$48,986.93

... 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.

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.)

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: Mint.com 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.

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.

Notes from the trenches

I'm now midstream on the buying-real-estate process. Almost every email I've sent in the past week begins with "EEK!"

The status: We made an offer. We haggled. The seller counter-offered not just a different dollar figure but an entirely different apartment. (It's a big building, about 250 units, of which a bit more than half are sold.) We liked the new (cheaper!) apartment much better and asked why we hadn't been shown it before. Answer: Because the asking price was vastly higher than the one on our original target. But since the square footage is a tad lower, the developer will take a lower price on it -- despite it having various other advantages that made it, to us at least, more attractive.

NYC real estate is insane.

Someday I will have a proper blow-by-blow, but here's what I've learned so far:

-NYC real estate is insane but the closing costs are off the planet. My whole real-estate quest started because I got envious of my friend's story of buying a Baltimore townhouse with an FHA loan and total cash costs of $4,500. My cash costs? We will be damn lucky to get out for $40,000. That includes 3.5% down and -- the really ouchie part -- NYC's smorgasboard of closing costs. Corcoran has a breakdown that seems accurate in my limited experience so far.

-If you're buying NYC real estate, do anything you can to get a CEMA (Consolidation, Extension and Modification) from the seller. I'm told they're more work for the banks and the lawyers, but they also save you vastly on the tax costs. Originating a new mortgage costs you almost 2% of the sale price in New York taxes. A CEMA transfers the seller's existing mortgage to you -- you only own taxes on the difference between their mortgage and your new one. We got a CEMA, and it's saving us a five-digit sum.

-On other hand, even with a CEMA you'll still get hit in New York with property transfer taxes. In our case, that also equals just under 2%, which has to be paid at close. Did I mention how much NYC real estate bites?

-If you're planning to tap investment or retirement accounts, start setting things up as early as you can. I'm pulling money from my IRA (Fidelity) and David's IRA (Vanguard).

When we went to transfer funds to cash in his IRA, we found that Vanguard didn't have proof of his taxpayer ID. That required sending in a W9. We're now waiting for it to process.

In my IRA, direct deposit of funds you're withdrawing requires activating a connection with your checking account. Fidelity claims that takes seven days, but I activated last Wednesday and my account says it won't be ready for transferring until this Friday. Then the actual transfer can take up to five days to process. I imagine I'll be paying the $15 fee to wire cash, which I could have saved if I'd set up the electronic account connection sooner.

Selling investments to move the money to cash also takes time. I did that too last Wednesday and am still waiting for my VWO trade to settle.

-If you can avoid an FHA loan, do it. It's pricey, costing 1.75% of the loan amount upfront (you can fold the cost into your loan, but you still have to pay it) and a monthly premium of up to 0.55% of the loan amount (calculated annually, paid monthly). It takes the place of PMI, which you don't pay on FHA loans. In our case, the premium adds $260 a month to our payments. If you have the money for a more substantial downpayment (we don't), you can avoid all this.

-EEK!

Hold breath, leap

Last time I posted, I was consumed with changing bank accounts. (I'm trying Schwab now, btw. Will report back soon on it.) Life is odd in how damn fast it changes.

We're trying to buy an apartment.

I kind of don't want to say much in case I jinx it, but if this works -- or if it irrevocably doesn't -- I'll post all the gritty details. The short version: The annual lease on our apartment runs out Feb. 28, and we'd planned to move. I **loathe** moving, but after five years here, I can't pretend any longer that two people, two cats and 2,000 books fit into a glorified studio with one (ONE!) closet.

I grumpily started scoping out rentals. I pretty much assumed that these days, if you can't put up 20% for a downpayment (and in NYC, that means six figures), you're toast. But one of my friends recently bought a house (in Baltimore) with an FHA loan. And I'd been hearing about various Brooklyn condos getting FHA approval. So I did a bit of poking around -- and found, much to my shock, that it has suddenly become a somewhat viable option.

You lock yourself out of most listings if you need to go the FHA route. I'm told getting approval for single family houses is very hard (many still exceed the loan-size caps, even though they've been raised), and you flat out can't do a co-op, which is what vast swathes of the NYC apartment market are.

But there's a half-dozen high profile Brooklyn condo projects that now have the fast-track FHA approval. And there's one I'm really drawn to. And we found a unit in it that is really, really intriguing for us. And I spoke with the building's preferred lender, and he gave us the green light for a loan with his bank. (5.5% interest! at worst! he thinks maybe less!)

So after two days of incessantly banging on my HP 12-C to work out all possible fees, contingencies, etc ... we're about to ready to put in a bid.

EEK. This feels like jumping off the high diving board.

Chase's incredibly sleazy WaMu bait-and-switch

Well, I need a new bank. Again.

As mentioned before, I have one hard-and-fast, possibly irrational demand for my bank accounts: No fee for using outside ATMs. I'll pay a fee to the ATM operator. I think the fees are obnoxiously high ($2 to spit out some cash? Really?), but I can at least recognize that the ATM owner is providing me with a service. For my own bank to charge me a fee for daring to venture outside its ATM network is punitive and controlling and it makes me wildly angry.

