Money and Credit

2012 IRS Anticipated Refund Dates

2011-12-02T06:33:00.005-05:00

Planning on a tax refund from the IRS in 2012? This schedule is provided by the IRS to give you an idea as to when you can expect your 2012 IRS Tax Refund after filing electronically.

2012 Irs Efile Refund Cycle Chart

Where's my refund? Undelivered Refunds!

2011-11-30T15:23:00.001-05:00

This just in from the IRS

WASHINGTON — In an annual reminder to taxpayers, the Internal Revenue Service announced today that it is looking to return $153.3 million in undelivered tax refund checks. In all, 99,123 taxpayers are due refund checks this year that could not be delivered because of mailing address errors.
Undelivered refund checks average $1,547 this year.
Taxpayers who believe their refund check may have been returned to the IRS as undelivered should use the “Where’s My Refund?” tool on IRS.gov. The tool will provide the status of their refund and, in some cases, instructions on how to resolve delivery problems.
Taxpayers checking on a refund over the phone will receive instructions on how to update their addresses. Taxpayers can access a telephone version of “Where’s My Refund?” by calling 1-800-829-1954.
While only a small percentage of checks mailed out by the IRS are returned as undelivered, taxpayers can put an end to lost, stolen or undelivered checks by choosing direct deposit when they file either paper or electronic returns. Last year, more than 78.4 million taxpayers chose to receive their refund through direct deposit. Taxpayers can receive refunds directly into their bank account, split a tax refund into two or three financial accounts or even buy a savings bond.
The IRS also recommends that taxpayers file their tax returns electronically, because e-file eliminates the risk of lost paper returns. E-file also reduces errors on tax returns and speeds up refunds. Nearly 8 out of 10 taxpayers chose e-file last year. E-file combined with direct deposit is the best option for taxpayers to avoid refund problems; it’s easy, fast and safe.
The public should be aware that the IRS does not contact taxpayers by e-mail to alert them of pending refunds and does not ask for personal or financial information through email. Such messages are common phishing scams. The agency urges taxpayers receiving such messages not to release any personal information, reply, open any attachments or click on any links to avoid malicious code that can infect their computers. The best way for an individual to verify if she or he has a pending refund is going directly to IRS.gov and using the “Where’s My Refund?” tool.

Will the Payroll Tax Cut Expire in December

2011-11-16T14:22:00.005-05:00

I’ve been reading a lot recently about the expiring payroll tax cut. This cut gives workers earning $50,000 per year a $1,000 tax break. This tax, which supports the Social Security program and is paid by employees, was cut to 4.2% of the first $106,800 of a worker’s income, reduced 2% from 6.2%. The payroll tax cut and unemployment insurance were part of a tax deal that President Obama reached with Republicans last December. Both of which will expire at midnight on December 31, 2011.

The different things that I’ve read say that there will be a drama filled show-down at the end of the year. Some say that the Republicans will not agree to any extension, that their position is “anything President Obama is for, we’re against”, regardless of whether or not it helps or hurts the American Taxpayer.

I can only see this through my eyes and the way I see it is this. Any money that the government has is quickly wasted. Any money that I have helps to support my family.

From a taxpayers perspective, a $1,000 decrease in usable cash is a lot of money. Groceries, telephone, electricity, gas in the car...

I know that extending this cut will put a big strain on Social Security, but frankly, we need the money NOW!

I surely don’t have an answer. Maybe if we veto’d most of the bloated government programs and operated on an austerity budget for a few years, then perhaps things would get better. I know that when things are tight at my house, we trim the wants from the needs. Why can’t we do the same in DC?

Only $400,000 left after feeding his family...

2011-09-20T07:53:00.001-04:00

Poor thing... Maybe he could get a second job to help him make ends meet!

Multi-Millionaire Lawmaker: I Can't Afford a Tax Hike

Can a debt settlement attorney stop harassing collection calls?

2011-08-31T19:00:00.002-04:00

Guest post from Kevin Craig

US citizens suffered from job losses, wage cuts and unemployment after the recent economic depression. Because of this, they are unable to pay their bills and have incurred an insurmountable amount of debt. If they default on their payments, they receive collection calls from the debt collectors. Therefore, in this time of financial crisis you should try to settle credit card debt to avoid the harassing calls from the debt collectors. When you plan to settle your debts, ensure that you hire a debt settlement attorney.

Your creditor might not agree to settle your debt if you are current on your payment so it can be a difficult task for you to settle your own debts. If you hire a debt settlement attorney then you can save a considerable amount on your outstanding balance. When you settle your debt you pay less than you originally owed to the creditors. In order to convince your creditors, you might need to default on your payment, but this will adversely affect your credit history.

Once you default on your payment you may continue to receive collection calls. In this situation your debt settlement attorney can help you avoid collection calls. The creditors generally transfer the delinquent accounts to the collection agencies. The attorney can send a certified mail to the debt collectors asking them to cease communication with the debtors. When the debtor is represented by an attorney it helps to decrease the number of collection calls. The debt collectors might not threaten to take legal action against you if you are being represented by a lawyer. He will be working as a mediator between you and the creditors. The creditor or the collection agency needs to contact your attorney if they need to communicate with you.

The creditors are liable to discuss the debt with the attorney in case they plan to sue you. An attorney can prevent their clients from going to court and help the creditor as well as the debtor to save money.

Your attorney can help you give detailed information on a debt settlement program. It will be easier to find a reliable attorney and can avoid getting into the trap of a fraudulent debt settlement company. Therefore, it is beneficial to hire an attorney to liberate yourself from debt.

AMAT

2011-02-23T11:50:00.003-05:00

Applied Materials Earnings Conference Call (Q1 2011)
Scheduled to start Thu, Feb 24, 2011, 4:30 pm Eastern

Kelley Blue Book Announces Winners of 2011 Best Resale Value Awards

2011-01-28T14:51:00.001-05:00

Kelley Blue Book Announces Winners of 2011 Best Resale Value Awards

Honda Fit Best in Subcompact
Honda Accord Best in Midsized
Honda CRV Best in Compact Utility

Car Shopping by Phone and Email

2010-11-07T07:35:00.007-05:00

I recently read a post at Get Rich Slowly. It was a readers submission describing how they shopped for a new car through email. As I was reading, I found myself thinking about how vulnerable the telephone and email car shopper is to abuse.

The writers strategy was simple; send out a bunch of emails to dealers within a 100 mile radius of where he\she lived, asking for their best drive away price on a specific vehicle (I've linked to the post in the first paragraph if you'd like to read it..) The dealer who replies with the lowest quote wins. Simple enough, seems like a great strategy, but there are a number of big risks doing business this way.

First off, let me get this off my chest and out of the way...

Let's say that tomorrow you show up for work, and the boss calls a meeting first thing. The boss says "In this economy, we have to be very frugal, very aware of our budget, and on the lookout for ways to reduce expenses." "So, today, before we get to work, we have decided to reduce our payroll expenses." "Good news is that those of you who are willing to work for the least amount of money today will have a job; bad news is those that don't give us the best price will not earn our business today." "So, here is what we will do today." "John, how little are you willing to take for your work today?" "Sue, will you do it for less than John?" "And how little are you willing to work for today Bob?".... Ridiculous? What kind of work will the boss get from the lowest bidder? Will they happily do the job for the boss? Will it be done right? Maybe John, Sue, and Bob won't work for a boss like that.

Okay, now back to Car Shopping by Phone and Email...

Asking dealers to 'bid' for your business surely will cut to the chase when it comes to getting the lowest price quote. The only shortcoming; you're doing business based solely on price- not always a good idea, especially when shopping for an automobile,and particularly a new automobile. Dealer reputation is very important when it comes time for when you need them "down the road". How can you be assured that this low quote isn't just bait on a hook?

Shopping with email and over phone gives you the feeling of being in the "drivers seat", eliminating negotiations. However, from the dealers perspective, they want to get you into the dealership. A salesperson uses the phone for two things; setting appointments and ordering lunch! Some will tell you whatever you want to hear to get you to come in, others will be honest. The honest dealers will be those with the marginally higher prices, or those unwilling to discuss price details over the phone.

There is a difference between Price and Cost. Price is something that you pay once, cost is something that you pay for as long as you own the product. Now, you may get a great price quote using the telephone and email strategy, but the cost of doing business with someone who will tell you anything they think it will take to get the sale may be more than the few hundred dollars you might save doing business with someone you can build a long-term relationship with. Sometimes it's better to pay a little more so that you can expect (and get!) a lot more.

If you opt to shop for a car this way, keep in mind that what you hear or read is not always true. Things to consider;

Do I know anyone who has done business with these folks before? Would they recommend them?
Word of mouth advertising is a dealers dream come true or worst nightmare. Ask around for recommendations before agreeing to anything. Reputation rules!

Is this dealership out of state? If so, how can I be assured that they know what they're doing when it comes to registering and titling my vehicle?
If you travel across state lines, beware! Chances are that a same state dealership will be required by the state to register and title your car. If purchased out of state, you are on your own. You will become responsible to visit your states motor vehicle office and take care of all of the paper work.

What are their administrative or documentation fees? Are they disclosed in the pricing that I've received?
These fees can vary between markets and have very wide ranges. You'll want to know if the price quoted includes the doc fee which can be as high as the dealer wants to charge. Note that in most states, this fee has to be the same for all customers and is not negotiable.

Do they have the car in stock?
Are they quoting you a low ball price on a car that they don't have? Dealers do this to get you out of the market, telling you that they will locate one or that they have one on order. Chances are, they don't have one on order and can't get one from another dealer (especially if its a high demand automobile). After making you wait, you'll get a call telling you that they can't get the one you want, but that they have this other model available, and the price for THIS one is a lot more than what you agreed to for the original one! By now, all of the other dealers who did have the car that you wanted in stock have sold out of their inventory. Now you're back to square one, and you can't find the car that you wanted anywhere because they've all been sold! And, because of scarcity in the market, the demand has driven up all of the prices! Make sure that they have one ready for immediate delivery!

What if I need service? Will my local dealer give me the same VIP Priority treatment as they give their customers if I purchased the car someplace else?
Loyalty goes both ways; you're loyal to your local dealer, they're loyal to you. Let's say that the service department is completely booked for the day, and you have a problem that needs immediate attention. You purchased your car from the competition 50 miles away because their price was $300 lower (maybe they even sold you the car at a loss!). Do you think that the service department will bump one of their loyal customers to help you out of your bind? How inclined do you think the dealership that you purchased it from will be to take care of a customer that cost them money on the sale? As I mentioned before, sometimes its better to pay a little more so that you can expect (and get!) a lot more!

How to get the best deal and price on a car

If you want the best deal and price, do your research and show up at the dealership! The best deals are made in person, not over the phone or email. Show them that you're a serious buyer and ready to make a deal by being prepared and ready to buy if the deal is right! An informed automobile shopper is far more likely to get a better deal than someone shopping for the lowest price!

Economic Indicator: Are you buying a car this year?

2010-03-10T10:26:00.003-05:00

Things look good- everything seems to be running pretty smooth now! Most prognostications anticipate we are on the crest of the wave to economic recovery. How we hope that this is true!

Jobs reports show that we're losing less jobs. This is a very strange indicator if you ask me. Looking forward to the day when we talk about how many new jobs are created each month versus how many jobs are lost each month.

Housing reports signs of recovery. Lending is easing a little bit (which seems like a lot when compared to what we've recently been subject to!).

New car sales are up too! Even Toyota, in spite of all of their recent woes, report that sales have increased 50% over the same period last year!

Which leads me to ask; do you plan a purchasing a new car or truck this year? Please take the poll and comment about what type of vehicle (Make, model) that you're planning on purchasing.

Creative Fees

2010-02-25T08:13:00.003-05:00

With the new laws surrounding the credit card industry, you'd kind of get the feeling that, finally, we "the consumer" have some real protections against the credit card issuers. It certainly seems this way; all the media attention and information notices from the credit card folks. But, as is often the case, things aren't always as they seem.

Sure, the new legislation offers many new protections against abusive credit card practices, like raising the interest rate on existing balances, but you must still be wary! There are other things that your credit card issuer can do to aggravate you, like increase your minimum monthly payments.

The new credit card laws will force credit card issuers to become much more creative in the way that they make their money; this means yet to be heard of fees imposed upon us. Can you imagine what they'll think of next?

Click Here to learn more about the new credit card laws from the Federal Reserve.

Geico Mastercard Adds $48 Annual Fee

2009-11-09T17:07:00.000-05:00

First, they reduce credit lines, now THIS!

Effective December 2009, card holders will be charged $4.00 per month for the priviledge of holding one of these cards.

Seems to me this is a sure fire way to thin out the herd of remaining card holders!

Credit Cards and Bank Tellers

2009-04-03T06:25:00.003-04:00

My last post talked about how Geico decreased my credit line. An article appears today in USA Today entitled "Credit slashed for responsible borrowers"!

From a bankers perspective, I understand entirely why this 'slashing' is required. Accounts issued to those that don't use them, or to those who avoid fees and other charges are simply unprofitable. It just doesn't make any sense to maintain accounts that effectively cost the business money.

From a consumers perspective, I feel quite defensive about this. First, it can and will impact credit scores (see my last post where I write about this). Second, I feel as though something of mine has been taken away from me un-rightfully, regardless of what the fine print might say.

Seems to me that the banking systems needs to find other ways to support their overhead. Perhaps they may consider reducing their overhead! Executive payroll, even in your small community banks and credit unions might surprise you!

Instead of looking for additional income from creditors, why not fee other transactions? Just for example...

Payroll expenses could be reduced by training customers to use automated systems for routine transactions rather than seeing a live person (teller). How? For every teller window transaction that could have been conducted at an ATM or online, a fee would be imposed that is not imposed had the automated system been used. One would pay extra to talk with a teller. Why? Because tellers cost more! Eventually, people would come to use the less expensive technology, thereby reducing the bank or credit unions reliance on human resources, ultimately reducing overhead expenses.

Would this work? Sure, it already does. When was the last time you talked with a teller when you stopped into ING Direct?

Geico Platinum Mastercard Reduces Credit Lines

2009-03-26T08:38:00.005-04:00

I've recently joined the group of folks who have had their credit negatively impacted by a credit card company that indiscriminately reduces credit lines. Geico Platinum Mastercard notified me that they were reducing my credit card line of credit significantly, down to the balance that I had carried on the account. How can this effect ones credit negatively?

A large part of ones credit score is determined by the amount of credit available. Earlier this month, I had a $10,000 limit on this card. If I carried a $1,000 balance, then I had 90% of my credit line available. When the credit limit is reduced, in this case to $1000, the available credit is now $0, making it appear as though I've 'maxed out' my credit line.

When the credit bureaus receive my balance information showing that I now have a $1000 balance on a $1000 credit line, my credit score will be recalculated and will likely drop significantly, for no fault of my own.

How can the credit card companies do this? I have made all of my payments on time, never late, never missed. Managed my account with stellar diligence. Still, I run the risk, again by no fault of my own, that my credit score will suffer. If my score drops, I run the risk of paying higher interest rates for future credit needs. You would think that there would be a law against this!

Read you account agreements carefully. There is almost always a clause that gives the card company the right to reduce or cancel the credit line at their discretion, regardless of your payment history.

What's the solution? I called Geico Platimum Mastercard and asked that they reconsider. They acknowledged that I had always paid my account better than agreed, but that there wasn't anything that they could (or would) do. Because it was a corporate business decision, they could not increase the line so that I would have only 50% utilization, nor would they reduce the APR on the account. My options were very limited.

I could; (1) decide not to pay them, or (2) pay off the balance in full. Fortunately, I was in the financial position that I could chose option 2. In addition, I will be looking for a new insurance company to handle my motor vehicle insurance needs. Note: I did not close the account because I want to keep my available credit lines open in order to preserve my credit rating.

Have you had this happen to you? What did you do?

Taxes

2009-03-20T07:00:00.003-04:00

Spent the better part the day yesterday in front of the computer looking for ways to reduce our tax obligation this year. Need I say that this year we're paying in? This is the first time in a long time, so I guess I can't complain too much.

In 2008, we had a job change. This 'life change' job change is part of the reason for the change in tax status; but its not the only reason.

Last year, we changed our W4's so that our employers were deducting the proper amounts from our paycheck. We stopped making loans to the federal government. Before we made this change, we were having too much taken from our pay, of which we'd receive back each year as a refund for overpayment.

Now, instead of waiting a year to have access to this money, we receive it weekly. I must admit however, it sure would be nice right about now to get a check!

2009 Tax Changes

2009-02-12T13:37:00.002-05:00

Source: IRS.gov

2009 Tax Changes for Individuals

Child-Related Tax Changes
Information on adoption benefits, child and dependent care credit, child's investment income, and additional child tax credit.

Credit for Prior Year Minimum Tax
There are several changes to the credit for prior year minimum tax.

Earned Income Credit
The earned income credit amounts have increased for 2008.

Education-Related Tax Changes
Information on education savings bond exclusion, hope and lifetime learning credits, tuition and fees deduction, and student loan interest deduction.

Exclusion of Income for Volunteer Firefighters and Emergency Medical Responders
For tax years beginning after 2007 and before 2011, gross income ...

Health/Medical-Related Tax Changes
Information on Archer Medical Savings Accounts (MSAs), Health Savings Accounts(HSAs), and long-term care premiums.

Home/Residence-Related Tax Changes
Information on mortgage insurance premiums, residential energy credits, and sale of main home by employees of intelligence communities.

Increase in Limit on Long-Term Care and Accelerated Death Benefits Exclusion
New limits on exclusion payments made under a long-term care insurance contract.

Itemized Deductions
The itemized deduction phaseout income limits have increased for 2008.

Maximum Tax Rate on Qualified Dividends and Net Capital Gain Reduced
There are changes to the maximum tax rate on qualified dividends and net capital gain.

Penalty for Failure to File Income Tax Return Increased
The failure to file penalty has increased.

Personal Exemptions
The deduction amount and phaseout income levels have increased for 2008. Also, the definition of qualifying relative is clarified.

Recovery Rebate Credit
See if you are eligible for the recovery rebate credit.

Social Security and Medicare Taxes
The maximum amount of wages subject to the social security tax and Medicare tax has increased for 2008.

Standard Mileage Rate
The standard mileage rate for business use of your vehicle, medical and move- related use and charitable use has increased for 2008.

Wage Threshold for Household Employees
The social security and Medicare wage threshold for household employees is...

2009 Anticipated Refund Dates

2009-02-12T13:30:00.003-05:00

To find out when you can expect your 2009 IRS Tax Refund, click here!

No Tax Break for Car Loan Interest

2009-02-12T13:00:00.002-05:00

As you might be aware, one of the provisions set forth in the proposed stimulus package was a tax break for interest paid on car loans. Sen. Barbara Mikulski (D-Md.) who sponsored the bill, confirmed today Congress has scaled back the bill and interest paid on car loans is not included in the package.

The final stimulus bill agreed upon by the House and the Senate provides tax relief for sales and excise tax.

Automotive News sources said the trim in the tax break for new-vehicle purchases reduced its cost from about $11 billion to about $2 billion. Negotiators wanted to limit the cost of the stimulus bill to ease the concerns of the lawmakers who were concerned with excessive spending.

Sale of Experian based FICO scores discontinued on myFICO.com

2009-02-09T06:30:00.002-05:00

Want to know what Experian is reporting about your credit history? It's going to be a little more difficult now!

Experian has announced that this action is specific to their consumer business unit, and will not impact their relationship with lenders.

