I recently did some some reporting on the debate over buy-and-hold investing vs. market timing. I'm mostly in the buy-and-hold camp. But here's my biggest takeaway…

There are two basic sales pitches on Wall Street:

1. Stocks are always a good buy. So pay me 1.4% of your assets per year to put you in stocks.

2. Stocks are sometimes a good buy, sometimes not. Pay me 1.4% to tell you the time.

Which is right? More

Many of us mid-career workers are racing to update our skills. Beyond the immediate recession, we can see that companies are less and less interested in providing long-term employment. New technologies quickly render experience obsolete. And a lot of white-collar industries (finance, real estate, and, ahem, media) look like they'll be smaller and less lucrative even after the recovery comes. But going back to school is tough once you have a mortgage and kids.

In my MONEY magazine column this month, I spot a glimmer of hope in "open source" online education. Some of the world's best schools — Yale, Berkeley, Stanford, MIT, Carnegie Mellon and even the Indian Institutes of Technology — are posting free course materials and lectures online. They're not a bad way to get up to speed on certain subjects, but they don't yet help you get any credentials to signal to employers that you've really learned the stuff. My column speculates a bit on how that gap might be bridged, particularly for professionals who have already gone to college and don't need a full master's degree.

Since I wrote that, the The Chronicle of Higher Education has published a more extensive look at just this issue. And it reports some discouraging news: More

Last month, Sen. Jon Kyl (R-Ariz.) introduced a health-reform-bill amendment that would have prevented the federal government from requiring insurers to offer any particular medical benefits. "I don’t need maternity care," he said. "And so requiring that to be in my insurance policy is something that I don’t need and will make the policy more expensive."

Michigan Democrat Debbie Stabenow zinged back: "I think your Mom probably did."

The left side of the blogsphere loved this. Democrats used it as fundraising opportunity.

Politicians are probably best advised to stick to a rigorous pro-motherhood line. But Kyl's point was really just an extension of a view about health insurance that a lot of Americans hold. More

The White House says President Obama will donate the $1.4 million in cash that comes with his Nobel Peace prize. Which made us wonder: What are the tax implications of this?

Over at Politico, Josh Gerstein reports on some of the possible legal complications of accepting the monetary award, even if the President immediately gives it away. His source suggests that Obama could, among other things, end up owing some tax.

Maybe only if he has a terrible accountant. As the Politico item notes at the end, there's an exception. Kail Padgett at the Tax Foundation's blog points us to the relevant section of the IRS tax instructions. One surprise: It actually mentions the Nobel. More

If the economic meltdown has forced you into a budget-friendly staycation this summer, you can treat yourself to some cheap and potentially cathartic entertainment. For a mere $5.95, just buy a deck of Financial Crisis Most Wanted Playing Cards.

Not to be outdone by the Iraqi most-wanted deck of cards from a few years ago, budding entrepreneur Jason Witt of San Ramon, Calif. came up with 52 faces of the financial crisis. The deck features Wall Street hot shots, financial felons (convicted or at least alleged), ineffectual regulators and other poster boys of the times. (And we do mean boys, since 51 of 52 cards picture men.) In the Iraqi version, the Ace of Spades was reserved for Saddam Hussein; in the crisis deck, that dishonor goes to Bernard Madoff, the Ponzi-schemer extraordinaire.

There is no shortage of intriguing “winning” hands. Here's a memorable full house:

–King of Spades: Alan Greenspan (former Federal Reserve chairman)
–King of Hearts: Angelo Mozilo (former CEO, Countrywide Financial, current defendant in civil fraud case for insider trading)
–King of Clubs: Richard Fuld (former CEO, Lehman Brothers)
–Ace of Diamonds: Ben Bernanke (current Federal Reserve Chairman)
–Ace of Clubs: Jim Cramer (CNBC stock jock)

The lone woman in the mix is FDIC chairwoman Sheila Bair. Witt says he wanted to include banking analyst Meredith Whitney, who has been credited as one of the few voices to sound the alarm bell early, but he was unable to snag permission.

