This one journey has finally come to an end. No, not the blog – our property tax fiasco.

Just over 11 months after appealing our grossly unfair property tax reassessment to the State Property Tax Appeal Board (PTAB), our case has finally been decided.  In case you’ve forgotten the details over the last year and a half, I’ll recap:

December 2007

We received our property tax assessment for the 2007 tax year and it increased by 15% and was set $50,000 higher than our home’s resale value.  I immediately contacted the county alerting them that I would contest the assessment.

January 2008

We met with the county Assessment Board to lay out our case that the house was unfairly assessed and to provide the credit union’s appraisal from when we purchased the house 1 1/2 years earlier as evidence.  We were told to wait until at least March before they released their decision.

May 2008

We finally received our reassessment (2 months late).  It was reassessed to $235,575 – still $25,000 higher than the credit union’s appraisal.  We then hired the appraisal company to perform a new full appraisal of our house for $300 to submit as evidence to the PTAB.  The new appraisal came back at $221,000.  That was higher than I wanted, but still $14,575 less than the county’s assessed value.  We overnighted the appraisal and appropriate property tax assessment appeal forms to the PTAB and awaited their decision.

Today

After contacting the PTAB numerous times over the last 11 months by phone and by their website, we finally received a letter announcing that they ruled completely in our in favor and adjusted our assessment to $221,000! They have even instructed the county to refund us what we overpaid on the tax.

SUCCESS!

My quick calculations show that we’ll likely receive a refund of around $260.  While this is less than the amount we paid for the appraisal, this reassessment will save us for many years to come.  Not only are we entitled to a refund of last year’s paid taxes, our taxes for this year will be lower and will continue to be lower until the county assesses our property again. (And I’ll be ready to appeal again when they do!)

It may have been a long, frustrating, and drawn-out experience, but it’s proof that you can successfully challenge your taxes if you are persistent and have truth on your side. Now if you’ll excuse me, it’s time to celebrate!

UPDATE

I received the refund check in the mail today (15 May 2009) and it was for over $600! Apparently, the state made this the actual assessed value of the property instead of adding the expected multiplier.  That means I got back more than double what I paid for my private appraisal.  Talk about a great investment!

Photo by: Amit Gupta

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

It’s that fateful time of year again when we either see how much of our money we get back from the government or we find how how much we still owe. Yes, tax time is upon us and if you haven’t completed your taxes by now, chances are you are scrambling through this final week to complete yours.

If you are fortunate enough to have a tax refund coming your way, you need to be mindful of how it is spent. While it’s tempting to go out and buy one of those fancy new TVs on sale at your local electronics store, that purchase may not serve you very well in the long run.

Avoid the Splurge

If you feel that money burning a hole in your pocket, you’re not alone; the temptation is strong for me, too. When we finished our basement, we installed all the wires and a built-in screen for a projector and sound system. But right now those wires and screen are unused because we don’t have the equipment. The $3,000 we got back could buy nearly all the electronics I need to make my dream home theater come to life.

While I would enjoy using our basement how we intended, it doesn’t make sense financially right now to buy some expensive electronic equipment that I’ll just be itching to replace again in three to five years.

Check Your Emergency Fund

There are many competing pieces of advice concerning emergency funds. What’s a right amount for one person may not be enough for another. I always shoot for saving enough money to cover three to six month’s worth of expenses. If you don’t have an emergency fund, please consider putting your refund in a high-yield savings account (I use ING Direct) and letting that cash infusion start you on the road toward better financial security.

Needs First; Wants Last

With the birth of our second child, our sole baby-safe vehicle is not enough. It’s time to replace my 14-year-old truck. It’s served me well, but the cost of maintaining the vehicle coupled with the fact that my children can’t ride in it has forced me to give it up.

Over the course of the next few months we’ll pick out a new vehicle and put down as much cash as we possibly can on it. The $3,000 from the tax refund plus the $1,000 we had in our snowflake account and the extra $300/month we’re saving from refinancing our mortgage should allow us to put together a hefty down payment and secure good financing.

Last year, we used our surprise tax refund to buy a new washing machine and this year we’ll use it to buy a new car. These are long-term investments in items that we need and will be using for years. Rather than buying a fancy new TV or gambling it all away, it helps you more to buy something that will be around for a long time and really get your money’s worth.

Time to Invest?