I realise that getting as wound up as I do about something that, at the outside, would cost me maybe $100 a year is unreasonable. I'll drop $100 for a dinner out without wincing. But. For whatever reason, this is my flash point. I do not want to do business with a bank that charges me for outside ATM withdrawls.

The last time I went bank shopping, WaMu won in large part because it didn't have outside ATM fees. That turned out to be not wholly true -- WaMu sneakily snuck in fees for checking your account balance at an outside ATM, even though withdrawing cash was free -- but I grouchily decided to let that stand.

When WaMu went down, this was my biggest and most immediate concern about getting rolled to Chase: ATM FEES, DO NOT WANT.

It took Chase nearly a year to actually force migrate me from the WaMu platform to their own, which finally happened in full in July. Chase sent out a giant, thick packet of diclosures about my new bank account. I, of course, skipped right to the ATM fees section, and found what seemed to be good news. For ex-WaMu customers, Chase was creating a new account, "Chase Free Extra Checking." Key difference between that and Chase's usual checking: No outside ATM fees.

I was pleasantly impressed. Chase seemed to be doing the right thing by its WamMu crowd. I carried on, relatively happy with my new bank.

Until this morning, when I went to balance my checkbook. And found, littered through my November transaction register, two $2 fees labeled "NON-CHASE ATM FEE-WITH"

What. the. hell!?

So, spitting bullets, I called Chase customer service. The rep explained that my account terms called for no fee for the first two non-Chase ATM withdrawls each month, and a $2 fee thereafter.

NO, I fired back. NOT TRUE. I have here this giant thick account disclosure paperwork stack which explicitly says no fees ever ...

While she put me on hold to go find an account specialist, I went Googling.

And found this blog post, with a warning in the comments about "IMPORTANT CHANGE TO NON-CHASE ATM FEES
FOR CHASE FREE EXTRA CHECKING"

Oh bugger.

Seems Chase snuck a pretty significant change in the account terms into the fine print of September statements. Here's the thing: Like almost everyone else on Earth these days, I have paperless statements. I don't read them. I scan my account register to reconcile things, but don't go reading fine print each month. And Chase never sent any kind of alert or special disclosure about "hey, we're changing the terms of your account, here's the explainer to read."

I pulled up the electronic version of my September statement, and sure enough, there's the ATM fee change notice. A whole TWO MONTHS after Chase helpfully assured me it wouldn't change fees. And the "two a month" bit is temporary -- starting 2/2/2010, all non-Chase ATM withdrawls are slapped with fees.

I'm pissed off and bank shopping.

It's not just the fee. It's the slimy way it was snuck through, and the lack of transparency, and the general sense I've always had from Chase that customer service is way, way down on their priority list, significantly below "pry every dollar we can from the marks we do business with." I always hated the way they treat credit-card customers. I shouldn't have expected them to treat banking customers any better.

So. Anyone have a bank they actually like? With no ATM fees. Because I am getting the hell out of Dodge, before Jamie Dimon's hordes figure out a way to slap a surcharge on customers for consuming oxygen or whatnot.

Must be love

The spouse and I just had an epic, high-volume heated debate about federal financial regulation. Now that we've made up, I'm utterly amused by this. Perhaps this is a topic they should add to premarital counseling -- "What's your theory on housekeeping? Do you want kids? And how do you feel about the last five Treasury secretary appointments?"

Silicon bonanza

Twenty years ago right about this month, my dad went out and bought our family's first personal computer. It was an Apple IIGS, and ours was the first family I knew of with our own computer. I recall it costing around $2,000.

My sister and I loved the new computer. It arrived just in time for me to hit middle school and start having papers to write, and I still can't fathom how anyone did that before electronic word processing. My family also had an electric typewriter, which I think I might have used to write precisely one school paper, but even then I had the sense that typewriter was more of an archaic novelty item than an actual functional tool.

The IIGS was eventually joined by a Mac (nominally bought for my Mom to use for her business, but Lisa and I mooched it frequently), and when I went off to college, I spent all my savings buying a Mac laptop. It had a 500MB hard drive and cost me about $1,000.

Not long after that, my sister got a first-generation iMac, and thus began our era of everyone in the family having their own PCs.

Since that first college Mac laptop, I've run through more computers than I can count. (In several cases, the line between what was 'mine' and what was my job's computer has been fuzzy -- starting my sophomore year of college, I had a school-issued laptop for my Residential Computer Assistant gig, which I basically used as my own personal machine as well as for work stuff.) But for the past decade, one split has been clear: I have my computers and David has his, and the two sets stay very separate.

Some of this comes down to preference. I like desktops, and by the end of college I'd made the switch from being an Apple fan to preferring Windows. (Yes yes, I know, this makes me an inferior human being. Trust me, there's nothing you can say on this that David hasn't already.) David strongly prefers Macs and laptops. So as soon as we had the spare cash, he went out and got his own MacBook.

