Yesterday I had to drive Mrs. ToughMoneyLove to a couple of doctor appointments. I took my netbook with me so that I could get some work done while I waited. This necessitated finding a location that offered free wifi. First stop: Barnes and Noble.

I ordered some food at the in-store cafe, sat down at an empty table, and connected to their AT&T-provided “hotspot.” A better name would be “coldspot.” The in-store wireless was fine but the connection bandwidth to the Internet varied wildly. Most of the time it was painfully slow, as in dial-up speed.

I decided to try a McDonald’s up the street. It’s AT&T Hotspot was not just cold, it was dead. I found the wireless network but it would never assign me an IP address. So back to Barnes and Noble I went. This is when it got weird.

I was sitting near the door that went from the cafe to the sidewalk. A well dressed older guy (older than Mr. ToughMoneyLove) walked out the door. This triggered the scanner alarm at the door. I looked up when the alarm went off.  None of the store employees paid the least bit of attention to the alarm.  I noticed the guy wasn’t carrying anything. That’s strange, I thought. What could have triggered the alarm? I then noticed a book-shaped bulge underneath the guy’s jacket, near his left hip. He had his arm carefully positioned just below it, supporting it. There was obviously something in there. I concluded that he had probably stolen a book or e-reader from the store. I wasn’t going to run out in the parking lot and confront him if the store employees showed no interest in their own warning system. I watched him get in his car (a Mazda Miata) and drive away. This guy was the worst shoplifter ever (in terms of calling attention to himself) but got away with it anyway because the employees were oblivious.

This Barnes and Noble is located in one of the wealthiest counties (per capita income) in the country. Which made the next event even more surprising.

I returned to my work but had plenty of time (waiting for web pages to load) to look around me. Another laptop user was a few feet away. Suddenly a guy appeared at this other table. He was older but not well dressed. He asked the other laptop user if he could use his computer for ten minutes. He said he would pay him.

WTF?

His request was awkwardly denied. Since I was sitting right there with my own computer open, I expected to be next on the request list.  I was ready. First, I would tell him that the public library had many computers and free internet access. If he persisted after that, his interaction with me was not going to be pleasant. But he never asked me. I suppose he could read my negative body language.

I guessed that this guy was homeless and looking to pull some sort of “I need money” scam. The “can I use your computer” query was only the start. Maybe he was planning a “grab and run” move.  He would have been better off just asking for money.

A few minutes later, as I was driving out of the parking lot, I saw this same guy walking along the road, probably looking for another store and another target.

I know this is the Christmas season and a time for giving. But what I experienced at the book store just doesn’t fit.

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The U.S. will be expected by everyone to take a lead role in rebuilding efforts. It will be expensive. So how should it be done?

Let’s look at the hard truth. For decades, Haiti has been an economic and political mess. In more recent years, Haiti ranks right up there with Somalia in having a dysfunctional government. According to reports from there now, the government has effectively disappeared.

Mrs. ToughMoneyLove has been to Haiti twice on medical missions. By all accounts, the people of Haiti (excluding the drug gangs, thugs, and corrupt politicians) are wonderful and deserving of far more than their government has provided them. They have lived lives of desperation for years.

The landscape of the country has been stripped of vegetation. Haiti produces far less food than it needs. The buildings are unsafe because there are no building codes. Clean water and electricity were hard to procure even before the earthquake.

It will probably cost more to “rebuild” Haiti than to start a new country from scratch because: (a) we basically have to bulldoze everything that is already there; and (b) we have to take care of the people who are there while we bulldoze and rebuild. That’s assuming that you could even do that.

It will be months before a massive rebuilding project can be planned, funded, and started. What will happen to the Haitians during that time? Where will they live? What will they eat? Most of all, who will govern and protect them?

Assuming that we rebuild Haiti, the country remains on a major fault line. Another earthquake could hit in our lifetimes, causing more devastation and loss of life. Do we want this to happen?

So you must know by now what Mr. ToughMoneyLove is thinking:  Should we evacuate the residents of Haiti who want to leave? Get those people out of there and to a place – perhaps the U.S. – where they can be cared for and protected? Yes, that is an enormous task for a population of 8 million people. But is it any more difficult than the alternatives? And will it cost less – in human and financial terms – than trying to rebuild a country that barely existed before the earthquake?

