Can you avoid paying interest on car loan?
Dear Dave: In an attempt to improve my credit, I recently bought a new car which I financed at 17.9 percent for 72 months. If I make the minimum payment of $468 a month, Iíll end up paying about $13,000 in interest alone. Is there a formula I can use to avoid paying all this interest? — Marcus
Dear Marcus: Yes, there is a formula that will keep you from paying all that interest. Sell the stinking car!
Your credit is lousy because you havenít paid your bills. And you havenít paid your bills because you bought a bunch of stuff you couldnít afford — like this new car at $468 a month.
Listen, you can save nearly $5,000 in just 10 months if you take those car payments and put them in a cookie jar. That will get you a great little used vehicle that wonít be an anchor around your neck for the next six years.
You fell for the big lie, my man. The one that says you can improve your credit by going into debt! — Dave
Business not doing well
Dear Dave: I opened my own business about six months ago, and itís not growing at all. Iím a single mom, we receive no child support and my parents are helping us with all the bills. My biggest concern is the house. I bought it five years ago, and when I opened my business I did it with money from a home equity loan. What can I do? — Gina
Dear Gina: The house is not the problem. You borrowed money to open a business, and that was no-no No. 1. You also have no savings — which is no-no No. 2 — and now the business isnít making a profit.
You need to close the shop and go find some work. The money you make at another job will determine whether you can stay in your home. If youíve got a mortgage, home equity loan and business debts hanging over your head, the chances of this are slim. You probably need to consider moving into a small, inexpensive apartment for a while.
If you do this, get your debts paid off and your finances back in order, you might be able to purchase a house again in a few years. I know the idea of giving up your home is hurtful, but when you get cancer you have to cut deep enough to get it all. Gina, what youíve got right now is financial cancer.
And if you donít fix it now it will eat you alive! — Dave
What is a 341 meeting?
Dear Dave: My husband and I filed bankruptcy last month. We now have a date scheduled for a 341 meeting. What exactly is this, and should we be worried? — Arlene
Dear Arlene: A 341 meeting is basically a meeting with creditors. Youíll go into a room with your lawyer and the bankruptcy trustee, and the creditors will ask you lots of questions about your bankruptcy filing in an open forum.
In 98 percent of the consumer cases filed, the creditors donít do a thing. The trustee may ask a couple of questions, but there wonít be any big surprises. Itís not like being grilled on the witness stand, and there wonít be any trick questions.
It will be really boring, though, and probably take up most of the day. — Dave