This popped to the front of my mind right now because my current desktop has been showing signs of impending death for months. It's only the second desktop I've had since 2002, and I got about four years out of it, so I can't complain too much about having to upgrade. I took the early Windows 7 reviews (the general tenor seems to be "well ... it's waaay better than Vista ... and seems to be actually ok ...") as a sign that I should finally let go of Windows XP. So, sitting on my living room floor and waiting to be installed, is a new HP Pavilion desktop with Windows 7. Total cost: $544. Can't complain about how computer costs have fallen over the years.

But I'm curious: Are David & I now the aberration or the norm? Do most families share one computer, or does everyone (adults, at least, and probably older teens) have their own?

Also, I remain slightly boggled by just how damn much computing power we get to take advantage of these days. David's standard computing lineup consists of: MacBook, iPhone, iPod 60GB classic, BlackBerry, fancy Canon camerathingie I forget the details of.

My computing setup: Windows desktop at home, HP Mini netbook for travel, BlackBerry, cell phone (very primitive Samsung, but it does have a browser), Palm (Tungsten E2, and I remain in deep denial about Palms basically being discontinued), iPod nano and Bluetooth-equipped Canon PowerShot. And all of that together costs less than my family's first IIGS. Wow.

Paychecks -- YAY!

One of my goals for 2010 is going to be "regain this mythic Work-Life Balance I hear talk of." But for the moment, I remain buried in gianter stacks of Things to Be Edited than I'd ever imagined existed. Possibly deciding "sure, I can manage 50 pieces for this upcoming big package!" was not one of my cleverest moments. (Caveat: I like my job better than any I've ever had, which is nifty. However, I wish I had 40-hour days in which to do said job.)

But while I've been toiling in the edit mines and not blogging, David returned to the working world. Six months after he quit his job, he's landed a new one.

Which changes our economic picture quite a lot.

We managed the one-job period better than I expected. Dropping to one income was always one of my personal nightmares, and it's been a happy surprise to find that we managed to pay our rent on time every month, cover the bills, and not slip into more credit-card debt than we can clear up in a month or two. This remotivates me to actually attempt some frugality and savings when we return to our usual two-paycheck state.

David's new job has two key features that make it very of-the-zeitgeist. First: It's a contract job. The general idea is that if both sides are still happy in a few months, it will convert into a standard salary-and-staff position. But he came in the door as a freelancer, and for the moment, the company prefers to keep it that way.

Which is fine by us, since we're covered on the only area of staff-vs-freelance job I don't want to live without: health insurance. My company has an absurdly good plan, and David switched onto mine as soon as I took this job. Paid time off, a 401(k), job security and other such luxuries would be nice, but as long as he's got health coverage and is getting steady paychecks, I can't get too fussed about 'em.

Second: David landed this job through personal networking, not a recruiter or job board. Personal networking of an especially oddball sort. He and a friend of his volunteer as Stats Dudes for the local roller-derby league. One of the skaters is a statistician. She and David got to chattering, and when an opening for a statistician came up at her company, he used the ref to get in the door. Ask me which of his many interests and hobbies would lead to a job, and I would never have guessed roller derby ...

We're still a few weeks away from actually getting that first check, and having to sort out freelancer taxes is going to be lots of fun. (I am suddenly very grateful for an excellent article a freelancer pitched me a few months back: "Freelancers: How to not screw up your taxes.") But we're at least tentatively back to full-operating-budget status.

And as the cliche goes -- David losing his job (in a roundabout way, since he quit) may have been, unexpectedly, the best thing to happen to us all year. He spent almost 10 years there, and many were good years, but things had gotten pretty rough. He needed new projects and challenges. Having a few months' break cheered him up astonishingly much, and he's really enjoying the new gig and the people he's meeting there. I thought quitting a job in the middle of a recession would be a horrendous mistake, but it seems to have led to much better things.

I like when life works out like that.

(Edited to add -- I've had this blog almost four years and never before made a "jobs" tag? How odd.)

My story of medial rationing

Something that can't be said often enough or loudly enough during the ongoing heath-care reform debate: Most of the dire things protestors and reform critics are most anxious about are happening now.

Want to see a real death panel? Go before an organ transplant board. Scared of waiting two months for an appointment with your family doctor? In Boston, the average wait time is currently 63 days. Worried that scarce and expensive health care will be rationed? It already is. The only difference is that the decision-makers about who gets care and who doesn't are insurance companies, not government-backed organizations.

Three years ago, we had a health care scare in my family. David and I are among the medically lucky: We've always had plans provided by large, multinational employers with relatively deep pockets. An ambulance ride, a night in the ER, a week in the hospital, and prescription drug costs of around $120 a month were covered with fairly little fuss. Of the roughly $20,000 that emergency week cost, we paid only around $1,500 out of pocket.

But this health scare necessitated weekly follow-up visits, initially with more than one specialist. It happened literally in the very first week of the year -- after I'd made my health care elections and locked in my FSA contributions (then at $0, because we'd never before used much medical care). In the 52 weeks that followed, about 60 follow-up appointments were required.

These weren't optional. I had letters from three different doctors attesting to the extremity of the situation and the fact that, in their opinion, this was a potentially life-and-death situation.

