The personal finance writer who irritates me the most

I grew up in Maryland reading the Washington Post, and it remains my favorite newspaper. I like the insider-baseball political coverage, the local tone (obsessive Butterstick coverage!), and the editorial choices it makes -- our Style section kicks NYT @#!, our fashion writer won the Pulitzer, and our advice columnist was named best in the country by Time magazine.

Which makes it particularly frustrating that the Post's personal-finance columnist annoys the hell out of me.

I keep trying. Today, I thought I'd take a look at "Color of Money" columnist Michelle Singletary's latest live chat transcript. Live chats are another thing I love about the Post, and I figured that I'd surely find a few things in Singletary's chat to admire or blog about.

Instead I found myself gritting my teeth. Constantly.

Singletary's basic financial philosophy seems sound: She loathes debt, and advises people to a) avoid it at all costs, and b) do whatever it takes to get out of debt, if you've succumbed and run it up. In our debt-laden culture, a stern taskmaster sounding dire warnings about debt isn't a bad thing -- most people (including me) could do with less yielding to temptation and more buckling down and saving money.

What frustrates me about Singletary's writing is her absolutism. She views debt as essentially a moral sin (direct quote: "Debt is evil. Credit is evil. You may decide it was necessary but it is evil nonetheless."), and counsels debt elimination as the absolute top financial priority for anyone in debt, No Matter What. And, further, counsels that people in debt should not spend one dollar on anything but basic food, basic shelter and life-sustaining necessities until every penny of debt is gone.

Take an example from this chat. A student about to graduate law school wrote in to say that she and her husband have saved like crazy to pay off their debts, and in three months they'll be in the clear for everything except her law-school loans. Now that they're reaching that milestone and she's about to start working and bringing in money, she realizes "we will be able to afford occasional new outfits or shoes, and other little luxuries." She wrote in to ask advice on how to wean off the austerity budget without going nuts: "how to enjoy little things while still staying on track with savings and keeping debt gone?"

Singletary's reply: forget about it. "I say you should stay on the crash diet until you pay off the student loan debt," she answered.

Another chat attendee wrote in to protest the harshness of that advice: "You cannot ask someone to never plan for a vacation, a new outfit, or a dinner out for the five to ten to twenty years it might take to pay off law school loans, (which run into six figures). She asked a reasonable question. Please give her a reasonable answer."

Singletary doesn't back off an inch in her reply. "Yes I can and have asked plenty of people to forget about vacations and eating out and whatever when they have six-figure consumer debt like student loans. It if takes years well so be it. You are not entitled to vacations, new outfits, dinner or whatever if you have massive consumer debt.." To top it off, she's snide: "Well, when you want to do my job apply to the Post."

If Singletary's absolutism were confined to debt reduction, I'd probably shrug it off as an overly aggressive response to a drastic problem. There's no question that too much debt is a dire and too-widespread problem, and I don't doubt most people are better served by erring on the side of austerity over indulgence. But her "my way is the only way" attitude carries over into territories where I see a lot more gray area -- most notably, the question of whether married/domestic couples should have joint bank accounts.

Some of her pieces on the subject are sensible and restrained. "Joined in Marriage and Finances" wisely observes that sharing finances doesn't mean you can't still each spend separately, and, a sentiment I particularly appreciate, "It's not true that a marriage has to always be a 50-50 partnership. Sometimes it's 80-20 or 10-90 or 0-100." I wholeheartedly agree with her advice to "accept that the day you get married is the day you stop being financially independent."

But I'm not convinced that joint accounts are the only acceptable financial arrangement for married couples -- and Singletary refuses to acknowledge that choices other than hers can ever be acceptable.

A particularly vivid example of this came in a chat in late 2005 on financial advice for engaged couples. Singletary opposes pre-nuptial agreements with the same vehemence she opposes separate bank accounts. A chatter wrote in to detail his financial situation and ask, "Are there other facts or legal issues regarding pre-nups we should consider?" Singletary ignored that part of the question and focused on her belief that pre-nups are a bad idea ("a prenup in my opinion is a plan to fail"). When called on that by another question-asker later in the chat ("Isn't this forum for information sharing regardless of what you personally believe?"), she blew up, and as she often does, got defensive and attacked: "I know the answer but you can't make me give the answer. And this is a forum for information AND my opinions. That's why they pay me to be a COLUMNIST. Look if you want information on a pre-nup you got to talk to an attorney and you know that. My tip is don't get one. And if you NEED one you don't need to be getting married."

The blinders of her own personal beliefs always circumscribe the advice she offers. In the recent chat, the one that had me gritting my teeth, an older chatter wrote to ask for resources to help sort through the financials of combining two finances later in life, when both partners in the marriage have substantial assets and kids from past relationships. 'Join everything' was, once again, her answer, with no recognition of the situation's nuances.

But where I really lost it -- and fired up this blog post -- was when I saw her response to someone looking for guidance on helping a niece about to gradate college make smart choices about the financial basics (car for transportation, work-appropriate wardrobe, security deposit and basic furnishings for an apartment, and so on). The questioner had advised the niece that if she really, really needed to put things on credit cards, she also needed to have a plan mapped out for paying off the charges, preferably within a year.

Singletary's advice was starker: "She can sleep on a bunch of blankets until she can afford furniture (and not on credit). I did."

