How to donate a car

It sounds so simple: Donate your used vehicle or boat to charity, avoid the hassles associated with selling it, and score a tax deduction at the same time. Everybody wins, right?

Not necessarily. As the saying goes, the road to h-e-double-hockey-sticks is paved with good intentions, and it can be surprisingly easy to fumble this well-meaning act.

Before you hand one of your biggest assets over to anyone, read the following tips to be sure you’re making the right moves.

1. Avoid middlemen. Numerous for-profit intermediary organizations advertise aggressively on TV, billboards and elsewhere, offering to help you donate your vehicle to charity. Here’s the catch: These organizations typically keep about 50 percent to 90 percent of the vehicle’s value for themselves, and the charities don’t get what they could have gotten. To prevent this, check directly with charities you admire and find out whether they accept car or boat donations.

2. Find a worthy charity. If the charities you normally support aren’t equipped to accept such donations, do some homework until you find a reputable charity that is. You can research charities’ track records online at this Better Business Bureau site and through Charity Navigator. 

3. Check the math. If you still feel compelled to use an intermediary organization – possibly because you’re busy – at least ask the organization how much of the car or boat’s value will go to charity. If the organization simply gives charities flat fees — say, $100 for a used vehicle regardless of its value, or $2,000 a month — your donation may not be eligible for a tax deduction.

4. Know the status of your recipient. In order for you to qualify for a deduction, the charity that gets your donation must be an IRS-approved 501(c)(3) organization. Your church, synagogue, mosque or temple likely qualifies. (Check first just to make sure.) You also can visit the Internal Revenue Service’s Web site and search for Publication 78 to find other qualifying non-profit organizations. (Just type “78” into the search field on the IRS home page and you’ll be directed to the right publication.)

5. Do the delivery yourself. Once you’ve identified a worthy charity, recognize that it will have to pay someone to pick up your car or boat for you. To help the charity maximize the benefit of your donation, drop the car or boat off yourself.

6. Transfer the vehicle with care. Want to eliminate all risk of running up parking tickets and other violations after you’ve said goodbye to your donated vehicle? Then formally re-title the vehicle to the charity, and report the transfer to your state’s department of motor vehicles or licensing. Never agree to leave the ownership space on the charity donation papers blank.

7. Your estimate of the donation’s value probably won’t cut it. If your car or boat is worth more than $500, the IRS is going to want to see evidence of how much the charity got for it. (Most charities that accept these donations turn around and sell them for cash.) You’ll need to get a receipt from the charity revealing exactly how much money it made.

8. Know when you can report the fair market value. You won’t need evidence of the sales price if the charity keeps the vehicle or vessel and uses it in its charitable work, or if your donation is worth less than $500. Then you can report its fair market value based on listings from Kelley Blue Book and similar sources.

9. Keep a thorough paper trail. If your donation is worth more than $500, you’ll have to attach IRS Form 8283 to your tax return. If it’s worth more than $5,000, your documentation must include an outside appraisal. You’ll also need proof of the donation, such as a receipt from the charity and a copy of the title change.

10. Be detail-oriented. This paper trail may seem cumbersome, but think about it: This may be one of the biggest charitable donations you ever make. By taking the time to dot the i’s, you can make sure that the charity gets the most benefit and you get the biggest possible deduction.

Sources and resources

• Charity Navigator
• Better Business Bureau
• Consumer Reports Money Adviser
• Internal Revenue Service

How to Improve Your Credit

You want to be sure your credit score is as high as you can make it because if your credit score is below 750, you may have to pay higher interest rates on loans or even have trouble borrowing money. But by monitoring your credit and taking a few simple steps, you can improve your credit score. Here are the key factors to improving your credit:

• Make sure that the information on your credit report is accurate. Are there accounts that don’t belong to you? Do balances appear even when an account has been paid in full?
• Pay your bills on time — every time. Send credit-card payments several days in advance of the billing cycle cutoff date instead of the due date listed on your statement.
• Keep your outstanding balances at 30 percent or less of your total credit line per account.This approach is just one of the many ways that help raise your credit score.
• Avoid opening new accounts. Transferring existing balances to a new lower rate card lowers your interest expense (often only temporarily), but it also lowers your credit score.
• Keep the old accounts open, even if you don’t use them. But watch out that no one else is using them, either. The length of time you have maintained your accounts is key.

Not only is it important for you to monitor your credit report, you need to monitor your credit score. You can use the Credit Score Monitoring Worksheet to keep track of your credit score over time.

Click here to download and print the Credit Score Monitoring Worksheet.

The Credit Score Monitoring Graph lets you track your credit score over time. Remember, the higher the number, the better!

Click here to download and print the Credit Score Monitoring Graph.

