Wife's death calls for portfolio re-examination

Dear Bruce: My wife and I, through 34 years of careful saving and spending, managed to accumulate considerable savings to supplement our retirement. We made all of our money decisions jointly. It’s been over a year since we invested $30,000 in her name in I Bonds. Subsequent to that time she died. I am not accustomed to not having her as a sounding board. I’m in poor health, and I don’t know if I have time to straighten my affairs out before I leave this mess to my heirs. What would you suggest? – E.G., Crystal River, Fla.
Dear E.G.: I sympathize with your loss. You ought to have your entire portfolio, including these bonds, examined by a competent broker who should be able to straighten everything out for you with relative ease. Now that your wife has passed on, your will should be updated to reflect your current desires. This is a very inexpensive process and it is the most loving thing you can do for your heirs.

Dear Bruce: I have accumulated a little less than $20,000 credit card debt. I have consolidated my debt and I am using a nonprofit company to help me with that. I have one credit card and a loan. I pay less interest than I used to pay to the consolidator, and they pay my two creditors. I will be out of debt in three years. I also have a car loan that will be paid off in three years. I recently received a $20,000 raise, so I have about $1,100 more take-home pay a month. I am living in an apartment and would like to save toward a townhouse. Before this raise, I was barely getting by because of the debt and was unable to save. I don’t know if it makes more financial sense to get a house as soon as I save enough money, despite the debt, or to put as much money as I can toward paying off the debt earlier and then focus on saving for the house. I would be able to afford a nicer house if I waited, but I’ve been told that it might make more sense to buy a house as soon as I can and use the higher tax benefits to help me pay off my debt. What is your advice? – L.C., via e-mail
Dear L.C.: I am sure people are giving you more advice than you could possibly absorb. It seems to me the answer to your question is pretty straightforward. You got yourself into a hole. Before you got this propitious raise, you were scratching just to live paycheck-to-paycheck. You know what that situation was like; why perpetuate it? You ought to pay your debts off as quickly as you are able, not worrying about buying houses. It would be nice to one day have a home, and hopefully that is in your future. But in the meantime, it would be far wiser to eliminate your debt (what a wonderful feeling that will be) and then start saving toward your home. By doing this, you will have a far greater amount of disposable income each month to purchase a more formidable dwelling.

Dear Bruce: My wife and I have three wonderful children with another on the way. I am self-employed and the health insurance that we have doesn’t include maternity care. At the time, the savings I made choosing this option made sense, as we were not going to be having any more children. Now I can add maternity coverage, however, there is a waiting period for it to become effective, which does us no good. I have been calling around asking for prices on what it’s going to cost to deliver our baby. In our area, the prices range from $6,000 to $20,000, assuming there are no complications in the delivery. We can handle the $6,000 and the $20,000 wouldn’t really hurt us, but if there were complications that could be a problem financially. Do you have any advice on what we might do? – J.W., Pittsburgh, Pa.
Dear J.W.: Well, short-term smart sometimes is long-term not-so-smart. You can’t insure a house once it’s on fire, and you can’t get maternity benefits retroactively. I’m somewhat surprised at the costs of delivery. I believe they are on the high side. Without insurance, they can be negotiated. Prenatal care is an absolute requisite. The delivery at a hospital or a birthing center can be negotiated. If there are complications, there’s unfortunately nothing one can do about that. Let’s hope that the pregnancy is normal. Congratulations on No. 4.
Dear Bruce: My family has accumulated about $40,000 in credit card debt. We are now pretty frugal. However, we are barely scraping by on the money we bring in and have no hope of paying this debt off unless we win the lottery. I have accumulated about $56,000 in my 401(k) at work. Should I use these funds to pay off the credit card debt? I own a home but did not think it was a good idea to take out a home equity or other type of loan to pay off the credit cards. I am 40 and still have time to build the 401(k). The debt is really eating away at me and beginning to affect me emotionally and physically. Your advice is greatly appreciated. – Reader, via e-mail
Dear Reader: You pose an interesting ethical, moral and legal question. You haven’t indicated how you got this deep in debt, but the likelihood is that unless you are a very substantial wage earner, you’re not going to be able to handle this one. I am very reluctant to suggest Chapter 7 bankruptcy, but on the other hand, I’m equally reluctant to suggest that you reduce your 401(k). While you say you have time to build it, that time is slipping rapidly by. If this debt was created by money being spent frivolously I’m very reluctant to recommend Chapter 7. If the debt was through no fault of your own, then perhaps that is the way to go. You should know that your creditors cannot attack your retirement money.

Bruce Williams is a national radio talk show host and syndicated columnist.
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