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By LIZ PULLIAM WESTON
Best Time To Buy Is When You're Financially And Psychologically Prepared
Dear Liz: As a first-time buyer, is this the right time to buy a new home? Based on current economic indicators, house prices may go down further. When do you think is the best time to buy?Answer: The best time to buy a home is when:
- You have a strong desire a homeowner.
- You’re financially prepared and can afford the costs of a home.
- You’re ready to stay put for several years.
Those, by the way, are exactly the same conditions buyers should have been able to meet at the peak of the boom. The best time to buy a home is when you’re ready, regardless of the market.
That said, if you buy now, you must be psychologically prepared for your home to lose value. That can be hard to stomach. You could wait until prices start to rebound – but you may lose out on low interest rates or some really great deals.
Either way, focus on getting your finances in the best possible shape. In today’s credit crunch, people with high credit scores and decent down payments (10 percent or better) are getting the best mortgage deals. You’ll probably also want to have a substantial amount in savings – preferably three months’ worth of mortgage payments – after the deal closes to ensure you’re ready for all the other costs of homeownership, such as maintenance and repairs.
Dear Liz: My fiancé and I sell cars for a living and we work on commission only. We can never predict what our pay is. The worse part is that if we do not sell a car, we could actually owe our employer money. We are both divorced and are bringing bills from our previous lives together. Please let me know how we can simplify our bills. I tried paying off the smallest debt and then, when that was done, applying the same amount to another bill. But it seems as soon as I start gaining momentum, I get stuck because my paycheck is lower than I hoped. We do not find out our pay until a day before payday.
Answer: Would one of you consider another job? Seriously, sometimes the best solution to an unpredictable income is to find a different career. That might create an existential crisis if you’re single and have your heart set on being, say, an artist.
But it’s hard to imagine selling cars is your heart’s desire. Or if it is, there’s a pretty good chance your fiancé might be willing to consider a job that’s less volatile. If at least one of you has a steady gig, you can start repaying your debts based on that income and turbo-charge those payments with the other’s commissions.
If you insist on staying put, the only way to handle unpredictable incomes is to base your expenses on the lowest amount you would expect to get paid. In a bad economy where car sales aren’t exactly going through the roof, that could be a small number indeed.
Dear Liz: Recently, I pulled my credit report to find a repossession on it dated January 2008. This entry dropped my credit score from 650 to 549. The vehicle in question was actually repossessed in 2002. Is this re-aging of a debt legal? The bad part is that if I paid the debt, it would continue to show on my credit report for another 10 years.
Answer: No, the bad part is that you’re dealing with an unethical collection agency that’s breaking the law. Most negative entries on credit reports, including repossessions, can’t be reported for more than seven years and six months after the date the account first went delinquent. That’s true regardless of whether the debt’s changed hands or you made later payments.
If you offer to pay the remaining debt, you’re encouraging this company in its illegal tactics – plus there’s no guarantee it won’t continue messing with your credit.
Start by disputing the entry with the credit bureaus. If that doesn’t work, strongly consider hiring an attorney familiar with the federal Fair Debt Collection Practices Act. You can get referrals from the National Assn. of Consumer Advocates at www.naca.net.
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© 2008, No More Red Inc. Liz Pulliam Weston is author of “Easy Money: How to Simplify Your Finances and Get What You Want Out of Life.” She regrets that she cannot respond personally to inquiries, but questions for possible inclusion in her column may be sent to 3940 Laurel Canyon Blvd., #238, Studio City, CA 91604, or use the “Contact Liz” form at her website, www.lizweston.com.
