Giving is an important and integral part of personal and family budgets throughout the nation. As American’s we are blessed with an abundance, and with great abundance comes great responsibility. But are we forgetting our own communities by focusing our giving efforts on national and international tragedies?

No matter where you go in the world you will always find the needy. There are needs in Indonesia, needs in Haiti, and needs in Africa, and need elsewhere in the United States, but…

What about the needs right here at home? Extensive television coverage of major tragedies can easily command our attention. Local community needs, on the other hand, rarely grace our TV screens.

Does this make one need more important than another? Of course not. It simply means that the focus our media gives tragic global events can cause the needs of our local communities to slip under the radar when it comes to charitable giving.

Shouldn’t we focus on meeting the needs within our local communities before committing our support to other national and international crises?

Media tends to focus on sensational events

When disaster strikes, no nation responds with the speed or quantity of the United States… Yet there is so much unmet need at the local community level. Why? Do American’s care about the broader needs of other states and nations more than the needs of their own neighborhood?

I don’t think so. I think local needs often go unmet simply because we’re unaware of exactly what they are. It’s more sensational for media outlets to carry stories of global disaster than to talk about the homeless people living 10 miles away.

If we care to know the needs that exist right in our own back yards, we have to seek out that information ourselves.

How to find local need

If you are interested in giving locally, here are a few place to start:

1. Local churches – Many local churches actively support community needs. If you’re interested in seeing how your church budget is spent, ask to see a copy of it. Churches often keep open books and are usually proactive about giving attendees a breakdown of how charitable funds are being distributed.
2. Township and city halls – Another great way to discover local needs is to check with your local municipality. Many times they will have precompiled lists of all local charities complete with location and contact information.
3. The phone book – Crack open the phone book and look up your local homeless shelter or food bank. Next, give them a call or stop by to see what they’re all about.
4. Take a walk – If you really want to get a feel for the needs of your community, just take a walk or a drive around town… It shouldn’t take you long to discover local needs. This may be a little disorganized, and you don’t want to just hand over cash to strangers on the street, but taking a look around can open your eyes to things you never saw before.

Giving locally makes sense

As I was writing this article, my wife came home from work and told me about a local family that lost everything in a house fire last night. She gave a good portion of her the money from her miscellaneous cash envelope to help their cause. This is the exactly the kind of local tragedy that happens every day, but rarely receives the media coverage necessary to elicit enough giving to meet the need.

The following snippet from a local charitable organization expresses the point beautifully:

“Giving locally makes sense because you know where and how your charitable dollars are being spent. Local charities and non-profit organizations understand and embrace the interests and values of our community. Local charities have fewer layers of administration than international or national charities and more of your dollars are likely to go directly to delivering the service the charity or non-profit was established to provide. In the end, giving closer to home improves our city’s quality of life and helps to build a stronger local community.”

Give where your burden or passions lie

Ultimately, you should give where you feel called to give. If you feel that your charitable donations should go to the aid of a foreign nation, then you should follow your heart. If you feel inclined to work with the homeless population in your community, then do that. The most important thing is to give somewhere.

Where we give

Because we believe giving should be focused locally before being committed elsewhere, our entire giving budget is allocated to our church and our local homeless shelter. Once we become debt free, we hope to be able to expand and give much more, but that’s a story for another day!

Personally, I have never given to an international organization nor to support the tragedies in a state or country other than my own. This is not because I don’t care about other nations or other communities, but because I have limited resources and would rather see them resources poured into the place where my family lives, works, and plays.

While I don’t want to project my burden for giving onto anyone else, my view is that a locally-focused giving strategy would greatly benefit individual communities.

Where do you give?

Do you give? If so, do you give locally, nationally, or internationally? Or perhaps a combination of all three? What do you think of the idea of focusing on your local community first?

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In the absence of this bill, you would’ve had to wait until you file your 2010 taxes to claim the deduction. Instead, any donations made between January 12th and February 28th can be included in your 2009 filing. A similar piece of legislation was passed in the aftermath of the 2004 Indian Ocean tsunami that devastated parts of Thailand and Indonesia.

If you’re curious as to what sort of donation qualifies, here’s what the House version of the bill says:

A contribution is described in this subsection if such contribution is a cash contribution made for the relief of victims in areas affected by the January 12, 2010, earthquake in Haiti for which a charitable contribution deduction is allowable under section 170 of the Internal Revenue Code of 1986.

So… It has to be a cash contribution, and you’ll presumably have to prove that it was for relief efforts in Haiti if you’re ever audited. This shouldn’t be hard as long as you have a receipt from a relief organization that’s helping with the recovery efforts. If you’re looking for ways to donate, check out my list of organizations from last week.

Tax implications

Keep in mind that just because you can claim the donation for 2009 doesn’t mean that you have to. In some cases, it might actually be beneficial to wait and claim it in 2010. For example, if you’re not itemzing for 2009 but will be for 2010, then wait. Also, if you expect to be in a higher tax bracket for 2010, it might make sense to wait.

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» Matching Donations, Update #3
» Matching Donations Update
» Matching Foodbank Donations Followup
» Charitable Donations are Down This Year

• The American Red Cross has pledged an initial $1M in support. You can help support their efforts by donating online, or you can donate $10 by texting HAITI to 90999. Receipts for your text donation are available through mGive.
• UNICEF has set up a dedicated site for their relief efforts.
• Doctors Without Borders has also created a dedicated website for their efforts.
• You can support the Yele Haiti Earthquake Fund (started by Haiti’s own Wyclef Jean) by donating online, or you can send $5 by texting Yele to 501501.

For a more complete list of options, check out The Daily Beast.

As always, if you smell a scam, beware. You can (and should) check out charitable organizations using sites such as Charity Navigator, Charity Watch, BBB.org, or The Foundation Center.

Hat tip to Lifehacker.

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What is a donor-advised fund?

