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Monday, June 08, 2009

Proof of the Need for IRS Reform

tax reformAn April 15, 2009 Reuters article includes Barack Obama's campaign promise about IRS reform. Obama says, "We need to simplify a monstrous tax code that is far too complicated for most Americans to understand...we will make it quicker, easier and less expensive for you to file a return..."

Someone should warn the President, negotiating lasting peace in the Middle East may be easier than simplifying the Internal Revenue Services. And I've just learned this (again), the hard way.

Some of you may remember my earlier blog entry about getting a back taxes bill for 2006 due to a short sale of my home that took place during that year. I tried to fight the bill, but it turned out that I really did owe the money (about $800), so I decided that the right thing to do was to face it and pay the tax. I also decided that paying $800 all at once was too burdensome for me (more than one month's rent). I thought it best to set up a payment plan with the IRS, and then when I got the amount down to something more manageable - say $400 - pay off the rest in full. After all, the IRS did offer me the option of setting up a payment plan. It seemed like it would be an easy and fair route.

So begins my personal adventure with the IRS that has taught me where the expressions "pulling out my hair" and "banging my head against a wall" came from. This should have been easy! Here's my timeline of events (be warned, it's scary and complicated):

December 5, 2008: Take all my paperwork/ bill from the IRS to their local office. Meet with IRS Representative #1 who tells me I can set up a payment plan right there. Yes, $40 a month will be fine! No, I do not need to do any further paperwork or sign any of the papers that the IRS has sent me. We can just do this whole thing face to face. I give him a voided check and fill out a form, and he gives me the (unbelievable) news that I will have to pay a $52 fee to set up the payment plan/ direct withdrawal. And, it will take the IRS at least two months to set up the direct withdrawal, so during that time I'll have to run my checks in person down to the local office on the first of each month.

December 5, 2008 - 1 hour later: I had just gotten home from the whole ordeal and was relaxing with a cup of coffee. (Remember this whole thing was extremely emotional as the short sale of the home was due to divorce and foreclosure.) I told myself at least it was over with. Phone rings. It is IRS Representative #1. He says, "You have to come back down here right now!" His tone is full of panic and that makes me panic. (When you've been through a financially devastating divorce, as I have, it doesn't take much.)

"What's wrong?" I ask.

"There's a problem with your check!"

"What?" I was sure there was no problem with my check, and since it was just a voided check there couldn't have been a problem with insufficient funds. "What's wrong with it?"

"You need to get down here right now!"

Okay - even in my panic, I could tell that this guy had no right to order me back down to the IRS office in the middle of a work day. "I'm busy now," I said. "Why, specifically, do I have to come back down there?"

Silence. After a few minutes of talking with him, I finally asked, "Did you make a mistake with entering my check into the system?"

It turned out, he had! And he had the nerve to call me and order me back down there without apologizing or explaining what had gone wrong. Talk about use of power to intimidate!

December 6, 2009: I make a second trip to the IRS office and deliver a second voided check.

December 29, 2008: I drop my first payment off at the IRS office.

January 22, 2009: I get a notice from the IRS that states, "Your next payment of $40.00 will be automatically withdrawn from your checking account on March 1, 2009." I feel relief - everything is set up and I won't have to worry anymore!

February 1, 2009: I drop my second payment off at the Providence IRS office.

March 1, 2009: I notice that $40 has not been withdrawn from my checking account. Something may be wrong....

March 3, 2009: I go back down to the Providence IRS office, by this point rather frustrated and annoyed. I ask to speak with anyone but IRS Representative #1 who I have now realized is incompetent. The receptionist sits me down with a very competent looking woman. The woman, IRS Representative #2, looks at my account. She's puzzled. Evidence of my payments is there. My checking account information is there.

"Hmmmm," she says, taking my certified letter from me. She goes to talk to a supervisor. They figure out that because I hadn't signed the paperwork agreeing that the debt was rightfully mine, the IRS will not begin the automatic withdrawals.

