Some anonymous spending polls for Christmas :)

For the family member ones, pick the person or people you would consider to fill that role (ignoring DNA unless you don’t want to ignore DNA).

Each one of these is a separate poll, so you’ll have to click the vote button for each one.  Sorry!

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Our annual charitable giving page

Time to get those charitable ducks in order, especially if you’re not going to be able to itemize under the new tax laws next year.

This year is probably a good one to do the Donor Advised Fund.  We’ve opted not to just because we want more flexibility right now with so much uncertainty, but your situation may be different!

Planned Parenthood : They need us more than ever before

RAINN :  help people impacted by sexual violence

CAIR :  Help Muslim victims of prejudice

Donors Choose (though, to be honest, I think the wobble chairs everyone in my [not poor] town wants are expensive and a waste of money– but there are a lot of teachers in lower income districts that want books and pencils and math supplies)  Note:  I am incapable of clicking on this without donating something.  I am such a soft touch for learning.  Ugh, #2 just sent me another link I had to fund.  Stahp!

WNDB:  We need diverse books!

ACLU :  One of the things standing in between us and fascism

EveryLibrary.org :  Helps political actions to fund public, school, and college libraries

EFF (the Electronic Frontier Foundation) seems pretty relevant right now

Emily’s List:  Help pro-choice women Democrats get elected to office!

Previous posts:  2016, 2015, 2014, 2013, (we have a couple posts in 2012 on charity, but I’m not finding a holiday one), 2011, 2010

Grumpy Nation:  Link us up to your favorite charities!

Stuff we’ve really enjoyed having this year

(besides books, though KJ Charles rocks!)

I love this teapot I got for my Birthday last year.  It is so easy to use and to clean, and it makes the right amount of tea for when you want, you know, a pot instead of just a mug.

Although you should probably not gift this to anyone, this home laser hair removal thing  has been fantastic.  I barely need to pluck my chin anymore at all (with the exception of a few white hairs that laser won’t get) and it’s been a few weeks since I’ve done even a touch-up with the laser.

I still really like my moleskin weekly planner, even though everyone else has switched to Google Calendar.

This Solo travel bag I got myself has been perfect for overnight travel without having to take a roller-bag.  For those who cannot part with the roller-bag, one of my colleagues swears by these packing cubes and will be getting them for almost everyone on her list this year.

This amazing lamp was everything I wanted and more!

DH loves this little pocket pen.  It is pretty clever.

Our in-laws love this ice cream scoop we got them, although it is not dishwasher safe.

#2 enjoys watching her DH play the latest Assassin’s Creed game.

Here’s a previous post on little things that just work.  I still get a lot of pleasure from using a high quality pencil sharpener.

What stuff has been “sparking joy” for you over the past year?

Switching away from Roth to Traditional retirement savings as a form of protest– even if it is suboptimal monetarily

The general conventional wisdom is that if you think you’ll be in a higher tax bracket now than at retirement, you should put tax-advantaged retirement (IRA/401(k)/403b/457b etc.) money in traditional retirement savings rather than in Roth savings.  That means you don’t pay taxes now, but you pay taxes later.  If you think you’ll be in a lower tax bracket at retirement, you should put your retirement money in Roth because you pay the taxes now, but will not have to pay taxes on the earnings later.

I have assumed that while our income will likely be lower in retirement, our tax brackets have a very good chance of being higher because they’ve been at historical lows and because we didn’t fix Social Security and Medicare when we had the chance, most likely we’ll be paying for big chunks of those out of general revenue (indeed, that’s the argument the last trustee of SS [Trump has not appointed any trustees, which is bad] made at a very depressing talk he gave recently).  So that would imply that for optimizing our wealth, we should do Roths now and pay the taxes now and live large on tax-free earnings later.  Of course, I’m not 100% sure that that’s going to happen or even that the US government will keep its promises about the tax-free status of the Roth vehicle.

So what I’ve been doing, as I tend to do when I have no idea what to do, is I’ve been using a 1/n heuristic.  Half my retirement money goes in traditional.  Half my retirement money goes in Roth.

If the Republicans pass their tax plan, chances are it will make even more monetary sense for me to put money in Roths– pay those taxes now because there’s no point trying to get my AGI down.

And yet… the Republicans are going to dig a huge hole in the national debt with their “no taxing rich people/no spending on investing in our future/spend a lot on the already rich and powerful” plans.  The US government is going to need my money more later when good people are in charge and the Republicans will have to face what they’ve done to the US sooner if they get less tax money now.  So I’m feeling like it will be patriotic to squeeze them now and pay more in taxes several decades down the line.  Even if that means that we end up with a smaller net worth when we die.

So… even though it’s a bit of paperwork for me… I think I’m going to change over all of my retirement savings to traditional.  Because the US government will need that tax money later.  I know it’s only a drop in the bucket for the US, especially given that they want to increase the deficit by well over 1.5 trillion this year alone, but I do what I can.

Of course, Republicans could mandate that all preferred retirement savings be in the form of Roth so they get taxed now instead of later.  And it sounds pretty likely that they’re going to make it so government employees can’t take advantage of both the 403(b) and the 457, which will cut my optional retirement saving in half.  That’s a way to punish high earning government employees (particularly those who don’t get much in the way of direct employer contributions) and a way to get good people to not want to work for the government (so either salaries would have to increase or other benefits would increase).  But I suspect these politicians don’t want competent people working as civil servants.  And they want to punish state and local employees, because why not.

How do you decide between Traditional and Roth options?

