Maybe that was just my home town, or maybe it was because it was 25 years ago.  In any case, in some places today, fire service is not only not guaranteed, sometimes fire calls are flat-out refused.

Such was the case for Gene Cranick, whose home caught fire September 29th, 2010.  He hadn’t paid his $75 rural fire subscription, so the fire department did not respond, even after he offered to pay whatever was needed.  His home burned to the ground, and his family lost everything.

A follow-on press conference from fire chief Bob Reavis emphasized the shortcomings of the rural fire subscription model when compared to a tax-based service, but also stated that the subscription model was the one they had to use with the rural areas in Tennessee’s Obion County that did not have their own fire departments.

One house in our subdivision had a fire a couple of weeks ago.  It burned to the ground.  In the days that followed, one of our other neighbors, who was a firefighter himself, told me parts of a conversation he had with one of the fire chiefs that responded to the fire.  Both of them agreed that there were shortcomings even in our fire protection system (which is paid for by our taxes county-wide, unlike that in Obion County) and that there would be discussions soon about what could be done to improve.

Regardless of the method by which the money comes in, residents get what they pay for. Sometimes fire protection is tax-based and everyone is covered.  Other times fire protection is subscription-based because of budgetary constraints imposed on municipalities by those who influence the budgets.  I predict that more and more will go subscription-based as municipal debt starts to weigh on budgets and the economy takes its toll.  When that one-in-a-thousand chance of getting a house fire hits you, you’re either covered or you’re not, and there probably isn’t time to get covered if you aren’t.  The subscription model in Obion County was a “pay before you need it” model, also called a “pay to spray” model.

Here are a couple of tips:

• Don’t assume you will have fire department support.  Verify it. If you’ve moved recently — or even if you haven’t! — please check to see what model your local fire department follows.  It may not be the same as you remember.
• Get a refresher on fire safety. Hopefully you won’t be as lazy as we were and wait until a neighbor gets hit before you plan an escape route from your house, get fire ladders, etc.  Check out FireSafety.gov for more information.
• If your fire department is volunteer, donate. The more that dwindling budgets are shored up with donations, the better the service will be for everyone.
• If your fire department runs on the subscription model, pay it. It’s now clear that some municipalities are defending the model, and you don’t want to be forced to go all-in on a two-three offsuit, if you know what I mean.
• If your fire department runs on the subscription model, do everything you can to make sure that you’re paid up at all times. Apparently Mr. Cranick forgot.  I know myself well enough to know that I could forget, too.  Do everything humanly possible not to forget.
• Petition the budget committee? I always feel a little dirty about swaying the vote, since I’m a laissez-faire kind of guy, but getting involved while fire protection is a hot topic (ahem) might be called for.

Any other tips I may have missed?

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About 97 percent of these donations will actually make it to the designated organizations — but the other 3 percent will be skimmed off by banks and credit card companies to cover their “transaction costs.”  Thanks to this hidden fee, American banks and credit card companies are making huge profits — somewhere in the neighborhood of $250 million a year — off of people’s charitable donations, according to a Huffington Post analysis.

Oh, please.  Spare me.

First of all, $250 million per year isn’t that much.  This is only about one-half of one percent of the total processing fees collected from credit card transactions (if the number on TrueCostOfCredit.com is to be believed).  This does not include all of the other fees that can be collected from the consumer side, like late fees and interest fees.  So, calling $250 million “huge profits” is stretching it.

Next, these fees aren’t “hidden.”  They’re well-known to every merchant (and most charities) that accept payments by credit card.  If consumers don’t know about these fees, then it’s probably because it doesn’t affect them directly.  In fact, merchant account agreements typically forbid merchants from refusing credit card transactions or tacking on “service fees” for the transaction, as it is a cost to be borne by the merchant, not the consumer.  The consumer need not care about it.

Next, the only reason that people can put their donations to a particular charity on a credit card is because the charity agreed to accept donations by credit card.  Furthermore, the charities are very wise to do so: according to the article, Oxfam and Operation USA pull in over 85% of their donations by credit cards.  Some of those donations could have been paid by check, but some of them just wouldn’t have been made at all.  Additionally, just as people are likely to buy more if they have a credit card as opposed to cash or check, people are likely to donate more if they donate with a credit card.

Charities aren’t profit-seeking like businesses are, of course, but there is competition among charities for a finite pool of money from donors.  Anything that makes it easier for people to donate makes it easier to tap into that scarce resource, and if there are costs associated with doing that, well, that’s the way things work.

