When the money starts looking tight, you can always start pushing out the “full retirement age.”

Full Retirement Age

Your full retirement age depends on the year you were born. If you were born in 1937 or earlier, your full retirement age is 65. As the years pass, the full retirement age goes up. If you were born between 1943 and 1954, the full retirement age is 66. 1960 and later? Full retirement age is 67. The full retirement age is the age at which you will receive 100% of your eligible benefits if you start taking Social Security then. You can take Social Security payments as early as 62 but the benefits are significantly reduced.

If your full retirement age is 67 then this is how much of your full retirement age benefit you would receive monthly:

• At 62 – You’d receive around 70% of full benefits
• At 63 – 75% of full benefits
• At 64 – 80%
• At 65 – 86.7%
• At 66 – 93.3%

If you don’t need the benefits and want to delay it beyond full retirement age, you can get an increase up to the age of 70 (after 70, you can still delay but you receive no increased benefit). If you were born 1943 or later and delayed it for one year, you’d get 8% more (or 2/3rds of 1% on the monthly benefit).

If you can wait, it’s often best to wait until full retirement so you don’t give up your benefits. If you are married, one of you can start taking benefits early while the other waits until full retirement. There are probably plenty of articles out there explaining “Social Security strategy” but they all start with full retirement age.

Hopefully this is something I can worry about in thirty-plus years.

Social Security Full Retirement Age from personal finance blog Bargaineering.com.

As you listen to monetary policymakers talk about inflation, and as you read about changes to the CPI, it helps to have a general idea about what is going on. That way, you will be prepared to make more informed decisions about what to do with your money.

The Basics: What is Inflation?

At its most basic, there isn’t really a big secret to inflation. Basically, inflation is a reduction in your spending power. As prices rise, your money buys less than it used to. Of course, the theory is that wages go up as prices rise, too, so you are still supposed to be able to preserve your earning power. Unfortunately, that theory doesn’t always hold true. Some economists point out that wage stagnation over the last couple of decades has contributed to a situation in which prices keep getting higher — but household incomes aren’t able to keep up.

One of the terms that some employ to describe the disconnect between inflation and economic growth is stagflation. One economic theory (and there are quite a few, many of them debatable) is that prices rise in response to economic growth. However, if prices are rising and the economy is growing at a snail’s pace, many call that stagflation. Some are convinced that we are headed right toward some serious stagflation, since the economy isn’t growing very much while energy costs rise and food inflation affects more household budgets.

Measuring Inflation: CPI and Core Inflation

So, how do we measure consumer inflation? We know that inflation is a rise in prices, but how do we tell the rate at which prices are rising? The government uses various measures to determine this, but two terms you are likely to have heard are CPI and core inflation.

CPI: This stands for the Consumer Price Index. It is a basket of prices for a wide variety of goods and services. Every month, tens of thousands of prices on products and services are compiled and averaged into the index. These items are categorized with different labels, including transportation, food, energy, medical, education and more. The CPI is generally used as a gauge of how quickly prices are rising.

Core Inflation: The government, in order to get a more “accurate” view of “overall” trends, breaks out more volatile elements of CPI: food and gas prices. This means that when the government makes monetary policy based on inflation rates, it doesn’t include food prices and fuel prices. Some argue that this means that monetary policy is being made based on a measure that doesn’t include some of the items that have the greatest direct impact on households.

Why You Should Care

Obviously, you should care because it’s your purchasing power being eroded by inflation. Your hard-earned dollar won’t buy as much in 10 years as it bought 5 years ago. You are probably already noticing this as packages get smaller and as prices rise. Some, instead of telling you to base your financial planning on government measures of inflation, advocate looking at your personal inflation rate.

You can do this by adding up what you spend on certain items each month, and then track trends in your own household spending. You can then adjust your personal economy’s monetary policy based on what you find.

What do you think of inflation measures? And how do you plan to beat inflation so that it doesn’t erode your purchasing power?

What is Inflation? And Why Should You Care? from personal finance blog Bargaineering.com.