Nobody knows what the market will do tomorrow, next week, or next year, but I do know that the market is about half of what it was at its peak. In my mind, that presents a buying opportunity at a 50% discount. It’s like a fire sale on stocks.

That said, I would trend to not invest any money in the stock market if you need that money in the short term. But if you have a decade or longer before you would need access to that money, why not set up an IRA and stash that money away for retirement? That way you can use your tax refund to help reduce next year’s taxes and help your future self in retirement. Sounds like a win-win to me.

Just Don’t Waste It

Your tax refund is the result of an interest-free loan you made to the government by withholding too much from your paycheck. Getting a refund back feels like fun money, but it was always yours to start with. Just like you wouldn’t go out and randomly blow a thousand dollars from your paycheck, don’t feel tempted to do this with your refund, either. Regardless of how much you got back or what you do with it, just don’t waste it. Financial freedom starts with using your money wisely – even “found” money.

Do you have an interesting story about your tax refund and how you used it? If so, share it with us in the comments!

Photo credit: kozume

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

Ahh, it’s Spring cleaning time again! This year the cleaning bug bit me hard and I went from room to room looking for junk that was cluttering up my house and my life. Armed with a large cardboard box and a roll of trash bags, I scoured each room for trash and donate-able items. If I found an item that might have value to someone else, it went in the donation box while worthless, spent junk went in the bag. By the time I finished the upstairs, I had filled up the box more than twice and carted out three bags of trash.

Cramped closets quickly opened up and a stuffed spare bedroom became accessible again. It wasn’t like they were packed with garbage. On the contrary, everything that was removed from those rooms was purchased with good intentions but just never left when its usefulness had expired.

Clutter is dangerous in many ways. It can be a fire or health hazard when it impedes your movement or gathers too much dust, it can sap the usefulness of your home by wasting space, and it can steal your money by forcing you to re-buy things you already own.

Clutter Is a Hazard

While finishing our basement, we were forced to move all our stored belongings to an unused upstairs bedroom. Box after box was moved to the room until there was no more free space and then we closed the door. Over the winter, more things were shoved into that “temporary” storage room until they no longer fit and we were forced to stack things next to the door in the hallway.

I can’t tell you how many times I stubbed my toe on a box, or had to shuffle around the stuff while carrying my baby. Now imagine if (heaven forbid) we had a fire. That junk suddenly endangers the lives of my whole family by possibly blocking a useful exit from our home.

After the first round of Spring cleaning, the hallway is clear and more than half of the stuff stored in that room has been thrown away, donated, or filed away where it belonged in the first place.

Clutter Wastes Space and Time

For the last year and a half, I have been unable to park my truck in the garage. Shelves stuffed with things I thought I might need later multiplied into tools, equipment, and supplies stacked on the garage floor and taking up a full parking spot. Last week, I entered the garage with a mission of parking the new car we’re planning to buy in its rightful place in the garage from Day 1. After a few hours of heavy labor, I had two truck loads of things to donate and an almost-clean garage. I still have a few more hours of work to organize my space, but I should be able to park inside again soon.

By letting that junk accumulate over the last three years, I prevented myself from using my garage for its original purpose and I had to brave the elements every day I left for work. I can’t even being to imagine the hours I wasted over those years scraping frost, snow, and ice from my truck. So, as a side effect of the wasted space, it also wasted my time.

Clutter Costs You Money

While cleaning out one closet, I found six dusty, empty picture frames. This discovery came just a few days after buying three new picture frames to display the latest photos of our children. Since I forgot about those frames, I ended up wasting $10 on new frames.

In the same closet, I found two piles of winter clothes that had been stacked last Spring to make room for warm-weather clothes. This winter, I was forced to buy two new pairs of jeans and a few shirts to fill a gap in my wardrobe. What I didn’t know was that “gap” could have been filled about five feet below where the new clothes were hung. Now that I’ve already replaced those clothes, they’ll be donated instead of stored for another year.

Donate Your Clutter and Claim Your Tax Reward

Twice each year, my church hosts a rummage sale where people bring in “yard sale or better” quality items and the church sells them as a fundraiser for missions. If your church or another organization you support doesn’t host sales like that, you can always donate to the Salvation Army, Goodwill, or other charity thrift stores.

The important thing to remember is to track the proper resale value of the donated items. A general rule of thumb is to claim no more than the average amount that the item could be resold for at a thrift store or yard sale. Both the Salvation Army and Goodwill websites include basic valuation guides. While it’s a mostly on-your-honor deduction, the last thing you want to do is suffer an audit for improperly claiming donations. (For more information on the rules concerning charitable donations, see IRS Publication 526.)