Many people won’t leave. That’s their choice. But I think we would be surprised by how many would say “I’ve had enough – I want something better.”

What do you think?

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Last year when everyone was writing and whining about how the drop in home values was hurting everyone, I disagreed. Families that could not otherwise afford to buy a home could now do so because prices had come down to meet their income levels. The neediest buyers could participate by finding and buying foreclosed properties. Good for them. By waiting until conditions made sense for them, they achieved success. That the seller’s hardship may have contributed to the buyer’s success does not and should not diminish the buyer’s achievement. Unless you personally inflicted the financial hard times on the eager seller, why should you or anyone else question the ethics of the deal?

Should those of us who experienced severe losses in our retirement porfolios criticize the ethics of new investors who are buying our stocks at 30% more discounts from what we paid? I don’t think so. I’m not happy about that development but my job is to do a better job of planning and insulating myself from the impact of changing economic decisions. Crying “foul” on the discount buyers doesn’t advance any worthwhile agenda.

So if someone calls you a “vulture consumer” for getting a bargain in a down economy, wear the label proudly. You probably earned it.

Image credit:  law_keven

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The first appointment was perhaps the most unique, starting with the fact that she was an hour late, causing me to have to squeeze her in between two other scheduled appointments.  She was in her early sixties and receiving Social Security disability.  I couldn’t determine what her disability was and she didn’t say.  All I know is that her adult daughter was fanning her the entire time she was in the office, as if her mother would keel over at any moment from some unknown malady.  Or it could have been a show put on for me.  Maybe she was concerned I would report her health to someone.  I think she did have at least one thing wrong with her:  stress.

As I began her tax return, she told me that she was renting a house which she shared with her adult son and two grandchildren.  On top of that, she said she was the only person in that household with income.  That came as a surprise considering her limited disability income, supplemented with a small pension she inherited from her mother.  What really struck me was that her adult son (and father of the grandchildren) showed up half-way through the appointment.  He was a large, seemingly healthy man.  Apparently the part about his disabled Mom supporting him and his children was true because the reason he interrupted our session was to borrow $10 from his mother.  Unbelievable.  

The other aspect of this woman’s financial life that surprised me was that she brought in a form W2G, i.e., to report gambling winnings.  Of course she told me that her losses easily exceeded her winnings.  What is it with folks who are living barely above the poverty line, supporting three other family members on disability, hanging out at a casino?  I suppose that whatever drives this behavior is similar to that which sustains the purchase of lottery tickets by the poorest of the poor.  Incidentally, she was married but not living with or being supported by her husband.  Where was that guy I wondered?  I kept my mouth shut on that one.

Like last week, only one of my six appointments this week was a married couple.  He was on Social Security and a small pension.  She was too young to claim Social Security but did not work.  The husband worked part time as a security guard at a local historical site.  I suppressed a laugh when I heard that because from looking at him, anyone over the age of 8 probably could have either outrun him or beat him up.  His wife didn’t want him to work but he told me that he worked more to stay busy than for the money.  Once again, this couple did not have much income but didn’t need much, in part because they owned their home, mortgage free.

I had one appointment with a divorced woman about my age.  She had one adult son the same age as our oldest son, but beyond that the stories could not have been more different.  She was a school teacher making a nice salary and provided most of the support for her son.  Yet she could not claim him as a dependent because she was unable to confirm his income to me.  I suggested that she call him.  She tried but her son could not take the call because he was meeting with his probation officer!  She told me that both her son and ex-husband suffered from manic-depression and had violently explosive tendencies.  I said a little prayer of thanks and gratitude after that appointment.

One of my appointments almost caused me to invoke my Mr. ToughMoneyLove personality.  As I was greeting this retired woman, I routinely asked her if she had filled out the taxpayer interview sheet that the receptionist had given her.  The volunteers use these sheets to guide our interviews of the taxpayers and the selection of the right forms to use in preparing the return.   In response to my question, she launched into a tirade about having to fill out a form that no one uses anyway.  I explained to her calmly that we (the unpaid volunteers) did in fact use the forms in preparing the return.  She said that couldn’t be true because she had seen them thrown away.  I told her that indeed we discarded (shredded actually) the forms after the return was finished but I assured her that I would read it first and rely on it.  So she stomped out to fill out the form.  One of the other taxpayers who was waiting her turn (and heard all of this) asked in a voice loud enough for everyone to hear:  ”I wonder if she throws her newspaper away after she reads it?”  I had to chuckle because that is the kind of remark Mr. ToughMoneyLove would make.  The irate taxpayer calmed down and I completed her return without a problem.  She was pleased to hear that she was receiving a nice refund.  Funny how money can change a mood like that.