The budget cuts are to cut spending by $40 billion (the fiscal year ends in September 30th) and it is the largest biggest cut made in a single year, made even more stunning by how little time we have left in the year (less than six months until October 1st). Part of the $40 billion is covered by $12 billion in reductions that started at the beginning of the fiscal year, Oct. 1, 2010; but the remaining $28 billion starts now(ish).

If you’re curious to see them all, CNN Money compiled a list and has offered some commentary here.

It seems like there’s a lot of penny pinching here or there but not much attention paid to the biggest pieces of our spending. Case in point: The Pentagon would receive $5 billion to be partially offset by $4.2 billion in eliminated military earmarks, with the difference made up elsewhere. I’m all for making sure we’re supporting our troops but there can be some belt tightening in the development efforts (rather than support/operations). When you look at a family budget, you don’t save much when you ask the kids to take an allowance cut.

What do you think about all this?

2011 Budget Cuts Compromise Revealed from personal finance blog Bargaineering.com.

Today, you’re in charge of the nation’s finances. Some of your options have more short-term savings and some have more long-term savings. When you have closed the budget gaps for both 2015 and 2030, you are done. Make your own plan, then share it online.

You get a list of programs with estimated savings to the deficit (out to 2015 and 2030), and you’re charged with saving $418 billion by 2015 and $1,355 billion by 2030. The sources of those estimates come from a litany of organizations, many of which you’ve probably seen referred to in other articles, and I’m inclined to take their savings estimates at face value. By playing this game, you start to appreciate how difficult it is to cut the deficit (despite out easy it is to put “fiscal responsibility” on political “to do” list) especially after the reaction to the draft Bowles-Simpson Plan.

You Fix The Budget from personal finance blog Bargaineering.com.

How is QE accomplished?

(in case you were curious) The central bank essentially credits its own account with new money and uses that money to buy assets from banks, thus increasing the reserves at those banks. Those banks can then lend that money out at a multiple based on the reserve ratio. If the ratio is 10%, then they can lend out 90% of the amount of the added reserves. Reserve ratios are the percentage of an asset they must keep as reserves (so if you have $100 and the ratio is 10%, you can lend out $90). The next bank can lend out $81, keeping $9, and so on and so forth.

Why do they use QE?

As you may be aware, the current federal funds rate is remarkably low – target is 0 – 0.25%. If additional stimulation is needed, they can’t exactly lower the federal funds rate to under 0%, then banks would be paid to borrow money from the Fed (and they would borrow an infinite amount!).

Quantitative easing is just another monetary policy tool they can use to inject money into the money supply to spur lending and boost the economy.

What are the risks of QE?

The biggest risk is hyperinflation, as it’s happened in a variety of places. Whenever you print more money, you devalue existing money since the underlying characteristics of the economy have not changed. Simplistically, if your economy is worth $1000 and you have 1,000 bills, each one is “worth” $1. If you print 1,000 more bills, each one is really worth just $0.50. In enormous economies worth trillions of dollars, the degree to which you print more money has the effect of nudging the economy in certain directions. The risk is that a nudge becomes a push or even a shove… down a hill. (Think: 1920s Germany following World War 1 and Zimbabwe in the early 2000s)

There you have it, quantitative easing in a nutshell.

What is Quantitative Easing? from personal finance blog Bargaineering.com.

With Labor Day upon us, I did a little bit of research into the origins and thought it’d be fun to know the history of the holiday. Labor Day was first celebrated in 1882 and when you think about its origins, it’s actually a pretty ugly story. In 1894, there was the Pullman Strike in which a labor dispute (3000 employees of the Pullman Palace Car Company went on strike and President Grover Cleveland sent US Marshalls and the US Army to break the strike) led to the deaths of 13 strikers and the wounding of 57 others. As a way to reconcile, we celebrate Labor Day as a national holiday with parades, barbecues, and other minor celebrations.

So on this Labor Day, get some rest, relaxation, and we’ll be back with more personal finance tomorrow!

Happy Labor Day 2010! from personal finance blog Bargaineering.com.