Fair Isaac has received notification from Experian of its decision to terminate the agreement which allows the distribution of Experian-based FICO® scores and reports from www.myFICO.com.

While it is our desire to continue informing consumers of FICO® scores from all three credit bureaus, FICO® scores from Experian will no longer be available to consumers. FICO® scores from Equifax and TransUnion continue to be available.

There are three myFICO® products which will be impacted by this change:

* FICO® Credit Complete: No longer available after February 13th, 2009.

* FICO® Standard: The single Experian FICO® score and report will no longer be available after February 13th, 2009. You will still be able to obtain FICO® scores and reports from Equifax and TransUnion.

* Suze Orman's FICO® Kit: The single Experian FICO® score and report will no longer be available after February 13th, 2009. You will still be able to obtain FICO® scores and reports from Equifax and TransUnion.

It is important to understand that the majority of lenders will continue to use FICO® scores based on Experian data to make creditworthiness decisions, but those FICO® scores based on Experian data will not be available via www.myFICO.com, nor any other public venue.

We sincerely regret any inconvenience this causes to our loyal customer base. For the affected services, we will provide a smooth and thoughtful transition. Please know we are committed to giving clear and continued communications on this issue.

For more details on this change, especially if you currently own any of the three products mentioned above, we have provided a thorough FAQ, which is found on the FICO® Forums page.

Here is a link to the FAQ

Car Loan Interest Tax Credit

2009-02-07T13:38:00.002-05:00

Senate Approves Mikulski's Auto Amendment
WASHINGTON, D.C. – U.S. Senator Barbara A. Mikulski’s (D-Md.) amendment to the American Recovery and Reinvestment Act to save American jobs and help American consumers by giving tax relief to new car buyers was approved by the Senate today.

“Today the Senate voted ‘yes’ to getting our economy rolling again,” Senator Mikulski said. “President Obama said the goal for the economic recovery program is to create jobs and save jobs. That’s exactly what my amendment does. It’s targeted at saving American jobs and helping families buy the cars they need to get to work and take their kids to school. Our economy is teetering, and Congress must take swift action to save jobs and lend a helping hand to struggling families. That’s what we did here today.”

Senator Mikulski’s amendment, the Auto Assistance Ownership Amendment, makes interest payments on car loans and state sales or excise car tax-deductible for new cars purchased between November 12, 2008 and December 31, 2009, which, in turn, will help more Americans afford cars during these tough economic times and spur investment in America’s ailing automobile industry. For more information about Senator Mikulski’s amendment, go to: http://mikulski.senate.gov/_pdfs/Press/autoownershiptaxamendment.pdf

The American automobile industry is currently one of the biggest drivers of the U.S. economy. One out of every 10 jobs in America is auto-related. A collapse of a major U.S. automaker, such as GM, Ford or Chrysler, would further erode the American economy, given the huge network of suppliers, dealers, and other businesses and communities that would be affected. Already this year the U.S. auto industry has shed 110,000 jobs. In Maryland, approximately 500 jobs have been lost this year due to the closing of automobile dealerships.

Co-sponsors of the amendment include: Senator Sam Brownback (R-Kan.), Senator Debbie Stabenow (D-Mich.), Senator Kay Bailey Hutchison (R- TX.), Senator Jim Webb (D-Va.), Senator Sherrod Brown (D-Ohio), Senator Robert F. Bennett (R-Utah) and Senator Evan Bayh (D-Ind.).

The next step in the legislative process for the Mikulski Amendment is Senate approval of the American Recovery and Reinvestment Act. The bill then goes to conference, where differences in the House and Senate versions will be resolved before the legislation is sent to President Obama for his signature.

Senator Mikulski’s remarks, as prepared for delivery on the Senate floor, follow:

“Mr. President, our economy is in shambles. Our unemployment rate is at a 16-year high. More Americans are out of work today than at any other point in the last 25 years, and we lost more jobs in 2008 than in any year since 1945. People are losing their jobs, their life savings, and their homes.

“There is much work to do and no time to waste. We’ve already done a bailout. We’ve helped the sharks and we’ve helped the whales. Now it’s time to help the minnows.

“I have a proposal that will help. I am offering an amendment, co-sponsored by Senator Brownback, to save the American automobile industry, to help consumers to get our economy back on track, and to help state governments get more revenue. “It’s simple, it’s straightforward, it’s bipartisan. It’s also timely, targeted and temporary. And it saves jobs. Everyone wants to save auto manufacturers, but no matter how much government aid we give to the Big 3 auto makers, they can’t survive if consumers don’t start buying cars. That’s where my amendment helps. “I want to stimulate demand in the automobile industry so that people go to showrooms and buy cars. Why is this a good idea? If you buy a car, someone’s got to make them, someone’s got to sell them, someone has to service them and someone has to provide administrative services. So this amendment is good for the manufacturers, the dealers, the suppliers and the consumers. “My amendment is simple. If you buy a new passenger car, minivan, or light truck by December 31st of 2009, you will get a tax deduction for your sales or excise tax and the interest on your loan. A family would save about $1,500 on a $25,000 car, not counting the additional incentives from dealers.

“My amendment is not about bailouts. It’s about jobs, jobs, jobs. Six million jobs are at stake in the American car industry. One out of 10 jobs in America relates to the auto industry. Right now the facts are gloomy. If we lose the Big 3, then 3 million jobs are at risk. The only way to save the Big 3 is to get people into showrooms, but 1,000 dealerships could close this year. That’s 53,000 jobs that could be lost just at the dealerships. I believe we can help by getting the consumer into the showroom. They will know that the government is on their side and helping them with one of the biggest purchases they will make during this tough time.

“My amendment also helps state governments. States rely on tax revenue from new car sales. In my home state and many other states the sales tax is around 6 percent, so on a $25,000 car the state gets $1,500 in revenue. New car sales are down millions per year from their averages. This means states are losing billions when they already are struggling. My amendment will help because as people buy new cars states’ tax revenues will increase.

“This amendment is a big deal to families because a car is the second biggest purchase most families make. My amendment is targeted. Families with an income of more than $250,000 a year are ineligible. Cars costing more than $49,500 also are ineligible. This amendment also helps the environment because it gets more people into new cars and new cars are cleaner and more fuel efficient than old cars.

“There are 20,000 new car dealerships nationwide. They employ a million people. In my own home state, there are around 300 dealerships. Most people don’t realize that dealers employ an average of 53 people in sales, mechanics, and administrative positions. I visited car dealerships in Maryland and heard from these employees.

“I’ve talked to people like the mechanic who works for a Chevy dealer in Bethesda. He’s worked there for 23 years. He said to me, ‘Senator Barb, all my life I’ve loved to work on cars. I just love it. I love to fix them, I love to repair them. If they’re new, I want to make sure they’re fit for duty. I’ve earned a good living. I’ve been happy and I think I’ve helped make a lot of other people happy. But the only way I can stay happy is if I continue to work. I’ve got a mortgage. I’ve got two kids in college. Maybe they’re going to go into engineering, I don’t know, but if we don’t get more people into this dealership, my job could be gone.’

“And I talked to the dealer. The dealer’s name is Sam. The first thing you note about him is that he wears the little rotary pin because he’s the guy that not only provides jobs in the community, he is also part of the Chamber of Commerce and part of the United Way.

“We are talking about people who are part of the fabric of our society. We are not talking about an abstraction and we’re not talking about a single zip code, like Wall Street. We are talking about the automobile industry, which is in every state and every community.

“Maybe you know somebody who works for a hedge fund. I don’t. But I do know the people who work for the automobile industry, like the receptionist who went to work at a dealership 43 years ago right out of high school. And she said, ‘Senator Barb, women couldn’t sell cars in those days, but I’ve been here in and out of this same dealership for 43 years. I’ve raised my kids and earned a good living doing the back office work and I want to keep on doing it. I’m not ready for Social Security and for God’s sake don’t put the money in Wall Street.’

“Well, I say let’s put money where it matters — where it creates jobs. That’s why we need this amendment — for creating jobs, for consumers, and for the auto industry that is such a driver of our country’s economy — so we can get America rolling again.”

2008 Tax Law Changes Highlights

2009-02-02T06:06:00.001-05:00

This information is from www.IRS.gov

Highlights of 2008 Tax Law Changes: Tax Breaks Renewed, Recovery Rebate Credit, Homeowner Relief

FS-2009-1, January 2009

AMT exemptions rise; several expiring deductions and credits get a new lease on life; a new standard property tax deduction and a special first-time homebuyer credit are available to some homeowners; and retirement savings incentives expand. These are among the changes taxpayers will find when they fill out their 2008 tax returns. More information about these and other changes, summarized below, can be found on IRS.gov and in various IRS documents, including the Instructions for Form 1040.

Economic Stimulus Payments Tax Free

Economic stimulus payments are not taxable, and they are not reported on 2008 tax returns. However, the stimulus payment does affect whether a taxpayer can claim the Recovery Rebate Credit and how much credit he or she can get. The credit is figured like last year's economic stimulus payment except that the amounts are based on tax year 2008 instead of 2007. A taxpayer may qualify for the Recovery Rebate Credit if, for example, she did not get an economic-stimulus payment or had a child in 2008. See Fact Sheet 2009-3 for details. In most cases, the IRS can figure the credit. The instructions for Forms 1040, 1040A and 1040EZ have more information.

AMT Exemption Increased for One Year

For tax-year 2008, Congress raised the alternative minimum tax exemption to the following levels:

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$69,950 for a married couple filing a joint return and qualifying widows and widowers, up from $66,250 in 2007
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$34,975 for a married person filing separately, up from $33,125 and
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$46,200 for singles and heads of household, up from $44,350

Under current law, these exemption amounts will drop to $45,000, $22,500 and $33,750, respectively, in 2009. Form 6251 and the AMT Calculator provide more information.

Expiring Tax Breaks Renewed

Several popular tax breaks that expired at the end of 2007 were renewed for tax-years 2008 and 2009. As a result, eligible taxpayers can claim:

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The deduction for state and local sales taxes on Form 1040 Schedule A , Line 5
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The educator expense deduction on Form 1040, Line 23 or Form 1040A, Line 16
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The tuition and fees deduction on Form 8917 and
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The District of Columbia first-time homebuyer credit on Form 8859

In addition, the residential energy-efficient property credit is extended through 2016. In general, solar electric, solar water heating and fuel cell property qualify for this credit. Starting in 2008, small wind energy and geothermal heat pump property also qualify. Use Form 5695 to claim the credit.

The non-business energy property credit for insulation, exterior windows, exterior doors, furnaces, water heaters and other energy-saving improvements to a main home is not available in 2008 but will return in 2009.

Standard Deduction Increased for Most Taxpayers

Nearly two out of three taxpayers choose to take the standard deduction rather than itemizing deductions such as mortgage interest and charitable contributions. The basic standard deduction is:

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$10,900 for married couples filing a joint return and qualifying widows and widowers, a $200 increase over 2007
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$5,450 for singles and married individuals filing separate returns, up $100 and
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$8,000 for heads of household, up $150

Higher amounts apply to blind people and senior citizens. The standard deduction is often reduced for a taxpayer who qualifies as someone else’s dependent.

New this year, taxpayers can claim an additional standard deduction, based on the state or local real-estate taxes paid in 2008. Taxes paid on foreign or business property do not count. The maximum deduction is $500, or $1,000 for joint filers.

Also new for 2008, a taxpayer can increase his standard deduction by the net disaster losses suffered from a federally declared disaster. A worksheet is available in the instructions for Forms 1040 and 1040A.

First-Time Homebuyer Credit

Those who bought a main home recently or are considering buying one may qualify for the first-time homebuyer credit. Normally, a taxpayer qualifies if she didn’t own a main home during the prior three years. This unique credit of up to $7,500 works much like a 15-year interest-free loan. It is available for a limited time only –– on homes bought from April 9, 2008, to June 30, 2009. It can be claimed on new Form 5405 and is repaid each year as an additional tax. Income limits and other special rules apply.

Tax Relief for Midwest Disaster Areas

Special tax relief related to severe storms, tornadoes or flooding, occurring after May 19, 2008, and before Aug. 1, 2008, is available to individuals in portions of Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska and Wisconsin that were affected by these disasters. Tax benefits include:

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Liberalized rules for certain personal casualty losses and charitable contributions
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An additional exemption amount for persons who provided housing for someone displaced by these disasters
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The option to use 2007 earned income to figure a 2008 earned income tax credit (EITC) and additional child tax credit
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An increased charitable standard mileage rate for use of personal vehicle for volunteer work related to these disasters
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Special rules for withdrawals and loans from IRAs and other qualified retirement plans

Details on these and other relief provisions are in Publication 4492-B .

Contribution Limits Rise for IRAs and Other Retirement Plans

This filing season, more people can make tax-deductible contributions to a traditional IRA. The deduction is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $53,000 and $63,000, compared to $52,000 and $62,000 last year.

For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $85,000 to $105,000, up from $83,000 to $103,000 last year.

Where an IRA contributor who is not covered by a workplace retirement plan is married to someone who is covered, the deduction is phased out if the couple’s income is between $159,000 and $169,000, up from $156,000 and $166,000 in 2007.

The phase-out range remains $0 to $10,000 for a married individual filing a separate return who is covered by a retirement plan at work.

The worksheet in the instructions for Form 1040 Line 32 or Form 1040A Line 17 can help a taxpayer figure the IRA deduction.

For 2008, the elective deferral (contribution) limit for employees who participate in 401(k), 403(b) and most 457 plans remains unchanged at $15,500. This limit rises to $16,500 in 2009. The catch-up contribution limit for those aged 50 to 70-½ remains at $5,000 in 2008 but rises to $5,500 in 2009.

The AGI phase-out range for taxpayers who contribute to a Roth IRA is $159,000 to $169,000 for joint filers and qualifying widows and widowers, compared to $156,000 to $166,000 in 2007. For singles and heads of household, the comparable phase-out range is $101,000 to $116,000, compared to $99,000 to $114,000 in 2007.

Standard Mileage Rates Adjusted for 2008

The standard mileage rate for business use of a car, van, pick-up or panel truck is 50.5 cents per mile from Jan. 1, 2008, to June 30, 2008, up 2 cents from 2007. The rate is 58.5 cents for each mile driven during the rest of 2008.

From Jan. 1, 2008, to June 30, 2008, the standard mileage rate for the cost of operating a vehicle for medical reasons or as part of a deductible move is 19 cents per mile, down a penny from 2007. The rate is 27 cents from July 1 to Dec. 31.

The standard mileage rate for using a car to provide services to charitable organizations is set by law and remains at 14 cents a mile. As noted earlier, special rates apply to the Midwest disaster area.

Exemptions Rise

The value of each personal and dependency exemption is $3,500, up $100 from 2007. Most taxpayers can take personal exemptions for themselves and an additional exemption for each eligible dependent. An individual who qualifies as someone else’s dependent cannot claim a personal exemption, and though personal and dependency exemptions are phased out for higher-income taxpayers, the phase-out rate is slower than in past years.

This is one of more than three dozen individual and business tax provisions that are adjusted each year to keep pace with inflation. A complete rundown of these changes can be found in 2008 Inflation Adjustments Widen Tax Brackets, Change Tax Benefits.

Earned Income Tax Credit Rises

The maximum earned income tax credit (EITC) is:

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$4,824 for people with two or more qualifying children, up from $4,716 in 2007
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$2,917 for those with one child, up from $2,853 last year and
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$438 for people with no children, up from $428 in 2007.

Available to low and moderate income workers and working families, the EITC helps taxpayers whose incomes are below certain income thresholds, which in 2008 rise to:

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$41,646 for those with two or more children
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$36,995 for people with one child and
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$15,880 for those with no children

One in six taxpayers claim the EITC, which, unlike most tax breaks, is refundable, meaning that individuals can get it even if they owe no tax and even if no tax is withheld from their paychecks.

Taxes Lowered for Many Investors

The five-percent tax rate on qualified dividends and net capital gains is reduced to zero. In general, this reduction applies to investors whose taxable income is below:

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$65,100, if married filing jointly or qualifying widow or widower
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$32,550, if single or married filing separately or
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$43,650, if head of household.

Note that taxable income is normally less than total income. The worksheet for Form 1040 Line 44, Form 1040A Line x or Schedule D and its instructions provide details.

Kiddie Tax Revised

The tax on a child's investment income applies if the child has investment income greater than $1,800 and is:

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Under 18 old
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18 years of age and had earned income that was equal to or less than half of his or her total support in 2008 or
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Over 18 and under 24, a student and during 2008 had earned income that was equal to or less than half of his or her total support.

Previously, the tax only applied to children under age 18. Form 8615 is used to figure this tax.

Self-Employment Tax Changes

For those who receive Social Security Retirement or disability benefits, any Conservation Reserve Program (CRP) payments are now exempt from the 15.3-percent social security self-employment tax. Schedule SE and its instructions and Publication 225, Farmer’s Tax Guide, have the details.

More farmers and self-employed people this year can choose the optional methods for figuring and paying the self-employment tax. These optional methods allow those with net losses or small amounts of business income a way to obtain up to four credits of Social Security coverage. The income thresholds for both the farm optional method and the nonfarm optional method are increased for 2008 and indexed for inflation in future years. Choosing an optional method may increase a taxpayer’s self-employment tax but it may also qualify him for the earned income tax credit, additional child tax credit, child and dependent care credit or self-employed health insurance deduction. Schedule SE and its instructions have details.

The Election is over; Now What?

2008-11-07T06:05:00.002-05:00

The elections are over. Many had hoped that with the new president elect, our financial crisis would begin to subside. Much to their dismay, the stock market has tumbled twice since.

I often wonder how much the media has contributed to the current state of economic affairs? What if nobody told us how bad it was; what if we didn't repeatedly hear and read, over and over, the economic bad news, how would we know?

Some people who have endured job lay-offs, foreclosures, etc. would have first hand knowledge obviously. But what about the rest of us? Do we really need to know? Maybe the better questions is do we want to know?

Personally, I don't want to hear about it anymore. Not sticking my head in the sand because I realize the importance of personal finance and money management. Moreover, I understand the importance of a good mental state of mind; the importance of attitude!

With all of the negativity fed to us by the media, we are begin to feel defeated. We are constantly reminded of an economic Armageddon.

I say damned the news! I'm putting my chin up and going forward with the best that I have! The sun has come up today and both of my feet hit the floor, look out world! We all have another opportunity today to take ourselves and our circumstances to the next level!

So, shut off the news and radio and go for it! Keep your chin up and keep doing your best! Make your attitude a good one! Things will get better!

Gas or Milk......

2008-05-13T12:23:00.003-04:00

As I was driving along today, I observed these two signs. Both of them were at the same convenience store. Curiously, the next gas station that I came upon, 12 miles away (yes, it's rural here..) the price per gallon for gasoline is $3.88. I didn't check on the milk...

Cast Off!

2008-05-04T06:25:00.000-04:00

The cast came off my arm Friday! Now for the therapy. I cannot believe how much my arm atrophied in just 6 weeks!

It is painful to try to move my wrist; I wonder how long it will take to get my mobility back?

Over the past few weeks I've used my time to catch up on some Personal Finance Reading. I plan on writing a post reviewing these books in the coming weeks.

Seems like quite a lot has happened in the PF world since breaking my wrist. That's good; we'll spend some time catching up!

I start therapy tomorrow. I hope that it is as quick as I suspect it will be painful. What's the saying- no pain no gain?

See you soon!

Check your refund status with "Where's my Refund"

2008-04-23T07:15:00.001-04:00

This just in from the IRS Newswire, a free IRS e-mail service.

