Wednesday, March 31, 2010


... is what it costs to transfer one piece of residential real estate, the apartment David and I are buying tomorrow (if, *fingers crossed fingers crossed* the close doesn't get delayed again).

None of that sum is the down payment, or any piece of the actual sale price. It consists entirely of title costs, attorney fees, broker commissions, taxes, and every other bit of this transaction that some third-party is managing to carve a piece off. I knew going in that this was going to be pricey, but damn. I'm impressed. And boggled.

Happily, we're not on the hook for all of that cost (merely the vast bulk of it), and some we financed into the mortgage loan. But still. This is not some Donald Trumpian multimillion-dollar real estate deal. It's a standard-issue, six-figure home loan, one in which I fought hard at every step against junk fees and avoidable "extras" we could opt out of (I now speak fluent GFE, HUD-1, RESPA and TIRSA Rate Manual).

That is an impressive amount of price padding from what you see on the sticker.

Friday, March 19, 2010

Health care reform zero hour

For someone who both a) cares a ton about healthcare reform, and b) works in a newsroom, I've been remarkably out of the loop on the whole Washington slog this past year.

Basically, I followed the details of some of the early proposals, but things were changing so quickly I lost the motivation to keep up. The best quote I've heard about Washington's legislative process came from an SBA spokesman last year, when my reporter pressed him for comment on stuff being talked about for inclusion in the not-yet-passed Recovery Act stimulus bill: "You don't give farm animals names if they're just going to get slaughtered. We're taking the same philosophy with these provisions."

That's how I came to view health reform: Call me when there's a bill about to go to the President to sign. Until then, everything in it is in quantum flux and not yet real.

So imagine my surprise when suddenly this week everything started moving super-fast and dominating the news and journalists began assembling for an all-day "this is it" coverageathon on Sunday. My reaction: Wait, what? What's happening? Is this going to be a really final bill?

Here's the best, clearest description I've seen (hat tip to Neil for the link) of the process now unfolding: from the Wall Street Journal, "Health-Care Bill's Final Act: A Look at Possible Scenarios." The gist: Yes, this is really it. By Monday, we could have new law.

What's in that law? That's what I'm trying to find out next. (It'll be what the Senate passed on Dec. 24, but I haven't delved into the details of that bill yet.)

Thursday, March 18, 2010

How to celebrate the anniversary of screwing up your taxes: Do it again

"We have a letter from the IRS saying we owe them money!" is not what you want to hear when you pick up the phone to answer a call from your spouse.

Ten years ago, the first year we were together, David and I managed to short the IRS to the tune of three grand and unexpectedly owe it all come April 15. The culprit was W-4 confusion: We both checked "married," not realizing that would set our withholdings as if we were each married *and* the family's only wage-earner. Throw together two salaries and a higher tax bracket and you have an expensive oops.

Since then, I've been pretty meticulous about the taxes, and we traditionally come in for a hefty refund. (Yes, intentionally -- we both would rather use the forced savings of overpaying the IRS than cut it close and end up owing. I realise that's financially foolish, but so far, the money I'm "losing" this way isn't enough for me to care.) This year's refund landed in my bank account just three days before David's panicky phone call.

It turns out what we owed money for was our 2008 taxes. "The income and payment information that we have on file does not match entries on your 2008 Form 1040," the letter sternly informed me.

"Calm down, wait till I get home, and I'll go through the records," I told David.

"Please give the IRS money so nothing bad will happen!!!" he replied. I admit, I shared a bit of the panic -- stiffing the IRS sounds like one of those things the federal government takes a very dim view of.

The form had one slightly reassuring line in it, though. "If this information is correct, you will owe $508," it said.

Okay. Suddenly owing $508 is no fun, but it's not like we were being told "cough up $10,000 and prepare for a stint in the debtors' gulag, and by the way, we're now gonna audit EVERY FORM YOU'VE EVER FILED WITH US, you untrustworthy tax-dodging leech."

The letter's "summary of proposed changes" showed two income payments unaccounted for on my 2008 taxes, but apparently very accounted for in documents the paying parties sent on to the IRS.

The first was $1,200 from Time Inc. for freelance work I did before I joined the staff, and for which I'd been paid on a 1099. When I went back in my records, I realised to my chagrin that the IRS was right. The work was done in late 2007 and paid in early 2008, and I'd totally forgotten about it by the time I filed my 2008 taxes -- which I did before the 1099 arrived in the mail. I hadn't included it. Note to self: columnist Matthew might be on to something with his checklist manifesto.

The second entry in the IRS list was "taxable dividends" of ... $13. This came from the Sharesave account I cashed out just eight months after I started, because I left the company long before the shares vested. Apparently I made $13 in interest off it. I have no idea if that's true or not -- my dim recollection is that I got back exactly what I'd put in -- but since the taxes due on $13 are about what a cup of overpriced coffee costs, I had no interest whatsoever in digging out records or trying to fight that charge.

