Here are some timeless classics from which we all can learn valuable personal-finance lessons
The Kiplinger Washington Editors have selected eight movies whose themes echo lessons of timeless personal-finance wisdom. They’re all about helping you to a prosperous future -- paying yourself first, staying out of debt, protecting your loved ones and giving generously to create a better world. I share their list below.
MAXED OUT: HARD TIMES, EASY CREDIT AND THE ERA OF PREDATORY LENDING (2006)
You’ll never feel so free about forking over a credit card again. And that’s a good thing. This independently made documentary is riveting as it explores America’s dangerous love affair with credit and leveraged debt, presaging the meltdown of 2008. Like being a “preferred” credit-card customer? This movie shows you why “chump” might be more apropos. In one scene, a Las Vegas real estate broker explains why she’s building a 10,000-square-foot home even though she’s not sure she’ll be able to afford it if interest rates go up. “If you look like you’ll make money, I guess eventually you will,” she observes. Priceless. LESSON: Borrow sparingly. Do you know anyone who got into big financial trouble because they didn’t borrow enough money? We don’t.
CONFESSIONS OF A SHOPAHOLIC (2009)
Ditsy Rebecca Bloomwood (played by the incomparable Isla Fisher) has 12 credit cards, all maxed to the hilt. She thinks nothing of using plastic to buy $200 worth of Marc Jacobs underwear because “underwear is a basic human right.” Then, in a plot twist only Hollywood could dream up, she becomes a writer for Successful Saving, a magazine that sounds an awful lot like Kiplinger’s Personal Finance. Coincidence? We like to think not. See how Rebecca erases $16,000 in credit-card debt and finds Mr. Right, without Mr. Right providing a financial bailout. LESSON: Use credit only to buy things of lasting value: a home, an education, maybe a car. For everything else, pay cash.
MR. BLANDING BUILDS HIS DREAM HOUSE (1948)
Tom Hanks and Shelley Long starred in a 1980s remake entitled “The Money Pit.” But we like the original best. Ad man Cary Grant can no longer stand the cramped quarters of his New York City apartment, so he moves wife Muriel (Myrna Loy) and their two daughters to a charming fixer-upper in Connecticut. End of story? Fat chance. Just the beginning of a hilarious saga about the reality of the American Dream. Even Muriel’s quaint request for a “little dry place to repot my plants” turns into an expensive ordeal of ripping out tile floors and installing drains. But there’s a happy ending: Maid Gussie’s declaration “If it ain’t wham, it ain’t ham” serves as the inspiration for a winning (and lucrative) ad campaign that allows Mr. Blanding to enjoy the fruits of country living in his dream house. LESSON: Owning a home comes with a great deal of responsibility, starting with good credit, a substantial down payment and the means to protect your investment.
ENRON: THE SMARTEST GUYS IN THE ROOM (2005)
Before Bernie Madoff, there were Kenneth Lay and Jeffrey Skilling, chief executives of a high-flying Houston “energy” company that was all about appearing to be stable and highly profitable when it was neither. (Enron actually didn’t “do” much of anything other than create impenetrable shell subsidiaries.) As Enron stock prices soared, top execs cashed out stock options worth millions, leaving employees with Enron stock as the only investment option for their 401(k) retirement plans. When the company collapsed, countless investors lost everything, and the retirement savings of thousands of Enron employees was wiped out. It’s a wrenching story that will make you angry. But the movie, which earned a 2005 Academy Award nomination for Best Documentary, is “almost indecently entertaining," observed A.O. Scott of the New York Times. Investors, you must see this movie. LESSONS: (1) If an enterprise seems too good to be true, it probably is. (2) Diversify, diversify, diversify your portfolio. Never put all your eggs in one basket.
WORKING GIRL (1988)
What we most like about this endearing ’80s film is the career advice. Tess McGill (Melanie Griffith in the best role of her career) takes a job with rapid advancement possibilities -- or so her investment-bank boss (Kevin Spacey) claims. She soon realizes all the company wants is a sexy secretary. Watch how Tess combines her business degree (from night school) and acumen with her Staten Island street smarts to engineer a mega-merger deal. There’s the usual sappy, Prince Charming happy ending, with Harrison Ford as Tess’s Wall Street love interest. But it provides an entertaining reminder that if you have something to offer your company and they don’t seem interested, there’s likely a market for your services elsewhere. Note in the final scene how Tess treats her replacement once she makes it to the top -- a good lesson there, too. LESSON: Your earning power, rooted in your education and job skills, is the most valuable asset you’ll ever own. It can’t be wiped out in a market crash. Keep your earning power growing through continuous education, training and personal development.
THE TREASURE OF THE SIERRA MADRE (1948)
Try watching this classic western as a cautionary tale about how not to launch a business venture. In fact, you could take everything that Howard (Walter Huston), Dobbs (Humphrey Bogart) and Curtin (Tim Holt) do in this classic to get rich quickly, do the opposite, and have something close to a credible business plan. LESSON: Don’t swing blindly in pursuit of a home run. In life, as in baseball, you’ll more than likely strike out. Always do your research and, for heaven’s sake, know your business partners.