But our medical plan capped outpatient visits at 30 a year. Somewhere in my filing cabinet I have a letter where the company explains that in this case, the medical necessity of the appointments was irrelevant. Having letters from doctors saying "left unsupervised, this could result in death" didn't matter at all. What mattered was that the fine print of my insurance plan said that beyond 30 visits a year, the company would not pay a penny, no matter what.

So we had a choice: Come up with $125 a week for these appointments, or take our chances without.

We're lucky. We were able to scrounge up the almost $4,000 a year that cost (on top of the $1,500 in out-of-pocket costs for Emergency Week, the $3,000 a year we already paid toward our work health-insurance plans, and the $500 we spent that year on prescription co-pays).

But if we hadn't been able to pay? No health care. If the result of that had been death, the insurance company would have had no liability, because in this case, it was completely within the terms of its agreement to entirely disregard the medical needs of its clients.

So when people drag out scare quotes about government health care rationing, I get extremely cranky. Doctors, drugs, hospital beds and the money to fund all of the above are limited. There is a reasonable debate to be had about how those resources should be allocated.

But let's not go into it pretending that we're not already making some brutal decisions about who gets care and who doesn't.

And if you're one of those who, like me, has a nice cushy corporate insurance plan, don't think you can't land in a situation where you're left without essential medical care.

Financial shocks

Today's fun money stat: Your ATM is a drug dealer.

From the AP:

Chances are there's cocaine in your wallet. Researchers looked at 234 bank notes from 17 cities in the U.S. and found that 90 percent had small traces of the illegal drug.

Bills from larger cities, such as Baltimore, Boston and Detroit, were among those with the highest average cocaine levels. Salt Lake City had the lowest.

Not surprising on either the high- or low-end front -- glad to see my semi-hometown, Balmer, is representin'.

Also not surprising: The notice I got in the mail today from American Express today about their terms crackdown. In the face of growing defaults and next year's looming credit card reform laws, Amex, like most other credit-card companies, is looking to pry higher profits out of its remaining customer base. My APR is about to jump from about 11.5% (8.24% plus the prime rate) to 17.24%. If I'm late on a payment, it vaults to 27.24%.

I've never been late on this Amex, but I did go late on a Providian card payment about three years ago when I was traveling and lost track of dates. I'm usually careful, but I can't swear I will never for the rest of my life miss a deadline.

Should I do that, I'll also be whacked with a $39 late payment fee.

Meanwhile, Chase-- the bank with which I have a backup card that thankfully has no balance -- has yoinked minimum payments up sharply, in some cases more than doubling what people owe. Three guesses what happens when someone owes a larger monthly payment than they can afford to pay? Oh look, late fees and higher APRs!

I realize credit card debt is a problem people opt into, and bear responsibility for. But also -- arugh. This is gonna be ugly.

My next career move: Professional gambler

Back in 1969(ish), my mom decided to invest in real estate.

Her much-older sister, who was of a generation that strongly believed in investing in Tangible Things, bought a summer house upstate. It was once part of a batch of cottages owned by a local hotel, which got sold off piecemeal as the 20th century progressed. Soon after her sister bought her house, the one ten feet away came up for sale. Family lore (I haven't cross-checked against property deeds or anything) has it that my mom bought the house for $6,000, and its furnishings for another $3,000. Thus did my family acquire a 700-square-foot house named Covehurst, more popularly known as "the decrepit shack in the Adirondacks."

(That sounds unfairly derogatory except to those who have actually seen the place. It was built around 100 years ago and, until recently, left untouched. Functional plumbing was an exciting and rare occurrence.)

Since we had a "summer house," my family trekked up to Brant Lake every summer. And promptly began casting about for entertainments. Our 30-year-old vintage Monopoly set, Lake George tourist traps, and outlet shopping will only take you so far on a family vacation. You eventually need new distractions.

Like gambling.

At some point, my family realized that Saratoga Springs was less than an hour away. My mom and dad had always enjoyed horse racing -- my dad has stories of the Triple Crown race he watched Secretariat run live, and win by 31 lengths. So we began making annual day trips to the Saratoga races. I'm pretty sure my sister and I started betting on horses before either of us had our first beer, which has to be a fairly novel and backward way of doing things these days.

This weekend, my family converged upstate, and I spent Friday watching the last seven races of the day at this year's Saratoga meet. I don't know enough about horses to handicap with any kind of "effective" gambling system, and I suspect that if I did, I wouldn't be successful any more often than I am now. If gambling were a science, lots more people would be rich. So I look over the stats, but I'm still susceptible to a catchy name.

Like "Economic Tsunami."

In the middle of an epic recession, is there any way I'm not betting on the horse named Economic Tsunami?

I picked another horse that looked good and laid down an exacta box and an across-the-board bet on Economic Tsunami.

Who came second! I can't recall exactly what I was holding, but I hit the exacta and a few other bets, and my $10 wager paid me back around $100.

That was the first of three exactas I hit, my new daily record. Since I only place $2 bets, I'll never win crazy money, but I walked in with a stake of $120 and left with $296.40 (advantage of a statistician spouse: you always end up knowing exactly what you won or lost), which was definitely my best day at the track to date.

