Wednesday, June 30, 2010

Combating Hoarding Disorder - Throwing Things Away

Hoarding Disorder doesn't just happen. It sneaks up on people a little bit at a time. Being proactive in discarding things is one way to prevent this from happening.

Hoarding Disorder is becoming a more noticeable problem in this country. In addition to the raised awareness of the problem, I think there are other factors making this almost an epidemic. Mental illness is on the rise, I believe, as more and more people disassociate themselves from reality (aided by the television and other skewed social norms). Our extreme wealth (largely unnoticed by most Americans) allows us to accumulate more and more. Even recycling and environmental efforts are to blame, as it becomes harder, in many parts of the country, to even throw things away. Hoarders can now argue they are enviro-friendly "recyclers."

But beyond the problems of the hard-core hoarder, as illustrated above, is the tendency of most Americans to accumulate "junk". Most American homes are filled to the rafters with "stuff" they neither want nor use. Outdated electronics, old documents, gifts and souvenirs, free things that seem "too good to throw away", parts and bits that "I might need someday".

The typical American home is crowded with "things" and as a result is not an attractive or restful place to be. Many Americas have their garages packed with boxes of junk, while their expensive cars sit outside in the elements. Put the cars in the garage, throw the junk in the trash, not vice-versa!

The problem with all this stuff is that the reasons we save it all are identical to the reasons the hoarder gives in keeping old paper bags. "Someone might need this someday," they say, "And they're too valuable to throw away!" A hoarder might say that about their bag collection, but a non-hoarder might say the same thing about an old jar of rusty screws.

And the common refrain of many people is, "Well, it doesn't cost me anything to keep it."

The latter is particularly not true. If you have a piece of something that has even a residual value, and you have no realistic intent of using it, sell it. Otherwise, it will just decay or become obsolete and eventually be thrown out as junk (by you or your heirs) and no value will come of it.

I came to this realization the other day when we moved our patio lounger. It was an elaborate affair we bought in the Keys - the sort of beach cabana that the resorts use. While it fit perfectly by our pool, it was crowding our small dock by the lake and we rarely used it. I put it on Craigslist and a week later it was gone - and I had $125 more in my pocket. If I had kept it on the premise that "It doesn't cost me anything," I would have tripped over it for a number of years, until one day it decayed to the point where I would throw it away. By selling it, I get $125 and someone else actually uses it.

Obsolete electronics is another form of clutter many folks have. Old computers, monitors, televisions, tape decks (remember those?), cell phones, telephones, and the like, all crowd closets, basements, attics, garages, drawers, and the like. They are old, obsolete, and partially or fully broken. Yet we feel that they might be "worth something" and hang on to them. After all, we paid a lot for them at one time, it seems a shame to throw them away!

With the switch to digital television and flat-screen TeeVees, many Americans are finding that their old "tube" TeeVees are horribly obsolete, even though they still work fine. If you are not using it, sell it at a garage sale for a dollar - it is probably cheaper than trying to throw it away!

With audio equipment, the same is true. Records and Tapes are obsolete. And CDs are already on the way to becoming obsolete, in favor of digital storage devices. Cassette tapes are not making a comeback. And despite the occasional articles about the vinyl freaks out there, records are not making a comeback either. Sell or discard this stuff. Your record collection might be worth a few bucks to a vinyl freak, but then again, probably not. Your drugstore copy of "Boston" that you played until the grooves wore out is not a "rare collectible" but just a worn-out record. There is a huge distinction between the two!

And there is the rub with hoarding disorder and how it sets in to all of us. We see an article in a magazine, on TeeVee, or online, about how such-and-such is now a "valuable collectible" and we start to think that maybe our worthless junk is "treasure in the attic". The folks at "Antiques Roadshow" really should be horsewhipped for making people believe this nonsense.

You see this all the time in the car business. An immaculately restored and rare car fetches $1M on the auction block, so Cletus thinks his rusted out '87 Camaro is worth at least a hundred grand. It is a skewed perception of reality.

The other problem people have is that they think "Well, if I discard something, suppose I need it later?" And of course, the answer is, there will always be one or two incidents where you toss something out and later wish you hadn't. But to keep mountains of garbage on the premise that you might need one thing is foolish. Moreover, there reaches a point where you have so much junk, you can't find the thing you need - which is the same as having thrown it away.

Paperwork is a big problem here. Many folks save records from 10-20 years ago. "You never know when you might need that document!" they say. The IRS only audits back 7 years, so there is little point in keeping records older than that. So they drown in boxes and boxes of old papers. And since they are afraid of throwing away something valuable, they can't part with these old boxes of junk without going through them, page by page, which takes hours and hours, so they never do it. Or if they do, they spend five hours and throw away maybe 50 pages. This is not a cost-effective use of your time!

Here's a hint: If you are archiving old papers, put them in a box, and mark it with a date and a "destroy by" date. When the time comes, you can just toss the box in the trash pile, rather than having to go through everything in it.

Keepsakes, mementos, photos, and other "treasures" can be a problem as well. It is nice to have a few such things, but after a while, they can clog your life. While it can be fun to go back through such things and reminisce, the actual opportunity to do so might not present itself ever, in your lifetime - or your children's lifetime.

For example, my Mother took endless photos during her life. When she died, no one was really interested in taking over custody of her hundreds of boxes of 35mm slides. Since no one does "slide shows" anymore, and the context of the slides was largely lost with the death of the author, it is doubtful that anyone will ever view such things again. And transferring several thousand slides to a computer is not a task for the faint of heart. So the slides languish in a closet somewhere, until some day they will disintegrate into dust and eventually get thrown out.

I was chagrined to be foisted off with all of her genealogy materials when she died. I have no heirs, so no one will be interested in the family history once I pass away. Yet none of my siblings was interested in this stuff, even though they have offspring who might want to know, someday, where crazy Grandma got her crazy from. Off to the burn pile it will go, in my lifetime, or after I am dead.

Uploading such things to the Internet is one way of preserving them and perhaps making them available to future generations (provided they are cached somewhere in perpetuity). But few people think of this. Left in a box in the basement, they are on water-heater flood away from mildewed oblivion. What is the point in that?

Free things are also problematic. So-called "Gimmies" or "Goodie Bag" materials you get at conventions, often emblazoned with the logo of a sponsoring company. That ashtray seems too nice to throw away, yet you don't smoke. The thing to remember about such things is that they are worth what you paid for them. So while your nicely embroidered ID badge holder seems "too nice to toss", in reality it is just clutter once the convention is over. Many an office becomes cluttered in this manner, with logo'ed hand exerciser balls and post-it note pads.

Books are another problem area. Yes, they have value, and yes, it is nice to have a "wall of books" in your study. But when they start taking up boxes on the floor, the basement, or the attic, you may have a problem. Electronic books and readers are not some far-out future invention anymore - but a reality. Within the next 10 years, paper books will go the way of vinyl. Does this mean your worn-out paperback copy of Catcher in the Rye will be worth millions? Hardly. Hardbound books, particularly first editions or early editions are, and will be, worthwhile to own. If you have them, put them in a nice bookcase. If you have them in a box in your cellar, sell them before they mildew. But the airport paperback spy thriller you read on the plane? Disposable, largely.

You can sell the books you no longer want on Amazon and other outlets, and thus realize some money from the transaction. In fact, some folks make a business of this. If you have boxes of books in your basement, attic, garage, or anywhere that is not a book shelf, you may want to ask yourself why.

And that is an interesting point. As I noted in my earlier posting on Hoarding Disorder, one characteristic of the hoarder is that they don't take care of their things and let them degrade and get destroyed over time. When you toss something in a 120-degree attic, you are letting it degrade. Keeping it in your barn, garage, or basement - same thing. If you really want to hang onto something, then make an effort to take care of it - in climate-controlled storage. If it doesn't seem worth the hassle, then ask yourself why you are keeping it.

Owning things is a form of slavery. If you own enough "stuff" you become a slave to your possessions. Eventually, the mental weight of all these things can be enough to crush you - and for hoarders, this is a literal risk.

But for the rest of us, clutter in our homes and daily lives can have an effect on our psyche - even if it doesn't morph into full-blown hoarding disorder.