What is in the House bill? Thought many expect the bill not to pass in the Senate, the House bill exempts the first $3.5 million of a person’s estate and the first $1 million in gifts. Then the highest rate applied to the taxable portion of the estate would be 45%. CNN Money does some morbid math and claims that of the 2.5 million Americans expected to die in 2009, only 0.25% (5,500) have estates large enough to be taxable.

Many experts don’t expect the bill, with its current numbers, to pass in the Senate. In that chamber, there is a bipartisan proposal for a $5 million exemption and a top rate of 35%. Either way, it’s likely that some sort of estate tax law, perhaps a stop-gap measure tax for a year, will be passed. (Remember, for a bill to become law, both House and Senate must pass the bill, it must be reconciled, then signed by the President… so this bill has only made it through step one)

Despite my Democratic leanings, I’ve never liked the idea of an estate tax. The WSJ quotes Democratic Rep. Jared Polis of Colorado: “Estate taxes help prevent a permanent aristocracy from arising in this country.” While that sounds great on the surface, I bet the ridiculously wealthy, the 0.25% this targets, have long adapted to the estate tax. They have top notch lawyers and accountants setting things up so they don’t get caught.

Also, if I’ve earned my money fair and square, paid all my taxes on it the first time around, why take a piece after I die? Since I’ve never done any estate planning, I don’t know much about the loopholes and end arounds I can run on the estate tax (I bet there are plenty), I might be blowing this out of proportion (especially since the exemption is would be for $3.5M) but the idea of it bothers me.

House Extends Estate Tax Permenantly from personal finance blog Bargaineering.com.

Well, it turns out both are going to become a reality as the Senate passed H.R.3548 – Worker, Homeownership, and Business Assistance Act of 2009 two days ago. The House passed their version in late September and just yesterday agreed to the Senate amendment to the bill (this is the “marrying” up part). The bill is on its way to the White House, if it hasn’t been signed already.

Homeownership Credits

The last homeownership stimulus bill created an $8,000 tax credit for first time homebuyers. In addition to adding a $6,500 tax credit, the income limits have been raised to $125,000 for individuals and $225,000 for couples. The current limits are $75,000 and $150,000. Finally, if you sell the home or it is no longer your primary residence within three years of purchase then you must repay the credit.

The homebuyer tax credits:

• $8,000 tax credit: If you are a first time homebuyer, you can get an $8,000 tax credit for purchasing a home. The claim deadline will be extended to April 30th, 2010, from the existing deadline of November 30th.
• $6,500 tax credit: If you already own a home and have lived in it for at least five of the last eight years, you can get a $6,500 tax credit for purchasing a home.

Unemployment Benefits

Unemployment benefits will be extended an extra 14 weeks for individuals who have already exhausted their benefits or will exhaust them before the end of the year. If you live in a state where the unemployment rate is above 8.5%, then you will receive an additional 20 weeks of benefits. According to the Bureau of Labor and Statistics, the following states have unemployment rates above 8.5%:

• MAINE – 8.5%
• IDAHO – 8.8%
• PENNSYLVANIA – 8.8%
• NEW YORK – 8.9%
• WEST VIRGINIA – 8.9%
• ARIZONA – 9.1%
• MISSISSIPPI – 9.2%
• MASSACHUSETTS – 9.3%
• WASHINGTON – 9.3%
• MISSOURI – 9.5%
• INDIANA – 9.6%
• NEW JERSEY – 9.8%
• GEORGIA – 10.1%
• OHIO – 10.1%
• ILLINOIS – 10.5%
• TENNESSEE – 10.5%
• ALABAMA – 10.7%
• NORTH CAROLINA – 10.8%
• KENTUCKY – 10.9%
• FLORIDA – 11.0%
• DISTRICT OF COLUMBIA – 11.4%
• OREGON – 11.5%
• SOUTH CAROLINA – 11.6%
• CALIFORNIA – 12.2%
• RHODE ISLAND – 13.0%
• NEVADA – 13.3%
• MICHIGAN – 15.3%

Business Assistance

If you’re wondering what the business assistance part of the Worker, Homeownership, and Business Assistance Act of 2009 is, even though it probably won’t affect you, you’ll be happy to learn that your local mom and pop store can deduct losses for 2008 and 2009 from profits in the five previous profitable years, increased from the last two years. Actually, any business can do this, not just “small” businesses.