Happily, the penalties on stiffing the IRS -- at least for the three-figure amount I did -- are completely minor. The IRS says I owe $489 in taxes on the $1,213 I underreported, and $19 for a year's worth of interest. That's it. No "pay this draconian fine so you learn to never again shortchange the taxman" fees. I'd owe more interest and possibly some penalties if I didn't pay up straight away, but if I sent the check before March 31, I'd be back in Uncle Sam's good graces.

I cut the check that night. ("I will take this to the mailbox right this second," David said, sealing the envelope as he changed out the door.) The Treasury cashed it yesterday.

And I hope to never again be a tax scofflaw. I mean, I'm pretty sure the government (current debt: $12,644,040,577,175) kinda needs the cash.

Saturday, March 06, 2010

The cost of dying

Hello world. Sorry I've been so quiet; balancing apartment-buying (eeek) and work is brain-and-time consuming. The real-estate adventure has yielded a ton of blog material, but I feel like I need to sit on a fair bit of it until the closing contracts are actually signed and stuff can't suddenly go awry -- which it has been on a fairly regular schedule. So I'm stockpiling material and planning lots of updates in a month ...

Meanwhile, I wanted to drop in a link to one of the best magazines pieces I've read in years: "Lessons of a $618,616 Death," this week's BusinessWeek cover story. (The cover itself is also breathtaking, with its fade-to-white line "The End of Life." The whole package is a wonderful reminder of the unique ways design and writing can fuse together in print.)

Health care is a topic I frequently come back to in this blog. I can't think of any financial decision more urgent -- what wouldn't you pay when you life is at stake? I also can't think of any financial system more utterly broken in this country. You think the housing market got irrational during the last decade years? It's nothing compared to health-care spending.

Amanda Bennett and her reporting colleague, Charles Babcock, do an astonishing job illustrating both the micro- and macro-economic issues of our current health system. The story's eye-grabbing headline number, $618,616, is what it cost for a seven-year fight against the kidney cancer that in 2007 killed Bennett's husband, Terence Bryan Foley -- "father of our two teenagers, a Chinese historian who earned his PhD in his sixties, a man who played more than 15 musical instruments and spoke six languages, a San Francisco cable car conductor and sports photographer, an expert on dairy cattle and swine nutrition, film noir, and Dixieland jazz."

It's a vast number -- not to corporations and Fortune 500 CEOs, but to those of us who budget carefully each month to pull together rent or mortgage checks. "I think had he known the costs, Terence would have objected to spending an amount equivalent to the cost of vaccine for nearly a quarter million children in developing countries," Bennett writes. "That's how he would have thought about it."

It's a number with almost no basis in tangible costs. The list price on one chest scan was $3,232. Medicare pays less than $300 for that scan. UnitedHealthcare pays almost $2,600. Empire BlueCross pays $775. What does it actually cost? "The documents revealed an economic system in which the sellers don't set the prices and the buyers don't know what they are," Bennett reports. "Prices bear little relation to demand or how well goods and services work."

Was one life worth this investment? Bennett does a deft job illustrating how fraught and unanswerable that question is. "Who did the paying? The health insurance system depends on healthy people bearing the cost for sick ones like Terence," she writes. "Should you have had a voice in Terence's final days? Would I make the same decision with my money for your loved ones? These are things I think about now but can't answer."

And yet. The intensive medical intervention -- at a six-figure expense -- bought Terence some statistically improbable extra time. I'll leave it to Bennett to describe what those extra months meant to her family -- stop reading this, go read her article.

I have my own version of the story, which almost certainly colors my health-care views. My mother was diagnosed with cancer when I was 14, and died of it when I was 16. I'm almost 32 now, which means I've lived nearly as many years without her as I had with her -- but there still isn't a day I don't feel how strongly how who she was affects who I am (hi, pitch-black sense of humor and perfectionistic streak! Also, the financial geekery. I like reading SEC filings. There's no way that's not genetically influenced by my bookkeeper mom -- it's downright unnatural.) And four years ago, I spent most of a week haunting the ER and waiting rooms at our local hospital. It was a medical problem with a lingering aftermath, and a fresh reminder -- not that I needed one -- of how essential good health is to having a life you enjoy living. And how financially fraught trying to safeguard it can be.

Fixing our health-care system is a bogglingly complex undertaking. There's a thousand ways changes can go wrong, and just as many ways for those with vested financial interests to hijack improvement efforts. But there's also a giant cost to leaving things as they are. And even for those like me, like Bennett -- with top-quality health insurance and the financial resources to navigate the labyrinth -- it's a badly broken system.

We can't afford to maintain the status quo.