What Harry says: Since avoiding risk is paramount, you can stick with U.S. Treasurys but with a different slant. The Treasury issues two types of bonds that should interest you: TIPS (Treasury Inflation-Protected Securities) and I Bonds (Inflation Bonds). Both guarantee that they will protect an investor against inflation measured by the consumer price index, but their rate today is very low. Since they are taxed as inflation grows (not always matched by the cash you receive each year), they are best used in a tax-deferred account such as an IRA. There are also mutual funds that invest in inflation-protected securities, both U.S. and corporate. As you would expect, these are a bit riskier. You can go one step higher on the risk ladder if you invest in mutual funds that invest in retail stocks and other companies that can raise price readily. Further up the ladder are mutual funds that invest in commodities or companies that are active in getting raw materials for food, manufacturing, fuel and the like. I suggest that you restrict your investments in non-Treasurys to perhaps 10 percent to 20 percent of the total to keep risks at a minimum but also give you a shot at appreciation beyond the inflation rate. Real estate is a traditional inflation fighter, but today, real estate is in a funk, so hold off on this area.

Dear Harry: My mother and grandmother just moved into my home so my wife and I can take care of my very ill grandmother and give my mother a home. My mother offered to give us the $100,000 proceeds that she got from the sale of her home in the northeast to help us with the remodeling cost and to get my mortgage principal down to a more manageable level. Will I have to pay taxes on the money? I discussed this with my tax guy, and he was not very helpful. Does it make a difference that mom made me a joint holder on her bank account?

What Harry says: This could easily be construed as the cost of lodging to her and therefore be non-taxable. However, to wear a belt and suspenders, you can file a Form 709 for her (the gift tax form). There will be no tax due. This form is filed by the donor, not the donee. The form is very straightforward and easy to fill out in your situation.

Dear Harry: I'm a young lawyer, and I have been living right at the edge of my income to impress potential clients (and I should add, potential dates) . In spite of all my education and experience, I have never really tried to find out how far I can go with this lifestyle and not get into financial trouble. Are there any reliable guidelines to follow beyond not living above my means?

What Harry says: Different "experts" set different limits. Let me lean to the conservative side and set markers that will keep you out of trouble. First and foremost, you have to stop trying to impress those potential dates and put limits on impressing potential clients. Considering all required debt payments, keep them below 50 percent of your gross monthly income. If you're above that, tighten your belt. Do you really need that fancy European car? Those "designer" suits? Monogrammed shirts? Your mortgage payments (including taxes and insurance) or rent should not exceed 28 to 30 percent of the monthly gross. That leaves you up to 20 percent for other debt payments, including your car. There you have it. I hope you're OK. If not, you know what to do. I might note that the Association of Independent Consumer Credit Counseling Agencies has members who deal with people in various professions, even doctors, stockbrokers and bankers.

Dear Harry: I am in the process of changing my will. One of my sons has been extremely nasty and neglectful for the past two or three years, and I want to disinherit him completely. I have two problems that I'd like to resolve before I meet with my lawyer. I have a savings account in joint names that I want to change to my name alone. I also have an insurance policy where he is a joint beneficiary with my other son. Is it enough to just change these in my will, or do you suggest that I do something else?

What Harry says: Get down to your bank and have them change the savings account to your name alone. Do this NOW! He is in the position of being able to clean out the account before you know what's happening. This is why I never recommend a joint account with a child. If it's necessary to have a child who has access to the account, use a power of attorney. The insurance company will honor the beneficiaries named in the policy. You cannot change this by a will even if the beneficiary is not irrevocable. Contact your insurance agent for the necessary forms to make the change you want.

Dear Harry: Some time ago, you wrote a column in which you said that variable annuities were rarely good vehicles for investing. I discussed the column with a friend who is in the insurance business. He works for one of the real big companies. He sent me an article titled "Fifty Reasons Why Variable Annuities May Be Better Long-Term Investments Than Mutual Funds." I read through the article, but much of it was beyond me. What is your reaction to it? Does it change your mind?

What Harry says: I saw this article a while ago. A lot of what the author says is just untrue. Some of it is true, but slanted in favor of annuities. Much of it is just very questionable. He has not changed my mind. For reasons stated by me many times in the past, fixed annuities have limited uses: variable annuities are very rarely an appropriate investment.

Dear Harry: I am writing on behalf of my elderly godmother who has severe medical problems. For the last several years, she has been hounded by a collection agency for a large department-store chain. She never owned a credit card for that store or even a Visa or MasterCard. I have written to them and called them, but no one wants to do anything. She has a very common last name, but her first name is Margaret and her middle initial is S. They are confusing her with a Marguerite whose middle initial is R. She never lived at the address shown on the original bill. This situation is hurting her emotionally on top of her many physical problems. What can we do?

What Harry says: Contact the Philadelphia Corporation for the Aging hotline at 215-765-9040. Also contact her Congressman's office with the suggestion that they contact the collection agency and the Federal Trade Commission. In this election year, your Congressman's people should be eager to help. These over-aggressive collection agency toads have to have their toes put to the fire. *

Write Harry Gross c/o the Daily News, Box 7788, Philadelphia, PA 19101. Harry urges all his readers to give blood - contact the American Red Cross at 800-GIVE LIFE.