How We’re Paying For This

For the fiscally conservative, you might be wondering how we’re going to pay for this. Extension of the homebuyer’s credit is going to cost around $11 billion and the business assistance will cost around $10.4 billion, according to the New York Times. Congress will pay for that portion of the bill by delaying a tax break for multinational corporations (it involves their worldwide interest expense), which will save around $20.1 billion. As for unemployment, otherwise known as jobless benefits, it will cost $2.4 billion and be paid by extending a $14/worker surcharge on employers into 2011 (which, by the way was created 30 years ago as a temporary measure… funny huh?).

(Photo: brapps)

Homebuyer Credit & Jobless Benefits Extended (H.R.3548) from personal finance blog Bargaineering.com.

The United States Mint is the agency in the United States Government responsible for the production of coins used in the US. It was created in 1792 by the Coinage Age of 1792 and put within the State Department. Later that year, the Mint opened its main branch in Philadelphia, PA and soon expanded to include several facilities across the United States. In 1799, with the Coinage Act of 1873, it was made an independent agency.

Mints & Mint Marks

There have been several Mint facilities in its history, there are only four active coin-producing mints today. The largest of them is the main office of the Mint in Philadelphia, PA. The current Philadelphia facility was opened in 1969. All coins, except the penny, created in Philadelphia after 1980 have a P mint mark, those created before had no mark. The engraving and design departments, as well as master die production for US coins, are located at the Philadelphia Mint.

The Denver Mint began in 1863 as a local assay office as a result of gold discoveries in the area. Assay offices test the purity of precious metals like gold. In 1906, the Mint opened a branch there and produces only circulation coins. Coins minted here bear the D mint mark.

The San Francisco Mint opened in 1854 much like Denver did, as an assay office to support the California gold rush. After numerous openings and closings, as a result of fluctuating coin demand, the Mint is now responsible primarily for proof coinage. Until 1868, the Philadelphia Mint was responsible for proof coinage before it was moved to San Francisco. Coins produced here bear an S mint mark.

The four branch is located in West Point and was granted official status as a branch of the Mint in 1988. It started as the West Point Bullion Depository, which opened in 1937, and produced pennies from 1973 to 1986. It was also responsible for producing many commemorative and proof coins, evidenced by a W mint mark. Today, it still holds gold bullion and is the only production facility for gold, silver, and platinum American Eagle coins.

Fort Knox is a Mint facility but produces no coins. Much like the West Point Bullion Depository, it’s primary function is to store gold and silver bullion reserves for the United States and other nations.

Mint Mark Recap

Here’s a quick recap of the four Mint marks and where the coins were produced. For coins in circulation, you’ll usually see a D or a P or no stamp. With no stamp, the coin is usually from Philadelphia unless it was a penny. In that case, there’s no way to tell whether it’s a Denver produced or Philadelphia produced coin.

• D – Denver Mint
• P – Philadelphia Mint
• S – San Francisco Mint
• W – West Point Mint

I think I’ve been on a trivia kick lately, after reading about the most valuable US coin and compiling a 50 fun facts about money.

(Photo: pagedooley)

The Mints of the United States from personal finance blog Bargaineering.com.

This article will cover the loan guaranty service offered by the United States Department of Veterans Affairs, also known as the VA home Loan program.

VA Loan Program History

The mission of the VA home loan program is to “to help veterans and active duty personnel purchase and retain homes in recognition of their service to the Nation. All veterans and other participants in the program will be treated in a courteous, responsive, and timely manner. We will endeavor to operate in the most efficient manner possible to minimize costs and ensure the best use of the taxpayer’s dollar.”

The program was created to help minimize the economic and socialogical problems of post-war readjustment following World War 2. It was created by the Servicemen’s Readjustment Act of 1944 as a loan guaranty program because it was cheaper than giving cash payments.

The logic behind the insurance program was that soldiers, especially in times of war, aren’t able to establish credit because they’re deployed in combat. The insurance would put them on even footing with their non-veteran citizen, who could build a credit history. If you’re curious about the full history of the VA program, you can read it here (it’s 28 pages long).