Choosing a Divorce Attorney

Choosing a divorce lawyer can be overwhelming. After all, your divorce attorney is the expert you'll rely on to help you make the best decisions about your divorce. An attorney can be involved in your divorce from start to finish, or work with you on a very limited basis. (Generally, if you and your spouse both feel confident about your ability to draft your own divorce agreement, you may be able to limit your use of an attorney to initial advice and information and final evaluation and feedback.)

When you do hire a divorce attorney, it's more than a matter of running your fingers through the lawyer ads in the yellow pages until you spot the word "divorce" or simply hiring the lawyer who helped you negotiate your office lease or draw up your will.

• You need to hire an attorney experienced in family law.

In some states, attorneys can be board-certified in family law. These lawyers specialize in divorce cases and other kinds of family law issues. To be certified, they must have significant trial experience and pass a rigorous test. To maintain their certification, they must receive substantial continuing education in family law each year, generally twice the amount of required continuing education of non-board certified family law attorneys. This type of family law attorney tends to charge more and demand higher retainers to begin a family law case than those who are not board-certified, but they are usually more experienced.

• The attorney you hire should talk to you in plain English, not legalese.

• The attorney should be someone you trust and feel comfortable with, because you may have to reveal highly personal information about yourself and your marriage.

• If you have young children, look for an attorney who makes it clear that during your divorce you must put your children's needs first and that he or she will not pursue unreasonable demands for child support or help you pursue vindictive child custody and visitation arrangements.

• And last, but certainly not least, your lawyer should be affordable.

Appropriate skills and experience

An old adage states, "There are horses for courses." This saying is as true for an attorney as for any other professional. In other words, when you select a family law attorney, you want one with the legal skills and knowledge needed to get the job done for you:

• If you need help negotiating your divorce agreement, the ideal attorney is a problem solver, works well with people, is adept at compromise,and is comfortable in court. Although you and your spouse may have no intention of going to court, an attorney's trial record and history of success in court can have some bearing on his or her ability to negotiate a settlement with your spouse's attorney.

• If you know from the start that you're headed for a divorce trial, you want an attorney who has considerable courtroom experience. Not all lawyers do.

• It is also helpful if the attorney you choose is familiar with the family law judges in your jurisdiction. Knowing the courtroom style of the judge who's likely to hear your case and how the judge has ruled on previous cases similar to yours helps your attorney adapt his or her legal strategy and style to that particular judge.

Don't base your hiring decision on which attorney has the nicest office. A fancy office in an expensive building says nothing about the adequacy of a lawyer's legal skills. At the same time, don't assume that just because you pay a lot of money to an attorney that his or her legal representation is appropriate to your needs or is of high quality.Also, don't let a lawyer's physical appearance influence your hiring decision.

If your financial situation is complex, the lawyer you hire should either have a solid understanding of the issues and laws that pertain to your divorce or work closely with other lawyers or financial experts who have that knowledge, such as a CPA or appraiser. Remember, negotiating your divorce agreement is as much about financial matters as it is about ending your marriage.

Personal style

If you are relying on an attorney to do more than simply review your divorce paperwork, you must be prepared to share details about your personal life, marriage, and finances. Therefore, you must feel comfortable with whoever represents you.

In addition, your attorney should share and support your basic philosophy or attitude toward your divorce. For example, if you want to keep things as calm, cooperative, and nonadversarial as possible, then avoid attorneys who like to "go for the jugular."

Do not confuse your attorney with your therapist or religious advisor. Your attorney's clock is usually running regardless of whether you call with a legal question or to complain about your spouse.

Affordability

If you don't have much money to spend on legal help, you may have to hire a relatively inexperienced lawyer instead of a seasoned professional. New attorneys tend to cost less than lawyers who have been practicing law for years and already have solid reputations. However, working with an up-and-coming or novice attorney has a potential advantage. In order to build up a good reputation, the attorney may be willing to work a little harder for you than a seasoned lawyer would.

Most family law attorneys bill for their services on an hourly basis. Few agree to take a flat fee based on the total amount of time and labor they think your divorce requires. Estimating up-front just how much time is necessary to finalize your divorce is difficult, because no lawyer knows exactly how any divorce is going to play out.

You're more apt to find an attorney who'll take your case for a flat fee if your divorce is 100 percent amicable and if the tasks the attorney will perform are very well defined. You may be able to find an attorney willing to accept a flat fee if your legal needs are very specific and very limited — for example, you just need some paperwork filled out and filed.

Among other things, an attorney's hourly rate depends on your region of the country and whether your community is rural or urban. Those of you living on the East and West Coasts can expect to pay the most.

Depending on where you live, on average the services of a divorce attorney will cost you anywhere from $100 an hour to more than $600 an hour, plus expenses.

Tips for Comparing Mortgage Lenders

Even if you elect to get quotes from various mortgage providers online, you can also check local mortgage providers. Your local newspaper most likely provides quotes for some of the most competitive mortgage lenders in your community. You may find that working with a local mortgage provider is most convenient. As you see later on in this article, the amount of paperwork that you’re required to pull together and provide to the lender is substantial. When working with a local lender, the loan-acquisition process may be easier than working with an online lender.