Arrrrrrggggg! This was the very same paperwork that IRS Representative #1 looked at on December 8th and pretty much told me I could throw away. He definitely said I did not need to sign it. Now, three months later, I sign. Representative #2 says she will fax it to the appropriate office and I should be all set. She advises me to just check if $40 is withdrawn from my account in April. If it doesn't work in April, it will work in May. Also, if it doesn't work in April, I can just mail the check to the local IRS office. There's no need to trek all the way down here over and over again. That's ridiculous and IRS Representative #1 should have told me that. Oh, and while I'm here on March 3rd, I make another $40 payment.

March 30, 2009: I get a letter - a certified letter (yikes!) - from the IRS. It states that it is a "notice of deficiency" and names a court date!!!! I am now panicking. I thought that this had been resolved back in December! Plus, I've been making regular payments - now totaling $120.

April 3, 2009: I notice the set-up has not taken effect yet, so I mail a $40 payment to my local IRS office.

May 3, 2009: I notice that the $40 has, once again, not been withdrawn from my account. I decide to mail a check and wait.

May4, 2009: Great news! I get a letter from the IRS that my 2006 account has been changed - I now officially owe them $714.40 (this reflects the original amount minus the $120 that I paid between January and March, plus the interest and fees). IRS Representative #2 had been right - it was apparently necessary for me to sign that paperwork, indicating that I acknowledged the amount owed as accurate.

May 20, 2009: I get a letter from the IRS inviting me to set up a payment plan with them. Here's the catch - there will be a $52 fee!!! I am a healthy 31 year-old woman, but the way my heart raced when I got this notice, I thought I might need to call an ambulance. I had already paid $52 - in December - to set up the plan! I decided that it may have just been a processing error - I would wait to see if the $40 would be withdrawn from my account on June 1st. After all, I'd been assured in DECEMBER (and then again in MARCH) that I was all set.

June 1, 2009: Nope. No money withdrawn from my account.

June 4, 2009: I call Representative #2 to ask her about this. She does not return my call.

June 5, 2009: I wake up early and am first in line at the IRS office. The receptionist tries to send me to still a third representative although IRS Representative #2 is sitting in her office without a client and I can SEE her from where I'm standing. I insist on seeing either her or her supervisor. IRS Representative #2 takes me into her cubicle. She pulls up my file again and examines the paperwork I've brought. We both realize at kind of the same time that IRS Representative #1 had not put the original $52 towards the fee to set up an automatic withdrawal, but rather had put it towards the amount I owed. Utter incompetence.

So, here I am, six months later, assured that this will work for July 1. IRS Representative #2, to her credit, was really just undoing the first guy's inaccurate information and inability to use the computer system to set up a payment plan. But on that last day, I sat in her office close to tears, my hands shaking and I said to her, "I have a master's degree in English! I'm good at reading forms and letters. I'm organized and honest. Why is this happening to me????"

Don't get me wrong - I know that having a master's degree doesn't make me incapable of making errors or misreading. But this situation has been so bewildering and stressful, if I weren't a good self-advocate, I think I would have just given up. How is someone with lower literacy, and/or less time, and/or less self-confidence supposed to deal with an organization where a representative can't even accurately set up a payment plan? I mean, your cell phone company can do that in about fifteen minutes! You can even do it yourself on-line for most large utility companies! The level of complexity and the amount of time and effort that this has taken is shameful. I have been trying to pay! Trying to do the right thing! I have probably spent a total of 15 hours just trying to get a payment plan set up. Not to mention the frequent trips downtown, the need to pay for parking, and the couple of times that I took time off from work to meet with these people.

The IRS mission statement is as follows:

Provide America's taxpayers top quality service by helping them meet their tax responsibilities and by applying the tax law with integrity and fairness to all.

In this case, mission failed. And, yes, IRS reform is desperately needed.

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Monday, March 30, 2009

Experiences Using a Non-Profit Debt Management Program

debt managementCalling a debt management program (DMP) was a low-point in my life. Newly divorced with more than $15,000 in credit card debt, I didn't trust anyone - not my ex-husband, not my credit card companies (who had come after me ruthlessly despite my very decent credit history), not my divorce attorney, not myself. I certainly didn't trust that the automated phone system at a debt management program called Consumer Credit Counseling Services (CCCS) would help me get out of this terrible financial situation.

