government http://www.wisebread.com/taxonomy/term/3932/all en-US Unclaimed Assets: Is the Government Holding Your Money? http://www.wisebread.com/unclaimed-assests-is-the-government-holding-your-money <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/unclaimed-assests-is-the-government-holding-your-money" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/cdn/farfuture/g18pTleb8udBg8kfCePcVv_ZF_Qz9dpS3cx4dn_xIfw/mtime:1362742838/files/fruganomics/imagecache/250w/blog-images/182490216_3ea5341f46_z.jpg" alt="uncle sam hat" title="uncle sam hat" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>State governments are holding an estimated $41.7 billion in unclaimed property, also called abandoned property. The funds could be from abandoned bank accounts, refunds, security deposits, insurance funds, customer over payments, or uncashed paychecks. The list goes on: stocks, bonds, contents of safe deposit boxes, pensions, tax refunds.</p> <p>The good news is that the Internet makes to easy to discover if some of that property is yours, and then to reclaim it. (See also:&nbsp;<a href="http://www.wisebread.com/how-to-buy-all-that-stuff-the-police-seize-and-its-cheap">How to Buy All That Stuff the Police Seize</a>)</p> <h2>The Law on Lost Loot</h2> <p>If an account has no activity and the company holding it has no contact with the owner for a year or more, the funds must be turned over to the state, which holds the money and tries to find the rightful owner, according to the <a target="_blank" href="http://www.unclaimed.org/">National Association of Unclaimed Property Administrators (NAUPA)</a>. Claims can usually be made into perpetuity, even by heirs.</p> <p>Because companies are required by law to send funds from lost accounts to the state of the owners' last known address, you could have unclaimed property in every state where you've lived.</p> <p>State laws vary. For instance, in some states unused gift cards are deemed abandoned. Some states auction off abandoned property &mdash; which could be anything from <a href="http://www.wisebread.com/cocktail-time-great-budget-liquors">liquor </a>to sardine cans &mdash; and try to return the proceeds to the owners.</p> <p>In fiscal year 2011, states returned a total of $2.25 billion to rightful owners, according to NAUPA. The average claim was $892. Amounts are often pocket change, but can occasionally run into the millions of dollars. In one such case an anonymous Connecticut resident claimed $32.8 million in proceeds from a stock sale.</p> <h2>Claiming Your Missing Property</h2> <p>How to find if you have unclaimed property?</p> <p>NAUPA's website has links to state unclaimed property programs. You can also search the database at <a target="_blank" href="http://missingmoney.com/">MissingMoney.com</a>. That site, which is endorsed by NAUPA, lets you search many state databases at once. Both sites are free.</p> <p>State programs aren't the only ones returning unclaimed property.</p> <p><strong>Claiming Lost Tax Refunds</strong></p> <p>Every year the IRS is unable to find people due tax refunds because they move, change their names, or have errors on their returns. For returns filed in 2011 for the 2010 tax year, unclaimed tax refunds to almost 100,000 tax payers amounted to over $150 million.</p> <p>Taxpayers can use the <a target="_blank" href="http://www.irs.gov/Refunds/Where's-My-Refund-It's-Quick,-Easy,-and-Secure.">&quot;Where's My Refund?&quot;</a> tool on IRS' website to locate missing refunds. They can also use the department's phone tool by calling 1-800-829-1954.</p> <p>To avoid lost returns in the first place, the IRS says taxpayers should file electronic returns and use direct deposit, which are faster and more efficient.</p> <p><strong>Claiming Lost Pension and Insurance Benefits</strong></p> <p>The Pension Benefit Guaranty Corp, a federal government agency, has over $300 million in unclaimed pension benefits for 38,000 people. You might be entitled to a benefit if you are a beneficiary of a deceased participant.</p> <p>To find if you are, use the agency's&nbsp;<a target="_blank" href="http://search.pbgc.gov/mp/mp.aspx">online search tool</a>.</p> <p>If you think you have unclaimed life insurance benefits, you should check the insurance company's website for an online database.</p> <p><strong>Claiming Lost Bonds</strong></p> <p>For <a href="http://www.wisebread.com/receiving-your-tax-refund-in-savings-bonds">U.S. savings bonds</a>, visit <a target="_blank" href="http://treasuryhunt.gov/">treasuryhunt.gov</a>. Each year, 25,000 payments are returned to the government as undeliverable, the Treasury Department reports. Billions of dollars in savings bonds have stopped earning interest, but haven&rsquo;t been cashed.</p> <p><strong>Using Paid Searchers</strong></p> <p>Some businesses, using states' freedom of information acts, will search for your unclaimed property for a fee. Although most businesses work within the law, watch out for scams. Before signing a contract, contact your state unclaimed property office for more information.</p> <p>There's no need to pay a fee when you can use free databases or contact your state's unclaimed property office directly.</p> <p>To avoid letting an account become abandoned in the first place follow these tips:</p> <ul> <li>Contact the institution holding the account once a year, especially if you move or change your martial status. Most financial institutions don't forward mail for security reasons.<br /> &nbsp;</li> <li>Keep accurate financial records, including bank account numbers, insurance policies, and information on rent and utility deposits.<br /> &nbsp;</li> <li>Cash checks right away.<br /> &nbsp;</li> <li>Respond promptly to requests for confirmation of account balances.<br /> &nbsp;</li> <li>If you have a safe deposit box, record its number, bank name and address, and give the extra key to someone you trust.<br /> &nbsp;</li> <li>Prepare and file a will that details all of your assets.</li> </ul> <p><em>Have you ever been reunited with your lost or forgotten money or property? Did you discover any using the tools linked above?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/michael-kling">Michael Kling</a> of <a href="http://www.wisebread.com/unclaimed-assests-is-the-government-holding-your-money">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-be-ashamed-to-be-on-public-assistance">Should You be Ashamed to be on Public Assistance?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/can-the-government-help-in-a-recession">Can the government help in a recession?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-it-the-end-of-6-real-estate-commissions">Is It the End of 6% Real Estate Commissions?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-can-you-do-if-you-cannot-afford-to-pay-your-taxes">What can you do if you cannot afford to pay your taxes</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-us-government-wants-you-in-debt">The U.S. Government Wants You in Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance abandoned property government unclaimed money Fri, 08 Mar 2013 11:24:30 +0000 Michael Kling 968070 at http://www.wisebread.com Ask the Readers: Would You Donate to the Government? http://www.wisebread.com/ask-the-readers-would-you-donate-to-the-government <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/ask-the-readers-would-you-donate-to-the-government" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/cdn/farfuture/50U73LJA_wXGVCQvOa15rO2QS0R9qOJgUn82nzxZdi0/mtime:1314096853/files/fruganomics/imagecache/250w/blog-images/44210696_12d559204e_z-1.jpg" alt="Would You Donate to the Government?" title="Would You Donate to the Government?" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p><em>Editor's Note: Congratulations to </em><a href="http://www.wisebread.com/ask-the-readers-would-you-donate-to-the-government#comment-504699"><em>Christie</em></a><em>, </em><a href="http://www.wisebread.com/ask-the-readers-would-you-donate-to-the-government#comment-505053"><em>John Mc</em></a><em>, and </em><a href="http://www.wisebread.com/ask-the-readers-would-you-donate-to-the-government#comment-504742"><em>Elizabeth S.</em></a><em> for winning this week's contest!</em></p> <p>The United States is currently over <a href="http://www.brillig.com/debt_clock/">$14 trillion</a> dollars in debt. After the recent debt-ceiling crisis, almost everyone became painfully aware of how in trouble the United States is financially. But is the severity of the situation enough to cause Americans to pull together to try to alleviate the debt issue by donating to the Bureau of Public Debt?</p> <p><strong>Would you donate to the government? &nbsp;</strong>Do you think that people should donate to help the United States reduce it's debt? Why or why not?</p> <p>Tell us if you would donate to the government and we'll enter you in a drawing to win a $20 Amazon Gift Card!</p> <h2>Win 1 of 3 $20 Amazon Gift Cards</h2> <p>We're doing three giveaways &mdash; one for random comments, one for random Facebook &quot;Likes&quot;, and another one for random tweets.</p> <h3>Mandatory Entry:&nbsp;</h3> <ul> <li>Post your answer in the comments below&nbsp;</li> </ul> <h3>For extra entries (1 per action):</h3> <ul> <li>Go to our <a href="http://www.facebook.com/pages/Wise-Bread/26830741467?ref=ts">Facebook page</a>, &quot;Like&quot; us, and leave a comment telling us you did, or</li> <li><a href="http://www.twitter.com/">Tweet</a> your answer. You have to be a follower of our <a href="http://twitter.com/wisebread">@wisebread account</a>. Include both &quot;@wisebread&quot; and &quot;#WBAsk&quot; in your tweet so we'll see it and count it. Leave a link to your tweet (click the timestamp for the individual URL) in a separate comment.</li> </ul> <p><strong>If you're inspired to write a whole blog post OR you have a photo on flickr to share, please link to it in the comments or tweet it.</strong></p> <h4>Giveaway Rules:</h4> <ul> <li>Contest ends Monday, August 29th at 11:59 pm Pacific. Winners will be announced after August 29th on the original post. Winners will also be contacted via email.</li> <li>You can enter all three drawings &mdash; once by leaving a comment, once by liking our Facebook update, and once by tweeting.</li> <li>This promotion is in no way sponsored, endorsed or administered, or associated with Facebook.</li> <li>You must be 18 and US resident to enter. Void where prohibited.</li> </ul> <p>Note: Due to recent changes in Facebook's promotions guidelines, we have restructured the entry format of our giveaways.</p> <p><strong>Good Luck!