Being proactive in getting rid of "junk" is a good way of preventing hoarding tendencies from starting. Throw away things you don't need, don't use, have no intention of using, or don't want. Make it a periodic habit to clean out rooms and view them with a critical eye. The problem with junk is that it accumulates slowly over time, until and we don't even notice its there.

Doing things is better than owning things. That is the topic for my next blog entry...

Tuesday, June 29, 2010

Secret People

People who are unnecessarily secret are annoying as all get out.

You've run into these types of folks before. The Secret People, I call them. They want to keep their lives "secret" from everyone else - and yet they have no secrets really to keep. It's not like they are cross-dressing sheep-shankers or anything. The secrets they want to keep are things like what is their favorite breakfast cereal.

Why do they do this? Well, it is a power game. As I noted in my Information Hoarders article, some people like to hoard information just for the sake of it. They also fear that if they let out too much information, you will lose interest in them. So long as they can withhold data, they believe you will keep coming back.

And the sad thing is, they have no secret lives to reveal. And that is precisely why they try to keep things secret - so that you won't realize what shallow, stupid people they really are. And another game Secret People like to play is to tell you a "Secret", which of course, like their choice in breakfast cereals, is hardly a secret at all.

When you mention to another friend that the Secret Person likes Cheerios as well, well the Secret Person gets all bent out of shape. "How dare you tell them I like Cheerios!" they scream, "That was a secret!" Hardly, of course. But it is a way they use to manipulate you. Now they have got you feeling bad and guilty, and they can extract "favors" from you or otherwise control you. It is a pretty sick game. 

(Some) Women in particular, like to play this game, particularly with each other. "Don't tell anybody this, but...." is a common way they start a sentence. Here's a clue: Have a secret? Then keep it. If you tell people something, it no longer is secret. End of story.

It seems pretty axiomatic, but once you tell one person your "secret" it no longer is secret. Expecting others to hold your secrets for you is unfair to other people and just a sick, selfish game you are playing. If someone decides to "confide" in you, tell them in no uncertain terms that you are not their personal data vault, and that if they want to keep "secrets" to keep the information to themselves, or just let it go. 

Why is this? It is simple, really. If you let yourself become the "data vault" for one or more individuals, you'll end up, in no time, with all sorts of information in your brain, each tidbit tagged with a "don't tell so-and-so" label. The secret-teller has burdened you with this information, and you now have to keep it all straight. Over time, your head will overload with this sort of junk - who said what about who, and who you can tell and who you can't tell. You are being manipulated, pure and simple. Baited, really.

The law of probability suggests that eventually, you will lose track of who has clearance to know what, and you will inadvertently tell someone that Suzie like Cheerios. And they usually are bullshit secrets like that. Stuff that no one really gives a rat's ass about, but when made "secret" suddenly seems so important. Some people really need to puff up the pathetic excuse that is their lives.

So just say "NO" to being someone's patsy, and this means saying "NO" to being someone's data vault. If someone likes to keep secrets and is secretive, and asks you to keep their secrets for them, ask yourself why you want to hang with someone like this. Open, Honest People are much less hassle and easier to deal with. In this day and age, there is little you need to keep "secret" from anyone.

Even if you are a cross-dressing sheep-shanker, chances are, no one cares (they've seen it all on TeeVee). So why be obsessive about trivial matters? Secrecy rarely enhances the lives of anyone involved. The free flow of information and exchange of ideas enhances our society. The "need to know" mentality often means that the people who really need to know, end up not knowing what they needed, in time to avoid catastrophe.

If you think about it, nearly every major disaster in the history of humankind can be boiled down to a communications or information problem. And often this lack of information was caused when people tried to keep secrets. Secrets kept by governments rarely enhance national security, but often cover-up major gaffes made by government employees. Romeo and Juliette would be happily married today (the saying goes) if they had only had better access to information.

Secrecy rarely enhances, but almost always detracts. And there is the most insidious form of secrecy out there - the secrets people want to tell you about how they feel about other people. I personally detest this sort of thing and the shallow people who play this sort of game. I have written about this before in a number of blog postings, such as Pretend Friends and That's What Friends are For.

You get together with friends and the first thing they start doing is bitching about the person absent from the group. "You know, Suzie is crazy," they say, "Did you see what she wore to dinner last night?" and everyone laughs. Poor Suzie. And what makes it worse, is that Suzie thinks these people are her "friends".  And if asked, they will claim to be Suzie's friend as well.

The problem I have with this sort of talk, is that the next time I see Suzie, it becomes, well, awkward. The vicious comments her friends made the night before are still ringing in my head. And the problem goes beyond Suzie. Because you know the minute you leave the room, they are saying the same, nasty, spiteful things about you as well. Some friends!

And it gets worse. People will pretend to be nice to people they really hate, or who are their personal enemies. It is not good to have enemies. But this pretend niceness really makes me want to vomit. I'd rather say "Fuck You" to someone's face that to pretend to be nice to them and then stab them in the back at the first opportunity. Which is more direct and honest and which is more underhanded and deceitful? I don't play the "secret" game and never have.

My life is an open book. I have nothing to hide and I don't live in fear. If I like you, you know it. If I despise you, you'll know that, too. But you'll always know where you stand with me. If I slip a knife between your ribs, I'll be looking you in the eye while I do it, not assaulting from behind, like a coward, and then running away. Secrecy serves no purpose in life. Avoid it at all costs and avoid people who want to play Secret games. If they want you to withhold secrets from others, chances are, they are keeping secrets from you.

Secrecy is a pointless game. If you find yourself wanting to keep secrets, ask yourself why you think it is useful to keep secrets and why the data should be secret. If you have an opinion about someone that you don't want them to know, it is probably best to keep it to yourself. If you have a piece of data that you don't want someone to know, ask yourself why you are keeping it from them and why. And ask yourself if they would be better off knowing this data or not - or whether they have a right to know it. 

Being secretive and weird is just annoying. It accomplishes nothing, other than to make people feel their lives are more important than they are. And maybe that's the whole deal right there. Secret People don't want to confront the ultimate questions in their lives - what is the point and meaning of their existence. By creating unnecessary "mystery" they make themselves feel important and make their lives seem meaningful and rich. But it is all a self-deceit. How sad and pathetic.

Monday, June 28, 2010

Flat Tax?

A lot of folks are clamoring for a flat tax these days. Does it make any sense?

Flat taxers are often dismissed as kooks - along with gold-bugs, John Birchers, and other far-out political movements. Many characterize their desire for a flat tax as a way of "simplifying" the tax code and thus pooh-pooh their motivations as the desires of the ignorant - people who are too unsophisticated to understand tax credits, deductions, and depreciation or understand how to run TurboTax once a year.

But I think the point of the flat-taxers goes beyond that. Government in our country has used the tax code as both stick and carrot - to encourage people to engage in certain types of behaviors. Some may argue that these behaviors are good for the country, the economy, the environment, or the individual. Others might argue that these incentives (and dis-incentives) are also good for special interest groups.

100 years ago, if you could afford to buy a home, you paid for it on a short-term note, after putting down a substantial down payment. A surprising number of people actually owned their own homes back then, but it did require a lot of discipline to save the money to buy. Others rented, and saw nothing wrong with that.

Today, politicians tout the "American Dream of Home Ownership" as if it were the motivation behind the founding Fathers (who already owned their own homes, thank you). We provide all sorts of incentives to buy a home, from tax credits for first time home buyers to the mortgage interest deduction. We also allow rich folks (like me) to deduct mortgage interest on their vacation homes, if they have a mortgage on their vacation homes (I don't).

Is this good or bad? Like all things, it depends. Many economists would argue that when you create a tax incentive, the real effect is to raise prices. When home interest is deductible, the amount that a homeowner can pay per month goes up - and thus prices rise in a competitive market. And homeowners do this calculation when determining affordability of a home. It may cost 30% more to own than rent, but with the tax deduction, they figure it all evens out, and then hope to make something on the back-end in appreciation.

Without these tax incentives, home prices would perhaps be lower. And there's the rub - you could not remove these tax incentives overnight without causing huge disruptions in the marketplace - they would have to be phased out over 15 years or more. Frankly, the time to do this was during the big real estate boom - it may have dampened the enthusiasm somewhat. Today, even talking about such an action would cause the market to nosedive.

So the irony is, the tax code thus encourages people to borrow more - to buy their home and to buy more home. And the tax code encourages people to take equity out of their home to spend - rather than relying on consumer credit. So we have created a system of debt.