But I had to try something! My creditors' calls wouldn't stop. The operators, I could tell, were getting ever more professional sounding, higher and higher up in collections at the banks I was dealing with. I had to find a way to restore order to my life - even if it was going to be a new order that I wasn't happy about having to live with.

Consumer Credit Counseling set up an appointment for me with one of their representatives, and I arrived at their satellite office near my home to find a friendly, polite, young man named Gerald waiting to discuss my findings with me. He was sympathetic. He listened as I described my situation. He said to me, "You can do this. You can get out of debt." He added something comforting like, "It happens to the best of us."

He explained to me the terms of "joining" CCCS: I had to divulge all my debts to them as well as tell them about my income and monthly expenses. Based on that information, they would negotiate with my creditors for lower interest rates and lower monthly payments. They would encourage my creditors to stop harassing me. Usually, Gerald said, it worked. I would stop getting harassing phone calls from creditors. This was the good part.

There were more terms, however. I would have to pay CCCS an initial fee, which I think was around $50. After that, I would have to pay them $24 a month for as long as I was on the program. They would need my checking account number because they would automatically withdraw my monthly payment (in my case it was $360 per month), then they would distribute it out to my creditors. Late payments or insufficient funds could mean getting dropped from the program.

And, perhaps most significantly, as long as I was on CCCS's program, I could not have a credit card or apply for a line of credit. Car loans were an exception.

I was hesitant to sign on. After all, I told myself, I didn't have a credit card problem - that problem had belonged to my ex-husband. My problem wasn't overspending, it was trusting the wrong man. The thing was, though, I was the primary card holder on our accounts, and I was therefore held legally responsible for the debt. I was the one who faced harassing phone calls daily. I was the one who, frankly, cared. I didn't want to go forward in life with a terrible credit record and debt up to my eyeballs. So, umm... I did have a credit card problem no matter what the source. And, I wanted my creditors' calls to finally, finally, stop.

I signed on.

With the help of the debt management program, Bank of America agreed to reduce an interest payment on a very high balance from 23% to 8%. HSBC reduced the interest on a card I had with them from 12% to 0%. And, Cox Communications, a cable/ phone company with whom I had an outstanding balance of $550, agreed to accept a monthly payment of just $20 as long as it came through the Debt Management Program. I had tried negotiating with all these creditors myself with no luck - the DMP did so easily and the harassing phone calls stopped.

I made my monthly payments. I never missed one, even though it was really hard sometimes. I lived without the convenience of a credit card for more than two years. While I was on the program, I also strove to make extra payments to my largest credit card balance (Bank of America), using the debt management program to keep me in good standing and generally on track, but exceeding their expectations by paying down the big debt.

(Gerald, by the way, told me I shouldn't have paid the extra money to the credit card balance, but used it to start a savings/ emergency fund - was this good advice or did he just want me to keep paying CCCS $20 a month? I'm not sure. I will say that every single person who I ever spoke to at CCCS, by phone or in person, treated me with kindness, compassion, and respect. I never heard a derogatory word or had the horrible experience of calling during business hours and being unable to reach a real person. Overall, I'm thankful to the company for their support.)

Finally, I was able to pay off almost all of the debt and a family member lent me the last few thousand so that I could go off the debt management program. I wanted to rejoin the world of credit - and reestablish myself as a good credit holder. I expected credit card offers to come pouring in to me. They haven't. I'm not sure if it's because I was on a debt management program or if it is because in the current economy banks simply aren't extending credit to new/ risky customers. I did finally procure a credit card, but it has a limit of just $500 and an annual fee of $39. (So... six months off the program and I'm $39 back in credit card debt, already... without even making a purchase.)

If you are considering a debt management program (DMP), here are some points to consider:

  • It should be a not-for-profit organization and the monthly fee should not be above $40.

  • You should be able to make extra payments to your credit card accounts at your convenience without going through the DMP.

  • You should be able to go off the program at any time you choose, with no penalty from the DMP itself. (Your credit card companies may punish you - for example, when I went off the DMP, my one card with a remaining balance went from a 0% interest rate - negotiated by the DMP - to an interest rate above 30%.)

  • You should be treated respectfully every time you call to speak to a representative at the DMP.