You know what, Singletary? That's a reasonable option to suggest, but it's not the only option. Thriftiness is a valuable character trait, but it can cross over into miserliness. Money isn't a valuable thing in and of itself; the only reason any of us need to care about it is because of what it can provide to enhance our quality of life. Taking care of the necessities and laying down a decent savings cushion needs to be a priority, but I don't think anyone is best-served by making it their sole, relentless focus. The about-to-graduate law student isn't "entitled" to an occasional dinner out or vacation, but she's not asking anyone to magically provide them; she's asking about balancing priorities so that she can enjoy a few indulgences while building a firm financial infrastructure.

Life is unpredictable, and there's no guarantees about later. Selling out your future to indulge now is a bad idea, but putting all your eggs in the "later" basket strikes me as an equally risky choice. What happens if the law student continues living in austerity, eating ramen noodles and passing on investing money in experiences she'd enjoy like a bit of travel or fine dining, only to get hit by a car the year before that student debt is paid down? Financial decisions are balancing acts. Balancing acts are, pretty much by definition, tricky and fraught. An absolutist stance makes decisions easier, but it doesn't guarantee an optimal outcome.

I believe the role of an advisor -- whether that's a newspaper columnist, a paid professional, or a friend offering a sympathetic ear -- is to help the questioner more clearly understand their options and the consequences of each potential choice. Once the issue is framed and discussed, the advisor should step back and let the questioner make their own choice. Personal experience and views can be helpful in the discussion ("here's what I did/would do"), but insisting that everyone make the same choices you have or would isn't advising. It's bullying.

Food spending, from $21 a week on up

One of my friends asked recently about food budgets: How much do you spend in an average week?

We're not frugal about food. I buy breakfast (yogurt, hummus, bagels, things along those lines) and lunch at the office most days, partially because going out to get food dislodges me from my desk. It'd be cheaper to bring food, but I'd miss the chance to munch at local places and get outdoors. I tend to actually eat at my desk, save the occasional sit-down lunch or voyage to the park. Lunchtime is good blogging time!

Anyway, buying food at the office tends to eat $40 or so a week (Manhattan pricing), and I'll usually spend another $120 or so each week on takeout or dinner out. Even cooking rarely "saves" me much; if I cook fish, I can easily drop $20 on it. For me, though, it's something I've consciously decided to spend a big chunk of my budget on. (I suspect I spend way less than most people in other areas, like on clothes -- most years, my clothing expenditure is probably in the three-digit range, an expense easily eclipsed by what I spend on food, books and travel.)

There are certainly ways to spend a lot less on food. There were times when we had to. When David first moved to the States, we spent a month or two with only my just-out-of-college salary. With a monthly take-home income of $1,652 (the number is seared in my brain), we had to cover $950 in monthly rent (a steal in Manhattan, but still daunting on an entry-level income) and several hundred more each month on bills and debt payments. It was one of the only times in my life I really had to confront issues of "we have $10 and three days till payday; what can we afford to eat?" (In college, where I had even less money, you could always reliably scrounge meals somewhere.) Hint: Rice with soy sauce and honey is cheap and filling!

This bubbled up to top of mind for me today because I came across a story about the Congressional "Food Stamp Challenge": Four Representatives agreed to try to live for the week with a $21 food budget, the amount the average food stamp recipient receives.

Now, $21 is probably less than most actual food-stamp recipients spend; my impression is that the program is designed to be an assist, not a sole nutritional support. I see debunkers have already blasted away at the $21 constraint as an artificially low one.

Still, this exercise is a great way to draw attention to the bind those with low wages often find themselves in, as they try to stretch paltry paychecks in impossible ways to cover the costs of modern necessities. Sure, it's a stunt, but I think politicians can use more exposure to the realities their constituents live with. If trying to live on a low budget drives the difficulty home in a way stacks of policy briefing books can't, I'm for it.

So how has life on a shoestring been treating the Representatives?

"No organic foods, no fresh vegetables, we were looking for the cheapest of everything," [Jim] McGovern [a Democrat from Massachusetts] said. "We got spaghetti and hamburger meat that was high in fat -- the fattiest meat on the shelf. I have high cholesterol and always try to get the leanest, but it's expensive. It's almost impossible to make healthy choices on a food stamp diet."

Tim Ryan, a Democrat from Ohio, aborted the challenge a day early and four pounds lighter.

Last Friday night, in New Hampshire to deliver a commencement speech, Ryan succumbed to a pork chop in the hotel restaurant because he feared he would otherwise be too weak to give the address.

Several participants blogged about their experiences. As Jim McGovern's wife Lisa posted:

For years before I had kids and especially when I was pregnant, people told me how hard it is and how tired you are. Everyone sort of says that and "knows" that -- it's just a no-brainier -- conventional wisdom -- common sense. And I thought I understood that too. Having kids is hard and tiring. Then I had kids. And those first few months gave me a whole new understanding of those words I had heard so many times. None of those words had adequately described it. And I don't have the words still. (Of course there is also the flip-side of love and joy which was unlike anything I had experienced either.) My point is, I learn things by experiencing them in a whole different way than I do by reading about or hearing them.

What do you 'owe' your parents?

Here's a fascinating kettle of worms: How much do your parents' financial lives affect your own, once you're an adult?

One half of the Make Love Not Debt blog team raised this issue in a post on Asian culture and finances. I'm as 'white middle-class suburban American' as you can get, with the usual financial dynamics attached to that -- money flows from the parents to the kids, until the kids are out of the nest and sometimes longer. There's no expectation or likelihood it will ever flow the other way, at least in my particular case, barring some kind of financial miracle or catastrophe. If I won the lottery, then sure, I'd kick back a fair chunk into sharing the wealth. If my dad (a single parent for the past decade) suddenly fell into disaster, I'd jump in and try to help.

