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Financing Workout Equipment

By Dave Ramsey
Author, The Total Money Makeover – Financial guru Dave Ramsey answers questions about wise financial decision-making.

Take Advantage of Treadmill Offer?

Dear Dave,
I’m trying to get in shape this year, and I’m looking at treadmills. I found an offer for a $999 machine with 10-month payment plan and no interest. Is it okay to go ahead and buy it on this plan rather than waiting to save up the money?
-- Clive

Dear Clive,
No! Chances are that plan has a catch that includes interest or some other fee tacked on if you’re late with a payment or go past the 10-month payment schedule.

The best way to buy a treadmill or any other piece of workout equipment is to get it used from the person who didn’t use it. There are tons of folks out there who make the resolution to get in shape, and buy these big, expensive contraptions with the best intentions. Then they fall off the wagon, and it sits there gathering dust.

Just save up the money, Clive. Then go to a used sports store or check out the local newspaper for a good, inexpensive machine someone’s trying to sell.

If you can’t afford to buy something outright, you can’t afford it – period!
-- Dave

Should You Diversify Among Brokers?

Dear Dave,
Is it a good idea not only to diversify among various mutual funds, but also among different companies that sell mutual funds?
-- Brian

Dear Brian,
There’s no need to do that. Find one good broker you’re comfortable with and who has the heart of a teacher. You want to know what’s going on with your money, and finding someone who can explain it well and help you understand the details is a must!

Just make sure your broker is not directly connected to the mutual fund. You don’t want someone with a vested interest. What you’re looking for here is someone who can objectively connect you to a good mutual fund with a solid five- to 10-year track record.
-- Dave


What are Points?

Dear Dave,
My wife and I are looking to buy our first home, but we don’t know a lot about the home-buying process. What are points? When is it a good idea to pay them?
-- Gary

Dear Gary,
Points are just pre-paid interest. One point equals one percent of the loan amount. For instance, if you’re borrowing $130,000, one point would equal $1,300.

Paying points or “origination” – which is another kind of point – is not a good idea. The average homeowner refinances every 5.6 years. Since it takes seven to 12 years to reach the break-even point and get your money back, it really doesn’t make sense.

Always go for zero points and zero origination unless the seller is paying!
-- Dave

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Dave Ramsey is a nationally-syndicated radio talk show host and author of the New York Times bestselling books, Financial Peace Revisited and The Total Money Makeover. His life-changing advice in the area of personal finance helps people get out of debt, stay out of debt and build wealth that will last a lifetime and beyond.

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