Taxpayers Can Check Their Refund Status
with “Where’s My Refund?”

WASHINGTON — Taxpayers who have filed their federal income tax returns and are expecting their refunds can use the Internal Revenue Service’s online tool, “Where’s My Refund?,” to check on the status of their refunds.

“Where’s My Refund?” is fast, easy, safe and convenient. Nearly 9.7 million taxpayers have checked the status of their 2007 federal income tax refunds online, up about 18 percent over the same time period last year.

To get to personalized refund information, taxpayers should be ready to enter their:

Social Security Number (or Taxpayer Identification Number),
Filing status (Single, Married Filing Joint Return, Married Filing Separate Return, Head of Household, or Qualifying Widow(er)),
Exact refund amount shown on their tax returns.

Taxpayers can check on the status of their refund seven days after e-filing a return. For a paper return, check four to six weeks after mailing the return.

“Where’s My Refund?” also includes links to customized information based on a taxpayer’s specific situation. For example if “Where’s My Refund?” shows that the IRS was unable to deliver a refund, a taxpayer can change his or her address online. Taxpayers can avoid undelivered refund checks by having their refunds directly deposited into a personal checking or savings account.

If 28 days have passed after the IRS says it mailed a refund check, “Where’s My Refund?” enables taxpayers to initiate a trace.

New this year Spanish-speaking taxpayers can get information about the status of their federal refunds using Dónde Está mi Reembolso? available by entering the Spanish language area of the web site by clicking the Espanol link on IRS.gov. The refund trace and address change features are only available in English at this time.

Taxpayers without internet access can check the status of their refunds by calling the IRS TeleTax System at 800-829-4477 or the IRS Refund Hotline at 800-829-1954. The TeleTax refund information is updated each weekend. If you do not get a date for your refund, please wait until the next week before calling back.

Where’s My Refund? is also accessible to visually impaired taxpayers who use the Job Access with Speech screen reader used with a Braille display and is compatible with different JAWS modes.

Some scam artists are sending phony emails, including those relating to “Where’s My Refund?”, to trick individuals into revealing personal financial information that can be used to access their financial accounts. People who want to access the genuine IRS Web site and the “Where’s My Refund?” feature should go directly to the IRS Web site by typing the address, www.irs.gov, into the address` line of their Internet window. The only genuine IRS Web site is IRS.gov.

Still nursing a broken wrist...

2008-04-07T10:15:00.001-04:00

Typing is hard enough with both hands, it's a lot harder with only one!

This is a guest post from Liza

Debt solution

More and more people who are facing enormous difficulties in paying off their debts are turning to debt solutions. There are almost four types of debt solutions namely repayment arrangements, debt consolidation and debt settlement. Amidst the mentioned debt solutions, debt consolidation and debt settlement the most sought after ones.

At it most basic, debt consolidation is combining all your debts into one single monthly repayment. Thus, at the end of each month instead of paying twenty different bills to different creditors all you have to do is simply make one singular monthly payment. The advantage of one monthly payment is that the risk of missed or late payments is reduced. Usually consolidation of debts is accompanied with lowering of interest rates. The consolidated debts carry much less interest rate, almost at times half, of what you had to pay earlier.

Debt settlement is another option that’s becoming increasingly popular with individuals who have a lot of debt and are considering filing bankruptcy. In a nutshell, debt settlement is an alternative to bankruptcy. You stop paying your bills and instead start accumulating funds to pay your creditors. Once you accrue a lump sum amount of money, start negotiating with your creditors. With the help of debt settlement usually 50% or sometimes even 75% of the original amount is reduced.

You might face troubles in negotiating with creditors and collection agencies. They might create pressure on you to collect more money. If you find that they are in no mood to negotiate then contact a reputed settlement company. The settlement companies have the experience and know very well how to come to an agreement with creditors and collection agencies.

IRS Offers Tips for Tax Filers for ES Payments

2008-03-28T07:06:00.003-04:00

Tips for Tax Filers on Economic Stimulus Payments

WASHINGTON — The Internal Revenue Service today urged taxpayers eligible for the economic stimulus payment to file their tax return now in order to get their payment in a timely manner.

This IRS reminder applies to taxpayers yet to file their 2007 income tax returns as well as retirees, disabled veterans, low-wage workers and others who normally are not required to file a return but who must do so this year to receive an economic stimulus payment.

“The quickest way to receive your refund and your economic stimulus payment is to file early, file electronically and use direct deposit,” said IRS Commissioner Doug Shulman.

Starting in May, the IRS will begin sending economic stimulus payments of up to $600 ($1,200 for married couples) to people who earn less than $75,000 ($150,000 for married couples). There is also is an additional payment of $300 for each eligible child younger than 17.

People who have no tax filing requirement may still be eligible to receive a payment of $300 ($600 for married couples) if they have at least $3,000 in qualifying income. Qualifying income includes any combination of earned income, nontaxable combat pay and certain benefits from Social Security, Veterans Affairs and Railroad Retirement. Individuals in this category may also be eligible for the additional $300 payment for each qualifying child.

The IRS offers these tax tips for taxpayers:

File now: Don’t wait until the 11th hour on April 15 if you want your stimulus payment on time. Your tax return must be processed by April 15 for you to receive your payment according to the payment schedule. Filing a paper return? Write ‘Stimulus Payment’ at the top of your form ONLY if you do not normally file a tax return and are filing just to receive a stimulus payment.

Use Free File: IRS Free File is a public-private partnership with 19 tax software companies that make their tax preparation software and electronic filing available for free to certain taxpayers. Anyone with an adjusted gross income of $54,000 or less, and that’s 97 million taxpayers, is eligible to use Free File, available only through www.irs.gov.

Use IRS e-file: If you don’t qualify for IRS Free File, you should still file your tax return electronically. Taxpayers can use IRS e-file through paid preparers or over-the-counter software. It’s the fastest way to process your tax return, which means it’s the quickest way for you to receive your refund and your economic stimulus payment.

Use direct deposit: It’s the best way to receive your refund and your economic stimulus payment. Even if you owe taxes, complete the blanks for direct deposit and, if you are eligible, the IRS will transmit your stimulus payment electronically. The IRS will begin making stimulus payments into direct deposit accounts on May 2. The agency will mail paper checks starting May 16.

Need more time: If you can’t make the April 15 deadline, remember to file a Form 4868, the automatic extension of time to file. This will give you until October 15 to submit a 2007 tax return.

Avoid Scams: If you receive unsolicited email or telephone calls from anyone purporting to be from the IRS, it’s probably a scam. Don’t click on any links; don’t answer any questions. Forward the emails or report the calls to phishing@irs.gov.
This year, there are millions of people who are not required to file a tax return but who must file a 2007 income tax return to let the IRS know they are eligible for a stimulus payment. Those are people who have no tax liability but who have at least $3,000 in qualifying income.

The $3,000 in qualifying income, for those who have no tax liability, must come from one or a combination of these sources: earned income (wages, tips, salary) nontaxable combat pay and certain benefits from Social Security, Veterans Affairs and Railroad Retirement. Interest income, capital gains or Supplemental Security Income payments do not qualify as income.

For people in this category, there are a few extra tips:

Super Saturday: Approximately 320 IRS offices will be open Saturday, March 29 from 9 a.m. to 3 p.m. to help prepare returns for people who are filing only so they can receive their stimulus payment. There is a state by state list of sites on IRS.gov.
Use Free File: Several Free File partners are offering tax software programs just for people who are filing solely to receive the economic stimulus payment. There is a special page on IRS.gov: Free File – Economic Stimulus Payment.

Package Form 1040A-3: This also includes tax tips, a sample Form 1040A and a blank Form 1040A that can be completed and mailed to the IRS. Filing a paper return? You must write “Stimulus Payment’ at the top of the Form 1040A.

Need more time: If you can’t make an April 15 deadline, you automatically have until October 15 to file a tax return solely to receive an economic stimulus payment. You do not have to file a form to be granted an extension. However, you must file by October 15 so the IRS can process your return and issue a stimulus payment before the end of the year.

Free help is available for low-income and older Americans. Volunteer tax preparation sites can be found by calling 1-800-906-9887.

Good Afternoon everyone,...

2008-03-22T16:56:00.001-04:00

Good Afternoon everyone, I just want to give you an update on the lay and low for the next few anyway. I had the unfortunate experienced on falling on a ladder today and bone in my risk, So, my ability to type is hampered a little bit. And in any event, I'll try to keep place and keep up the voice blogs for the next two days. Thanks , and I talk to you soon. listen

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Decoupled Debit Cards- What?

2008-03-20T06:55:00.004-04:00

Decoupled Debit Cards- What?

For a minute, lets imagine a new debit card in your wallet. This new debit card is just like all the others; it looks like a credit card; you swipe it like a credit card. But, different than the others, it's not associated with a specific bank account. Instead, you tell the issuer of the card, say Capital One for example, which checking account you want the money to come from. This new debit card is like a universal debit card that you link to all of your many different checking accounts. So now instead of having a pocket full of debit cards, you have only one.

Okay, let's wake up! Day dream is over! Back to reality.

What if this dream were reality? What if I told you it IS reality?

Capital One bank has quietly been piloting this new debit card for almost a year now.

As reported on PaymentNews;

"Having quietly tested the cards via direct marketing with their own credit card customers earlier in the year, Capital One says it now has its first co-brand debit pilot in market with in-store kiosk, Internet and phone-based enrollment. It says it plans for a second merchant client to launch its pilot this summer and for an affinity client to launch in the third quarter.

With this new debit card, Capital One will offer awards with every purchase! Whether you're using the card to pay for groceries, credit card bills, or to purchase gasoline, you might earn points or other rewards from the issuer. Gwenn Bezard of Aite Groupe says..

"There's a huge difference between the rewards programs of credit cards and debit cards. The actual value received by the customer is 64 cents for every $100 spent with a credit card, while the value received for a debit card program is 10 cents. The actual value that a customer will receive (with the Capital One MasterCard) is expected to be between 40 cents and 60 cents. That's four to five times higher than the typical debit rewards card."

What's in it for Capital One? They earn income know as 'interchange' for each transaction that you complete. Gwen Bezard describes in a report by research firm the Aite Groupe that decoupled debit cars will be a "direct assault against incumbent deposit financial institutions." This means that many banks risk losing HUGE amounts of income to Capital One. If this pans out as Capital One hopes, it will redefine the bankers view of interchange income. Not only would the banks lose the interchange, they'd still have to pay for the processing charges, further damaging their income. Processing includes handling disputes and error resolutions, insufficient fund issues, and ACH transaction fees.

Here's a short video on US Banker, the Lowdown on Decoupled Debit Cards.

Want more info? Read this article at Smartmoney.

Keep your eyes open! If a decoupled Capital One debit card sounds good to you, you'll have to wait until you receive an invitation. Spend a few minutes searching online and you will find their application to enroll, but you need a reference code that per Capital One, you can only receive by invitation.

If you want to call Capital One for more information, their phone number is 1-866-833-9233.

Credit after Bankruptcy

2008-03-19T07:23:00.002-04:00

A reader asks...

What happens with my credit cards after filing bankruptcy? Will I still be able to use them? Do I send them back? What if I need a credit card in the future?

A discharge in bankruptcy will wipe away your credit card debt. This means that you will no longer be obligated to repay and the credit card company(ies) are forbiden from ever attempting to collect the debt from you.

Any credit cards that you have now with balances that are discharged in bankruptcy will be closed by the credit card company and you will no longer be able to use them.

However, after the bankruptcy is complete, you may be able to obtain a secured credit card from a bank or credit union. You might may be able to obtain a traditional 'unsecured' credit card, but the limit will be quite low and the interest rate will be very high.

A secured credit card is a 'traditional' credit card with a twist. You deposit money in a financial institution and grant that institution a security interest in your deposit in exchange for the credit card. The financial institution will hold the money that you have on deposit just in case you were to default on the credit card. If you were to default, they would take the money on deposit to payoff the balance on the card and close the account.

For example, you deposit $500 in a savings account at a credit union, the credit union puts a 'freeze' on the $500 and issues you a credit card with a $500 limit.

A secured credit card after bankruptcy is really a good way to go. You get a managable credit line at a reasonable interest rate. This is a good way to rebuild your credit after bankruptcy.

BIG VISA security breach~Hannaford Brothers

2008-03-18T06:09:00.006-04:00

Here we go, again! Do you remember the TJ Maxx data security breach? This new compromise isn't yet as big, but could be!

News just started to filter out to financial institutions on Friday that VISA branded cards and their card holders were compromised. Because of the agreements that VISA has with their merchants, not much more was said. They only explained that a merchant discovered a problem.

Now, a few days later, it is official. The breach happened at Hannaford Brothers grocery stores. Thus far, 4.2 million cards have been compromised and 1800 cases of fraud have been reported.

Hannaford reports that no identifying personal information was exposed, only VISA card and PIN numbers.

So, if you used your VISA debit card in a Hannaford grocery store in the Northeast, or a Sweetbay store in Florida, or in an independent grocery store selling Hannaford branded products, you should immediately contact your financial institution.

Yesterday, the VISA networks put out a formal alert to all financial institutions explaining the compromise. This alert directs the financial institutions to block the affected cards and re-issue replacements.

Apparently this breach was discovered on Feb. 27, 2008, and shut down on March 10th. According to reports, the data breach started on Dec 7, 2007.

Your financial institution has received a list of all their customers with accounts that were compromised. If you discover unauthorized transactions on your card, immediately contact your financial institution. Keep records of everything just in case you need to follow up; copies of statements, name of the person that you spoke with and the time of day, dollar amounts, dates, etc.. You have protection under the banking laws just in case you are a victim of fraud.

News from the IRS- Economic Stimulus Payments

2008-03-17T15:13:00.002-04:00

Just received this alert from the IRS about the Economic Stimulus Payments-

WASHINGTON — The Internal Revenue Service announced today that it will begin sending more than 130 million economic stimulus payments starting May 2. The initial round of weekly payments will be completed by early July.

The IRS also announced the availability of a new online calculator on IRS.gov to help people determine the amount of their stimulus payments.

Stimulus payments will be made by direct deposit to people who choose to receive their 2007 income tax refunds through direct deposit. All others will receive their economic stimulus payments in the form of a paper check.

“To receive an economic stimulus payment, people just need to file their tax returns as they usually do,” said IRS Acting Commissioner Linda E. Stiff. “The payments will be automatic for the vast majority of taxpayers. Some lower-income workers and recipients of certain Social Security and veterans benefits who don’t normally need to file a tax return will need to do so in order to receive a stimulus payment. IRS.gov has all the information people need to help them obtain a stimulus payment.”

Stimulus payments will be sent out in the order of the last two digits of the Social Security number used on the tax return.

Because the IRS will use the Social Security number to determine when checks are mailed, taxpayers may receive their checks at different times than their neighbors or other family members. On a jointly filed return, the first Social Security number listed will determine the mail-out time.

The IRS expects to make about 34 million payments within the first three weeks after the payment schedule begins May 2. With more than 130 million households expected to receive stimulus payments, more than 25 percent of the payments will be made in the first three weeks.

Taxpayers who choose direct deposit on their federal income tax returns can expect to receive their economic stimulus payments between May 2 and May 16 provided their returns were received and processed by April 15, 2008. For taxpayers who did not choose direct deposit on their tax return but whose returns were processed by April 15, the paper checks will be in the mail starting May 16, with the initial mailings completed by around July 11.

The IRS is also announcing today the availability of an on-line calculator on IRS.gov to help taxpayers determine if they are eligible to receive an economic stimulus payment and if they are, how much they can expect. Anyone who has prepared a 2007 income tax return can use the calculator. It will ask taxpayers a series of questions, so they should have their 2007 tax returns handy. After answering the questions, the calculator will provide the projected dollar value of the payment.

Below are the schedules for economic stimulus payments related to tax returns processed by April 15, 2008.

Stimulus Payment Schedule for Tax Returns
Received and Processed by April 15

Direct Deposit Payments

If the last two digits of your Social Security number are:
Your economic stimulus payment deposit should be sent to your bank account by:

00 – 20
May 2

21 – 75
May 9

76 – 99
May 16

Paper Check

If the last two digits of your Social Security number are:
Your check should be in the mail by:

00 – 09
May 16

10 – 18
May 23

19 – 25
May 30

26 – 38
June 6

39 – 51
June 13

52 – 63
June 20

64 – 75
June 27

76 – 87
July 4

88 – 99
July 11

A small percentage of tax returns will require additional time to process and to compute a stimulus payment amount. For these returns, stimulus payments may not be issued in accordance with the schedule above, even if the tax return was processed by April 15.

All or part of an economic stimulus payment may be applied to back taxes or certain other debts of the taxpayer, such as delinquent child support and student loans. In such cases, the IRS will send a letter to the taxpayer explaining the offset.

To accommodate people whose tax returns are processed after April 15, the IRS will continue sending weekly payments. People who file tax returns after April 15 and receive a refund can expect to receive their economic stimulus payments in about two weeks after receiving their tax refunds, but not before the date they would have received their payment if the return had been processed by April 15. To ensure taxpayers receive their stimulus payment this year, they must file a tax return by Oct. 15.

Two bureaus of the Treasury Department are involved in making the payments. The IRS will calculate the amount of each economic stimulus payment based on the tax year 2007 income tax returns it receives. The IRS will then forward the information to the Financial Management Service (FMS), which is the bureau of the Treasury Department that makes federal payments such as Social Security benefits, federal income tax refunds and, now, economic stimulus payments.

The IRS reminds taxpayers that they can get their stimulus payments faster by using direct deposit when they file their tax return.

In addition, the IRS urges taxpayers to file electronically. For people who normally don’t need to file a tax return, the IRS and Free File Alliance have a special program set up to allow for free electronic filing.

Resolution Update

2008-03-17T06:07:00.005-04:00

Seeing that we're almost through the first 90 days of the year (76 and counting..), I thought I'd look to see how I'm progressing towards my new years resolutions. The original post is in quotes...

* Drop Sixteen Pounds by April 1- just before hunting season '07, I weighed in at 166#. This morning I'm 180#. I have this really cool Navy Seals exercise and diet plan that worked very well for me a few years ago. I'll begin that plan again to help reach this goal.

With two weeks to go, I've made progress, but I'm not nearly as close to my target. Right now I'm at 174#. At this rate, it will be the end of April before I'm down to where I'd like to be. Good news is that I'm going in the right direction!

* Payoff the MBNA Visa Card- I have a few more months at the intro rate of 1.49%, then it will adjust to prime +. The balance is right around $7k (I intentionally charged some big ticket expenses and purchases instead of taking the money out of a high yielding money market account, of which I will do when the rate on the credit card adjusts.)

I was able to meet this goal, although I didn't exactly pay it off. In reality, I paid off about $4500 of the amount owed and refinanced the balance into long term debt. The good news here is that we are down to a car loan, our mortgage, our HELOC, and a small personal loan. Other than our monthly living expenses, this is all of our debt. Progress!

* Sell the boat- not the little fishing boat, but the run about. On top of being expensive to insure and maintain, the price of gasoline is becoming quite prohibitive. The only problem with selling it now is I'll be taking a bath in losses because I'll need to price it low enough to attract a buyer. The boat, although in extremely good condition, is 20 years old this year. This 23' Regal Valenti runs like a top, powered by a 7.4 liter Mercruiser. I've owned it now for 4 years and loved almost every minute with it! In case you or somebody you know wants to buy it, I'll email you pictures! It has a brand new 2006 Venture Trailer that can go with it, if the price is right!