And it is not like people don't have money. No, but our tax system encourages them to put the money into stocks, not their homes, by making the 401(k) and IRA deductions so lucrative. So the average American, as I previously noted, has as much in his 401(k) as he owes on his mortgage. And the irony is, his 401(k) might be invested in mortgage-backed securities, so he is in effect loaning money to himself.

Of course, the investment bankers of America love this situation. We borrow money from them, and they collect interest and fees. Then we give them our life's savings, and they collect interest and fees. Unlike 100 years ago, where the industrious middle-class worker would put his excess savings into his home, we now have this complicated arrangement where, to chase after deductions, we put money into stocks and then borrow against our home.

The problem with this scheme is this: stocks can drop all the way to zero in value, whereas a home has at least a floor price. A worker can lose all of his retirement savings if it is in stocks and end up with nothing - and then lose his home, which is mortgaged. And all of this is because we've decided that paying off your home is a bad thing and investing in stocks is a good one.

There are numerous other incentives in the system, and they change from year to year. Tax deductions and credits are (or were) available for electric cars, diesel vehicles, hybrid cars, vehicles over 6,000GVW (as business expenses) and numerous other things, from wind power, to solar power, to whatever Congress decides what is good for us.

Is this carrot-and-stick approach to governance a good idea? Maybe. Maybe not. It causes people to engage in activities they ordinarily would not do - like build a wind farm. Are wind farms good or bad? Well, at the present time, they are uneconomical, if viewed in terms of cost per KiloWatt. We are building them only because of the tax breaks offered. In effect, we are voluntarily paying more for energy (in terms of government subsidy) than we ordinarily would, because we think it is a good thing to do.

Will this pay off in the long run? Perhaps. Perhaps eventually, the technological pump will be primed and these types of technologies will be cost-effective in their own right and people will switch to this type of power. And perhaps these projects will reduce our dependence on foreign oil and also make the environment cleaner.

Perhaps. Or perhaps like the home mortgage interest deduction, it will merely affect prices. If you build a billion-KiloWatt wind farm off the coast of Massachusetts, it will provide a lot of energy that is presently being provided by burning fossil fuels like oil, gas, and coal. As a result, demand for these fuels will go down. As we all know from school, or just basic life experience, when demand goes down, prices....plummet.

So the net effect of subsidizing these projects is to cause the prices of traditional fuels to drop, making them even more affordable (and making wind and solar even more unaffordable) which in turn means we will have to increase subsidies. Suddenly, we are in the power business and the Government is deciding which power systems are the best. Again, maybe this is a good idea or not, but let's not kid ourselves that by providing a tax incentive, all we are doing is "encouraging" activities. No, rather we are directing them.

And does this reduce our reliance on foreign oil or improve the environment? Initially, it may appear so, but again, if demand for fossil fuels decreases, then the prices drop as well. Suddenly, a "clean coal" plant is really cheap (although not really clean) and cheap gas encourages people to take a second look at that 8-liter Hummer they rejected only last year.

And that's the problem with incentives - unintended consequences. You may put in a tax incentive with the best of intentions, and have it all go horribly wrong as people try to game the system.

Take, for example, alternative fuel vehicles subsidies and vehicle depreciation rules. The former was designed to encourage people to buy alternative fuel vehicles (diesel) to get better gas mileage during a time of shortage (as if shortage wasn't enough!). The latter was designed to allow business to write-down the cost of a vehicle in a single year, provided it exceeded the 6,000 GVW rating.

The result was an orgy of buying of super-sized trucks. As one friend of mine in Arizona explained it, between the State and Federal tax credits and deductions offered, it was like getting a free truck. And the free truck was a 6,000 lb diesel Suburban or Ford Excursion.

Rather than saving the planet, we were encouraging people to rape it. Other makers followed suit - Hummer and even BMW, which introduced the X6, the first vehicle which used the IRS code as its design specification.

And increasingly, special interest groups are getting tax credits and tax deductions passed which favor their own special interests directly. Or, they get tax incentives passed that appear to favor the consumer, but in fact only encourage consumer spending in particular areas. A first-time homeowners tax credit is a fine thing, but does it help the consumer, the real estate agent, or the home builder or seller? The answer is, all three, and who lobbied for it? Certainly not the consumers.

And the problem with tax incentives is that they are like drugs. Once hooked, you can't quit, without going through painful withdrawal symptoms. As noted above, the home mortgage interest deduction could not be removed overnight without causing millions to lose their homes. Even the "first time home buyer" tax credit is proving hard to kick, as when the credit is set to expire, home sales plummet. The credit is quickly extended, of course, at the insistence of the real estate agents and builders of America.

Many folks argue that the flat-taxers are failing to realize that a truly flat tax will be a windfall to the very rich in this country, as it would lower their tax rates considerably and raise those of the working poor. This is a good argument, but it also has flaws.

To begin with, the very, very rich have ways of reducing or eliminating their tax burdens. Yes, they pay a lot of taxes, but they use every tax dodge in the book. Meanwhile, the middle class and upper middle class get socked, as they cannot afford to set up tax havens offshore, or engage in the number of other tricks used to avoid paying taxes.

Granted, the very poor pay little taxes in this country, but as such, they have little incentive to complain about taxes in general. If you pay nothing, then a new spending plan sounds like a swell idea. Tax somebody else, is the only tax plan that we can all agree on.

Our progressive tax scheme taxes you more (generally) as your income rises, until you reach a plateau where not only do your taxes drop (Social Security, Medicare) you can afford tax dodges as well, such as converting ordinary income into capital gains (see my earlier blog entry on this).

The problem with this scheme is that increasing taxes act as a disincentive to work at a certain point. If tax rates are high enough, the increased wealth from increased work, particularly for middle-class Americans, drops off precipitously as your income increases. This is, to some extent, why we do have a large middle class in this country. If you make $60,000 a year and your neighbor makes $100,000 a year, your actual spendable income may not be much different. He just pays a lot more taxes. And since he works 60-80 hours a week, he probably spends more in terms of commuting, meals, and other conveniences that allow him to work.

I have found in my personal life that this is true. Staying out of the highest bracket allows you to pay lower taxes. If you can structure your life so your "ordinary income" is low, well, you pay a lot less in taxes. And this also means that the opportunity to "make more money" is not as lucrative as it seems at first, as you don't end up making a lot more. People will turn away work, if the marginal profit from it is slim enough and the hassle is too much.

Again, unintended consequences of a tax incentive scheme. Or intended? If you offer lower taxes to people making less money, the incentive make less money. That does seem pretty simple, no?

Of course, all this debate on flat taxes is utter nonsense, as it will never pass Congress. Moreover, your Federal taxes are only a small portion of the picture and a clever way of hiding your overall tax burden. Property taxes are an increasing burden on Americans, and it is a subject that is not being talked about much. Many people are paying $5,000 to $10,000 a year in property taxes - an amount rivaling if not exceeding their Federal tax burdens. State taxes are taking an ever-increasing bite of the pie as well. And of course local sales taxes can represent 4-10% of your disposable income. This is not even counting things like staggering cigarette taxes, car taxes, and other specialized taxes.

Some have argued that you could eliminate the Federal income tax system entirely and raise money in other ways (you could even just print money and thus "tax" everyone equally through inflation). Regardless, the political will to install a flat tax system is lacking, and the disruption to the economy at this point would be severe. And since we are taxed in so many other ways, it would not have a huge impact on our overall tax bills.

Going forward, perhaps we could let some tax incentives expire and avoid creating new ones. This, I think, is where the "teabaggers" are coming from. In response to the recent recession, we instituted, in addition to a number of bailout programs, a number of tax incentives that only applied to certain groups of people or people making certain economic decisions. Cash for clunkers was a great program, if you had an old clunker and could afford a brand-new car. Usually, these are mutually exclusive groups, however.

While the intention of the program was good, the result was only that people who were in the right place at the right time could benefit from the program. Those of us who exercise fiscal restraint, and drove well-maintained older cars, for example, were not offered any kind of freebie. And that's where I think their resentment comes from.

Maybe, like a drug user hooked on crack, we need to wean ourselves of tax incentives as a means of trying to control the economy. The unintended consequences of incentives often cannot be foreseen and may cause more problems than they solve. Moreover, such incentives skew demand in the marketplace and thus do little more than skew pricing, leading to more unintended consequences.