  • They can only help you as much as you are willing to commit to helping yourself.

The Federal Trade Commission has also posted information for consumers about using Debt Management Programs effectively and about how to know if the program is legitimate. Link to that information here.

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Tuesday, March 10, 2009

Filling Many Shoes: When Combining Part-time Jobs Is Your Best Option

Combining Part-Time JobsMy shoe rack tells you something about me. You'll find barn boots next to high heeled sandals. Teacher clogs beside black sneakers approved for restaurant work. Artsy looking knee high boots next to the slippers I wear when I write at home. Each pair of shoes represents a footwear requirement for a current or former place of employment. I fill many professional shoes - in the ten years since I graduated from college with a BA in English I've held at least fifteen part time jobs, often combining them to comprise a full time income. Working this way has come about partly by necessity (I was a grad student for a while) and partly by choice (as a working freelance writer, it is always easier to balance my jobs around my writing life than the other way around). For me, it has proven a (fairly) stable way to earn a living.

In this troubled economy, people are being forced to get creative about how to earn a living. I'd like to throw out the idea that combining part time incomes can be a great way to work and live. So, here is the truth of that working reality - the good and the bad, as well as some tips to make it work.

Advantages that I've found:

  • Meeting interesting people and always finding new professional contacts and connections.

  • Getting to try different career options, some of which may not be right for me in the long run, but were still interesting or beneficial. (For example, I worked at a retail pet shop during a time that I had a puppy - this saved me money and helped me support my animal. Another example: I will never forget the two years that I spent tutoring adults with literacy challenges. Meeting people who so longed to read and write, something I so take for granted, was humbling and life-altering.
  • Personal freedom! I do know that my friend who is an accountant for a major financial firm makes a lot more money than I do and is successful in a material way that I'm not. I do get jealous of that sometimes. (Especially because she's one of the lucky ones who makes great money and also loves her job.) But I do get to walk my dog on a deserted beach on Thursday mornings... and Wednesday afternoons... and drink tea with my friend on Friday mornings... Basically, combining part-time jobs has left me with the freedom to arrange my schedule so that I have lots of time for my dog and some time for my creative writing projects.
  • Staying young at heart. There is something about working in multiple professions that means I have to stay flexible and get along with people who are diverse in all kinds of ways. Variety keeps my brain agile.

  • Part-time jobs can pay really well for less commitment than full time work. I'm thinking right now of people who gain $250 of income per week by delivering a daily newspaper. Yes, they have to wake up very early, but for approximately fifteen hours of work per week they are not doing too badly. Plus, I've been told by an acquaintance who delivers the paper that holiday tips from customers often total $1,000.

  • An unexpected job security. I know that most of us assume in bad economic times, part-time employees would be the first to go. But consider the fact that employers don't have to pay us benefits, and often get more for less. It's in their best interest to keep us on during tough times. My jobs have not been affected by the economy thus far. Plus, if I lose one job, I'm not totally without income. I have the others to fall back on, and can often pick up more hours.

  • 401K - I do actually get this from one of my part-time jobs, which is a nice benefit.

  • Gym membership. Because one of my part-time jobs involves tutoring at a college, I can use the college facilities, like the gym and the library, for free.

Disadvantages that have come up over the years include the following:

  • No health care benefits. I purchase these independently.

  • A lack of job security. Okay, I'm contradicting myself, but sometimes part-time jobs are more easily cut, or they are temporary and end because, say, a federal education grant ends.

  • Strange hours. Often, part-timers are covering shifts that full-timers don't want to cover. For example, I've worked Sunday afternoons for the past five years. This works for me, though I know for some people that's the worst shift imaginable.

  • Employers who, naturally, don't know your whole schedule. My boss at one job might adjust my hours slightly, not thinking it's a big deal, but it may throw off my other job and cause me to have to do some major hustling, or shuffle the other schedule.

  • Along the same lines, I sometimes feel like I'm being pulled in ten different directions.

  • Lower income overall. I definitely have a sporadic income because, well, I work more at some points in the year than others. This is annoying! And it has required me to become better at saving/ planning. I also think that it results in a lower income overall than if I were working at a full time job that someone with an advanced degree would work at.

