Government 
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Another Stimulus Check? Perhaps.

Another Economic Stimulus Check?Update: Here’s the latest on the second stimulus package.

When Democratic Presidential hopeful Barack Obama mentioned a second stimulus check in a speech in early June, I didn’t think that it would actually happen. Presidential nominees do a lot of talking in the months leading up to November and I chalked the idea of another stimulus check as a short term as just that – talk.

Well, turns out that the Democrats, led by House Speaker Nancy Pelosi, want another stimulus check. As expected, the Republicans are firing back, President Bush is asking that we “wait for the stimulus package to fully kick in,” and it’s simply business as usual in Washington.

I have mixed feelings about yet another stimulus check. On one hand, I understand that there are many families on the boundaries getting squeezed by soaring fuel and food prices. On the other, I don’t think the “stimulus package” is really stimulus at all and I don’t really think a stimulus package is the solution to our economic woes. Overall, I think it’s just political maneuvering and time that would be better spent on more important issues like education, medicare care, or climate change.

At this point, it’s merely political fodder and we shouldn’t expect another stimulus check, just that there have been discussions of one. As anyone who has watched Congress work can attest to, there are plenty of discussions in Washington that lead nowhere.

Democrats plan second economic stimulus bill [Associated Press]

(Photo: daquellamanera)


 Frugal Living 
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Get A Stimulus Check Every Year!

With Presidential hopeful Barack Obama mentioning a potential second economic stimulus check, many folks are clamoring to know more. Unfortunately, there’s much else to say about it other than that he’d push for one in the short term.

I, however, offer a different solution. In order to find an additional $600, you only need to cut $50 a month. In reality, that comes out to only $11.54 a week. Reduce your spending by eleven dollars, fifty four cents a week and you will have created your own stimulus check. That’s it. Can you do it? I’m betting that you can and here are some recommendations of what you might want to trim.

Subscriptions

NetflixGet a list of all the subscriptions you have and really take a long hard look at what you really use. Do you have a $50/month (or more) gym membership that you don’t use? Do you have a $15/month Netflix membership but have had the same DVDs for the last three months? Do you get a copy of Good Housekeeping every month yet you never do anything except leave it on the coffee table? Trim it.

  • Gym memberships,
  • Video rentals memberships,
  • Magazines,
  • Cable television,
  • Internet,
  • there are plenty more…

Food & Fuel

Food and fuel are the two largest expenses for most families so it makes sense, after trimming that which we can live without, that we turn to these two categories to find further savings. (what doesn’t make sense is why they’re not included in “Core-CPI,” oh wait I remember, it’s so the number seems better! :) )

First, let’s tackle food.

Food:

Yellow SquashEvery Thursday there’s a farmers market within walking distance of my home in which fresh produce is sold at very low prices. I can get yellow squash for $1/lb. versus $1.49/lb. at the local Giant supermarket. That’s a 33% discount and while we don’t eat a ton of yellow squash, savings is savings.

Another recommendation I’ve heard, which I am trying to follow, is to eat more vegetables and less meat. Vegetables are healthier for you and far cheaper. Chicken breast, at it’s very cheapest, was $1.69/lb. and usually $2.99/lb. Beef? Forget it, you’re talking the north side of $4 a pound and sometimes much higher depending on the cut, grade, and whatever sale’s going on. Supplement your meals with more vegetables and some meat, for the various nutrients, but eat more leafy greens than fatty meats.

Lastly, be sure to review the circulars. You can see what’s on sale for the week ahead and plan your menu accordingly. We know that the front page of the Giant Food supermarket circular has the sales so we structure our meals according to what’s on sale. This week we had some shish-kabobs and will prepare some “crumby chicken” (it’s chicken breast coated with breadcrumbs, except it’s Ritz crackers) tonight. Chicken is on sale. :) (oh, and a leftover calendar helps reduce spoilage… still going strong with nothing going bad yet!)