A donor advised fund is essentially an umbrella charity run by an investment company. You can make donations into an account over which you serve as an “advisor” and take an immediate tax deduction. You can then advise the company on how to invest the money, as well as when and where to direct the funds in the form of a charitable grant.

Advantages of donor-advised funds

The primary advantage of a donor-advised fund is that you can use it to aggregate charitable contributions in a specific year even if you want to spread the donations themselves out over time. This can help maximize your tax savings while giving you time to make prudent decisions about who gets what (and when).

Beyond the above, you can also directly donate appreciated stocks, mutual funds, etc., which saves you from paying capital gains taxes on them prior to the donation. While some charities are set up to take such donations, others aren’t. A donor-advised fund makes this strategy available to all.

Finally, if you make lots of charitable contributions, a donor-advised fund can simplify your paperwork. Instead of getting receipts from many individual charities, you get a single tax receipt. This is especially helpful if you want to donate securities, as outlined above.

Disadvantages of donor-advised funds

The biggest disadvantage of a donor-advised fund is that you technically lose control over the money. According to IRS guidelines, your contribution must both irrevocable and unconditional. While you are allowed to advise the fund on how to invest and when/where to donate funds in your account, all such moves must be approved by the fund.

In reality, this is less scary than it sounds, as the approval of grant recommendations is typically automatic as long as the recipient is a bona fide charity. In fact, I’ve never heard of a case where a legitimate grant request has been turned down. The restrictions come because the fund itself is technically the charity to which you’re donating.

Other downsides to donor-advised funds are management fees and minimum investment requirement. While the fees aren’t huge (typically less than 1% plus whatever expenses are associated with the underlying investments), they are definitely something to consider. As for minimum investments, the lowest values I’ve been able to find are in the $5k range for the initial contribution with subsequent contributions starting at $500.

What about taking credit vs. remaining anonymous?

If it’s important to you to receive credit for your donation (i.e., for the recipient to know who you are), then you’re in luck. Donor-advised funds allow you to name your fund (e.g., The Smith Family Charitable Fund) and will provide the recipient with contact details when they disburse the funds.

Conversely, if you’d prefer to remain completely anonymous, a donor-advised fund can provide an additional layer of isolation between you and the ultimate recipient. Thus, you can make truly anonymous donations

Who offers donor-advised funds?

Donor-advised funds are available through a number of mutual funds families, including Vanguard, Fidelity, Schwab, and T. Rowe Price.

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For starters, it’s important to recognize that everyone is different, and that you need to do what make the most sense for you. Admittedly, the idea of capping your savings is probably not for everyone. Also, even if you agree with my view that you really only need “so much money,” your target amount will most likely differ from mine, and that’s fine.

The backstory

A few months ago, J.D. Roth published an article entitled “What Next? The Third Stage of Personal Finance.” My article today was written partly in response to J.D.’s question, though I go beyond simply answering the question to propose a general financial practice.

In J.D.’s post, he said:

“Despite my increased wealth, I am not happy. I love what I do — I love writing every day and interacting with readers — but I do too much of it. I spend about 60 hours each week working on this site. I’m neglecting other parts of my life.

I’ve reached a place of financial security. My income is good. I save and invest. I don’t spend frivolously. Now I find myself in the enviable position of having to decide: Should I decrease my workload, or should I use some of my income to invest in the things that make me happy?

…

The entire reason I paid off my debt, increased savings, quit my job, and built a business was so that I could live a pastoral lifestyle. But I’m not living it. In fact, I’m working harder than I ever have before.

I love this job. It’s a joy and a privilege to do what I do. But I wonder: Am I burning myself out? Am I sacrificing time for money? Maybe thereís some middle ground. Or maybe it’s time to move to a new stage of personal finance.”

This “new stage of personal finance” is my challenge for the day.

A personal savings ceiling

In a recent video on Bankrate.com, a credit expert shared this single best piece of advice for saving more money:

“Figure out why you want to save. What is your goal? What is the intention for you to save money? Once you figure that out it makes it easier to save because you have something you’re reaching towards.”

Until about six months ago, these questions had never really resonated with me. Now that I’ve set a goal of complete financial freedom, I’ve given these sorts of things a great deal of thought. What most people fail to examine, however, is the question of “How much is enough?”

The idea that it’s possible to have “enough” has led me to the concept of a personal savings ceiling. In other words, as long as I have enough to lead a happy life, why not give away the excess?

For background…

• My goal is to build a substantive nest egg, and then live off my investment income, supplemented by income from my part-time, self-paced, passion-chasing hobbies
• I am already freely giving a portion of my time and my finances to worthy causes, and I consider this sort of giving to be one of the most valuable things I do in life

Now that I’ve formulated a solid plan for getting out of debt, living frugally, and saving/investing my money, I’m well on my way to reaching my goals. Yes, I still have a long ways to go, but that hasn’t stopped me from thinking ahead and working to define how much is enough.

Give it away

Anyone who has ever given to a worthy cause knows that it truly is more blessed to give than to receive. In the many comments left by readers in response to J.D.’s article, there were around ten mentions of giving. Most of the people who advised J.D. to focus on giving were already happily giving themselves, and were thus speaking from experience.

I intend to take this advice to heart, and have thus committed to giving away not just some, but all of my excess. I also intend to give of my time. If I’m successful in achieving my goals, then I won’t have to work a 40+ hour work week, and will have free time to do as I please.

I plan to continue on my current path of giving not only my money, but also my time. If I do not have to work a 40+ hour work week I will be free to do as I please. I plan to pursue my passions, to help myself, and to help others.

What do you think of my proposal? Have I indeed lost my mind?

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Preventing impulse buys

Perhaps the most important thing you can do to prevent clutter is to resist clever marketing ploys. Take a look around yourself. Chance are that much of the clutter in your house is the result of impulse buys that seemed like a great idea at the time even though they weren’t. In order to prevent these types of purchases, you need to learn to distinguish fleeting desires from genuine wants and needs.

Commit to asking yourself some questions before you buy:

• Do I really want/need it?
• How often will I use it?
• Where am I going to put it?
• What’s the worst thing that will happen if I wait?

