Smart Money: Leases should cover apartment cleaning issues, expenses

|tab|

Bruce Williams is a national radio talk show host and syndicated columnist|ret||ret||tab|

Dear Bruce: We recently rented a home while we are building our own. The landlord charged the outgoing tenant for cleaning the carpets and painting. It has been many years since I have been a renter, but as I understand it, this should be part of the normal upkeep at the owner's expense. Can he do this? B.L., Sacramento, Calif.|ret||ret||tab|

Dear B.L.: If the lease calls for such payments, he certainly can. Customarily, if it's a long-term lease, the landlord pays for things like painting and cleaning. If the tenant has only been there for a year, and the paint is beat up or they were heavy smokers and the walls have been stained, then it is not unreasonable for the landlord to look to the tenant for reimbursement. |ret||ret||tab|

Cleaning is quite another matter. Most leases have some reference to cleaning, but the problem is one person's clean is another person's filthy. Many tenants will move out and swear that the place was spotless. A dispassionate observer may suggest that the apartment or house was an adjunct to the village dump. |ret||ret||tab|

It is to each party's advantage to have the details spelled out in the lease and have a walk through in the beginning and a walk through at the end. By doing this there is no disagreement upon the condition at the outset and the conclusion of the tenancy. |ret||ret||tab|

|ret||ret||tab|

Dear Bruce: I'm 25, as is my fiance. We're getting married next year. We'd like to buy a five-acre lot or so with a home, but the problem is debt. I have $10,000 in student loans, not to mention $3,000 in credit card debt. We do not want to live in the city, and my fiance would like to plant fruit trees and have a greenhouse. Even though finance rates are down, we are scared they won't be by next year. We make $54,000 between us. What do you suggest? P.B., via e-mail|ret||ret||tab|

Dear P.B.: Slow down a little bit and take a deep breath. You are young, and you have a relatively modest amount of debt, which can be handled. No one can give you an absolute answer on whether interest rates will be up or down next year. |ret||ret||tab|

Planting fruit trees is a long-range proposition. There would be many years between planting and your first cash crop. You could, of course, consider buying an established orchard, but then we are talking about some serious money. Don't worry about missing out on a percentage point or two in long-term interest rates. I suggest you get your house in order, save some money and then think about longer-term investments. |ret||ret||tab|

|ret||ret||tab|

Dear Bruce: You mentioned Roth IRAs a number of times. I am 42 and putting the maximum into my 401(k). What sources do you recommend for getting a Roth IRA? R.B., Lexington, Ky.|ret||ret||tab|

Dear R.B.: Roth is the law that allows preferential tax treatment. The money that you put into your Roth account $3,000 at this writing must come from after-tax dollars. This money will work for you for the next 25 years, and whatever monies are earned will then be totally tax-free. In addition, you are free to withdraw your principal anytime without penalty. |ret||ret||tab|

Only the earned interest would be subject to penalty if you make a premature withdrawal. You can purchase a Roth account through any brokerage house or, if you prefer, a bank. The important thing to remember is that you have to help make the decision as to how the money should be invested.|ret||ret||tab|

|ret||ret||tab|

Dear Bruce: In the past, you have suggested using credit-counseling firms. What would you recommend for someone who is $63,000 in credit card debt alone, not counting house payments or two car payments? |ret||ret||tab|

They have considered cashing in their 401(k)s and trading their cars for something less expensive, even though they owe more than they are worth. I don't know what to recommend. They can't even make minimum payments on the credit cards. I don't want to loan them money considering the large amount and what little I could spare. J.C., via e-mail|ret||ret||tab|

Dear J.C.: There is a distinct possibility that these individuals are candidates for personal bankruptcy. You didn't mention the income, but $63,000 in unsecured credit plus the cars and their home, spells Chapter 7 to me unless there are a huge amounts of income, which I doubt. I would caution you strongly: Don't throw good money after bad. You will only prolong what apparently is inevitable.|ret||ret||tab|

|ret||ret||tab|

Dear Bruce: You've suggested many times that timeshares are not good investments. What is the substance of that argument? J.T., via e-mail|ret||ret||tab|

Dear J.T.: I wish I had more time and space. I know of no circumstance where buying a timeshare is a good "investment." Generally speaking, marketing eats up a substantial portion of the money about 40 percent that one spends for a timeshare. In addition, the secondary market for timeshares is almost nonexistent. A 15 percent to 20 percent return of capital is considered above the norm. You can generally rent a unit similar to the timeshare you would purchase in the same area for substantially less than the cost of the money, maintenance charges, etc., that come with a timeshare. |ret||ret||tab|

Generally, timeshares are sold by high-pressure sales people to the detriment of the purchaser. It is true that some large, respected firms have entered the timeshare business, and perhaps their influence will eventually change the general tenor of the industry, but, until such time, I would avoid timeshares.|ret||ret||tab|

|ret||ret||tab|

Dear Bruce: I am considering investing in some annuities, but I understand that you are not a fan of these. Can you tell me why? H. F., Redding, Pa.|ret||ret||tab|

Dear H.F.: Many of the advantages of annuities have gone away with changes in the tax laws, and many other advantages touted by people in the business are, in my view, largely illusionary. As an example, they will tell you that your principal is guaranteed with insurance, but that is only the amount that you invest and only guaranteed if you die. |ret||ret||tab|

This is not to say that annuities are necessarily a bad product just because many of the tax advantages have gone away. They fill a need for many people, but they need to be scrutinized carefully for hidden costs and conditions. Many sales people fail to point these out to their clients, and then when the client wants to make a change or remove the money prematurely, they find out that it can be expensive to do so. |ret||ret||tab|

[[In-content Ad]]