I doubt it will happen. It is so much easier to just get another fix than to go into re-hab....

Normative Cues and the African-American Bandaid

People come in all colors, so why shouldn't band-aids? Or more concisely, why do most band-aids come in a color which represents the color of the ruling class of America? Subtle Normative Cues often fly far under the radar!

I have mentioned the term Normative Cues several times in this blog. I am not sure whether I heard this term somewhere before (from one of my Psychologist friends) or made it up, or heard it and applied it incorrectly.

What I do mean by the term, however, is subtle (or not-so-subtle) social cues in our society that tell you what is "Normal" in terms of behavior or the like.

Some of these cues fly so far under the radar that you might never notice them. And one was brought to my attention by a little old lady in Washington DC.

As a newly minted Patent Agent, my name appeared first in the list of Agents and Attorneys in the DC Patent Agent directory (due to zip code). I got lots of phone calls from folks wanting to get Patents. Most of them, when I explained the costs involved, thanked me and hung up.

But one persistent little old lady wanted to talk with me about her idea for an African-American Bandaid. Intrigued I listed to her story.

She pointed out to me that band-aids come in one color (or they did at the time) and that was a pink, "flesh" tone color - the color of white people (not really even a good match there, but better than for those of darker hues). She pointed out to me that every time a person of color puts on one of these band-aids, it is a reminder that their skin tone is not the "norm".

Her solution was to come up with a range of band-aids with designs on them, with African-American themes. She noted that people of all races come in a number of different hues, and that trying to make a "black band-aid" was just as pointless as making a pink one.

This sort of floored me. I had never thought about such things before. And the odd thing was, when I mentioned it to my friends, I got two types of reactions. White friends would say the whole thing was ridiculous, a tempest in a teapot, etc. and shrug it off. Black friends would give a knowing smile and say "well, you get used to things like that, I guess".

But it is true. And for a young black kid, every time he put on the band-aid, it stuck out like a sore thumb, and the fact that it didn't "match" made a statement as well.

At the same time, I was reading Jet magazine (I have a diverse reading list) and noted an article about an attorney in New Jersey who had a similar idea. He was marketing a rainbow pack of band-aids in different hues, in order to solve the color issue. The only problem with his approach, was that with all the different hues, once you used up the ones that matched, you had to resort to the less-matching colors.

I talked with him on the phone about his invention, and his comments were interesting. He said he pitched his idea to the bandage companies, and not only were they not interested in the idea - they were hostile to it.

But wait, it gets worse. Much worse.

Bandages weren't pink until the mid-20th Century, about the same era that saw the rebel flag made a part of the Georgia State flag and "Under God" was added to the pledge of allegiance. If you look back in time, bandages were white (polar white, not pink) or clear. The pink "skin tone" (an interesting term!) didn't become popular until the age of desegregation.

Sure, other color bandages have been available since then - white bandages used in hospitals, and even clear bandages.  And I've seen ads from the 1960's where the bandage makers have tried various patterns for children and even primary colors (red, blue, green, yellow, but of course, not black).  But the "pink" Flesh-tone bandage has been the mainstream bandage since about the 1940's.

I told the nice little old lady that I would try to make some phone calls and see if the bandage companies were interested in her idea. The results were disturbing. I wrote to one company and received no response. I decided to call to see if they got my letter. The operator who answered listened to me and then put me on hold for a moment. When she came back, she read, word-for-word, a written statement regarding the color of band-aids.

It was scary. Not only were they aware of the issue of band-aid color, but a number of people had called them about it - enough people to warrant a written statement to be read over the phone.

And it begs the question - if enough people are calling about it to warrant a written statement, why not look at this as a marketing opportunity?

Of course the problem with changing color is that it creates all sorts of new issues. No one color is "correct" of course. And as our country becomes more diverse, the pink color chosen in 1950 no longer works for a greater portion of the population. Hispanics and blacks may outnumber "whites" in the future. What are you saying when you sell pink band-aids to a society when pink people are a minority?

Things have changed since then (this was nearly 20 years ago). Clear bandages are becoming more and more prevalent (and solve the color problem by providing no color). I notice that some colored band-aids (and I am using the term in the generic sense, not the trademarked sense) seem to be darkening in hue (at least the cloth-backed kind). More and more band-aids, particularly those marketed for children, use colorful designs and trademarked characters, and thus avoid the color controversy altogether. And I have noticed, here and there, a few packages of band-aids offered in different colors (other than pink).

It seems the band-aid people finally get it.

But the point of this entry (and I did have one) is that Normative Cues can be very, very subtle. You may not notice them at all, as they fly under your radar. And when someone points them out, they are likely to be shouted down as being alarmist or a kook.

Crayola renamed its pink crayon, which used to be called "flesh" - and many people said that this was an example of "Political Correctness" run amok.   But in many cases, this "Political Correctness" is often merely pointing out normative cues, not necessarily arguing for changing them.   Normative cues are the bedrock that holds a society together - and beyond our laws and traditions, sets forth norms of behavior and interaction.   And when you say "your skin color is not normal" you are saying something very powerful - even if it is as subtly presented as in a box of crayons or bandages.

And again, this is not to say the Crayola people or the Bandaid people are racist Klan members, only that they are reflecting the normative cues of the society they are in.  And in our society, for many years, "flesh" colored meant pink.

When something is presented to you as representing a norm, you may not even question it. In any discussion, you should always challenge the premise before addressing the argument.

Perhaps the pink band-aid is not the end of the world. Perhaps not. As a white kid growing up, I never gave it a second thought. But I am sure every black kid, at one time in their life, put on that band-aid and thought about it, as the contrast in colors shouted back at them, you are not the normal color.

In your personal life, as well as with your personal finances, it pays to be sensitive to this type of subtle cue. Television bombards us with these sorts of instructions, telling us what is the "norm" for almost every minor behavior in our lives. For the large part, most of us accept these cues without much of a thought. Living well and living better require that you examine these cues rather than take them, much like a fish swallows a hook. You may find that you have been sold something you never wanted in the first place - and that you never realized you signed on for it at the time.


Some links of interest:

Note the Ebon-Aide website appears to be down and the domain name for sale....

Fun with Dick and Jane

When we were youngsters in school, our world view was very simple.

In the second grade, I learned how to read from the "Fun with Dick and Jane" series. I remember one book in particular, where Dick and Jane visit Grandpa's farm, complete with chickens, goats, cows, a red barn with silo, and friendly Grandpa on his tractor and motherly Grandma baking pies in the kitchen.

They never mentioned Silas, the hired hand, who drank too much. Or that Grandpa liked to listen to Rush Limbaugh and shout epithets at the radio. Or that Grandma was suffering from hoarding disorder.  Or that the friendly mailman was perhaps a bit too friendly.

In short, there were no crazy or criminal people in Dick and Jane's world.   Everyone was nice, happy, and world was a perfect place. And to some extent, it took the next couple of decades of my life to figure out that not only were there crazy people on the planet, but that perhaps most of them were crazy, to some extent or another. Contrary to what we were taught in school, crazy was not the exception, but the norm. Rational thinking is what is rare in this day and age.

Perhaps the first intimations that all was not a sunny Dick and Jane world was a lecture I was given in school, accompanied with a 16mm film, entitled "Stranger Danger". In the film, a man in a white, 1968 Pontiac Bonneville sedan drives around, offering candy to children if they will go for a ride in his car. We were told not to take the candy, under any circumstances. I asked, of course, if it were permissible to take the candy and then run away really fast, at which point my teacher started scribbling furiously in my "permanent record". To this day, whenever I see a white, 1968 Pontiac Bonneville, I think of Stranger Danger.

But for the most part, during my childhood, criminals and crazy people really didn't register on the Richter scale. The bad guys got caught every week on TV, within the confines of a 22-minute Cop show. Organized crime, corruption in high places, or in the corporate world wasn't talked about - and perhaps didn't happen as often as today. And crazy people, if they existed at all, were talked about in hushed tones.

Was our world always the way it is today, and as a child I was shielded from it? Or have we traveled down some sort of slippery slope since then, and like a frog being slowly cooked in a pot of water, haven't noticed the temperature change until it is too late?

