Monday, June 16, 2008

Don’t Let High Fuel Prices Stop You From Volunteering

Author: Nick
Category: Money
Topics: , , ,

comic 36 - volunteering

If it seems like every article here is related to gas prices lately, that’s because the price of gas influences so much of what we do with our puny American lives. Want a vacation? Need gas. Want to work? Need gas. Want to drive downtown and pick up a few hookers? Need gas. Well, here’s another one: want to volunteer to help others in your community? Need gas. And unfortunately for a lot of those on the receiving end of volunteer work, high gas prices are pushing some people to reduce their hours spent volunteering or to stop altogether.

While every type of volunteer—from scout leaders to soup kitchen operators—are feeling the pinch at the pump, there are many less fortunate folks out there who need the help of unpaid, unreimbursed volunteers just to get by. And when volunteering includes lots of driving—perhaps taking patients to required medical treatments, or delivering food to shelters—the price of fuel can greatly impact a person’s ability to be generous. Worse yet, with the price of everything going up, more and more people who have never needed a helping hand are finding themselves in positions of need. Put together, that translates to more needy, but fewer volunteers to serve them.

Having driven over 1,000 miles this year alone to perform volunteer work (including 450 miles this past weekend), I have a great appreciation for the hardships volunteers are enduring due to high gas prices. What I don’t have is a lot of sympathy for their excuses if they choose to cut down or quit their volunteering. That’s because Uncle Sam is more than happy to help you pay for your gas that you use in the course of your volunteer work.

In case you don’t already know, mileage incurred that is directly related to volunteering for qualified charitable organizations is tax deductible. For 2008, you are allowed to deduct 14 cents from your taxable income for every mile you drive for charity. So if you drive, say, 2,000 miles a year for charity in a vehicle that gets about 30 miles per gallon, you’ll pay $280 for gas priced at $4.20 a gallon. But if you take the time to carefully log your mileage each time you take a trip for volunteering, you could deduct 14 cents for each of those 2,000 miles, or $280. Isn’t that nice how that math worked out!

While I’ve tried to convince others I volunteer with to log their mileage for the tax deduction, many of them choose not to—even if they itemize their deductions anyway—because it’s “too much trouble.” On the contrary, logging volunteer mileage is incredibly simple:

  1. Create a mileage log book. Take a small notebook, and throw it in your glove compartment along with a pen.
  2. Log your miles for each trip. Record your starting and ending mileage for each trip you make to volunteer for qualified charities.
  3. Add ’em up. Whip out the old calculator (or use a spreadsheet like me) at tax time and take a deduction for your charitable miles driven.

Of course, you’ll want to be careful whenever you try to tell the IRS you don’t owe them tax on every dime you make. You may wish to consult a tax accountant or attorney before deducting your charitable driving, and you’ll want to confirm that your volunteer work is being performed for a qualified charitable organization. But as long as you document your volunteer driving well, you should have nothing to worry about.

On a side note, I will mention that the Federal government has not seen fit to increase the deduction rate for charitable work mileage in over a decade. While deductions for business, medical, and moving mileage have all risen steadily (and are all at rates higher than volunteer work), volunteers have been stuck at the same deduction rate since 1998 despite rising gas prices. I think news of waning volunteerism will finally help to spur a rate bump for volunteers soon.

Thursday, June 12, 2008

Upside Down on Your Mortgage? Buy A New House For Cheap, Then Default On the Old One!

Author: Nick
Category: Money
Topics: ,

comic 35 - foreclosure

The current housing/mortgage/credit/energy/everything crisis is inspiring people to find creative solutions to overcoming their financial problems. The latest get unpoor quick scheme: swapping houses with negative equity for much cheaper ones. Even folks who are $100k or more underwater on their current mortgages can escape their crushing debt and still come out as homeowners. It’s so easy, even you can do it by following these simple steps:

  1. Sign a contract on a new house for cheap.
  2. Forge a rental agreement for your current house and use the “rental income” to help you get a mortgage for the new house.
  3. Move in to the new, reasonably-priced house.
  4. Default on the old mortgage and let the bank foreclose.

Some banks and government agencies are calling this “buy and bail” tactic fraud, usually pointing to step two which requires you to put your current house down as rental income. But since many mortgage lenders let you buy a new home before you sell the old one without a rental agreement in place (just the motivation to sell quickly so you’re not paying two mortgages), you may be able to bypass the fraud part of the scheme entirely. Those who’ve pulled it off successfully say there’s nothing fraudulent about it, possibly because it uses the banks’ own policies against them.