This is one thing that I really do not want to do, but understand that I really should. It's not yet the right time of year to put a boat up for sale (we still have a foot or two of snow on the ground..). I think that my bath might be worse now than what I originally thought. I'm not in a position where I NEED to sell the boat, its just that if I don't use it more than a few times a year, is it really worth keeping?

* Read a book a week- right now I'm finishing up Rudy Giuliani's biography (not that I'm a fan or anything, just reading the book). Next in line will be Tim Ferriss's 4 Hour Work Week or Lee Iaccoca's latest.

I finished reading Giuliani's biography. I'm glad that's over. I also finished Tim Ferriss's 4 Hour Work Week. This has to have been one of the most eye opening books that I have ever read. Highly recommended! I probably would have read a couple of more books by now, but I've been so engrossed reading, and re-reading this book, I haven't wanted to use the time that I've found for anything else, yet!

* Work 4 hours per week!

It was relatively easy to shave off a few hours a week by employing some of the methods discussed in the 4 Hour Work Week. Progress!

* Stay within the budget!

Anyone who has ever tried to stay within a budget will tell you that one of the hardest parts of establishing a budget is keeping track of everything that you spend. Simplifying our spending was and is the hardest part. However, the fewer the daily expenses, the less there is to keep track of. More progress!

* Continue to grow my business- will be adding a few new services to include tax prep and plastic card POS processing.

Thus far, I've progressed to the point of having the plastic card POS processing service available, but haven't yet pursued it. It's on the back burner right now. I need to work on the game plan.

* Visit Graceland

Our plans for this goal have changed a tad. Instead of going to Tennessee, we're going to DC. We'll be visiting all of the attractions.. We'll be there for about a 3 days, so we should have enough time. From there, we're going to visit Hershey, PA, going to Hershey Park. No telling how long they'll be open now that they're moving operations to Mexico....

Kids and Cash

2008-03-12T06:47:00.005-04:00

One of the best and nicest things that we as parents can do for our children is to teach them about money. I don't mean things like balancing a checkbook. I'm talking about fiscal responsibility.

Things like how to earn. How to save. How to buy. How to give. How to invest.

A while back, I wrote in this post about a story that suggested kids today expect that they'll be big wage earners, earning over six figures. I hope its true! But, without knowing how to handle their finances, they'll end up living paycheck to paycheck, no matter what their level of income.

Here are a couple of real quick ideas posted at Free Money Finance on starting the teaching the process with your kids.

Related posts on Money and Credit
Teaching a son about borrowing
Financial Illiterates

Tapped into the Emergency Fund

2008-03-10T07:23:00.002-04:00

At around midnight Sunday, the lights went out. I was worried that if the power was out for too long, the pipes might begin freezing. But, it wasn't terribly cold outside and I knew that it would probably be okay at least until it was light out.

When the sun came up, we still didn't have any power. So, I went to the basement to get out the emergency generator. Getting it out from the basement wasn't an easy chore. Ice had built up in front of the basement door. I had to chop through that before I could get the door opened.

Finally, I got the generator outside and went to start it up. Wouldn't you know, after my third or so pull on the cord it snaps! Now what!

I go inside to call the power company to find out just how long they anticipate the power being out. After holding for 15 minutes or so, I'm told it could be until TUESDAY!

Now, the power had been out for nearly eight hours at this point. I couldn't fix the generator, or otherwise get it to start, so I called Lowes to see if they had any generators.

Chuck told me that they were going fast, that he had a few left. I took out my emergency credit card and purchased it over the phone.

This generator set me back about $750.00.

I really didn't want to spend this money, but I didn't feel I had much of a choice. As far as I knew, the power may have been out for another couple of days, and if my pipes were to freeze, it would have cost me as much, if not more, to repair the damage. Not to mention that I wouldn't have any heat or water if the pipes were to freeze.

Anyway, the new generator has an electric starter, so I won't have to worry about breaking the cord next time. I'll get the old generator fixed and keep it as another stand by, or maybe I'll sell it to get some of the money back.

The power came back on at 4:00 pm. The new generator ran for just over 5 hours...

Reviewed- Kiplingers new Car Buyers Guide

2008-03-06T08:27:00.001-05:00

Kiplinger just announced its new Car Buyers Guide, so I thought I'd spend a few minutes checking out the site. Here is what I found-

User Friendliness-

On a scale of 1-10, 10 being the most user friendly, I'd rate this site a 10. I was able to quickly and easly find out MPG and invoice information on each vehicle that I researched. Very easy to navigate.

Usefulness of Information-

Excellent information is provided on each model that was researched. From saftey equipment and ratings, to base invoice price, tons of easily accessable information!

Site Design-

Although it is a little busy, it is nicely laid out and easy to navigate. It didn't take me long to adjust to all of the infomation and to find what I was looking for.

Content-

Tons of information for the car shopper. From new car invoice pricing to used car information, this site appears to have it all! I especially liked the ability to 'spec out' the car of my choice so that I could (1) see how much money it would be, and (2) see what options were available.

Summary-
Great content, lots of information for the car shopper. If you're looking for information to arm yourself with before shopping, I'd highly recommend visiting the Kiplinger Car Buyers Guide

Click Here for the Press Release

This Remedy is as bad as the problem!

2008-03-05T06:54:00.005-05:00

This remedy is about as bad as the problem!
Bernancke suggests banks write off loan principal to save foreclosure

During a speech yesterday at the annual convention of Independent Community Bankers in Orlando, Florida, Chm. Bernancke gave a speech about 'Reducing Preventable Mortgage Foreclosures'. He mentioned that over the past year and a half, delinquency rates on riskier mortgage loans have steadily climbed.

"... weak underwriting might not have produced widespread payment problems had house prices continued to rise at the rapid pace seen earlier in the decade. Rising prices provided leveraged borrowers with significant increases in home equity and, consequently, with greater financial flexibility. Instead, as you know, house prices are now falling in many parts of the country. The resulting decline in equity reduces both the ability and the financial incentive of stressed borrowers to remain in their homes. Indeed, historically, borrowers with little or no equity have been substantially more likely than others to fall behind in their payments. The large number of outstanding mortgages with negative amortization features may exacerbate this problem."

The banker\lenders job is to measure risk, mitigate risk, and recirculate the money. One factor used to mitigate risk is limiting loan to value (LTV). In a real estate market that for years did nothing but climb and climb, it may have become easy for the banker\lender to exercise more flexibility when it came to LTV, assuming that the housing market would not crash.

One of the work out strategies that the Chairman discussed was refinancing the delinquent mortgage. He recognized that in many cases this is not possible. Two major challenges to refinancing are (1) tightening credit standards, and, (2) LTV Limitations.

"In cases where refinancing is not possible, the next-best solution may often be some type of loss-mitigation arrangement between the lender and the distressed borrower. Indeed, the Federal Reserve and other regulators have issued guidance urging lenders and servicers to pursue such arrangements as an alternative to foreclosure when feasible and prudent. For the lender or servicer, working out a loan makes economic sense if the net present value (NPV) of the payments under a loss-mitigation strategy exceeds the NPV of payments that would be received in foreclosure. Loss mitigation is made more attractive by the fact that foreclosure costs are often substantial. Historically, the foreclosure process has usually taken from a few months up to a year and a half, depending on state law and whether the borrower files for bankruptcy. The losses to the lender include the missed mortgage payments during that period, taxes, legal and administrative fees, real estate owned (REO) sales commissions, and maintenance expenses. Additional losses arise from the reduction in value associated with repossessed properties, particularly if they are unoccupied for some period."

Mr. Bernancke further discussed the Hope Now project, where lenders have modified loan terms and reduced interest rates to make payments more affordable. But, he explained, this isn't really happening.

What he suggested as a remedy would further poison our economic recovery. Yes, it would stave off foreclosure, but how will it motivate those who aren't willing to or otherwise cannot make the payments, whether out of poor financial skills or lack of income? Moreover,it would wreak further havoc on Wall Street.

In order to cut losses, Chm. Bernancke suggests that banks write off the amount of the loan that is 'unsecured'; the balance of the loan that exceeds the property value.

If banks were to subscribe to this kind of thinking, how would investors react? How many more billions of dollars in losses would this amount to? How would this pan out?

First, housing values would further deteriorate, credit would become even harder to come by. Credit standards would be even more stringent, and interest rates and fees would skyrocket in an effort to immediately recover these losses.

I understand the 'why' behind Chm. Bernanckes suggestion, but I'm not clear on how it could possibly make a bad situation any better. I see it as another blow to our economy should it ever happen.

Read the transcript of the entire speech here

Should you take your $$$ and run?

2008-03-04T07:01:00.003-05:00

During recent testimony, Chairman Bernanke predicted that there could be a rise in the failure rate of small banks. This comes because many of these small banks may have invested in areas where prices have fallen dramatically and are suffering losses associated with the subprime mortgage fiasco. What happens to the money that you have on deposit in these banks if they go belly up?

Federal Deposit Insurance Corporation

The FDIC protects your deposits up to certain limits should the bank fail. So, you don't need to rush out and withdraw you money from these small banks. However, you need to make sure that your deposit accounts are appropriately structured and that the bank IS in fact insured.

Not all banks are insured by the FDIC
Look for this logo to be sure that your bank is insured:

Click here to find out if your bank is insured by the FDIC

Types of deposits that are insured by the FDIC are; checking accounts, savings accounts, trusts, CD's, and, IRA's. Note that the maximum insured balance per account is $100,000 (Federal Law provides up to $250,000 coverage for certain IRA's). So, if you have a savings account with $137,000, only $100,000 of it is insured, the remaining balance is at risk.

How do you protect the entire amount? This from the FDIC Publication Your Insured Deposits "Deposits maintained in different categories of legal ownership at the same bank can be separately insured. Therefore, it is possible to have deposits of more than $100,000 at one insured bank and still be fully insured."

There are eight ownership categories recognized by the FDIC which have certain requirements that will allow you to insure more than $100,000. Click on each for more information.

* Single Accounts
* Certain Retirement Accounts
* Joint Accounts
* Revocable Trust Accounts
* Irrevocable Trust Accounts
* Employee Benefit Plan Accounts
* Corporation/Partnership/Unincorporated Association Accounts
* Government Accounts

Don't make a bad debt collector out of a good one!

2008-03-03T06:23:00.004-05:00

Just like good customer service and poor customer service, you have good and bad debt collectors. The good ones will work with you in order to get the debt paid. The bad ones on the other hand, they'll become abusive and break the law in order to get paid.

Speaking as an experienced debt collector (a good one!), nobody likes to be tricked or lied to, especially someone who is looking for ways to help you through a hard time. If you say that you're going to do something, then do it. Or, if something happens that makes it so you can't do what you say you're going to, then let the debt collector know.

"Most people are not aware of their rights.
And unfortunately debt collectors take advantage of that fact,"

Don't tell a lie just to get the debt collector off the phone. The debt isn't going to go away and neither is the debt collector. It is time to come to terms with the debt, own up to it, and deal with it.

What if you're one of the unfortunate ones that get a bad debt collector who is nasty, abusive, and, doesn't care about the Fair Debt Collection Practices Act? First, know your rights! You need to know what the debt collector can and cannot say and do. Knowing your rights is your primary defense against unfair debt collection practices.

This article called "Rogue Debt Collectors--How to Fight Them" by Jen Haley, explains some of your rights and shares some ideas on ways of dealing with the rogue debt collector.

Own a cat? You can relate!

2008-03-01T15:16:00.001-05:00

Couldn't help but put this up here...

If you've ever owned a cat...
Uploaded by a62vw

Don't take anything for Granite

2008-02-29T09:45:00.003-05:00

I listen to Morning Edition on NPR during my commute to work. This morning, they aired an interview that they had with a granite company owner in Barre, Vermont.

Barre toutes itself as the Granite Capital of the World. Have you ever been there? It is a very Italian community with many very skilled atisians. The Hope Cemetary, as are many of the other cemetarys in central Vermont, is a showplace of the scupltures that these talented folks create.

The interview wasn't about how gifted these people are. Instead, it is about how much of the talent and granite is now imported from China. The granite company owner said that what would cost her over $2000 to create is available, delivered from China, for LESS THAN HALF of what it costs her!

What will this do to the granite industry in the US? What about the scupltors who live here? What does this have to say about us, the consumers?

It made me think about how we in this country have raised the bar of living so high that we have driven ourselves right out of the market place; we are too high priced! The people in China are happy just to have a pot to, well, cook in! We on the other hand, not only need more, but WANT more!

Seperating our needs from our wants must become a priority. Lowering our standards might help to drive down our costs, and eventually turn things around for us.

Could this be what happens when a people become materialistic?

What are you thoughts? How do you feel about our standard of living? Do you feel that by having such high standards that we have ruined it for ourselves? Do you think that we have too many luxuries that have turned us into spoiled children?

Here is a link to the NPR podcast "U.S. Increaasingly Turning Overseas for Granite"

How to stop charging stuff on credit cards

2008-02-28T06:04:00.006-05:00

Stop charging stuff on credit cards

This might seem like a no brainer to some, but to others it is real issue. People trying to get themselves out of debt can have a hard time doing so if they continue to use credit cards instead of cash. When you're in the debt hole, a credit card isn't a ladder to help you get out. It's like a shovel that digs your hole only deeper. The enticements to use the credit cards, like low introductory interest rates, rebates, and, travel points, don't help at all. If you're in the debt hole, you need to ignore these incentives and take steps to make steps to climb out of the hole!

If you use credit cards out of necessity, you need to take a hard look at what you are purchasing with the credit cards. The suggestions that follow should help.

Identifying the Stuff

The first step to take is find out what 'stuff' you are charging. Get your last few months of credit card statements, a pad of paper, a pen, and take a look at what you purchased with the credit cards. Make three columns on a piece of paper. Title them as follows; Bills and Utilities Stuff, Store and Online Purchases Stuff, and, Other Stuff. You can take it a step further and add columns to track the amount of the charge for the stuff, but keeping this simple is more important than detail right now.

Next, take another hard look at the things that you charged. Put an 'X' next to each item that you know that you could have lived without, a 'feel good' charge. Circle those items that are necessities in your life. Place a check next to anything that wasn't a necessity, but something that you like anyway and aren't really willing to do without. If there is anything left that doesn't have an 'X' or a check mark or is circled, draw thin line through it. These are things that you don't need and can live without. Take an honest look at why you decided to trade your money for this 'stuff' and keep reading...

Click here for an example of what your paper might look like -

Click here for a spreadsheet

Breaking the Cycle (BTC)- Start paying cash

Let's look at ways to make purchases in the future without using the credit card. Each charge that you made was a payable to someone, that instead of giving them cash or writing them a check, you opted to use a credit card. From a convenience and speed perspective, nothing is better than swiping the plastic to take care of the bill, but at the same time it conveniently and speedily puts you in debt! It is too easy for most people to make charges to their credit card and lose track of how much they've spent until they get their credit card statements in the mail.

BTC Strategies for necessary stuff- The Circles

Set up an online checking and savings account, like at ING DIRECT, where you can get free on-line bill pay, a debit card, and, electronic checking. Instead of having your monthly cable or satellite services charged to a credit card, pay them electronically with free on-line bill pay. You can schedule regular payments to come out of the account so that you don't really even have to think about it. If the payments are variable, then go to the utilities web site, and change the credit card billing information to the debit card that will come with your new online checking and savings account.
Other necessary purchases like food, clothes, and gasoline should no longer be charged to your credit cards. Instead, plan for these purchases in your budget and begin using cash or your debit card. If you have a traditional bank (bricks and mortar, local branch) where you have a checking account, write checks instead of using the debit card. This helps to break the habit of using plastic. Have a personal goal of eliminating plastic from your life. Its good for your finances, and good for our environment!
Carry cash instead of credit cards. Use cash for the small minor and daily necessary purchases.

BTC Strategies for stuff you're not willing to do without- The Checks

Eating out is something that many of us enjoy and might not be willing to do without. But, do we need to charge these dining expenses to a credit card? Remember, these are items that are more discretionary than the necessities and are things that are more lifestyle, quality of life type things. Don't let that which brings quality to your life contribute to your debt hole! Bring plenty of cash to pay for your dining entertainment. If you don't have the cash, then reconsider whether or not you can afford this lifestyle (right now anyway, after you get out of debt, you'll surely be able to better afford it!).
As already mentioned, these are truly quality of life and lifestyle things which need to be considered in a budget. If you are regularly charging these 'Checks' to your credit card, ask yourself if you could continue enjoying them if you had to pay cash each time. Could you even do it on cash? If not, then this is a HUGE wake up call that you're living beyond your means. This is probably one of the big reasons why you're in a debt hole with nothing to help you but a maxed out credit card and some airline miles!

BTC Strategies for the 'Feel Good' stuff

Sometimes people shop and buy stuff just because it makes them feel better. For many this is an addiction for which professional intervention should be sought. For others, it is a matter of prioritizing what they want to use their money for, and how they're going to pay for it. When going to the mall out of boredom, bring some cash, leave the credit cards at home. This limits what you can buy on impulse and won't dig your debt hole any deeper.
Put a freeze on your credit card. This doesn't mean you call the credit card company, no it's much easier than that. Here is what you do. (1) Get an empty coffee jar, or some other plastic container. (2) Fill it 3/4 full with water. You can ad some food coloring if you'd like, it makes for a nice effect! (3) Carefully place all of your credit cards in the water. You must be very careful so as to not splash yourself and get everything around you all wet! (4) Place the container with the credit cards in it into your freezer and let chill for 24-48 hours. Now, when you're getting ready to go to the mall and get some feel good stuff, you'll have plenty of time to think about what you're doing with your money while you wait for your credit card to thaw out...

Now, some will tell you to keep one of the credit cards out for emergencies. I've thought about this long and hard. Don't do it- freeze them all! If you are in a debt hole, no matter what, you don't need more debt. There isn't anything so important that you need to spend money on right NOW!

BTC Strategies for all the Other Stuff

Plan your purchases. This other stuff is stuff that you've determined that you didn't even need! You just bought it! Now, if it still has tags on it or if its still in its package, maybe you can return it or sell it on ebay.
Get on a budget to help plan where you're spending your money. Don't lose site of the fact that just because your not forking over cash or righting a check that you're not going to pay for this. Borrowing and spending is a plan for disaster. You want out of the debt hole don't you? Cut out this other stuff then!

In summary, the goal is to avoid using the credit card to finance your purchases. Although credit cards are convenient and efficient, if you're using them instead of cash, then you're in danger of digging a hole that will be very hard to get out of. There used to be a saying that if you don't have the cash in your wallet, then you can't afford it. In today's world, if you don't have the cash in the bank or the cash flow to afford this stuff that you are charging on your credit card, then you can't afford it. Credit cards are the number one reason people have driven themselves into bankruptcy and other financial ruins. Be wary of credit cards, use cash and checks instead.

Related Posts
Transfer fees and minimum payments
Compulsive Spending Disorder
Bankruptcy on the rise

Need a Smoke?

2008-02-27T06:18:00.002-05:00

Fortunately, I was able to break the smoking addiction years ago. You know what they say about reformed smokers, they're the worst kind! One of the things that helped me to stop smoking (notice I wrote stop, not quit? I take great pride in having not ever quit anything, but I have stopped doing some things.. there's a difference!) was the toll it was taking on my wallet, not to mention my health!

A pack 'o' butts cost somewhere in the neighborhood of $5.00. If someone were to go through a pack a day, they're missing out on some serious cash. To say that smoking is expensive is an understatement. Talk about money going up in smoke!

A person smoking a pack of cigarettes a day spends about $1,825 a year. If this person became a non-smoker, and made regular monthly contributions to a savings account earning a measly 4%, they would at the end of...