</strong></p> <div class="field field-type-text field-field-blog-teaser"> <div class="field-items"> <div class="field-item odd"> Tell us if you would donate to the government and we&#039;ll enter you in a drawing to win a $20 Amazon Gift Card! </div> </div> </div> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ashley-jacobs">Ashley Jacobs</a> of <a href="http://www.wisebread.com/ask-the-readers-would-you-donate-to-the-government">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/ask-the-readers-hamburger-what-to-do-with-it-a-chance-to-win-20">Ask the Readers: Hamburger, What to Do With It? (A Chance to win $20!)</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/ask-the-readers-should-kids-get-paid-for-doing-chores">Ask The Readers: Should Kids Get Paid For Doing Chores?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/ask-the-readers-how-did-you-spend-your-first-paycheck">Ask the Readers: How Did You Spend Your First Paycheck?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/ask-the-readers-200-giveaway-would-you-ding-your-credit-to-get-out-of-debt">Ask the Readers $200 Giveaway: Would You Ding Your Credit to Get Out of Debt?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/ask-the-readers-what-is-your-new-years-resolution">Ask the Readers: What Is Your New Year&#039;s Resolution?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Giveaways Ask the Readers donation government Tue, 23 Aug 2011 10:36:20 +0000 Ashley Jacobs 671094 at http://www.wisebread.com The Debt Ceiling Crisis in Everyday English http://www.wisebread.com/the-debt-ceiling-crisis-in-everyday-english <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-debt-ceiling-crisis-in-everyday-english" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/cdn/farfuture/4-YVH8Pz09D6haww6hivvMsAoZ0Z5kIYzVoqkFg7ANc/mtime:1311980558/files/fruganomics/imagecache/250w/blog-images/capitol_building.jpg" alt="The U.S. Capitol Building" title="The U.S. Capitol Building" class="imagecache imagecache-250w" width="250" height="154" /></a> </div> </div> </div> <p>If you&rsquo;re like most Americans, you&rsquo;ve heard more than you ever wanted to hear about the debt ceiling crisis. However, hearing is different from understanding, and this is a complex problem that can be difficult to grasp. In this case, it's been even harder to get an accurate explanation about what is going on in language that&rsquo;s easy to understand. After all, if you&rsquo;re not an economist or a financier, it&rsquo;s easy to wonder what the big deal is, anyway.</p> <p>This week, I had the chance to talk to FOX Business Network reporter Shibani Joshi to see if she could shed some light on this situation and what it means for everyday Americans. She&rsquo;s been following the story closely for weeks now and was eager to help Wise Bread readers gain a deeper understanding of the debt crisis. (See also: <a href="http://www.wisebread.com/debt-ceiling-contingency-plans">Debt Ceiling Contingency Plans</a>)</p> <h3>What Is the Debt Crisis All About?</h3> <p>Basically, the country is running out of money. As of next Tuesday, August 2nd, the country will no longer be able to borrow more money because it will already have borrowed the maximum amount allowed under current laws. While this may not have a huge effect immediately (since the country does have other sources of income), if not resolved it means that, eventually, the U.S. will not be able to pay its bills. This includes payments owed on the money we&rsquo;ve already borrowed, as well as veteran&rsquo;s benefits, Social Security, Medicare and Medicaid, and more.</p> <p>The government&rsquo;s problem is similar to the problems that, on a smaller level, caused the recession. Joshi puts it this way, &ldquo;In the same way we saw Americans living outside of their means by taking out too much credit to buy bigger homes than they could afford and maxing out their credit cards, the U.S. government uses too much credit. This is a magnified example of what happened to millions of Americans in the last decade.&rdquo;</p> <h3>Is it a Big Deal?</h3> <p>According to Joshi, this is a significant problem. &ldquo;If the U.S. can&rsquo;t pay its bills,&rdquo; she says, &ldquo;it defaults on its loans and then the entire world will be impacted.&rdquo; Many countries look to the United States as a financial leader, even during a recession. If we cannot meet our financial responsibilities, this will trickle down to effect people worldwide.</p> <p>Not raising the debt ceiling will not only effect people around the world financially, but in other ways, too. &ldquo;We are the most stable nation in the world, and the beacon that the world looks to for security,&rdquo; Joshi says. If we are proven to be less secure than we appear, that will effect how other countries interact with us and could, eventually, lead to shifts in power around the globe.</p> <h3>Should You Panic?</h3> <p>Not yet. The August 2nd deadline isn&rsquo;t hard and fast, except that we cannot borrow more money after that date. However, &ldquo;we still have cash coming into the government, and the government will be able to pay its bills for a short time after August 2nd,&rdquo; Joshi explains. This means that there is more time and space for lawmakers to agree on a plan than is being touted in many news sources.</p> <p>In addition, Joshi stresses that &ldquo;this is sometimes just how the system works. An outcome will be reached. It may not be fun or pretty, but it is how our system works.&rdquo; She believes that, while lawmakers may hold out until the very last minute, they are not willing to sacrifice the well-being of the country they serve and the rest of the world for a few partisan ideals.</p> <h3>If We Don&rsquo;t Raise the Debt Ceiling, How Does It Affect Average Americans?</h3> <p>The most significant place that average Americans will see an effect from this crisis is in the value of their investments. The Dow has fallen nearly 500 points during the last week because of the disagreements in Washington on this issue. &ldquo;That is your money,&rdquo; Joshi explains, &ldquo;in retirement funds, college funds, and more.&rdquo; It&rsquo;s expected that interest rates will also rise, which means that mortgage, auto loan, and credit card rates will go up, too. The prices of certain commodities, like oil and gold, are also expected to rise. &ldquo;This could affect your grocery bills and the price at the pump,&rdquo; Joshi says, which hits every American where it counts.</p> <p>Beyond that, Americans who rely on money from the government may be put in very difficult situations. If the country cannot provide that depended-upon income, these individuals and families could face serious financial difficulty.</p> <p>However, it&rsquo;s also important to note that we don&rsquo;t know exactly what will happen. We&rsquo;ve never defaulted on loans before, nor have we had a lowered credit rating. So for the moment, all of this is speculation.</p> <h3>What Can Every American Do in Regards to this Crisis?</h3> <p><strong>1. Don&rsquo;t panic. </strong>Give the government a bit more time to figure things out.</p> <p><strong>2. Get educated.</strong> Before you decide what you think about this issue, learn more about it. The information in this article is a bare-bones explanation. If you want to know more, continue researching until you feel like you understand what&rsquo;s going on. Then, and only then, decide how you think it should be resolved.</p> <p><strong>3. Take action.</strong> When you know how you&rsquo;d like to see the situation handled, contact your federal representatives to let them know. You can call, email, write, or Tweet your opinions. Talk to friends and family members, too. After all, many Americans still don&rsquo;t understand the issue very well.</p> <p><strong>4. Be open to compromise.</strong> Issues as complex as these almost always require conversation and <a href="http://www.wisebread.com/how-to-agree-without-compromise">concessions on all sides</a> before they&rsquo;re resolved. Instead of insisting that your solution is correct, dialogue with others and try to come to a mutual understanding, just like we all want our representatives to do right now.</p> <p><strong>5. Be open to change.</strong> This country needs to operate on a balanced budget that doesn&rsquo;t involve burgeoning debt, and that means that things cannot continue the way they are. &ldquo;We have major issues to deal with that go beyond the debt ceiling,&rdquo; Joshi says, &ldquo;including a huge spending problem, entitlements that are dysfunctional, and a tax code that could use a house cleaning.&rdquo; Making things better means change, and it will be easier if we all see it coming.</p> <p><em>Shibani Joshi joined FOX Business Network (FBN) in September 2007 as a reporter. To her role, Joshi brings experience in investment banking, strategy and business development. Joshi began her career as an investment banking analyst at Morgan Stanley, where she worked on merger, acquisition, and corporate finance deals in the real estate sector. </em></p> <p><em>Joshi holds an MBA degree from Harvard Business School. She also earned a bachelor&rsquo;s degree in finance and accounting at the University of Oklahoma. Joshi is a native of Oklahoma City and her parents are originally from Pune, India. FOX Business Network will be airing a special report on the debt crisis on Monday, August 1 at 5AM/ET, where you can hear more of her thoughts and explanations on the current issues. &nbsp;</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/sarah-winfrey">Sarah Winfrey</a> of <a href="http://www.wisebread.com/the-debt-ceiling-crisis-in-everyday-english">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/low-interest-rates-do-not-make-homes-affordable">Low Interest Rates Do Not Make Homes Affordable</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-indirect-ways-taxes-to-the-rich-may-hurt-you">6 Indirect Ways Taxes to the Rich May Hurt You</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/debt-ceiling-contingency-plans">Debt Ceiling Contingency Plans</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stalemate-on-the-debt-ceiling">Stalemate on the Debt Ceiling?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-most-important-free-piece-of-paper-youll-ever-receive">The most important FREE piece of paper you&#039;ll ever receive.