Archive for February, 2009

If you don’t know what a destination club is, it’s probably because you don’t make enough money. A cousin to the better-known time-shares, it emerged as a popular new vacation trend about five years ago, catering to affluent and adventurous travelers who wanted to enjoy the comforts of a second home without worrying about the upkeep.

Club members would pay a one-time deposit starting at about $40,000 and annual dues of $3,000 to $100,000; in return, they’d enjoy access to hundreds of multimillion-dollar properties with something to suit everyone’s taste.

The recession has put a damper on the lifestyles of the rich and famous, however, as plunging memberships have forced some clubs into bankruptcy and left club management top-heavy with real estate, just as the market took a nosedive. Destination club members did not own the properties, but the annual dues they paid gave them access to the homes for a fixed number of days each year. In bankruptcy, club members would be treated as unsecured creditors, and many of their $40,000+ deposits evaporated.

Despite the industry’s contractions, at least some of its members remain loyal. According to one fan, “It’s a bummer, but we’re still open-minded.”

President Obama has said he won’t adopt a plan to tax drivers based on how many miles they drive instead of how much gasoline they buy, but governors in several states support the idea.

That’s because state tax revenue collected from gasoline taxes is sputtering. Financially strapped Americans are driving less due to the economic downturn. Gasoline taxes pay for the federal government’s upkeep of highway and bridge construction. More fuel-efficient vehicles, particularly electric cars, are also on the horizon, and state lawmakers fear they will reduce demand for gasoline even further.

A miles-driven tax is gaining traction in Colorado, Florida, Idaho, Massachusetts, Minnesota, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island and Texas amid growing recognition that new ways of funding the nation’s aging road infrastructure need to be found, according to MSNBC.  Last year, Congress made $8 billion of emergency funds available to close the gap between gas tax revenues and the amount of federally designated funds allocated for state projects. The gap between revenue generated by the gas tax and the cost of highway maintenance is expected to grow.

Under a mileage tax system, all new vehicles would be required to have an installed Global Positioning System (GPS) mileage counter; drivers could be taxed in the range of a quarter-cent to 1.2 cents for every mile driven. Drivers would pay the mileage tax at the gas pumps, eliminating an advantage some motorists who live near state lines now enjoy when driving across state lines to purchase gas that’s cheaper due to lower state gas taxes.

Angry drivers who say the idea is wrong on many levels cite privacy invasion issues raised by the use of GPS to monitor drivers, plus the belief that a mileage tax would discourage drivers from buying fuel-efficient vehicles, since they’d still pay the same as drivers of gas-guzzlers. Others say such a tax would unfairly burden those living in rural areas where nearly every errand requires a lengthy drive.

Currently, the federal gas tax is 18.4 cents per gallon, while state gas taxes range from a low of eight cents per gallon in Alaska (a tax that’s been suspended through August 31, 2009), to a high of 41 cents per gallon in New York, according to The Tax Foundation.

Do you think a mileage tax has any redeeming value?

Apparently, closing Connecticut’s budget shortfall of $1.35 billion this year is more important to the state’s governor than whether a bunch of drunk drivers are unleashed on Connecticut roads after drinking and gambling all night.

Governor Jody Rell has proposed 24-hour bar service at the state’s two casinos to match the round-the-clock legal drinking that already exists in Las Vegas and Atlantic City.

Right now, Connecticut’s casino the bars shut down at 1 a.m. on weekdays and at 2 a.m. on weekends. Democratic lawmakers want to keep it that way, arguing that to do otherwise would require more money be spent on law enforcement, patrols and DUI roadblocks.

“Drinking and gambling all night is not a responsible response to our deficit crisis,” said Senate President Pro Tem Donald Williams, the highest-ranking senator.

I have to agree. What is she thinking? This sounds like an incredibly shortsighted idea. We need to balance the state budget, but not with complete disregard for any other objective. Promoting all-night drinking at casinos just runs contrary to everything a lot of groups like Mothers Against Drunk Driving and the state police have worked hard for years to accomplish ⎯ a reduction in the tragic and senseless loss of lives due to drunk driving.

What kind of message does the governor’s proposal send? That state revenue trumps saving lives?