But in the routine course of things, our financial lives are almost completely independent. When I budget out future priorities, I only have to worry about me and David; we don't need to account for supporting our parents, either wholly or in part. It's only in recent years, as my social circle broadened beyond the suburban-middle-class peers I grew up with, that I've realised how unusual that it.

More than half my friends expect to have significant financial obligations to their parents. In some cases, culture is the driver; the Asian cultural expectations MLND describes are ones I've seen at play in some of my friends' families. In college, several friends grumbled that the only "acceptable" choices for them were to be economics majors or pre-med. Their parents were willing to work themselves to the bone to send their kids to top schools; in return, they expected the children to pursue lucrative careers (medicine, law, or investment banking -- maybe computer programming, though that was definitely on the fringe), so that both they and their children could reap the financial and social rewards of that professional success.

In other cases, the obligation comes from class issues. Most of my friends are in a similar socioeconomic band to me: We have careers that pay way more than the average U.S. salary. (Although in NYC, "way more than U.S. average" can still mean living paycheck-to-paycheck. Journalism is not the career for those who dream of rolling in moneypiles.) For me, that keeps me pretty level with my parents' socioeconomic band. But for some of my friends, professional-middle-class is a step up. One very close friend quips about how she grew up in a trailer and was raised by a trucker. Her dad works way, way harder than I ever have -- but his financial situation is also more precarious than mine has ever been, or than his daughter's now is. Her parents don't have that nice retirement pension my Dad does. Which means the kids are going to inherit some of the responsibility for their parents' financial security as they age. Because what are the other options? It's not like her parents made bad decisions or gambled or drank away their financial stability. They poured what money they had into raising their kids.

You hear a lot of talk about financial planning for babies, and for the costs of raising kids. There's less talk about the complex calculus of how much you "owe" to your parents, and what a giant difference those obligations can make in financial lifecycle planning.

(Did I just write "lifecycle"? I've spent too much time in the jargon trenches this week.)

Equipping your kitchen from scratch for $200

I rarely go in for frugality on this blog or in daily life, but I had to link to a nifty article in this week's New York Times: "A No-Frills Kitchen Still Cooks" (found via Matthew's always entertaining and prolific food blog Roots & Grubs). I could quibble with some of Bittman's recommendations (no baking pan? I use my 8x8" one often for casseroles; the list seems geared toward someone who cooks on the stovetop but not in the oven), as I'm sure every reader can, but I really like the basic premise of 'practical ways to frugally equip a new household.'

I remember the sticker shock I felt when I left college for my first apartment in the late '90s. Not just for things like furniture, which you expect to spend up on, but for all the basic things we take for granted -- Windex, olive oil (I don't recommend using them in combination), bathroom towels, scissors, storage boxes and so on. I felt like I was running to the supermarket every hour to fling money at them for household essentials. So for new grads and others setting up house for the first time, tips like Bittman's seem essential. It's good graduation-season reading.

And on that note, off I go to my college commencement! YAAY no more classes! Now to spend the next three lifetimes working off my loans.

Resetting myths about resetting debt statutes of limitations

I've been a very remiss blogger lately, and the culprit is, as usual, travel. San Francisco this week, Vegas last, and a crunching work deadline on a feature piece in the midst -- I'm behind on everything, oy. But! The end of the insanity is in sight! And I have lots of financial thoughts scampering around in my head.

Starting with an update on the "repairing your financial sins" series about rebuilding damaged credit. The common word of caution to people thinking of repaying or resuming communication about old debts is "proceed with caution," because doing so can reportedly "reset" and restart the clock on the statute of limitations. Regular reader Karawynn linked in comments to a Consumerist article saying that's a myth, and that the statute of limitations runs from the date payment initially became delinquent, no matter what happens later. Their sources: a nonbinding opinion from the FTC ("because the commencement of the seven year period is now described with some precision by the statute, it is our opinion that none of the subsequent events you listed -- sale of the charged off account by the creditor, or a payment on or dispute about the account by the consumer -- changes the allowable period for a [credit reporting agency] to report a chargeoff") and a direct comment from a TransUnion spokesman, who said (paraphrased) 'paying the account after a delinquency has been reported by a credit grantor will not have the impact of "resetting" the item.'

However -- these comments relate only to what can legally happen on your credit report, not a) what can actually happen (in practice, unscrupulous debt collectors have been caught running all kinds of skeevy stuff up the flagpole to see what flies) and b) what payments do to reset the debt legally. By reinitiating activity on an old debt, you may bump it back into the active column and restart the statue of limitations for the debt's legal expiration (the point at which the creditor no longer has any legal right to pursue you for payment).

The key point to bear in mind is that a credit report is different from a legal accounting of your debts. Some creditors never report debts to credit agencies; that doesn't mean you don't legally owe the debt. Some statutes-of-limitations expire before the seven-year window used for tracking credit-report items; that doesn't mean those old delinquent debts can't continue to haunt your credit rating, even after you no longer legally owe anything on them.

It also explains why paying a delinquent debt doesn't remove it from your credit report, and may not do anything useful for you at all, from a credit-rating standpoint. (It can certainly be useful if it clears a debt you're still within the statute of limitations on and legally liable for.) Remember, the purpose of a credit report is to help credit-granting agencies judge how easy it will be to get money back from you. If you let a debt go delinquent, that makes you a pain for the creditors to deal with -- and even if you later get everything together and clear those delinquencies, there's still a legitimate red flag, since you did incur the delinquency in the first place.

