About ten minutes ago, Neil Irwin published an article in the Washington Post that pertains to a topic every American is going to want to read.  Its no secret that the reason our economy is so fragile right now is because the banks are not able to move any of their overly leveraged mortgage-backed securities, (need a refresher?  click here), and the U.S. Government is doing everything it can to lessen this infection.  So here is their new plan: allow the wealthier entities buy the toxic assets at auction.  Why are they doing this?

The reason why we believe they are doing an auction for these “toxic” assests is because they are nearly impossible to put a current price on.  If you think about it, they are compiled of mortgages on homes that are currently foreclosed on and have no real interested buyers.  Until the mortgage market picks up, these assets will remain anchors on the banks books.  Treasury Secretary Geithner’s plan has the potential to work, and whether you are a fan of him, you should be cheering for him today.

 
 
 
The idea to involve private investors in this mess is a great one and one that had to be done.  The American public is tired of seeing their money go to over leveraged financial institutions.  This plan allows hedge funds and other investors the option to buy these assets with the Federal Government taking on most of the risk.  The private investors are going to have to hold onto these new funds for awhile in order to see a return.  But, this buying of “toxic” assets will accomplish three things in our opinion:
 
1) allow the banks to start acting like banks again, by lending money;

2) pump some private money into a mess that was largely privately created; and

3) put a price on assets that are in terrible need of price discovery.

How well will this work?  I don’t know about you, but I hope its a huge success.  I think this could be a plan that doesn’t go far enough and the market will react in the same nature, or it could get alot of peoples/investors hopes up.  Our hope is that private investors are willing to take on some risk and put some of their money back into the game.  If they fail to showup or the comeption is weak, the outcome of this new plan will also be weak.  $

Recession Rhymes
By: MYM

Humpty Dumpty
Hedge fund managers sat on a wall
The over leveraged risk takers had a great fall
All the taxpayer dollars and President’s men
Tried to put the wall street pieces together again

Old King Cole
Old Uncle Sam was a merry old soul and a merry old soul was he
He called for his checkbook  in the middle of the night
and he called for AIG
Every hard working American believed the riddle, and a very fine riddle was he
Oh there’s none so rare, your tax dollars can’t compare
With Uncle Sam and his new best friend—AIG

Jack be Nimble
Rich be nimble
CEO’s be quick
Accredited Investors
Jumped over the regulators stick

This Little Piggy
Rich little piggy went to the market
Working little piggy stayed home
Investing piggy stared in disbelief
Because now he had none
And all the little piggy’s went
wee wee wee to their foreclosed homes

Three Blind Mice
Billions played nice
A few rolled the dice
Now they run and count their sum
They pushed bad sales  and gave bad advice
Did you ever see such a thing in your life
When so few ruined it for all those playing nice?

Why is your paycheck more than usual?  Because the economy stinks and the Democrats are in control!  That was intended to be a joke, but it’s actually true.  You may have noticed that your paycheck is slightly higher than it has been in the past, mine was $31 more.  This is a result of the second stimulus bill passed by Congress.  There is a section titled, “Making Work Pay Credit,” which essentially does what the first stimulus did, which is giving us some of our money back!  The major difference is, this time around, the money is coming to us piecemeal through our paychecks by reducing our taxable federal income taxes.

You’ll notice that your federal income tax withheld has been reduced by the same amount as your paycheck increased.  This is all a good thing, because the credit is a credit, we will not have to pay taxes on the extra amount we receive each check.  Most of everyone will receive the credit; our President has said that 95% of the population will receive tax help.

How Much is the Credit?
To quote the legislation,

“there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the lesser of—(1) 6.2 percent of earned income of the taxpayer, or (2) $400 ($800 in the case of a joint return).”

Simply put, this means that you will receive whichever is the lesser amount of 6.2 percent of your earned income or a max of $400 for single filers or $800 for a married couples, over the year.  Although most don’t realize it, this credit is more than the first stimulus passed last year when we received checks for $600.

How Long Will The Credit Last?
We will receive the credit in 2009 and 2010.

Why Was My Credit Less/More Than My Coworkers?
We had this discussion at work when we looked at our first paycheck with the credit.  I looked online and couldn’t find anything explaining it, so again, I went to the source—the stimulus bill itself.  I’ll quote the bill,

“(1) IN GENERAL.—The amount allowable as a credit under subsection (a) (determined without regard to this paragraph and subsection (c)) for the taxable year shall be reduced (but not below zero) by 2 percent of so much of the taxpayer’s modified adjusted gross income as exceeds $75,000 ($150,000 in the case of a joint return).”

In English, this means if you make over $75,000/single filers or $150,000/married filers, then your credit begins to phase out by 2 percent.