Bartering for what you want is, by all accounts, a booming business.

The New York Times reported recently that people are finding ways to exchange goods and services like haircuts, massages and carpentry when a trade is preferable than spending money.

A retired neighbor of mine manages the books for the owner of a local nursery. In exchange for her help, the nursery owner has done some landscaping and much-needed masonry work for her.

My mother, an artist, gets her tax returns done pro bono by a Manhattan accountant with a fondness for fine art.

It only takes a quick check of Craig’s List to see there’s a whole community of people who have figured out how to get what they want without exchanging money.

But here’s the bad news, a surprise for many people — according to the IRS, the fair-market value of goods and services received in exchange for goods or services must be reported as income in the year it was received.

That’s a pretty broad but unforgiving definition of “revenue.”

New-home construction is in the doldrums, but those homes that are being built are taking up a little less room than they used to.

The average size of homes has shrunk from 2,629 square feet in the second quarter of 2008 to 2,438 square feet in the third quarter, MarketWatch recently reported.

The economy and the environment seem to be conspiring to change our lifestyles in many ways, and Americans are beginning to discover that good things can indeed come in small packages.

For home buyers who are struggling with the bills, here’s a trend that just makes sense. Not only will your purchase price be lower, but you’ll enjoy other cost savings for as long as you own your home. It’ll cost you less to heat a smaller space in winter and to cool it in warmer months. You’ll pay less in property taxes on a smaller house, and you’ll spend less money furnishing a smaller space, too.

Design trends include a continued demand for energy efficiency throughout the home, but other trends are growing in popularity, too. Many of these reflect a desire to maximize the use of space in an environmentally-friendly way, including:

• Multi-purpose family rooms
• Outdoor kitchens and entertainment areas
• An emphasis on affordability
• Natural lighting
• Fewer luxury details, such as granite countertops or high ceilings
• More practical usage of wall space and entryways
• Freezers (In contrast to declining sales of other big appliances, freezer sales are up, reflecting the growing inclination to stretch the household budget via lower-priced bulk purchases. At the same time, there’s a greater interest in home gardens.)

Taxes are on everyone’s minds this time of year. For those of us who haven’t filed our tax returns yet, it may be of some comfort to know that Tax Freedom Day comes three days earlier this year, thanks to the government’s rebate checks.

National Tax Freedom Day arrives on April 23, 2009. That means Americans will have to put their noses to the grindstone for almost four months of the year, from January 1 to April 23, before earning enough money to pay their share of this year’s local, state and federal taxes. The Tax Foundation calculates Tax Freedom Day each year to demonstrate how much our government is costing us.

According to Tax Foundation president Scott Hodge, Americans paid more in total taxes in 2008 than they spent on food, clothing and housing combined.

Here’s how the Tax Foundation breaks down how much you work to pay for taxes and necessities:

Federal taxes: 74 days
State and local taxes: 39 days
Total taxes: 113 days

Housing: 60 days
Healthcare: 50 days
Food: 35 days
Transportation: 29 days
Recreation: 21 days
Clothing: 13 days

Because state taxes vary, Tax Freedom Day arrives sooner or later in different states. Alaskans celebrate Tax Freedom earlier than any other state, on March 29. In Connecticut, New Jersey and New York, Tax Freedom Day doesn’t arrive until May.

In these harsh economic times, almost everyone’s budgets err on the side of frugality, but one New Hampshire family is taking penny-pinching to a whole new level. Heather and Bourne Spooner want their family of four to live on $1,500 for one year! Yes, an entire year! Now that’s ambition.

The family set a goal to spend only $1,500 this year on all groceries and household and personal care items. They plan to achieve it by stocking up, shopping during sales and paying close attention to coupons. They’ve even sworn off dining out until their anniversary on Dec. 28.

And it seems they’re well on the way to their goal. The family, which includes two young boys, told MyFOXBoston.com that they’ve only spent $125 so far this year. Heather began her mission back in July 2008, feverishly clipping coupons and stocking up so the family would be prepared for their money-saving ‘09 adventure.

The family is documenting their efforts on their blog “Living on $1,500 for One Year.”