Because buy-and-bail is happening more and more frequently, government-sponsored underwriters like Fannie Mae are moving quickly to help clamp down on the practice. And even without new rules and regulations, buy-and-bail is still a tricky endeavor with plenty of drawbacks, such as:

  • Your credit will suffer greatly. Since foreclosures latch themselves to your credit report for seven years, you really better like that new house because you won’t be getting another mortgage loan for a good long time.
  • You might go to jail or get sued. If your old lender finds out that you drew up a fraudulent rental agreement to get the new mortgage, they might come after you with their army of lawyers. Even if you don’t use the fake rental agreement, jilted lenders may still come after your assets including your new home.
  • It’s morally wrong. Forget rules and laws and everything else. If you pull off a buy-and-bail, you’ll be just as sleazy as the bank that sold you a mortgage you couldn’t afford in the first place.
  • Banks can just say no. If a lender suspects something like a buy-and-bail situation, they might turn your down. But if you’re going for a mortgage with someone other than your current lender, there’s really no reason for the new lender to say no even if they suspect buy-and-bail since only the old lender will have to deal with the resulting foreclosure.

A few banks have wised up to the buy-and-bail scheme and are now requiring people who buy a new home before selling the old to prove they can pay the mortgage on both of them. Of course, even if you can pay both mortgages doesn’t mean you’re going to.

Personally, if you’re that far under on your current mortgage and you want to sell, I think your first attempt should be at making a short sale—selling the house for less than the balance of your mortgage—with your lender’s blessing. You get to avoid any legal tangles, the bank doesn’t lose as much money as it would on a foreclosure, and the house goes to a real person instead of a bank. Of course, if your bank won’t help you out with a short sale, you may be slightly more morally justified in buying and bailing on them.

Wednesday, June 11, 2008

Super-Widescreen Laptops: My Lap Isn’t THAT Big!

Author: Nick
Category: Money

comic 34 - desktop replacement

Like many others, I switched to using notebook (or so-called “laptop”) computers years ago after realizing that having a computer I could bring with me anywhere meant I’d never have to decipher my own chicken scratch in a paper notebook ever again. That was the clear distinction between a notebook and a desktop computer: portability. Sure, you could throw your LCD monitor, 20-pound desktop tower, keyboard, and mouse into a large backpack and take it anywhere you like, but the idea of hauling around something in the sub-six-pound range was a lot more appealing.

My current notebook has a screen that’s roughly 14 inches wide. (As with TVs, the width of a computer screen is measured diagonally from one corner to the opposite.) When I first got it nearly five years ago, that was a relatively standard size for notebook screens. Today, notebooks are much more commonly found in sizes ranging from 15 to 17 inches, and there are already several notebooks on the market above 20 inches! These monsters won’t fit into most standard notebook carrying bags… or most non-standard bags. In fact, your best bet for hauling around these giants is stealing a pillowcase from your bedroom and shoving it in that!

While the 20-inchers are typically priced at the high end ($2,000+), an alarming trend has appeared in recent months: wider notebooks are actually cheaper than their smaller counterparts. Most of the major manufacturers—Dell, HP/Compaq, Gateway, Sony, and others—offer customizable screen sizes for the same notebook configuration, and you’ll generally have to pay anywhere from $50 to $200 more to downsize from a 15.4-inch screen to a 14.1 or 13.3. The reasons for the price premium are many:

  • Smaller screens mean smaller parts needed. The extra inch or two provided to wider notebooks means you can cram bigger parts in that are easier and cheaper to manufacture.
  • Smaller screens are often viewed as more desirable. People really do want the smaller notebooks, but since notebook makers aren’t really listening to that demand, they can charge more for the smaller ones because people will buy them right up.
  • Businesses are willing to pay more for smaller screens. Companies with lots of money to invest in notebooks for its employees are usually first in line for the smaller-sized notebooks. Smaller notebooks work best for companies because they take up less office real estate and won’t cripple their workers who carry them to and fro.

The funny thing about these 17-inch+ notebooks is that the classic “laptop” designation given to notebook-sized computers really no longer applies to them unless you’ve got an extra-large lap. And I doubt there’s anyone with a 20-inch lap who has fingers small enough to use a notebook keyboard. A new phrase was coined to describe these big machines—“desktop replacements,” meaning they’re as powerful as your three-year-old desktop computer, but you can probably still tote it around if needed.