And I owe it all to Economic Tsunami.

*Crash* *bang* $40

One of my friends recounted yesterday the ironic tale of how trying to save $4.50 cost her $40. The gist: To save the cost of a round-trip subway ride, she borrowed her roommate's bike -- then inadvertently blew out a tire. Sometimes, the transit gods, they laugh and smite.

I had my own version of that this evening. For possibly the First Time Ever, I am aiming to stick to a weekly budget. This is not a budget in the traditional (and, from my admittedly spoiled viewpoint, impossibly restrictive) sense, with pre-assigned totals for each category of spending. This is simply a fixed weekly number I'm trying to stay in sight of.

So, in the pursuit of frugality, I decided to cook in this evening, even though David is out at a baseball game and that's usually my cue to go eat somewhere he hates. I stocked up massively at the Red Hook Fairway this weekend (aka, Supermarket Nirvana), so one quick trip through the supermarket in my office building's basement later, I had a $3.90 piece of wild sockeye salmon and all the ingredients I needed for dinner. Once home, I hacked up some cauliflower to caramelize, washed a few dishes, and set things to roasting.

And then, from the corner of my eye, saw a fast gray blur of leaping kitten and heard a gigantic crash of glass.

Ashley, who this week got big enough to leap onto the kitchen counter, had just had his first encounter with the dish rack. The blender lost.

My first thought was "!$%@$$@$! I will never keep us all from stepping on a glass shard." My second was "well, I never much liked that blender."

I'd be much crankier about this had I not been thinking idly for years about replacing my very inexpensive blender with something flashier -- or maybe even, dare to dream, with an actual food processor. I've wanted one for ages, and it wasn't the price that stopped me, it was the idea of surrendering counter space to a new gadget.

I'm off to Amazon in a bit to price food processors/blenders/combo gadgets (does the iPhone perform blender functions yet?), but I'm bemused that my adventure in frugal cooking in has likely necessitated the blowing of my brand-new weekly budget to finance a blender replacement. I know "accident" is a category we have to budget for, but is there anyone who doesn't get annoyed by the unexpected expenses they incur?

I guess I'll just go be grateful I don't own a car.

Pay your bill, lose your credit line

It's a widely told story that credit-card companies are whacking credit lines left and right. Just like so many of the customers they serve, they relied too much on leverage during the boom years, and now they're trying to dig out from under the financial rubble.

But here's a twist I hadn't realized: Paying off your bill is a good way to get your card terminated.

My friend A. has been an American Express customer for most of this decade. She carried a balance on the card, but never once paid a bill late, and generally paid more than the minimum owed. Recently, she consolidated various bits of debt, and in one fell swoop paid off all of her credit cards.

The next day, most of them started rejecting charges.

A. was sort-of prepared for this. An ongoing divorce and consequent delinquent mortgage (for the house she moved out of that her ex-spouse can't afford to maintain) has done unpleasant things to her credit score, and she figured that if she paid off outstanding balances, her credit-card lenders might carpe diem and reduce her available credit lines.

So she called them right after she zeroed out the bills, starting with Amex. "Should I expect my credit limit to be reduced?" she asked. Nope, not at all, the Amex rep assured her. No signs of a review on her account, no red flags -- she was all set.

Less than 24 hours later, we stood in a store watching her card get declined. As A. rang Amex on her cell, the Army & Navy shop owner was on the store phone with Discover, A.'s backup card, which was also bouncing charges.

Several phone calls later, the story that emerged: A. had never been late on an Amex payment, but she had a habit of paying "too little" on the account, saith the rep. (What's too little? Who can say? Something between the minimum due and the full statement balance, it seems.) Something in the system flagged A. as a bad credit risk, so the moment her card balance hit $0, Amex took the opportunity to clamp down and close her account entirely. No notice, no warning.

And because the account had been closed, there was no possible way to resurrect it. If A. wanted a credit line with Amex (not bloody likely, at that point), she'd have to open a new account -- thereby hitting her credit score yet further, by closing out one of her oldest credit lines and simultaneously putting in a request for a new line.

This happened on two of her four credit lines. To Discover's credit, it didn't terminate the card. It just bounced attempted charges for a few days as a fraud protection measure, because the massive payment to zero out the card struck its anti-fraud algorithms as strange. (Are there fraudsters who pay down your credit cards? If so, hit me please!)

So, be warned: If you're considering paying off a card you would like to keep using, it might work in your favor to not let the card go to a zero balance. Keep a bit of a balance on it -- less than your statement balance, so you don't owe finance charges, but something north of $0 -- so that the account still has activity.

Otherwise, your credit-card lender may decide that any risk at all is one it doesn't currently want to run.

Travels with Frugal Ferret

It's amazing how one week of vacation can bottleneck a whole month of my life.

I took the last week of June off. This meant frantic, 12-hour-day scrambling for the week before at work, to set things up for my absence, followed by frantic, 12-hour-day scrambling upon my return, to catch by up. Hence, no posting. Broken up by a week of no posting because I was doing some massive lounging about.

