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Should health prognosis prompt a saver to spend on fun?

Also: Advice on unloading a time share, and bank withdrawals don't affect credit scores.

December 12, 2010|Liz Pulliam Weston | Money Talk

Dear Liz: I'm in my early 50s and in good financial shape. I have no debt and a comfortable savings account and am working toward retirement goals with my wife of 21 years. For years I have lived very modestly (some would say cheaply).

However, recently I had a health issue that is making me rethink my future finances. I was told I had about a 20% chance of surviving this thing and, although I'm OK for now, there is no guarantee it won't return at any moment. So should I keep planning for retirement, or should I take the "You can't take it with you" attitude and start having some fun? Of course I know my wife may survive me by many years, so I am not talking about blowing everything, just lightening up.

Answer: Given that all of us are going to die someday, and few know exactly when, financial planning is all about balancing future needs with current fun. Blow too much money now, and you (or your spouse) could suffer for it later. Defer too much gratification, though, and you miss out on life.

Add to that mix the fact that medical prognoses can change. New treatments could extend your life or you could beat the odds and survive this thing.

The prudent thing to do would be to take your situation to a fee-only financial planner and discuss the options. Perhaps you could free up more money for travel or other memorable experiences with your wife in exchange for accepting that if you survive, you may have to work longer than you'd originally planned.

• Unloading a time share

Dear Liz: We bought a time share in Orlando, Fla. We tried to sell it through someone who turned out to be a con artist and lost $2,600 to him. Please help us unload this curse.

Answer: Your first stop should be EBay. Look on the auction site for completed sales of time shares in your development, using the exact name of the property and clicking on the "completed sales" option on the left side of the page. If there have been any sales, you may be able to sell yours on the site, although you're likely to get at best only a fraction of what you've paid. You also could try listing it on sites such as the Timeshare Users Group at tug2.net, Bidshares.com or RedWeek.com.

If you don't find any completed sales on EBay, however, your time share may have little or no value. You can try contacting the project's developer to see if you can transfer the time share back. You're unlikely to get any money from the developer, but you could at least get out from under maintenance and other fees. If you borrowed money to buy this time share, you'll have to figure out a way to pay off the loan or risk a default that could trash your credit.

What you don't want to do is pay anyone another big upfront fee. Con artists may insist that fat fees are necessary to "list" your property, or they may even promise that they have a buyer, but they're only taking advantage of people who are desperate to get rid of money-sucking time shares.

• Bank withdrawals don't affect credit scores

Dear Liz: Because of financial needs, I may need to withdraw early from several of my certificates of deposit. I know there are fees or penalties associated with the early withdrawals, but would this affect my credit scores or any other financial rating? I don't want to tarnish my relationships with financial institutions in any negative way and want to keep my credit score of 800-plus untarnished.

Answer: Your credit scores are based entirely on the information contained within your credit reports. If you access them (you can get a free annual look at http://www.annualcreditreport.com), you'll notice there are no bank accounts listed — only credit accounts.

The only time your behavior with a bank account could wind up on your credit report is if you bounce checks and fail to pay the bank. In that case, your account could be turned over to collections, and that could show up on your credit reports.

Otherwise, though, your banking relationships don't affect your scores.

Liz Pulliam Weston is the author of the upcoming book "The 10 Commandments of Money: Survive and Thrive in the New Economy." Questions for possible inclusion in her column may be sent to 3940 Laurel Canyon, No. 238, Studio City, CA 91604 or via the "Contact Liz" form at asklizweston.com. Distributed by No More Red Inc.

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