  • No sick days! No snow days! No holidays! When the rest of the world is safe at home, celebrating time off, I'm often regretting lost income. For me, this might be the biggest disadvantage.

Okay, so let's recognize that right now people may be forced into this situation - working two or three part time jobs to make ends meet. How can you make it work for you?

  • Find jobs that complement one another. For example, I teach writing courses that naturally have a lot of prep work. My (generous) bosses at my tutoring job allow me to grade papers if I have downtime between students. This makes these two jobs fit together perfectly, and allows me to give more hours to the tutoring center than I would otherwise be able to. Along the same line, if you have one job that requires lots of mental work, it can be good to have a second job that's more physical/ social. In this way, teaching has been complimented by waitressing for me in the past.

  • Say yes to opportunity! Just try it. As long as it's a safe situation, you don't have much to lose. It's very easy to quit a part-time job if it turns out to be awful. (No, distributing free samples at the local deli was not a professional dream come true for me. It didn't kill me either.)

  • Ask your employer to consider giving you benefits like health care or sick days. Many will consider it, especially if you're working more than 20 hours a week.

  • Know where your funding comes from if you're working for a non-profit. Often non-profits pay part-time employees very well because they need to use grant money within a specified amount of time. However, employment after the end of the grant period can depend on the organization receiving the grant again. This is not necessarily bad, but it's nice to know ahead of time if "lack of funding" could become a reason for the position to end or change.

  • Make yourself a part of the workplace culture, even if you are not there that much. This can be hard as lots of places get clique-y, but it's important to your job security. Participate in conversations, ask questions, make suggestions politely, look at and talk to your boss. Even when it's part time, you want and need to seem invested. Plus, it will be more fun.

  • Commit to a schedule you can live with. I work very hard for four days, then have three days off. The long days are tough, but it works for me. Others might prefer six shorter days. Almost everyone needs at least one day off every week. Consider that when you commit.

  • The old adage "do what you love" tends to work for people, even if it means taking a job that you're overqualified for in some ways... part-time work can be a great way to experiment with new career possibilities.

  • Be honest with people. Let them know you're interested in full time work if you are. Also, let them know in the meantime that you're balancing more than one place of employment. I have always found my bosses to be understanding about this.

Okay, so if I've sold you on searching for part-time work, here are some suggestions (via YahooShine!) about the 7 best part-time jobs available. Happy searching! Be ready to expand your shoe rack!

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Friday, January 23, 2009

Bad Economic Times for People = Trouble for Pets

Bad Economic Times for People = Trouble for PetsThe Associated Press recently reported that,
"one in seven [pet] owners nationwide reported reduced spending on their pets during the past year's recession. Of those cutting back, more than a quarter said they have seriously considered giving up their pet." This article went on to explain that the average annual cost of owning a dog is $1,400; a cat, $1,000. Those are not easy numbers in an economy where every penny of our paychecks seems to be spoken for before reaching the bank account.

The expense of pet ownership is not a surprise. After all, any pet owner who has ever confronted an emergency vet bill certainly knows that pet ownership can be a real financial burden. But now, the question is not one of emergency – at least not in the sense of a cat getting hit by a car, or a dog overdosing on coffee beans (actually happened to my sister’s dog Viszla), or a Labrador needing a major surgical procedure for displaced hips. Those kinds of emergencies are heartbreaking, and pet owners always face hard choices about them. But now, we’re talking about a different kinds of emergencies for people and their pets: What happens when my house is foreclosed and the apartment I can afford doesn’t allow dogs? What happens when I have to work a second job to make ends meet, and I can’t afford a dog walker? What happens when, frankly, the burden of cat food, liter, routine flea and tick treatments, and veterinary services are just more than I can afford?

I faced a similar situation a few years ago when I went through a sudden divorce and lost my home. It was difficult enough to know what to do with myself, let alone the one year-old, 70 pound, retriever-Sheppard mix! 70 pounds of exuberant puppy who still liked to chew the occasional pair of underwear or the delectable couch pillow from time to time – how would I find a housing situation where I could keep this guy? What would I do with him when I was at work?

