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On money

Some queenly advice on when to get rich

Personal Finance editor
huntley

HELEN
HUNTLEY

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By HELEN HUNTLEY, Times Staff Writer

© St. Petersburg Times
published February 16, 2003


Those of us who dispense or seek financial advice probably are predisposed to take our finances and ourselves a little too seriously -- especially on a day like today when we're pondering the serious subject of income taxes. What better moment, I thought, than to share a few pearls from The Sweet Potato Queens' Big-Ass Cookbook (and Financial Planner).

Author Jill Conner Browne confesses right up front that she's no Suze Orman, and indeed she isn't. But she has managed to learn a few financial truths, which she drops amid butter-and-bacon-drenched recipes and hilarious tales of life and love.

"My very first financial plan in life was that Daddy would live forever," she said. "If you have a similar plan in place, here's my word of caution: He won't. . . . Figure out how to take care of yourself while he is still alive."

Browne quite astutely notes that all of us so-called financial experts give what boils down to the same advice: "Squirrel money away every chance you get." She's right, of course.

Browne's contribution is explaining why this advice is so important, starting with the fact that good plastic surgery is expensive. Furthermore, money may be needed for "fancy lawyering, bail money and liability insurance" in the event that one's romantic relationships don't work out. And, of course, the ultimate reason:

"Rich old people are generally more attractive than poor old people, so by all means, try to get rich before age sets in."

The book, published by Three Rivers Press, is $13.95, available in bookstores and on the queens' Web site (www.sweetpotatoqueens.com).

* * *

Q. My parents recently divorced after 30 years of marriage. Is there a way for my mom to sever her credit from my father's and establish some of her own? When she inquired, the credit bureau told her my father would have to make the request, his name being first.

Your mom already has a credit record in her own name. If your parents had joint accounts, those accounts are part of her separate credit history as well as your father's. I think what you are asking is what happens to their old accounts. The answer depends on the creditor, not the credit bureau.

The best alternative after divorce is to close all joint accounts and apply for a few new individual accounts. A lender can close a joint account at the request of either spouse.

The problem is that if there is a balance owed on an old account, the lender probably is not going to let your mother off the hook even if the divorce settlement says your father is solely responsible for the bills. Ideally a couple should sell joint property to pay joint debts, or each person should take out a loan to pay off his or her share of the debts. Whether your mother will be able to get new credit as an individual will depend on her credit history, how much she owes and how much income she has.

A free brochure on divorce and credit is available on request by writing Experian Consumer Education, P.O. Box 1239, Allen, TX 75013.

* * *

Q. I have two IRAs and will start taking mandatory distributions soon. I have no spouse, but I do have multiple beneficiaries, ranging in age from 48 to 72. I am rather confused regarding the table to be used to figure withdrawals. Is it the responsibility of the custodians to inform me how much I must withdraw?

Your custodians are supposed to alert you to your need to take a distribution and help with calculations if you ask. However, it is ultimately your responsibility to withdraw the correct amount, so it is best to figure out how the process works.

Since you are not married, the ages of your beneficiaries do not matter. Just look up your own life expectancy based on your age at the end of each year. For example, the IRS' table shows a life expectancy of 26.5 years for someone age 71. Add up the year-end balances for your two IRAs and divide the total by 26.5 to get the amount to withdraw. The actual withdrawal can be taken from one or both accounts in any proportion.

The penalty for failing to take a required distribution is 50 percent of the amount you should have taken but didn't. So far the IRS has not really enforced this, though that could change in 2004 when reporting requirements increase for custodians.

-- Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, send it to On Money. We'll try to answer those we think are of greatest reader interest. All questions must be submitted in writing, but readers' names will not be published. Send questions to Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731.

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