The comments and the letters are pouring into ask “Frank” financial questions.
Frank has offered his services once again.
Frank:
I own a four bedroom condo in Naples FL which is held in the retirement plan of my S corporation. I plan to take some “clients” on a golf junket to Naples and use the condo. Can I pay rent for the condo to my plan for its use and deduct it as a business expense. I know you can help me. My CPA thinks I’m nuts. He’s nuts!
Harry from Hingham
Frankly, Mr. Harry I have no idea why you think you have problem. If the condo is a retirement plan asset, then at some point in time you have to show that it has some income potential. If you rent it from your corporation, you must first spend the money for rent and you will only realize a deduction equal to your marginal rate. Go use the condo for a weekend or whatever. Who will know ???
Monty writes:
Harry, go figure, a guy from Hingham with a I have too much money and I do not know what to do with it question. Give your money to a guy in Weymouth. he will know what to do with it. As a matter of fact, give him the condo for a week. he will bring down a half dozen of his buddies from Martini’s bar, they will dial up a few escorts from the yellow pages, have a party rip the place up and you will be left with damage that is insurable and tax deductible.
Problem solved!
By the way, your CPA ( cleaning-pressing-and alterations) was right. You are nuts.
I am adding a new guest Columnist to The Monty Minute.
We are in tough financial times, and it seems that all people want to talk about is the economy. When I have a question about money, I go to Frank.
Frank has a keen business sense. He is a retired CFO of a car company, and spends most of his day making, saving and managing money. He might be on the conservative side, but none the less, I trust his opinions on money matters.
Dear Frank:
I have five thousand dollars that I want to keep safe. Should I buy a CD
or treasury?
signed,
desperate in Dedham
Dear Desperate:
Frankly, it depends whether you’ll be needing the money any time soon. Assuming you’re not, a short term CD is your best bet. You can open one at any bank or credit union. In the case of a treasury, you will have to establish a Treasury Direct Account, which will require a destination account be opened, it would take a little chasing around. If there may be a need for the money soon, a money market account would be the way to go. Remember, be sure you are covered by FDIC insurance.
Monty’s advice:
Hey Dead ham desperado, take the 5 g’s and get yourself a $500 hooker. go out to dinner at the capital grill. go crazy. take the remaining $4000 and go to Foxwoods. put it all on red at the roulette table. If you win, tip the hooker, and then go to the bank and get a CD with the $8500. You are now way ahead.
Dear Frank:
I have 130,000 in a home mortgage at 5.65 fixed 3o years and 30,000 in
consumer debt.
Should I refinance the whole shabang at 5.85 30 years, or take a
home equity loan fixed at 6.0 for the 30,000 and leave my mortgage alone?
Broke in Brockton
Dear B in B:
Frankly, you should not have that much credit card debt. Do not refinance the mortgage. First, scout around to determine if you can obtain another credit card company to consolidate the debt at an reasonable rate, and work it down. If not, take the home equity loan. Be sure you are comfortable with the payment schedule, when you’re finished paying it off your original mortgage will be that much closer to being paid off, if you later on sell the home you’ll have that much more in equity.
Monty’s advice:
Dear Brockton Boxer:
What are you a moron? You bought a house in Brockton, and now you want advice. You should have your head examined Too late now for advice. Stop paying the mortgage get foreclosed on and move on up to an upscale neighborhood like Whitman.
Monty
Dear Frank:
What is the difference between a Roth IRA and a Simple IRA ? Which is
better?
Simple Simon
Dear Simple:
Frankly, each has some advantage over the other. The Roth is funded with after tax money, and has an income restriction. The advantage here is that all of the gains are tax free after 59 1/2 years of age. The Simple is funded with before tax money which lowers your current tax bite, but when you draw on it at the same age, you’ll be taxed as ordinary income. You’re personal situation will dictate which is better for you.
Monty’s advice:
Dear Simon:
Ira, Roth? What the hell are these? I thought Ira and Roth were two Jewish guys from Newton.
Monty
Dear Frank:
I have 25,000 in the bank but owe 25,000 on a home equity loan at 6 %
should I pay it off ?
Confused in Cohasett:
Dear Confused:
Frankly, if you are in a position to service this debt, keep paying it down. In times like these,you want to have some “powder dry” in event you suffer an interruption of income, or some other immediate need for the money. That being said, this is a situation I would revisit regularly and act in a manner consistent with your then situation.
Monty’s advice:
Dear Cohasett Clipper:
A guy from Cohasett with just $25,000 in the bank? HMMM your the one. I knew there was one broke ass person in that ritzy smitzy little town. Keep your mouth shut and do not let anybody know your broke. You might get shipped out to Weymouth.
PS Do you wear your sweaters, or do you just hang it over your shoulders?
Monty
Spend your money wisely.