Perhaps statistics would tell if the crime rate or merely our perception of crime has actually increased. One thing is sure, today, the Cop shows on TeeVee and the movies, often show the criminals getting away. Or the shows are about the criminals, with the Cops as the bad guys. Our cultural perception of crime and criminality has changed, to be sure. Crime is now viewed as inevitable, or an unsolvable problem, particularly with regard to organized crime and the "war on drugs". And criminals are often viewed as quasi-heroes in many books, films, and TeeVee shows, if not as victims themselves. Let's face it, when you watch the Sopranos, you rooted for Tony, didn't you?

As I noted in an earlier blog entry, the de-institutionalization of the mentally ill has made their presence in the community more noticeable. And the shame of mental illness, at least as characterized in 1960's terms, has largely faded away. Mental illness is no longer talked about in hushed tones anymore. But it seems these days, everyone is on an anti-depressant, and on every block there is one crazy-cat-lady or one hoarder. Perhaps this is a result of the general aging of the population. Or perhaps we are all getting a little crazier over time. Maybe its because of all those microwaves. Better wear a tinfoil hat!

But perhaps the saddest thing about our modern era is that the ideal of the perfect, friendly, and safe world of Dick and Jane is no longer viewed as desirable or realistic. We live in a world of a harsh new reality now, and you'd better get used to it, buster! Stranger Danger is the new primer for children. And as far as anything else goes, we'll I've got mine Jack, you get yours. It's a gimme, gimme kind of world now.

This new level of hostility is seen everywhere in common daily life and over petty occurrences. People tailgate like mad now, if they are convinced you are going 5 mph too slowly. Competition for something as simple as a parking place or a place in line is viewed as a life-or-death matter (and sometimes escalates into one). Perhaps this is an inevitable consequence of our more crowded society and an inevitable result of the population boom.

It may sound hard to believe, but when I was a youngster, in many places in your average town, there were vacant lots without homes on them. Land was cheap, and there was no pressing need to build on every last 1/4 acre. Even more unbelievable, there was land that was essentially abandoned or unused. Behind our home in Lake Forest, for example, was an enormous field that must have covered 100 acres or more. Today, of course, it is a housing development.

When I moved to Fairfax County in 1987, people actually farmed there. Today, the County is "built out" - there are no more undeveloped tracts of land anywhere in the county (other than Parkland and roadways). The population of the County is greater than the State of Vermont. In less than two decades, the landscape there changed dramatically. Multiply this times the many suburban areas across the country and you can see that America has irrevocably changed - forever - in the last few decades.

Of course, my parent's generation could say the same thing. Back when they were young, there were no "Sunbelt" cities or Interstate Highway System. Life was even simpler back then. That was their reality, and to their parents, it seemed hopelessly complex, what with the Model-T cars, radios, record players, and all.

So today's generation probably finds the present social climate acceptable, as it is the climate they are used to. But to me, it seems more and more like Hong Kong, in terms of population density, and less like Mayberry RFD. And even in the less densely populated areas of our country, it seems that social mores have changed irrevocably. People today seem more polarized and ready to pounce on one another, rather than to try to get along. It is all too easy to demonize whole populations on a whim.

Social and political issues have polarized small villages and towns. And often, these are silly disputes over nonsensical things. A town famous for its local potters is rife with controversy, over, what, I am not sure (white clay versus brown clay?). Villagers in another town are in a protracted 10-year dispute over the renovation of a local bar. Websites are started, names are called, and people are hung in effigy. It all seems rather silly to me. The idea of compromise and getting along seem to be lost. People want a winner-take-all solution, or nothing. And most often, they end up with nothing, other than lingering hard feelings that last for years.

It seems that something significant has been lost over the decades. For the average citizen, 30-50 years ago, there were moral rules that were obeyed in addition to the laws of the land. You didn't cheat people outright, or try to take advantage of someone to the fullest extent possible. We didn't have payday loans with 300% interest. The phone company didn't send out $3000 cell phone bills and expect to be paid. Banks didn't issue mortgages with "toxic" interest rate escalation clauses, and they certainly didn't issue them to people they knew couldn't pay them back. There was what you could do under the law, and then there was a set of unwritten moral rules on top of that. Certain things just weren't done!

Today, only the rule of law is the outer bounds for the behavior of many people - there are no moral obligations that restrain their behavior. And even the rule of law can be bent or broken if you have enough money or influence. Self-interest is all that matters, it seems, and it touted as the engine of free enterprise. So if you can fleece a customer, go for it. Never mind that long term, such actions will tend to suppress commerce, as consumers become wary of engaging in commerce. All that matters today is the quarterly profit or loss statement.

And for many, this also means using chicanery and strategy to get what they want. Can you manipulate public opinion or use procedural techniques to get what you want? Then do it. So long as it puts a penny more in your pocket, it should be done, regardless if the social cost is in the thousands of dollars.

Many on the Right decry the changes to our modern society and claim they want to return to the Mayberry or Dick and Jane society of the past. But others note that such nostalgia is somewhat selective. Crime and criminality existed back in those days, but was not as talked about - particularly corruption and organized crime. And the idealized view of the past fails to take into account the rights of minorities and women in those days. Not every one was content as Aunt Bea.

And of course, the irony is, the folks on the Right are the ones most likely to champion "self interest" as the best motivation for our economic engine. They fail to realize that unfettered self-interest, without an underlying values system, will not lead to a return to the innocence of Mayberry, but more of the dark Gotham City of Batman Returns.

And lest you think I am picking on the Right, the folks on the Left are no better. Folks in Ithaca, New York, like to tout their cultural and social sensitivities as a status symbol. But it is little more than that. They take a patronizing, and condescending attitude toward the "less fortunate" which does little to alleviate their plight (and most likely perpetuates it). Perpetual welfare - also something not mentioned in the Dick and Jane world. And intolerant? You'd find more flexible thinking at a Born Again Christian Convention than in downtown Ithaca. Ithacans are very liberal, tolerant, free-thinkers, provided you think exactly as they do.

No, creating a permanent underclass welfare state is not the answer either, nor is feeling sorry for criminals (at the expense of law-abiding citizens). The actions of the Left have only amplified the actions of the Right in this regard. Leftists are arguably worse than Rightists, in that they commit the additional crime of hypocrisy. They claim to own the moral high ground, but engage in the same selfish behaviors - for different reasons - than those on the Right.

So perhaps it is not realistic to "go back" to an earlier time - nor desirable. However, it is possible that we can change the society we are in? I am beginning to think the answer is "Perhaps not". Population pressure is what drives the changes to our society. As our country and our planet becomes more and more crowded, competition for resources - everything from rare earth metals to parking spaces at the mall - becomes more intense. Playing nice and living according to a moral code become, for many, a nicety that is not affordable.

So what was the point of this post? I am not sure I had one - or one that could be succinctly stated in 10 words or less. As I get older, I think more and more than the time I lived in was not a bad one, and I am not sure I want to see the time that comes after me. And perhaps every human feels this way. When I was born, we had already won the great war against fascism. We fought and won a cold war against Communism. We put a man on the moon (and haven't returned since). Our technology has advanced considerably since then, and things that we used to dream about in high school (miniature computers, portable phones) are now everyday consumer goods. And the rights of individuals in our society are greater than at any time in the history of our planet. Yes, there has been an upside to change over time.

And perhaps the kids of today see that upside and their children will see an even brighter future. The "war on terror" and the "war on drugs" will be won - or at least figured out. And maybe they will learn to get along with less hostility or need to scapegoat. Or perhaps they will just get used to it. Or perhaps it is just human nature for people to squabble and scrabble for every last handhold and advantage, like rats scrambling from a sinking ship.

Or perhaps that big comet will come and just wipe it all out. Either way, I'm good with it.

Sunday, June 27, 2010

Use 401(k) or IRA to pay off your Mortgage?

With hefty balances in their 401(k)s but crappy rates of return, and high balances and interest rates on their mortgages, many folks are tempted to cash in their 401(k) plans to pay off their mortgages. It probably is not a very good idea, however.

As more and more households face financial stress these days, many people are looking at the balances in their 401(k) or IRA accounts and wondering whether instead of struggling with mortgage payments, they should use the 401(k) or IRA money instead to just "pay off" the mortgage.

Is this a good idea or not? Like anything else, it depends on the circumstances. But in general, it probably is a bad idea, mostly due to the tax consequences.