Jokers are reserved for educational purposes. One features a 10-year timeline of key events, the other lists acronyms of the time, such as CDO and TARP.

What’s missing are stand-ins for some other key players, including the appraisers happy to pump hot air into the already dangerous bubble, and yes, the homeowners who fell for it all and took on mortgages they never really could afford. Who would you nominate for your own deck of shame?

–Carla Fried

Nostalgia for the 1950s started kicking in even before the next decade had drawn to a close: Sha Na Na, you may recall, was one of the headline acts at Woodstock. But most of those who pine for those particular good old days–besides retro designers and fans of Grease–have tended to come from the conservative end of the spectrum, from those who see the 60s as the beginnings of America's end.

But recently, some on the left have begun making sympathetic noises about the age of pre-tubby Elvis. Economist and New York Times pundit Paul Krugman, in his book The Conscience of a Liberal, harks back to his boyhood in the 50s, when, he notes, our country was a lot more egalitarian than it is now, when blue-collar workers made solid middle-class wages and there were no hedge fund managers raking in billions a year. "Middle-class America didn’t emerge by accident," Krugman writes. "It was created by what has been called the Great Compression of incomes that took place during World War II, and sustained for a generation by social norms that favored equality, strong labor unions and progressive taxation."

In a provocative white paper (recently excerpted in Reason magazine, libertarian think-tanker Brink Lindsey takes on what he calls Krugman's "Nostalgianomics."

Lindsey, a top researcher at the Cato Institute, concedes that the 50s were, in many respects, golden years for the middle class. But, he goes on to argue, the shared prosperity of those years rested on some exceptional circumstances, such as steep declines at the top end of the income spectrum caused by the Depression, rapid growth in demand for low-skilled labor, and a quick increase in the supply of skilled workers. (It also didn't hurt that in the early post-war period our biggest potential global competitors, Europe and Japan, had been devastated by the war.)

And Lindsey goes on to argue that the "social norms" of those years weren't all as warm and fuzzy as Krugman suggests. The economic consensus of those days, Lindsey says, was built on market cartels that limited competition to favor producers over consumers. "The restrictions on competition," he writes, "were buttressed by racial prejudice, sexual discrimination, and postwar conformism…." These restrictive social norms were ultimately overthrown by the cultural revolutions of the 60s. "Doing your own thing" meant greater individualism, and, inevitably, this individualism led to greater inequality.

In other words, Lindsey suggests, you can't go back to these "golden years" without rolling back some pretty hard-won social gains.

Blogger Matt Yglesias argues that Lindsey's attack on Krugman seems "silly" at best. "I’ve read Conscience of a Liberal," he writes, "and it’s not as if the book ends with a call for the return of comprehensive regulation of airline fares or the re-establishment of the AT&T monopoly."

That's true. And indeed, though Lindsey would hardly support it, you could reduce inequality in a big way (without bringing back a single regulation) by simply taxing the rich more. But Lindsey's bigger point stands: The 50s really aren't worth bringing back, even if we could. As Lindsey put it when I spoke with him for an upcoming MONEY piece: "Nostalgia's rarely a good guide to policy making. "

–David Futrelle

I've been a personal-finance journalist for over a decade, and what I'm about to say almost amounts to heresy in my line of work: Some of your most pressing financial questions just don't have any satisfying answers. There may not be much you can do.

Most financial advice sounds like something out of a how-to manual. Building a table with a dovetail joint? Go get a fine-tooth saw and sharp chisels. Want to shelter your retirement savings from future taxes? Put it in a Roth IRA. But there's a whole set of money problems that can't always be solved by finding (or buying) the right tool.