If you answer these questions honestly, you’ll go a long way toward cutting down on your impulse buy and the clutter that inevitably results.

Combatting clutter once you have it

Despite your best intentions, chances are that excess stuff will gradually accumulate around your home. Be proactive if you don’t want it getting out of hand. Here are a few ideas for getting a handle on things:

Consider swapping with family or friends. Get together with your family and friends to swap furniture, clothes, books, movies, etc. This not only saves you money, it also keeps perfectly useful items out of the landfill and reduces the amount of idle stuff sitting around your home.

Donate items to a worthy cause. Aside from taking things to Goodwill, look for charities that need specific items. For example, Phones for Life and Donate A Phone are always on the lookout for used cell phones, and New Eyes for the Needy wants your old eyeglasses. In addition to clearing our some space and doing a good deed, your donation might also qualify for an income tax deduction.

Sell your excess stuff. Consider having a yard sale, or selling your stuff on eBay. You’ll free up some space, and you’ll also generate some cash that can be used for paying off debt, adding to your emergency fund, or saving for other goals.

Do you have any tips for preventing impulse buys or reducing clutter?

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1. Our Local Food Bank (Find Yours — My Review)
2. Our Local Homeless Shelter (No Review Yet)
3. Modest Needs (My Review)
4. The American Red Cross (My Review)
5. The Conservation Fund (My Review)
6. Unicef (No Review Yet)

All but the homeless shelter are holdovers from last year. We chose these because we believe in the work that they’re doing, and they all do a great job of putting our contributions to work. That being said, The American Red Cross has stumbled a bit in recent years, so we’re keeping an eye on them going forward.

As for our kids, who put aside 10% of their allowance for donation to a charity of their choice, two have selected the food bank, one has selected the the Red Cross, and one has selected The Conservation Fund.

Whichever charities you choose to support, I urge you to continue helping them despite the current economic conditions. If you can’t afford monetary support, please consider making non-monetary contributions. And if you’re at a loss as to how to find worthy charities, I encourage you to check out these sites:

• Charity Navigator
• Charity Watch
• BBB Charity Site
• Guidestar.org

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» From the Archives (December 23rd – December 30th)
» Charities of Choice 2007
» Charities of Choice 2006, Part III: Our Local Food Bank
» Charities of Choice 2006, Part IV: The Conservation Fund
» Five Ideas for Charitable Giving in a Bad Economy
» Charities of Choice 2006, Part II: The American Red Cross
» Charitable Donations are Down This Year
» Finding the Right Charity

Here goes…

1. Donate your time. Volunteers are the lifeblood of most charities. Consider volunteering your time to help out your charity of choice.
2. Donate used clothing. Do you have any clothes hanging in your closet that no longer fit? If so, consider giving them a second life by donating them to a worth charity.
3. Donate used household goods. Got any extra pots, pans, or other durable goods taking up space around your house? If so, why not donate them to someone that will make use of them?
4. Donate frequent flyer miles. If you have frequent flyer miles sitting around that aren’t likely to get used, consider donating them. Most (if not all) major frequent flyer programs allow you to donate your miles to charitable causes. Check with your program of choice for details.
5. Donate your blood. What’s more value than the gift of life? Check GiveLife.org for a local blood drive and then go donate.

If you have any suggestions of your own, please leave a comment.

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» Navigating the Recession
» Charitable Donations are Down This Year
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Thanks to all who donated, including: jim, C, Andrew, Jesse, Cap, Rachel, Crystina, Jacqueline, Jeremy, Kevin, Brian, Kenneth, Karen, Philip, Sudheer, David, Tom, Phyllis, Bridget, Amanda, AnnMarie, and Manon.

If you didn’t have a chance to participate, I’d still like to encourage your to look up your local foodbank and make a donation. While we’re no longer matching donations, your contribution can still go a long way.

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» Hurricane Relief Donations

A reader wrote in over the weekend and said that they wanted to extend the program by offering to match an additional $1000 in contributions. So… I’ve decided to extend this program through the end of this week. As before, all you have to do is make a donation to you local food bank, and then let me know about it.

What are you waiting for?

Hop on over to Feeding America to look up you local foodbank. Once you’ve made your donation, let me know.

For additional details, check our my original offer.

And thanks to those that have donated thus far: jim, C, Andrew, Jesse, Cap, Rachel, Crystina, and Jacqueline.

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» Conservation Fund: Matching Donations Followup
» Hurricane Relief Donations

There’s more than $450 $350 in matching funds left to be claimed, so please consider looking up your local foodbank and making a donation.

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» Matching Foodbank Donations Followup
» Charities of Choice 2006, Part II: The American Red Cross
» Buffett Makes Largest Donation Ever

For those of you that don’t keep up with this sort of thing, today is Blog Action Day. If you’re not familiar with Blog Action Day, it’s a day when upwards of 10k bloggers (myself included) band together to write about a topic that needs greater attention. Last year’s topic was the environment. This year, the topic is poverty.

Rather than simply writing about the poverty problem, I decided that I wanted to do something a bit more tangible. So… Like last year, I thought I’d try to raise a bit of money to help combat the problem.

Here’s how it works… My family will match all donations made this week up to $1000 $2000 total (extended! click here for details) with a donation of our own. Note that this will be in addition to our normal annual contributions, so it’s a true match. All you have to do is find your local food bank, make your donation, and then let me know about it. In order to simplify the record-keeping, all of our matching donations will go to our local food bank in a lump sum donation.

Feed the world in four easy steps:

1. Visit Feeding America to find your local foodbank.

2. Make your donation (follow the link directly to your local foodbank, or donate via Feeding America).

3. Let me know via e-mail to ‘nickel’ at this domain (fivecentnickel.com) or via my contact form (specify the amount).

4. Save your receipt… It’s tax deductible, after all.

For the most part, we’ll do this on the honor system, but I reserve the right to ask for proof of any questionable (in my opinion) donations. Proof would constitute a screen shot of your donation (or confirmation e-mail) — you will of course be free to blot out the sensitive parts (name, address, etc.).