Be sure to ask the following questions of potential mortgage lenders:

• What is the current interest rate of the mortgage being considered?
• Are discount points (money you spend to buy down the interest rate) or origination points (fees that some lenders charge) included? Generally, you’ll want a loan with the lowest interest rate without discount points. However, if you have lots of extra cash on hand and plan to stay in the home for a very long time, you may benefit from paying discount points. You should be able to completely avoid origination points.
• Will you please provide me with a good-faith estimate illustrating all my fees and closing costs? If the lender refuses, then don’t do business with them!
• Can I lock in the interest rate, and if so, what will it cost me to do so? Lenders will allow you to secure an interest rate in advance of closing on your mortgage. You may want to lock in the current rate if you suspect rates will go up before closing. Lenders will charge a fee to provide you with a guaranteed rate. The lower the fee, the better!
• What is the minimum down payment required for this loan? Many loans require a 20% down payment. The lender will need to know how much of a down payment you plan on making to determine the right loan options for you.
• What is required for me to obtain a prequalification or preapproval letter?
• Is there a prepayment penalty on this loan? There's absolutely no reason to obtain a mortgage that has a prepayment penalty. If the lender is offering a loan with a penalty for paying it off early, walk away. The chances of you staying in that home and not refinancing your mortgage at some point over the next 30 years are highly unlikely.

Use the Mortgage Comparison Worksheet when gathering quotes and feedback on the preceding questions from a variety of lenders.

Click here to download and print the Mortgage Comparison Worksheet.

You must remember that the cost of your mortgage includes not only the interest rate, but also the closing costs, which can be substantial. Typically, you should anticipate closing costs to be in the neighborhood of $1,200 to $1,500, but the closing costs do vary greatly between lenders. Generally, these costs must be paid out of pocket, along with any discount points, at closing. However, closing costs and discount points are negotiable items, and you may be able to negotiate with the seller to pay these costs for you. If the seller isn’t paying these costs for you, don’t forget these additional costs must be paid along with your down payment when you close on the mortgage and obtain the deed to your new home.

How to Defer or Discharge Student Loan Debt

Under special circumstances, you can receive a deferment on the repayment of your federal student loans. You may even get your entire student loan debt forgiven (or to use the technical term, discharged) in certain circumstances.

To be eligible for deferment, your loan can’t be in default. If it is, you have to get back on a satisfactory payment program and keep making payments until you receive approval for deferment.

Here’s how you might be able to get a deferment or discharge of your student loan debt:

• Deferring a Stafford Loan: In some cases, if you’re unable to find full-time employment after you graduate or if you experience severe economic hardship, or in one of the following specific circumstances:
  • You become a full-time elementary or secondary teacher for five consecutive years in an area that serves low-income families.
  • Your school closes before you can complete your program.
  • Your school doesn’t pay out your loan amount.
  • You file for bankruptcy and the bankruptcy court decides that your student loan needs to be discharged.
  • You die or become permanently disabled, making work impossible.
• Putting off Perkins payments: You automatically get a nine-month grace period with a Perkins Loan, but you may be able to postpone repayment even longer if
  • You’re unable to find work on a full-time basis.
  • You encounter severe economic hardship.
  • You become a community service worker in such professions as law enforcement, corrections, or teaching in designated low-income areas.
• Cancelling your Perkins loan: Situations that may qualify for a cancellation of your Perkins Loan include
  • Becoming a full-time special education teacher or a teacher of children with diagnosed learning disabilities.
  • Performing early intervention services for the elderly on a full-time, professional basis.
  • Serving as a full-time law enforcement or corrections officer.
  • Becoming a full-time staff member in the education division of a Head Start Program.
  Up to 70 percent of your Perkins Loan can be forgiven if you enlist in the AmeriCorps VISTA Program or become a Peace Corps volunteer.

How to Save on Insurance

Given all the insurance coverage you need — health insurance, homeowner’s insurance, life insurance, auto insurance — those costs can take a large bite out of your bank account. Fortunately, you can reduce the amount you pay for insurance without jeopardizing protection.

To some people, a lower deductible (the amount you have to pay before insurance starts paying the bills) means you “get something” from an insurance plan. Others point out that plans with higher deductibles are cheaper.

In general, high-deductible plans are much less expensive than low-deductible plans. If you can raise and set aside the money you’d need to make your deductible, you can save on your insurance premiums.

Insurance is intended to cover risks you can’t afford to bear on your own. The higher the deductible, the lower the premium. By raising your deductibles to $1,000 from $250, you may be able to reduce your premium by as much as 25 to 30 percent.

Just make sure you don’t raise your deductible so high that you can’t pay that amount in case of an emergency.