If you are over 59-1/2, you can withdraw money from your 401(k) or IRA account without penalty. So for someone near retirement or contemplating retirement (or laid off late in life), such a move might be tempting. After all, if you've been laid off at age 60, you might not have the income to pay the monthly mortgage. But you might have the money in your 401(k) or IRA to pay it all off in one lump sum.

And as an "investment", a home these days, while not appreciating significantly, isn't likely to drop too much lower in value. People will still need places to live, and any home has a minimum value, even as a rental property. As a "safe" investment, it beats bonds and money market funds (offering 0.5% or less these days) in terms of the mortgage interest saved (5.5% or more) or even appreciation.

And since there is no 10%+ tax penalty for an older person, at least they don't get dinged that way.

However, there are other consequences.

For example, since 401(k) and traditional IRA money is not taxed when you put it into your retirement account, it will be taxed when you withdraw it. If you take out $300,000 in one lump sum to pay off your mortgage, you will have a hefty Federal and State tax bill - perhaps $100,000 or more - as you will now be in the highest income bracket (38.5% or more). So to pay off a $300,000 mortgage, you'd have to withdraw $400,000 to $500,000 from your 401(k) account.

(Income from cashing in your 401(k) or a traditional IRA is taxed as ordinary income, not as capital gains, as it was never taxed as ordinary income when you put it in.   A Roth IRA, on the other hand, is taxed when you put the money in - and is generally tax-free when you take it out - so the result may be different for a Roth IRA.   This article does not address Roth IRAs.

For us younger folks, the consequences are more serious, as there will be a 10%+ penalty for early withdrawal tacked on top of that.

But many people are having this idea as of late (Google it and see) and it does illustrate the fallacy of our tax-incentive based system:
  1. The average middle class person is encouraged to take on mortgage debt, because the debt is "tax deductible".
  2. The average middle class person is also encouraged to contribute to a 401(k) or traditional IRA as the contribution is "tax deductible".
  3. The 401(k) or traditional IRA is invested in a mutual fund, that in turn, invests in mortgage-back securities.
  4. So the homeowner is basically borrowing from himself, and lending to himself, but paying other people as intermediaries in the transaction.
  5. The mortgage-backed securities go bust, cutting the homeowner's 401(k) or IRA value in half.
  6. Housing prices tank, leaving the homeowner "upside down" as he was encouraged to borrow against his home.
  7. If the homeowner had put the 401(k) or IRA money against his mortgage, he'd at least own his home free and clear, instead of a bunch of worthless pieces of paper.
That is the problem with tax-based incentives, in a nutshell, and it does get one wondering why most of us spend our lives chasing after parts of the IRS code instead of doing what we want to do.  As I noted in my Should You Be Debt-Free? entry, using the tax code as an investment guide can be short-sighted.

Once you have invested money in your 401(k) or traditional IRA, it probably is too late to take it all out in one lump sum and pay off your mortgage - without devastating tax consequences. But the proposition does underscore the fallacy of using the IRS as your investment counselor. The overhead and transaction fees, not to mention the risk, in "loaning money to yourself" is rather high, as many of us are finding out, the hard way.

We put money in our 401(k) or traditional IRA and give it to financial institutions. We then borrow money from those same financial institutions in the form of mortgages. We thus put our lives at the mercy of bankers - and thus depend on the volatility of interest rates, property values, and stock prices.

Was this ever such a good idea? So long as stock prices continue to climb and interest rates stay low and housing prices are stable, it was a good model. When the whole thing reverses, however, we look on with envy at the guy who owns his own home, free and clear. Who's the Motley Fool now?

Some 401(k) mortgage plans allow you to borrow against the balance, provided you pay it back. The problem with this approach is twofold: First, the interest rate on such a loan is likely to be higher than on your existing mortgage. Second, the interest is not likely to be tax deductible, as it is not secured by the property. So as an alternative, I am not sure that is workable, either.

During the last election, President Obama discussed eliminating the 10% penalty in certain circumstances, to allow people to pay bills and save their homes. The proposition never came to pass, and it is not clear that it ever will, or that it could be used to allow you to pay off your mortgage. If such a proposal were passed, it would encourage people to cash in 401(k) money more freely, which would probably cause the markets to take a hit. So it likely will not pass.

Regardless of the political implications of the proposition, if you are considering such a move, it might be telling you something. If the monthly mortgage payment seems like too much dough, then perhaps you own too much house for your comfort and income level. Selling your home and moving to a smaller, cheaper place (or renting) might be a better move, in terms of cutting your cash flow requirements.

If you are over 59-1/2 and really want to do this, you should at least consider ways of reducing your tax burden. If you are laid off, for example, and are struggling to make the monthly mortgage payments, you might consider withdrawing from your 401(k) over a number of years, so that it does not put you in the next tax bracket and increase your tax burden.   Or at the very least, take out part in December and then the next part in January, so you can divide the amount over two tax years and hopefully put yourself in a lower marginal bracket.  Consult your tax adviser for more details.

But realistically, this may not work, as even a fairly small amount of money can put you in a high bracket, and if you stretch the payments out over, say, 10 years, then chances are, you are better off just making the regular mortgage payments. The net result is about the same. And hopefully, at this stage in life, you are at the point where the remaining mortgage payments are more principle than interest.

A better prospect might be to sell and move to a smaller home.  If you are stressed out over mortgage payments, that may be a sign you own too much home for your income bracket.   The advantages of this move are many.   First, you preserve your retirement account, so you have something to retire on.  Second, a smaller or cheaper home has lower taxes, insurance, and utility bills, so you cut your monthly overhead.   Third, if you have some equity in your existing home, you may be able to sell that home and buy a cheaper home and pay all-cash or take out a smaller mortgage.   Another option, of course, is to rent, and in many markets, the cost of renting a home is far less than the cost of owning - which makes no sense at all, but there you have it.

For younger people, the prospect of the increased taxes AND the 10% penalty make this an even worse proposition. Simply stated, there is no easy way to do this and not pay a staggering amount of taxes, at the highest possible rates.

And there lies the rub. The entire point of the 401(k) was to put money aside, tax-free, so you could take it out when you retired, at presumably a lower tax rate. Taking out a lump sum and paying a 10% penalty on top of that means that you are paying in at a lower tax rate and taking out at the highest. It reverses the whole point of the 401(k).

You would have been better off getting a 15 year mortgage back when you bought the house....

Note that for an investment property, it may be possible to use 401(k) money in a self-directed IRA to buy a property for investment. This cannot be a personal residence, however. I looked into this several years back, and talked with an adviser with an investment company that would manage the money in a manner consistent with IRS rules. The problem with this approach, at the time, was that it required that the purchase price of the property be equal to or less than the money in my 401(k) account (and I could not aggregate the money with my partner's). At the time, my 401(k) account wasn't large enough to make such a lump sum investment.

(Note that the link above suggests that you can "loan money to yourself" in a self-directed 401(k), but I am suspicious that this sounds literally too good to be true. They also suggest, that, contrary to the advice I was given, that you can borrow money to buy Real Estate, in addition to the money from the 401(k). Approach with caution!)

I suppose some clever fellow could figure out a way to form a sub-S corp, invest his 401(k) money in that, in a self-directed IRA, and then have the sub-S corp buy his house, which he would then rent back. This would avoid the tax problem, as you would not be "withdrawing" from your 401(k) but rather "investing" it. But I suspect such an approach would raise the ire of the IRS, as it would be too self-serving.

In addition, at retirement, you have to take out a certain percentage of your 401(k) and pay taxes on it every year. I am not sure how this could be done in such a scenario. I guess you could take out a percentage of stock from the Sub-S corp and transfer ownership to yourself and pay taxes on the valuation of the stock. That would at least allow you to space out your tax problems, but might instead cause a cash-flow problem (where do you get the cash to pay the taxes on the stock?). And of course, how you valuate the stock might piss off the IRS as well.

It is an interesting thought, though. Weirder things have been done and are now part of the code. The Starker Deferred Exchange, for example, would never have occurred, if a fellow named Starker hadn't forced the issue at one time...

UPDATED March 26, 2014.

Diagnosing Car Electrical Problems

Most car electrical problems, like the problems in any electrical circuit, can be traced to the power supply - in this case, the battery.

Note:  See my companion articles on Mysterious Electrical Gremlins and Understanding the Check Engine Light.