Don’t worry, my goal here is to give the money away. I just don’t want someone lying that they gave a large amount and effectively ending the fundraiser early.

Assuming that people actually take me up on this offer, I’ll post a list of donors and amounts (I may post periodic updates, as well, depending on the response).

Fellow Bloggers: Make a minimum donation of $50 and I’ll include a link to your site when I post updates and/or the final list. Again, keep in mind that I might ask for proof, so don’t lie. If you do, I’ll out you in a very public way.

About Feeding America*

Feeding America is the nation’s leading charitable hunger-relief organization:

• A network of more than 200 member food banks and food-rescue organizations
• Serving all 50 states, the District of Columbia, and Puerto Rico

The Feeding America network secures and distributes more than 2 billion pounds of donated food and grocery products annually.

The Feeding America network supports approximately 63,000 local charitable agencies operating more than 70,000 programs including food pantries, soup kitchens, emergency shelters, after-school programs, Kids Cafes, Community Kitchens and BackPack Programs.

Each year, the Feeding America network provides food assistance to more than 25 million low-income people facing hunger in the United States, including more than 9 million children and nearly 3 million seniors.

*Feeding America was formerly known as America’s Second Harvest.

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Limits on contributions

For 2008, you can donate $2,300 to a candidate per primary, and $2,300 per general election. You can also donate $28,500 to a national party, $10,000 per state or local party, and $5,000 per political action committee (PAC). If that’s just not enough for your tastes, you can make limit-free contributions to a so-called 527 group, which is a candidate lobbyist group that isn’t subject to the same regulations as PACs (e.g., the Swift Boat Veterans for Truth in 2004).

Privacy considerations

Whenever you make a campaign contributions, you have to provide your name, job, employer, and address. Moreover, once your contributions to a candidate, party, or PAC exceed $200, the campaign is required to pass your info to the Federal Elections Commission (FEC) which then posts it on FEC.gov. A variety of other sites (such as OpenSecrets.org and FundRace.org) then display it in searchable databases.

Tax implications

Whether you donate to a candidate, a PAC, a party, or a 527 group, you won’t get any federal tax relief because political donations are not tax deductible. If you want to support your candidate of choice and receive a tax deduction, the best you can do is to donate instead to a charity that your candidate supports. For example, if your candidate supports universal healthcare, you can donate to Physicians for a National Health Program. Likewise, if you are strongly in the Pro-Life or Pro-Choice camps, you could donate to an appropriate charity whose views are in line with yours (and those of your preferred candidate).

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Mileage Related to Volunteering

While volunteering does not, in and of itself, produce any tax deductions, your travel expenses for getting to and from the volunteer location are deductible. And if you use your car once you get there (e.g., to deliver food to the needy), that’s deductible, as well. You can either claim the standard deduction of $0.14/mile or the actual cost of your gas. You can also include parking fees and/or tolls.

Out-of-Pocket Expenses

If you incur non-reimbursed expenses on behalf of a qualified organization, these expenses can be deducted as charitable contributions. Moreover, if your volunteer work requires that you wear a uniform, the costs of that clothing (as well as keeping it clean) are deductible.

Gifts of Appreciated Property

Donating appreciated assets (such as shares of stock) provides a dual benefit in that you avoid paying the capital gains taxes that you would’ve incurred upon the sale of these assets and you get to deduct the full value of the assets. Just be careful… If you’ve owned the asset less than a year then you can only deduct what you paid for it.

Just keep in mind that if your gift is worth $250 or more, you have to get a receipt from the organization to which you donated in order to substantiate your deduction. Also keep in mind that mileage-related deduction usually need to be documented. As such, you might not be able to take advantage of everything on this list for 2007. However, you should be in good shape going forward if you start keeping track now.

And here are some examples of the sorts of charity-related things that you can’t deduct:

» Contributions to an individual, regardless of their level of need.

» Contributions to a group created to lobby for law changes.

» The value of your time or services (such as lost wages while volunteering)

» Personal expenses (such as the cost of meals while volunteering)

» Appraisal fees for determining the value of donated property

Source: Bankrate.com

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1. Modest Needs (My Review)
2. The American Red Cross (My Review)
3. Our Local Food Bank (Find Yours — My Review)
4. The Conservation Fund (My Review)
5. Unicef

The first four are holdovers from last year, whereas Unicef is a new one for us this year; thus, I haven’t written about them previously.

Like the others, Unicef sports a four star rating from Charity Navigator and nearly 92% of their funds go to “program services,” with just 2% going toward administration and 6% going toward fundraising costs. Beyond this, we also believe strongly in their mission, which has a worldwide focus on children’s health and welfare.

Whichever charities you happen to support, I urge you to contribute whatever you can afford, especially given the recent news that charitable contributions are down this year while requests for assistance are on the rise.

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» Charities of Choice 2006, Part II: The American Red Cross
» Charitable Donations are Down This Year
» The Best of December 2007

Apparently a number of charities have experienced noticeable declines in donations this year. This isn’t terribly surprising given the economic challenges that we’re currently facing, but it’s a bit of a double whammy, as more people than average are asking for help this year.

So… Please consider spreading some holiday cheer by supporting your favorite charities.

[Source: Boston Globe]

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» National Tax Advice Day 2007
» Year End Money Moves
» Matching Donations to Your Local Food Bank

Every year in mid- to late-December, my wife and I make a point of going through our closets, the playroom, and the garage with the intention of purging our house of excess stuff. We both hate clutter, and this is also a great way to help out local charities. And now that we’re done having kids, we’ve been able to clear out a good bit of kid stuff in each of the past couple of years.

Beyond being incredibly cathartic, doing this can be pretty rewarding from a financial standpoint… Last year during tax time I spent a bit of time entering everything into ItsDeductible (free with Turbo Tax Deluxe) and, while it took me a couple of hours, it was well worth the trouble.