10 years they would have $22,900
15 years they would have $38,271
20 years they would have $57,040

That's at 4%! What if you could earn 8%?

10 years.... $28,546
15 years.... $53,993
20 years.... $91,907

What if instead of saving this money, it was used it snowball debt? First, the reformed smoker could rapidly reduce and retire their debt, then they'd be able to save like a miser! Not to mention, they'd would be a lot healthier too!

There’s a hole in the bucket - Blunt Money

2008-02-26T07:03:00.000-05:00

You're going to the well with you water bucket. It's a pretty good walk from where you started to get to the well. You fill your bucket with water and trek on back to where you began. Now, your bucket is empty. All that work for what? Nothing? An empty bucket? Is that what you wanted?

How did the bucket get empty? Was it because you weren't watching it? Was the water spilling over the sides as you went along?

Is there a hole in the bucket? Is the water somehow leaking out from a hole that you're not aware of? Or, is there a hole that you do know about, but you're just trying to get the bucket home before it's empty?

Alright, what does this tale of the empty bucket have to do with personal finance?

What if the bucket was your wallet or bank account. What if the water was your paycheck. What if the trek from the well to where you started was the time between paychecks?

How would you fix your bucket? Some people try to patch the hole with a short term loan. In some cases, these short term loans can be a life saver, as described in this post called Removing the Burden of Debt. But, other times, borrowing to replace the money that you lost because you were careless with your bucket, or to patch a whole is a very bad idea.

Be sure to read this post at Blunt Money There’s a hole in the bucket where there is more discussion about borrowing when you have a bucket problem!

141st Carnival of Personal Finance

2008-02-25T20:03:00.001-05:00

The 141st Carnival of Personal Finance is hosted by the Broke Grad Student. There were many, many, excellent posts! Here are few of my favorites.

Five advantages and disadvantages to online banking by Money Mythos- just what it says!
Reduce and eliminate ATM Fees at Green Panda Treehouse. According to GPT, over $4.5 billion in ATM fees went from our pockets to the bank. I'm all for keeping this cha-ching!
Top 10 Tips for Getting Your First Mortgage over at the Finance Blog. Some good advise. I agree that there isn't any harm in waiting. Time is usually on your side.
The importance of renters insurance, and why you need it at the Moneycrashers. Extremely valuable! Unless you have nothing of value that could be stolen or burned in a fire, then you need it!
Tips for entering sweepstakes and getting free stuff offered by the Baglady. You can't win if you don't play!
How to put together a budget with irregular income. Another post at the Moneycrashers!
Budgeting- An easier, smarter way by Prime time money. I like the idea, focus on what you need to change, not what is working the way you planned.
The Credit Report Jingle and Car buying Reality by Monroe on a budget. When did lenders stop worrying about whether or not you can afford the proposed loan payment?

Thanks goes out to the Broke Grad Student for hosting this weeks carnival, and thank you for including my post about correcting errors on your credit report !

Looking for some free financial calculators?

2008-02-23T07:38:00.003-05:00

I found a post over at the The Digerati Life this morning. You might be interested in some of the calculators mentioned there. I'll bet the Life Expectancy calculator is getting a lot of use!

Have a great weekend!

Here's the link to The Digerati Life and the Free Calculators!

How to correct an error on your credit report- Free e-book

2008-02-22T05:37:00.007-05:00

As mentioned in yesterdays post, sometimes there are errors on your credit report. How do you correct them and have them removed?

One way would be to work with a credit repair company. However, you can save money by doing it yourself.

Step One
You'll need to have a copy of your credit report (Click here to learn how to get a free credit report). With this, you'll be able to reference the exact information and how it is being reported should you need to provide it for documentation. Get any other proof of the error that you have (paid receipts, etc.) and make copies of them. DO NOT SEND ORIGINALS because if they become lost....

Step Two
You need to tell the consumer reporting agency (CRA), in writing, what you believe the error is and how it should be corrected. Your letter needs to include your complete name and address and clearly identify the items on your credit record that you are disputing. You need to state the reasons why you believe the information is incorrect and ask that the information be removed from your credit file. Mail COPIES (no originals) of any documentation that you might have. If you are mailing a copy of your credit file, mail only the page that has the trade-line that you're disputing, and highlight or circle the item that you're disputing. Here is a sample dispute letter from the FTC that you can use:

Date
Your Name
Your Address, City, State, Zip Code
Complaint Department

Name of Company
Address
City, State, Zip Code

Dear Sir or Madam:

I am writing to dispute the following information in my file. I have circled the items I dispute on the attached copy of the report I received.

This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be removed (or request another specific change) to correct the information.

Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please reinvestigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.

Sincerely,
Your name

Enclosures: (List what you are enclosing.)

Step Three
Make copies of the letter and all of the documents that you're including. Mail the letter Certified and request a Return Receipt to the CRA. This will give you formal record of both mailing the letter and the CRA's receipt of the letter. Once the CRA has the letter, by law they must act on it unless they feel that it is lacking basis or otherwise does not have merit, completing an investigation usually withing 30 days.

Here is the address and contact information for the credit bureaus:

Equifax
P.O. Box 740256
Atlanta, GA 30374
(800)-685-1111
Web site: www.equifax.com

Experian
PO Box 2002
Allen, TX 75013
(888) 397-3742
Web site: www.experian.com

TransUnion LLC
P.O. Box 2000
Chester, PA 19022
(800) 888-4213
Web site: www.transunion.com

Mail copies of the information that you sent to the CRA to the creditor or other information provider that you dispute the item. Read this post for more information about disputing a billing error.

The CRA will contact the organization that provided the information that you are disputing, forwarding any relevant documents that you might have provided. If the information provider determines that there is an error, they must notify all three of the repositories (Equifax, Trans Union, Experian) of the error and have it corrected. They must report their actions back to the CRA who in turn will notify you in writing of the outcome. You will be provided another free copy of your credit report if any changes are made to it as a result of the investigation.

Step Four
Ask the CRA to send notices of the corrected information to anyone who has received a copy of your credit report in the last six months, just to set things straight with those that might have made a decision about you based upon the incorrect information contained in your credit report. For example, the loan that you received might be priced higher because of the error (read here for more information about how errors can effect your credit score). If the correction has a material effect on your credit score, then you should ask the creditor to reconsider your situation.

Step Five
If the investigation does not result in the item being removed or corrected, then you can ask that a statement about the account be included on your credit file and on future reports. This gives you an opportunity to have your statement appear on the credit report along with the trade-line information that you are disagreeing with.

If the information provider fails to respond to your dispute letter, the CRA will remove the information from your file. This may mean that if you bombard the CRA and information provide with dispute letters, the information provider may give up and not respond or change the information just to make you go away.

Otherwise, if the information is correct, and the information provider is unwilling to change it, the only other way for it to be removed is through the passing of time. Most negative information will be reported for 7 years, bankruptcy information is reported for 10 years. Other information like judgments can be reported for 7 years or until the statute of limitations runs out.

Get this free eBook from the FTC on Building A Better Credit Report

Related Posts
Disputing Credit Card Charges
Get Acquainted With Your Credit Score

You can read this and many other informative personal financial posts at the Broke Grad Student who is hosting the 141st Carnival of Personal Finance!

Get Acquainted with your Credit Score

2008-02-21T05:50:00.003-05:00

Get acquainted with your credit score

I was looking at some of my previous posts tagged credit score, and this one caught my attention. If you're not sure what a credit score is, then you've come to the right place! In the next few paragraphs, I'll try to summarize for you what a credit score is, how it is used, and, how it is developed. Click here to see a video on the topic.

What a Credit Score is and how it is used

Your credit score is your financial lifeblood. Whether your applying for credit, a job, or insurance, chances are that somebody is looking at your credit score. A credit score is a number assigned to your credit history that helps lenders, employers, and, insurers determine the level of risk that your credit history represents. The lower your score, the higher the risk. The higher the score, the lower the risk. Although each user of the credit score has different cut off levels where they determine that anything below a score of XXX is too much risk, credit scores really even the playing field for all of us.

People can get loan decisions faster
Credit decisions are fairer
Older credit problems count for less

Your credit report and the information that it contains directly impacts your credit score. For this reason, it is very important that you monitor the information that appears in your credit report. Recent changes to the law entitle you to a free credit report every year. You can start the easy process of getting your free credit report by clicking here.

Your credit score is calculated (developed) base upon five criteria:

Your payment history- 35% of your score is weighted on how you have historically handled your credit obligations
The amounts that you owe- 30% of your score is calculated based upon how much credit do you have available to you. Put another way, are you maxed out on your credit cards? The more credit that you have available to you, the better the effect on your credit score.
Length of Credit History- 15% of your score is based upon much of your history is available. In other words, are you just starting out with credit, or have you had a long history of using credit?
New Credit- 10% of your score is calculated based on how long it has been since you opened a new account. If you're opening a new credit account every month, this may have an adverse impact on your score. However, because only 10% of your score is based upon this factor, the overall impact here is small.
Types of Credit in use account for the final 10% of your score calculation. Do you have a good mix of retail accounts (store cards), credit cards, and installment loans? Again, this is a small percent of the calculation, so the types and mix of accounts will not have a huge bearing on your score.

Keep in mind that items 3, 4, and, 5 by themselves won't have a big impact on your credit score. However, these items will have a big impact when all are considered together.

To get more facts about your credit score, get this free ebook from myFICO.com .

How does info get on a credit report?

2008-02-20T06:27:00.003-05:00

If you're reading this, then you're probably curious about how information gets into your credit report. How does your payment history and public records end up in a credit report? How does it translate into a credit rating?

How is information reported to the consumer reporting agency?

Your repayment history is the single most important factor in determining a credit score. This information is transmitted electronically from your bank, credit union, or finance companies, through the data processing system that the institution tracks your account with.

There is a system of codes that is used to universally transmit and decipher the information about your repayment history. These codes are referred to as the Metro II codes. These codes ensure that all lenders report information in a consistent manner. In addition to providing the status of the account (current, past due, delinquent) it also provides for reporting of the ECOA Codes (joint account, single account), Compliance Condition Codes (bankruptcy, legal, etc.), and, Consumer Information Indicators (account disputed, etc.).

As payments are received and posted to the financial institutions data processor, the payment due date is advanced and the status is updated to current, or past due, delinquent, etc. Note that past due is not the same as delinquent. 'Past due' or late payments will not show up on a credit report unless or until they are at least 30 days past due. Some financial institutions will not report late payments until you are 60 days past due.

After the payments are posted and the financial institutions data is updated, the information is sent to the credit repositories, primarily to Equifax, Trans Union, andor Experian. This data is transmitted electronically in Metro II format on a regular, usually monthly, basis.

How do public records get reported to the consumer reporting agency?

Before we talk about how a public record gets reported, let's first define what a public record is. Simply put, a public record is any information about you that is available to the public. For example, property transfers are public record. The status of your real estate tax bill is public record. Whether or not you have filed for bankruptcy is public record. Wage garnishments are handled through the sheriffs department and are public record. If you are party to a lawsuit, etc. All of this information is available in the public records area in your county clerks office.

There are those that visit the county offices, known as abstactors (one who gather and summarizes information), who gather this information and provide it to the credit reporting agencies.

The credit repositories then take this information and sell it to others in the form of a credit report. This credit report is used to determine any number of things. Employers use this information when considering you as a candidate for employment, obviously lenders use the data to determine your credit worthiness, and, insurance companies use the information to determine your eligibility and to price your premiums.

Sometimes the information that a lender reports is wrong. For example, you made your loan payment through the mail but is was mistakenly posted to another persons account. Maybe your account numbers are very similar and the person that posted the payment made a data entry mistake.

Other times, the public records are incomplete or inaccurate. If you have a common sir-name (Baker is very common in our area) information about another person with the same or a name very similar to yours may be picked up by the abstractor and reported on your credit report.

How does my new address and employer get reported to the CRA's?

Each time you apply for a loan or request credit, you're usually required to provide some personal information like your social security number, your date of birth, your address, and, your employer. The finance company or lender enters this data into its loan origination system usually before they order a credit report. When they order the credit report, the information that you provided is transmitted to the CRA that they are ordering the report from.

Here are a couple of other resources that I hope you find helpful.

How Credit Reports Work

Your Credit Report Brochure from the FRB of San Fransisco

Whats in your credit report from myFICO.com

What is a FICO Score?

2008-02-19T06:19:00.005-05:00

This week, I'll be writing about your credit score, how creditors report to the repositories, what they report, when, and what you can do if you disagree.

In this video clip from the Suze Orman Show, Suze explains what a FICO Score is and how it used.

Carnival of Personal Finance 140

2008-02-18T10:33:00.005-05:00

Carnival of Personal Finance #140

This weeks Carnival of Personal Finance is hosted by The Financial Blogger.

Here are a couple of my favorites-

•Time or Money, What do you want more of? By Money Management and You
This posts ties right in with some of the teachings of Timothy Ferriss’ book, the Four Hour Work Week

•Lessons I wish I learned earlier by Smart Easy Money
A good reminder that history is our best teacher and that we can learn from the experiences, the successes and mistakes, of others.

•Save Time and Money with These Tips for Organizing Your Personal and Financial Records by The Personal Financier
If anyone needs help filing, it’s me! Good advise on getting yourself organized.

•My Experiment: Asking for a Better Deal by Alpha Consumer, Kimberly Palmer
This post is proof that you need to ask to receive. I wonder how many deals we pass up just because we don’t ask?

•The Car I didn’t buy at Blunt Money
A perfect example of being happy with what we already have.

Thanks for all the great posts, and thanks to The Financial Blogger for hosting this week!

Good afternoon everybody,...

2008-02-17T12:47:00.001-05:00

Good afternoon everybody, just wanted to say thanks, so very excited about the hits that we are getting on the blog. Thank you all for reading and look forward to see you again next week. listen

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Ways to Save $1000

2008-02-16T10:57:00.007-05:00

I just read an article on MSN Money about ways to save $1000. This article talks about seven painless moves you can make to save. Here is my take on these seven moves...

Seven Ways to Save- Some ways are better than others.

Way #1- Stop eating out so damned much!
In the MSN article, the first way to save is by looking for discounted dinner entrees. Yes, this is a good way to save at the restaurant, but there is still a better way. Don't eat at the restaurant! If you are traveling out of town on business and need to get something to eat (as long as you're not entertaining your clients) you could go to a local grocery and get a large prepared salad, something to drink and a desert. Go to the deli and get something that is already prepared, or have them make you something special. If it's towards the end of the day, you can probably get a discount on the pre-made stuff. A salad, chicken wrap, eclair, and a soda all for around $10 bucks- and no tip. Besides, it won't make you as fat!

Way #2- Stop buying stuff you don't need
Good idea. Here's a better one. Sleep on it before buying it. Why would anyone have unopened and unused items (maybe you already bought one and just forgot?) Unless its canned food, you've probably purchased it on impulse.

Anything that you THINK you need deserves at least a night or two of going without it. If after a couple of days of thinking about it you still feel the same way, then go out and get it. Think of the time you'll save yourself by not having to back and return something that you didn't need or really want in the first place!

Way #3- Get a deal at the grocer
As long as you're not just buying stuff because you got a good deal on it, this is a good idea. It is a great idea to ask the clerk about additional coupons for things that you are on your grocery list. Oh yeah, make a list! This alone will help you stick to your budget and not buy on impulse.

Another good way to save at the grocery store? Buy the store brand instead of the name brand. Although you might have coupons on the name brand, oftentimes the store brand is still less.

Way #4- When was the last time you went to the library?
Best idea in this article so far! Your local library is a huge public resource that is largely undiscovered. For the price of admission, you would be hard pressed to find a better selection or value.

Way #5- Consolidate your techno service
Depending on where you live, this is easier said than done. If the cost in your area is high and the services limited, you might be able to rely on your local library for internet access. If you do have cable, phone, and internet services that can be bundled without a loss of features, then consolidating them is a good idea.

In my area, cable television and internet are provided by the same carrier who also provides VOIP, but I prefer Vonage because of the many features that it offers that the cable guy doesn't (yet, anyway). So, my cable tv and internet are bundled, but I pay for my three phone lines (two phone and one fax) seperately.

Way #6- Lawn care and alarm service?
The article goes on to say that after you're done making deals with your cable guy, you should negotiate with your lawn care guy and your alarm company guy. Whoa, hang on a second. If you're taking steps like clipping coupons to save a little money, dontcha think that maybe paying someone to cut your grass and clip your bushes is a little outside of your price range? I can understand the alarm thing if you live in a high crime unpoliced forest. But if you have neighbors (that you like and are not afraid that they might be over to steal from you when you're not there, or worse, when you are!) then maybe you could each watch out for the other? Do you have a cell phone that can call 911? Do you have any sharp things that you could stick in an intruder? Maybe you could get some mace or pepper spray. They make pepper spray that when used on grizzly bears will make them think twice about attacking you, maybe it would work good on your local bad guy too?

Way #7- The big Cash Stash
Where do you get this 'stash money' and why not stash it now to make savings easier now? Get it by doing steps 1 through 6 and take the savings and put it in a high yielding account like ING DIRECT. If you don't have an account there, then click on the square at the top of this page that says ING DIRECT on it, it's on the top left hand side. Be sure to tell 'em that the Colonel sent ya'!

Way #8- Read the advise and articles on the Money Blog Network!
No, the MSN article didn't mention this way to save, but it sure should have! Although I'm not in the network (I'd really like to be, just not sure how to get initiated, any body know how?), the information shared here is as good as, if not better than, any that you can pay for!

You can help me expand this list of ways to save money by leaving a comment telling about ways that you have found to save money! How big can this list get? Let's see!

Have you filed your 2007 income taxes?

2008-02-15T05:57:00.007-05:00

Have you filed your 2007 income taxes yet? I'm planning on getting my done this weekend. I'm surveying readers today to see how many people have filed already. If you wouldn't mind selecting either 'yes' or 'no' after clicking here.

I'll post the results here next week. Thanks for participating!

Free E-Book From Oprah and Suze

2008-02-14T05:57:00.001-05:00

If you go to Oprah's web site before 8/7c on 2/14/08 and scroll down towards the bottom of the page, you'll find a link to Women and Money, a free e-book by Suze Orman. Note that you should right click on the link and then 'save as' to your desktop. Trying to open it from the website will likely result in shear frustration!

If anyone has read this and would like to comment, please do! I'll right a report once I've finished reading it.

Here's another link to the website;

Suicide, Lies, Debt: A Suburban Nightmare

Have you had enough yet?

2008-02-13T06:47:00.004-05:00

Just in case you haven't had enough yet, here is some more information about the economic stimulus package from the Office of the Speaker Nancy Pelosi, released on February 7th. Here is an excerpt:

Today, the House will complete action and send to the White House bipartisan economic stimulus legislation (H.R. 5140) to help hardworking Americans who are struggling with the high costs of gas, health care and groceries, and to jumpstart our slowing economy and create jobs here at home.
It will:
• Put hundreds of dollars into the hands of more than 130 million American families including seniors and disabled veterans who will spend it immediately to reinvigorate the economy;
• Build on the child tax credit by offering a one-time rebate of $300 per child;
• Expand financing opportunities for Americans in danger of losing their homes because of the mortgage crisis;
• Promote small business investment in plants and equipment; and
• Help create 500,000 jobs by the end of the year.
Getting this bipartisan bill done quickly is a victory for the American people that will inject confidence and consumer demand, promote economic growth, and create jobs. We will take additional action to help American workers and help our economy recover and grow.