You can give your expensive shoes a longer life by replacing the inserts

[#2 already knew this, but didn’t tell #1 because it never occurred to her that #1 wouldn’t know this]

I was doing some post-conference shoe shopping (I <3 pikolinos!!) because the naot maryjanes I bought two years ago weren’t as comfy as they were, you know, two years ago.  The salesman, after selling me on a new pair of pikolino maryjanes that I am completely and totally in love with noted that I could extend the life of my naots by replacing the inserts because the sole was still going strong, I’d just worn down the insides.  So he sold me a pair of inserts (and a pair of sandals that I’m not completely in love with, but are comfortable and fill another need, since I don’t know when I’ll be at another Euro shoe store).

And he put the new inserts in my shoes and indeed, I no longer needed to buy the pikolinos, but I did anyway because I love them.  I have two more pairs of Naot maryjanes that can have their lives extended with new inserts as well, so I’m planning on going online and getting replacements.  Now, replacements are not cheap– $55 per pair, but that’s a lot less expensive than fancy new shoes.

I knew cowboy boots could be resoled and I knew Birkenstocks could be recorked, but I didn’t realize there was such an easy fix for Naots.  And who knows, maybe my beloved Pikolinos at some point in the future as well.

Do you repair your shoes, or do you just buy new when they wear out?

Ask the grumpies: How best to save for kids’ college

First Gen American asks:

I would love a post on savings bonds as a vehicle for college savings…pros and cons vs 529. Also is one better for high earners. There seems to be some language about earning limits on the tax deductability of the earnings but no penalty if not used for educational expenses.

Disclaimer:  We are not professional financial planners.  Before making important financial decisions, talk to a fee-only financial planner with fiduciary responsibility and/or do your own research.

According to this page from the treasury:

For single taxpayers, the [education] tax exclusion income limit [for savings bonds] is an adjusted gross income of $92,550 and above. For married taxpayers filing jointly, the tax exclusion income limit is an adjusted gross income of $146,300 and above.

So to me that says that savings bonds are not a good vehicle for college savings for high earners.  Maybe if they’re the kid’s and the kid is not filing as a dependent, but that seems risky too given how FAFSA and CSS heavily weight the kids’ savings (exceptions here).

Savings bonds are also a less risky, lower earning asset.  Given the lack of tax advantages for higher earnings and current interest rates, they’re not much better than CDs or high interest savings accounts for low-risk low-earnings savings and will also show up in financial aid decisions.

So… for both high and low earners in the “may get some financial aid” range, the best thing to do with your money is to put your savings in places that won’t count against your financial aid– so fill up retirement accounts (especially IRA Roths if you can since you can take out the principal on those in case of emergency), pay off credit cards, put money in home equity below what CSS forms pick up, fill up your HSA, and so on.  (Forbes magazine is probably the best place to look for these kinds of limits/suggestions.)  That may seem counter-intuitive that the best way to save for college is to hide money in ways that it is more difficult to tap for college, but financial aid is powerful and you can take out (short-term) loans for college but you can’t take out loans for your retirement (and taking out loans for your mortgage can be expensive and problematic).

AFTER you’ve hidden as much as you can, I still think the 529 in a state that either gives you a state tax break or, failing that, a state that has good Vanguard options with low fees is your best bet.  You could also do a Coverdell if your income is low enough (<220K in 2017 and 2018), but they’re not really any better than 529s unless you have private K-12 tuition that it could go towards, and the limit is pretty small.

If you are too high income to qualify for financial aid (and note that that income may be higher than you think) then you don’t need to play games hiding your income and savings because there’s not anything you could do to get things low enough for colleges to pitch in.  It may also be worthwhile in this case to push some savings onto the child so as to take advantage of the child’s lower income.  If you’re in this situation, don’t just read free advice from the internet– pay for a fantastic fee only financial planner with fiduciary responsibility and get all of your financials in order.

High earners and grandparents cutting down their estates may want to look into frontloading 529s with 5 years worth of 14K gift exclusions or, if they don’t want to force the money to be used for college, they can look into a gift trust.

How are you saving for kids’ college (if applicable)? 

We’re trying the “bunch your property taxes” thing

[HEY– TUESDAY IS VOTE DAY IN THE US!  MAKE SURE YOU VOTE!!!!  LOCAL ELECTIONS ARE IMPORTANT!   Also:

Ditto all the racist xenophobic mailers that have been going out.  We cannot let hate win just because we weren’t paying attention to state and local elections!

… END SOAPBOX.  VOTE.  ]

This is our first tax year without Wells Fargo paying our mortgage taxes out of escrow.

Our property taxes are 8K/year.  We have a choice of paying half before November and half in June, or paying in full in November.  That means it is possible for us to pay half in one year and 1.5 times the next, followed by half the next year and so on.  Alternatively we could pay 1x each year.

Given our regular charitable giving and other taxes, we’re right up against the standard deduction if we pay 1x each year.  So it makes more sense for us to try to bunch it into every other year.

So, this year I wrote out a check for half the property taxes and we’ll be taking the standard deduction.  We’ll put off our holiday charitable giving to January rather than December.  Next year we’ll itemize.

We’ll see how this ends up working out this year, and next year too.  Hopefully we didn’t make a mistake (especially given upcoming changes to the tax code)!  If a tax plan that limits the property tax deduction to 10K really does pass, then I will send out the second property tax check before December 31st and our annual charitable giving then too.  I put a note in our google calendar to double check on things sometime in December.

Do you itemize your taxes?  Do you play any fun games with timing for tax purposes?