The best example of this: Paying for long-term care, whether it's for your aging parents or for yourself. In his new book Caring for Our Parents, the journalist and Urban Institute researcher Howard Gleckman makes a compelling argument that the cost of long-term care will be the next shoe to drop in America's ongoing health-care crisis.

This story is personal for Gleckman (who also edits an excellent blog on tax policy). In the course of just a few months, first his father-in-law and then his father fell ill. His family had shell out thousands of dollars to pay for just a few weeks of nursing-home care, and then battled with a Medicare managed-care insurance company that refused to pay $85 a day for his dad's at-home aide. Even little things were a struggle: For a time, the only way his father (who lived in a different state) could get to a doctor was to call an ambulance. "I was a journalist and my wife was a lawyer, [but] we were hit with this huge crisis and we didn't even know where to start," Gleckman told me recently.

That huge complexity is likely in your future, too. About 70% of seniors will eventually need some kind of long-term care, according to one study Gleckman cites, and most of that isn't covered by Medicare. (Long-term care isn't medicine and doctors—it's the people with strong backs who lift you out of bed and make sure you are eating.) A day in a nursing home runs an average of $180, and the rate keeps going up faster than inflation. After you burn through your lifetime of savings or home equity, the main safety net to pay for this is Medicaid, the government insurance program for the poor. With 77 million baby boomers hurtling towards retirement, that system is likely to come under major financial pressure.

This is where the "right tool" problem comes in. There is a product on the market that's supposed to solve this: long-term care insurance. But it's an answer with a lot of asterisks. A couple of years ago, MONEY's Amanda Gengler and I took a close look atLTC insurance and who it might be right for. Read it here.That story kept me up at night with worry about offering the right advice—the stakes of the decision to buy insurance can be very high, and the product is dauntingly complex.

Among the questions you'll have to tangle with: Are you buying enough coverage (or the right kind) to pay for unpredictable future costs? Will you be able to afford to keep paying the policy 10, 20, or even 40 years from now, especially if premiums rise? And these days, you'd have to add: Can you trust the financial strength of the insurance company?

Speaking very broadly, long-term care insurance can make sense if you'll have enough money to comfortably pay premiums for life, expect to have an estate worth preserving, and are willing to do a lot of careful research to make sure you get the right policy. In short, while today's private LTC insurance can work for some people, it's not going to be an affordable solution for most us. And so it also won't protect the younger taxpayers who are going to be on the hook for more and more of these costs in the coming decades.

Gleckman thinks we'll need to set up some kind of public or hybrid public-private insurance system, so that more Americans will be preparing in advance to pay for the cost of their own care. This insurance might pay just part of the costs, leaving plenty of room for private insurers to sell supplemental coverage. Ideally, Gleckman says, the insurance would be mandatory, so that, by spreading the cost among millions, the premiums could be kept low.

America is already facing a hefty bill for boomers' retirement and regular medical costs—can we really add long-term care to the government's menu of responsibilities? The truth is that cost is going to hit us whether we plan for it our not. And this is one problem we'll need to face as a society, not just as individuals.

—Pat Regnier

Gas Tax Map (click to enlarge)

President Obama’s recent announcement that auto fuel efficiency standards are being sped up to require an average per-fleet fuel economy of 35.5 mpg for cars by 2016 (the previous goal was 35 mpg by 2020) has its environmental and geopolitical merits. Less green house gas emissions, less dependency on foreign oil producers is a very big win-win.

But it is potentially lousy news for the roads we drive. A primary funding mechanism for road and bridge construction and repairs is through the imposition of pay-at-the-pump gas taxes. The federal government collects 18.4 cents on each gallon of gas sold, and every state (except Alaska) tacks on its own levies, ranging from 20 cents to 40 cents per gallon. By pushing us into more efficient cars, the federal and state governments are going to take in less gas tax revenue. And it’s not as if they are exactly running big surpluses to make that palatable.