</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Financial News Congress debt ceiling government Fri, 29 Jul 2011 22:46:06 +0000 Sarah Winfrey 644066 at http://www.wisebread.com 6 Indirect Ways Taxes to the Rich May Hurt You http://www.wisebread.com/6-indirect-ways-taxes-to-the-rich-may-hurt-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-indirect-ways-taxes-to-the-rich-may-hurt-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/cdn/farfuture/DJ6p0NV45sQJ_dJZlLDrsPT_0YMDP4ZZMMgPllAbUz4/mtime:1301029898/files/fruganomics/imagecache/250w/blog-images/3458373576_dcdbb1537f.jpg" alt="stack of pennies" title="stack of pennies" class="imagecache imagecache-250w" width="250" height="168" /></a> </div> </div> </div> <p>With Congress taking their time with the discussion of extending the Bush tax cuts, everyone seems to have stated their opinion on whether high income earners should have their taxes raised. Naturally, as only 3% of all taxpayers qualify for the highest tax bracket, most middle class people are in favor of letting the tax cuts expire only for the highest earners.</p> <p>On the surface, it doesn't concern them, so everything is A-OK. But does high taxes for high income earners really not matter to the middle class? Here are a few possible ways higher taxes could affect anyone.</p> <p><strong>High taxes could affect your boss' salary, and how do you think she feels about this?</strong> No matter how much anyone makes, higher taxes mean a reduced paycheck. Do you think she will be happier or less satisfied? If she is unhappy, do you think the work place will be a better environment?</p> <p><em>Of course, not all bosses will ever let his/her emotions affect the work place, but you know these people are out there!</em></p> <p><strong>High taxes definitely affect business owners, and that could mean less perks for employees to offset that dreaded tax bill.</strong> For small business owners who make celebration plans like where to go for the Christmas party based on mood, employees are definitely taking a hit.</p> <p>Don't care about perks? What about your salary? The decision of salary increases often come directly from the top. If business owners are feeling the pinch, she is naturally less likely to feel generous to everyone else. If she is unhappy, you might not get a raise no matter how many times you ask.</p> <p><strong>High taxes could affect essential services.</strong> Everyone's assumption that the rich can afford to pay higher taxes is absolutely right, but they can also afford to work much less than they do now. Go too far with tax rates, and the motivation to work longer hours fade. This potentially means fewer doctors performing surgery, and fewer entrepreneurs coming up with brilliant ideas that improve our way of life, which lead to lower quality of life for everyone.</p> <p><strong>The economy could suffer.</strong> Studies have shown that the top 3% of income earners make up 25% of discretionary spending. If they have less to spend, the United States economy, being a consumer economy, will suffer. Less demand for goods, less money for all businesses, and many more lost jobs.</p> <p><strong>High-tax states will suffer too.</strong> This might sound irrational (and it very well could be), but a few people I know are thinking about moving to another state with a lower tax rate. After all, addresses matter when it comes to our finances. They can afford to pay higher taxes, but because the subject is on the forefront of their minds, any solution to counteract the effects are on the table. And it doesn't stop at the state lines either. Some are even thinking of moving overseas to countries where tax rates are more generous.</p> <p><strong>Your children could ultimately suffer.</strong> As our government goes further into debt and needs more revenue to sustain its &quot;lifestyle,&quot; the only way to get money is taking it from businesses and individuals through taxes.</p> <p>Eventually, businesses and individuals alike will realize that it might be better to move abroad. On a small scale, this has already been happening in the past decade. If this becomes more of a widespread trend, then America could lose its competitiveness and everyone living in it will suffer.</p> <p>&nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/david-ning">David Ning</a> of <a href="http://www.wisebread.com/6-indirect-ways-taxes-to-the-rich-may-hurt-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-put-your-2011-payroll-tax-break-to-work">6 Ways to Put Your 2011 Payroll Tax Break to Work</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-will-the-obama-tax-cut-deal-affect-you">How Will the Obama Tax-Cut Deal Affect You?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/save-money-with-a-dependent-care-tax-credit-and-fsa">Save Money with a Dependent Care Tax Credit and FSA</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-can-you-do-if-you-cannot-afford-to-pay-your-taxes">What can you do if you cannot afford to pay your taxes</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/low-interest-rates-do-not-make-homes-affordable">Low Interest Rates Do Not Make Homes Affordable</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Financial News Taxes government tax cuts Tue, 19 Oct 2010 13:00:09 +0000 David Ning 265778 at http://www.wisebread.com Low Interest Rates Do Not Make Homes Affordable http://www.wisebread.com/low-interest-rates-do-not-make-homes-affordable <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/low-interest-rates-do-not-make-homes-affordable" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/cdn/farfuture/cN7ytKrn27gQABi5qt82W5KCnTraSvSzkTuSusDPCqk/mtime:1295029249/files/fruganomics/imagecache/250w/blog-images/2683703739_818b785616.jpg" alt="real estate signs" title="real estate signs" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p>Does the sales price of your home matter if the mortgage rate is low enough?</p> <p>If you ever thought about buying a home, the recent all-time low mortgage rates must be enticing. And this is exactly how the government wants everybody to feel, by the way. In an effort to keep homes affordable (as they claim), the federal reserve is driving down interest rates to record lows. But is what they are doing helping? Let's take a look.</p> <p>Just a short couple of years ago, interest rates were at 6 percent. For a $300,000 mortgage, the payment would have been $1798.65 a month. With the interest rate at 4.5 percent, the monthly payment drops to $1520.06. So far so good, because it costs us less to own our home.</p> <p>But wait a minute.</p> <p>Most people don't just refinance and lower their payment. These days, with rates at 4.5 percent, roughly the same monthly payment ($1798.73, to be exact) could get you a $355,000 mortgage. So what do people do? Instead of buying a $350,000 home with their down payment and loan approval letter, they shop for a $400,000 home. And who can blame them? An extra $50,000 almost always gets them a nicer place. Sometimes, it would actually allow them to pay more for a house than they otherwise would.</p> <p>For example, they might have been able to get the house for $350,000 if they tell the seller that the offer is all they are approved for, but if a buyer can muster up $400,000, he might end up offering $360,000. Same house, higher transaction price. Having a lower interest rate also allows more people to qualify for a home. This is a good thing for someone who couldn't afford the payment before, but it drives prices higher because of more demand, ultimately lowering affordability for everybody.</p> <p>In other words, lowering interest rates gets more people thinking about buying a home and drives up demand. Most of the time, that's a noble and worthwhile goal, since home ownership is still a dream of many. But as you've witnessed in the last decade, allowing more people to own homes mindlessly is just reckless. What we really need to do is make homes affordable so financially responsible people can actually afford the payments, which is only achievable through lower home prices.</p> <p>I'm a homeowner too, so the selfish side of me is thinking that high-priced homes are good. But for the economy to grow and our country to be a place people want to be in the future, nice homes need to be affordable without government intervention. Unaffordable home prices will never get us there. Please allow homes to be affordable again for the hard-working American.</p> <p><em>Related articles from MoneyNing:</em></p> <ul> <li><em>How to Recast Your Mortgage</em></li> <li><em>First Time Home Buyer Tips and Guide</em></li> </ul> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/david-ning">David Ning</a> of <a href="http://www.wisebread.com/low-interest-rates-do-not-make-homes-affordable">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-it-the-end-of-6-real-estate-commissions">Is It the End of 6% Real Estate Commissions?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/book-review-buying-a-home-the-missing-manual">Book Review - Buying a Home: The Missing Manual</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/real-estate-appraisals-ten-things-most-people-just-dont-understand-about-them">Real Estate Appraisals - Ten things most people just don&#039;t understand about them</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-long-can-you-stay-in-your-home-after-you-stop-paying-the-mortgage">How Long Can You Stay in Your Home After You Stop Paying the Mortgage?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/buy-the-same-house-twice-for-less-than-buying-it-once">Buy the Same House Twice for Less Than Buying It Once</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Financial News Real Estate and Housing buying a home government home ownership housing interest rate mortgage real estate Wed, 04 Aug 2010 17:00:31 +0000 David Ning 196125 at http://www.wisebread.com The U.S. Government Wants You in Debt http://www.wisebread.com/the-us-government-wants-you-in-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-us-government-wants-you-in-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/cdn/farfuture/UYkCDVCQ4mPf5Z83chnuH18OwL2wF8SURQZmdlOGEjg/mtime:1301029928/files/fruganomics/imagecache/250w/blog-images/2444594474_f557e3f850.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>I&rsquo;m going to out on a limb and make the bold statement: the United States government wants you in debt, rather than you saving money. Politics aside, I am going to discuss why I believe this statement to be true. If you accept my premise, I will then discuss ways you can use it to your advantage.</p> <h2>Current Examples</h2> <p>Government taxes serve more than the purpose to fund federal obligations. Taxes (either increases or decreases) have been a method in which a government can modify personal behavior. If the government wants people to stop smoking, it creates a &ldquo;sin&rdquo; tax to make it more costly to smoke. When a government offers tax incentives for acquiring debt, they are basically stating they want you to purchase things with debt. The government then rewards you when you comply. Why else would the government have implemented these policies to stimulate the economy?