Why should credit card companies and banks be compelled to do all of this for free? If I make a donation of $100 and put it on my credit card, it carries exactly the same risk to the credit card company as if I had bought $100 worth of groceries.  The issuing bank paid my donation to the charity almost immediately, and now they’re left with collecting it from me, which I could choose to not pay (granted, at my own peril).  Yet, that’s exactly what was done:  the credit card companies have bowed to pressure and will waive transaction fees for donations to selected charities for a few months.

If businesses want to contribute to rescue, repair, and aid efforts, that’s great.  You rock!  But if not, hey, you’ve counted the cost, and it’s your business.  I don’t fault airlines for profiting from transporting aid workers to and from Haiti.  I don’t fault oil refiners for profiting from selling jet fuel to the airlines.  I don’t fault companies selling first-aid kits, blankets, water, whatever, to charities to distribute to those affected.  And I don’t fault credit card companies for charging charities to make the donation process smoother so all of this great rescue can happen more quickly, and probably on a grander scale, than without it.

This objection to merchant fee profits is just another day in the credit card provider witch hunt that got the CARD Act through in the name of protecting consumers.  This will actually hurt us all in the long run.  Now a few more tens of millions of dollars have been shamed away from the credit card providers at a moment of opportunity.

If these transaction costs bother you (they might) the solution is pretty easy:  Write a check, mail it in, and bear all of the transaction costs yourself.  (Which actually isn’t true either:  workers have to open your envelope, record the check, take it to the bank, etc.)  Or charge it to a credit card that’s currently waiving its fees for donations to your chosen charity.

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Subsequently J gave me a sneak peek at another charity project he had in the works.  At the moment it appears he has it on the back burner, but from what I saw it was really polished and had a nice message to it.

So I wasn’t surprised when I saw that he had more giving activity going on this weekend.  He bought $100 worth of scratch-off lottery tickets and pledged any winnings to Project Hopeful.  After all was said and done, he raised more than $200 through his winnings and other matching donations.  Not bad at all!

In the weekend leading up to The Big Scratch, he entertained guesses for what his winnings would be.  He was hoping for $125, but my guess was closer to the right answer than anyone else’s.

I guessed he’d win $39, and he actually won $38.

Now, I understand completely that this was all in fun and I know without a shadow of a doubt that J’s heart was in the right place in doing this, and I’m not trying to take that away from him at all.  But I knew that it was almost a sure thing that he wouldn’t win more than the cost of the tickets.

Why?  Mathematics.  The more tickets you buy, the more likely you are to come close to the mathematical odds that were set forth in the game. There are two extremes.  If you buy one ticket, you either win 100% of the time, or you lose 100% of the time.  That’s one extreme.  If you buy all of the tickets, and if the odds of winning are 1:4.21, or 23.75%, then you’ll win 23.75% of the time.  That’s the other extreme.

J bought 100 tickets, and he had 20 winning tickets out of 100, or 20%.  That’s not that far off from 23.75%.  Had he gone all out and spent his yearly entertainment budget of $1200 (assuming $100/month), his win percentage would likely have been within a percent of the actual odds.

“Well, one of those tickets could have been a big winner, MBH.”  Absolutely right.  But not likely!

Let’s take ‘Tis The Season, one of the games J played. I’ll assume that the 1:4.21 odds apply to this game (they may not). The Maryland Lottery page shows the number of unclaimed prizes. Here are the numbers as of right now:

$1,000 – 16
$500 – 316
$100 – 567
$50 – 741
$12 – 7,592
$6 – 33,176
$3 – 57,130
$2 – 191,098
$1 – 270,869

Just as you’d expect: There are a lot more smaller prizes than big ones remaining. But let’s add another row to these numbers:

$1,000 – 16
$500 – 316
$100 – 567
$50 – 741
$12 – 7,592
$6 – 33,176
$3 – 57,130
$2 – 191,098
$1 – 270,869
$0 – 1,802,431 (est.)

I took the number of unclaimed prizes (561,505) and multiplied that sum by 3.21 (4.21 – 1) to estimate the number of non-winning tickets.  The majority of tickets are in that last (unwritten) line.

Playing the lottery long-term is a money-loser. It will eat your lunch without question.  J just took the opportunity to compress a year’s worth of lottery playing (two tickets per week) into a single weekend.

So anyway, I’m glad that J raised as much as he did.  He even offered to buy me a beer for being the best guesser.  But after this post, I’m probably the one who will need to be buying.

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Tuesday afternoon I was talking with a friend about the economy, the bailouts, etc.  We differ in opinion on how things should be handled — he’s anti-business and I’m free market — but I let it be known that it was my opinion that it was the church’s job to take care of the poor, not the government’s.