Speaking of refunds, once again of my six appointments today, only one (the school teacher) paid any income tax at all, and two of them received a refundable credit over and above their zero tax liability.   As our government continues to implement and increase these different refundable tax credits, we are going to see more of this.  I’m not so sure it’s a great idea to have so many Americans who are completely dis-invested from the national budget.

Finally, I had to call one of my appointments from last week to tell him that his return had been flagged because he under-reported the amount of his 2008 stimulus payment.  This came about when I told him during our session that he owed the IRS $50 in taxes.  He then “remembered” that he received a stimulus payment of only $300, not $600.  That changed the final number from a payment to a $250 refund.  Busted.

So what were the big picture lessons I learned today?  First, you can learn an awful lot about people and their families in a short period of time, just by talking about their finances.  It’s amazing how forthcoming people are in a setting like that – sharing stuff with me, a complete stranger.  For some – the woman with the manic-depressive son for example – it seems like it is therapeutic for them to talk about it.  Second, there is still a lot of adult family interdependence and exploitation going on out there.  I am relieved that I am not a divorce lawyer.  I’m not sure I could stand the hard truth overload that would bring.

I hope you are finding this experience as interesting as I am.  Please share your thoughts.

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Yesterday was my second weekly visit to the AARP Tax-Aide office where I am volunteering as a tax preparer for elderly and low-income taxpayers.

I had five appointments yesterday and was able to complete five returns.  All of the taxpayers that came in were retired (collecting pension income and/or Social Security).  Here are my week two observations:

1.  Unlike week one, everyone who came in yesterday was very appreciative of the free service they were receiving.  Also unlike week one, they were all making less than the guidelines set for users of volunteer services.  I felt like I was doing the job that I had signed up for.

2.  Only one of the five appointments was a married couple.  The other four were widowed or divorced and living alone.  That made me sad to think about and very grateful for my marriage.

3.  Two of the five appointments owned their homes.  The others rented.  I was pleased to learn that the homes were fully paid for.  The married couple has lived in the same home for 46 years.  Amazing.  Both of the homeowners were pleasantly surprised when I told them that for 2008, they could deduct at least a portion of their real estate taxes even if they didn’t itemize.  Ironically, even though they were ignorant of this feature when they came in, both of them called me after they left, asking where on the return did I give them the deduction.  It’s confusing because when the tax software we use prints the return, it hides the fact that the real estate taxes are added into the standard deduction.

4.  One of the appointments had to report gambling winnings.  This couple liked to visit casinos and on two occasions had hit jackpots large enough to trigger receipt of W-2G gambling winnings forms.  While sharing this with me, they told me that their losses exceeded their winnings.  They assumed that this would zero out the income effect of the winnings reported by the casinos.  They were not very happy when I explained that they could not deduct the losses unless they itemized.  They did not have enough other deductions to itemize.  I hope they stay away from the casinos this year!

5.  Four of the five taxpayers were still working.  This was very interesting because all of those working (one full-time) were also collecting Social Security.  For two of them, this made a big chunk of their Social Security taxable.  One of the taxpayers was under age 66 and told me that she was going to stop working because her benefits were reduced by working.  I explained to her that although her benefit would be reduced by working now (until full retirement age), the benefits she lost during that period of working would be re-captured by being added to her benefit after she reached full retirement age.  Most retirees are not aware of this benefit re-capture and make poor decisions about not working after claiming Social Security at age 62 because of it.

6.  One woman said she was going to use her tax refund to buy a cemetery plot.  This woman was in her early 60′s but had experienced some health problems.  She was literally concerned about not making it through 2009.  She actually looked healthy to me.  I tried to encourage her to think optimistically and use that refund for something fun.  (Me – Mr. ToughMoneyLove – giving pep talks?)  I don’t know if I was persuasive or not.  Can you imagine sending your taxes to the government all year, then having them returned to you the next year so you can prepare to bury yourself?