</p> <ul> <li>Federal Reserve policies have forced the average one-year CD interest rates to currently below 1.5% APR. In addition, the <a href="http://www.fdic.gov/news/news/press/2009/pr09082.html">FDIC recently ruled</a> banks that are not &ldquo;well capitalized&rdquo; will not be allowed to sell fixed investment products for more than 75 basis points (or 0.75%) above the national average. This effectively punishes savers and fixed income retirees, while rewarding people who have debt with lower loan rates.<br /> &nbsp;</li> <li>Offering the Cash-for-Clunkers program rewarded people to buy new cars (mostly likely with an <a href="http://www.autoloandaily.com/loan-news/auto-loan-daily/breaking-news/1943-more-late-car-loan-payments-and-buyers-remorse-from-cash-for-clunkers-deals">auto loan</a>), while trading in existing working cars (more than likely these cars were debt free).<br /> &nbsp;</li> <li>A tax credit of $8,000 to buy a home, originally just for first time homebuyers, now is for anyone. Congress liked the plan so much, they have extended it into 2010. How many people bought a house with cash only?<br /> &nbsp;</li> <li>Why is it people who did not take on too much debt are indirectly punished, while others who over extended themselves are <a href="http://blogs.wsj.com/developments/2009/11/25/happy-thanksgiving-judge-erases-long-island-familys-mortgage/">excused of their loans</a>? Can you say moral hazard?</li> </ul> <p>It&rsquo;s been said many times over <a href="http://www.hoover.org/research/factsonpolicy/facts/4931661.html">70% of the U.S. economy is consumer based</a>. If the consumer disappears what happens to the economy? This might be the core reason why the United States policy might be trying to continue spending any way possible.</p> <h2>Older Examples</h2> <p>You might be thinking, &ldquo;Investor Junkie, you must be a Republican, since you are mentioning policies of the current administration.&rdquo; You'd be wrong. Examples have existed for many years regardless of which party controls government &mdash; some as long as the Federal Reserve has been in existence.</p> <ul> <li>George W. Bush stated after 9/11 that <a href="http://www.washingtonpost.com/wp-dyn/content/article/2008/10/03/AR2008100301977.html">we must go out and keep spending</a>.<br /> &nbsp;</li> <li>The Federal Reserve&rsquo;s economic policy has always favored inflation, while deflation is considered &ldquo;evil.&rdquo; Deflation by itself is assumed to be bad, but that&rsquo;s not always the case. Deflation helps savers as the value of your money saved increases. Deflation when you have massive leverage (as our government and many people on a personal level do) makes debt cost more. This causes the government to be in a bad situation; so the goal of the Federal Reserve is to re-inflate what was deflated. I personally believe the Federal Reserve is doing this at no cost spared, and will cause future ramifications.<br /> &nbsp;</li> <li>Since the Federal Reserve has been created in 1913 the dollar has lost 95% of its value. Don&rsquo;t believe me? Visit <a href="http://www.westegg.com/inflation/">The Inflation Calculator</a>, and plug in one dollar, enter 1913 as the start year, and 2008 as the end year. What cost $0.05 in 1913 now costs $1.00. Because of inflation the value of your money, if you don&rsquo;t do anything with it, decreases. Would you rather save it, or immediately buy something with it? Better yet, if you buy with debt that debt will be worth less in the future. Inflation causes you to make this decision.<br /> &nbsp;</li> <li>Your home&rsquo;s mortgage interest is tax deductible. Netherlands, Sweden, and Switzerland are the only other countries to offer a <a href="http://en.wikipedia.org/wiki/Home_mortgage_interest_deduction">tax deduction</a>, effectively saying you should not only buy a home, but also buy a home with debt.<br /> &nbsp;</li> <li>Businesses can take on loans to purchase equipment and it&rsquo;s considered capital improvements. When purchasing via a loan, you can take a tax deduction from the interest.<br /> &nbsp;</li> <li>Freddie Mac, Fannie Mae, and banks were mandated by the <a href="http://www.washingtonpost.com/wp-dyn/content/article/2008/06/09/AR2008060902626.html">federal government</a> to make subprime loans.<br /> &nbsp;</li> <li>Inflation, on average for the past 97 years, has been around <a href="http://www.inflationdata.com/Inflation/Inflation_Rate/Long_Term_Inflation.asp">3.43%</a>. This means any debt that&rsquo;s held for one year is worth 3.43% less than it was the previous year.<br /> &nbsp;</li> <li>The government taxes interest earned from most savings and investments.</li> </ul> <p>Yet again you might be thinking, &ldquo;But Investor Junkie, the U.S. government offers tax deductions for retirement accounts.&rdquo; Yes this is very true! There are examples of tax deductions for savings, but it usually only delays taxes, and does not eliminate them. Currently Roth IRAs are an exception to this rule.</p> <p>Let&rsquo;s not forget about estate taxes. If you have saved over the years and have a sizeable nest egg, a good portion of that nest egg could die with you. By default, your heirs are taxed considerably on your inherited savings after a specific dollar amount. Taxes are delayed, but usually never eliminated.</p> <h2>Use the U.S. government policy to your advantage!</h2> <p>From the many examples I have shown, the United States government wants you to acquire debt. I&rsquo;m not sure this is a done on purpose or by accident. Don&rsquo;t fret &mdash; not all is bad. If you understand what&rsquo;s occurring, you can seize the opportunity.</p> <p>How to take advantage of this situation:</p> <ul> <li>Acquire fixed rate debt on assets that increase in value with inflation. A perfect example is to own a home and real estate investments. Use Bankrate.com web site to <a href="http://www.bankrate.com/calculators/mortgages/loan-tax-deduction-calculator.aspx">calculate your real interest rate after taxes</a>. Mortgage rates are at historic lows and probably will be higher in the future.<br /> &nbsp;</li> <li>Where the government does offer incentives to save, use them. This can include any of the following investments: 401K, 403b, IRA, Roth IRA, 529.<br /> &nbsp;</li> <li>If you believe we are going to have higher inflation in the next 10-30 years than the previous 30 years, you are best to purchase hard assets. Commodities and real estate do very well in high inflation environments.<br /> &nbsp;</li> <li>Plan methods to minimize or delay your taxes every step of the way, including at death.<br /> &nbsp;</li> <li>For the more adventurous type, owning a business is another method to acquire debts that are tax deductible and earn income in the process.</li> </ul> <p>In the end, it&rsquo;s been said the only sure things in life are death and taxes. Having debt is also almost another sure thing, and best to use government policies to your advantage.</p> <p><strong><em>What are your thoughts on the topic? Do you think the government wants you in debt? Do you believe it&rsquo;s on purpose or by accident?</em></strong></p> <div class="field field-type-text field-field-guestpost-blurb"> <div class="field-label">Guest Post Blurb:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <p>This is a guest post by <a href="http://investorjunkie.com/">Investor Junkie</a>, who likes likes to discuss what it's like being an entrepreneur and investing. He's about making money work for you by talking about passive and active investments. Read more articles by Investor Junkie:</p> <ul> <li><a href="http://investorjunkie.com/does-net-worth-matter">Does Net Worth Matter?</a></li> <li><a href="http://investorjunkie.com/the-4-percent-rule-to-investing">The 4% Rule to Investing</a></li> <li><a href="http://investorjunkie.com/merry-christmas-we-are-canceling-service-with-your-company">Merry Christmas! We are Canceling Service with your Company</a></li> </ul> </div> </div> </div> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/investor-junkie">Investor Junkie</a> of <a href="http://www.wisebread.com/the-us-government-wants-you-in-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/peak-debt">Peak Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/whats-the-big-deal-about-banks-refusing-to-lend">What&#039;s the big deal about banks refusing to lend?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/we-are-our-own-worst-enemy">We Are Our Own Worst Enemy</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-does-the-fannie-mae-and-freddie-mac-bailout-affect-you">How does the Fannie Mae and Freddie Mac bailout affect you?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/self-sufficiency-self-reliance-and-freedom">Self-sufficiency, self-reliance, and freedom</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Debt Management debt Economy government Thu, 28 Jan 2010 14:00:02 +0000 Investor Junkie 4923 at http://www.wisebread.com Borrowers, lenders, and others--beware trusting the government http://www.wisebread.com/borrowers-lenders-and-others-beware-trusting-the-government <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/borrowers-lenders-and-others-beware-trusting-the-government" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/cdn/farfuture/3cXAneYynHTDl9H6-8-N29ETLU-3FzWgk1WMqIcdYlQ/mtime:1301029913/files/fruganomics/imagecache/250w/blog-images/lincoln-head_0.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="260" /></a> </div> </div> </div> <p>Having a prosperous country (as opposed to having merely a prosperous elite) depends fundamentally on the rule of law. The system can work adequately well with various sets of rules, as long as they're known in advance and fairly applied. During hard times, though, there's a strong temptation to ignore the rules in a search for a less-bad result. Both borrowers and lenders need to watch out.</p> <p>There has always been a fault line between creditors and debtors. There are usually many more debtors, which tends to give that side a certain amount of power--especially in a democracy. On the other hand, the creditors usually have a lot more money, which gives that side a kind of power as well. These divisions play out over time, changing the rules to favor one side or the other.