On the other hand, credit reports and credit ratings do take recent history into account. A two-year-old delinquency will hurt you far less than a two-month-old one. As the problem ages, it becomes less harmful. And if you have recent problems, the best thing you can do is reach some sort of arrangement with your creditors before the account is charged off. (When that happens varies, but it's almost never less than 90 days or more than 365 days after the debt became delinquent.) Charge-offs are the really black smirches you want to avoid, and they're often preventable -- creditors will be pretty flexible about payment arrangements so long as you're active about negotiating with them.

Underwater homes (not the fun, aquatic kind)

With adjustable-rate mortgages coming home to roost and the subsequent, entirely predictable and long-predicted collapse of the subprime lending market, the dark side of buying real estate is getting a public airing in the press. But there's not just the risk of taking on a mortgage bigger than you can afford -- there's the risk of being really locked in to the house you buy. In a culture that pushes homeownership as an almost essential step in building financial security, it's a risk that's not often highlighted.

The Washington Post has a piece today on "upside-down homes," where sellers end up owing the bank the difference between the mortgage they took on and the lower price they're able to sell for. The idea that housing prices can go down as well as up isn't a novel one, of course, but I admit that the reality of the consequences that can have didn't hit home for me until I read through a few of the article's examples:

Jeffrey Taylor and his wife bought their dream home in Purcellville for $538,000 last August. Now they have to sell it because they are getting divorced and neither one can afford the mortgage alone.

The most they could get for it was $430,000. After paying all the real estate commissions and taxes, they will still owe the bank $118,000.

When David & I (eventually) get serious about buying an apartment, our plan has always been to buy a place we can envision staying in essentially forever. We probably won't be leaving Brooklyn, and neither of us has any interest in getting a "starter apartment" and trying to flip upwards. But the article did prompt me to proceed with caution and be really damn sure we're both committed. The tales of people being forced by circumstances (usually divorce) to have no choice other than selling into a less-frenzied market than the one in which they bought -- and to actually end up owing money to sell a house -- are pretty scary.

Account creep

I think I have a relatively straightforward financial life: no investment accounts, no real estate, just the basics. But eeek. I sat down today to update my bookmarks for my financial sites .... and the total is impressive. A checking account, a 401k, two credit cards, my student loan account, my HSA, and, now, my sharesaver thing. Plus the site I use to manage my pretax monthly subway card purchase funds. That's not counting sites for the other credit card which I never use, my closed 401k (I rolled it over to my new one last year), my closed FSA, my PayPal account, or on which I pay recurring bills, like Verizon's.

This space seems to be screaming out for a mashup -- something that will let you access all your accounts from one interface. But, alas, security restrictions mean no financial services company is exactly rushing to open APIs and let developers plunge in. (Ok, I grudgingly concede that's sensible.) Still, it seems like there must be a more sensible way to keep tabs on the profusion of financial sites. How on earth did people manage years ago and not simply lose track of accounts?

Risk-free company stock options

I promise to post something relevant to people beyond me soon, but for today, I'm untangling an interesting stock plan my new (I've been here a year; I'm sure it will eventually stop feeling like my "new" job) company offers: Sharesave. This appears to be a UK thing, which makes sense because somewhere up the food chain my company is actually British. (It's such a typical modern-conglomeration thing ... my magazine is published by a Long Island-based tech publishing company that I think has been sold fortybazillion times, and is currently owned by an even bigger publishing company. In London.)

Anyway, the way this scheme works is: I nominate an after-tax amount to be pulled each month out of my paychecks. I pick a contract term, either three years or five. During that time, my nominated amount is pulled from my paychecks each month and put into a savings account. At the end of the contract term, I have the option to convert my savings to company shares, purchased at a discounted rate fixed at the start of the contract. For the contract term opening now, the fixed price is $12.55, a 20 percent discount to the company's trading share price on the official offer date. (I would mention what the actual share price is today, but I honestly can't figure it out. Whatever currency it's being quoted in doesn't seem to be pounds. What on earth does the London Stock Exchange use?)

The neat thing about this is that it's zero-risk. If my company shares are underwater (meaning that at the end of the contract in three years, they're trading below my $12.55 option price), I'm not obligated to roll my savings into stock. I get it back, plus interest. So, I get to take advantage of the upside if the share price rises, but I'm not gambling my savings if it doesn't.

Which pleases me greatly. My company seems to be a nice healthy company, but I've seen the Enron documentary a few too many times to be willing to sink my savings, or my 401k, or basically any actual cash money, into company stock.

I'm tossing about $100 a month into the Sharesave jackpot. It'll be the first formal savings thing I've set up outside my 401k -- overdue, I know. Check back in June 2010 to see if it's made me rich ...

How to mess up an Amex payment and destroy your finances

Lest my personal-finance blogging imply I have all of our financial matters nicely in hand, here's a fun cautionary tale about how I firebombed David's bank account.

Because David and I have separate checking accounts and budgets, we each pay in each month to pay off the charges we've run through our main credit card, my Amex. I use Amex's Pay Online option, which lets me directly debit money from linked bank accounts. Two weeks ago, I sat down to pay David's portion of this month's bill. I calculated what he owed, cleared the amount with him, typed in the amount, hit the "pay" button, and clicked on "confirm and pay."

As I whizzed past the confirm screen and said yes yes pay, I realised -- literally the second I was hitting the button -- that I'd put in an amount almost twice what I actually intended to put in. An amount substantially greater than what David actually had sitting in his bank account.

I caught the mistake the instant I hit the button -- but by then, it was too late. Amex's online payments are instantaneous. Once you've confirmed, you can't change or revoke the payment.

