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January 2008
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Well, it is almost the end of January, and so far, I've kept some resolutions (hooray!). One of my resolutions this year was to keep better records. This was precipitated by the fact that we had to file our federal taxes late (we got an extension) because my husband had an emergency appendectomy just before tax time. Plus, I found I was often puzzled with the question: "Where did all that money go?" I'm combining low tech and high tech. Low tech: I have a small notebook I carry with me everywhere which slips into a clear plastic case which closes and holds loose papers. In there go all the receipts as well as notes, e.g. cash, credit card, ATM, reimbursed, non-reimbursed, etc. High tech: I have done an Excel spread sheet where I'm recording the same data. My late mother-in-law, for all the years I knew her, lived very frugally, and always recorded every penny she spent. I can't honestly say I'm recording every penny, but it is enlightening to see where the money goes. I'll let you know next April (2009) how it ends up working for me! On a more sobering note, I have to think that my generation (Boomers) would be going into retirement in better shape if we had ended up with the same financial values as our Silent Generation and GI Generation parents. As we teeter on the edge of a recession (or so the economists are predicting), it occurs to me that in a country where 40% of the population doesn't remember when someone named Bush or Clinton wasn't President of the United States, we certainly have a lot of people who don't have any memory of 'hard times'--or even stagflation. We are careless with our money in our culture. We spend more than we earn; we have too high balances on our credit cards; our national savings rate is close to zero. . .and many Americans have bought (and borrowed for) way more house than they could reasonably afford. As a long-time REALTOR, I can remember when we used to print off an amortization schedule to give the buyers at the closing--we would then show them how to drop down to the next month, and make a principal payment, thus saving hundreds of dollars of interest, and paying the loan off early. (For newer agents: the bi-weekly mortgage hadn't been invented yet. ) We passed on to our clients the goal of owning their home free and clear--as soon as possible. We promoted a home's investment value based on the premise that a buyer would pay it off, keep it paid off, and thus (some day) go into retirement with a nice asset. A huge part of the mess we are in now is because people speculated in real estate. They bought property expecting that double digit appreciation would continue indefinitely, and the plan was to sell and get out, take the profits and run. Obviously, it didn't work that way for a lot of people. And, on top of that, they weren't speculating--or gambling (let's be honest) with 'mad money'--they were betting the family home. As REALTORS, let's encourage financial responsibility with our clients. Let's not urge them to buy more house than they can afford. Let's show them the benefit of paying a mortgage off early. Let's emphasize that the family home is many things--but a vehicle for speculation and quick profits is not one of them. let's urge everyone to get a little notebook and start figuring out where their money is going--and maybe resolve to save more of it.
Melanie J. McLane, ABR, CRB, CRS, ePRO, GRI, RAA, SRES SRS, 32 year veteran of the real estate industry. Offering training, speaking and consulting throughout the industry, I teach everything from ABR to USPAP. Certified ePRO Instructor. To contact me, email me at: melanie@TheMelanieGroup.com or visit my website: www.TheMelanieGroup.com
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My state legislature (Pennsylvania) is currently kicking around a number of ideas for property reform, including an amendment to the state constitution outlawing the use of real estate taxes to fund public schools. Apparently, the $1 billion dollars Governor Rendell promised we would get from slots and use for schools hasn't quite materialized. In some parts of the state, school taxes are quite high--several thousand per year. The spending per student varies widely, from as low as under $2000 per student per year to over $21,000 per student per year. It sure doesn't look very equal. We have 501 school districts in Pennsylvania, each one ruled by a local school board. The persons elected to school board range in intelligence, talent, and dedication from Moe and Curly to the caliber of a Andrew Carnegie, or possibly a Henry Ford. Some folks manage to get themselves elected to school board to right an old wrong (real or perceived), get their family members jobs in the district, or just grind another axe. A product of what was then, and still appears to be, a fairly decent public school district in Pennsylvania, I went on to college and majored in English Literature. It is my study of literature, and Charles Dickens in particular, that causes me to cynically say that I cannot ever envision my state (or any other state) eliminating property tax as a source of revenue for anything. Various Dickens characters, including some in Great Expectations referred to 'portable property'. Portable property was, and is, just what it sounds like: property you can move around with you. Easy to conceal in many cases (some extremely valuable items, like gems and precious metals are quite small), and therefore hard to tax. Real estate, on the other hand, is really hard to hide. I'll never forget a great story I got from a student in an appraisal class several years ago. As an icebreaker exercise, I told everyone, as they introduced themselves, to finish this sentence: "The weirdest thing I ever saw while doing an appraisal inspection was...." Well, the weirdest thing for Phyllis Riccadonna, from Elk County PA (if you don't know where, it's at the end of the world--turn left), who went out to do an inspection and couldn't find the house. She searched and searched, finally asking a man sitting in (what else?) a pick up truck next to a metal storage building where so-and-so's house was. "Right here" he replied, taking her inside the metal pole barn, where a complete ranch home was located. "I'm not paying taxes on a house" he asserted. Well, the roof on that place would probably not wear out...and it might be great house for someone who works third shift and wants darkness at noon...but back to the point--real estate is just too darn attractive for taxing bodies. It's there, it can't be hidden, ownership records are for the most part public--it is a tax collector's dream. So, although I'm watching the debate in my home state with interest....I don't think it has a 'dickens' of a chance.
Melanie J. McLane, ABR, CRB, CRS, ePRO, GRI, RAA, SRES, SRS, 32 year veteran of the real estate industry. Offering training, speaking and consulting throughout the industry, I teach everything from ABR to USPAP. Certified ePRO Instructor. To contact me, email me at: melanie@TheMelanieGroup.com or visit my website: www.TheMelanieGroup.com
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