What Should You Do With The Credit?
Save it.  Unless you are experiencing economic trouble, which many of us unfortunately are, then you should increase your saving contributions by the same amount as the credit.  Why not, you’re living fine without the added few dollars anyways? In general, the amount is small enough where paying off debts is probably laughable and saving in this financial atmosphere is a must.

For the Select Few Who are Interested, Here is the Tax Credit Language Directly from the Bill:

Subtitle A—Tax Relief for Individuals and
Families
PART I—GENERAL TAX RELIEF
SEC. 1001. MAKING WORK PAY CREDIT.

(a) IN GENERAL.—Subpart C of part IV of subchapter A of
chapter 1 is amended by inserting after section 36 the following
new section:

‘‘SEC. 36A. MAKING WORK PAY CREDIT.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eligible individual,
there shall be allowed as a credit against the tax imposed
by this subtitle for the taxable year an amount equal to the lesser
of—

‘‘(1) 6.2 percent of earned income of the taxpayer, or
‘‘(2) $400 ($800 in the case of a joint return).
‘‘(b) LIMITATION BASED ON MODIFIED ADJUSTED GROSS
INCOME.—

‘‘(1) IN GENERAL.—The amount allowable as a credit under
subsection (a) (determined without regard to this paragraph
and subsection (c)) for the taxable year shall be reduced (but
not below zero) by 2 percent of so much of the taxpayer’s
modified adjusted gross income as exceeds $75,000 ($150,000
in the case of a joint return).

‘‘(2) MODIFIED ADJUSTED GROSS INCOME.—For purposes of
subparagraph (A), the term ‘modified adjusted gross income’
means the adjusted gross income of the taxpayer for the taxable
year increased by any amount excluded from gross income
under section 911, 931, or 933.

‘‘(c) REDUCTION FOR CERTAIN OTHER PAYMENTS.—The credit
allowed under subsection (a) for any taxable year shall be reduced
by the amount of any payments received by the taxpayer during
such taxable year under section 2201, and any credit allowed to
the taxpayer under section 2202, of the American Recovery and
Reinvestment Tax Act of 2009.

‘‘(d) DEFINITIONS AND SPECIAL RULES.—For purposes of this
section—

‘‘(1) ELIGIBLE INDIVIDUAL.—

‘‘(A) IN GENERAL.—The term ‘eligible individual’ means
any individual other than—
‘‘(i) any nonresident alien individual,
‘‘(ii) any individual with respect to whom a deduction
under section 151 is allowable to another taxpayer
for a taxable year beginning in the calendar year in
which the individual’s taxable year begins, and
‘‘(iii) an estate or trust.

‘‘(B) IDENTIFICATION NUMBER REQUIREMENT.—Such
term shall not include any individual who does not include
on the return of tax for the taxable year—
‘‘(i) such individual’s social security account
number, and
‘‘(ii) in the case of a joint return, the social security
account number of one of the taxpayers on such return.
For purposes of the preceding sentence, the social security
account number shall not include a TIN issued by the
Internal Revenue Service.

‘‘(2) EARNED INCOME.—The term ‘earned income’ has the
meaning given such term by section 32(c)(2), except that such
term shall not include net earnings from self-employment which
are not taken into account in computing taxable income. For
purposes of the preceding sentence, any amount excluded from
gross income by reason of section 112 shall be treated as
earned income which is taken into account in computing taxable
income for the taxable year.
‘‘(e) TERMINATION.—This section shall not apply to taxable years
beginning after December 31, 2010.’’.
(b) TREATMENT OF POSSESSIONS.—
(1) PAYMENTS TO POSSESSIONS.—
(A) MIRROR CODE POSSESSION.—The Secretary of the
Treasury shall pay to each possession of the United States
with a mirror code tax system amounts equal to the loss
to that possession by reason of the amendments made
by this section with respect to taxable years beginning
in 2009 and 2010. Such amounts shall be determined by
the Secretary of the Treasury based on information provided
by the government of the respective possession.
(B) OTHER POSSESSIONS.—The Secretary of the
Treasury shall pay to each possession of the United States
which does not have a mirror code tax system amounts
estimated by the Secretary of the Treasury as being equal
to the aggregate benefits that would have been provided
to residents of such possession by reason of the amendments
made by this section for taxable years beginning
in 2009 and 2010 if a mirror code tax system had been
in effect in such possession. The preceding sentence shall
not apply with respect to any possession of the United
States unless such possession has a plan, which has been
approved by the Secretary of the Treasury, under which
such possession will promptly distribute such payments
to the residents of such possession.

