Friday, April 30, 2010

Hoarding is Ruining Our Country

Yes, hoarding is ruining our country, because it diverts wealth that all of us have into objects the hoarder renders useless. Not very long ago, most people even in this rich country did not own many possessions. If you visit the governor’s mansion in Williamsburg, Virginia, the furnishing are sparse. If you check out Biltmore in North Carolina, built by the wealthy Vanderbilts, furnishings are opulent but there is lots of empty floor space. If you watch televisions shows that depict the homes of current celebrities, you will see that they may have many possessions, but they also have generous space for all of them. Why is it that, today, in ordinary American houses everywhere, excess possessions are jammed into every available space, often on top of each other and spilling across areas where people need to walk?

Everyone, including me, is very kind to hoarders to their faces, because we can see how completely oversensitive they are to reality. They can’t face it and they don’t thank us for telling the truth about how they live. But they want even more from us: They want us to ignore the sheer waste of their behavior. A lot of that waste is monetary. Hoarders usually claim they merely have a sorting problem. If they admit there is any problem at all, they claim they’ve just gotten overwhelmed. If they invite in normal people to help them, it is not to remove the clutter: it is to sort the clutter. They don’t want to part with any of their excess possessions. They just want the enormous piles of clutter to somehow miraculously fit into the inadequate space they have.

A scary television show, “Buried Alive,” visits the homes of extreme hoarders and shows them getting therapy over a period of time and trying to reduce their piles. I hope they succeed. Alas, these are not isolated instances. Serious cluttering-into-hoarding is a growing disease in our country. How many people do you know who waste money by keeping possessions in storage, for instance? Who trash pick? Who are addicted to home shopping television or eBay auctions or flea markets? Some people joke that a yard sale is when you put out all your junk and other people take it back to their homes. So true. How many ugly clothes, badly designed toys, now many completely unnecessary and useless decorative items make the trudge from one household to another each year? I know some people find this an entertaining and inexpensive method of shopping, but why go looking for useless junk?

Why not put your money to work for you? Sure, we've had a tough time recently with the stock market, but historically, the middle and lower classes have not been involved in the stock market and instead found their wealth in other ways. One way is to save money, just save it, whether in a cookie jar or a bank account. Another way is to make investments in people: Help a relative or friend, give money and time to charity, and so on. A third is to nourish a small business; a major reason most of them fail is undercapitalization. You could lend someone money, all tied up legally with a written agreement, or micro-lend through the Internet and earn interest while helping build a capitalist enterprise, whether in this country or elsewhere. You also could do what Americans did 100 years ago: restore broken items to usefulness, and sell or donate them. Finally, you could spend your money on improving yourself: on more education, on recreation that refreshes your soul and restores your body, on maintenance of your home, and much, much more. The possibilities are endless.

Interestingly, a lot of hoarders claim that they plan to fix broken items and then sell them or give them away. But they don't; instead, they stockpile them. People who compulsively shop for clothing don't even try to rationalize their need for hundreds of purses. This is wasteful behavior, and in some cases it is the financial ruination of a family. Unfortunately, no approach to cure hoarding has been found to work on a lasting basis. People who overbuy or overcollect slowly slip into trashing up their homes, renting storage units, even buying additional houses just to hold their excess possessions. They alienate their relatives and friends, and end up alone with their hoard.

What I dislike most about hoarding, aside from the sheer disgusting, unsanitary aspect of it (and make no mistake, most hoarders are creating toxic conditions--imagine all that formaldehyde outgassing in a cramped home, plus all the mold being created), is the waste. Americans are the richest people in the history of mankind, and we are throwing away our wealth on useless trifles and trash, or on excess volumes of useful items that we then turn into trash. That's why I say hoarding is ruining our country.

So far, this might sound like just another antihoarding rant. But we can do something about our hoarding tendencies. That's the subject of my next post.

Monday, April 19, 2010

The Financial Tuneup

A tuneup is an expensive trip to the mechanic that is supposed to keep your car in tiptop shape. I’ve never been sure if a tuneup made sense. Today’s cars probably don’t need them, given their newer technology. But what about a financial tuneup? In March, the NY Times ran a cute article called “Thirty-One Steps to a Financial Tuneup.” But who wants to do anything in March? Now that we’re chastened by tax returns and hoping to do better as this year progresses, perhaps this is a good time to consider the list.

The truth is, this is a boring list. Many of the items on the list would take hours of research and they result in no joy, only second-guessing. Insurance, for instance. It’s a good idea to review your insurance, consolidate it, get better rates if you have improved your health, get a volume discount by having your house and your car insured by the same company, and more. But from personal experience last year, I know that doing this takes hours and hours and hours. You’re comparing apples and oranges. This company has a different deductible from this one; this one offers umbrella insurance and this one doesn’t. This one won’t cover any water damage, and this one will. And on and on and on. When you finally make your choice, you worry that you made the wrong one. It's your own little self-induced nightmare. How many of us want to start this kind of project?

Possibly the most interesting part of this checklist is the comments readers made about each item. People recount their own experiences, and since these are not the bland, one-size-fits-all of the initial advice, they give clues to your own personal situation that the checklist does not.