I was fortunate; my parents took us in until I could get back on my feet and find housing where he was allowed. He’s still with me at age four, and the love, companionship, and sense of security that he’s brought me are worth any sacrifice I may have made. However, I’m sure I could have been out of my parent’s house sooner if I hadn’t been looking for housing and work that would meet my financial needs as well as the needs of my pet.

In the process, of all this, I learned a few things to make pet ownership more affordable, and I’d like to share those tips with you here. However, I also recognize that even with practical approaches like these, keeping a pet sometimes does become just too burdensome, too difficult. While we all acknowledge that in an ideal world, a commitment to a pet is for life, people do get into situations that are so unexpected or out of control that the animal needs a new home. Also, people can become ill or have to escape an abusive situation. With that in mind, this article also provides tips for finding the best placement for your animals when crisis merits the extreme action of having to give up your pet.

Tips and Considerations to Make
Pet Ownership More Affordable:

  • Give up your gym membership before you give up your dog! Walking or jogging is good exercise, and the $50 a month you spend on a gym membership will cover dog food. It’s easier to re-join a gym when times get better than it is to get your pet back! Visit Hike with Your Dog to find dog friendly places to exercise in any of the fifty states.
  • Form a dog walking Co-op. A huge problem for (especially single) dog owners is what to do when we have to work a 14 hour day and it’s not possible to get home to take the dog out. Dog walkers and doggie daycare are expensive! A resourceful alternative is to find one or two people in the same situation and form a Co-op where you can exchange services. Think creatively – it doesn’t have to be a day by day exchange. I once knew someone who walked her neighbor’s dog every Wednesday afternoon in exchange for two consecutive weeks of vacation dog sitting in the summer. This worked out great for both of them, and went on for years.
  • In a crisis situation, such as having to flee your home due to a domestic violence situation, many animal shelters offer temporary housing for dogs, cats, and even exotics. Inquiring at your local shelter is a good place to start when there’s a true emergency such as domestic violence, fire, or hospitalization. The Humane Society of the United States provides an on-line directory of nationwide safe haven services on their website.
  • Keep your pet vaccinated to avoid fines and illness! Most shelters offer annual rabies clinics where they give this vital vaccination for free or at a greatly reduced rate. For example, Anne Arundel County Animal Control in Maryland offers this weekly, the price per pet only $5. Local animal shelters can usually provide information about similar programs in your area.
  • Spaying or neutering your pet is one of the best ways to keep costs down. After all, it avoids the pitfall of having, accidentally, more pets! Many shelters, and even some vet schools, offer spay/ neuter support or clinics, so you should inquire locally. Usually, these services can be provided for a discounted rate of $40 - $50 – services can be as much as five times that amount at a regular vet’s office. The national organization SpayUSA offers a list of reduced price services nationwide.
  • Finally, be practical. A long time ago, I decided that if I couldn’t afford a multi-vitamin for me, then Basil wasn’t getting any fancy supplements. On the other hand, I continued to feed him a quality dog food (even when I was eating PB&J for dinner) because I knew that the quality food would keep him healthy, which would prevent trips to the vet. The same went for preventative flea/tick medications and heartworm pills. I found the money for them because I knew they would prevent bigger problems. Believe me, your pet would rather be curled up next to you at night, after a dinner of slightly less-fancy food, than lying on a floor in a shelter somewhere. I speak for the dogs and cats here. Pets can go through the ups and downs of family life with us.

In addition to the tips I’ve given above, the ASPCA website offers some excellent, practical tips for making pet ownership affordable.

Before you give up your pet, consider the terrific physical and emotional benefits of having a dog or cat in your life. The Center for Disease Control shares some of these benefits on their website. Here are two notable quotes:

“...Pets can decrease your blood pressure, cholesterol levels, triglyceride levels, [and] feelings of loneliness...”

“...Pets can increase your opportunities for exercise and outdoor activities, and opportunities for socialization...”

It’s hard to put a price on that. I know in my case, Basil has comforted many tears through my divorce, kept me company when I’ve been lonely, and has forced me to get up in the morning to walk and feed him when I didn’t have much other reason for getting out of bed.