Consider that the 2010 Toyota Prius clocks in at an estimated 51 miles per gallon. Assuming 15,000 miles driven a year, the Prius owner pays just $54 in federal tax. The same mileage on the 2009 Hyundai Genesis–voted North American Car of the Year–generates a minimum of  $102 in federal tax. (I gave the Genesis the benefit of the doubt and used its highway average of 27 mpg rather than its less-efficient 18 mpg for city driving.) If both cars happen to be driven in California (40 cents/gallon in taxes) the Prius driver pays an additional $118 into state coffers, while the Genesis owner owes $222.

The hit to gas-tax revenue has not gone unnoticed by the folks collecting the revenue.  Oregon road-tested a program that would replace the gas tax with a mileage tax, and other states are also considering similar pay-as-you-go taxes levied on your actual miles driven. (For the privacy-possessive out there, yes, GPS is how the data is collected.)

And the National Surface Transportation Infrastructure Financing Commission (translation:  a bipartisan panel of government and industry folks concerned about roads and bridges) recently backed switching from a gas tax to a mileage tax as a long-term solution for road and bridge funding. The commission estimates that to meets its base case for maintenance and improvements, the tax would be roughly 2.3 cents per mile.

Yet when Transportation Secretary Ray LaHood floated the mileage levy as an idea worth pursuing in an April interview with the Associated Press, the White House quickly went out of its way to say LaHood was wrong. That may be the politically expedient response in a recession, but eventually something’s gotta give.
The commission pointed out that the shortfall for federal highway and transit projects is expected to run $400 billion from 2010 through 2015. In the meantime, the commission’s proposal to cover shortfalls is to raise the federal gas tax by 10% (it hasn’t budged since 1993); it’s not hard to imagine cash-strapped states will be looking for near-term solutions to the growing shortfall too.

–Carla Fried

Friday’s news that the official unemployment rate is now at a 26-year high of 9.4% is actually a rosy spin on what is really happening.

The official unemployment stat that gets the headline treatment, the BLS’ U-3 data set, doesn’t count all sorts of folks who are unemployed and underemployed.

To get a more comprehensive snapshot of the labor picture you need to focus on the less well-known U-6 data set known as “alternative measures of labor utilization.” The U-6 includes folks counted in U-3 plus “ all marginally attached workers” as well as people who aren’t working full-time but wish they were (i.e., the underemployed.) Marginally employed covers “persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past.”

And when you add up U-3 and all the underutilized workers the official U-6 rate for May 2009 is 16.4%. That’s an official BLS-generated stat that no one really wants to talk about: One out of every six members of the civilian labor force is either out of work or not fully employed. (And that doesn’t even account for the rising ranks of workers coping with furloughs.)

Okay, so exactly how bad is that from a historical perspective? Pretty bad. The BLS began reporting U-6 in 1994; in January 1994 the U-6 rate was 11.8% and then steadily declined before reaching an all-time low in October 2000 of 6.8%. During the ensuing recession/bear market U-6 peaked at 10.4% (Sept 2003) until the credit crisis took hold in 2008. The U-6 rate hit 10.9% in August 2009 August 2008 and has been on a rapid climb ever since; over the past year it has shot from 9.8% to today’s 16.4%. It sure makes it hard to buy into the green shoots theory just yet.

–Carla Fried

After announcing a plan that would have allowed first time homebuyers to use a special tax credit to cover the 3.5% required down payment on an FHA-insured loan, the Dept. of Housing and Urban Development apparently had second thoughts.

Late last week HUD released a newly remodeled plan that does not allow the first-time homebuyer tax credit to be used for the down payment. Seems there was plenty of push back that allowing borrowers to land a mortgage without any “skin in the game” was not exactly a great idea. What’s amazing is that the proposal even got floated in the first place; the notion that taxpayer dollars would have been on the line for mortgages that required no down payment was a bit of a head spinner.

