Government Column


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You Fix The Budget

A lot of the political rhetoric during the mid-term elections focused on reducing government spending and reducing the deficit (I found it a little hypocritical considering the average household credit card debt was in the thousands of dollars). That likely prompted the New York Times to put together a little “game” in which you get to fix the budget.

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.

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What is Quantitative Easing?

Quantitative easing, known as QE, is a monetary policy used by a central bank to increase the money supply by increasing the excess reserves. In layman’s terms, they inject a lot of new money into the money supply through open market operations. If this sounds like the central bank is just printing more money, you’re right (technically they just make up money out of thin air electronically, no actual printing is necessary). The specifics of how they do this are probably not important to 99.99% of us, but they’re explained below, but what is important is why a central bank like the Federal Reserve would want to do this.

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.

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Happy Labor Day 2010!

Can you believe it’s the first Monday in September already? I would say that this year has absolutely flown by but with the severe weather (multiple feet of snow in the winter, multiple days of 100+ degree weather in the summer), I think I’ve acutely felt every single day as it passed.

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!

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House Extends Estate Tax Permenantly

This week, the House of Representatives passed H.R.4154, titled the “Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009.” HR 4154 would amend the Internal Revenue Code to prevent the repeal of the estate tax next year. Under current law, there would be no estate tax for 2010 and your estate would transfer tax free to your heirs.

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.

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Homebuyer Credit & Jobless Benefits Extended (H.R.3548)

Stimulus!In the last few months, there have been two big “stimulus” related items discussed in the House and Senate. The first was talk of extending the first time homebuyer credit in both time (when you could use it) and scope (who qualified). The second was about extending unemployment benefits by an additional 13 weeks.

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.

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The Mints of the United States

United States One Dollar Proof CoinIf you’ve ever looked at a coin, chances are you’ve been interested in what was on it. There’s the year it was stamped, various Latin sayings, some images of buildings or famous individuals from US history, and there usually is a random letter. You probably know that the letter corresponds to the Mint facility that produced the coin, but what letter stands for what? How Mint facilities are there? Where are they located?

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.

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Veterans Affairs VA Mortgage Loan Requirements Guide

Seal of Veterans AffairsLast week, I wrote an FHA loan requirement guide to help folks looking to find more information about the Federal Housing Administration’s loan insurance program. In that post and in emails, many readers told me that I should take a look at the FDA and VA programs because it may be more appropriate for someone looking to purchase or refinance their existing home.

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.

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Searching For Your Unclaimed Money & Property

Stack of moneyI originally published this post in July 2005 but recently updated all the links to the correct state Unclaimed Property division website.

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. :)

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