(2) COORDINATION WITH CREDIT ALLOWED AGAINST UNITED
STATES INCOME TAXES.—No credit shall be allowed against
United States income taxes for any taxable year under section
36A of the Internal Revenue Code of 1986 (as added by this
section) to any person—
(A) to whom a credit is allowed against taxes imposed
by the possession by reason of the amendments made by
this section for such taxable year, or
(B) who is eligible for a payment under a plan described
in paragraph (1)(B) with respect to such taxable year.
(3) DEFINITIONS AND SPECIAL RULES.—
(A) POSSESSION OF THE UNITED STATES.—For purposes
of this subsection, the term ‘‘possession of the United
States’’ includes the Commonwealth of Puerto Rico and
the Commonwealth of the Northern Mariana Islands.
(B) MIRROR CODE TAX SYSTEM.—For purposes of this
subsection, the term ‘‘mirror code tax system’’ means, with
respect to any possession of the United States, the income
tax system of such possession if the income tax liability
of the residents of such possession under such system is
determined by reference to the income tax laws of the
United States as if such possession were the United States.
(C) TREATMENT OF PAYMENTS.—For purposes of section
1324(b)(2) of title 31, United States Code, the payments
under this subsection shall be treated in the same manner
as a refund due from the credit allowed under section
36A of the Internal Revenue Code of 1986 (as added by
this section).

(c) REFUNDS DISREGARDED IN THE ADMINISTRATION OF FEDERAL
PROGRAMS AND FEDERALLY ASSISTED PROGRAMS.—Any credit or
refund allowed or made to any individual by reason of section
36A of the Internal Revenue Code of 1986 (as added by this section)
or by reason of subsection (b) of this section shall not be taken
into account as income and shall not be taken into account as
resources for the month of receipt and the following 2 months

What’s in the 407 page stimulus bill that will actually affect the normal taxpaying citizen?  Because of the enormity of the bill and the various sectors it reaches, whether you realize it or not, this bill will affect you in many ways.  As for as actual provisions that put immediate money in your pockets, there isn’t a whole lot.  However, there are a few sections of the bill you should know about like the tax credit that will make your paychecks bigger, retiree tax checks, and tax breaks for new automobile owners.  Below are what we feel are a the most relevant sections of the new stimulus bill that matter to you.

Provisions of the “American Recovery and Reinvestment Act of 2009” that Might Put Money into YOUR Pocket:

Tax Cuts (Make Work Pay Credit). Do you remember Joe the Plumber?  That debate was ultimately about tax cuts, and tax cuts that the majority (95%) of Americans are supposed to see in the coming months.  Depending on your income, single workers will receive about $400 and couples about $800 of tax relief in 2009.  You won’t receive a check like the first stimulus, rather you will see your paychecks increase slightly, probably about $12-14 per week.  You may think this is nothing, but I like that it wasn’t given in one big sum like the last stimulus, which usually gets us to blow it.

What are the details?
The credit begins phasing out once your income exceeds $75,000 ($100,000 if married) and disappears once your income exceeds $100,000 ($200,000 if married).

Energy Efficient Appliance Tax Credits. This provision made changes to existing credits and in many instances increased the credits and extended them.  To get specific details on this credit, please check out this link.

What were the main changes?

• The tax credits that were previously effective for 2009, have been extended to 2010 as well.
• The tax credit has been raised from 10% to 30%.
• The tax credits that were for a specific dollar amount (ex $300 for a CAC), have been converted to 30% of the cost.
• The maximum credit has been raised from $500 to $1500 for the two years (2009–2010). However, some improvements such as geothermal heat pumps, solar water heaters, and solar panels are not subject to the $1,500 maximum.
• The $200 cap on windows has been removed.

First Time Home Buyer Credit. I went over this in a previous post and it’s a provision you should not ignore if you plan on buying a home this summer.  The credit is equal to 10% of the purchase price of the home; of course, it cannot be for over the maximum credit of $8,000 and this a credit not a deduction, which means free money!

How Do I Claim the First Time Home Buyer Tax Credit?
You will receive the credit when you file either your 2008 or 2009 individual tax return.  If you qualify, you will have to fill out Form 5405, which will help them determine the amount you can expect to receive.  In case you already filed your return and you qualify for the credit, don’t worry, you can amend your return and still get the credit.

Who Qualifies for the First Time Home Buyer Tax Credit?
First time homeowners who purchased their house between January 1,2009 and December 1, 2009 are eligible for the credit.  But don’t let the title of the credit fool you.  If you have not owned a home for three years, you also qualify for the credit.  It should have been called the First Time Home Buyer and Three Years Removed From Homeownership Tax Credit.

What are the Income Limits ?
Single taxpayers with incomes up to $75,000 and couples filing together with an income of up to $150,000 can expect to receive the full credit.