The easiest way to handle this is to document everything you donate before you take it to the charity and (if you’re very cautious) take photos of all the donated items. That way you can help prove you donated the items and it will help in assigning values to the items. We ended up with two pages worth of donations listed with an estimated value of nearly $300. While it’s not a huge amount, that’s “free money” come tax time when listing our charitable donations.

Enjoy Your Reclaimed Space

It’s amazing how good it feels to be able to walk through the hallway safely, no matter what time of day or night. It’s great to walk into our closet and immediately find exactly what I’m looking for. It’s liberating to have the room to properly store my belongings in our designated storage areas instead of “wherever I find room”.

Now that you’re free from clutter, your next goal should be to keep it from coming back. Easier said than done, I know, but just remember how this feels right now and it should be easier.

Photo by: sindesign

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

By the time you read this, I will be on the road to my old hometown to visit friends and watch some small town fireworks. Fortunately, whatever the public show lacks we will make up for with our own show. No, I’m not foolish enough to waste my own money on fireworks – I let my friends do all the buying!

It’ll be nice to go “back home” for the first time in over eight years. I can’t say why it’s been so long, I just haven’t had any real reason to go back. But it’s a wonderful thing to see how things have changed in your absence.

This week my wife’s article, Save Big With Summer Bargain Hunting, was included in the Carnival of Personal Finance which was hosted this week by Greener Pastures: Personal Finance. This was her first submission, so congrats to The Cavewife for making it into the carnival!

I also wanted to share a special shout to Glblguy, host of Gather Little by Little. He’s a good friend of mine and he just celebrated his first year of blogging this week. Head over and send him your congratulations if you haven’t already.

Here’s some other deserving articles I found this week:

• beingfrugal.net – Are You Under the Influence?
• Clever Dude – Wanting Too Much
• I’ve Paid For This Twice Already – Short Term Disability Insurance As A Stopgap For The True Emergency Fund
• Chief Family Officer – How I paid zero dollars out of pocket at CVS in June
• MSN Smart Spending – 8 natural ways to make water more flavorful
• My Two Dollars – Rice is Nice..And Cheap!
• The Wisdom Journal – The Truth About Your Credit Score (from an expert)
• Mrs. Micah – Personal Finance Bullying?

Have a great, safe 4th of July. Enjoy your weekend!

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

This weekend I received my property tax bill. (What a lovely wedding anniversary gift…) According to the county’s assessment of my property, the decidedly unfair multiplier they use to “balance” the tax load, and the base tax rate, I owe just over $4,800 in property taxes this year. This amount reflects a nearly 13% increase since last year. I’m still awaiting the results from my appeal of my assessment to the State, but I’m sure my tax load won’t be much lower. But if I had not fought my original assessment, I would have likely owed well over $5,300.

While the statement that “the only things in life that are certain are death and taxes” may be true, that doesn’t mean you can’t fight back. With a little preparation and a lot of patience, you can try to get your tax bill lowered as well.

Do Your Research and Gather Your Evidence

Before you make your challenge, you need to know the laws and rights that apply to you. Contact your county assessor’s office either online or in person to find out the procedures that you must follow. The last thing you want is for your challenge to be denied on a technicality, so be very careful on what forms to fill out, what evidence to submit, and how to submit it.

The most valuable piece of evidence you can secure is a recent (within the last 3 months) full-value appraisal. An appraisal like this will measure your home’s value compared to 3 or 4 nearby recently-sold properties. This will show you what the market conditions are like in your area and what effect they have on your home’s value. A respectable appraisal company will know exactly what evidence to gather if you tell them the purpose for the appraisal.

Be Confident

Remember that the property tax review board is manned by people and use that to your advantage. You may only have the opportunity to meet with one member for about 5 minutes, but make as much of that time as you can. If you walk in smartly dressed, knowledgeable, and confident, you’re more likely to convince that board member that your house really is worth exactly what you say it is. Don’t over-do it, but you also don’t want to walk in looking and acting like a beggar trying to save his house.

Be Prepared To Wait

After our meeting, we were told to expect to hear back with the board’s response in 6 weeks. Then, the local news stations started running stories about the outrageous tax assessments and encouraged people to challenge them. Understandably, the board was flooded with complaints (most of which were valid) and it took way longer than the 6 weeks to hear all the challenges. Four months later, we finally received our adjusted appraisal. If your area just underwent a massive reassessment, expect to wait a long time to get your appeal heard and an even longer time for a response.