7.  Two of the taxpayers were still helping support adult children.  One of those adult children was disabled.  The other recently divorced.  The unwealthy are still sacrificing to help the even less-wealthy.

8.  One of the taxpayers needed an amended 2007 return.  She had used one of the franchised tax preparation services last year.  They had neglected to evaluate her entitlement to an earned income credit, which is a refundable credit.  She is coming back next week so that I can try to undo that and put a little more money into her pocket.

This brings me to the final – and to me the most important – thing I learned from week two.  These people were generally happy and getting by fine on not very much.  We are talking about folks living simple lives on minimal incomes.  But no one complained (unless you count being worried about your mortality.) They smiled on their way into my office and were smiling when they left.

I think they were able to achieve a level of contentment because (a) they had little or no debt and (b) had learned to adapt and live on what they had.  There was none of the money envy and constantly expecting more that seem to affect so many of us.  They knew that there wasn’t going to be any more.  So they dealt with, accepted it, and lived their lives that way.  Refreshing.  Inspiring.

I hope some of these little life lessons are affecting you as they are me.  Please drop a comment and let me know.

Photo Credit:  Ewan M.

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My 25 year old step daughter has been allowed to live with us (we have a duplex, she lives “upstairs”) for going on two years now.  We offered her help because she was working full time and going to school part time and since her dad didn’t have the resources to fund her education, at least he could let her live here rent free.  This was going along just fine until she got into a car accident last November.  She totaled her car, then she had a meltdown.  She quit going to school, got fired from her job, and now she won’t do anything.  We’ve tried everything we can think of to help her get back on track, but she refuses all of our efforts.  Frankly, I don’t know where she gets the money to eat these days.  We’ve been as patient as we can with her, but we’ve had to give her an ultimatum, either start doing something productive, (school or work would be fine) or move out by the end of September.  This is really hard on us because her behavior is so baffling.  She doesn’t seem depressed, or psychotic, or anything like that, she just won’t DO anything.  To top it off she’s got a boyfriend who’s almost 20 years her senior (who she won’t even introduce to us).  It’s enough to make me depressed or psychotic!!  Stay tuned, I’ll update when the time comes.

I will be looking for updates on this situation but it seems  that there is more involved here than just money.  (I am referring in part to the boy friend 20 years senior. )  

In a previous tough love money story, a similar drastic action by a parent was in fact successful.  In other examples where money love was given to a family member in the form of a loan, that backfired.  This is borne out by Delores, another poster who had this to say about an unsuccessful tough love action toward a family member:

For instance, a few years ago, when my husband and I had some savings left after he left the military and we moved to another state, his older brother asked if we’d give him $300 so he could get training for a job that would help him while he went to college.  Basically, his plan was to get bartending training so he could work evenings/nights while attending school during the day.  As far as I know, he quit the bartending training halfway through for some reason and never got a refund of any of the money.  We also paid his car insurance at this time because he was between jobs.  He’s still barely employed (by choice)  and has since picked a fight with me that deteriorated into him no longer speaking to me…my firm opinion is this was largely motivated by the guilt of owing us money.  As in, “well I don’t have to worry about paying her back now because she’s such a bitch.”  I see now that is exactly how he thinks, and I guarantee that short of life saving surgery he will never get another dime from us.”

This outcome seems to clarify why some experts recommend that you connect the family member with a third-party professional who can provide a dispassionate assessment to the family member, without fear of a damaging permanent alienation.  I will continue to look for reports on true tough love stories like these.

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“One of the hardest things I’ve ever done in my live.  My son, at the time, was 19.  He had dropped out of school (gotten his GED), could not hold onto a job because he would partly late, sleep in and be late for work so eventually would get fired.  After nearly a year of this, I packed him up one evening, drove him to a motel, paid for 1 week’s lodging and gave him $100.  Told him he was on his own.  Then I went home and cried my heart out. It is still painful to recall.  I’d ride the bus to work everyday, wondering if he was one of the many homeless people I saw.

He grew up, learned that he needed a job to eat and provide for himself.  He told me a long time ago, that he knew I had had done what I had to do.  But Gawd, it was hard for me to do!”

I know many other parents have had similar problems.  (Fortunately, I have not!)  This parent showed extreme toughness but it paid off.   Maybe other parents need to follow this tough love example in helping their children with money problems?

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