I wonder how things might be today had the government decided to do this BEFORE we were in trouble? Apparently, The Speaker is pleased at how quickly they were abler to get this bipartisan bill done, why couldn't they have done it sooner? How many families would have had some relief from the high price of everything if they had?

You can download a copy of the fact sheet by clicking here

2008-02-12T06:46:00.000-05:00

The 139th Carnival of Personal Finance is brought to us this week by My Dollar Plan . Be sure to visit this great new personal finance blog! Here are a couple of my favorite posts from this weeks carnival:

Struggling on a Six Figure Income over at Free Money Finance. Isn't the old adage that the more you make the more that you spend? Is this whats happening here?
Seven things women wished men knew about money is posted at beingfrugal.net. Super feedback! I'm sure this hits home for many of us! Thanks!
15 Ways to Establish and Improve your Credit History and FICO Score posted by Jeremy at Generation X Finance. Some good, common sense tips that are sure fire to help!
The Pursuit of Perfection and What Happens Next, and from one Pats fan to another, I know you pain!
Alison at This Wasn't in the Plan talks about checks and balances and my credit card, and how budgeting is easier using a credit card over cash.

Here are a couple of posts from the host (Ha!) that I really liked:

Many thanks to My Dollar Plan for hosting this weeks carnival! Keep up the great posts!

Steal Money, No Jail

2008-02-11T09:53:00.000-05:00

If you could steal a whole lot of money without risk of going to jail, would you? What if you could borrow the money, and if things didn't work out the way you planned, you just walk away? What if you were to borrower the money KNOWING that if it didn't work out the way you planned, you'd just walk away? What if you bought a house with this money, and things didn't work out the way you planned and the value of the house dropped. Why not just give the house back to the people that you borrowed the money from? Okay, so its not worth what you owe, but hey, at least you're giving it back, right? After all, its not like your going to jail!

This is exactly what millions of people are doing right now, today, with your money! But wait you say, nobody took any money from me! Well, consider this...

You get money, you put it in the bank. The bank pays you interest. To do so, they lend it to others, charge them more than what they pay you. Your money, and the other depositors money, is used to fund loans. Many of them mortgages. Many of those have gone bad. Very bad.

Banks financed loans without verifying income (ability to repay) or giving much concern to the current value of the property that they were taking as collateral. The lender and the borrower were playing a game, speculating on the the rising value of the housing market, with your money!

Now, those deals have gone bad. Instead of paying you a decent interest rate for your deposit, instead of getting paid back money for the loan, the bank is getting a house that was never worth what they loaned for it to begin with.

So, how is this like stealing and not going to jail? I borrow $800,000 from you, promise to pay you back, even give you collateral to back the deal. After a while, I find that I made a poor investment with the money that you loaned me. Now, instead of you getting paid back the $800,000 plus interest, I give you the collateral that was pledged, which is now worth seventy-five cents on the dollar. My bad investment has caused you to lose over $200,000 plus interest! You get left with the loss, and a piece of real estate to try and sell in a terrible market. I walk away without consequence. Now, don't you feel like you were just robbed?

Read this article on money.cnn.com about how people are sending lenders the keys to their homes.

Goodbye Universal Default

2008-02-08T07:01:00.000-05:00

Credit card companies are beginning to announce that they will no longer jack your interest rate if your credit score goes down. This practice of increasing your interest rate if you have a decline in your credit score is covered under what the credit card companies call the 'universal default clause'. Many people have had their credit card rate increased under this clause even when their repayment history was perfect with the credit card company that was increasing the interest rate. Here is a great write up which answers the question What is a Universal Default Clause

CHASE announced in November that they're discontinuing the practice, and Citibank made the same announcement earlier in 2007.

This is great news for people with credit cards. Fees will be less! Although this isn't necessarily 'new' news, it appears that it will get more attention in 2008 with the subprime crisis receiving even more attention from our government. Now, I'm no fan of regulations, but maybe the oppressive credit card fee structures will finally get some federal oversite!

Bush's big gift to Wal-Mart - MSN Money

2008-02-07T07:31:00.000-05:00

In this post, Michael Brush talks about how you might spend the money that you might get in the mail. He thinks that this stimulus package will be like a windfall for retailers like Wal-Mart.

I still believe that most people will use any money that they get to pay off some of their accumulated revolving debt, as I wrote about in this post.

If people do go on a buying spree, it could have the effect of stimulating the economy. If a TV is sold, then another will be manufactured. Another person in the chain gets their paycheck, spends it, and the beat goes on (dada da da dada) and the beat goes on! We call this the 'mulitplier effect'.

The multiplier effect -- money spent that gets spent again -- means the ultimate impact on the economy would be bigger than $100 billion. Chris Varvares, the president of Macroeconomic Advisers, thinks each rebate dollar spent would increase growth by $2.

The rebates and recent Federal Reserve interest-rate cuts "should keep the consumer spending right through the spring and into the summer," says economist Ed Yardeni, the president of Yardeni Research. "I'm sure marketing departments are already coming up with ways to get those rebate checks spent in their stores."

Bush's big gift to Wal-Mart - MSN Money

Talk about a Blogroll!

2008-02-06T07:03:00.000-05:00

Talk about a blogroll! You need to look at Dollar Frugals Insanely Massive Blogroll. I found a bunch of new sites that I like, and I was very pleased to see Money and Credit listed there!

Here are a couple more that I read regularly....

Blueprint for financial prosperity

Journey to Financial Freedom (finandom.com)

Five Cent Nickel

The Frugal Law Student

The Simple Dollar

UPDATED- How many allowances should you claim on the W4?

2008-02-05T05:18:00.002-05:00

I've heard from many of you that this previous post didn't give you the information that you were looking for. So, let me offer my apologies and try to do a better job of it this time.

I am not a tax planner, or tax specialist, so PLEASE consult with a professional if you have questions.

Now, with that out of the way, let's see how having too many or too few allowances can effect your withholding.

How many W4 allowances do you claim?

Are you getting a refund from the IRS this year? If so, you're having to much money withheld from your paycheck. For some people with cash flow problems, adjusting your W4 allowances is a great way to get more cash into your pocketbook each payday to help with those cash flow problems.

The IRS has a worksheet that will help you calculate how many allowances you can take. Just follow this link to the worksheet.

Another great way to do some what if scenarios is by using one of the many free calculators like this one at H&R Block

What happens if you claimed just two allowances on your W4, when in real life you have four, and you claim those four allowances when you file your taxes? Chances are you would get a refund.

As I wrote in my first post about how many allowances you should take, the simple answer is not too many, and not too few. If you have too few, then you're getting more money in your paycheck each pay period. If on the other hand you're paying into the IRS, then you have too many allowances. Remember, the BIGGER the allowance number, the bigger the paycheck. The smaller the allowances, the smaller the paycheck. If your allowance number is too big, then you'll pay in to the IRS. If your allowance number is too small, you'll likely receive a refund from the IRS.

If you want to increase your take home pay, increase your allowances. If you want to increase your refund, decrease your allowances.

Now, keep in mind that if you want to increase your take home pay by increasing your allowances, BE VERY CAREFULL! If you claim too many, you could end up paying in at the end of the year.

Your goal for changing your allowances should be easy. You should be paying what you owe; not any more, and not any less.

Here are a few more resources that I hope you find helpful:

How to adjust your withholding - Kiplinger

Exemption Allowance Amount - H&R Block

Tweak Your Income Tax Withholding - About.com

Adjust your withholding so you don't get a big refund - Bankrate.com

Paycheck Calculator - Paycheck City

Carnival of Personal Finanance CXXXVIII and Super Superbowl XLII

2008-02-04T06:21:00.000-05:00

Be sure to check out this weeks Carnival of Personal Finance hosted by I've Paid For This Twice Already...

Hats off to the NY Giants! Congratulations on winning a very well played game. We were in the New England camp here in the kingdom so we were sad to see the streak come to an end. We were simply outplayed.

Now for some much deserved R and R!

To stupid to be true!

2008-02-02T08:22:00.001-05:00

There is a story out today about a collection agency, Nationwide Collections, Inc. of Fort Pierce, Florida, that is soon to be sued by a lawyer for a client over a $16.96 collection letter.

Apparently, the letter's author is an idiot!

According to news reports, the letter was addressed to "Sh@t Face", and the greeting line read "Dear Sh%t". I can't help but laugh! What kind of moron would send a letter out like this?

You would think that a company would require, at the very minimum, an introduction to the Fair Debt Collection Practices Act before allowing someone to send out any letters.

The silver lining? The recipient of the letter says that they never had an account with the company that placed the debt with the collection agency, but is now suing for abuse of the FDCPA.

The account that was placed for collection appears to have been a music club account that was opened under the name of "Sh&t Face". I remember my brother once opened an account with one of these companies in his dogs name... Don't you think someone in subscriptions would read these things? It must be a hoot, working there and reading these things, but don't you think they'd save a little time, energy, and money and just pull those orders that had names like that?

How to dispute a credit card error

2008-02-01T07:33:00.001-05:00

You received your credit card statement. Good thing that you took a look at it because there is a charge on it that you know that you didn't make. Great, now what?

Well, if you're like me, you'd call the credit card company and ask them to look into it. On the surface, it would seem that this should be enough; it isn't. You have some rights under the Fair Credit Billing Act (FCBA) and further protection under Reg Z, but in order to preserve those rights, you need to make sure that you follow the rules.

The FCBA procedures apply only to disputes about 'Billing Errors'.

unauthorized charges. Federal law limits your responsibility for unauthorized charges to $50;
charges that list the wrong date or amount;
charges for goods and services you didn't accept or weren't delivered as agreed;
math errors;
failure to post payments and other credits, such as returns;
failure to send bills to your current address - provided the creditor receives your change of address, in writing, at least 20 days before the billing period ends; and
charges for which you ask for an explanation or written proof of purchase along with a claimed error or request for clarification.

As I mentioned earlier, you'd think a phone call would do it, but not in this day and age! Read your billing error notice very carefully! This is usually found on the back of your bank\credit union\open end\revolving account agreement. They usually read something like this;

YOUR BILLING RIGHTS KEEP THIS NOTICE FOR FUTURE USE
This notice contains important information about your rights and our responsibilities under the Fair Credit Billing Act.

Notify Us In Case of Errors or Questions About Your Bill
If you think your bill is wrong, or if you need more information about a transaction on your bill, write us [on a separate sheet] at [address] [the address listed on your bill]. Write to us as soon as possible. We must hear from you no later than 60 days after we sent you the first bill on which the error or problem appeared. You can telephone us, but doing so will not preserve your rights.

In your letter, give us the following information:
Your name and account number.
The dollar amount of the suspected error.
Describe the error and explain, if you can, why you believe there is an error. If you need more information, describe the item you are not sure about.

If you have authorized us to pay your credit card bill automatically from your savings or checking account, you can stop the payment on any amount you think is wrong. To stop the payment your letter must reach us three business days before the automatic payment is scheduled to occur.

Your Rights and Our Responsibilities After We Receive Your Written Notice
We must acknowledge your letter within 30 days, unless we have corrected the error by then. Within 90 days, we must either correct the error or explain why we believe the bill was correct.

After we receive your letter, we cannot try to collect any amount you question, or report you as delinquent. We can continue to bill you for the amount you question, including finance charges, and we can apply any unpaid amount against your credit limit.

You do not have to pay any questioned amount while we are investigating, but you are still obligated to pay the parts of your bill that are not in question.

If we find that we made a mistake on your bill, you will not have to pay any finance charges related to any questioned amount.

If we didn't make a mistake, you may have to pay finance charges, and you will have to make up any missed payments on the questioned amount. In either case, we will send you a statement of the amount you owe and the date that it is due.

If you fail to pay the amount that we think you owe, we may report you as delinquent. However, if our explanation does not satisfy you and you write to us within ten days telling us that you still refuse to pay, we must tell anyone we report you to that you have a question about your bill. And, we must tell you the name of anyone we reported you to. We must tell anyone we report you to that the matter has been settled between us when it finally is.

If we don't follow these rules, we can't collect the first $50 of the questioned amount, even if your bill was correct.

Special Rule for Credit Card Purchases
If you have a problem with the quality of property or services that you purchased with a credit card, and you have tried in good faith to correct the problem with the merchant, you may have the right not to pay the remaining amount due on the property or services. There are two limitations on this right:
(a) You must have made the purchase in your home state or, if not within your home state, within 100 miles of your current mailing address; and
(b) The purchase price must have been more than $50. These limitations do not apply if we own or operate the merchant, or if we mailed you the advertisement for the property or services.

A couple of notes- You MUST write to the company, a phone call will not ensure your rights. You must WRITE to them within 60 days of the date of the notice that first contained the error. Your letter must contain your name, billing address (the address on your bill), the dollar amount of the error, and a description of why you believe there is an error.

What can you do if the creditor will not respond? You may report the creditor to the Fair Trade Commission (FTC) by calling toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Or you can visit their website FTC.gov, or by completing and submitting this online form . Depending upon the situation and the dollar amount, you might want to consider hiring a lawyer to help you.

In case you missed the debate last night...

2008-02-01T06:49:00.000-05:00

Were you watching the season premier of Lost or the new Eli Stone and missed the Obama and Clinton debate? No worries, it is in ten parts that automatically advance on youtube. Here you go!

2008 IRS Anticipated Refund Dates

2008-01-31T10:58:00.000-05:00

Click on the image to enlarge or here to be redirected to the official IRS pdf file

10 Tips: What to do with tax rebate? - 10 Tips- msnbc.com

2008-01-31T06:46:00.000-05:00

10 Tips: What to do with tax rebate? - 10 Tips- msnbc.com

In this article on by Laura T. Coffey, we can read about 10 things we can do with a tax rebate. I especially like the suggestion of paying down credit card debt. This is a sure fire way to earn a fantastic return on your money. Paying off $2000 in credit card debt that charges 18% per month in interest is the same as earning an 18% return on the stock market, without the risk!

Here is my "Top 10 List: How to spend your tax rebate"

10. Buy a new HDTV

9. Make a lump sum contribution to your retirement account

8. Deposit the money into a high yield money market account

7. Buy a new wardrobe

6. Update your sofa and recliners

5. New tires for your car

4. Start a college fund for your kid(s)

3. Pay back the loan that your inlaws gave you

2. Pay down revolving credit card debt

1. Hold on to the money until the government
asks for it back!

It's getting harder and harder to get a loan

2008-01-30T07:16:00.000-05:00

....

Lenders are closing the door on riskier consumer loans. It seemed like it was just the other day that we had money for everybody, but as I wrote in this post, how quickly it all changes! In light of all the foreclosures and dismal economic news, loans to people with less than perfect credit are becoming few and far between.

Have you been unexpectedly denied a loan? If so, there still may be hope. With a little more effort, you might be able to negotiate a counter offer, basically a win-win for you and the lender...

First, pull your self together and ask the lender if you can talk with them. You want to gain some insight about why you were turned down for the loan. Be willing to discuss your credit history and some of those long forgotten medical collections or that time not long ago when you were late with your credit card payment. Your credibility is at stake. Knowing what is on your credit report and being able to discuss it rationally is very import step in gaining this credibility.

Would the lender agree to make the loan with another borrower on the note with you? Someone with very good credit, a stable job, and who has lived in the area for an extended period (5-10 years)?

Do you have anything that you could offer as security (collateral)? The family silver probably won't work, but your Jet Ski or Quad might! Many lenders will be more willing to take your car as collateral over recreational merchandise simply because cars are much easier to take-back (sugar coating on repossess) if the deal goes bad.

Are there credit issues that need to be resolved before the lender is willing to talk further? Sometimes, things like large collection accounts and money judgments will keep you from qualifying for a loan. Collection accounts oftentimes turn into money judgments. With a money judgment, the creditor can seize your wages, and attach liens to your assets. Because of the potential that a judgment has on impairing your income, many lenders will not loan money to you unless and\or until these are satisfied.

No doesn't always mean no. Keep in mind that the lender wants to make loans- needs to make loans. By asking a few questions and working with the lender, you just might be able to help turn that no into a yes.

Banks vs Credit Unions

2008-01-29T09:23:00.000-05:00

Great vid from Youtube! This gal did a fantastic job!

Click the word Comments below to post your comments!

Getting paid to lose money

2008-01-29T05:39:00.000-05:00

If you're like me, you go to work each day to help your employer to make a profit. In exchange for helping your employer to make money, you get a share of that profit; its your paycheck.

Now, image that you go to work and lose money for your employer and go home. The next day, you go back to work, lose more money and go home. How many times would you need to do this before your employer told you to go home and not to come back?

What if instead of getting canned for losing money, you got a bonus? I'm not sure how it works, but there is a way to do this. Just ask Vikram Pandit, CEO of Citigroup.

Citigroup awarded Chief Executive Vikram Pandit $26.7 million worth of shares and 3 million stock options six weeks after he took over the largest U.S. bank, and a week after the company reported a record $9.83 billion quarterly loss. USA Today

Jeeze, I need to stop trying so hard!

Canceled: No More Refund Anticipation Loans?

2008-01-28T06:41:00.000-05:00

This comment on the heels of the IRS saying that it may restrict the tax preparer from sharing the tax payers information with lenders.

Sen. Charles Schumer, a New York Democrat and member of the Senate Banking Committee, said in a statement "people all over the country are getting ripped off by these so-called refund loans, and it's time to stop them dead in their tracks." He called the loans "usurious."

I found this article from March of 2006 on bankrate.com that talks about the very high price for a RAL-

Tax preparers, both independent operations and major chains, charge interest rates that can run on an annualized basis well into triple figures, all for the privilege of getting money a few days earlier. The IRS further mitigates the risk to lenders with its Debt Indicator service, alerting them to any claims (child support, unpaid federal student loan) against refund-loan applicants' refunds.

The IRS and Treasury announced an Advanced Notice of Proposed Rulemaking (ANPR)regarding the marketing of RAL's. Read the entire notice here Following is a summary:

SUMMARY: This document describes rules that the
Treasury Department and the IRS are considering proposing, in
a notice of proposed rulemaking,regarding the disclosure and
use of tax return information by tax return preparers. The
rules would apply to the marketing of refund anticipation loans
RALs) and certain other products in connection with the
preparation of a tax return and, as an exception to the general
principle that taxpayers should have control over their tax
return information that is reflected in final regulations
published in T.D. 9375, which is published elsewhere in this
issue of the Federal Register, provide that a tax return preparer
may not obtain a taxpayer's consent to disclose or use tax return
information for the purpose of soliciting taxpayers to purchase
such products. This document invites comments from the public
regarding these contemplated rules. All materials submitted will
be available for public inspection and copying.
DATES: Written or electronic comments must be received by April 7,
2008.

Stock prices for H&R Block and Jackson Hewitt took a nose dive on this news...

The 137th Carnival of Personal Finance

2008-01-28T06:30:00.000-05:00

Be sure to pay a visit to The Dividend Guy who is hosting this weeks 137th Carnival of Personal Finance. Some great posts! Thanks Dividend Guy!

The value is dropping, so I'm not paying!

2008-01-27T19:15:00.000-05:00

I am watching a segment on 60 Minutes on the mortgage meltdown. Interviewed was this couple that said that is doesn't make any sense to pay $3200 per month for a 1200 square foot home, so they're just not going to make the payment to the lender.

They feel that if the property value keeps going down, and that payment keeps going up, why should they keep paying?

Hows about because they signed their name, giving their word that they would pay the loan back. So much for integrity! The lender is holding up their end of the deal, helped them finance what they wanted, and now their going to walk away? Tell me, how did this become the lenders fault? What could the lender possibley do to increase the market value of their home so that they feel better about repaying their loan?