My vacation was a bit of a personal-finance odyssey. When we dropped down to a one-job family in March, the first thing to go was our travel budget. I refer to Australians as People Who Do Not Stay Put. Within nine years of moving here, David managed trips to all 50 states. (I'm still one short: Hawaii.) Usually, we squeeze in a summer road trip and several extended weekend trips. This year, we're not weekending anywhere we can't reach by BoltBus.

But I had a wedding I couldn't miss in Denver, and as long as I was schlepping most of the way across the country, it seemed a waste not to try to tack on a trip to Seattle. Crash space was on offer in both cities, so I could make the trip for only the cost of airfare.

I still didn't want to spend several hundred dollars out of pocket if I could avoid it, so I cast about for other options. Like credit-card reward points.

The points that mysteriously disappeared from my Amex card when it rolled from an In NYC card to a Blue card in January happily reappeared about six weeks later. Amex's Membership Rewards system lets you use points to "pay" for travel purchases -- like airline tickets.

The bad: The redemption rate is a bit worse than the '10,000 points = $100 rate' that seems to be the going rate for what credit-card rewards points optimally buy.

The good: Because you're using points to pay off Amex Travel, instead of using the airlines' frequent-flier programs, this kind of redemption doesn't seem to run into the rampant blackout dates and other restrictions that airlines slap on their programs. The flights I wanted were easy to book. In the end, I shelled out just under 43,000 points to pay for about $380 in air tickets.

Of course, then I managed to blow all my frugality cred by spending all the money I saved on airfare on various glutinous foodie fits, but I think that's a fair trade.

The other reason my vacation was personal-finance themed was that I stayed in Seattle with Karawynn of Pocket Mint, whose zeal for the frugality mission astounds and inspires me. My idea of cost-cutting is remembering to order a case of inexpensive wine in bulk every month or two so I won't be tempted to make one-off runs to the shop for pricier bottles to drink with dinner. Karawynn calculates the savings involved in making her own bread. ($1.20 per loaf. Now you know.)

While discussing the cost of Starbucks-vs-homebrewed coffee, we somehow established that $3 coffee is a favored extravagance of Wasteful Weasels. "Karawynn doesn't like Wasteful Weasels," her partner Jak said sadly, mouring a tad for the days when he would make a run out for fast, full-cream coffees instead of brewing his own (which taste better!) with rationed half-and-half.

And thus did Pocket Mint's proprietress acquire a nickname referenced frequently through the rest of my trip: Frugal Ferret.

(Frugal Ferret was particularly horrified when Jak and I emerged from Voodoo Doughnut with a box of five, though I'm not sure if that was more about the indulgence of dropping $15 on sugar or for the sheer calorific destruction we wreaked. Either way, the Triple Chocolate Penetration was worth it.)

My first foray into ETFs

I finally managed to move my Fidelity IRA money out of cash reserves and into funds -- just in time for the market's first down week in a month. So much for market timing.

Anyway, back to our saga of my IRA allocation. Having picked Fidelity Spartan Total Market Index (FSTMX) for my U.S. stock market index, I next needed an international index fund. Turing again to my trusty Money magazine list, I saw a few Fidelity and Vanguard recommendations.

But I also saw this thing called "ETFs" -- with lower expense fees! I'd heard of ETFs (exchange-traded funds) before but had no real idea what they were, so I started Googling, and found a nice primer.

Basically, for my purposes, it seemed to boil down to this: An ETF would have a lower expense fee than a fund. However, an ETF trades like a stock, which means buying one incurs a commission. At Fidelity, for my IRA, that would be $19.99. This made me leery, so I went back to looking at regular-old index mutual funds.

Usually, for my international fund, I buy something that tracks a total international stock index. But this time, I decided to be a little adventurous. It seems reasonable to speculate that emerging markets will do better over the next decade or two than developed ones -- there's a whole lot of room for growth there. So I decided that I wanted the Vanguard Emerging Markets Stock Index (VEIEX). It seemed like buying that, since it's a non-Fidelity fund, would probably incur the $75 fee that so annoyed me earlier, but I decided to suck it up and buy it.

... except when I tried, I got a notice that the fund was closed to new investors. Er? I don't know if that's actually true, or if for some reason it wasn't compatible with my Fidelity IRA -- remember, Fidelity's whole interface has been confusing the hell out of me -- but it seemed like this wasn't going to happen.

But having gotten it into my head that VEIEX was the fund I wanted, it was now the fund I really, really wanted. And lo, Vanguard's Emerging Markets ETF (VWO) tracked the same thing. And I could definitely buy that ... so I did. Commission be damned.

Buying a mutual fund, I could specify how much I wanted to invest. For a stock, or in this case the ETF, I had to put in an order for a number of shares, and take my chances with precisely how much that would cost at open. So I worked out what half the remaining money in my IRA would be, divided by Friday's closing price (I was doing this on a weekend), and put in an order for a batch of shares.