ItsDeductible assigns a fair market value based on prevailing prices at resale outlets and on eBay, and this value was consistently above what I would’ve otherwise used if I just had to pull a number out of thin air. In the end, we wound up with several thousand dollars worth of non-cash donations that turned into a really nice tax deduction. Of course, this number was inflated a bit by the fact that we moved during 2006, and thus donated more throughout the year than we otherwise would have.

The bottom line here is that, as long as you itemize your tax deductions, you can save yourself a nice chunk of money without going to the trouble of running a garage sale. This is especially true if you find yourself in one of the higher tax brackets — in our case, we’ll save nearly 40% of the value of the items that we donate when you consider both state and federal taxes.

Things to keep in mind:

Clothing and household items “must be in good used condition or better” to qualify for the deduction. That being said, you can claim a deduction of more than $500 for any single item, regardless of its condition, if your include a qualified appraisal of the item with the return.

You also need to keep documentation on hand to substantiate your deductions in case of an audit. First and foremost, be sure to get a receipt for your donation. You should also produce an itemized list of everything that you donate, and it wouldn’t be a bad idea to spread the items out and snap some pictures before dropping them off.

Finally, be sure to make your donation by New Year’s Eve at the latest, otherwise you’ll have to wait a year to take the deduction.

This article is part of the MoneyBlogNetwork Group Writing Project on year end money moves. Be sure to check out the other contributions to this project:

AllFinancialMatters – Time to Rebalance Your Portfolio
Blueprint for Financial Prosperity – Dumb Year End Money Moves
Consumerism Commentary – Use Your Flexible Spending Account Before It’s Too Late
NoCreditNeeded – Jump Start Your Debt Reduction…
FreeMoneyFinance – Make Your Charitable Deductions Before Year End
MightyBargainHunter – Grab Some Year End Bargains
Get Rich Slowly – Paycheck and Witholding Calculators for Year End Money Moves

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Related Articles at fivecentnickel.com:

» Flexible Spending Closed out at a Profit
» The Best of December 2007
» Storing our Stuff
» 401(k) Changes to Encourage Saving
» Preparing for our Moving Sale
» Leverage: Home Appreciation vs. Investment Perfomance
» Twelve Tips for Preparing Your House for Sale
» Twelve Commonly Missed Income Tax Deductions

1. Spend out your Flexible Spending Account. While you typically have until sometime early next year to make claims against your FSA, eligible expenses actually have to be incurred this year. So if it looks like you’ll end up having money left over at the end of the year, it’s time to get creative. Buy a new pair of glasses, stock up on eligible non-prescription medications, etc. If you don’t, you can kiss that money goodbye.

2. Make your 529 contributions for 2007. In case you’re not aware, contributions to 529 college saving plans need to be made by December 31st if you want them to count for this year. The reason for this is that 529 contributions are subject to the annual gift tax exclusion, meaning that a donor can contribute up to $12k to an individual each year without having to deal with gift taxes. The same goes for Education Savings Accounts (ESAs) — technically, you have until April 15th to make your contribution to an ESA, but such contributions are subject to the gift tax so making it before the end of they year has its advantages.

3. Modify retirement contribution amounts for 2008. I actually just did this two days ago. We got a late start on our maxing out my 403(b) and 457(b) last year, so our monthly contributions have been a bit on the high side. Thus, I turned in the paperwork to adjust them down a bit for 2008. With the holidays looming, this isn’t something that you want to leave until the last minute — in fact, my employer’s HR office closes down on December 21st and doesn’t re-open until after the New Year.

4. Charitable donations. This should go without saying, but December 31st is the last day to make charitable contributions and be able to deduct them from your current year’s taxes. So don’t leave things to the last minute like we did last year — if you do and any problems crop up, you won’t have time to get things straightened out.

5. Clean out the house. This should probably be lumped in with charitable contributions, but it’s cathartic enough that I thought I’d split it out on its own. Every year around this time we get serious about cleaning out our closets, the garage, etc. and donating our extra stuff to charity. Part of out motivation for doing this is to start the New Year with a clean slate, but an equally important part of our motivation is to capture a nice tax deduction before the year ends. Just be sure to get a receipt!

Like I said above, if you have any suggestions of your own, please add them in the comments.

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Related Articles at fivecentnickel.com:

» One Year Ago This Week (November 12th – November 18th)
» One Year Ago This Week (November 19th – November 25th)
» One Year Ago This Week (November 26th – December 2nd)
» Money Moves for 2006, Part 4: Your Health
» Money Moves for 2006, Part 1: Your Home
» Money Moves for 2006, Part 3: Your Job
» Money Moves for 2006, Part 5: Your Family
» From the Archives (November 18th – November 24th)

Steve T
Rocket Dollar
Blueprint for Financial Prosperity
rocketc
MoneyNing
Ask Dong
The Good Human
A reader named Ben
A reader named Kate
A reader named derek
A reader named Ryan

If you’re feeling charitable, I highly recommend making a donation to The Conservation Fund.

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Related Articles at fivecentnickel.com:

» Matching Donations, Update #3
» Matching Donations Update
» Matching Donations, Update #2
» Matching Foodbank Donations Followup
» Matching Donations to The Conservation Fund
» Food Bank Donation Update
» Matching Foodbank Donations Extended
» Charities of Choice 2006, Part IV: The Conservation Fund

The Good Human
A reader named Ben

Without naming names and saying who gave what, we’re up to $425 (without the match), so there’s a good bit of room left to go.

Remember… This offer is good through Friday.

Click here for more details.

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Related Articles at fivecentnickel.com:

» Matching Donations Update
» Food Bank Donation Update
» Matching Donations, Update #2
» Matching Foodbank Donations Followup
» Matching Foodbank Donations Extended
» Conservation Fund: Matching Donations Followup
» Matching Donations to Your Local Food Bank
» Hurricane Relief Donations

rocketc
MoneyNing
Ask Dong

Remember… This offer is good through Friday — and it’s good for readers, too.