I got on the phone right away to Amex's customer service, which threw up its hands and said to call Citibank and arrange a stop-payment.

Citibank's customer service center is in India, and is impressive in its level of cluelessness. Dealing with them has rarely proved helpful, and this experience was no exception. The center put in a stop payment order. A week later, we learned -- painfully -- that Amex payments don't work like typical check or debit payments, and can't be halted with a stop payment.

This whole mess was compounded by David's lack of access to his account info. In a separate incident, he lost his debit Paypass keychain thingie right after my payment debacle and had to cancel his debit card and get it reissued. Doing that temporarily cut off his access to Citibank's online banking site -- meaning he couldn't check and see what happened with the Amex charge. It took more than a week for his replacement card to arrive.

When it did, Tuesday, David hit the ATM and found that his account appeared untouched: the Amex payment had apparently bounced or been stopped. Figuring we'd worked through the mess, I went in that night and put in another payment on Amex's website, for the amount I'd originally intended to pay.

Insert hollow, dark laughter. Yesterday morning, David found his account hugely overdraw. So, instead of dealing with the Indian call center, David went to a Citibank branch to ask: What happened?

The original Amex payment was never stopped. It can't be. Online payments of the sort I made are apparently handled as direct electronic transactions between financial institutions, routing through the Federal Reserve system. If a payment doesn't go through because of insufficient funds, it tries again. Three times.

So, we now have the original payment making its second or third attempt to go through, plus the second payment I made last night starting its attempts. We're even further into the hole than when we started. And presumably every time one of these payments fails, it will generate another bounced transaction fee, on both sides, from Amex and from Citbank. Amex already socked us with one $38 fee for the first bounce. I'm praying each subsequent bounce won't incur another.

The obvious way to solve this mess is to throw enough money into David's account to let all the Amex payments suck out the money they're trying to. But, er. We lack the cash. My clever plans to create an emergency fund haven't actually come to fruition yet, partially because taking just five credits this semester
(I'm almost finished, yay!) killed my ability to get loans and all my free cash is temporarily tied up paying for the credits my company will soon reimburse. So, for the moment, we're just kind of financially screwed.

I think we can dig mostly out of the hole with this Friday's paychecks. It'll be months before I crawl out of the guilt hole, though. I owe David lots of extra niceness in return for temporarily completely destroying his bank account :(

Have we scrapped the heath-care system yet? No? Damn.

Last Friday I made an appointment with a new doctor for my annual physical. I already knew this doctor, who came recommended, didn't take my insurance; I'd decided I'd rather pay out of pocket (well, out of my HSA) for a recommended physician than take a stab in the dark at my insurer's in-network directory. So it didn't surprise me when the doctor said she doesn't take my insurance (I already knew that from her website). What surprised me is when she said she could only fit me in because I'm not paying with any insurance.

"I just can't take any more in-network patients," she said in her email. (Doctor with email? I love her already!) I understand why. It's no secret that networks reimburse providers at a highly discounted rate, one that increases slightly more often than Halley's Comet appears, and make them slog through mountains of paperwork to get the meager checks.

Once again, the medical services David and I actually require are services our insurance won't pay for. The cover story in this week's New York magazine is about "generation uninsured.". That's a huge problem. At least half my friends don't have any kind of insurance and are basically crossing their fingers they won't have a financially devastating health emergency. But the other, less recognized side of the problem is that even those who do have insurance, who pay the ever-rising premiums for company plans or scrape up the psychotic sums demanded for solo insurance, are getting less and less for that not-inconsiderable monthly payment.

The only silver lining to all this is my firm belief that a system so catastrophically &!*@ed, one that even the business community is ready to scrap, can't last much longer.

Head go boom now -- FSA reimbursements

March 31 is the deadline for claiming money from your 2006 flexible spending account, and I'm still trying to dredge back the last $26.65 of mine that Wageworks is clinging to with a deathgrip.

When we last left the saga, Wageworks was declining to pay any of my "pay me back" submissions, instead using any receipts I sent for reimbursement to clear the backlog of charges I'd put on my FSA Visa debit card but had not sent verification receipts in to cover (because I didn't realise they wanted verification receipts.)

I've long since lost receipts for most of the things I'd initially charged on the FSA card. However, Wageworks lets you file "substitute receipts" -- you submit one for any valid expense you haven't previously funneled through the FSA, and it swaps that over and clears the verification backlog. Fine. We had more than enough medical expenses last year for me to pull up documentation on a substitute expense.

So I had David procure a receipt for one of his medical visits and sent that off to Wageworks last month, with the verification form and the little "substitute receipt" tickybox all checked off. The total outstanding amount of charges needing verification (there are two or three) is $24.97. The amount left in my FSA is $26.65. So, total of $51.62. I sent a receipt for $80, figuring they would clear the backlog, refund me the balance of my account, and call it all done.

But lo, a month has ticked by, with no money flooding into my coffers and no logged activity on my online "track my account activity" dashboard. So, this afternoon, I summoned the willpower to call again and inquire.

It seems that the Bureaucratic Powers That Be do not automatically link charge verification paperwork and "pay me back" claims -- except when it works in their favor to do so.

A charge I filed for "pay me back" can be rerouted to clear a verification backlog, but a receipt submitted for verification won't automatically refund me for the additional amount beyond the backlog.

Not only that, but it won't trickle over to other charges awaiting verification. I only checked the little tickeybox on the card verification form once, next to one of the charges. Since the receipt covered an amount greater than all the charges, I assumed it would carry through and clear them all.