I wonder if they would just stop paying if the property value went up? It seems to me that it shouldn't matter what the property value is. Sure, it wouldn't be fair, but a deal is a deal. Afterall, they admitted that they could afford the payment, but it didn't make any sense for them to repay, so they weren't going to.

Sure, they felt trapped. They couldn't refinance because they owed more than what the house was worth. I wonder why they bought this house? Was it to be their home, or was it an investment?

If it was to be their home, then what difference would the value make? It is their home, no other place like it!

If it wasn't their home, then was it an investment? Were they speculating on the value of the home, planning to sell it as soon as they could get a tidy profit? Were they gambling on the future value of this property?

Many people gamble and speculate every day. Some people win big, some people lose big.

Maybe these people in the interview never made an 'investment' in a car. Let's say that they paid cash for a new car, drove it for a couple of months and then found that it no longer was worth what they paid for it. What would they do? Bring it back to the dealer and demand their money back? What if they had financed it? Would they just stop paying for it? Probably, and probably.

I know a car is much different than real estate, but the principle is the same. In my opinion, it's people with attitudes like these that give those with real problems a bad name.

Do you think that this mortgage crisis is made up primarily of people that were speculating on future real estate values, or do you think that it is from people who just didn't have a clue about what they were doing?

Get some money in the mail!

2008-01-25T10:57:00.000-05:00

You have probably heard the news that your economic stimulator will arrive in your mailbox sometime in May.

If you're married and earning less than $100k per year, you can look foward to a $1,200 check. If you have kids, you'll get $300 for each.

I'm not sure if this stimulus package is going to have the intended effect. News today is that if it doesn't then the government will consider another one.

Some have argued that wealthier taxpayers are more likely to put a $300 check into savings or pay down debt, and that directing more of the stimulus to lower-income households that spend the money is likely to have a greater positive impact on the slowing economy. CNN

I think it is a misnomer that only the wealther taxpayers are likely to pay down debt with this return. Most folks are walking around with some signifcant credit card debt, the average person today has over $9000 of it. I believe that a large portion of these checks will go right to paying down debt. In my case, it's going towards Christmas gifts purchased in 2007!

Not that we should count our chickens before they hatch, but what would you do with $1,200 of found money? Pay a bill? Put it in savings? Retire in Mexico?

Money for Snowflaking

2008-01-25T07:10:00.001-05:00

This is a neat debt reduction strategy posted over at I've Paid For This Twice Already. Use the snowball approach to debt reduction supplemented with these extra snowflakes.

All debt reduction strategies and plans have one thing in common; they require discipline. Without discipline, all you have is a plan. You need to take action and be in control, play by the rules. Don't lose site of the prize- No More Debt!

How many allowances should you claim on the W4?

2008-01-25T06:38:00.000-05:00

UPDATE- This post is continued here

Not too many and not too few! The worksheet that the IRS provide with the form is kind of helpful but might still leave you scratching your head.

The more allowances that you claim, the lower the taxes are that are subtracted from your gross pay.

Claim too many, and you may end up paying in to the IRS at the end of the year. To add insult to injury, you might have to pay a penalty too!

Claim too few, and you give the government a free loan for the year.

Many people use their W4 allowances kind of like a forced savings program. This is okay if it is absolutely the only way that you can save money, although you have many other options available to you.

Instead giving the government a free loan for $xxxx.xx, claim a fewer number of allowances to increase the amount of your take home pay. Take this increase and divert it to Sharebuilder or some other type of savings program. This is wiser than getting a big check back from the government. Why?

First, you won't have access to the cash. This is good if you don't need it for something else like paying off bills. This means that you won't spend it frivolously.

Second, you will be investing the money, not just saving it. The difference between savings and investing (in theory anyway) is that saving your money means you're merely holding onto it, not spending it. The cash is depreciating (unless you have it in a high yielding account, like ING Direct). Investing it means that your money is working for you, cloning itself, becoming worth even more over time.

Click here to leave your Comment!

We need to see you

2008-01-24T14:19:00.000-05:00

This notice was on a monthly statement that I received the other day. Could it be that Citibank has had some 'difficulties' authenticating their online customers. Have they had a problem with overseas wires? It's been a few days since receiving this and I haven't read any breaking news, so maybe it's just a precautionary thing. I hope that they're not having regulatory problems on top of their mortgage problems!

I'm not an economist.... But...

2008-01-23T20:15:00.001-05:00

I'm not an economist, so that's why I wasn't able to write it as eloquently in this post as Mr. Schenk, Sr. Economist for CUNA said it in this quote:

"The Fed is essentially asking these folks with unprecedented levels of debt to bail out the economy by running out and borrowing more. This suggests--as Fed Chairman Ben Bernanke argued last week--that fiscal stimulus also may be needed."

Read the entire article here

Is it really this bad?

2008-01-23T12:34:00.000-05:00

How bad is it? Taking it all into consideration, it's not all that bad; or is it? I guess it depends on your point of view.

Take for example this post over at Advanced Personal Finance. Some very good points are made about the 'hype' and the reality.

Me? I'm bearish. Moved everything to cash (everything makes it sound like such a big amount, I wish!). Safest bet for you buck is in a high yield money market account someplace....

Click the word Comments below to post your comments!

Tax Prep Software

2008-01-23T05:27:00.000-05:00

I received a full version of TaxCut in the mail a couple of weeks ago. Made it pretty easy to decide what to use to prepare my taxes this year! Now that I have received most of my tax docs, I guess its time to load up the software.

It would be nice if the H&R Block folks would send me a free version! The software that they sent requires payment at some point, probably when you license it during the registration process. The box that it came in says that it is the "Same TaxCut software and at the same manufacturer's suggested retail price as sold in stores". I wonder how it compares to what I can buy it for locally? I'll keep you posted!

Blame it on the banks!

2008-01-22T06:46:00.000-05:00

I read an article by Roger Lowenstein in the February 2008 Smartmoney Magazine called Blame the Banks. Roger opines that banks are the blame for the subprime fiasco. He feels that the bankers acted more like stock brokers instead of lenders. His arguments are compelling.

"... they played a dangerous game. They issued and repackaged loans on the basis of whether they could be resold-not on the basis of wheter the loans were any good. They forgot they were bankers and acted like traders. A Banker loans money with the expectation of getting it back. A trader merely hopes to fob the loan off on the next guy."

Why did the banks do this? Simple answer- PROFIT!

Bankers are struggling to get and keep deposits. What is the one thing that they can do to almost guarantee that we'll deposit our money with them? Pay us high yields for our deposit accounts. Where does the money come from to pay us these high yields? Fee income and interest income earned from loans.

How do bankers get loans to earn income? By lending money at low loan rates.

In a market that requires the paying of high yields to attract deposits and low loan rates to attract loans, it is very difficult to earn a profit for the stockholders. How can you pay 5.00% for a 5 year certificate of deposit, and make a 15 year mortgage loan for 5.25% and not go broke? One way is by selling off the loan and re-investing the cash into another loan. A money recycling mill. Each time the money is cycled through, it comes back with a little more. The more your recycle, the more money you have.

I agree with Mr. Lowenstein, bankers should stick to banking and come up with another way of satisfying their stockholders, as long as it doesn't involve charging their customers a fee every time they exhale. Maybe the bankers should take a look at the way credit unions operate; non-profit financial cooperatives. I wonder what this subprime mess would have looked like if banks were more like credit unions; would it even have happened?

Avoiding the Rush- Preparing your tax return early

2008-01-21T08:05:00.000-05:00

It's time to start thinking about filing your tax return for 2007. Here are a few ideas to help you get started.

Tax paper depository
January is the month that you'll start receiving all kinds of tax forms in the mail. Get a large manila envelope, small file box, shoe box, something to centralize the collection of these documents. You'll save a lot of time finding them when you're ready to start working on your return, and you'll avoid having to amend the return if you forget something. Be on the look out for W2's from your employer(s), 1099's from your banks, brokerages, etc., and 1098's from your mortgage company(ies).

Purchase some tax prep software
If you're a do-it-yourselfer, there are a number of software programs available on the market today. I used H&R Block's Tax Cut last year and found it to be easy to use. I've also used Turbo Tax and found that to be just as capable. What I like about these programs is that they will 'audit' your return before you finish them, pointing out any not so obvious errors or red flags.

Another option is to file using the IRS's 'Free File'. If you AGI in 2007 was $54,000 or less, you can use Free File to prepare and e-file your taxes online. If you earned over the maximum, you can still use the IRS's E-file to prepare and file your return. If you file the "old way", you'll be receiving a packet in the mail from the Feds and your State. Be sure that you have all the forms that you need! You can pick these up at any Post Office, some libraries, or download them from the IRS's forms website.

Make an appointment with yourself
When you have all of your paperwork together and have installed your software, its time to schedule a couple of hours with yourself to prepare your return. I like to be in a quiet place where I won't be interrupted.

Direct deposit your refund
Having your refund electronically deposited into your bank account eliminates checks lost in the mail. Another benefit; you'll get your money much sooner than you would if it were being mailed to you.

Getting your taxes done sooner than later relives the last minute stresses of waiting, and if you're getting a refund you won't have to wait until May, June, or July to decide how to spend it!

Carnival of Personal Finance #135

2008-01-18T06:27:00.000-05:00

Last Week's Carnival of Personal Finance was hosted by Plonkee Monkey and included a number of excellent posts.

Here are a couple of my favorites:

How I taught my pre-schooler the value of a dollar- If you're a regular reader, then you know how I feel about financial education!

Preventing Child ID Theft- Can you imagine just starting out only to learn that you're ID has been stolen? I mean, it's bad enough as it is being established and having it happen...

Stop Planning: 50 Ways to Improve Your Finances Today- I especially like the idea of focusing on one thing a day instead of your entire annual plan.

How quickly it all changes...

2008-01-17T18:35:00.000-05:00

This video is an eye opener. I watched it again this past weekend during an event I attended. This was the second time that I had seen it. The first time was a post on a blog called Vince Cordic's Marketing Tactics which I had referred to last year on this blog.

It was worth the time to watch it the first time, and the second time. I put it here for you to see, perhaps again.

No Worries, the Fed will save us!

2008-01-17T08:20:00.000-05:00

Billions of dollars in losses from the subprime disaster. Waining consumer confidence. Personal savings at a historical low. Warnings of recession.

The news from the financial world has not been good. How can this be fixed? Surely I don't have the answer, but I do have a few observations that I find interesting and make me say 'hummm'..

The word today is that the Fed will undertake measures to spur the economy, to encourage consumer spending. The holiday season retail sales reports indicated that people actualy spent less in December than they did in November; a sure sign of recession?

With personal savings at an all time low, and more and more Americans living from paycheck to paycheck, I wonder what the government will do to create cash to spend? Or, instead of putting money in our pocket, will they merely continue to advocate for credit purchases which in many opinions have lead to the current state of our economy.

Simply put, continued debt accumulation further reduces savings, pushing the savings rate into negative numbers. Encourage more debt spending only esaserbates an already dismal economic prediction.

Hopefully, all the doom and gloom predictors are wrong. Hopefully, our new President and his\her people have an answer.

I'm not a financial scientist, but I believe the answer continues to lay in financial education. The core of this education must be to help us learn that we cannot borrow and spend. We must learn the savings discipline, and the value of earning a reward, to not get it now, but to earn it later.

Anyway, our government will be attempting a fast track fix to the economy. More to come!

Do you have an emergency fund?

2008-01-16T08:01:00.001-05:00

In these times of economic uncertainty, it is a wise idea to have an emergency fund. Experts tell us that we should have a fund balance of at least 3 months worth of expenses. This fund is not a savings account and should be used only in extreme emergencies (unexpected bill, job loss, layoff, or other unexpected emergency). Having this set up before you might need it will afford short term protection for your credit rating and assets.

Here a few tips on setting up this fund:

Make sure that you have easy access to the cash. If you keep it in a high yielding online money market account, be sure that you are able to access it readily. Keep in mind that you might need this money in the event of an environmental disaster (Katrina), so you need to understand how you might be able to access the cash without internet access or electricity.
If you are lucky enough to have saved some money, then set aside some now to establish this fund. If not, then consider using your tax refund. Other ways to fund the account would be through the sale of things that you have but don't use anymore.
Find an account with a good yield, but don't let the rate be your only driver; remember that you need easy access to the funds.
Fund the account with an automatic savings plan

Here is a video found at Smartmoney.com that talks about these tips.

Free Today, January 15th Jump-Start Day at Kiplinger

2008-01-15T06:40:00.001-05:00

What a great opportunity to talk with a professional financial planner about your personal finance questions! Members of the National Association of Personal Financial Advisors (NAPFA) will be standing by to talk with you about your financial concerns and answer your questions. On January 15th and Friday, January 25th from 9 a.m. to 6 p.m. Eastern Time, these planners who are well versed in investments, taxes, insurance, estate planning, and saving for college and retirement, who normally charge clients $100 to $300 an, will be providing their expertise for free!

Just call toll-free 888-919-2345 or log on for online discussion with a knowledgeable and professional adviser!

The National Association of Personal Financial Advisors

NAPFA Code of Ethics

Objectivity: NAPFA members strive to be as unbiased as possible in providing advice to clients and NAPFA members practice on a fee-only basis.

Confidentiality: NAPFA members shall keep all client data private unless authorization is received from the client to share it. NAPFA members shall treat all documents with care and take care when disposing of them. Relations with clients shall be kept private.

Competence: NAPFA members shall strive to maintain a high level of knowledge and ability. Members shall attain continuing education at least at the minimum level required by NAPFA. Members shall not provide advice in areas where they are not capable.

Fairness & Suitability: Dealings and recommendation with clients will always be in the client’s best interests. NAPFA members put their clients first.

Integrity & Honesty: NAPFA members will endeavor to always take the high road and to be ever mindful of the potential for misunderstanding that can accrue in normal human interactions. NAPFA members will be diligent to keep actions and reactions so far above board that a thinking client, or other professional, would not doubt intentions. In all actions, NAPFA members should be mindful that in addition to serving our clients, we are about the business of building a profession and our actions should reflect this.

Regulatory Compliance: NAPFA members will strive to maintain conformity with legal regulations.

Full Disclosure: NAPFA members shall fully describe method of compensation and potential conflicts of interest to clients and also specify the total cost of investments.

Professionalism: NAPFA members shall conduct themselves in a way that would be a credit to NAPFA at all times. NAPFA membership involves integrity, honest treatment of clients, and treating people with respect.

Removing the Burden of Debt

2008-01-14T13:22:00.000-05:00

(sponsored post)

If you face some crushing debt burdens, from credit cards or payday loans, you may wonder if you'll ever get out of the cycle of debt. A short-term loan like a cash advance is one way to avoid recurring debt, if used wisely. Used improperly, it can end up costing you much more than what you originally understood. This happens mostly when paycheck loans are used without understanding that they work best as short-term loans. You can decide to refinance the loan, but this will usually outweigh the benefits of taking it out in the first place and convert it from a short-term solution to a lengthier debt burden.

While debt is a fact of life in modern America, recurring debt doesn't have to be. There are times when you want to be able to get loans to finance emergencies like a broken down car or an unexpected medical bill. But, once the emergency is over the bill should be paid in full as quickly as possible. The problems can increase when a bill is not paid when it is due, and instead it is rolled over into a new loan. At that time penalties and fees may be levied for missing the original due date or the interest rate increases. This can make you end up paying two or three times the actual cost of your emergency.

If you find yourself in debt, seek to settle your accounts as quickly as possible, negotiating with your lender for a payment plan you can meet. You can reduce your risk of not meeting the due date by limiting the amount of money you withdraw. Then, if you do need more, that will be available after you pay off the first loan. In the meantime, try to put aside any small amount to start building an emergency fund. It doesn't have to be large; it can be $10/week. If at the end of two months you haven't used the money, you will have $80 in an emergency fund. This isn't much, but the psychological lift of seeing some savings is better than having no savings and feeling burdened by debt too.

Do you need Credit Insurance?

2008-01-11T06:12:00.001-05:00

Do you need credit insurance? In a word, maybe! It depends on a number of things like where your income is derived, the type of other insurance coverages that you have, and the type of credit that it is covering.

What is Credit Insurance?

Not to be confused with debt forgiveness programs, Credit Life Insurance will guarantee that if you die, your loan will be paid in full, thereby leaving your estate (or at least a little more of it) to your heirs. Example: You have a $15,000 car loan which is covered by Credit Life Insurance. You die. Instead of having to payoff the car with your life insurance policy, liquidating it, or letting the lender repossess it, the credit life insurance pays off the loan, the estate keeps the car, and the life insurance proceeds can be used for things other than paying off the car. Your estate effectively gets the car without having to pay for it. Like debt forgiveness programs, you pay a monthly premium for Credit Life Insurance.

Credit Disability Insurance is what you want in case you live! Insurance studies show that you are 4 times more likely to become disabled than die in an accident. This type of insurance will make 100% of your loan payment until you are able to return to work or until the loan is paid in full (up to an upon amount, talk to your loan officer). Example: You fall off of you back porch and break you back while going outside to get your dog. You can't work. How are you going to pay for your car loan? Here comes Credit Disability Insurance to the rescue! Sure, you might be entitled to short term disability from other sources, but this temporary income is usually significantly lower than your regular income. With Credit Disability Insurance, you don't have to worry about a large chunk of this temporary supplemental income going towards what is usually a pretty big car payment.

So, do you really need this coverage?

If you have a whole pile of life insurance (a million dollars or so), and relatively little other debt, then you probably don't need Credit Life Insurance for small balance loans, like cars, ATV's, snowmobiles, things like this. You might consider it for a mortgage or other very large balance loan. Although you could increase you life insurance policy instead...

To determine whether or not you should have Credit Disability Insurance, you need to think about how you will pay your loan obligations if you were to become disabled, earning a small percentage of your normal pay. If you can meet your obligations on the reduced pay, maintain your good credit rating, and otherwise not experience undo hardship because of the reduced pay, then you probably don't need credit life insurance. On the other hand, if your credit is at risk, if you think you might risk a repossession, or get behind on the bills, you should seriously consider purchasing this coverage.

How much does it cost?

Credit Life Insurance is relatively inexpensive, usually just pennies for every $100 of loan balance. Credit Disability Insurance will cost more than Credit Life Insurance, but remember you are 4 times more likely to use the Credit Disability Insurance than the Credit Life Insurance.

Don't let the cost of optional Credit Life and Disability Insurance deter you from purchasing it if you think you need it. Moreover, if you think the added costs is out of your budget then you need to reconsider whether or not you can afford to not have this insurance. If you can't afford the payment with insurance, then you probably can't afford the loan because how will you pay it back if you become disabled?

Summary

For most of us, Credit Life and Disability is worth the added expense. If you feel you can't afford it, then you should examine very closely whether or not you can even afford the loan. If you can't afford the payment with insurance, how will you afford the payment on a reduced income?

Most lending institutions offer optional credit life and disability insurance. You can expect the cost to run about $.50 per thousand for single credit life, and about $2.00 per thousand for single credit disability. The amount added to you monthly payment for a $25,000 loan would be $62.50. Keep in mind that this is decreasing term insurance. The premium is recalculated each month based upon the outstanding loan balance. As your loan balance decreases, so will the monthly insurance cost.

Click the word "Comments" below to leave your comments!

Free Turbo Tax Software!

2008-01-10T05:22:00.000-05:00

As we get closer to tax season, its time to think about updating your tax prep software for 2008.

I've used Turbo Tax and Tax Cut, and found them both to be very easy to use and understand and recommend both.

