Northwest Arkansas Democrat-Gazette
MONEY MANNERS
DEAR JEANNE AND LEONARD: My sister, her husband, their daughter and I are going on a ski trip together, for which we’ve rented a three-bedroom, three-bath house. My sister and brotherin-law will have the master suite, while my niece and I will each have our own bedroom and bathroom. Since I’m one of four people sharing the house, I feel I should pay one-quarter of the rent. But I realize my sister may be thinking that since I’ll be occupying one of three bedrooms, I should be paying one-third. What do you think is fair here?
— Ellen
DEAR ELLEN: The Declaration of Independence states that all men are created equal. But the same cannot be said of bedrooms. If the house you’ve rented is anything like most vacation rentals, the master suite is an order of magnitude nicer than the other two bedrooms. Which means that to be fair, you should divide the rent by bodies, not bedrooms.
If, however, your sister feels you should pay a third of the rent, ask her how she feels about drawing straws to see who gets the master suite. Because if the rent is being allocated per bedroom, then there’s no reason you should be automatically assigned to an inferior one.
DEAR JEANNE & LEONARD: This year I’ll be hitting the age when I’m forced to start taking required minimum distributions from my IRA. A recent newsletter from my stockbroker suggested three options for using the money: (1) keep it and reinvest it; (2) gift it; or (3) use it to create a legacy. So I’m thinking about giving my nieces the money to pay off their college debt. What are your thoughts?
— G.S.
DEAR G.S.: That apparently your stockbroker doesn’t approve of your spending the money on yourself.
Be that as it may, whether you should help your nieces pay off their college debt depends in part on their character. Will they, for example, be genuinely appreciative? And will they benefit from your generosity and not foolishly spend the money you’ll be saving them? It also depends, of course, on how close you are to your nieces and on how much pleasure it would give you to help them. Most importantly, though, it depends on whether you can afford this act of generosity. If you feel any uncertainty about your financial security, keep the money. Seventy is not old, these days, and you can always help your nieces further down the road — to buy a house, say — assuming you are confident when you do so that you can meet your personal financial needs well into your 90s.
One more thing: Before you make a decision, fully explore the tax consequences of each option you are considering. You don’t want any unpleasant surprises.