Happily, at work the next day I spotted an article on the upcoming story budget about ETFs. It's posted here: "ETF investing done right." It backs up what I'd hazily worked out for myself: Because you pay a commission on each trade, ETFs don't make sense for things like active 401(k)s, where each week you're putting in money money and immediately investing it. But my IRA is basically a one-shot deal -- I'm sinking in this chunk of cash once, investing it once, and then basically leaving things alone. If I do add more to this IRA, it'll only happen once a year or so. For that kind of investment, an ETF can be a little bit better than a mutual fund -- though really, it strikes me as pretty close to being just 'half a dozen of one or six of the other.'

Tackling the IRA

I finally sat down to allocate my Fidelity IRA balance. What a headache.

I knew I wanted to mimic my 401(k) allocation, which is pretty basic: 40% U.S. stock market index, 30% international stock index, 30% bond index.

In my 401(k) accounts, this has always been very easy to create. The provider generally only offers one or two choices available in each category, so I grab the one with the lowest fees (hence my allegiance to index funds). But with my IRA, I apparently had the whole universe of stocks, funds and exotic investment critters available to choose from. Aiee! Decision paralysis!

As a starting point, I typed "best index funds" into Google -- and the first result was a link back to my own company's site, for a list Money magazine apparently compiles annually of recommended mutual funds. Which is exactly the kind of thing I was after, hooray!

First step: Try to figure out what fees Fidelity is going to charge me for my purchases. Digging around in the "help" section on their "trade mutual funds" page, I found this in the FAQ:

Fidelity will charge a short-term redemption fee if you buy a non–Fidelity fund and sell it within 180 days. This would be in addition to any fees charged by the fund itself.

That was the only thing listed in their "fees" section aside from some boilerplate about purchase, expense and redemption fees, so I figured I was pretty much in the clear. I typed in a purchase order for a batch of VTSMX, Vanguard Total Stock Market Index.

.... and then hit a warning that this purchase would incur a $75 fee. Grump. Fidelity offered an alternative: check out their list of no-fee "similar" investments. I clicked to see that, and got a screenfull of 100+ funds that aren't at all the same as what I wanted. No index funds, many with higher management fees -- I bailed.

Back to the list. Also recommended by Money was FSTMX, Fidelity Spartan Total Market Index. That had a $10,000 minimum investment, which was a few hundred dollars more than investing exactly 40% of my portfolio would call for.

Still, I figured Fidelity probably wouldn't charge me fees for investing in their own funds and decided to take the plunge. So I filled out the clickieboxes and successfully put in my order. One purchase down, two to go.

Next, for my international index-fund order, we come to the story of "Stacy learns what the hell an ETF is." Tune in tomorrow ...

Leaps of faith

I spend every day at work editing, assigning, vetting and too rarely writing about all the many ways being a small-business owner really bites it right now. The economy is belting the [redacted] out of almost everyone right now; being "your own boss" sounds peachy till you realise that then the one who's responsible for every single paycheck (and permit check and tax check and payroll check and expenses check and insurance check ...) is you. I'm a firm believer that the best way to "make a small fortune" is to take a larger fortune and use it to start a business.

And, as a moonlighting Muser on Personal Finance Matters, I'm aware that the #1 rule of investing is "don't invest what you aren't willing to lose."

So what's the first thing I did after David left his job earlier this year? Take a chunk of my scant available cash and sink it into investing in a small business. A restaurant. (BusinessWeek did a piece debunking the 'myth' of the high restaurant failure rate. Their cheery finding: It's not 90% of restaurants that fail! It's only 60%!)

I never intended to be a business "investor," and barring extraordinary circumstances, I doubt I will be again any time in the foreseeable. Some business journalists chafe against the professional stricture against buying stocks and making personal business investments; I always considered it something of a relief. Hooray, I have an excuse for never developing a "personal portfolio." I write a personal-finance blog because I'm philosophically fascinated by money, and the way how we get it and what we do with it cuts to the core of the individual choices each of us make. On a dollars-and-cents-and-actual-tangible-cash level, money bores me. Hence my laziness about allocating my IRA balance and my sanguine outlook on the giant suicide dive my 401k -- the only "savings" I have -- has taken in the past year. If I lost five figures in actual cash, I'd be a wreck. A five-figure loss in my 401k? Eh, it's supposed to be "long-term savings," right?, and so far, this whole "retirement savings" thing is just numbers on paper to me. I sock away the max my company matches every year, and have since I was 20 because it seems the sensible thing to do (free money? yes please!), but at no point has the "savings" in that account every felt tangible to me.

Which is a longwinded way of saying I can't see myself ever investing in a business because I've done a mathematical calculation and determined that doing so would work out in my financial favor. I invested in this one because the moment I heard it was being considered, I desperately wanted it to exist. I'm a pragmatist. I realise that most things require money to exist. So if I could move little financial bits around and help make this business real, in a tangible way? Hell yes.

Which is, I've realised after 18 months on the smallbiz beat, is the mentality entrepreneurs always have about their businesses. It's not a balance sheet. It's not a disembodied economic entity, or a way to generate cash. It's a service or a shop or a creation they passionately want to see made real.

As an editor, I genuinely admire the entrepreneurs who can take a step back and face bottom-line realities. As an employee, those are the business owners I want to work for. But as a writer, I'm more of a dreamer. I want to see amazing visions made real.