Click here for more details.

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Related Articles at fivecentnickel.com:

» Matching Donations, Update #3
» Matching Donations Update
» Food Bank Donation Update
» Matching Foodbank Donations Followup
» Matching Foodbank Donations Extended
» Conservation Fund: Matching Donations Followup
» Matching Donations to Your Local Food Bank
» Hurricane Relief Donations

Steve T
Rocket Dollar
Blueprint for Financial Prosperity

Remember… This offer is good through Friday — and you don’t have to be a blogger to participate.

Click here for more details.

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Related Articles at fivecentnickel.com:

» Matching Donations, Update #3
» Food Bank Donation Update
» Matching Donations, Update #2
» Matching Foodbank Donations Followup
» Matching Foodbank Donations Extended
» Conservation Fund: Matching Donations Followup
» Matching Donations to Your Local Food Bank
» Hurricane Relief Donations

In honor of Blog Action Day’s focus on the environment, I’ve decided to try and raise a bit of money for The Conservation Fund (details about the Fund are below). Here’s how it works… My family will match all donations made this week up to $1000 total (through Friday) with a donation of our own. All you have to do is make your donation and let me know about it.

Save the world in four easy steps:

1. Go to the online donation page.

2. Make your donation.

3. Let me know via e-mail to ‘nickel’ at this domain (fivecentnickel.com) or via my contact form (specify the amount).

4. Save your receipt… It’s tax deductible, after all.

For the most part, we’ll do this on the honor system, but I reserve the right to ask for proof of any questionable (in my opinion) donations. Proof would constitute a screen shot of your donation (or confirmation e-mail) — you will of course be free to blot out the sensitive parts (name, address, etc.).

Don’t worry, my goal here is to give the money away. I just don’t want someone lying that they gave a large amount and effectively ending the fundraiser early.

Assuming that people actually take me up on this offer, I’ll post a list of donors and amounts (I may post periodic updates, as well, depending on the response).

Fellow Bloggers: Make a minimum donation of $50 and I’ll include a link to your site when I post updates and/or the final list. Again, keep in mind that I might ask for proof, so don’t lie. If you do, I’ll out you in a very public way.

About The Conservation Fund:

The Conservation Fund forges partnerships to protect America’s legacy of land and water resources. Through land acquisition, community and economic development, and conservation training, the Fund and its partners demonstrate effective conservation solutions emphasizing the integration of economic and environmental goals.

Land Conservation
The Fund helps local, state and federal agencies, and nonprofit organizations acquire property from willing sellers to protect open space, wildlife habitat, public recreation areas, river corridors and historic places.

Community and Economic Development
The Fund works with communities as well as different sectors of industry, including forest and chemical companies, developers, and ranchers to demonstrate sustainable practices that balance economic and environmental goals.

Conservation Training
The Fund serves as a national resource for environmental organizations by providing financial resources and technical assistance as well as formal training to land conservation professionals from all sectors.

The Conservation Fund spends an impressive 95.7% of their funds on program expenses, with just 3.1% going to administration and 1.2% going to fund raising. Charity Navigator rates them four (out of a possible four) start, and the American Institute of Philanthropy gave them an A+ rating.

Click here to donate now.

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Related Articles at fivecentnickel.com:

» Matching Donations, Update #3
» Matching Donations Update
» Matching Donations, Update #2
» Conservation Fund: Matching Donations Followup
» Matching Foodbank Donations Followup
» Food Bank Donation Update
» Matching Foodbank Donations Extended
» Charities of Choice 2006, Part IV: The Conservation Fund

On New Year’s Eve, I went to the Red Cross website to make a donation. I entered all the necessary information, including our contact info, the amount that we wished to donate, and our credit card details. I then hit submit. Everything seemed to go fine, and they promised to send an e-mail confirmation. The next day (Jan. 1, 2007) I happened to log into our credit card account, where I was greeted with the following message from Citi:

A review of this account has shown recent high-risk activity. Please contact our Customer Service Unit at 1-800-950-5114.

I called the number and learned that they had deemed our (attempted) donation suspicious, and they had thus refused the transaction. Huh? A charitable donation made on last day of the year is suspicious? I would venture to guess that a tremendous number of people in this country procrastinate and make charitable contributions on the last day of the year.

The real problem here (aside from the fact that the Red Cross never got their money) is that it’s now 2007, and it looks like we won’t be able to count our donation against the 2006 tax year.

When I brought this up to the Citi CSR, her response was that I should call the Red Cross to find out what happened (why? they’re not the ones that refused the transaction). She also said that, if it had been her, she would’ve called her credit card company immediately if she had trouble completing a transaction. Guess what? So would I. But as I made perfectly clear to her throughout the conversation, there was no indication of trouble on my end. The transaction appeared to go through and Citi made no subsequent attempt to get in touch with me. They just posted a notice on our account for us to see and respond to if/when we ever happened to login and see it.

When I pressed her on the lack of contact, she said that it had “only been a day” and they hadn’t been able to reach us yet. Hadn’t bothered trying is more like it — we were home continually from the time of the transaction until the moment I called, and our phone had been on the hook the entire time. She also stated that they have hundreds of thousands of customers, and can’t be expected to stay in touch with all of them. While I’m all for fraud prevention, this is way overboard.

I have since attempted to follow up with the Red Cross, even though this was in no way their fault (or mine, for that matter). Their donor hotline (1-800-435-7669) referred me to the National Donor Relations and Fundraising department at 1-800-797-8022. Unfortunately, they’re not set up to answer calls, and their voicemail system for requesting a callback seems to be broken — when I press ‘8′ to leave a message, I get error tones and a message saying that “Your call cannot be completed as dialed.” I have thus resorted to e-mailing their National Headquarters. I actually received a relatively quick e-mail response from an actual person, and am now waiting on a callback.