Tax Deduction for New Car Purchases. Despite rumors from previous versions of the bill, you cannot deduct interest paid on a new car loans, similar to home mortgages.  However, the bill does allow us to deduct sales tax paid on a new vehicle.  Everyone knows how I feel about buying new cars, but if you really feel you need a new one, I guess this is an incentive.

When do I have to buy a car by?
Any new car, light truck, recreational vehicle, or motorcycles purchased between February 17th and December 31, 2009.

What are the income restrictions?
Income restrictions are in play.  Individuals with a modified adjusted gross income of less than $125,000 or joint-filers making less than $250,000 a year in 2009 qualify.

What if the car I purchased is not a new model, but has never had an owner?
It doesn’t matter what year the vehicle is, you just have to be the first owner, thus the car is basically new.

Seniors on Social Security Receive Checks. Starting in May (or no later than 120-days after the bill was signed), the Social Security Administration will begin to send checks for $250 to recipients of social security.  The money should be sent in the same way you already receive your benefits.

Are there income restriction limits?
No.

Education Tax Credit. If you are a parent of a dependent college student or even independent college students, then you can claim a credit of up to $2,500/year to help with the cost of school.  You have to of paid the cost after January 1, 2009.

Food Stamps. Families who are eligible for food stamps will receive an estimated $79 of additional worth of stamps a month.  $

Congress has been blamed for pushing homeownership so much so that in part, they helped our subprime crisis evolve.  After all, it’s easy for them to turn a regulatory eye when their constituents are happy and in nice homes.  Having said that, in a desperate move to try to get people to buy homes again (this time to rejuvenate the crippled market) they have made law in the recently passed stimulus package an $8,000 tax credit for first time homeowners.

Again, this is a credit not a deduction, which means it is a free $8,000 (if you qualify for the full amount) in your pocket and not a write off on your taxable earnings for the year.  Honestly, I’m amazed at this credit and I hope many of you can take advantage of it.  Originally, the amount was $7,500 and had to be repaid, which raised many questions if the money should even be accepted by new homeowners. Well, that’s in the past and the future is green (for some of you).

How Do I Claim the First Time Home Buyer Tax Credit?
You will receive the credit when you file either your 2008 or 2009 individual tax return.  If you qualify, you will have to fill out Form 5405, which will help them determine the amount you can expect to receive.  In case you already filed your return and you qualify for the credit, don’t worry, you can amend your return and still get the credit.

Who Qualifies for the First Time Home Buyer Tax Credit?
First time homebuyers who purchased their house between January 1,2009 and December 1, 2009 are eligible for the credit.  But don’t let the title of the credit fool you.  If you have not owned a home for three years, you also qualify for the credit.  It should have been called the First Time Home Buyer and Three Years Removed From Homeownership Tax Credit.

What are the Income Limits ?
Single taxpayers with incomes up to $75,000 and couples filing together with an income of up to $150,000 can expect to receive the full credit.

How Much of the Credit Will I Receive?
The credit is equal to 10% of the purchase price of the home; of course, it cannot be for over the maximum credit of $8,000.

So, if any of you know anyone who might be able to qualify for this credit, let them know!  This is one of the few provisions of the second stimulus package that directly puts money into taxpayer’s pockets. $

Sure, we read about the economy every single day.  About business crumbling, prices rising and money literally just getting printed in order to pay things away.  Our government is pulling out all the stops in attempts to redeem a shred of what was lost but the only thing that is going to help is time.  

They say time heals all wounds, and we have a pretty big one.  Coming up next week we will be publishing a review on the book “Dear Mr. Buffett” by Janet Tavakoli and before I get into what we can learn from her and Monsieur Buffett, what about what the economy really means for the average person…A while back when a good friend of mine was listening to me recap what was going on all over the world, he patiently waited until I was finished and asked “Yea, but what does that really mean to me?  Should I be doing something?”  At the time I reacted impulsevily saygin “Of course there is!” but now I think back and it gives me pause…

How does it all really affect us?  For those of us that work off commission types of incomes, this obviously has a great effect, but if we don’t, what should we be doing?  It boils down to the unemployment rate.  

Right now is probably the worst time to lose your job due to the fact that this country is slowly marching towards unemployment rates not seen since the early 80’s where it was about 10.9%.  Thats pretty high.  For every ten people, one is sitting on the street unable to provide for their families.  

What should we be doing?  For one, shore up your work environment.  Be on the spot about your job performance, but not too much…check this list from Chris Kalaboukis at About.com:

1. Don’t Excel.  If you excel at your job, you’ll get noticed. Your co-workers will notice that you are doing well and start talking to the boss about it. They’ll gang up on you to try and take you down. They’ll look for some evidence which poses you in some negative light, and use it as an excuse to get rid of you. Any excuse works in this climate. So don’t excel. Excellence makes you different, and “difference” is a negative. Don’t be different.