Their mission sounds like it requires a lot of discipline and even more time in the kitchen. I’m not so sure most would be up for the challenge — namely myself, and I’m only one person. That’s why this is one story I definitely plan on following. I’m very interested to see if the Spooners can pull it off.

Have you created a new 2009-specific budget for your family to cope in the current economy? Is it as severe as the Spooners’ 2009 fiscal plan? Has this family’s story inspired you to start one now?

A Reuters news story says the U.S. could be poised for a serious fuel-supply shortfall once the economy rebounds.

Why? Because U.S. refineries, responding to collapsing short-term demand, are postponing or cancelling more than $10 billion worth of scheduled upgrades and capital spending.

Valero Energy Corp., the largest U.S. refiner, as well as ConocoPhillips, Sunoco, Chevron and Marathon Oil, are all delaying projects. No new refineries have been built in the U.S. since 1976. Because refinery expansions take years to complete, short-term delays could spell trouble ahead.

If the economy rebounds too quickly, the imbalance could cause fuel prices to skyrocket. The greater the mismatch between production and demand, the rockier price changes could be.

“I think it’s fair to say we’re probably going to end up with higher-priced fuel because of these delays and postponements and deferrals, but that day of reckoning is at least two or three years away,” said Joseph Arsenio, managing director at Arsenio Capital Management in Larkspur, California.

There are multiple forces at work that all point to higher fossil fuel costs in the future — OPEC’s determination to get crude oil prices back in the $80- to $100-a-barrel range, surging demand for oil in China and India, and the arrival of peak oil production in many oil-producing nations. My feeling is that we’re going to need more than a few years to develop a viable alternative wind and solar energy infrastructure.

If you’re a teacher or health services worker in the southern United States, you’re in a pretty good position right now. If you’re not, and in need of work, you might want to think about a career change and/or relocating down to Dixie. That’s because a new Job Openings and Labor Turnover (JOLTS) report says that, despite December’s job openings hitting the lowest rate recorded since the report started eight years ago, there are jobs available in health services and education.

In a strange twist, though, the professional and business travel industries reported the most hires in December, as well as the most layoffs, discharges and retirements.

The report’s findings also revealed that the South fared better for the amount of open positions than the Northeast, Midwest and West, though job openings have declined overall in all four areas of the country. That’s not encouraging news, considering the barrage of headlines detailing thousands of new layoffs every day.

Other than pinpointing where the jobs that still exist are, this report basically reinforced what I (and I’m sure you) already suspected: people aren’t just getting laid off from one job, they’re being shut out of the job market almost entirely.

Even New York City, the epicenter of business and a town that inspired the theme of “if you can make it there, you can make it anywhere,” is predicted to reach a startling 10.5 percent unemployment — well above the 7.6 percent national unemployment average and far above the low end of the scale, like Idaho Falls’ 1.9 percent unemployment rate.

So this begs the question: Where are the out of work supposed to turn? The South I guess… or maybe Idaho Falls.

Have we reached a point as a nation where mobility is necessary to maintain some semblance of our former lifestyles? According to a recent survey, most Americans are willing to relocate if it means finding a job. In fact, “59 percent of employees say they’d be willing to relocate to another city for a new job and 44 percent say they’d be willing to relocate to another state, province or region for a new job.”

What about you? Are you willing to move? And do you think the current job market will lead to a population shift in some areas of the country?

Given the state of the economy and the frequent references to “the worst economic decline since the Great Depression,” I must admit to a new fascination with learning as much as I can about what the Great Depression was really like and whether what we’re going through now even approaches the hardships endured by Americans then.

What’s one difference between now and then? The food we eat at home.

Researchers analyzed 18 recipes that appeared in all seven editions of the enormously popular The Joy of Cooking, a cookbook that’s been around for 73 years. According to the New York Times, all but one of the recipes has increased in calories per serving, by an average of 39%. Researchers attributed 62% of the caloric increase to the use of different ingredients today and 38% to bigger serving sizes. Greater affluence today, the study said, permits families to use more fat, sugar and meat to replace potatoes, as well as more sauces.

So maybe when the government talks about sacrifices and making cutbacks, we should just replace the sour cream and the butter with leaner alternatives.