Dave Says; Advice for old debts and investing with online apps.

The past can haunt you

Dear Dave,

My wife co-signed on a loan for an old boyfriend five or six years ago. Now, a collection agency is after her for the remaining $5,000. We make about $90,000 a year combined, and our attorney recommended we file Chapter 7 bankruptcy. The idea of filing bankruptcy scares me. Is there a better way to handle this?

—Jeffrey

Dear Jeffrey,

Your attorney doesn’t sound very bright. A bankruptcy stays on your record for years. It’s just plain stupid to consider trashing your financial life over $5,000. This collector bought the loan for pennies on the dollar. It’s an old debt, and that means there are very low expectations for collection. At the same time, your wife did co-sign for the loan. If you have the money, and you can pay it off without hurting yourselves financially, do it. That’s the right thing, both morally and legally. If you don’t have that kind of cash on hand, try haggling with them. See if you can get them to agree to settle for $2,500. Remember to get this agreement in writing before you send them a dime, and do not give them access to your bank account. Chances are they’ll threaten to sue and all that stuff, but my guess is you can work out something on an old loan like this. It may take a couple of weeks and a little patience, but that’s a small price to pay if it saves you $2,500. Sorry, but you guys will have to pay something to make this go away. And I hope it teaches you both a valuable lesson — never co-sign on a loan!

—Dave

apps and stocks?

Dear Dave,

What do you think about online investing apps, and the way they allow you to jump in and out of stocks for really low fees?

—Anonymous

Dear Anonymous,

I don’t think about them, and I don’t use them. And I don’t play single stocks-period. There’s a ton of research out there showing that people who play individual stocks on their own or with their broker, or with a golfing buddy see a rate of return of about 7 percent on average. You can make anywhere from 10 to 14 percent, on average, with good growth stock mutual funds. I could probably play single stocks more intelligently than most people, but why? If the average is noticeably less than I’m seeing with my mutual funds, why bother going there? Plus, with a mutual fund portfolio, you’ve got someone who does this kind of thing for a living managing and researching your investments for you in your best interest. I don’t have an app on my phone that lets me trade stocks, nor do I plan on getting one. There’s nothing wrong with apps, in general, but I’ll never recommend jumping in and out of single stocks as a method of investing.

—Dave