This will not, of course, stop us from donating to the Red Cross — I would just like to arrange for it to be credited in 2006 (for tax purposes), when I actually went through the motions of making the donation. But it is a major headache that I hadn’t counted on, and I place the blame squarely on Citibank. This also makes me wonder how many other donations didn’t go through, and how much money this will end up costing the Red Cross.

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Related Articles at fivecentnickel.com:

» From the Archives (December 31st – January 5th)
» The Best of January 2007
» Year End Money Moves
» Charities of Choice 2006, Part II: The American Red Cross
» Your Secret Credit Scores
» Charities of Choice (2008 Edition)
» Charities of Choice 2006, Part III: Our Local Food Bank
» Hurricane Relief Donations

Last year, our nine year old donated to The Conservation Fund, while ‘the middles’ donated to the American Red Cross. This year, however, they all decided to donate to The Conservation Fund (a total of $43.65 when they pooled their funds) and my wife and I decided that we would do likewise, on par with the contributions that we made to our other three charities.

So what’s The Conservation Fund all about? According to their mission statement:

The Conservation Fund forges partnerships to protect America’s legacy of land and water resources. Through land acquisition, community and economic development, and conservation training, the Fund and its partners demonstrate effective conservation solutions emphasizing the integration of economic and environmental goals.

Land Conservation
The Fund helps local, state and federal agencies, and nonprofit organizations acquire property from willing sellers to protect open space, wildlife habitat, public recreation areas, river corridors and historic places.

Community and Economic Development
The Fund works with communities as well as different sectors of industry, including forest and chemical companies, developers, and ranchers to demonstrate sustainable practices that balance economic and environmental goals.

Conservation Training
The Fund serves as a national resource for environmental organizations by providing financial resources and technical assistance as well as formal training to land conservation professionals from all sectors.

The Conservation Fund spends an impressive 95.7% of their funds on program expenses, with just 3.1% going to administration and 1.2% going to fund raising. Charity Navigator rates them four (out of a possible four) start, and the American Institute of Philanthropy gave them an A+ rating.

If you’re looking for a worthwhile cause to support, and you’re at all interested in conservation the nation’s natural resources, then I encourage you to consider donating to The Conservation Fund.

See also:
Part I (Modest Needs)
Part II (American Red Cross)
Part III (Our Local Food Bank)

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Related Articles at fivecentnickel.com:

» Charities of Choice 2006, Part III: Our Local Food Bank
» Charities of Choice 2007
» Charities of Choice (2008 Edition)
» Charities of Choice 2006, Part II: The American Red Cross
» From the Archives (December 23rd – December 30th)
» Charities of Choice 2006, Part I: Modest Needs
» Conservation Fund: Matching Donations Followup
» Matching Donations, Update #3

See also:
Part I (Modest Needs)
Part II (American Red Cross)
Part IV (The Conservation Fund)

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Related Articles at fivecentnickel.com:

» From the Archives (December 23rd – December 30th)
» Charities of Choice 2007
» Charities of Choice (2008 Edition)
» Charities of Choice 2006, Part IV: The Conservation Fund
» Charities of Choice 2006, Part II: The American Red Cross
» Food Bank Donation Update
» Charities of Choice 2006, Part I: Modest Needs
» Matching Foodbank Donations Extended

Beyond all the good that they do, the American Red Cross is a highly efficient charity. In fact, Charity Navigator give them four (out of a possible four) stars, and they spend just under 92% of all funds on program expenses, with just 5% going to administrative expenses and 3.5% going toward fundraising.

If you choose to donate to the American Red Cross, you can actually specify how you want the money used. For example, you can ask that your contribution go toward their national disaster relief fund, their international response fund, your local Red Cross chapter, their military services, their measles initiative, or their blood services campaign. Alternatively, you can ask that your contribution be used wherever the need is greatest — this is what we always do.

In case you’re curious, here’s their mission statement:

The American Red Cross has helped people mobilize to help their neighbors for 125 years. Last year, victims of a record 72,883 disasters, most of them fires, turned to the Red Cross for help and hope. Through more than 800 locally supported chapters, more than 15 million people each year gain the skills they need to prepare for and respond to emergencies in their homes, communities and world. Almost four million people give blood – the gift of life – through the Red Cross, making it the largest supplier of blood and blood products in the U.S. As part of the International Red Cross and Red Crescent Movement, a global network of more than 180 national societies, the Red Cross helps restore hope and dignity to the world’s most vulnerable people.

If you’re looking for a worthy charity to support, please consider making a donation to the American Red Cross.

See also:
Part I (Modest Needs)
Part III (Our Local Food Bank)
Part IV (The Conservation Fund)

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Related Articles at fivecentnickel.com:

» Charities of Choice 2006, Part III: Our Local Food Bank
» From the Archives (December 23rd – December 30th)
» Charities of Choice (2008 Edition)
» Charities of Choice 2007
» Charities of Choice 2006, Part IV: The Conservation Fund
» Charities of Choice 2006, Part I: Modest Needs
» Hurricane Relief Donations
» Five Ideas for Charitable Giving in a Bad Economy

Rather than adding charities to the fold, we’ve decided to focus on three core charities. The first of these, which I’m going to be talking about today, is a new one for us. It’s called Modest Needs, and I think the best way to portray what they’re trying to do is by taking a look at their mission statement:

Modest Needs exists to:

- Prevent otherwise financially self-sufficient individuals and families from entering the cycle of poverty, when this might be avoided with a small amount of well-timed financial assistance;

- Restore the financial self-sufficiency of individuals who are willing to work but are temporarily unable to do so because they do not have the means to remit payment for a work-related expense; and

- Empower permanently disadvantaged individuals who otherwise live within their limited means to continue to live independently, despite a temporary, unexpected financial set-back.

To this end, they offer the following types of grants:

Self-Sufficiency Grants – Modest Needs makes Self-Sufficiency Grants by remitting payment to a creditor for an expense on behalf of an otherwise self-sufficient individual or family for a relatively small, emergency expense which the individual or family could not have anticipated or prepared for.