Well, that very night, God gave me the opportunity to help the poor.  (Funny how He holds you to your word.)  A woman approached me in Border’s asking for a ride a few miles down the road.  I was hesitant, but after a couple of minutes I decided to give her a ride.  She was the one that ended up taking me for a ride (ha!) but that’s all right.  She got coffee, dinner, part of tomorrow’s breakfast, and a room for the night.  It cost me $55 total and a couple hours’ time, but it got her to the next day in a little more comfort than she probably would have otherwise, and she thanked me several times.

This was a real eye-opener.  It’s easy to get comfortable in a middle-class lifestyle and forget that there are a lot of people struggling pretty hard.  Here are some things I learned:

• There’s a lot of need. We stayed at the Waffle House for a little while.  During that visit there was another gentleman sleeping in one of the booths near the bathrooms (homeless) and when the waitress reminded that gentleman that he wasn’t to ask customers for a ride, another guy piped up saying that he had been homeless.  That’s three people in one restaurant one night, out of maybe twenty customers, and those were just the ones I knew about.
• For every winning bidder of a storage bin auction, there’s someone losing their stuff. “M” (the woman I helped out) had her belongings in storage and couldn’t keep up with the rent.  She lost her clothes.  All she had was her work uniform.
• Necessity is the mother of invention. The Waffle House ran out of disposable forks, so she got one at the gas station (she didn’t own any).  She knew where to get the coupon book for the hotel that she stayed at (fairly regularly, I found out).
• Homeless people really are looked down on. I observed the other customers in the Waffle House and the looks on their faces said it all.
• There are compassionate people out there. Despite that having a homeless person sleeping in one of the booths isn’t really “good for business,” they let him do that anyway.  I left a fairly large tip.
• Living that kind of life is probably exhausting. I can’t imagine what it’s like but I could see it on her face.
• Planning is a lot shorter-term in this situation. When you’re wondering if someone’s going to be kind and give you a bed to sleep in tonight, thinking much past, maybe, next paycheck (if that) doesn’t really enter the picture that much.  That was the impression I got talking with her; her problems dominated the conversation.  (That’s not judgment, just observation.)
• I’m not going to solve her problems. Her solving her problems will be difficult enough.  The other guy I mentioned earlier (the one who piped up) I found out was an ex-convict.  You’d have a hard time guessing that because he was so well-spoken.  But his criminal record got in the way of a lot of employment opportunities.  He’s doing pretty well, but that kind of rough history will always be a liability.  The same with “M” — she has an uphill battle and will probably never be able to retire (she was at least in her 40s).
• Many people probably don’t receive as much “kindness from strangers” because they’re bigger physically.  I certainly was taking a risk inviting “M” into my car to take her down the road, and she wasn’t even that intimidating physically.  The guy that was sleeping in the Waffle House?  I wouldn’t feel safe because I was at a big disadvantage physically.  He could be a teddy bear, but one look at him and I just saw grizzly bear.  He can’t control people’s reactions to his size.
• My “problems” are just barely annoyances. A bad day at work or missing a tax deadline and paying a $10 penalty don’t really rank up there with needing a place to sleep or going hungry.
• And finally, I’m very thankful that I have a strong marriage, because if I didn’t, my wife would question why I had a charge for a hotel room on our credit card.

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I’m not anti-charity and we do support several, and we give generously to our church. But at the same time, I have no problem just hanging up without a word as soon as I realize it’s a charity. Absolutely none whatsoever. That sounds cold — and for all I know it might be — but here are the three main reasons:

• The charities don’t take the hint. You’d think after hanging up on them two dozen times that it would be pretty clear that I don’t want to donate. Nope. This doesn’t enter the equation because …
• The charities don’t have to take the hint. Even if I tell them I don’t ever want to give and that they’re wasting their time calling me, charities are exempt from the laws governing the National Do Not Call Registry. I cannot stop them from calling. From the Business FAQ page on DoNotCall.org:

The National Do Not Call Registry does not limit calls by political organizations, charities, or telephone surveyors.

• Charities will continue to ask for money. Most charities worth supporting have legitimate reasons to ask for money, but when’s the last time you heard a fundraising drive end early because they raised enough money? The charities that we support always, always continue to offer us opportunities to give more.

The few charities that call us at home again and again — the “usual suspects” — are ones that we’ve never had any interest in supporting. In most cases the charities we support don’t call us. That’s why I don’t feel the slightest twinge of guilt hanging up on the ones who do. The calling rules are set up in their favor, but I can still control the length of the call.

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