How the VA Loan Program Works

The program is a loan guaranty, like traditional private mortgage insurance, and it’s greatest appeal is that qualified individuals can get 100% financing of the sales price as long as they satisfy certain income or credit requirements. There is no limit to the maximum loan amount but lenders generally cap them because they resell the mortgages on the secondary market.

Cost of an VA Loan

The VA does not offer the loan, just the guarantee, so the rates and points can change from lender to lender. There isn’t a mortgage insurance premium each month, like with private mortgage insurance, but the VA charges an up front VA funding fee that can be financed. If you are eligible for a VA home loan, it’s best for you to request a bunch of quotes and compare the costs of each loan to one another.

In general, the decision is based on how much of a down payment you have. If you have less than 20%, a conventional mortgage will require a monthly private mortgage insurance payment that a VA mortgage wouldn’t require. Instead, the VA loan will have a “funding fee” that increases the size of the loan.

The funding fee is a percentage of the loan amount based on this schedule:

• 0% down payment: 2.15% of the loan amount for first time homebuyers
• 5% down payment: 1.50%
• 10% down payment: 1.25%

VA Loan Eligibility Requirements

If you are active duty or honorably discharged, chances are you are eligible. The VA only gives general rules of eligibility and they are:

• Served 181 days during peacetime (Active Duty)
• Served 90 days during war time (Active Duty)
• Served 6 years in the Reserves or National Guard
• You are the spouse of a service member who was killed in the line of duty, missing in action, or a prisoner of war.

Obtaining a Certificate of Eligibility: It is important that you obtain a Certificate of Eligibility for VA home loan benefits. You do this by completing the a VA Form 26-1880 and submitting it to the VA Eligibility Center with proof of service. The Certificate of Eligibility is important and you can also get it through your lender, who will use the ACE (Automated Certificate of Eligibility) system.

The Loan Process

In general, the whole process takes about five steps, outlined in greater detail at VA Home Loan Product page:

1. A veteran picks a home, the purchase and sales agreement will include a VA option clause that lets it be terminated should the veteran not be able to obtain a VA loan.
2. Contact a lender to apply for a loan. This includes all of the processing of eligibility, loan applications, and collection of supporting documents.
3. The lender processes the credit and income information and orders a VA appraisal of the property.
4. Lender collects the remaining information and underwrites (or rejects) the loan.
5. At close, if the loan satisfies VA regulations and guidelines then the transaction closes.

As you can see, the process is very much like a regular home sale process.

If anything on this page is incorrect, please let me know and I will correct it immediately!

(Photo: terren in Virginia)

Veterans Affairs VA Mortgage Loan Requirements Guide from personal finance blog Bargaineering.com.

If you’ve ever rented an apartment, you’ve left a deposit… but did you get that back before you left? They said they’d mail it… but did you actually get it? How about the utility company, did you get your deposit back from them? What about those six months you lived in another state, were you entitled to a state income tax refund? Did you actually get it? Unclaimed or abandoned property departments exist in every state and through free online searches you can find a ton of money you may have inadvertently left behind. I haven’t lived in enough places to have left behind any hard earned cash (I looked, no luck though) but you might have.

Below is a comprehensive list of every state’s (even D.C. and Puerto Rico) website that has a search for unclaimed property. Take a few minutes and see if you’ve discovered any cash and leave a comment if you do! I didn’t find any but perhaps you can find a nice fat check somewhere with your name on it.

Don’t pay for a service that finds unclaimed property, the information they use is publicly and freely available!

(Photo: amagill )

Searching For Your Unclaimed Money & Property from personal finance blog Bargaineering.com.

I think accountability is fundamental and I agree with many that the secrecy of the Fed, protected by the U.S. Code under 31 USC 714 – Sec. 714, is not in keeping with the transparency and openness we should require of our public officials (I understand the Fed technically only quasi-public, but for all intents and purposes it’s public in my mind). I understand it when we need to keep things hidden for purposes of national security but I don’t think this extends to national financial security.

