Be cautious in preparing for disaster

Q. With all the horrific weather disasters occurring, how does one prepare for something like this financially? I want to make sure that my finances are safe, but also accessible if an emergency happens.

A. If you are referring to the hurricanes, there isn’t much you can do about that. Be certain that you don’t have too much tied up in quantities that are so large they’d be difficult to handle if a storm came and you had to leave it behind. In other words, keep currency or gold on hand that can be transported readily.

On the other side of that, the chances of being caught in one of these storms are relatively modest, and the chances of losing possessions are very small. I would be cautious, but not overly cautious.

Q. I am considering taking out $15,000 from the equity in my home. Currently, I don’t have a mortgage, and the house is worth around $120,000. I would like to pay off my credit cards so I can start saving again. Do you think this is a good idea?

A. That’s not a bad idea. As long as you’re borrowing the money at a lower rate of interest than you were paying to keep the credit on the cards. In almost every case, you can get a mortgage for a heck of a lot lower rate than the credit card companies are going to charge you. Taking $15,000 from the equity of $120,000 does not seem to me to be excessive. As long as you can handle the payments on the $15,000, I have no quarrel with your idea. Good luck.

Q. Next year I will be making my last mortgage payment and will own my home free and clear. I am concerned that paying off this debt and having no major bills may affect my credit rating, which is very good. Should I maintain a balance on my credit card, which I never do, or finance my future big-dollar purchases to maintain a credit history?

A. There’s no reason in the world to maintain a balance on a credit card. I haven’t borrowed any money on my credit cards in many years and yet I still have an 800-plus credit rating. You’re doing great and I would continue.

Send questions 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.

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