On online car forums, you often see postings about car electrical problems. And you may hear questions about car electrical problems from friends and acquaintances. In almost every case, the scenario is the same, and the cause the same, and yet people end up spending 2-3 times more money than they have to, in order to fix the problem. As I will note in a subsequent blog entry, people are often irrationally afraid of repair bills, and as a result end up spending hundreds, if not thousands of dollars more in repairs, in an attempt to avoid a repair.

The typical car electrical problem starts out as follows:
"I went out to start the car this morning (boy was it cold today!) and when I turned the key, it just clicked - nothing. It was fine yesterday, so it can't be the battery. I had a friend jump-start the car and it ran fine after that, so it can't be the battery. The car ran fine all day and started OK after work so it can't be the battery.  I went to the mall and when I came out, it did the same thing again! I had someone jump start the car and it ran fine, so it can't be the battery. There must be a short circuit somewhere draining the battery! Can anyone help me?"
The common thread on these postings or inquiries is always the same - the questioner immediately dismisses the battery as the problem, when in fact it is often the most likely problem. Once they put these blinders on, the problem becomes "mysterious and unsolvable" merely because they irrationally discard the most common solution.

Car batteries are much better today than they were even a few years ago. I've had batteries last as long as 9 years in a car, which is amazing. Only a few years back, the "60 month" DieHard car battery from Sears was considered the top of the line. Technology has improved over time.

But car batteries can fail at any time, even when brand new. And although they can last as long as 9 years, typically most fail in the 5-7 year range, if not before. And cheaper batteries might not last even that long.

The failure mode of car batteries appears sudden, which is something that confuses people.  Most folks' experience with batteries is based on flashlight or other consumer product batteries.  A flashlight battery fails slowly over time, getting dimmer and dimmer, until one day, it is a mere flicker and then goes out. Consumers think that this gradual failure mode applies to car batteries as well, which is why they dismiss the battery as the problem when the car "suddenly" fails to start.

A new car battery, fully charged, should be putting out about 13.5 Volts. Yes, it is a 12-volt battery, but if it actually is at 12 volts, it is partially discharged - actually mostly dead.  At 11.5 Volts it may not start the car.  Below 10.5 Volts it is basically dead and may cause all sorts of weird things to happen in the car (car alarm going off, etc.).

So the level of charge and voltage is not linear.  It is not like the battery is half-charged at 6 Volts and fully charged at 12.  More like half charged at 12 volts and fully charged at 13.5  Most consumers don't get that, and if they are smart enough to put a voltmeter on the battery, wonder why the car won't start when the battery is showing 11 volts, which they think of as 11/12ths charged.  11 volts is pretty much dead.

The other thing consumers fail to realize about car batteries, is that they don't have a lot of depth of charge, and this depth becomes shallower over time. As a car battery ages, it may hold little more than a surface charge.   There is enough charge to crank over the engine and start the car - once - before the alternator kicks in and recharges the battery, which in turn will now have just enough charge to re-start the car - once.

On the first cold day of the year, where the engine needs to crank a little harder or longer, or the first time the driver leaves the dome light on for a few moments too long, this surface charge isn't enough to start the car, and "suddenly" the battery appears to fail.  "Gee, it worked yesterday," the owner thinks, applying his flashlight battery experience to the situation, "it should work today!"

If you have a fine ear for such things, you may notice that, just prior to failure, the starter motor is cranking a little slower than before.   But the change is very gradual and most folks don't notice it in time.  On the other hand, you will notice how the starter motor spins much faster once you replace the battery, as the contrast is noticeable.  But it is not like in the movies where the car cranks slower and slower - at least anymore.  Modern starter motors stop cranking at all, once the voltage drops below 11.5 or thereabouts.

Thus consumers are so quick to dismiss the battery as the source of their troubles, as the car doesn't crank at all, but merely "clicks".  The consumer thinks this "click" is an indication of some sort of mechanical trouble, and often blames the starter motor.  However, when battery voltage drops down to about 11.5 volts or less, there is not enough juice to turn the starter motor.  The clicking you hear is the starter solenoid pulling in, a sound you don't normally hear as it is normally drowned out by the sound of the engine turning over.  But chances are, if you hear a "click" you have a dead battery.

So how to you diagnose and fix these problems?  As I noted in the header of this piece, in any electrical circuit or device, the most common failure mode is in the power supply.  So when diagnosing problems in any electrical circuit, the first thing an Engineer does is check the power supply.  In this case, the battery.

With the car off, your battery should be at 13.0 to 13.5 volts, once it is charged.  If it won't hold a charge, well, end of story, buy a new battery.  Anything from 12.5 to 13.0 Volts is suspect, and if you are having problems and the battery is of any age at all, I'd replace it.  Below 12.0 volts, your battery is likely shot.

With the car running, by the way, the voltage should be 13.5 to 14.5 Volts, which also confuses a lot of consumers. A battery won't charge unless the voltage applied to it is greater than its basic voltage (otherwise current won't flow).   So to charge a battery that is nominally 13 volts, you need 13.5 to 14.5 volts to make things happen.  If the car is less than 13.5 volts when running, you may have an alternator problem - but more about that later.

Most auto parts stores or auto centers will test your car battery for free - either in the car or with it removed.  Such testers will test the battery under load as well, and provide a more complete diagnostic than mere voltage level.

However, car batteries are cheap (usually less than $100) and if they are more than 4 years old and you are having problems, it is a good idea to just replace the battery to eliminate this as a potential problem source in your diagnostics.  This is particularly true if you live in a cold climate and winter is coming.   If your car has an older battery and winter is on its way, it might not be a bad idea to buy a new battery, just so you don't get stuck somewhere on a cold night.  It is cheap insurance and less costly than calling a tow truck.

You can install a battery in a car yourself pretty easily, but with modern cars, there are some considerations to take into account.   Some car radios (such as in BMWs) have anti-theft codes that need to be entered after the power has been removed, so make sure you have these codes before removing power to the car.

In many cars, self-learning computer systems may have to "re-learn" themselves when you put in a new battery.  So, for example, in my Ford pickup, the transmission will shift poorly for the first 50 miles after installing a new battery.

Most modern cars will also set off the check engine light if voltage drops below 10.5 volts, as "low voltage" may be one of the error codes.   Moreover, low voltage may trigger spurious error messages as well.   If your car has been jumped a number of times, chances are, you'll get a CE light, which will need to be reset.

Other flaky things may happen if your battery is disconnected.   My BMWs, for example, set off the brake and ABS lights when power is removed.  Once the car rolls a few feet, the lights reset themselves. There are some folks who "transplant" batteries into a car, using a jumper cable or charger, to keep power to the car when the battery is being replaced, to avoid problems.  The only problem with this approach is that the positive (+) battery cable is "hot" when disconnected and can spark if allowed to touch ground.

And speaking of which, when disconnecting a car battery, always do the negative cable first. When connecting, do the negative last.  If you disconnect the positive first, you may shock yourself if you are touching the positive terminal (with your wrench) and your body touches a ground on the car body. Similarly, if you connect the negative first, when you connect the positive, you increase the chance of electrocution.

CAUTION:  A charging battery produces hydrogen gas.  If you connect or disconnect jumper cables while a battery is charging, it may cause a spark and ignite the hydrogen, ,causing the battery to explode and showering you with sulfuric acid.  Wear safety goggles and perhaps shut off the car before disconnecting the jumper cables.  Better yet, get out of the habit of jump-starting cars.

Thus, if you are at all uncomfortable or unfamiliar with the process, have a mechanic replace the battery. People who are not handy with tools should avoid the process.

The second problem with the "it can't be the battery" people have is that oftentimes their battery problems morph into alternator problems.  It has happened to me, so I know.   My truck sat for long periods of time between use and when I went to start it one day, it wouldn't start.  I jumped the battery and it worked fine.  Over a period of a month, the car stereo and other electronics pulled down an older battery to the point where the truck wouldn't start.

The problem was, once I jump-started the truck, the alternator had to pick up a huge load to recharge a totally dead car battery.  For the old generators and alternators of the 1950's and 1960's, this was not a big problem.  But today, with weight a paramount concern for carmakers, alternators will not put out sustained high currents, without overheating.   A modern alternator may be rated for 100 amps or more - but only intermittently, not continually.