2. Don’t Do Poorly.  Don’t let yourself slack off in any way either. They will use any excuse in a change in your job habits in order to red circle your position. Don’t give them any kind of excuse. However, make sure that you also always follow rule one: don’t do any more or less that what is expected of you, if you do you’ll stick out, and that’s the last thing you need right now. Keep on steaming at that exact same clip; don’t vary your speed in any way.

3. Don’t Complain.  This is a sure job buster. Management is strung tight: stress is at an all time high. Money is barely trickling in, if at all. Now is not the time to complain. Bottle it all up, and never say a SINGLE word to anyone at work, or anyone who knows anyone at work, no matter how unfair or wrong things are. Management doesn’t want to hear problems OR solutions. They’d like to hear NOTHING. Nothing is king. Silence is queen. They do like to hear keys busily tapping though.

WARNING: Don’t be fooled by an “open door policy” or your boss asking you “How Are Things?” or “What’s wrong”. Always respond to the former with “Fantastic” and never, never respond to the latter with anything other than “Nothing! Everything’s just great”. In fact, don’t ever give him the reason to say “What’s wrong”: see point 7

4. Use the mantra “I’m just happy to have a job.”  Every day, when you get up, in the shower, while you’re shaving, on your way to work, just repeat, again and again. “I’m just happy to have a job, I’m just happy to be working”. When your boss cuts your salary, just say “That’s OK, I’m just happy to be working”. When your boss gives that hot sales lead to another sales rep, just say to yourself “It’s OK, because I still have a job”. When your boss ask you to work the weekend, just say “No problem”, and think to yourself. “I’m just happy to have a job.” When your boss goes to Hawaii but you have to stay behind and work, remember the mantra.

5. Take a salary cut gracefully when offered.  If your boss cuts your salary in order to keep the company afloat (or for his new minivan purchase) just smile and say “I know that its all for the good of the company, that’s fine, we’ll just get by with less”. Even better, offer to take a salary cut, if you know that the company is in trouble.

6. Get politically neutral.  Always good advice, but even more so now. If you ally yourself with the wrong crowd, you could be in trouble. If you ally yourself too closely with your boss, you could be in trouble if he goes. Be very aware of what’s going on, but don’t ally yourself with anyone. Remember your mission here is to keep your job at all costs. Look out for number one.

7. Wear a Mask.  Every morning, before you go to work, put on your “work mask”. Here are some key things to remember about your work mask. Keep a SMILE on that mask! It is never unhappy. At worst it’s neutral, but never for long. Never, ever let down your work mask while you are at work, or while you are in the company of anyone from work, or anyone who knows anyone at work. Smile, be happy, and never give anyone a reason to say “What’s Wrong”. That, my friend, is the beginning of the end. You may as well get your resume out.

8. Work longer hours.  You may think that this point conflicts with point 1, but its how you do it, not what you do. Make sure that you actually spend more time working, but not do more work. This may sound confusing but it’s actually quite simple. Your boss doesn’t usually care how much you produce, but they do care when you come in and when you leave (sometimes, they are simple creatures). Always, always come in before the boss and leave after. If you do leave before the boss, make sure that you send email to “the team” but copying your boss at 1am (or even better) 2:00 a.m. in the morning, so that he gets the impression that you are hard at work, even at 2:00 a.m. Even though you’re really only working hard at keeping your job, 2:00 a.m. emails are still pretty damn impressive to the boss.

9. Sacrifice everything for your job.  Now is the time to stay at work long hours, keep your head down and shut up. Don’t miss your wife, don’t miss your kids. Don’t miss the karate lessons, soccer games and Little League games. What you are doing is way more important than that right now. You are focused on keeping your job. That is all that matters. That is all your boss cares about, and this is tricky, no matter how much he talks like he cares, he really doesn’t. Don’t let your guard down. Not for a second.

10. Be a work-bot.  When you work for someone else, you are not yourself. You are a robot. A cog in a machine. Sure, some of us are bigger or smaller cogs, in bigger or smaller machines, but we are all cogs. Do your absolute best to be the best cog that you can be. A cog that doesn’t fit always gets replaced.

Does anyone have anything to add to this?  Or aggree or disagree?

The Money Life Network has organized another group project entitled “Jumpstart YOUR Economy: Tips for Starting The New Year Off Right,” and we have to say, that we are excited to write about it.  As of late, there has been enormous amount of activity in Washington DC regarding the economy, almost too much.  I can think of about 3 articles right off the top of my head that I want to write simply on the current events and the incredibly dark days ahead, but unfortunately, I also have a full time job in this field and time has been somewhat, shall we say….limited?