Sometimes, though, there are situations where owning a pet becomes impossible. The safety of people comes first, obviously, and I know it must be hard for those who have to lose a pet because they’re leaving an abusive relationship. It’s also hard to admit for any reason that you’re unable to adequately provide food, shelter, and exercise for an animal that you love. Sometimes, what is actually the responsible thing to do – giving up the pet – may not appear responsible to others. I don’t think it’s a decision to make lightly, but sometimes it’s necessary. If it is necessary to give up your pet, you owe it yourself and your animal to handle the situation responsibly. I’ll never forget a story that a shelter worker told me: she got to work and found six cats in cages on the shelter doorstep, all dead or near dead from hypothermia. That's cruel, inhumane and inexcusable.

Strategies for Finding a Safe, Happy,
and Appropriate New Home for Your Pet:

  • Use networking among family and friends as your first resource for finding a home. And, no, I do not mean guilt tripping someone into taking your animal! I mean, put forth a word of mouth and email campaign to find the right home for your dog or cat. A friend of mine, Sarah, had to go through this when she found she couldn’t afford her one-year-old lab-pitbull mix. According to Sarah,

    “It just wasn’t fair. I probably shouldn’t have had the dog to begin with… she had too much energy and I couldn’t afford to work less. I didn’t have the time for her.”
    Sarah’s story has a happy ending, though.

    “I used email and contacted friends. I offered the dog, with her crate, bed, toys, and over a month’s supply of food. She was up to date on all her shots.”

    It took some time, but Sarah eventually found a family who lived on a three acre property to take the dog.

    “I visit her sometimes,” Sarah says, “and they send pictures.” She adds, “It’s for the best.”
  • Another great resource is a reputable breed rescue organization such as Yankee Golden Retriever Rescue or Persian and Himalayan Cat Rescue. This works best if you have a purebred animal, but sometimes the organization will accept a mix or “similar-type.” The reason this is a good resource is these organizations generally do not euthanize, foster dogs in temporary homes, and have an understanding of the kind of home your dog or cat will do best in.
  • Tell your veterinarian that you need to find a home for your pet. Vets (and veterinary assistants) see lots of pet owners every day and they know who the responsible owners are. This can be a great resource. The same goes for groomers, dog walkers, trainers, feed store owners, or any other professional who may know and like your pet.
  • The popular website Petfinder.com will not allow individuals to post pets there for adoption. However, Petfinder does offer a great search engine for finding animal welfare groups by zip code. Sometimes an animal welfare group may not be able to take your pet in, but will be willing to make a courtesy posting on Petfinder for you if they believe your animal is a good prospect for adoption.
  • Contact local shelters until you find someone willing to take your animal. Check for no-kill policies. Provide, if possible, a monetary donation to the shelter to help them support your dog or cat until they can place it. NEVER, ever just drop your pet on a shelter doorstep. In many states, that’s illegal and punishable with fines or jail time!
  • Be careful when giving away your pet! You don’t want your pet to end up in the wrong hands, so request references/ visit the home of anyone you’re going to give your pet to, even if the person claims to be a representative of a rescue organization. Do a little research. You are going to all this trouble to avoid having the pet meet an unhappy ending! It would be terrible to give your pet away and find out later that the home or organization was not what it claimed to be.

Needing to find an animal a new home is a very hard situation to be in, but it can have a happy ending. The right situation can come along like serendipity. Five-month-old SeamusRecently, I interviewed Alyson, a single woman in her fifties who has always loved animals (and has owned many pets) but has been without pets for a while because she's had to care for her mother. After her mother’s death, Alyson wished for a new animal, but part of her was still grieving and this held her back from rushing out to get one. Then, one afternoon, she was at an old friend’s house and mentioned that she’d been thinking of getting a pet. The friend encouraged her to take Jack, a litter-box trained Dwarf rabbit that the friend’s 14 year-old daughter just simply didn’t have much time for anymore. A first-time rabbit owner, Alyson quickly takes out her camera phone to show me a picture of Jack, saying,

“I saw him out in the garage and he was so cute and looked so lonely, I just thought, it’s time. And [Jack] really has personality. If he wants my attention, he jumps up and begs for affection. It’s good for everyone. My friend -- Jack's previous owner -- feels happy because she’d been plagued with guilt about the situation. She and her kids can come to visit. I’m happy to have this delightful pet. And Jack’s happy because I can’t get enough of him. Everyone’s happy.”