Nope. Resubmit with all the boxes checked, suggested the rep.

Arugh. But we had also just established that clearing the verification backlog wouldn't get me my refund ...

After 15 very convoluted minutes, we appear to have determined that resending my $80 receipt, this time with a Pay Me Back form, will clear the backlog and trigger my refund. Apparently. I have only the rep's assurances to go on that the receipt won't be kicked back entirely, since they've already seen it once.

Eleven days left to sort it out. At this point, it's the principle of the matter motivating me. I don't want this bureaucratic custer@%^! to keep my money!

And I am really glad I have a different FSA (well, HSA) provider this year. Let's see if Amex is less complication to work with than Wageworks.

Stalking the wild NetBank ATM

I'm traveling this week -- Seattle for fun, Santa Clara for work -- which means blogging will probably be light. But I just had a wacky personal-finance moment. I'm at the Santa Clara Convention Center (for EclipseCon) and stopped at one of the convention center ATMs to snag cash. While it was processing, it flashed a commercial. For NetBank. *Blink.* I'm used to thinking of my bank as this semi-obscure thing. My first thought was that running my NetBank card somehow triggered a NetBank ad, but then I noticed the ATM was NetBank-branded. I've never seen a NetBank ATM in the wild! As mentioned before, I'm used to sucking it up and paying ATM fees (on the front-end only, not the back) whenever I withdraw cash.

Yes yes, I realise this is a financially unwise move, but I really like my bank, and for a long stretch it just didn't have any in-network ATMs in NYC. It was "pay the fees or switch banks." Plus, I'm lazy, and relatively willing to pay the fees for the convenience of going to the very nearest ATM (rather than hunting for one associated with my bank) when I need cash. I think the fees should be a hell of a lot less, but that's a whole other blogpost.

But this NetBank ATM prompted me to go take a look and see where others might be hiding. It seems my little bank got big when I wasn't paying attention -- their website claims they operate the second-largest ATM network in the U.S. They even appear to have a few near-ish my office in Manhattan now! Who knew?

It was a slightly surreal feeling getting money out of the ATM ... and not paying a surcharge. ($2, on this ATM. Bad NetBank! Stop price gouging!) Now I want to go play with the free ATM again and again. It's like my own little slot machine.

Journalistic probings of the debt and heath care messes

Pulitzer Prize jurors will meet next week to mull over the best of this year's journalistic offerings, and one series getting notice is the Boston Globe's in-depth Debtor's Hell investigation. I've been reading through the pieces during my downtime; there's a lot of material, and it's excellent. The Globe documents both the skyrocketing growth of the problem -- between 2000 and 2005, the number of debt-collection lawsuits filed in Mass. averaged out to one for every five households -- and the catastrophic flaws of an overwhelmed regulatory system that lacks the resources and manpower to keep abuses in check.

I love rigorous work like this that shows off journalism at its best. When regulators, politicians, and the courts fail to protect citizens from predatory practices and ensure just outcomes, we need media attention to focus a spotlight on the problem. Accountability begins with awareness.

In the spirit of spotlighting, I also wanted to point attention to a fantastic piece from last spring in the New York Review of Books: "The Health Care Crisis and What to Do About It". Ostensibly a critical look at several recent books on the U.S. health-care system, the article is really a rigorous examination of what's going wrong, why, and what issues reform measures will need to address.

And if anyone needs another example of why the heath care status quo is not acceptable, just take a look at today's Washington Post: "For Want of a Dentist". The unwritten rest of that headline is "... a ten-year-old boy died from a toothache."

The nitty numerical details of being a full-time writer

At the risk of looking like a big shill for John Scalzi's Whatever blog, I'm going to cite it in two consecutive entries. Lots of people fantasize about becoming a full-time writer. Some who try it then write whiney articles about how badly it pays. The harsh reality is that midlist authors don't generate enough ancillary economic activity to make being a midlist author a particularly lucrative career path.

But what are the actual numbers involved? Scalzi, a veteran freelance writer and semi-fledgling science-fiction writer, breaks them out in two blog entries: one tallying what he made from his fiction writing in 2006 and an earlier one approximating all of his writing/editing income in 2005. If you're an aspiring writer, or simply someone curious about the economics of the field, check them out.

On my end, the figures had a few surprises. Scalzi has been pretty successful marketing his work and building a following (a 500-copy run of a small press book published this week sold out before it shipped), and he gets pretty strong critical reviews; I would have expected his take from the fiction to be a bit higher, though I follow his explanations of why it wasn't. If you're making your money off royalties, rather than big advances, it's going to take a long time to actually land in your bank account.

On the flip side, I'm surprised he's doing so well off the freelance journalism and corporate work. Finding steady, lucrative clients who cough up paychecks when they're due is the real skill of freelance writing -- the actual journalism is the easy part. Obviously, Scalzi has got the business end of things well in hand.

The one caveat I'd throw in is that Scalzi has an unusual asset working in his favor: He is insanely prolific. In an average year, he writes multiple novels. If you're going to rely on fiction for a substantial portion of your income, being quick helps; your editor doesn't care how many years you slaved over a book. Your advance depends solely on the book's marketability, not the time that went into its creation.

Similarly, if you're relying on journalism and freelance work, churning articles quickly is going to have a direct, positive effect on your bottom line. Scalzi estimates that he writes 20,000 to 30,000 words in a typical week. I don't think I know of any other writers keeping that pace. In my staff job, I'd estimate that I publish 5,000 to 7,000 words in an average week; my most prolific peers probably do 10,000 to 15,000.