So we are going to try and convey a simple and important message that should compliment our compatriots’ articles (which you can find further down in this article).  This is an issue that many people talk about and never seem to get right…
Its a common misconception that the economy initially dried up due to an actual lack of currency or money.  In retrospect it might seem that way, but it actually started due to a lack solvency, or for lack of a better term, consumer confidence.  Now that that has taken a deep hold, the secondary mechanisms are starting rear their heads, almost like clock work: recession, job loss and further plummet of the market.  Welcome to 2009.

So what do we do?  Some might say that its a good idea to buy American and stimulate the economy.  I’ll fill you in on a secret: That’s not going to work. Under normal circumstances, maybe a little but to throw money at this problem, especially through the citizens, its just throwing good money after bad.  My last count has us right about 2 trillion dollars.  Sorry, that needs the respect it deserves, $2 Trillion Dollars.  $2,000,000,000,000.00.

Personally, I can’t be a huge advocate of giving money back to the government at this point.  I would rather save it and be exposed as little risk as possible.  I think a majority of funds should not get any further than a money market, with a healthy proportion for picking up bargains on the 10 year low market.  Keep in mind that the market is probably going to turn this year, are you ready?  If you are on the fence about buying a house, do it.  Rates are extreme and there is a saturation of available houses to look at.  Stay away from short sales, the third party investor involved is not going to be nice to you.  Foreclosures are a great deal if you can get one (Frank and his wife got one, as did my fiance and I), just remember this is a buyers market.

Where do you stash your cash?  Money markets have the best rates while still being the safest with respect to risk, but it might pay to check and see if your bank is offering a similar product that you can get into easily.  These may also be called Cash Rserve Funds.

Do you have a broker?  Are your investments conservative and long term?  Why do you have a broker?  Ditch ‘em!  With a fair amount of homework, you will probably know as much as they do in a matter of months.  And you will save a bundle on management fees.

Budgeting is also a must.  Spend some time living simply and get as much cash together that you can.  Set aside what you will need for bills for a month and set the remainder to automatically redirect to a high yielding savings account.  Set this and forget it!  If you are near 30 years old, you need to be putting away at least $1,000 a month to have significant savings when you retire.  Want to travel and relax later in life?  Better start ramping that number up a little more because that $1,000 is only going to cover the bare minimum.  With the economy the way it is, its time to be scared.

What do our other frugal friends have for us?  Take a look and get them in your email daily!

• SenseToSave.com Maximize your money – review your tax exemptions now!
• BibleMoneyMatters.com Doing Your First Budget
• FreeFromBroke.com 9 Reasons You Need An Online High-Yield Savings Account
• PTMoney.com 52 Ways to Make Extra Money
• MyInvestingBlog.com Tips to Finding a Fit Financial Helper
• Remodelingthislife.com Prepare For a Year of Holidays

Not to leave on a sour note, one positive advantage to all of this is that there can be some great bargains to be had.  Just do the proper information gathering and due diligence.  If you ever have a question, you know where to reach us.  :) $

If you didn’t receive your full rebate check a few months back, you may still be eligible to apply for the remainder of your stimulus if you made less in 2008 then in 2007.  The original stimulus checks were rushed out with the hopes of a magical boost to our ailing economy.  Because they were rushed out, the IRS used our 2007 return as a basis to determine the amount to send to each taxpayer.  However, the stimulus checks are actually tax credits for 2008, meaning you were  prepaid your credit.  So, you may be eligible to claim the remainder of your check if your income is under the following requirements.

Single filers received a $600 rebate and married couples received $1200 rebate plus an additional $300 per dependent younger than 17.  You received these amounts if you your gross income for 2007 income was less than $75,000/single filers or $150,000/married filers.  If you earned more than this, then your rebate check was reduced $50 for every $1,000 above the limits.  The rebate phased out completely at $87,000 for single filers without dependents and $174,000 for married filers without dependents.

You may need to read this twice, but stay with me, were getting to the punch line.  If you earned more than the maximums mentioned above in 2007 and didn’t receive your full rebate, but earned less then the minimums in 2008, then you are eligible to file for the rest of your stimulus check with your 2008 taxes.  Why?  Because it was actually a prepayment credit on your 2008 taxes using your 2007 income figures.  Also, if you had kids in 2008, congratulations, because you can still claim your $300 credit to buy some diapers.  Lastly, if you didn’t qualify for the rebate because you were claimed as a dependent in 2007 but not in 2008 you can file to get your full rebate–young filers take note.

If you qualify for the remainder of your stimulus, it will be added to your 2008 Federal refund.  You can figure out the credit when you file form 1040 for 2008.  Or if you using a tax software, it should ask you questions leading to your additional payment.

Let us recap:

• If you didn’t receive a full stimulus and made less in 2007 then in 2008 you may be eligible for the remainder of your stimulus.