Finally, if you do find yourself in a situation where you have to give up an animal, you should honor that animal by putting yourself on pet probation. I’m not saying, never own a pet again, but I am saying, make yourself wait 3 – 5 years, until your life situation (financial, housing, etc.) is stable enough that you know you won’t get into the unfortunate position of having to part with an animal you love.

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Monday, January 05, 2009

Short Sale, Long Consequences

Short Sale, Long Consequences: A story about divorce, foreclosure and the IRS
Short Sale
It is August 2008 and I have been divorced for two years now. What a two years it has been. Left with nearly $15,000 in credit card debt by my reckless and deceitful ex-husband, and just out of graduate school working part-time jobs to get by, it seemed like I would never catch up. Oh, and there is the deadly “foreclosure proceedings begun” on my credit report, which I’m told will be there for the next seven years. Nonetheless, it is August 2008; I am divorced, happy, and free, with a new love in my life, and more than two thirds of the debt paid off. I am able to go off the debt management program that has helped me reach this goal. I plan, and take, my first vacation in more than five years.

What do I come home to? A notice and bill from the IRS that they are increasing my 2006 reported income by more than $5,000, meaning I owe them about $800, because my ex and I sold our foreclosed house in a short sale more than two years ago.

Just when I think life is getting better, something surfaces, something bites my (thankfully, tanned) backside.

Of course, my first reaction is that this is an injustice. For one, the mortgage company (since gone bankrupt itself) never told me that I would be liable for claiming the waived debt as income, and never furnished me with a 1099 form. (In a recent phone call, their rep claimed they sent it to my ex, logical as he was the primary borrower.) For another, there is the sting of personal injustice: my ex had let the home fall into foreclosure behind my back. I still don’t know what happened to all the money that was supposedly going towards mortgage payments, thousands and thousands of dollars. (Of course, I do have my suspicions, most of which involve my ex’s internet affairs, substance abuse, and sending money to his con-artist brother in Europe for weird and always unsuccessful business ventures.)

The irony is, it was me who decided to file taxes separately for 2006, although we were technically still married for half of it, because I didn’t want to be associated with him any longer, even in the eyes of the IRS. If we’d filed jointly, he’d now be liable for half the short sale income. In fact, I might even be eligible for an IRS protection called “Innocent Spouse,” that waives the liability of a spouse when debt or income has been concealed. (He never shared the 1099.) As it is, however, two tax professionals and the IRS help desk in Providence, RI have convinced me that I am liable for the amount and will be held responsible, especially since my ex doesn’t seem to have filed income taxes at all for that year. As both of the accountants told me, “The IRS goes after the person with the deeper pockets.” It seems unimaginable but that person is me!

Ademola, another member of the www.FedPrimeRate.com Money Blog, wrote an entry about this recently. Bush and Co. have issued a special moratorium that currently prohibits taxing short sale amounts. It’s a good idea; with so many people facing foreclosure and crisis, this waiver is a welcome relief, I’m sure. After all, in my case the short sale amount, and subsequent tax, wasn’t thousands and thousands of dollars. In today’s market, however, large short sale amounts are a distinct possibility for those trying to sell their homes, especially if there’s a need to sell quickly. Read more about the moratorium here.

My story, though, is still a teaching story, I think. When you’re in financial and personal crisis, as I was when I negotiated the short sale, it’s easy to jump at the first relief without considering the long-term consequences. Don’t get me wrong, the short sale was probably still my best option, but I would have handled the taxes differently. I wish I had slowed down and asked myself questions, not yes/no questions, but open questions like: What do I need to know about a short sale?

That’s the thing about crisis: It seems like the time to act fast. Maybe, that’s really the time to slow down and do research. To ask an expert. To ask yourself: how will this affect me two years from now, when I come home from vacation, tanned, happy, and newly in love? How will this affect me when I’m almost-financially-secure again? How might this affect me in eight years or eighteen? In the moment when it’s hardest to think about long-term, we sometimes most need to.

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