zero points and zero origination unless the seller is paying! — Dave

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Dave Ramsey Dave Ramsey
DAILY Columnist

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