In case you don’t feel like following the link, here’s the NY Times’ list:

1. Save 1% more from your paycheck
2. Reconsider your investments
3. Rebalance your investments
4. Find a better bank
5. Make an extra mortgage payment
6. Open a home equity line of credit
7. Increase your student loan payment
8. Seek a lower-interest credit card
9. Set an automated payment toward your debt
10. Read the rules on your rewards card
11. Cash in your rewards
12. Find a better-earning rewards card
13. Check your credit reports for free
14. Consider a financial planner
15. Pare part of your budget
16. Read your tax return
17. Enroll in a flexible spending account
18. Reread your will
19. Automate your giving
20. Walk a loved one through your affairs
21. Ask your cable company for a better deal
22. Ask your wireless company for a better deal
23. Ask your landline company for a better deal
24. Spend your gift cards
25. Check your life insurance coverage
26. Buy a disability policy
27. Consider renter's insurance
28. Raise your auto and home insurance deductibles
29. Do a home inventory
30. Read your home insurance policy
31. Shop for new home and auto policies

Nothing wrong with working your way through this checklist, but in my case, and I suspect for many of you, some of these items just aren’t relevant. Gift cards? Don’t have any. Rewards credit cards? Don’t have any of those, either. Save 1% more of my paycheck? What paycheck? And that item about opening a line of credit for just-in-case cash is way out of date; banks have been closing these and refusing to open new ones lately. An extra mortgage payment in a year is your vacation. Do you want to skip taking a vacation just to end your mortgage a little sooner? I didn't think so.

Still, I admit that I love checklists, even ones that don't fit me very well. If there's even one action I carry out because I've read this list, the author, Ron Lieber, has helped me. Maybe it's worth following the link and checking out in detail.

A Note

Cross posting my WordPress blog entry about money.

Thursday, April 15, 2010

Tax Day

It's April 15th, and for many people, this is a desperate day. If you have delayed or put it off or couldn't spare the time or couldn't find the documents, today is the day when you have to act.

Either you file your Form 1040 tax return today or you file a Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return. Form 4868 gives you until October 15th, no questions asked, to file your return. There is no penalty for filing within that extended period. Oh, but there is a catch. If you are going to owe taxes, you have to pay them with your application today. Otherwise, you'll pay interest on what is owed and a penalty for late paying, too. The good news is you can file for an extension via the Internet. But you should do it before midnight.

Or, you could just dig in and finish your taxes today.

I know the feeling of being in this final big hurry. One year I was so late getting our tax return together that my husband had to drive to another state to mail it--and he was the last one the police let into the line before they closed the mail drop. I also remember as a kid going in the car with my mother as she drove all the way into DC from the Maryland suburbs to drop the family tax return at the mailbox in front of the main post office near Union Station. Versions of these scenes will occur today. If you are the one heading out late tonight, my condolences.

Maybe next year you could make life easier on yourself and get your taxes finished sooner. There are volunteer sites across the nation where you can take all your tax questions in addition to getting your return prepared free of charge. Free e-file, too. These volunteer sites are not for everyone. If you run a small business and have inventory or employees, you need to look to a paid tax preparer. But if you have a job like delivering pizzas, where you are paid as an independent contractor, you can probably find a free tax preparing site that will handle your return. Even if you have a complicated tax situation, chances are that these sites can help you.

But don't wait until the last minute. That's self-induced stress you don't need. I won't pretend that income taxes are simple; they are not. Every year, the Federal tax rules get tinkered with, resulting in more confusion for us all. Often, state tax laws change, too. Before I do my tax preparer volunteering each year, I train in the new rules and then pass an exam, but I still struggle to remember all the changes.

It's a whole lot easier learning about these new rules in January than it is trying to learn them on the evening of April 15th. Desperation is not the proper mood in which to do taxes. If you handle yours early in the tax season, you'll be relaxed because you have plenty of time. This results in fewer errors. Many people do not realize that they can file their returns without mailing any payment until April 15th. The tax voucher, Form 1040-V, makes separating the return filing and the payment mailing easy. And of course you may pay by credit card these days.

On a day like today when you're down to the wire, it's easy to promise yourself that you won't let this happen next year. You'll get organized by March 15th instead, or maybe even February 15th. I hope you do, because if there's anything we volunteer tax preparers dislike, it's desperate, impatient people who have boxed themselves into a corner and now want that to be someone else's fault. We can't help you if you still haven't found all your documents. Or if you don't know the answers to the standard questions. Or if you have put this off as long as possible and now want us to hurry up and perform a miracle.

Nobody likes paying taxes; we get it. But since taxes are as inevitable as death, why kick and scream and procrastinate? The good news/bad news is that we get a do-over next year. We can aspire to handling our obligations better in 2011. Meanwhile, in only a few hours, the madness of tax day 2010 will be over.

Tuesday, April 6, 2010

Insurance Woes, the Happy Ending

[See my post of March 12 for the back story.]

My friend’s claim was paid by Access America. He’s jubilant, and he ascribes the quick settlement to the power of blogging. I am glad that Access America paid attention to my blog post about the hazards of trip insurance, and offered to cut through the red tape involved in settling this claim.

Now I must point out that despite my friend’s happy ending, we each of us still have the responsibility to investigate in advance any insurance we buy. No more buying a pig in a poke. As the Romans said, “let the buyer beware.”

One of the pleasures of blogging is its potentially infinite reach, but sometimes we wonder if anyone is paying attention. This time, someone was, and we have a happy ending.