So the next time you’re in the market for a notebook computer, you’ll definitely want to give ample consideration to the appropriate screen size and weight for your needs. All too often, I’ve run into people who only paid attention to things like processor speed and disk drive space when purchasing their notebooks, and they’re always complaining that they hate lugging around their 17-inch, nine-pound monstrosity.

dell mini laptop
As for me, since my notebook is still in Stage 3 of its lifecycle, I’m hoping a good deal on a sub-15-inch notebook will come along this summer because I absolutely refuse to buy one that’s bigger than what I have now. In fact, I might try to hold out for Dell’s upcoming mini-laptop offering, shown here at almost actual size! Okay, at nine inches, it’s slightly bigger than pictured, but it’s still a far cry from those 20-inch behemoths that’ll keep chiropractors in business for the next half-century.

Monday, June 9, 2008

The 9/80 Work Week: Salvation from High Gas Prices Or Screwball Hippie Idea?

Author: Nick
Category: Money

comic 33 - friday off

There have been rumors spreading where I work that we may soon be switching to a 9/80 work schedule. If you don’t know what that is, consider that most professional adults work a 5/40 work week: 40 hours a week over five days a week (usually eight hours a day). With a 9/80 work schedule, one must look at a two-week work calendar. During an “A” week, one works nine-hour days for five days. During the subsequent “B” week, one works nine-hour days for three days, an eight-hour day the fourth day, and zero hours the fifth day. In short, you work more hours the other days to take every other Friday off.

9/80 work weeks are certainly not a new idea; small parts of my business have been doing it for years. But most workplaces hadn’t given the alternate schedule much thought since it ran counter to a decades-old tradition of 40 hours a week, every week. Today, as gas prices continue to soar and people look for ways to cut down on their commutes, the prospect of saving a round-trip every other week is forcing some employers to give 9/80 a second look.

The 9/80 plan has its clear benefits and drawbacks compared to the traditional 5/40 schedule as the table below summarizes.

9/80 Benefits 9/80 Drawbacks
  • One less commuting round-trip every two weeks.
  • Most work days last nine hours.
  • Frequent non-weekend time off for errands, doctor’s appointments, etc.
  • Holidays and vacations may have scheduling issues.
  • Nine-hour work days may help you avoid rush hours.
  • Nine-hour work days may exhaust workers, reduce productivity.
  • May help company reduce overtime expenses if everyone works nine hours most days.
  • Doesn’t help people who normally work nine or more hours a day anyway. (They may have to work 10+ hours a day now.)
  • Helps discourage “long lunches” when people have an extra full day off every other week.
  • May impact child care schedules, cost workers more for longer care.
  • In theory, workers would take fewer sick days simply because they work fewer total days.
  • May not be viable if your business’s customers all work 5/40.

Personally, I don’t have a preference for a 9/80 or 5/40 work schedule. I usually work a 9-9-9-8-5 work week anyway, so a 9/80 schedule would just mean I’d do a 9-9-9-8-0 every other week instead.

A few places are also trying out 4/40 schedules—10-hour days, every Friday off. While I do work 10 hours a day fairly often anyway, if I had to do that every day, I would probably be rather grumpy by mid-Wednesday. Then again, I’m usually grumpy by mid-Wednesday anyway.

Sunday, June 8, 2008

Make Sure Your Ceiling Fan Is Spinning The Right Way or You’ll Be Warm and Stupid Like

Author: Nick
Category: Money

Here’s some advice from The Consumerist website:

If the blades [of your ceiling fan] are spinning counterclockwise, then you’re doing it wrong, and the fan is circulating warmer air.

This would be great advice if it weren’t for the fact that it’s super-totally wrong. The vast majority of ceiling fans blow down air—cooling you—when they’re moving counterclockwise and recirculate warmer air down when they move clockwise.

If you’re paranoid that your ceiling fan might be special and should spin clockwise, just look at the angle of the blades. See, they’re tilted about 10 degrees or so. To cool you off, the part of the blade that is angled higher should be moving forward so that the back end can push air down on you.

Also, a real quick rant: The Consumerist is a really sucky blog. I mean, there are blogs less than three days old run by illiterate, one-armed orphans who only speak gibberish that get their stuff right more often. Please, Consumerist, as popular as you are, you need to do some fact-checking once in a while. You guys are very quick to take anything that hits your inbox as 100% fact just because it makes big businesses look bad and yourselves look cool and smart and sexy. Well, you’re not. Okay, Meg Marco is pretty hot, but that’s about it. Stop misleading people, and if you can’t do that, simply redirect your visitors here where at least I admit that everything you read here is full of crap.

Happy Sunday, everyone!