Have a Backup Plan

The property tax review board did not give us a favorable reassessment and they still missed our home’s value by at least $15,000. We immediately scheduled an independent full-value appraisal so we would have fresh evidence to submit to the State Board of Review for our final appeal. We are still waiting to hear back from the State, but I’m sure they will reduce our tax burden considering the strong evidence we provided them.

Pay What They Say You Owe

Our tax bill arrived and the first half of the property tax is due at the end of next month. I doubt that we’ll hear back from the State by then, so we have no choice but to pay the first installment in full. Unfortunately, you do not have the choice to not pay your taxes – no matter how unfair they are. It’s really not worth losing your home over a tax quibble that can be worked out later.

That said, we will make our displeasure very clear to the county. When we write the check, we will write in the memo field in very bold letters, “PAID IN PROTEST”. Yes, it seems a little petty, but that’s really the only legal way to approach this. You may be tempted to do more, but whatever you do, do not write any curse word or threat in the memo line! I have heard stories of people being arrested for making threats or using obscene language on their payment, and it’s really not worth getting in trouble over a few little words. Keep it civil and you’re more likely to win over the interested parties.

They Never Go Away

No matter who’s controlling the government in whatever position, taxes will always trend up and will always have to be paid. But that doesn’t mean you can’t challenge your tax burden or protest the amount. It only makes sense to keep as many of your hard-earned dollars in your own pocket instead of handing them away to the government. Good luck on your challenge!

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

Yesterday, I mentioned that we hired an appraiser to come and give us a full appraisal of our house for property tax purposes. When the appraisal came in much higher than expected – $15,000 over our purchase price 2 years ago – I wondered if we could benefit from this dramatic change.

I remembered reading before about taking control of the tax and insurance escrow your bank forces you to fund. The bank does this to make sure that you don’t accidentally lose their property by either defaulting on your taxes or by an uninsured loss of the property. Many banks and credit unions will allow you to take control of this account at a certain debt level – proving you are a trustworthy debtor.

I contacted my credit union and they said they would allow me to manage my own tax and insurance payments if my loan-to-value was less than 80%. With the new appraisal, my loan-to-value crept down to 80.4%. Apparently this was enough to convince them to release my escrow and they surprised me by immediately depositing my accrued balance of over $3,500 into my attached savings account. As soon as the check for that balance makes it to me, I will immediately deposit that into a new ING Direct Orange Savings account that I set up just for my own personal escrow account.

Immediately, by using ING Direct instead of my credit union, I will realize an interest rate increase from 1% to 3% and triple my earnings over the course of a year. The max amount in this account should be somewhere around $5,500, so I could earn up to $110 more over the year than if I had left it at the credit union.

This also opens up the option for me to use a short-term CD (6 months, probably) to gain even more interest. The downside of investing in a CD is that it requires me to have my full balance available up-front instead of direct depositing my escrow amount into a savings account. Plus, if I happened to have $5,500 just sitting around, I would rather start investing in some Vanguard index funds instead of collecting a mere 3% interest.

This method isn’t for the undisciplined, though. Since your bank isn’t making you save that money, you have to remember to do it yourself. That means setting up an automatic withdrawal or a direct deposit from your paycheck to make sure you’re saving enough for when the tax bill arrives. The last thing you want is for the county to auction off your property to pay your tax debt, so you must be sure to have the money you need for the tax bill available when it arrives.

If you’ve reached 80% loan-to-value, I recommend asking your lender about releasing your escrow. It won’t be a huge gain initially, but over time the interest will add up for you and you get the assurance of knowing you are in control of your finances.

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

Way back in January, I wrote that I was challenging our very unfair property tax assessment. Finally, last month, we received the review board’s reassessment. They dropped the assessor’s valuation of our property by $25,000, but it was still $29,000 more than our purchase price from just 2 years ago. My wife and I decided to hire an appraiser to come in and get a full valuation on our property.

The appraiser came in, measured all our rooms, and retreated to his offices to do the necessary research. On Friday, he returned the results of his full appraisal: $221,000. Ouch! That is $15,000 more than what we purchased it for 2 years ago. Any other time, this would be a welcome change, but when you’re trying to challenge your property tax, you want an assessment as low as possible.