In making a Self-Sufficiency Grant, our goal is to prevent an otherwise self-sufficient individual or family from entering the cycle of poverty as a result of the financial burden posed by a relatively small emergency expense.

For example, we might make a Self-Sufficiency Grant to cover the cost of an emergency auto repair that must be made if an individual is to continue working.

Back-to-Work Grants – Modest Needs makes Back-to-Work grants by remitting payment for a small work-related fee or expense on behalf of a temporarily unemployed individual.

In making a Back-to-Work grant, our goal is to provide a willing but temporarily unemployed individual with the means to return to work.

For example, we might make a Back to Work grant to cover the cost of a professional license renewal for a temporarily displaced worker.

Independent Living Grants – Modest Needs makes Independent Living Grants by remitting payment to a creditor for an expense on behalf of persons who are permanently unable to work but who nevertheless are living independently on the limited income to which they are entitled – their retirement income, or their permanent disability income, for example.

In making an Independent Living Grant, our goal is to empower financially responsible persons who cannot work to continue to live independently on their limited incomes, despite an unexpected expense which no conventional agency is prepared to address.

For example, we might make an Independent Living Grant to cover the cost of maintenance on a piece of accessibility equipment not covered by Medicaid, to cover an unexpectedly large prescription medication co-pay, or to assist with a large summer cooling bill.

Beyond engaging that work that we believe in, we’re also totally on-board with their financial efficiency – in fact, just under 93% of their funds go to “program services,” with the remainder going to program management (5%) and fund raising (2%). One of the really interesing things about Modest Needs is that you can view and rate the requests that they receive. Thus, if you’re so inclined, you can help to shape the work that they do.

A couple more interesting notes:

- 65% of Modest Needs recipients go on to become donors themselves.
- In 2006 they found an anonymous donor to match all donation, and they’ve renewed this arrangement for 2007.

If you’re looking for a worthy charity, please consider donating to Modest Needs.

See also:
Part II (American Red Cross)
Part III (Our Local Food Bank)
Part IV (The Conservation Fund)

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Related Articles at fivecentnickel.com:

» Charities of Choice 2006, Part III: Our Local Food Bank
» From the Archives (December 23rd – December 30th)
» Charities of Choice 2007
» Charities of Choice (2008 Edition)
» Charities of Choice 2006, Part IV: The Conservation Fund
» Charities of Choice 2006, Part II: The American Red Cross
» Five Ideas for Charitable Giving in a Bad Economy
» Charitable Donations are Down This Year

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Related Articles at fivecentnickel.com:

» From the Archives (November 25th – December 1st)
» American Cancer Society Charity Drive
» Finding the Right Charity
» Series I Savings Bonds Now Paying 3.36%
» Back to Basics – Suggestions?
» Charities of Choice (2008 Edition)
» One Year Ago This Week (November 12th – November 18th)
» Hurricane Relief Donations

Jim over at Blueprint for Financial Prosperity has just launched a charity drive to raise money for the ACS, and I’ve decided to chip in with $100 myself. We’re actually planning on doing a good bit more for various charities before the year is done, and I’ll be posting more details as we sort things out. But in the meantime, please consider supporting Jim’s cause by donating to the American Cancer Society.

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Related Articles at fivecentnickel.com:

» Finding the Right Charity
» Charities of Choice (2008 Edition)
» Charity Spotlight Series
» Hurricane Relief Donations
» Charities of Choice 2006, Part II: The American Red Cross
» How to Support Haitian Relief Efforts
» Charities of Choice 2006, Part III: Our Local Food Bank
» Five Ideas for Charitable Giving in a Bad Economy

Andrew Carnegie: $7.2 billion
John D. Rockefeller: $7.1 billion
John Rockefeller, Jr.: $5.5 billion

The goals of the Gates Foundation, which has been bankrolled thus far by $26 billion from Bill and Melinda Gates, include improving the quality of schools across the country as well as eradicating the world’s top 20 diseases, including AIDs, malaria, and tuberculosis… No word yet on whether or not they’ll tackle the common cold.

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» Citibank Refused to Process our Red Cross Donation
» How to Become a Millionaire – Tips on Getting Rich from the World’s Richest Man
» Food Bank Donation Update
» The Safest Banks: Everbank and ING are the Best
» Matching Foodbank Donations Extended
» Matching Donations to The Conservation Fund

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Related Articles at fivecentnickel.com:

» From the Archives (December 23rd – December 30th)
» Using ‘ItsDeductible’ to Figure the Value of Donations
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Another good site for checking out charities is Charity Watch, which is maintained by the American Institute of Philanthropy. Thanks also to Jeremy for suggesting Give.org, which seems to be akin to the BBB for charitable organizations. So there you have it. Go forth and give!

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Related Articles at fivecentnickel.com:

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» Charity Spotlight Series
» From the Archives (December 23rd – December 30th)
» Weekly Roundup – 02/02/07
» Charities of Choice (2008 Edition)
» Hurricane Relief Donations
» How to Support Haitian Relief Efforts
» Kids & Money: Setting an Allowance

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» How Much Does a Million Dollars Weigh?
» How Much Does a Million Dollars Weigh? (Revisited)
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» What Would You Do With a Million Dollars?

According to the American Institute of Philanthropy, the four top-rated charities offering relief directly to victims of Hurricane Katrina are:

Salvation Army (A)
1-800-725-2769

American Red Cross (A-)
1-800-HELP-NOW

Church World Service (A-)
1-800-297-1516

America’s Second Harvest (B+)
1-800-771-2303

Note that the letter grade following each charity reflects: (1) the portion of their budget that goes directly to program services, and (2) their fundraising efficiency (i.e., the amount of money that they spend raising money). Check here for a compilation of charities that others are recommending. And if you do decide to make a donation, be sure to notify FreeMoneyFinance, as he’s matching donations up to a total of $500 $1,000 $2,000.

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» Conservation Fund: Matching Donations Followup
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» Matching Donations, Update #3