</p> <h2>Changing and fudging</h2> <p>As I said, you can achieve prosperity under a broad range of different sets of rules. (Respect for private property is important, but you can be prosperous even with zoning, taxes, and eminent domain. Free markets are important, but it is probably better yet to have the government enforcing accurate weights and measures.) You can even change the rules, as long as the changes are done carefully, with a due respect for deals struck under the old rules. What really hurts prosperity is <strong>ignoring</strong> the rules--playing fast-and-loose with the rules so as to get an appealing outcome.</p> <p>Right now we're definitely seeing the rules being changed--and possibly seeing them being fudged as well.</p> <p>One example of rule changing is the <a href="http://www.wisebread.com/how-will-the-new-credit-card-rules-affect-consumers">new credit-card law</a>. Generally, I think the changes are good changes. (The key test is: does the change bring the rules closer to what they should have already been? I think the restrictions on how banks can raise rates on already-existing debt fall solidly into that category, as do rules requiring that banks send bills well before they're due and apply payments promptly.) Of course, when the rules are being changed in your favor, it can be tempting to see only the upside.</p> <p>Rule fudging, on the other hand, is almost always bad. Just now there's some possible fudging going on in the government-led efforts to reorganize Chrysler and GM.</p> <p>Now, I'm not even sure that the rules <strong>are</strong> being fudged. The long-standing rules for chapter 11 bankruptcy already included a bias in favor of preserving the enterprise--even secured creditors could be made to accept equity instead of getting to grab their collateral, if the judge decided that keeping the company going could eventually provide as much total return to creditors. I'm not a lawyer, and I'm not knowledgeable enough about bankruptcy law to know if those rules are being followed or not. (Legally, the issue seems to have to do with whether the employee trust created to take over the costs of retiree health care amounts to a separate entity that should have to stand in line with other creditors, or if money owed to it should be treated like other employee compensation. I can certainly seem both sides of that issue.)</p> <h2>Be aware</h2> <p>But whether the rules are being fudged in that case or not, it's important to be aware of several things:</p> <ul> <li>First, there's always more rule-fudging during hard times. During good times there's a tendency to just go with the flow, even when the results seem to drop an especially heavy load on one person or another. People can rationalize that, &quot;Yeah, he got the short end of the stick, but he'll just have to pick himself up and carry on.&quot; During bad times, though--when maybe he <strong>can't</strong> just carry on--there's a greater temptation to bend the rules to produce a less cruel outcome.</li> <li>Second, don't assume that the rule changes will all go one way. Both sides have political power and any particular rule change can have complex effects. As recently as 2005 the creditor class had enough power to push through punitive changes to the bankruptcy law. Now the debtor class has enough power to push through changes to the credit card law. (But not, so far, enough power to push through bankruptcy law changes that would allow a bankruptcy judge to reduce the amount owed on a mortgage.)</li> <li>Third, although it's good when changing the rules produces <strong>better</strong> rules, just getting the rules changed in your favor is no cause for celebration. Rule changing does harm in several ways, one of which is that greater uncertainty makes everyone a little more cautious--which means that loans are harder to get and interest rates are higher. Everyone guessing what sorts of fudging are likely acts to change things even if the rule fudging doesn't even happen. (For example, because the action around the automakers favors unionized workers, the market seems to be pushing up the interest rates for <a href="http://www.reuters.com/article/americasDealsNews/idUSTRE54P68K20090526?sp=true">broad swath of other companies with unionized workers</a>, in anticipation that their workers and lenders might get similar treatment.)</li> </ul> <p>Rule changes don't have to involve creditors and debtors. <strong> Anybody</strong> whose success depends on government policies is at risk. As just one example, a few years ago, when everyone was in a tizzy about a shortage of landfill space, Illinois created a package of tax breaks for people who built incinerators for solid waste. The political winds quickly changed, though, and solid waste incinerators began seeming like a bad idea. So the state repealed the tax break, leaving many companies with half-built incinerators in the lurch.</p> <h2>Diversification</h2> <p>Analyze how you would be affected if the government changed any rules that you depend on. If one or a few simple rule changes could cost you big bucks, the safe thing to do is to change your position so that you're not so dependent on those specific rules.</p> <p>Note that this is not the same as the most profitable choice! If you align your finances to take maximum advantage of some special rules, you can often make a bunch of money--it's just that you're screwed if the rules change faster than you can adjust.</p> <p>Sometimes, that's a risk worth taking. After all, you can often get a feel for whether the rule is vulnerable to change by looking at how many voters depend on it. But it's just plain safer to spread things around, so that any one rule change won't affect you too drastically.</p> <p>For example, although it makes good sense to tax-shelter some of your income in 401(k)s and IRAs, I advise saving some money outside these plans as well. Yes, you're paying taxes that you could have deferred, but those big pots of tax-deferred money are a perpetual temptation for the government. (There has been more than one proposal for a &quot;one-time&quot; tax on retirement accounts to fund some spending priority or another.)</p> <p>A little diversification--together with a healthy distrust of the government--will do a lot to keep you safe.<br /> &nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/borrowers-lenders-and-others-beware-trusting-the-government">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-7"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-three-interest-rates">The Three Interest Rates</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/when-should-you-say-no-to-those-who-want-to-borrow-money-from-you">When Should You Say No to Those Who Want to Borrow Money from You?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/can-the-government-help-in-a-recession">Can the government help in a recession?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-can-you-do-if-you-cannot-afford-to-pay-your-taxes">What can you do if you cannot afford to pay your taxes</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/investment-gains-taxes-increase-the-worst-tax-policy-ever">Investment Gains Taxes Increase - The Worst Tax Policy Ever?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance borrowing credit cards government lenders borrowers lending public policy tax policy taxes Thu, 28 May 2009 15:10:27 +0000 Philip Brewer 3208 at http://www.wisebread.com What can you do if you cannot afford to pay your taxes http://www.wisebread.com/what-can-you-do-if-you-cannot-afford-to-pay-your-taxes <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-can-you-do-if-you-cannot-afford-to-pay-your-taxes" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/cdn/farfuture/QE0RsXX-uwrGkkEJ9F-AI-ODyFh9scpKFBIznqLcIT4/mtime:1301029919/files/fruganomics/imagecache/250w/blog-images/taxes_1.jpg" alt="Have your taxes done today" title="" class="imagecache imagecache-250w" width="250" height="200" /></a> </div> </div> </div> <p>Today is April 15th, also known as the dreaded Tax Day in America. Due to the recession many people may find that they do not have enough money in the bank to pay what they owe.&nbsp; Instead of marching in <a href="http://www.sfgate.com/cgi-bin/object/article?f=/n/a/2009/04/15/national/a080019D17.DTL&amp;o=13">the various &quot;tea parties</a>&quot; happening today, this is what you can do if you find that you do not have enough money to pay Uncle Sam.&nbsp; </p> <p>The first thing you should do is to file for an extension with <a href="http://www.irs.gov/pub/irs-pdf/f4868.pdf">form 4868.</a>&nbsp; Simply filing this form gives you six months of breathing room and extends the deadline to October 15th.&nbsp; If you know that you owe a significant amount of taxes you should also pay what you can at this point because you still have to pay penalties and interest&nbsp; on the amount you owe.</p> <p>The tax penalty is 0.5% of the amount you owe every month after today if you file your taxes&nbsp; and cannot pay the full amount.&nbsp; Additionally, you have to pay&nbsp; interest with an APR of around 3% on the amount owed.&nbsp; However, if you do not file at all the penalty would be 5% of the amount you owe every month plus interest. The maximum penalty is 25%.&nbsp; Basically, the first thing you should do is to mail in your return or extension request even if you cannot pay the entire amount.</p> <p>This year, <a href="http://www.washingtonpost.com/wp-dyn/content/article/2009/02/14/AR2009021400079.html">the IRS is supposedly offering leniency </a>to those who are facing financial hardship.&nbsp; However, they will only help if you file a return in time and if you proactively contact them.&nbsp; The IRS has always had an installment plan for paying your taxes, but you need to<a href="http://www.irs.gov/pub/irs-pdf/f9465.pdf "> file Form 9465 </a>to do this or apply online for an installment plan.&nbsp; The installment plan is generally available to those with tax bills less than $25,000 and a good history of past tax payment.&nbsp; There is still a 0.25 percent a month penalty on this plan.</p> <p>If it is possible for you to borrow money at a rate lower than what the IRS is charging then you should use that to pay off the IRS first.&nbsp; For example, if you have a credit card with a 0% promotional rate you can pay the taxes with it and pay it over the promotional period.&nbsp; There is a transaction fee of 2.49% to put your taxes on a credit card, but if you have a 12 months promotional period at 0% then it is cheaper to owe the credit card company over the period of one year.&nbsp; This is not without risk since credit card companies can change their rates suddenly so you should try to pay it off as soon as possible.