So when Chef Chris, who created one of the best meals I've ever had (and I'm a food lover; I've dragged David to recommended restaurants in 47 states so far) in a city I love, posted on his blog that he'd found a great space for a new restaurant and needed a few investors, I dove in. I'm a tiny, tiny stakeholder in this venture; financially, I'm a gnat among giraffes, and in terms of time invested, Chef Chris and Chef Paul and their crew are living this venture daily. I have every confidence they'll make it a success, and I'll get my money back with a profit, but I honestly don't care. Which is why I felt comfortable making the investment in the first place.

As a financial writer, the first piece of advice everyone (including me!) gives is "don't risk money you'll regret losing." I know the odds. I know investing in a new business right now seems bonkers. Running a small business in the best of times is murderously hard, and in a recession? Aiee.

But I also know I could lose every penny I've invested in this and wouldn't regret it, because I think this needs to exist, and the only thing I'd regret is if I'd not done everything I could to make that happen. Which is what the true-believer entrepreneurs I talk with for articles always say: They never really had a choice. They had to do this, had to start that business, because they needed to try. Some succeed, most fail, but everyone had to make the attempt and see the thing they'd envisioned made real.

So if you're in New Orleans, I recommend dropping by the Green Goddess. As a good journalist, I have to note that I have a financial conflict of interest in recommending it, but as this whole post was written to explain, I'm a fervent believer that you'll have a pretty amazing meal there.

I want a new acronym (or, Goodbye 401k, Hello IRA)

Two days before last month's cat trauma hit and most of my organizational planning ground to a temporary halt, I did manage to do what I'd promised to: Convert two abandoned 401(k) accounts (one each for me and David) into IRAs. Total elapsed workflow time: two weeks.

I could have left the accounts alone, or rolled my old 401(k) into my new one, but I wanted IRAs because I'd learned that you can withdraw up to $10,000 from them penalty-free (you'll still owe taxes) for a first-time real-estate purchase, which we may want to do at some point.

Initially, I'd planned to pick a financial provider and consolidate as many accounts as possible in one place. Technically there's no reason I shouldn't do that -- each of our accounts is well under FDIC insurance limits, and they're all housed at big financial services companies that are pretty unlikely to fail or seriously screw up. Plus, most of the money in the accounts is invested in mutual funds, which ought to tangibly own the underlying securities. If the brokerage makes a mistake or rips off the money, there's SPIC protection. That's a lot of backup.

And yet, still. With everything that's gone on in recent months with financal debacles, it felt like diversification would be a good idea. On the unlikely chance something goes wrong, not having all our retirement money parked at one company feels like a wise move. Besides, with my financial-services track record, my provider collapsing or my money being sucked out by hacker thieves doesn't seem so farfetched.

So I opted to set up an IRA for David at Vanguard, where his 401(k) already was, and I moved my old JPMorgan 401(k) to an IRA at Fidelity, the company that houses my current 401(k).

Doing David's was super-straightforward. He'd never registered with Vanguard's website, so I signed up and created his account there. After you do that for the first time, the site won't let you move money for seven days. I waited out the week, then went through the site's wizard-like steps for rolling a 401(k) to an IRA and reallocating the balance. If you want to keep your allocations exactly as they were for your 401(k), you can do that with one click. In total, the whole thing took me about 20 minutes (plus the one-week wait).

Because I was doing a transfer, mine was trickier. Fidelity let me open a rollover IRA online. But to get the cash into the account, I had to call JPMorgan to arrange a termination and transfer.

Calling JPMorgan revealed the sad truth behind the phantom vesting I'd been accumulating each year. Sure enough, it happened because my old company never actually told JPMorgan I'd left. To move my 401(k), they had to go back to the company and confirm my termination date -- and once they'd done that, poof went my two years of extra vesting. Drat.

JPMorgan took a week to sort that out, and then my account was free for transfer. To clean out my balance, JPMorgan sent me a check, payable to Fidelity Management Trust Company. Because the check was made out to Fidelity, not me, it was for my full balance -- no tax withholding that I'd later have to try to claw back.

It was extremely weird getting a check in the mail totaling about six months of my after-tax pay. It's definitely the largest check of "mine" I've ever held. Even though the check was bank-paper and not cash, walking around with it for a day was disconcerting. Reluctant to drop it back in the mail, I took advantage of Fidelity's Investor Centers to deposit it in person -- Fidelity has a branch right in the building I occasionally work out of.

Setting up David's IRA investment choices was easy; Vanguard's allocation options looked just like those I was used to from funding and allocating 401(k) contributions. Fidelity's, not so much. The interface looks more like what I'd imagine a traditional brokerage interface looks like. Instead of picking from a small batch of preselected mutual-fund options, I need to tell it what stocks or funds I want my IRA money invested in.

In the face of all these choices, I keep freezing up. I haven't yet summoned the willpower to work out what to do next, so for the moment, I am being an extremely bad long-term investor and leaving the giant lump sum parked in a "Fidelity Cash Reserves" account.

Oh well, it's not like stocks have done anything dramatic in recent weeks, right?