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Letter to the editor

Work top down on charity giving

You asked: I get a lot of appeals in the mail from charities. All of them seem so worthy. How do I decide which ones to give to?

By Helen Huntley, Times Personal Finance Editor
Published December 16, 2007

You asked

I get a lot of appeals in the mail from charities. All of them seem so worthy. How do I decide which ones to give to?

I favor the top-down approach. Select one or two areas of concern that are closest to your heart, such as religion, education, the arts or social services to the needy. Throw out all appeals unrelated to your choice. Learn something about the organizations that are related by visiting them in person or researching them on the Internet (www.guidestar.org is a good source. Then pick. Larger gifts to a few organizations are more meaningful than small gifts to many.

My wife is retiring soon with $300,000 in her 401(k). Would it be smart to use some of that money to pay off the $30,000 we owe on our home? Our income next year will be $45,000 and we have no credit card debt.

Compare the interest rate you are paying on the mortgage with the investment return you would receive on the money if you did not pay off the house. In general, I like the idea of having your house paid off in retirement. Keep in mind that your mortgage payment won't just disappear: You still will be responsible for paying insurance and taxes.

My grandson works for a firm that has a 401(k) into which he deposits 6 percent and the firm 41/2 percent. He is making approximately $100,000 per year. Can he contribute into a Roth IRA and if so what percentage can he do?

He can contribute a full $4,000 per year if he is single and his modified adjusted gross income is less than $99,000 or he is married with joint income of less than $156,000. A partial contribution is allowed between $99,000 and $114,000 if single and between $156,000 and $166,000 if married filing jointly. If he is 50 or older the maximum contribution is $4,000. If his income is too high for a Roth, he can contribute to a traditional, nondeductible IRA.

Next week's question

How did the demise of Lou Pearlman's empire affect your life?

To ask a question, make a comment or answer the Money Question of Week, e-mail hhuntley@sptimes.com or write Helen Huntley, P.O. Box 1121, St. Petersburg, FL 33731. Visit her MoneyTalk blog (blogs.tampabay.com/money) for more money information.

[Last modified December 14, 2007, 21:42:15]