If you have a job, you’re paying into the Social Security program. Social Security, or more officially and appropriately, the Old age, survivors, and disability insurance program (OASDI); is more than just a check when you retire or a payroll deduction on your pay stub. In addition to the “old age” portion, it is also a disability insurance program that provides for individuals who are unable to work because of a disability.

Each month, you pay 6.2% of your paycheck into the OASDI program, up to a limit of $6,621.60 a year (the tax is only on the first $106,800 of earnings). Three months before your birthday, you will receive a Social Security Statement. This post will explain how to read and review that Social Security statement.

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When I was reading Dale Siegel’s The New Rules of Mortgages, was struck by the sheer number of available mortgage options available to Americans. I knew about your standard vanilla varieties (30 year fixed, 15 year fixed), even the trickier ones (ARMs, Option ARMs), but I knew very little about the various government sponsored programs designed to help low to moderate income or first time hombuyer families get a piece of homeownership.

One of these programs is the FHA, or Federal Housing Administration, mortgage insurance program. It’s part of the U.S. Department of Housing and Urban Development (HUD) and the FHA provides mortgage insurance on loans made by FHA-approved lenders. The logic behind the program is that low and moderate income families and first time homebuyers, especially in these economic times, may need a little extra help in the homeownership process. This help comes by way of an insurance program, that the borrowers will pay for at least five years of the loan, offered by the government.

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I’ve never had the need or the opportunity the learn about Medicare or Medicaid, two government programs that garner a lot of attention every two years, and that have recently been in the news because of President Obama’s attempts to bring about health care reform. Like many people, I didn’t understand how either program worked so I decided to do some research and put together this Foundation post.

The biggest difference between the two is eligibility based on financial need. Medicaid is designed to help low-income, financially needy individuals and is administered differently in each state. Medicare is not based on need and is entitlement based, through your payments into the program through your taxes. Medicare is administered nationally and the rules are the same everywhere.

If you’re curious to learn more, read on plucky adventurer because it starts getting a little more complicated.

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May 20th Update: The House of Representatives gave their approval of the CARD Act passed in the Senate and the bill is on its way to President Obama.

Today, the Senate voted 90-5 in favor of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009, which is one step closer to credit card reform in America. In April, the House of Representatives passed a similar Credit Cardholders’ Bill of Rights Act of 2009 (357-to-70) and now the two chambers must reconcile the bills for President Obama to sign into law.

Here are the major parts of the Senate CARD Act:

• Credit card companies cannot raise interest rates on existing balances unless a card holder was 60 days behind.
• If a credit card company raises rates, six months of on-time payment would restore the interest rate to the previous level.
• Companies must notify consumers 45 days in advance of any rate increases.
• Companies cannot charge a late fee if they were late in processing a payment.
• Statements must be mailed 21 days before the payment due date.
• Rules were put in place that would make it harder for for companies to issue cards to those under 21.
• Interest rates cannot be increased within the first 12 months, promotional rates must be in place a minimum of 6 months.

The major points of the House’s Credit Cardholders’ Bill of Rights Act of 2009 are similar. The House’s version also requires promotional rates to remain in effect for a minimum of 6 months and other similarities regarding interest rate hikes and payment rules. There are additional rules in the House version that remain to be reconciled. For example, in the House bill, credit card companies must warn a customer if they get close to their credit limit.

It’s expected that the two bills will be reconciled and President Obama will be able to sign the bill into law before Memorial Day recess.

Credit Cardholders’ Bill of Rights Act of 2009 [Thomas.gov]
Credit CARD Act of 2009 [Thomas.gov]
Senate Passes Bill to Restrict Credit-Card Practices [New York Times]

I’ve been hearing a lot about the government’s Making Home Affordable mortgage refinance program. Having looked at refinancing our mortgage a few months ago, but not pulling the trigger, I was interested to see if we could benefit from this program (we can’t, but that’s not a bad thing). It’s designed to help people get more favorable loan terms in scenarios where their home has lost value. A lot of lenders won’t refinance a loan if the value of your home is less than the loan amount, it’s simply a matter of math; this program looks to help alleviate some of that.

This program, introduced by the Obama Administration as part of the Financial Stability Plan, is estimated to help 7 to 9 million people. They estimate the Home Affordable Refinance Program will help 4 to 5 million and the Home Affordable Modification Program will help 3 – 4 million. What this means is that you should act quickly if you want your application processed quickly. The longer you wait to apply, the larger the backlog will grow, so let’s get to the program!

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After this morning’s post about cons, I thought I was getting conned when I started reading about the new 2009 Louis Braille Bicentennial Silver Dollar because I didn’t hear a single thing about it until today. Made me think of those Obama coins with a sticker on them! (don’t worry, these Braille Bicentennial Silver Dollar coins are real)

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I went to a conference of internet marketers a few weeks ago and spent some time learning from some of the best and the brightest in the industry. One of the things I came away with was the prevalence of “stimulus check” related scams that were floating around the web. I don’t think any of the people attending were involved in pushing these offers because the general consensus was that if you were involved, it was only a matter of time before the FTC dropped the hammer and penalized you heavily for your involvement.

Well, surprise surprise, the FTC released a consumer alert warning consumers about stimulus scams:
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Are you sitting down? Do you have a pen and paper handy? Looks like the $15,000 tax credit to buy a new home has been scrapped, saving $35 billion from the stimulus package, and replaced with an extension to the $7,500 and an increase of that credit to $8,000. The $7,500 first time homebuyer tax credit was set to expire July 1st, this $8,000 provision would extend that. CNNMoney is reporting that the credit is available for those who buy a home between Jan. 1, 2009 and Dec. 1, 2009 (source).

The cost of the extension and modest increase is pegged at around $2-3 billion. Another key provision? The repayment requirement will be nixed. That means the $7,500 15-year loan at 0% interest will now become $8,000 cash money in your pocket. I believe existing borrowers would have that loan forgiven.

Home buyers who hoped for a $15,000 tax credit to buy a new home, as promised by the Senate, will be disappointed. A proposed $35 billion credit to support home sales was jettisoned in favor of a more modest $2 billion to $3 billion provision.

The proposal would eliminate the repayment requirement in an existing tax credit for first-time home buyers, and raise the credit to $8,000 from $7,500. Congressional aides cautioned Wednesday that the credit’s size was still subject to negotiation.

Congress Strikes $789 Billion Stimulus Deal [Wall Street Journal]