If you'd like to try your hand at winning a free copy of Turbo Tax, visit Free Money Finance where you can Post A Comment to enter in the drawing.

Good Luck!

Click Here To Post Your Comment

Proposed Changes to Truth In Lending

2008-01-09T10:01:00.000-05:00

The Federal Reserve has put out for comment proposed changes to Regulation Z- Truth In Lending. These changes, if adopted and made into law, will have an effect on the mortgage loan industry, and as you have probably read or heard by now, make qualifying for a mortgage much more difficult.

Is this additional regulation good for the consumer? Is it good for the industry?

From a consumer perspective, it will afford yet another opportunity for you to sign and read something; more disclosures for you. I've been lending money for a long time and virtually NOBODY reads these things unless the banker takes the time to go over the documents together with the applicant. Now, most applications are originated through the mail and online, diminishing the opportunity to go over the documents with the applicant.

From an industry perspective, it appears that this might be a bad thing. Anytime an already heavily regulated industry is burdened with more regulation, it impedes business. Moreover, in this particular case, it may very well put some people right out of business.

Not only have I given mortgage to a lender as security for a loan on some real estate that I own, and I am a lender who takes mortgages from others as security for real estate loans. Although far from unique, my perspective is from both sides of the desk.

As a consumer, I'm not sure that I will be effected much, nor will I feel more informed. Just more paper that I need to affix my initials and signature to. Sure, I might be REQUIRED to provide evidence of my income and assets because the regulation mandates it, but I kind of expected to do that anyway.

From a lenders perspective, I think that the regulation will have a broad and adverse impact on the industry. Our government would like to mandate sound underwriting policies and requirements, requiring that the lender verify income and assets, and the borrowers ability to repay the loan. This makes me wonder what the government thinks we bankers are doing? Is this to suggest that we just willy nilly give out loans to people without first making a determination as to whether or not they qualify or if they can repay the loan? Why would anyone do that anyway? I can see increasing regulatory requirements for those involved on the business side who have nothing to lose if the deal goes bad, but for those that have real money at stake on the business side; they don't want to lose their money anymore than the next guy does!

So much of what happened with this sub-prime mortgage disaster is credit score, LTV, and MORTGAGE BROKER driven. Not to vilify the Brokers out there, most are professionals, but there are some that will tell you only what they want you to know, and only what you want to hear, just to get a juicy commission check at the end of the month. In my opinion, the subprime mortgage loan problems could be almost entirely resolved by simply prohibiting mortgage brokers access to these types of loan products.

Those that received the 'Liar Loans' or NINA's (no income, no asset verification) or stated income loans, had to have had very good credit history's in order to qualify. Many of these homes that are foreclosing are NON OWNER OCCUPIED investment properties. The owners financed them with little money down, expecting that the real estate market would continue to climb, and that they could cash out on the equity in a short time. No principle investment, pay interest for a few years on the amount borrower, then sell the property at a high profit because the market value has risen so much.

For example, an investor buys a $100,000 property, no money down and takes an interest only loan to finance it. This invest er is gambling that in a relatively short time frame, the property will be worth $160,000, and that they will sell and profit on the new equity. What happened is that instead of increasing in value, the property decreased in value, and the investor is walking away without losing any real money...

Anyway, here is what the Fed is proposing to do with Regulation Z:

Highlights of Proposed Rule to Amend Home Mortgage Provisions of Regulation Z

The proposal would establish a new category of “higher-priced mortgages” that should include virtually all subprime loans.1 The proposal would, for these loans:

-Prohibit a lender from engaging in a pattern or practice of lending without considering borrowers’ ability to repay the loans from sources other than the home’s value.

-Prohibit a lender from making a loan by relying on income or assets that it does not verify.

-Restrict prepayment penalties only to loans that meet certain conditions, including the condition that the penalty expire at least sixty days before any possible payment increase.

-Require that the lender establish an escrow account for the payment of property taxes and homeowners’ insurance. The lender may only offer the borrower the opportunity to opt out of the escrow account after one year.

The proposal would, for these and most other mortgages:

-Prohibit lenders from paying mortgage brokers “yield spread premiums” that exceed the amount the consumer had agreed in advance the broker would receive. A yield spread premium is the fee paid by a lender to a broker for higher-rate loans.

-Prohibit certain servicing practices, such as failing to credit a payment to a consumer’s account when the servicer receives it, failing to provide a payoff statement within a reasonable period of time, and “pyramiding” late fees.

-Prohibit a creditor or broker from coercing or encouraging an appraiser to misrepresent the value of a home.

-Prohibit seven misleading or deceptive advertising practices for closed-end loans; for example, using the term “fixed” to describe a rate that is not truly fixed. It would also require that all applicable rates or payments be disclosed in advertisements with equal prominence as advertised introductory or “teaser” rates.

-Require truth-in-lending disclosures to borrowers early enough to use while shopping for a mortgage. Lenders could not charge fees until after the consumer receives the disclosures, except a fee to obtain a credit report.

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Footnotes

1. Higher-priced mortgages would be those whose annual percentage rate (APR) exceeds the yield on Treasury securities of comparable maturity by at least three percentage points for first-lien loans, or five percentage points for subordinate-lien loans. Return to text

The Promise and Pitfalls of Courtesy Pay

2008-01-08T06:41:00.000-05:00

Does your financial institution offer a product that will honor a check that you have written, even if it overdraws your account? This service is commonly referred to as Courtesy Pay or Overdraft Protection. How does it work? Is it for you? Let's take a look at how it works.

Now that you're all done shopping at the grocery store, you're at the check out and whip out your checkbook or check card or debit card to pay for the purchase. You write or swipe and you're on your way. What if there wasn't enough money in the account? What will happen to the check? Will it be returned? If there wasn't enough money in the account, why did it accept my check or debit card? Because you have Courtesy Pay!

Courtesy Pay isn't a loan; instead you pay a flat fee as opposed to daily interest, in other words, it isn't an overdraft line of credit. In my experience, Courtesy Pay is more expensive than an overdraft line of credit. The fees can range from very little to quite a lot! One local institution charges an initial fee of $29 per returned item. More on that in a minute...

The bank or credit union who offers this product does so under no obligation. This means that it is discretionary. If they feel you are abusing the privilege, or if it is not in your best interest, they may revoke it.

The institution decides what the maximum amount per account will be honored if the account is overdrawn. Let's say that the institution has determined that they will honor up to $750 overdraft protection, or as a Courtesy, pay the check or debit on your behalf up to $750. For this service, they charge you a fee. They expect, and a condition of continued protection, that you will bring the account to at least a zero balance within a certain number of days. Courtesy pay will honor your check, draft, or debit, even if your account does not have ample funds available to pay the item in full.

Is it for you? That really depends. If you occasionally make an error in your checkbook, then maybe it is for you. Courtesy Pay saves you the embarrassment of having an item returned to a merchant, and it saves you the expense of 'non sufficient funds' and returned check fees. In our marketplace, a returned check will cost $25, and the NSF fee averages $30, so this could be a $55 mistake.

What if you regularly make mistakes in your checkbook, or what if you're running short on cash? What if you used to play the check 'float'? If this is the case, you should really consider whether or not you really want this type of service. Why wouldn't you want this service? Good question. Let me explain.

Let's say that you write a check for $250, but there is only $225 in your account. You had made a mistake in your math, or forgot to enter a transaction because according to your records you had $400 in the account. You have courtesy pay so your bank or credit union honors the check and tacks another $29 (the courtesy pay fee) to your account. Now, you're $54 overdrawn in your account.

But wait, you're not done writing checks yet! You write another check, this time to the grocer, for $100. But, there isn't $100 in the account. The check is honored by your bank, they add the $100 plus the $29 fee to your account. Now, you're $183 overdrawn in your account when, according to your checkbook, you think that you have $75 left in the account. Now, off to the gas station.

You pump $60 of fuel in the car, use your debit card to pay, the transaction is processed. Your account is charged the $30 plus another $29 for the fee. Balance in your checkbook says $15, balance at the bank is negative $272.

On your way back home, you stop and pick up a few last minute items, use your debit card to pay for the $10 purchase... $39 more added to your negative balance. Your checkbook register shows a $5 balance until your next deposit (maybe you have the deposit all ready to go, just waiting to deposit it tomorrow), when the actual balance THAT YOU NOW OWE is $311!

As you can see, a one time fee of $29 isn't such a bad deal, but overdraw just a few items (some institutions will even honor withdrawals at ATM machines that overdraw your account!) and the fee can quickly surpass $100. Now, what if you didn't have courtesy pay and instead bounced 4 checks around town? Courtesy pay would still be less expensive than paying the NSF fee and returned check charges, say nothing about the humiliation and risk that the merchant no longer accepts checks from you. I guess Courtesy Pay is the lesser of the two evils.... but you know what they say; the lesser of the two is still evil!

My vote: pass on the courtesy pay and overdraft protection programs. If you feel more secure having this type of protection, look for an overdraft line of credit instead. You'll need to meet credit requirements, but in the long run, this can be MUCH less expensive and it will save the embarrassment and costs associated with bouncing a check.

Transfer Fees and Minimum Payments

2008-01-07T13:32:00.000-05:00

You just received a fantastic balance transfer offer in the mail and you have a couple of credit card balances that you have been thinking about consolidating. Maybe this is the time! Should you transfer those balances using this offer? Let's take a look to find out how much it might cost.

So the offer says that you can transfer your balances at a low 3.9% fixed rate for 12 months. Sounds reasonable, after all, you are paying 16% on the accounts that you want to consolidate, so at least for the first year (if you carry a balance this long) you will have paid less in interest. So far so good.

The transfer fee (see the small print on the offer that you received) will increase the balance that you are transferring, and you will pay interest on this transfer fee. In our example, let's use a nice round number, say $6000, as the amount that we are thinking about transferring.

What would it cost if you did nothing and decided not to consolidate and transfer the balances? According to Bankrate's credit card payment calculator, it would take TWENTY FOUR YEARS and cost of over $6,500 in interest to repay this debt if you paid just the minimum monthly payment. If you were to instead make a dedicated payment of $200 per month (instead of whatever the minimum payment is) you would retire the obligation in just 39 months, and pay only $1,714 in interest. Now, if the minimum payment was 2.5% of the outstanding balance, then it would be $50 more each month to save almost $5000 in interest and shave a couple of decades off of the time it would take to pay it back!

Do we agree that if at all possible, you should pay a regular fixed amount each month rather than making just the minimum payment?

Alright, now back to the balance transfer. Assuming that the balance transfer fee is 3% of the balance transferred, the 'new' balance on the card that you are transferring to would be $6,180.00. How does this compare to just leaving it on the other card and making fixed monthly payments? Let's take a look.

Because the interest rate on the transferred to account is fixed for only 12 months, we need to take an additional step to calculate the total costs. During the first 12 months, you will have paid $220.00 in interest, paying the principal down to $4,751. If instead you made a fixed monthly payment of $200 per month, your interest expense would be $207, and your outstanding balance would be $3,987. Now we have to make some assumptions as to what your adjusted interest might once this introductory rate of 3.9% expires at the end of 12 months.

Most all credit cards use the Prime Rate as an index. To this they add a margin for risk. Let's base our scenario on today's current Prime Rate of 7.25% with a margin of 8.75 added for risk, making your adjusted rate 16.00% (note that this new rate is the same as what the old credit card rate is at today..). Note that these rates are subject to change anytime that the Prime Rate changes. For our purposes, we will assume that the Prime Rate stays until the balance has been paid in full.

If you had paid only the minimum monthly payment for the first 12 months, and assuming the adjusted rate thereafter is 16%, it will take you 20 years to payoff the remaining balance, and the interest expense would be $3,949. If you dedicated $200 per month for this debt, it would be paid in 28 months at a cost of $845.00.

Now, let's see how the transfer option works out...

Option 1- Do Nothing
It will take 288 Months to repay, and cost you $6500

Option 2- No Transfer, Dedicated $200 Monthly Payment
This option reduces the time to pay to just 39 months, and costs $1714

Option 3- Transfer, pay minimum
This option shaves 7 months from the term, and saves quite a bit, costs $5548

Option 4- Transfer, Dedicated $200 Montly Payment
Here you have the best of both. Retires debt in 29 payments and costs $1400

As you can see, doing something is a whole lot better than doing nothing! If you were to transfer the balance and make only the minimum payment, you would payoff the debt 7 months sooner, moreover you would save almost $1000 in finance charges. No, over 20 years, that is not a whole lot of money but it is money that you did not give to the credit card company.

Quite obviously, based upon our assumptions that the adjusted interest rate will not change (unless you have a fixed rate card, it will!), the apparent best choice would be to take the balance transfer option and dedicate a higher monthly payment. Doing so will cost you significantly less AND get payoff the obligation much faster.

So, take me to court then!

2008-01-05T11:29:00.000-05:00

What happens to your credit if you are sued by someone and they win? Do lenders know? Does it matter?

If you are sued, and the other party wins, a money judgment will be entered in their favor. This judgment is a public record and therefore can and probably will become public knowledge. Anyone that wants to know can go to the county office (the county in which you reside) and search your name against the public records. This record will remain 'active' for 10 years unless it is renewed. If it is renewed, it will remain active for another 10 years. However, it can be renewed only once.

This judgment will likely appear on your credit report, and if you own real estate, it will become a lien against the real estate. When a lender looks at your credit report and observes this judgment record, it is likely they will want an explanation at best, at worst they will deny your loan request without any questions asked. Of course, they will take into consideration a number of things like how old the judgment is and whether or not you've been sued successfully by anyone else and whether or not there are any other collection items reporting on your credit file.

Because this is a public record, if it is picked up on your credit report, it will have an adverse effect on your credit score. Public records of any kind will drag your credit score down. This will impair your ability to get credit with reasonable terms, if at all.

If a creditor (or anyone else for that matter) receives a money judgment against you, they can move to garnish your wages and assets. If they are able to track down your bank accounts, their attorney can lawfully demand that the deposit institution relinquish your money, and the deposit institution is required to do so.

If you're an employee and your income is above a certain level, the judgment creditor can garnish your wages by turning the matter over to the county sheriff. If you're self employed, the sheriff can seize your cash register, or seize payment(s) from your customers.

Does any of this matter? To the creditor, absolutely! To the judgment debtor? Depends I guess! If they don't have a job or any assets, and their credit history is already bad, then I guess it wouldn't really matter too much. But if the person is of good credit character, they might look for another way to resolve the matter to avoid the judgment.

If someone owes you money, a money judgment might be able to help you. Remember, you can't get blood from a stone, and it's no fun trying. It's a waste of time; impossible! Don't waste your time and resources, and don't throw good money after bad trying to get blood from a stone. Depending upon how much you're suing for, the court might require that you hire an attorney to represent you. Check with your local court to find out the maximum amount that you can bring a lawsuit for in small claims court.

Consumer Finance Tips from NAFCU and a plug for Credit Unions

2008-01-04T07:39:00.001-05:00

NAFCU: National Association of Federal Credit Unions | NAFCU offers consumer finance tips for 2008

Create a budget: Know how much money you bring home and how much you spend. If you don’t know how to make a budget, check with a credit union; many offer financial literacy classes.
Vow to spend less than you make: If you are constantly overspending, you will never have enough money to save or invest.

Start saving now: It pays to save for things like retirement, college and buying a house as early as possible. Dropping unnecessary services and avoiding ATM fees can also help; thousands of ATMs in credit unions’ networks are fee-free, while bank ATM fees have hit record highs.
Review your credit record and financial statements regularly: Get a free copy of your credit report once a year at www.annualcreditreport.com. Scrutinize statements from your financial institution and credit-card companies regularly to guard against identity theft.
Reduce your debt: Make a plan to reduce your balances. Plan to pay the highest-cost credit card first. Consolidating debt may also help, as can paying more than the minimum due each month.
Plan ahead: This applies to everything from vacations to holiday shopping. Look for bargain airfares, start a vacation or holiday account. At many credit unions, you can open an account with as little as $5.
Start an emergency fund: Unexpected events like an illness or an auto or appliance repair can require big money. Most financial advisors recommend saving three months’ expenses to fund these items.
Make your money work for you: Credit unions offer competitive rates and great service in a broad range of products and services, including savings and checking; many offer online services. Visit the Credit Union Data section at www.ncua.gov to find one.
Use credit cards smartly: Get a credit card with a low annual fee or with rewards that suit your interests, and pay on time. Consumer Reports recently found that credit unions offer some of the best credit card rates.
Review all your financial documents: ID thieves can be anywhere, so shred financial documents and credit card offers before throwing them out. Review your insurance needs, and make a will.

Consumer Protection

2008-01-03T06:55:00.000-05:00

There are a number of laws in the United States that regulate businesses and how they interact with their customers. These laws are intended to protect the consumer against unfair business practices. To a large degree, these law do as they were intended. To another degree, many people do not understand them, and because of this lack of understanding, do not benefit from them as much as they should. And yet to another degree, many businesses and business people do not understand them and put themselves and their businesses and\or employers at risk because of their ignorance.

Here is a list of most of the Consumer Protections Acts (laws), and links to some informational and official web sites.

Spend a Day Without Spending Anything!

2008-01-02T05:38:00.000-05:00

Here is a great way to save a little money every week!

Do you know how much money you spend every day? I'm not talking about your daily car payment or mortgage loan payment, I'm talking about the cost for the cup(s) of coffee, eating out, things like that. If you are like me, it is pretty easy to spend quite a bit each day on little things that can add up to a lot of wasted cash.

One of the better ideas that I have read is designating one day each week as your 'no spending day'. Did you know that there is an official Buy Nothing Day? (This year it was on November 23rd in the U.S. Here is a link to the BND web site so you can keep track of it for 2008). When this day comes each week, instead of wasting the money on what-have-you, put it in a savings jar. Then, at the end of the month, decide what you are going to do with it; apply it towards a bill or put it in your savings account.

Keeping track of what you spend each day is one of the first steps to take when putting together a budget.

Read this article for more about Adbusters and BND

New Year Resolutions - 2008

2008-01-01T08:27:00.000-05:00

A little off topic, but here are my resolutions for the year:

Drop Sixteen Pounds by April 1- just before hunting season '07, I weighed in at 166#. This morning I'm 180#. I have this really cool Navy Seals exercise and diet plan that worked very well for me a few years ago. I'll begin that plan again to help reach this goal.
Payoff the MBNA Visa Card- I have a few more months at the intro rate of 1.49%, then it will adjust to prime +. The balance is right around $7k (I intentionally charged some big ticket expenses and purchases instead of taking the money out of a high yielding money market account, of which I will do when the rate on the credit card adjusts.)
Sell the boat- not the little fishing boat, but the run about. On top of being expensive to insure and maintain, the price of gasoline is becoming quite prohibitive. The only problem with selling it now is I'll be taking a bath in losses because I'll need to price it low enough to attract a buyer. The boat, although in extremely good condition, is 20 years old this year. This 23' Regal Valenti runs like a top, powered by a 7.4 liter Mercruiser. I've owned it now for 4 years and loved almost every minute with it! In case you or somebody you know wants to buy it, I'll email you pictures! It has a brand new 2006 Venture Trailer that can go with it, if the price is right!
Read a book a week- right now I'm finishing up Rudy Giuliani's biography (not that I'm a fan or anything, just reading the book). Next in line will be Tim Ferriss' 4 Hour Work Week or Lee Iaccoca's latest.
Work 4 hours per week!
Stay within the budget!
Continue to grow my business- will be adding a few new services to include tax prep and plastic card POS processing.
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