</p> <p>The IRS&nbsp; really hates it when you ignore them&nbsp; so it is&nbsp; urging taxpayers to file their taxes on time and then call 1-800-829-1040 to discuss payment options. If you do not contact the IRS&nbsp; at all then its agents&nbsp; do have many aggressive collection tactics and the power to place liens on your property. So the bottom line is that you should send something to the IRS today regardless of your ability to pay.<br /> &nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/xin-lu">Xin Lu</a> of <a href="http://www.wisebread.com/what-can-you-do-if-you-cannot-afford-to-pay-your-taxes">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-8"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/top-10-tax-urban-legends-myths-and-rumors">Top 10 Tax Urban Legends, Myths and Rumors.</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/more-tax-credits-coming-for-homebuyers">More Tax Credits Coming for Homebuyers?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-things-the-irs-doesnt-want-you-to-know-about-them">6 Things the IRS Doesn&#039;t Want You to Know About Them</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/taxes-on-irregular-income">Taxes on irregular income</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Credit Cards Taxes government IRS taxes Wed, 15 Apr 2009 21:18:43 +0000 Xin Lu 3054 at http://www.wisebread.com Will these car buying incentives get you to buy a new car? http://www.wisebread.com/will-these-car-buying-incentives-get-you-to-buy-a-new-car <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/will-these-car-buying-incentives-get-you-to-buy-a-new-car" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/cdn/farfuture/fpHqTlkkyzFZubHrCwEPreP0B_NURFQ74qFCpax4Bt4/mtime:1295022930/files/fruganomics/imagecache/250w/blog-images/junkcar.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="333" /></a> </div> </div> </div> <p> This week President Obama rolled out an initiative for the failing American&nbsp; automakers to restructure.&nbsp; The plan proposes several consumer incentives to jumpstart auto sales.&nbsp; Here are some&nbsp; details on the financial incentives&nbsp; you can expect if you buy a new car this year.</p> <p>First, the government is picking up the tab on the warranties of General Motors and Chrysler cars if consumers were to buy a new car from these companies. Consumers have been wary of buying these cars since if the companies go bankrupt the warranties may not be honored.&nbsp; Now that problem is gone and these cars should be a little easier to sell.</p> <p>Next, the federal stimulus package passed earlier this year already has a tax incentive for consumers who buy a car from February 16th to the end of the year.&nbsp; Basically, consumers can deduct the sales or excise taxes from purchasing a new car from their income taxes.&nbsp; In California this tax deduction can be quite significant since sales tax is 8% to 9%.&nbsp; In states with no sales tax this would not be so much of an incentive.</p> <p>Finally, there are <a href="http://online.wsj.com/article/SB123853805152575391.html">several &quot;clunkers for cash&quot; proposals</a> going around Congress that allows consumers to trade in old or fuel inefficient cars for cash from the government.&nbsp;&nbsp; Essentially, the government is offering to buy crappy cars for more than what they are worth to encourage consumers to buy new fuel efficient cars.&nbsp; However, this proposal may cost the government billions of dollars per year and that money is yet to be found.&nbsp; President Obama seemed to be highly supportive of this plan and a similar program in Germany supposedly boosted auto sales by 20%.</p> <p>Personally, I plan to drive my ten year old Honda Accord another ten to fifteen years because it is unnecessary to replace it despite the incentives.&nbsp; What do you think?&nbsp; How big of a financial bonus would you need to buy a new car in the current economic climate?&nbsp; If you were offered $3000 to $5000 for your &quot;clunker&quot;, would you take it?<br /> &nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/xin-lu">Xin Lu</a> of <a href="http://www.wisebread.com/will-these-car-buying-incentives-get-you-to-buy-a-new-car">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-9"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-be-ashamed-to-be-on-public-assistance">Should You be Ashamed to be on Public Assistance?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-can-you-do-if-you-cannot-afford-to-pay-your-taxes">What can you do if you cannot afford to pay your taxes</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-more-questionable-aspects-of-the-housing-bailout-bill">The Questionable Aspects of The Housing Bailout Bill - H.R. 3221</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/could-the-last-person-to-leave-america-please-turn-out-the-light">Could the last person to leave America please turn out the light.</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-will-you-do-when-gas-drops-below-150-a-gallon">What will you do when gas drops below $1.50 a gallon?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Cars and Transportation Consumer Affairs Taxes car government incentives Wed, 01 Apr 2009 05:37:34 +0000 Xin Lu 2993 at http://www.wisebread.com Where Did Your iPod Come From? The Story of Stuff http://www.wisebread.com/where-did-your-ipod-come-from-the-story-of-stuff-0 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/where-did-your-ipod-come-from-the-story-of-stuff-0" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/cdn/farfuture/4Z_f6T-BXVKEZLeWKN10i0e-g350_cN2kXEZ9DFiKVk/mtime:1294999744/files/fruganomics/imagecache/250w/blog-images/home-digger_0.gif" alt="The Story of Stuff" title="The Story of Stuff" class="imagecache imagecache-250w" width="242" height="111" /></a> </div> </div> </div> <p class="MsoNormal">Do you know the difference between planned and perceived obsolescence?</p> <p class="MsoNormal">Do you know why high heels are fashionable with chunky heels one year, and thin heels the next year?</p> <p class="MsoNormal">Why is breast milk the &ldquo;food&rdquo; highest in toxic contaminants?</p> <p class="MsoNormal">And do you know why in the wake of September 11<sup>th</sup>, George Bush told us all to go shopping?</p> <p class="MsoNormal"><o:p>&nbsp;</o:p></p> <p class="MsoNormal">These questions and many, many others are answered in <a href="http://www.storyofstuff.com/">The Story of Stuff</a>, a 20-minute documentary about the life cycle of products and services, explaining everything about&hellip;well&hellip;stuff.</p> <p class="MsoNormal"><o:p>&nbsp;</o:p></p> <p class="MsoNormal">The underlying environmental message is not communicated using sensationalistic footage or over-dramatic statements of Armageddon. In fact, the flash illustrations and enthusiastic presenter make this video appropriate (and constructive if you ask me) for even children to watch.</p> <p class="MsoNormal"><o:p>&nbsp;</o:p></p> <p class="MsoNormal">Fact checkers will enjoy the <a href="http://www.storyofstuff.com/resources.html">resources</a> section of the site, which includes an annotated script. And anybody whose curiosity is piqued will find more information, along with constructive and innovative suggestions to harness change on the website.</p> <p class="MsoNormal"><o:p>&nbsp;</o:p></p> <p class="MsoNormal">It is worth the next 20 minutes of your life to learn about The Story of Stuff. <a href="http://www.storyofstuff.com/">Check it out here</a>.</p> <p>&nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/nora-dunn">Nora Dunn</a> of <a href="http://www.wisebread.com/where-did-your-ipod-come-from-the-story-of-stuff-0">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-10"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-the-courtesy-flush-dead">Is the courtesy flush dead?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/unbearably-stupid-packaging">Dumbest packaging ever?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-poor-folks-and-the-middle-class-on-the-same-side">Are poor folks and the middle class on the same side?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/oprah-asks-a-great-question-what-can-you-live-without">Oprah Asks A Great Question; What Can You Live Without?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/trade-versus-localization">Trade versus localization</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Consumer Affairs Green Living Lifestyle Annie Leonard government perceived obsolescence planned obsolescence the story of stuff Tue, 10 Mar 2009 07:46:03 +0000 Nora Dunn 2910 at http://www.wisebread.com Need a job? Apply to become a Census enumerator http://www.wisebread.com/need-a-job-apply-to-become-a-census-enumerator <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/need-a-job-apply-to-become-a-census-enumerator" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/cdn/farfuture/4vAYrluebLbMcD3-Q5j5s6HZmI1DjlOh7zLNW2nI0t0/mtime:1294997969/files/fruganomics/imagecache/250w/blog-images/census.gif" alt="" title="" class="imagecache imagecache-250w" width="250" height="34" /></a> </div> </div> </div> <p>The Census Bureau produces an important set of demographics data about the United States every ten years.&nbsp; The 2010 Census is coming up soon and the Bureau is hiring thousands of temporary workers to help with data gathering.&nbsp; The recruitment starts now.</p> <p>The Bureau has set up <a href="http://2010.census.gov/2010censusjobs/ ">a great website detailing the recruitment effort for Census enumerators</a>.&nbsp; The Census enumerators are meant to go out into their communities and confirm the addresses of almost everyone.&nbsp; The pay is quite good and varies by the geographic location.&nbsp; Here in the San Francisco Bay Area the pay starts at $22.00 an hour.</p> <p>This is a good temporary opportunity for those who want to make some extra money and learn something about their own neighborhoods.&nbsp; The enumerators must be at least 18, score well on a written exam given by the Census Bureau, and submit to an FBI background check.&nbsp; Additionally, a valid Social Security number is required and the enumerator must have transportation to do the work.&nbsp; The Bureau is also looking for people who can speak multiple languages because the United States has become very multilingual.</p> <p>Considering that the economy is in the pits right now, the 2010 Census seems well timed to provide a mini stimulus in many communities.<br /> &nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/xin-lu">Xin Lu</a> of <a href="http://www.wisebread.com/need-a-job-apply-to-become-a-census-enumerator">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-11"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/my-disgusting-fake-game-show-asks-what-would-you-do-for-money">My disgusting fake game show asks &quot;What would you do for money?