DEAR BRUCE: I would like to ask this question for my brother about investing in the Iraqi dinar. I say no, it's a bad idea. He, on the other hand, is convinced it's a great idea. I listen to your radio show two to three times a week and highly regard your opinion. What can I say or do to convince my brother this is a bad idea? — Paul, via e-mail
DEAR PAUL: Currency speculation can be a very rewarding enterprise — but it is fraught with peril. The Iraqi dinar is extraordinarily speculative and has nothing behind it. While it can be observed that Iraq has lots of oil, with the huge amount of turmoil that is currently embroiling that nation and so many amateurs, military personnel and some civilians working there and getting involved in this, it is one of the last currencies I would speculate in just now.
There may be a fortune waiting to be made; if so, it will pass me by.
DEAR BRUCE: I'm writing to you to get some feedback about taking on a roommate. Before doing so, I wanted to find out some information. I called my insurance company and asked what would happen if the person who rented the room stole items in the house while I was gone? They said I better only rent to someone I know really well. The underwriter would not cover the loss. I then asked what would happen if I came home and someone broke in and stole items while I was away? They said that was covered. This bit of logic does not make sense to me. Theft is theft! Renting out a room should not change anything. — N.O., via e-mail
DEAR N.O.: You said, "Theft is theft." That is not necessarily the case.
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The same thing is true here. If the roommate steals things, he is your guest and you are not covered by your burglary insurance. But if someone breaks in, even though the roommate is living there, and wipes the place out, you are covered. You cannot insure against those people you permit to use your facilities. The insurance-company information was valid and appropriate.
DEAR BRUCE: I own a newly built home, a 1,700-foot Cape Cod with five bedrooms, 21/2 baths, full basement, attached garage and a large lot, 100 by 300. I got a 100 percent mortgage one year ago ($155,000); actually, the first mortgage was $124,000 at 6.975 percent and a second mortgage of $31,000 at 9.675 percent. (I have $15,000 cash in savings now.) My total mortgage payments are $1,036 a month, plus $250 a month for property tax plus house insurance. The house is in a moderate neighborhood, and is overbuilt in comparison to the neighboring homes. I have other bills, including $400 monthly car payments. (My income and expenses are about even.)
I am retired and receive $1,200 month, and my Social Security is $1,047 month. My wife's Social Security is $530 month. I am having a very hard time making my payments. I am 70, and my wife is 65. If I decide to "walk away" from the house and let the mortgage company take it over, what would be the ramifications? I know my credit score would take a nosedive. Can my retirement check and Social Security check be garnished if I stop making payments? I also owe $12,000 on a $9,000 (2002) Buick automobile. I will let it go back, too.
What would you do? I don't think the house will sell for the amount owed against it ($154,760) in these hard times. — B.W., Flint, Mich.
DEAR B.W.: I must ask, at your age, whatever possessed you to go into hock the way you have? You bought a house with literally no money down and a great deal of money on a car. I have a difficult time understanding this. That said, your credit score will do more than take a nosedive; it will implode.
Social Security cannot be garnished. As far as your pension, it is different in every state. Check with Michigan's Department of Financial Services. They should be able to tell you if it can be garnished. You might wish to discuss a voluntary repossession with the mortgage company with them foregoing the deficiencies. While this may be hard for them to swallow, it might be the most expeditious way to go. The automobile is another matter. The likelihood is, it will be repossessed and sold, and they will make every effort to collect from any other assets you may have. You might wish to talk to one of the credit-counseling agencies and see if they can help negotiate a deal with your creditors.
Send your questions to: Smart Money, P.O. Box 503, Elfers, FL 34680. E-mail to: bruce@brucewilliams.com. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.