What HUD finally settled on was that lenders can essentially advance qualified home buyers the value of their tax credit today to reduce their mortgage costs, but only if the borrower can bring a minimum 3.5% down payment to the table. Approved uses of the tax credit include paying for closing costs, making a larger down payment (to thereby reduce the monthly mortgage cost) or buying down the interest rate by paying points. The real value of the new rule is that eligible homebuyers can now “use” their tax credit today, rather than having to wait to recoup the value of the credit when they file their 2009 federal tax return in early 2010.

Basically, if you meet the eligibility rules you can now get a maximum of $8,000 advanced to you to buy a home. Single homebuyers with income below $75,000 and married couples who file a joint return with income below $150,000 are eligible for the max tax credit. (A limited credit is available for individuals with income between $75,000-$95,000 and joint filers with income between $150,000 and $170,000; the credit completely phases out above those income levels.) Anyone who has not owned a primary residence for three years is considered a first-timer but to grab the tax credit you must close on an FHA-insured loan before December 1 of this year.

– Carla Fried

Grab one now, or hope for lower rates?

So what’s a floater to do now? Well, if you’ve lost your betting mojo, lock in and be happy. Yes, happy. Let’s remember that 5.45% is still seriously good. It was only one year ago that the average 30-year fixed rate was 6.1%. And long term, it is all but assured that a 5.45% fixed rate is going to look darn nice. It may take some time before the Fed gives up the fight and has to let rates rise to attract buyers for all the debt we now have to pay off, but it will happen. So while today’s 5.45% is high relative to a month or two ago, it is likely to be one you will boast about in the coming years.

Okay, enough of the long-term perspective. What if you’re still in betting mode and wondering about the next few weeks and months? Well, that’s one big crap shoot. The recent spike has been caused by action in the 10-year Treasury market (the 30-year fixed rate tends to follow movements in the 10-year note.) Late last week the bond market started worrying about inflation and servicing the federal deficit, and one thing led to another and the 10-year Treasury yield shot from 3.4% last Thursday to above 3.7% during trading yesterday (Thursday) before closing lower at 3.67%. Plenty of market watchers are expecting the trend line on the 10-year Treasury to keep moving up. But here’s where it gets interesting: there’s not as clear a picture if a continued rise in the Treasury will automatically cause the 30-year fixed to also rise.

The big wildcard is Ben Bernanke and his merry band at the Federal Reserve. The Fed has been actively buying up long-term Treasuries and mortgage backed securities in an effort to help keep yields low. When rates started rising the past few weeks the Fed signaled it wasn’t too concerned; in fact it seemed to be cheered by the notion that those slightly rising rates were a sign the economy was gaining a bit of strength. But now there’s a sense that the continued rise-capped by the big spike this past Wednesday-could refocus the Fed’s effort to push yields down; it has yet to use up even half the money it has allotted for the buyback programs, so it’s got plenty of gunpowder ready.

That could be good news for rate floaters; assuming the Fed is still worried that rates rising too quickly and too far will put the kibosh on the already anemic credit market recovery, it’s a decent argument to assume the Fed will soon ramp up its repurchases in an effort to push yields back down after their recent spike.

As David Rosenberg, the former Merrill Lynch economist now at Gluskin Sheff noted on Thursday morning:

“It’s one thing to have a Treasury yield backup when mortgage rates are still declining, but that is no longer the case. The yield on the 30-year fixed-rate is already up 20 basis points from the lows; 1-year ARMs have jumped 17bps. This is not what the Fed wants to see.”

Indeed, the recent rate uptick has sent a chill through the still frigid housing markets. According to the Mortgage Bankers Association, mortgage applications dropped 14.2% this week compared to a week prior.

The bet’s yours, floaters: lock in now at what still qualifies as a terrific interest rate, or put your money on the Federal Reserve pushing yields down in the coming weeks. Which way are you leaning?

– Carla Fried

The Obama administration brought one of the leading proponents of retirement plan reform into the official fold in late April, signaling the administration is going to push hard to reform the retirement saving plan system.