Fortunately, this assessment was still $14,000 less than the property tax review board’s recommendation. This was a sufficient difference to justify the hassle of appealing this to the state. We overnighted the necessary paperwork and copies of our appraisal to the state property tax review board’s office. Hopefully the week-old appraisal, complete with 4 comparable properties, will be enough to convince them to not gouge us for more money that we don’t have. I really hope the state will side with us and correct the huge, glaring mistake the county has made, since there is no higher avenue for appeal outside of a lawsuit – which would be prohibitively expensive considering the “relatively” small difference in value.

Wish us luck!

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

Wednesday morning, I went to the county courthouse to challenge my property tax assessment. (I talked more about receiving the notice from the county in a previous post.) When I arrived, 4 of my neighbors were already there! Apparently, they over-assessed our entire neighborhood. Hopefully that will give me some leverage to get mine changed, too…

The process of the challenge was, for lack of better words, uneventful and deflating. When my name was called, I walked into the office of one of the three Assessment Board members with my bank’s appraisal printed out, noting that the bank believed it to be worth $50,000 less than what the county wanted to tax me for. Since I purchased this house 1 1/2 years ago, I believe there should be no problem in getting this overturned, but that was not the impression the board member gave me. She glanced over the assessment, wrote down a few numbers on another sheet, and, with a very bored expression, told me I’ll receive a new letter in March detailing what they decided.

What? I have to wait 2 more months to get this resolved with no real indication that anything will be done for me? I live in one of the most corrupt areas in the region (if not the whole country), so not getting any affirmation immediately sends of warning bells in my head that the only reason she even let me in her office to challenge it is because she was legally required to. *sigh* I suppose that’s the best I can do. Now to wait for March to roll around and pray that there is a secondary appeal process if they do screw me over…

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

As I wrote before, one of my goals for 2008 is to increase my giving to my church to reach 10% of my income, meaning I intend to tithe in 2008. We give consistently throughout the year so that it has become a habit, a part of our lifestyle. On the flip side, there are many who choose instead to wait until the end of the year to give.

I want to take a look at the differences between the two philosophies. Feel free to add your own ideas in the comments.

Benefits

Year-Long Giving

• Allows you to meter your giving and make it part of your monthly budget
• Useful for long-term commitment giving to one organization
• Helps cover the charity’s day-to-day expenses

Year-End Giving

• Allows you to save your money, gain interest, and give a larger one-time donation at the end
• Useful for giving to multiple organizations – divide one-time donation of x dollars into y organizations
• Helps cover charity’s large holiday expenditures

Weaknesses

Year-Long Giving

• One month may be a little tighter than the another, making giving more difficult
• You lose the potential compounded gains from year-long savings

Year-End Giving

• You actually have to save, otherwise there won’t be as much to give
• The charitable organization loses out on the compounded gains from your donation, assuming your giving comes only from December’s income

Possible Motivations

Year-Long Giving

• Long-term commitment to an organization
• Religious obligations, implied or otherwise
• Tax deduction

Year-End Giving

• Offset gains for tax purposes
• Fund a charity in dire need
• Use as leverage to fund a specific cause within a charity

This is far from a complete list, because I’m interested in hearing what you believe. After writing this, I still feel that year-long giving is the best way for me to give at the level I choose and that it will best serve my church to give in that fashion.

So, what do you think? Am I missing any big factors? Do you disagree with any of my categorizations? Tell me in the comments.

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

Well, I just received the most enjoyable piece of mail today… My credit union sent out my new set of coupons for paying my mortgage for 2008 and, much to my bewilderment, the amount went up by almost $50 per month! That means my taxes for last year were more than $400 higher than the bank expected. My taxes went up by over 10%! Well, so much for me getting ahead… Now I’ll have to have an extra $25 pulled for each paycheck to cover the difference.

On top of that, when the assessment of my property arrived in the mail earlier this month, I immediately sent notice that I would be contesting it. The county apparently decided that, even with falling house prices around me, my house increased in value by about 15%. They pegged the assessment at $50,000 higher than the highest appraisal I received a year and a half ago when I purchased the property. I was incensed! My hearing is on January 9 and you can be sure I’m going to write more on it.

Fortunately, property taxes in this area are something that can be contested. And, in cases such as these, it makes sense to. I would encourage everyone to take advantage of that opportunity and not just sit back and take it if your government is treating you in a way you believe to be unfair.

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com