Under normal circumstances, I don’t see it necessary for the Fed to disclose the contents of their FOMC meetings. This creates a problem for the attendees because if they are 100% forthcoming in their meetings, it could come back to haunt them. This might make the “official” meeting a joke and push true discussion behind closed doors.

However, during this economic crisis, the Fed has given trillions of dollars in loan guarantees and hasn’t disclosed what they got in return. This is a problem because it’s those trillions belong to you, me, and our children (and our children’s children!). As the dollar hits historic lows versus other currencies and faces the real threat of losing reserve status, the money we’ve earned is worth less and less because of these actions.

I don’t want to increase the bureaucracy in Washington but I think transparency, in this particular case, is crucial.

The Senate version of this bill is S. 604, cheerily named the Federal Reserve Sunshine Act of 2009, has 30 sponsors and was last referred to the Committee on Banking, Housing, and Urban Affairs back in March (this means it’s most likely dead in that form).

What do you think about this bill? Should the Fed be more transparent (at least to Congress)? Or are we wasting time and scrutinizing too much?

(Photo: epicharmus)

Federal Reserve Transparency Act of 2009 (HR 1207) from personal finance blog Bargaineering.com.

The current first time homebuyer credit is set to expire on December 1st, 2009. Schrader’s bill would do two crucial things:

• The program would be extended to October 1st, 2010,
• Homes purchased “after 2008,” rather than “in 2009″ would be elivible.

There is also one other change, you could treat the purchase of a home after December 31st, 2009 and before October 1st, 2010 as occurring on December 31st, 2009 for tax purposes. In other words, if you bought the house in 2010, you could take the credit on your 2009 tax return.

Don’t get too excited just yet, the bill was introduced on the 15th and was referred to the Committee on Ways and Means. Several bills just like this one have been introduced over the last few months and died in the Committee on Ways and Means (HR 1993, HR 2606, HR 2655, HR 2905… the list keeps going).

First Time Homebuyer Tax Credit Extension (HR 3842) from personal finance blog Bargaineering.com.

In normal times, unemployment benefits last twenty-six weeks after someone loses their job. In normal times, it takes newly unemployed people less than 26 weeks to find a job… until today. But we aren’t in normal times. According to data from the Bureau of Labor Statistics, this is the first time since 1948, when they started collecting this information, that the average time it takes to find a job is longer than the 26 weeks of state unemployment benefits.

The House of Representatives passed a bill last month (H.R. 3548) that would extend unemployment benefits in high-unemployment states by 13 weeks. The Senate is debating similar bills (S. 1699 was referred to committee) and the fight is over who gets benefits and how much.

S. 1699 would give an extra 13 weeks to states with unemployment rates higher than 8.5% funded by extending unemployment tax on employers.

These last few months emphasize how important it is to have an emergency fund. Standard unemployment benefits offer six months of income, if everyone had a six month emergency fund then it would matter less if the average time to find a job was longer than 26 weeks. People would still have money saved to pay for things.

Should we be taxing employers and giving the money to people without jobs? I’m not against helping people who are in trouble, we all should try to look out for each other, but this may be the wrong way to go about it. I think that companies they need to pay extra for the people they already hire, they probably will be hiring less. Fewer new jobs means longer employment periods and higher rates. Is this the right direction anyway?

Unemployment Benefits Extension Stalls in Senate from personal finance blog Bargaineering.com.

It exists and it’s a bill that has been introduced in the House of Representatives by Representative Thaddeus McCotter (R-MI). The Humanity and Pets Partnered Through the Years (HAPPY) Act, H.R. 3501, would offer a $3,500 tax deduction for qualified pet care expenses. A qualified pet is a “legally owned, domesticated, live animal” that isn’t used for research or business. Expenses cover pet products, service, veterinary visits, and basically anything that is related to the care of a pet.

It seems like a difficult time to be introducing this bill when we have so many other economic issues to deal with but it sure is sweet.

First reaction: Frivolous deficit spending? Or legitimate deduction we should entertain?

HAPPY Act: $3,500 Pet Care Expenses Deduction (Proposed) from personal finance blog Bargaineering.com.