Mark Iwry has segued from wonk-land (Brookings, and principal at the Retirement Security Project) to become the new senior adviser to Treasury Secretary Timothy Geithner and deputy assistant secretary for retirement and health care policy. Along with David John of the Heritage Foundation, Iwry co-authored the blueprint for the Automatic IRA that is now included in the Obama administration’s 2010 budget proposal. This new savings vehicle would require employers who do not currently offer a retirement plan to set up an automatic direct deposit for employees to contribute to their own IRA. (For more on Auto IRAs click here.)

That apparently is just the start. Recently Iwry along with other leading retirement policy experts have begun floating the idea of a way to systematically provide steady guaranteed income from retirees 401(k) accounts, much like an old-fashioned (and rare) defined benefit pension.

In a recent interview with Investment News before joining the Obama administration Mr. Iwry said the annuity initiative is “in the early stages, but there has been a fair amount of interest in our ideas and the core concepts so far.”

In a March presentation to the Conference on Financial Literacy, Iwry and John laid out some of the current (early) thinking on creating annuities for defined-contribution retirees:

• Half of a retiree’s assets in a 401(k)-type account would be automatically paid as monthly income for a two-year trial period (the default trial arrangement), unless the retiree affirmatively elected a different form of payout permitted under the plan.
• After the trial period of 24 consecutive monthly payments, the retiree could again opt for alternative forms of payment. Those who made no affirmative choice within a specified period would continue to receive monthly payments as the program converts automatically from trial-period income to permanent income.

Iwry and John have also floated ways to encourage pre-retirees still contributing to a plan to create a pot of annuitized money. One possibility is to have the employer match made into a deferred annuity. Another idea is to use deferred annuities within the “bond” portion of lifecycle funds as employees near retirement.

It’s still too early to know if this plan will have traction, but it is interesting that the Obama administration is clearly focused on how to improve the potential outcomes for Baby Boomers rapidly transitioning from the age of accumulation to the perilous de-cumulation period. Left on their own (and at the mercy of online retirement income calculators) the concern is that too many boomers will set too aggressive a withdrawal schedule early in their retirement that will cause them to outlive their assets.

We’ll keep you posted on the progress of the annuitization movement inside the Beltway.

– Carla Fried

Every month Merrill Lynch (or Bank of America Securities-Merrill Lynch for you scorekeepers) checks in with a bunch of big time money managers to take their bullish/bearish temperature. Collectively the 400 or so global managers in the May survey are pushing the buttons controlling portfolios worth nearly $1 trillion, so we’re not talking about a Beardstown lady survey here.

And these pros are getting their bull on. Seventy percent said they believe the world economy will improve over the next 12 months and so they are upping their equity stakes. The area getting the most attention: emerging markets. The report notes that 46% of the money managers are now overweight the emerging markets, compared to 26% back in April. The bullishness for China specifically is at its highest since the survey began tracking Chinese sentiment in 2003.

Maybe it’s just coincidence, but um, it just so happens that the MSCI emerging markets index has shot up 15% in the past month, and has gained nearly 50% over the past three months. A bit of performance chasing perhaps? To be sure, emerging markets got hammered mercilessly in ’08 (the iShares Emerging Market ETF lost nearly 50%) so there is a decent valuation gambit at play, but even the co-head of Merrill’s international investment team expressed some concern at the surge in emerging markets interest. “….this rush to take on risk, especially in emerging markets is reminiscent of bubble-like behavior,” said Michael Hartnett.

Individual investors might be wise to pause and consider the bubble possibility before investing at today’s levels. The fact is, fund investors have an absolutely horrid record chasing emerging market performance. According to Morningstar, the iShares MSCI Emerging Markets ETF has an impressive 11.7% annualized gain over the past five years through April. That’s the fund. But investor returns-that is the dollar-weighted returns that measure what the typical investor actually earned based on when they invested-is an anemic 0.96%. Poor timing resulted in earning nearly 10 percentage points less than the actual ETF returned. You might want to keep that in mind before joining the pros piling into emerging markets funds after this big run-up.