I understand why people are loathe to reveal specific details of their own financial situations, but I'm all in favor of this kind of information being more widely spread. The first step in making any choice is having the information you need for an informed decision.

Birds & Bills redesign!

If you usually read Birds & Bills on a feed, surf on over to the site today -- it features a massive overhaul. The best new element is a gorgeous new logo, designed by artist Renee Thompson. Lacking any design skills myself, I'd been hunting around for an artist to commission a design from. When I found her work on deviantART, I promptly fell in love. And, she specializes in birds! Such a perfect fit! I was really delighted she took the commission, and I'm blissed to be ditching my old off-the-shelf template for a lovely custom design. If you like Renee's work, you can find more in her Etsy store.

The new design also features long-overdue tags functionality. I've added a list of the tags I use to the blog sidebar. That should make it easier if you're hunting for posts on a specific topic, like retirement planning or credit cards.

What other features should I incorporate? Speak up, if there's some site-navigation element you find lacking. For instance, should I compile a "table of contents" with links to significant posts (like the one on 401k strategy, or the article about How FICO scores are calculated)? Does anyone need/want a search box?

While I'm in a bit of a relaunch phase, this seems a good time to mention Birds & Bills' editorial policies. Flipping through pfblogs.org (a great blog aggregator) a few weeks ago, I was surprised to find a handful of posts tagged [PayPerPost]. I've heard about this insidious little outlet before, but I hadn't previously run across it in the wild.

I don't consider blog ethics completely interchangable with my day-job, beat journalism ethical practices. (To earn my paychecks, I write about software over at CRN.) I'm a lot more opinionated here about issues and financial services vendors and than I would be about companies/topics on my beat. However, I do consider blog ethics akin to the responsibilities of a columnist: someone whose job is to provide opinionated, personal, but independent views. "Transparency above all" is my policy. If I try out a service I've been given free access to, or review a book from a publisher that has sent a free copy, I'll mention the freebie. If I don't add that kind of disclaimer, you can assume I'm paying the going rate for any goods or services I comment on.

When it comes to advertising, my views nicely coincide with what John Scalzi wrote in the Whatever a few weeks ago: I get approached every so often about running ads here, and I don't take up the offers because, "One, I don't wanna. Two, I don't wanna. Three, I don't wanna." I'm not opposed to ad-subsidized media. Advertising underwrites my paychecks and keeps the magazine I write for in business. But I don't have a pressing need to run it here, and I don't like the cluttered look it gives so many blogs. I've run the math; putting AdSense or whatever on Birds & Bills wouldn't generate enough income for me to consider it worth the visual clutter. So, now and for the forseeable future, no ads.

Finally, while I'm rambling on blogging topics, thanks for reading along over here. Birds & Bills recently had its one-year anniversary. I don't have a good stats tracker (the kludgy one I used broke in today's redesign), so I have no idea how many people are out there, but I'm happy a few people are following along as I thrash out financial matters.

A sample 'cease communications' letter to debt collectors

My posts about debt expiration and statutes of limitation weren't wholly theoretical. I've been dodging calls for the last few months from a collector trying to shake out money for a debt from 2000 that I don't consider valid. (It's a long story, as these things generally are.) Instead of running through hoops trying to track down all the paperwork to prove that the debt is well and truly not legitimate, I opted to wait out the clock till 2007, at which point it became an indisputably expired debt.

This collector is fairly low pressure; their main tactic seems to be leaving automated messages on my answering machine every few weeks. Still, the calls stress David out and I'd also like them to stop, so I figured it's time to formally issue a "cease communications" request, as allowed by the Fair Debt Collection Practices Act. Under that law, you can at any time tell a collector to stop contacting you, and they have to oblige. Once you've made the request, the only communications they're legally allowed to send is a notice of specific actions, like filing a lawsuit.

In case anyone else can use it, I'm posting the letter I'm sending. I'm citing the New York state law that sets the statute of limitations on debts; if you'd like to find a local law to cite, the Fair Debt Collection website has good pointers to state laws.


[Date]

[Your Address]

Dear [Collector]:

I am writing regarding your attempts to collect a debt of $XXX for XXXX (account #XXX). I do not acknowledge the validity of this debt, which, in any case, is beyond the six-year statute of limitations for collection in New York, as laid out in the New York State Consolidated Law & Rules (chapter 8, article 2).

In accordance with the Fair Debt Collection Practices Act, Sec. 805(c), I am requesting that you cease any further communication with me on this matter and discontinue phone calls. If I receive any further communication -- other than a written notice that further collection efforts are being terminated -- I will submit a complaint about your organization to the Federal Trade Commission and the New York Better Business Bureau.

Sincerely,


[Your Name]

The trail even Sacagawea couldn't blaze

Think the third time will be the charm for the dollar coin in the U.S.? Refusing to concede defeat after the chilly reception to the Susan B. Anthony and the only slightly more enthusiastic uptake of the Sacagawea dollar, the mint is debuting yet another dollar coin today: the Presidential coin. Among the lures the Mint is dangling are "larger, more dramatic artwork" and edge inscriptions of "E Pluribus Unum" and "In God We Trust."

The New York Times has a detailed look at the dollar coin's advantages and travails. Personally, I like 'em. New Yorkers probably deal with more Sacagaweas than most Americas, since the subway machines give them as change. When I've gone and visited Australia (where David hails from), I've always adapted pretty quickly to the coins-only system for $1s and $2s. Although, their $1 coins have kangaroos. I bet $1 coins would be way more popular here if we put kangaroos on them.