• If you had kids in 2008 you can get the $300 dependent stimulus with your 2008 return.

• If you didn’t get a rebate because you were claimed as a dependent in 2007, but are filing on your own in 2008, you can receive your stimulus with your 2008 return. $

The fate of the upcoming stimulus bill is still up in the air with Senate Republican’s being the major roadblock.  This is exactly why our democratic process is so genius.  I personally believe we need a stimulus bill to create jobs and improve not only our nation’s physical infrastructure, but our economical infrastructure as well. However, a stimulus bill must be exactly that, a stimulus and if the Republicans can successfully shed light on wasteful spending currently included in the House passed version of the stimulus bill, then everyone wins but special interests.   We cannot afford, nor should taxpayers be expected to fund  $246 million for Hollywood movie producers  or $110 million to the Farm Service Agency to upgrade their computer systems.  If a provision in the stimulus bill does not provide near-term jobs or needed relief to those who need it, it should be stricken from the legislation.

Below is a list of what the Senate Republicans feel should be taken out of the House passed bill; I tend to agree with most of it.  What are your thoughts?

• $2 billion earmark to re-start FutureGen, a near-zero emissions coal power plant in Illinois that the Department of Energy defunded last year because it said the project was inefficient.
• A $246 million tax break for Hollywood movie producers to buy motion picture film.
• $650 million for the digital television converter box coupon program.
• $88 million for the Coast Guard to design a new polar icebreaker (arctic ship).
• $448 million for constructing the Department of Homeland Security headquarters.
• $248 million for furniture at the new Homeland Security headquarters.
• $600 million to buy hybrid vehicles for federal employees.
• $400 million for the Centers for Disease Control to screen and prevent STD’s
• $1.4 billion for rural waste disposal programs.
• $125 million for the Washington sewer system.
• $150 million for Smithsonian museum facilities.
• $1 billion for the 2010 Census, which has a projected cost overrun of $3 billion.
• $75 million for “smoking cessation activities.”
• $200 million for public computer centers at community colleges.
• $75 million for salaries of employees at the FBI.
• $25 million for tribal alcohol and substance abuse reduction.
• $500 million for flood reduction projects on the Mississippi River.
• $10 million to inspect canals in urban areas.
• $6 billion to turn federal buildings into “green” buildings.
• $500 million for state and local fire stations.
• $650 million for wildland fire management on forest service lands.
• $1.2 billion for “youth activities,” including youth summer job programs.
• $88 million for renovating the headquarters of the Public Health Service.
• $412 million for CDC buildings and property.
• $500 million for building and repairing National Institutes of Health facilities in Bethesda, Maryland.
• $160 million for “paid volunteers” at the Corporation for National and Community Service.
• $5.5 million for “energy efficiency initiatives” at the Department of Veterans Affairs National Cemetery Administration.
• $850 million for Amtrak.
• $100 million for reducing the hazard of lead-based paint.
• $75 million to construct a “security training” facility for State Department Security officers when they can be trained at existing facilities of other agencies.
• $110 million to the Farm Service Agency to upgrade computer systems.
• $200 million in funding for the lease of alternative energy vehicles for use on military installations. $

[Although, I have to say that, Obama's wealth "redistribution" plan bothers me, I feel more comfrtable with McCain's wealth "creation" plan.  McCain would also like to keep the tax cuts we have in place, where Obama would have them removed, or allow them to expire.  Granted paying less taxes right now might be a little selfish or un-patriotic, and not to the greater good of the country with its debt mounting, but hey, I am allowed to be somewhat self centered with the money I earn right?  Again, the lower income families may pay less in taxes but all will certainly pay more in capital gains.  You have to be somewhat honest with yourself and see that both candidates are "Pinnochio-ish" in that they are in such a battle they will say promise whatever they can and not be able to deliver when its crunch time.  But then again, hasn't that always been the case?  No president is a financial genius, they just pick them.  Frank is probably on the right track to check their cards and see who they are holding to speculate who might be going in, although its anyones guess as to what THEY will do.  Media doesn't talk about that much though....interesting.  -Ben]

Sen. John McCain’s life is inspiring and the way he continues to beat the odds shows great character.  But ino times of such financial crisis, I believe Obama is the better choice.  Senator McCain has said himself that economics is not his strong suit and his remark about our economy being fundamentally strong right before a recession-like downward spiral is evidence of this.  McCain also showed his lack of financial knowledge when he originally said the U.S. government should not bailout AIG, then changing his mind after the government eventually bailed them out.  AIG’s involvement in our economy is enormous, the rise of derivatives products like credit default swaps (unregulated market that has grown to over 60 trillion dollars, more than twice the size of our traded markets) makes their survival mandatory—a notion McCain didn’t understand completely, but did not hesitate to take a uneducated stand on.