As a result, my truck battery went dead again. And when I bought a new battery, the problem persisted. The new battery appeared not to be holding a charge. I checked the system voltage and realized that my alternator wasn't charging.   In fact, the windings had melted together and shorted out. (It should be noted, that when it comes to "there's a short somewhere", the alternator is usually the culprit.   A shorted alternator can drain a car battery, even with the ignition off).

Lesson learned, I bought a rebuilt alternator.  On the box were explicit instructions NOT to try to charge a dead battery with the alternator - they just can't handle the load!  I was lucky, others are not as lucky. Some folks continue this route, running a brand new battery dead again and again, and then smoking new alternators one after the other.  Several alternators and batteries later, they sell the car, convinced it has an "unsolvable" electrical problem.

You see, in addition to being basically dead at 11 volts, a car battery is not a deep-cycle battery.  As a result, you can destroy a brand new car battery (or severely shorten its life) if you leave the lights on and run the battery totally dead a few times.  Even a 2-3 year old battery can be toast, if it has been totally discharged more than a few times.

So the bad battery leads to a smoked alternator which in turns allows the new replacement battery to go dead, which in turn smokes a new alternator, and so on.

(Any by the way, an alternator, unlike a generator, requires a battery in the circuit in order to work properly.   If you disconnect a battery from a car while it is running, you will likely "fry" the alternator in short order - like immediately.)

To avoid this problem, fully charge a car battery before installing it. Test the alternator as well as battery (again, most shops will do this for free, or you can check the output voltage as noted above).  If you must jump start a car, leave the cars connected for a while to allow both alternators to charge your battery. Don't run your car for a long period of time, but rather shut it down after 15 minutes to let the alternator cool.  But avoid jump-starting if at all possible.

In modern cars, jump-starting can cause all sorts of problems.   Electrical systems as noted above, can do flaky things when voltages go low.  Jumping can cause spikes in voltage which are just as bad.  And every time you jump-start a car is an opportunity for someone to reverse the cables, which causes all sorts of bad things to happen.

Most cars, by the way, have an "idiot light" or voltage gauge. The idiot light, usually in the shape of a battery, comes on when system voltage is below 14 volts or thereabouts. Thus, when you turn on the ignition, the light comes on, as the car battery is at 13.5 volts. When you start the car, the alternator kicks in, and the voltage goes up to about 14.5 volts, and the light goes off.   If the "battery" light comes on, chances are, you have an alternator problem, ironically.

Voltage gauges work the same way, but most are not accurate enough to read a proper voltage level very well.   Some older cars have Ammeters, which show the rate of charge. When the alternator is working, it may show a positive amperage, representing the current charging the battery.  When accessories are turned on, the amperage may drop or go negative, representing current draining from the battery.   Such gauges were interesting to have during the early history of the automobile, when charging systems were fragile.  But often the connections on such gauges cause more problems than the good they do.   For this reason, I do not recommend "aftermarket" gauge sets, as they add little in terms of useful information and can cause electrical problems down the road.

Presuming you have eliminated the battery and alternator as the problems, where do you go from here? Connectors are the second largest failure mode in a car, and the first connector you should check is the battery terminals.   Terminals can come loose (or be improperly installed) or become corroded. Clean and tighten the terminals and see what happens.  A neighbor recently had this problem. His mechanic couldn't get the negative terminal to reach, and attached it at an angle.  As a result, it was making only intermittent contact and the car would "mysteriously" not start sometimes.  Loosening the cable (it was wire-tied to the frame) so it would reach and then tightening the contact fixed the problem.

Cars left for long periods of time will discharge their batteries. Most cars can sit for about a month before the various computers and radio gear discharges the battery.  If you let a car sit for any length of time, a battery tender may be a good idea.   These chargers keep the battery topped up and compensate for the minor current drains from all the accessories in the car.   I own four of these types of chargers and use them, as I tend to let cars sit. (UPDATE:  Not much anymore!  Down to just two cars!)

Note that if you remove a battery from a car, boat, or tractor, you should put it inside, in a heated space, and not on a concrete floor.   Batteries can freeze, particularly when discharged, and this freezing usually destroys them.  A battery that appears "puffed out" probably froze at some time.  Folklore suggests that you should not leave a battery on a concrete floor, although it is not clear whether there is any science behind this. There may be two reasons for this folklore.  First, a concrete floor may be cold, and transfer heat away from the battery more quickly, allowing it to freeze more readily.  Second, plate material can slough off a battery if it is exposed to vibrations, and a concrete floor may more readily transmit such vibrations to the battery.  Whether it is folklore or not, I put my batteries on a wooden shelf in the winter and not in use.

So, you've replaced the battery, tested the alternator, checked the battery terminals, and you are still having problems.  Now what? The odds of a real "short somewhere" are actually very small. W ires sitting by themselves and not moving (rubbing or abrading) don't suddenly decide to shed their insulation and short out.   Automotive designers are aware of the difficulties of vibration when wires pass through bulkheads and provide grommets and bushings to compensate.   And wiring harness portions going to doors and trunks are extensively tested prior to production to insure that they do not break or short as they flex at the joints.

Sometimes errors do occur.  For example, in some BMW 3-series coupes and sedans (E36) the trunk wiring harness had a tendency to short out.   Most of such cars had a new harness installed under warranty. But such shortfalls are few and far between.  These are the rare exception, not the norm.

The easiest way to test for undue electrical drains is to insert an ammeter in line with the negative terminal of the car battery and the ground cable (NOTE: With the engine OFF, or you will fry your voltmeter and alternator) with all accessories off.  The current draw should be on the order of milliAmps (check the service manual to be sure) from the various computers in the car (engine, radio, SRS, ABS, transmission, etc.).  If it is larger than this, pull fuses one at a time and note the change in current draw.  If one circuit seems to be pulling more amperage than normal, you can than trace this one circuit for problems, rather than just pulling at wires willy-nilly.   Again, note the precautions above, and make sure if you disconnect power from an electrical device (such as your radio) you won't need a special code to reactivate it.

Aftermarket radios tend to draw more power, even when off, than factory components. Many of these types of radios are installed after the car is a few years old and the battery is getting worn. The combination of an aftermarket radio and an older battery can trigger an electrical problem.  And again, the solution is usually a new battery (hopefully replaced before the alternator is shot as well).  So often, you hear of these "mysterious short somewhere" pleas right after some youngster put a boom-boom stereo in his old hoop-de.

And speaking of which, some car stereos and navigation systems can draw a LOT of power. My new Pioneer AVIC-Z2 is on a 20-amp circuit (it has a hard drive and basically is a small computer). The owners manual explicitly states that the radio should NEVER be run unless the engine is running.  It draws that much power.   And my experience has shown than running the radio even for a half-hour, can pull down the battery enough to the point where the car may not start.

Folks who make a hobby of huge radios and subwoofers (and we all love pulling up to a light next to them, don't we?) often install a separate battery (and alternator) to power the accessory equipment. The standard car battery can easily be drained flat by large aftermarket subwoofer amplifiers and other audio, video, and navigation accessories. If you plan on putting in a bad-ass stereo, you might want to consider an auxiliary battery and alternator as well.

* * *

UPDATE November 2015:  I had a chance to put this to the test recently.   Our camper battery seemed a little low - the lights were dim whenever the charger was off, and it didn't seem to hold a charge for very long - even though the battery was only three years old.

I pulled the battery and took it to Wal-Mart.  After three hours of charging it, they could not get it to go above 12 volts - it had a shorted cell.   This is not unexpected, as the battery sits in the back of the trailer and bounces up and down (no shocks on trailers) and batteries detest this treatment.  Plate material sloughs off and then shorts adjacent cells.  Motorboats face the same problem.   I put in a new battery and to be on the safe side, a newer, higher-capacity charger as well.   Problem fixed.

The M Roadster battery seemed fine when we got back from vacation.   I used a maintenance charger on it, of course, while we were gone.   It started and ran fine.  But the next day, nothing but "click, click".   Again, battery failure modes may appear sudden.   Since the battery was five years old, off to Wal-Mart for a new one and problem solved.

So many men, in particular, resist buying a new battery for some reason.  I think it was $90.   Not a lot of money to spend.  But they will spend hundreds of dollars and dozens of man-hours trying to trace a "mysterious short, somewhere" when the problem is the battery, period.