TurboTax Rip-Off On Amex Discount

The reason I decided to try TurboTax this year was the 25% discount on the federal return cost. In actual practise, this translated to about $5 off, but by the time that sunk in I was committed.

Having just filed, I feel even more ripped off by my inability to actual get my damn $5. The offer didn't come with a promotion code; to use it, you're supposed to access TurboTax through a special page on OfficialPayments.com. (This special page: https://www.officialpayments.com/promotions/turbotax/amex/index.html) When I started my return, I initiated it at that site. When I went back to finish it today, I want straight to TurboTax. Come checkout time, no discount. So I went back to the original site and saw the note that you need to "Remember to access and complete your return through the TurboTax links on the American Express Web site." Being a dutiful little discount hunter, I clicked the link, re-stepped through TurboTax to the checkout ... and again saw no discount. GRRR.

At this point, I decided further chasing was not worth the $5 and surrendered. But if anyone does manage to use an OfficialPayments discount: What's the trick? Do you also need to open an account there and log in through that? (Something NOT MENTIONED BY AMEX AT ANY POINT ...)

Shock of the day: I itemize

When I get swamped, "tomorrow" tends to get interpreted loosely. Anyway, back into the tax trenches!

Although I finished doing my taxes, I haven't filed them yet: I'm one of the people affected by late tax-law changes that the IRS needed extra time to handle. People claiming the deduction for college tuition expenses were affected by the changes, which the IRS estimated would apply to about 1 million of the 136 million tax returns the IRS expects to process this season. Although, clicking over to that press release, I see a note that "As of 2/3/07, the IRS is Processing Extender Claims" ... so it looks like I can go file as soon as I finish blogging.

Others might also get tripped up trying to file early, though. Various news outlets are reporting rising corrections rates in the 1099s sent to investors with dividends and other investment income. Thanks to tax-law tangles, the error rate on those forms has climbed as high as 14 percent -- meaning that people who file early could face the frustration of finding corrected forms in their mailboxes a few months after they've finished their returns. (You can amend, though it's optional if the error was in the IRS's favor. Even if it's not, unless the error is huge, I imagine few people bother to make the correction. The odds of getting audited remain small and dwindling.)

The last few years I've been stumbling over discoveries of things I can still deduct even though I don't itemize. Last year, it was my tuition deduction: Even though I don't qualify for any of the educational credits (which give you $1 off your taxes for each credit dollar you qualify for), I did max out the $4,000 allowable deduction. Using that cut about $1,000 off my tax bill (or, in my case, added $1,000 to my refund). Sweet.

This year, I discovered that I do itemize. I always assumed we wouldn't have any reason to until we had a mortgage. But there are a handful of other scenarios that can make itemizing the cost-effective thing, and it turns out that the amount we pay in state and local taxes exceeds the standard deduction. (Ah, NYC. Did I mention how depressing it was to go through the TurboTax Local portion and have it wrack up a whopping refund -- until I ticked the 'I live in NYC box'? It actually had a little animation of my refund dollars spinning away as it wheeled its refund-calculation line backwards. When I winged at David about this, he responded, "Your taxes buy subways. It's worth it.")

The practical upshot of this is that for the first time, I'm deducting charitable donations. The downside is that because I always went along assuming "I don't itemize and get no deduction," I never kept the paperwork on our donations. Oops. Guess this is the year I start!

The TurboTax vs TaxACT decision

Our last W-2 finally arrived yesterday, so I plunged right into doing the taxes. Much banging around online turned up no good reviews of the online tax software, grrr. I didn't even find many current reviews of the boxed versions, which surprised me. Isn't this a gimmie for every personal-finance beat writer at any publication of size? PC magazine had one of the only comprehensive bake-offs I could find.

I usually go with TaxACT, but I swore to look elsewhere after running into some minor hassles last year. One look at the prices of "elsewhere" nearly sent me running back. My Amex offered me a 25% discount on the federal-return cost with TurboTax ... but the savings that translates to is actually pretty small, especially since the more-expensive state return isn't discounted. Even with the discount, the total cost for TurboTax online for me will be about $48 -- versus $16 for TaxACT. Ow.

Still .... TaxACT was annoying me, and I'd never tried anything else. The reviewers all swear by TurboTax. Solely for the experience of taking the Cadillac out for a test drive, I decided to shell out and try it. (And hey, blog fodder.)

The interface was indeed a little smoother -- but I'm not sure the end result was any different. I didn't turn up any exciting new deductions I wouldn't have otherwise known about. Plus, TurboTax still had one of the more annoying features that irked me with TaxACT: if you need to go back and revisit something out of order, it's easy to get lost. While working on my state return, I clicked back to the federal return to check out a previously entered amount. That lost my place in the state return workflow, and I couldn't get back -- I had to click through all the fields I'd already entered, costing me an extra 20 minutes of work. Grr.

So, next year, I'll probably save the money and return to TaxACT.

For those allergic to paying full price for tax software, various deals abound. TurboTax has a 15% off deal to anyone paying with a Visa, Amex, MasterCard or Discover. Your financial services providers may have their own deals. My friend Fahmi reports that Fidelity offers TurboTax free to its customers, and PC World is making TaxACT free to subscribers. State Farm also offers TurboTax free for customers.

Meanwhile, if you have an adjusted gross income of $52,000 or less, you qualify for FreeFile -- a program 70 percent of taxpayers are supposedly eligible for. FreeFile deals have all kinds of odd qualification standards, but the IRS helpfully offers a wizard to guide you to an eligible program.

More from the tax trenches tomorrow ....