– Carla Fried

You may recall that part of the Economic Recovery and Reinvestment Act passed back in February includes a nice fat tax incentive for first-time homebuyers. The new law provides a maximum $8,000 refundable tax credit for first-time homebuyers with modified adjusted gross income of $75,000 ($150,000 for married couples filing a joint return). The hope was that the credit would push potential first time buyers already enticed by lower home prices and record-low mortgage rates to take the real estate plunge.

Well, apparently that’s not working as well as expected, or as fast as expected.

So HUD has upped the ante. Last week HUD announced that the $8,000 credit can now be used for a down payment and closing costs on an FHA-insured loan. The tweak to the program is that instead of waiting for the $8,000 credit when you file your 2009 tax return in 2010 (which doesn’t do you any good coming up with the down payment today) you can now change your tax withholding ASAP to get the $8,000 in your pocket, and FHA lenders have the green light to let you apply that money to the down payment and closing costs.

“The biggest obstacle for first-time buyers is coming up with a down payment,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla,” in the official NAHB back slap lauding the change in policy. “We commend [HUD] Secretary Donovan for acting decisively to enable buyers to access the tax credit at the time of closing. This will help to stimulate home sales, stabilize housing and get the economy back on track.”

Hmm. I could have sworn that one of the takeaways from the great real estate wash out was that maybe, just maybe, no down payment loans aren’t such a great idea. That in fact, requiring potential buyers to have a little skin in the game is one of a few important factors in assessing the financial viability of the purchase. It gives the home buyer a vested interest in protecting an investment, that is, paying the mortgage. But with this new twist, homebuyers are essentially able to use $8,000 of taxpayer skin to finance a purchase.

Now to be sure, FHA loans have never carried big down payments; it can be as little as 3.5%, plus the cost of the FHA insurance. But bringing 3.5% to the table is still more motivation to be fiscally responsible than bringing nothing. Yet now thanks to more taxpayer largesse, a first time buyer can take out a $200,000 FHA-backed mortgage, use the tax credit to cover the 3.5% down payment ($7,000) and have another $1,000 for closing costs.

– Carla Fried

It’s easy to sell an unwanted bathroom vanity light on Craigslist. But when you’re looking to gut the kitchen or bathroom, finding a seller-and arranging delivery-for a tub or stove becomes a bit impractical, so the tendency is to let the contractor come in, demolish, and haul off everything to the dump.

But there’s another renovation model to consider: Surgical deconstruction that salvages the material for resale. One of the leading deconstruction outfits is the San Francisco-based nonprofit The ReUse People of America (TRP). The firm arranges for a certified contractor to come in and carefully remove unwanted materials, from tubs, to doors, down to the wood beams if it’s a full teardown. You can then claim the value of the deconstructed goods as a tax deduction. If the value is more than $5,000 you’ll need an official appraisal to satisfy the IRS; a deconstruction firm should be able to hook you up with a qualified appraiser.

While the cost of the surgical demolition costs more than letting your contractor go at it with sledgehammer, the value of the tax break can more than offset that cost depending on your tax bracket.

It’s not just a matter of more green in your wallet; it means less stuff being hauled off to the landfill; TRP estimates that its programs have so far diverted more than 260,000 tons of building material from landfills.

While most of TRP’s business is in California, the deconstruction movement is gaining national momentum; TRP operates retail stores where anyone can pick up donated materials on the cheap in Chicago, Denver and Kansas City, along with more than a half-dozen California outlets. You can learn more here. And other firms, some for-profit, now offer deconstruction as well as demolition. The best way to locate deconstructionists in your area is to try a simple Google search of “residential deconstruction” with the name of your town. You can also ask your local home building association or contractors if they are aware of any programs.

– Carla Fried