McCain said in March, “I’m always in favor of deregulation,” a comment that is scary considering the mortgage crisis grew out of less regulation and minimal oversight—some of which stemmed from legislation McCain was in favor of in the 90’s.  McCain also is in favor of putting some social security funds into personal savings accounts.  The idea being individual investors could get higher rates of return by investing their own money into the markets, rather than pay into social security.  This idea is very tempting, but is filled with problems.  Social security funds have one major upside and that is it is sheltered from the downsides of the markets.  In other words, your social security money is not down 30% this year.  Social security is far from being perfect, but personal accounts are not the answer I believe consumers need.

Sen. Obama is far from being the next Warren Buffet, but has demonstrated a strong knowledge in financials.  I’m very enticed into selecting Obama because of his future choice for the Treasury Secretary.  Obama’s replacement would find themselves taking over the largest rescue plan in our nations history in the early and crucial stages, not to mention would also be instrumental in shaping a new financial regulatory system.  An Obama Treasury Secretary would be one with oversight as a prime principle and would bring new ideas to a failing system of regulation.

The Democrats are expecting gains in both the House and the Senate; this is another reason for an Obama endorsement.  As you know, for anything to pass in the Senate, 60 votes are needed.  If the Democrats can reach this veto-proof majority, change is likely to happen.  A republican president would likely hold a veto pen to any major financial reform that our country desperately needs.  The basic philosophy that the market can police itself is largely true, but we have learned is not enough.

I don’t agree with all of Obama’s specific proposals and other non-financial issues.  I am a little afraid of his thin resume.  But overall I am impressed by his ability to calmly assess situations and make calculated decisions—a characteristic which separates the two candidates.  While there is no perfect candidate, I feel financially, the everyday consumer would benefit more from an Obama presidency.

I welcome any of your comments on the elections and hope all of you make it to the polls on Tuesday.  $

Unless you have been a miracle investor, your portfolio has taken a hit that nobody would of believed possible only a couple years ago.  No longer do employees rely on traditional defined-benefit pension plans where a set income stream is usually promised throughout retirement.  Now, employees are faced with taking their retirement into their own hands with 401ks, which have lost trillions of dollars since the beginning of the year.  Because of this increased reliance on personal retirement accounts, it’s imperative our markets are corrected soon.

This weekend, financial leaders from across the world met to try to formulate a plan to move forward in a globally coordinated way.  Not only are the U.S. markets taking dramatic hits, but because of the globalized way our markets operate, countries everywhere are feeling the U.S. credit squeeze.  Weekend talks seemed to have ended with an understanding of principles moving forward.  I’m afraid this is a lackluster effort in dealing with such a monumental crisis.  We need our countries to formulate an actual plan to tame our markets and have it incorporated world wide.  Principles are great for press releases, but as we have seen in our mortgage markets, principles alone are only as good as the actor.

I’m afraid our markets aren’t done falling.  The confusing world of derivatives, especially credit default swaps (CDS), will probably continue to drag us down because of the enormous size of the market they represent and the uncertainty of their values (roughly, the CDS market alone is more than a 60 trillion dollar market, with little to no regulation and is greater than two times the size of our stock market.)  Although these issues are probably best described in a separate post, I think it’s important to understand that there are still many issues that need to be resolved before investors will be comfortable buying again.

I will continue to purchase securities when big negative swings occur and I won’t sell anything I currently own, however, I’m concerned like you, that the worst may not be behind us.  The good news is, it’s a three-day weekend for some and there is plenty of football and MLB playoffs to watch.  $

To have front row seats in Washington, watching legislators like we have, and red numbers flying all over the place has really set a somber tone.  Not only in our office, or at MYM, but across the country.  Maybe somber is the wrong word…more like horror.  The only word I can think of that best describes our current situation is: unprecedented.  While it may be a Chinese curse but when they said “May you live during interesting times…“  Yikes.

The good news is that a very great number of us are in a position to be positive, move forward and even gain from this.  The FDIC has increased its insurance limits, the bailout, excuse me, the “Rescue Plan,” has been passed and the market is generating a very unique buying opportunity.  Lets take a look at what some of the finance authors from around the web have to say…

• MiB Smarter Money: Debunking The 25 Most Outrageous Money Myths
  
• Bible Money Matters: Is Your 401(k) Losing Moeny? DON’T PANIC!!!
  
• Prime Time Money:  Proof that Going “Cash Only” Works
  
• Free From Broke:  Best Financial Advice You’ve Received
  
• Sense to Save:  More ‘Middle Class’ Folks Shopping At Thrift Stores
  
• Remodeling This Life:  Financial Advice for Your Twenties
  

Have you ever started your own topic on a discussion board?  Give it a shot!