MILDRED PIERCE (1945)
In this classic, a determined but misguided middle-class mom (legendary actress Joan Crawford in the lead role) cuts her husband loose and sets out on her own to support her two children. She works her way up from waitress and pie maker to restaurant mogul, but her life becomes all about providing a more lavish lifestyle for her sulky daughter. On the way to the top, Mildred compromises her principles and loses almost everything dear to her. Nominated for six Academy Awards in 1945, this film won Crawford her only Best Actress Oscar. The movie has largely been forgotten. Too bad. It’s a great story about personal finance. (And if you like it, you might also try I Remember Mama (1948), another forgotten classic starring legendary actress Irene Dunne. Make sure you have plenty of Kleenex on hand, though.) LESSON: In your quest for financial success, don’t lose sight of what’s most important in your life. Maintain a lifestyle and budget that protect it all.
IT’S A WONDERFUL LIFE (1947)
This Frank Capra masterpiece, cited by the American Film Institute as one of the 100 greatest films ever made, comes up on virtually everybody’s best list here at Kiplinger, and not just during the holidays. You probably know the story by heart. But why is George Bailey toasted as “the richest man in town” at the end? He’s certainly not a likable fellow throughout the movie. As his dreams are stifled by small-town life, he turns bitter, suicidal and verbally abusive to his wife, children and poor old Uncle Billy. Yet, unlike bitter Old Man Potter, who only sees money as an end in itself, George comes to see it as a means to creating happiness for others. (You might also try Scrooge (1951), starring Alastair Sim. It’s the only movie version of this Charles Dickens classic, A Christmas Carol, worth the watching.) LESSON: When you share your good fortune by donating your money, time and talent to charity, you help create a stronger economy and a healthier, safer world.
Wednesday, December 30, 2009
Tips on Year-End Charitable Giving
To be deductible, clothing and household items donated to charity generally must be in good used condition or better. A clothing or household item for which you claim a deduction of over $500 does not have to meet this standard if you include a qualified appraisal of the item with the return.
For all donations of property including clothing and household items, if possible, get a receipt from the charity that includes the name of the charity, date of the contribution, and a reasonably-detailed description of the donated property. If a donation is left at a charity’s unattended drop site, keep a written record of the donation that includes this information, as well as the fair market value of the property at the time of the donation and the method used to determine that value.
The deduction for a motor vehicle, boat or airplane donated to charity is usually limited to the gross proceeds the charity receives from its sale, if the claimed value is more than $500.
To deduct a charitable donation of money, regardless of amount, you must have a bank record or a written receipt from the charity showing the name of the charity and the date and amount of the contribution. Bank records include canceled checks, bank or credit union statements, and credit card statements, IF they show the name of the charity, the date, and the amount paid. Donations of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction.
Here are a few additional reminders:
• Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of 2009 count for 2009. This is true even if the credit card bill isn’t paid until 2010. Also, checks count for 2009 as long as they are mailed in 2009 and clear, shortly thereafter.
• Check that the organization is qualified. Only donations to qualified organizations are tax-deductible. IRS Publication 78, available online and at many public libraries, lists most organizations that are qualified to receive deductible contributions. In addition, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even if they are not listed in Publication 78. Money given directly to an individual is not a charitable contribution.
• For individuals, only taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions. This deduction is not available if you choose the standard deduction or file a short form (Form 1040A or 1040EZ). Even then, you will have a tax savings only if the total of all itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc.) exceeds the standard deduction.
• There are other rules and restrictions governing the deductibility of charitable donations. Please contact me directly if you have questions about how this information affects your specific tax situation.
For all donations of property including clothing and household items, if possible, get a receipt from the charity that includes the name of the charity, date of the contribution, and a reasonably-detailed description of the donated property. If a donation is left at a charity’s unattended drop site, keep a written record of the donation that includes this information, as well as the fair market value of the property at the time of the donation and the method used to determine that value.
The deduction for a motor vehicle, boat or airplane donated to charity is usually limited to the gross proceeds the charity receives from its sale, if the claimed value is more than $500.
To deduct a charitable donation of money, regardless of amount, you must have a bank record or a written receipt from the charity showing the name of the charity and the date and amount of the contribution. Bank records include canceled checks, bank or credit union statements, and credit card statements, IF they show the name of the charity, the date, and the amount paid. Donations of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction.
Here are a few additional reminders:
• Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of 2009 count for 2009. This is true even if the credit card bill isn’t paid until 2010. Also, checks count for 2009 as long as they are mailed in 2009 and clear, shortly thereafter.
• Check that the organization is qualified. Only donations to qualified organizations are tax-deductible. IRS Publication 78, available online and at many public libraries, lists most organizations that are qualified to receive deductible contributions. In addition, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even if they are not listed in Publication 78. Money given directly to an individual is not a charitable contribution.
• For individuals, only taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions. This deduction is not available if you choose the standard deduction or file a short form (Form 1040A or 1040EZ). Even then, you will have a tax savings only if the total of all itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc.) exceeds the standard deduction.
• There are other rules and restrictions governing the deductibility of charitable donations. Please contact me directly if you have questions about how this information affects your specific tax situation.
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