&quot;</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/tips-for-finding-legitimate-work-at-home-opportunities">Tips for Finding Legitimate Work at Home Opportunities</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-good-writing-skills-saves-and-earns-money">How good writing skills save and earn money</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/get-paid-for-your-psychic-skills-at-predictify">Get Paid for your Psychic Skills at Predictify</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/obama-eases-treasury-costs-with-at-home-money-printing-stimulus">Obama Eases Treasury Costs with At-Home Money Printing Stimulus</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance census government Making Extra Cash money Thu, 22 Jan 2009 22:10:55 +0000 Xin Lu 2767 at http://www.wisebread.com Do we really need help with getting more debt? http://www.wisebread.com/do-we-really-need-help-in-getting-more-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/do-we-really-need-help-in-getting-more-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/cdn/farfuture/7SqZkKXUs2BudQ4zFk32CPQ6DDXMev0aUl0tSKRUA-Y/mtime:1301029906/files/fruganomics/imagecache/250w/blog-images/creidtcards.jpg" alt="Credit Cards" title="credit cards" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p> Today a new rescue program called the Term Asset-Backed Securities Loan Facility (TALF) was announced by the Treasury and Federal Reserve to support owners of securities backed by credit card debt, student loans, auto loans, and loans approved by the Small Business Administration.&nbsp; Supposedly this initiative will free up consumer credit, but the question is, are we really in need of more debt right now?</p> <p>This week I received a letter from one of my credit card issuers that informed me that they closed one of my inactive accounts.&nbsp; I have not touched that card for more than three years, so it was fine with me.&nbsp; In the same week, I received about five to ten different credit card preapproval letters that I could use to replace the one account I lost.&nbsp; Although this is anecdotal, most people I know already have enough credit cards and getting a new card is as easy as going to the mailbox and returning a form.&nbsp; I have yet to read a news report that name actual credit card issuers who are lowering their credit card approval rates so it seems that the credit card markets are far from frozen.</p> <p>As to auto loans, it seems that lenders are tightening their lending criteria.&nbsp; <a href="http://www.mediapost.com/publications/?fa=Articles.showArticleHomePage&amp;art_aid=94936">Edmunds.com says</a> that consumers with average credit will be required to make down payments as high as 20% and loan terms are shorter.&nbsp; Basically, loans are still being made, but consumers need to have good credit, and that does not seem like a bad thing.&nbsp; If auto loans are truly impossible to get, then consumers could simply save up and pay in cash.&nbsp; In many instances, used cars are not so prohibitively expensive that you have to finance it with a loan.</p> <p>When it comes to student loans, it seems that private loans are frozen for the most part, but there are still plenty of opportunities for students to get federally backed loans.&nbsp; Again, this may not be a bad thing because private loans usually carry much higher interest rates than federally backed loans.&nbsp; If enrollment truly drops significantly in universities due to lack of financing for students, then it is possible that many private universities may consider reducing their fees or handing out more grants, and that is also good for the consumer.</p> <p>Finally, there are the small business loans.&nbsp; According to this <a href="http://www.bizjournals.com/tampabay/stories/2008/11/24/daily21.html">article in BizJournals </a>the volume of small business loans made so far this fiscal year through the Small Business Administration's 7(a) loan program&nbsp; is 55 percent below the same period a year earlier due to the inability of lenders to sell their loans on the secondary market, reduced demand for credit, and tighter lending standards.&nbsp; It is possible that the TALF program could open up the secondary market for these loans again and more small businesses can be started, but it may be that many entrepreneurs are shying away from starting a business in the current economy.&nbsp;</p> <p>Right now, I do not know how much this new plan will help consumers, but it would certainly help the investors in these debt backed securities right away.&nbsp; I really do not think Americans need&nbsp; any help in getting more credit card debt or loans to buy flashy cars they cannot afford, but debt to start small businesses may create new jobs and spur economic growth.&nbsp; For the most part, I think&nbsp; this is a good time to eliminate&nbsp; debt, and not acquire more.&nbsp;</p> <p><strong><em>Have you had trouble getting credit recently?&nbsp; How much do you think this new rescue program will affect you?</em></strong><br /> &nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/xin-lu">Xin Lu</a> of <a href="http://www.wisebread.com/do-we-really-need-help-in-getting-more-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-12"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/we-are-our-own-worst-enemy">We Are Our Own Worst Enemy</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/uk-banks-are-blocking-customers-credit-cards-will-the-usa-be-next">UK banks are blocking customers&#039; credit cards. Will the USA be next?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-can-you-do-with-13-extra-a-week-0">What can you do with $13 extra a week?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-inspiring-saver-found-true-love-shook-off-debt-denial-and-paid-off-123000">How One Inspiring Saver Found True Love, Shook Off Debt Denial, and Paid Off $123,000</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-tricks-to-save-money-with-credit-cards">10 Tricks to Save Money with Credit Cards</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Consumer Affairs Credit Cards Debt Management credit cards debt government news Tue, 25 Nov 2008 23:17:01 +0000 Xin Lu 2603 at http://www.wisebread.com When will the bailouts stop? A summary of 2008 stimulus packages and bailouts in the United States http://www.wisebread.com/when-will-the-bailouts-stop-a-summation-of-2008-stimulus-packages-and-bailouts-in-the-united-states <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/when-will-the-bailouts-stop-a-summation-of-2008-stimulus-packages-and-bailouts-in-the-united-states" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/cdn/farfuture/1eAP63YuAjqb2UAcwCRitzaIxvWQk3CQ_yjjWS8s3RA/mtime:1301029902/files/fruganomics/imagecache/250w/blog-images/bailout.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="283" /></a> </div> </div> </div> <p>2008 will probably go down in history as the year of bailouts, crashes, and meltdowns. Here is a quick run down of all the laws and bills congress pushed through with lightning speed in this election year. With two months left in the year, we may see some more bailouts and stimulus packages to come.</p> <p><strong>02/13/2008</strong> - <a href="http://en.wikipedia.org/wiki/Economic_Stimulus_Act_of_2008">$168 billion stimulus package is passed into law</a> . This included tax rebate checks for individuals making less than $75000, and married couples making less than $150000. The <a href="http://baglady.dreamhosters.com/2008/02/08/the-dark-side-of-the-economic-stimulus-package/">most overlooked part of this package</a> was that the jumbo loan limit was raised for mortgages that are purchased by Fannie Mae and Freddie Mac. This means that just eight months ago the government was still a cheerleader behind more debt and more spending. <br /><strong><br />03/26/2008</strong> - The Federal Reserve extends a $29 billion &quot;loan&quot; to J.P. Morgan Chase to purchase the failed Bear Stearns through a shell company. <a href="http://www.businessweek.com/magazine/content/08_14/b4078000069548.htm">BusinessWeek has a good article</a> on how this deal worked. Essentially, the Fed purchased $29 billion in mortgage backed securites that could lose value.</p> <p><strong>07/26/2008</strong> - $300 billion &quot;housing rescue&quot; bill was passed. This is the bill that established the Hope for Homeowners program, and also gave Treasury Secretary Paulson the ability to give Fannie Mae and Freddie Mac a limitless line of credit. The <a href="http://www.hud.gov/fha/home080730.cfm">Hope for Homeowners</a> program has now started and offers those who cannot afford their mortgages a chance to refinance into smaller mortgages insured by the Federal Housing Administration. This made Paul wonder if <a href="/should-we-all-just-stop-paying-the-mortgage">we should all just stop paying our mortgages</a> .</p> <p><strong>9/7/2008</strong> - Fannie Mae and Freddie Mac were taken over by the Federal Housing Finance Agency and the Treasury <a href="http://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_and_Freddie_Mac#Capital_infusion_by_the_Treasury">promised up to $100 billion in future support and capital investments per company</a> . The actual total costs are yet to be determined. </p> <p><strong>9/17/2008</strong> - AIG mostly purchased by the United States government for $85 billion dollars. The United States now owns 79.9% of the insurer through a loan deal.</p> <p><strong>10/03/2008 </strong>- <a href="/how-a-700-billion-bailout-became-a-800-billion-rescue-plan">$700 billion pork ladened package </a> gets signed into law. The Treasury has been given the right to buy troubled assets and hold them. Also, $250 billion are used to purchase stocks in thousands of banks. Additionally, a variety of random provisions such as exemption of taxes on toy wooden arrows were included.</p> <p><strong>Now</strong> - The White House and Congress is now mulling over a second stimulus package of the year. This package is planned to be<a href="http://ap.google.com/article/ALeqM5gbB-yBIGYGpOLykwIKDn5wZrVP5wD93UAQJG0"> anywhere from $150 billion to $300 billion.</a> Noone knows the details, yet. Additionally, there is a $25 billion auto industry bailout that is waiting to be signed into law. I guess $25 billion is really peanuts compared to what has already been passed.