Weekly financial Q&A, with advice on same-as-cash deals and how to keep a Legacy Drawer.
My wife and I bought some furniture a while back on what we thought was a 24-months-same-as-cash plan. The original purchase price was $1,600. The other day, I got a call from a collector saying that it was actually a 12-month plan, and the balance is now $2,800. We looked at the contract, and it was our mistake on the length of the plan. Still, that makes the interest rate about 30 percent. Is there anything we can do about this?
This is one of the reasons I tell people to stay away from “same as cash” agreements. You may not have agreed to a specific percentage rate, and I’ll bet it’s something less when you factor in the time before and after the 12-month period ended. Still, I’m pretty sure that when you signed the contract you did agree to have this thing convert to a financed contract if you didn’t pay it off in 12 months. These kinds of deals are really scummy. Not only have they charged you interest since the 12-month period ended, they’ve also back-charged you interest for the entire length of the contract!
These same-as-cash contracts are a bear trap. They’re designed to mess you over big time. You can try to dispute it, but I’ve got a feeling you’ll lose and have to pay about $1,200 in stupid tax on this one.
Lots of people think they can pull one over on a company with the “same as cash” deal, but stuff almost always comes up — even if you don’t misread the contract. I’ve said it a million times, Robert. If you play with snakes, you will be bitten!
A place for everything
I’ve heard you talk about something you call the Legacy Drawer. What exactly is this, and what goes into it?
One of the best ways I know to tell your family how much you love them is by having your financial act together and organized in a central location. The Legacy Drawer is a collection of your essential financial documents in a safe place where they can find them when you die, or if you’re sick or disabled.
All of the pieces of your financial life should be in this drawer. I’m talking about your will, living will, estate plan, investment statements, insurance policies, and property deeds. You should also include stuff like power of attorney statements, access information to lock boxes, and other instructions to family and loved ones.
Make sure it’s really well-organized, too. It should be laid out simply enough that anyone who can read could open it up and find exactly what’s needed in just a few minutes. The stress of having a loved one die or become seriously ill is bad enough. You don’t want to make it any harder on them by leaving your finances in a mess!
For more financial help, go to daveramsey.com. You can hear his radio show weekday afternoons. Find a station or listen on his website. Dave also is on Facebook and Twitter.