My wife co-signed on a loan for an old boyfriend five or six years ago. Now, a collection agency is after her for the remaining $5,000. We make about $90,000 a year combined, and our attorney recommended we file Chapter 7 bankruptcy. The idea of filing bankruptcy scares me. Is there a better way to handle this?
Your attorney doesnít sound very bright. A bankruptcy stays on your record for years. Itís just plain stupid to consider trashing your financial life over $5,000.
This collector bought the loan for pennies on the dollar. Itís an old debt, and that means there are very low expectations for collection. At the same time, your wife did co-sign for the loan.
If you have the money, and you can pay it off without hurting yourselves financially, do it. Thatís the right thing, both morally and legally. If you donít have that kind of cash on hand, try haggling with them. See if you can get them to agree to settle for $2,500. Remember to get this agreement in writing before you send them a dime, and do not give them access to your bank account.
Chances are theyíll threaten to sue and all that stuff, but my guess is you can work out something on an old loan like this. It may take a couple of weeks and a little patience, but thatís a small price to pay if it saves you $2,500.
Sorry, but you guys will have to pay something to make this go away. And I hope it teaches you both a valuable lesson ó never co-sign on a loan.
Apps and stocks?
What do you think about online investing apps, and the way they allow you to jump in and out of stocks for really low fees?
I donít think about them, and I donít use them. And I donít play single stocks ó period.
Thereís a ton of research out there showing that people who play individual stocks on their own ó or with their broker, or with a golfing buddy ó see a rate of return of about seven percent on average. You can make anywhere from 10 to 14 percent, on average, with good growth stock mutual funds.
I could probably play single stocks more intelligently than most people, but why? If the average is noticeably less than Iím seeing with my mutual funds, why bother going there? Plus, with a mutual fund portfolio, youíve got someone who does this kind of thing for a living managing and researching your investments for you in your best interest.
I donít have an app on my phone that lets me trade stocks, nor do I plan on getting one. Thereís nothing wrong with apps, in general, but Iíll never recommend jumping in and out of single stocks as a method of investing.††††
ó Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 13 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.