</p> <p>Where will all of this money come from? Some say that not all of these deals will be expenditures because the equity stakes the government is taking in the largest banks and AIG will eventually give a return to the taxpayers. However, noone seems to be quite sure if that would really happen. Meanwhile, the reach of United States government has certainly grown with all of these acquisitions. When you add it all up, the quick financial maneuvers taken by the United States Government is costing more than the war in Iraq.</p> <p>Another comment on the whole fiasco is that the National Debt Clock has run out of digits and <a href="http://www.cnn.com/2008/US/10/12/national.debt.clock.ap/index.html">each family&#39;s share is $86,023.</a> No matter who the next president is, he must work on reducing the <a href="http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo5.htm">ever rising national debt</a> . In fiscal year 2008 the United States <a href="http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm">spent over $450 billion in debt interest payments</a> , and if the government does not chip away at its debt principal then more and more of this nation&#39;s production will be going towards debt service. Something has to be done, but one government bailout or stimulus after another is not the answer.</p> <p>Finally, the scariest thing about these bailouts is not just the amount of money they will cost American taxpayers for generations to come, but that these bills were passed with haste and little concern for the voice of the people. <a href="http://www.youtube.com/watch?v=sZFwRAfkV1g">In this video</a>, Senator Diane Feinstein states that she received 91,000 phonecalls of which 85,000 were against the $700 billion bailout, but that she believes that these angry citizens do not understand the good the bailout will do. Is a democratic government really democratic if most of the elected officials do not serve the people that voted for them? </p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/xin-lu">Xin Lu</a> of <a href="http://www.wisebread.com/when-will-the-bailouts-stop-a-summation-of-2008-stimulus-packages-and-bailouts-in-the-united-states">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-13"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/will-these-car-buying-incentives-get-you-to-buy-a-new-car">Will these car buying incentives get you to buy a new car?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/do-we-really-need-help-in-getting-more-debt">Do we really need help with getting more debt?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-be-ashamed-to-be-on-public-assistance">Should You be Ashamed to be on Public Assistance?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/could-the-last-person-to-leave-america-please-turn-out-the-light">Could the last person to leave America please turn out the light.</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/where-did-your-ipod-come-from-the-story-of-stuff-0">Where Did Your iPod Come From? The Story of Stuff</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Consumer Affairs Taxes bailouts government news Mon, 20 Oct 2008 21:48:36 +0000 Xin Lu 2536 at http://www.wisebread.com Download the 451-page bailout proposal http://www.wisebread.com/download-the-451-page-bailout-proposal <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/download-the-451-page-bailout-proposal" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/cdn/farfuture/MfU3mMwZmktQL2ObgVdBOHGLhnXIUMYJnmXmoEiArA0/mtime:1295389105/files/fruganomics/imagecache/250w/blog-images/64368770_7bce91daf6.jpg" alt="tired of reading" title="tired of reading" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>Well folks, I hope you have plenty of time on your hands. The initial 3-page document that Bush and Paulson put forward has grown somewhat. It&#39;s hardly surprising, considering how much of a broad sweep the initial bailout plan was. However, you have to wonder how many people out there have the time, patience and understanding to read a 451-page economic document. But, if you want, you can download it right here. </p> <p>Simply <a href="http://freepdfhosting.com/16d96dd8b2.pdf">click this link </a> and you should be prompted to save the entire document to your computer. For those with slow connections, this could take a while. But certainly nowhere near as long as the monumental read that awaits you. A document like this could hide all sorts of legal loopholes and technicalities, so I hope there are plenty of non-partisan economists looking through this for the sake of every American taxpayer. Happy reading.</p> <p><em>Note: This PDF was current at the time this article was published. These days, an hour is a long time in politics. </em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/paul-michael">Paul Michael</a> of <a href="http://www.wisebread.com/download-the-451-page-bailout-proposal">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-14"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/looking-on-the-bright-side-how-to-find-a-silver-lining-in-the-current-financial-crisis">Looking On The Bright Side: How to Find A Silver Lining In The Current Financial Crisis</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/could-the-last-person-to-leave-america-please-turn-out-the-light">Could the last person to leave America please turn out the light.</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/do-we-really-need-help-in-getting-more-debt">Do we really need help with getting more debt?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-be-ashamed-to-be-on-public-assistance">Should You be Ashamed to be on Public Assistance?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-overdraft-protection-racket-why-banks-want-you-to-overdraw-and-how-you-can-get-your-money-back">The Overdraft Protection Racket: Why Banks Want You To Overdraw, And How You Can Get Your Money Back.</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Consumer Affairs Credit Cards bailout Crisis Economy government Wall Street Wed, 01 Oct 2008 19:08:03 +0000 Paul Michael 2483 at http://www.wisebread.com Root cause of the financial crisis http://www.wisebread.com/root-cause-of-the-financial-crisis <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/root-cause-of-the-financial-crisis" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/cdn/farfuture/9cnaP37x6UnvaRHiN9g0CpgT3gELvI0e9KmSkhq4XwQ/mtime:1301029893/files/fruganomics/imagecache/250w/blog-images/foreclosure-sign_0.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p>Several times recently, Treasury Secretary Paulson (and many others) have claimed that the &quot;root cause&quot; of the current financial crisis is &quot;the housing correction.&quot;  This is completely wrong--and unless policy makers realize that it&#39;s completely wrong, they&#39;re not likely to make the right policy decisions. </p> <p>Just today, in his <a href="http://www.treas.gov/press/releases/hp1153.htm">testimony before the Senate Banking Committee</a>, Paulson said:<br /> <blockquote>And that root cause is the housing correction which has resulted in illiquid mortgage-related assets that are choking off the flow of credit which is so vitally important to our economy. We must address this underlying problem, and restore confidence in our financial markets and financial institutions so they can perform their mission of supporting future prosperity and growth.</p></blockquote> <p>Now, first of all, the proposal doesn&#39;t address the housing correction--it addresses the illiquid mortgage-related assets (by buying them)--so it&#39;s still a step removed from what Paulson claims is the root cause.  (Directly addressing the housing correction would involve <strong>buying houses</strong>, not buying loans.)  But that&#39;s neither here nor there, because the root cause is not the housing correction.  The root cause was the housing boom.</p> <p>Roughly speaking, an average household needs to earn enough money to be able to afford an average house.  You can adjust that a bit--smaller, younger, poorer households can be left out of the calculation if you assume that they&#39;ll rent rather than own--but after leaving them out, it&#39;s just not sustainable for the average house to cost more than the average household can afford to pay--who else is going to buy it?</p> <p>Now, you can back things up yet another step in your search for root cause:  How did house prices get too high?  The answer to that question (which has mostly to do with bad interest rate decisions from the Fed interacting with bad public policy in financial market regulation) will help us prevent the next financial crisis.  But for addressing this financial crisis, all we need to understand is that the correction is <strong>not</strong> the root cause.  The root cause is that house prices got so high that the average household couldn&#39;t afford an average house.  Once that happened, a correction was inevitable.</p> <p>The way to address the root cause is to let house prices drop to where an average house is within the means of an average household.  (Or, alternatively, boost the income of the average household to the point that they can afford an average house.  But that&#39;s very hard.  Letting houses prices go on falling, although painful for everyone who owns a house or who has lent money to someone who owns a house, is very easy.)</p> <p>Now, some sort of bailout plan may be necessary to keep the financial system from simply collapsing under the weight of all that bad debt.  But if that plan is focused on keeping house prices from falling, it&#39;s a hopeless plan.  If you successfully kept house prices up, we would remain mired in this problem until incomes rose enough to make house prices affordable.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/root-cause-of-the-financial-crisis">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-15"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-it-the-end-of-6-real-estate-commissions">Is It the End of 6% Real Estate Commissions?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/low-interest-rates-do-not-make-homes-affordable">Low Interest Rates Do Not Make Homes Affordable</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/more-tax-credits-coming-for-homebuyers">More Tax Credits Coming for Homebuyers?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/real-estate-appraisals-ten-things-most-people-just-dont-understand-about-them">Real Estate Appraisals - Ten things most people just don&#039;t understand about them</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-long-can-you-stay-in-your-home-after-you-stop-paying-the-mortgage">How Long Can You Stay in Your Home After You Stop Paying the Mortgage?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing bailout financial financial crisis government real estate Tue, 23 Sep 2008 18:21:19 +0000 Philip Brewer 2452 at http://www.wisebread.com