Fuel:

I’m a huge proponent of car pooling, as it has the potential for the greatest savings. A second best option is to employ some techniques of realistic hypermiling. Don’t tailgate trucks, but consider easing off the gas if you see a red light and not slamming it when it turns green.

Everyone can tell you to car pool or hypermile, how about something no one else has said before? Go to Google Maps and plot out your daily commute. Google will often give you the fastest route but not necessarily the shortest one. What you can do is drag the path and investigate some alternative routes to see if it reduces your total mileage. While there are factors not illustrated on the map (rush hour zones, traffic lights, etc), it will give you an accurate count of the miles traveled. You will have to decide for yourself whether the trade-offs are wroth it.

In my case, I plotted my former commute and was able to reduce the trip from 16.1 miles to 15.5 miles. Qualitatively, the shorter commute had three more traffic lights, took smaller roads, but often missed a stretch of two highways that are usually clogged during rush hour. I felt the two were equal, except one route was shorter by 0.6 miles. 0.6 miles may seem inconsequential but it’s actually worth $40 a year! At $4/gallon gas and a 30MPG car, each mile costs 8 cents. If I make the twice a day for 250 days, the typical work year, then I save $40 by cutting out the 0.6 miles. This, of course, assumes both trips take the same amount of time.

So, plot your trip and any frequent trips you make (such as to the grocery store, doctor, dentist, etc.) to see if you can squeeze any efficiencies out of it.

There you go, some damn good suggestions on how to squeeze an extra stimulus check each year. :)

(Netflix image by Ross C., Yellow Squash image by tombarta)


 Government 
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Second Economic Stimulus Check: Obama’s Economic Plan

The Make Work Pay tax credit will put $400 ($800 for couples) into your pocket and was passed in the recovery and reinvestment plan.

1/15: The Committee on Appropriations just released the an executive summery of the details of the American Recovery and Reinvestment Plan.

Update 10/21: Bernanke recently endorsed a stimulus package and new life has been given to the prospects of a second stimulus package.

Update: Looks like there’s been more movement on another stimulus check. I wouldn’t hold my breath but it’s a step past campaign fodder.

The ink hasn’t even dried on the first economic stimulus checks mailed out last month and this month and there’s already talk of another stimulus package that would include a second stimulus check, tax breaks for the middle class and seniors, as well as debt relief for students. It’s the first economic salvo fired by Democratic Presidential presumptive nominee Barack Obama this week in a speech at the North Carolina State Fairgrounds [full text of that speech]. In his speech, he briefly discussed long term goals but focused on the short term ones, including a second economic stimulus check.

Second Stimulus Check: $50 Billion

The idea of a second economic stimulus check (who can say no to another stimulus check?)is obviously what most people latched onto (though there were no details in the speech itself) and it was the first thing he mentioned in the short term plan.

That’s why I’ve called for another round of fiscal stimulus, an immediate $50 billion to help those who’ve been hit hardest by this economic downturn – Americans who have lost their jobs, their homes, and are facing rising costs and cutbacks in state and local services like education and health care. We need to expand unemployment benefits and extend them for those who can’t find another job right away – especially since the long-term unemployment rate is nearly twice as high as it was during the last recession. And we must help the millions of homeowners who are facing foreclosure through no fault of their own. [Page 3 of speech]

The other things mentioned in that piece is a 13-week (or more) extension to unemployment benefits, a $10 billion Foreclosure Prevention Fund (which would include a credit of 10% of their mortgage interest payment every year), as well as changes to the mortgage industry to include a Home Score system that helps consumers compare mortgage offers and assess payback ability.

Middle Class & Senior Tax Relief

Page 5 goes into, after railing on McCain, how he’ll slash of corporate tax breaks, close tax loopholes, and begin windfall taxing oil companies to help pay for middle class tax cuts. $1,000 of relief for approximately 95% of workers and families, paid for by the windfall profits of Exxon Mobil. His plan also called for the elimination of income taxes for retirees that earn less than $50,000 a year and raising the Social Security tax cap, without changing the retirement age or privatizing Social Security.

There are several more subjects in the speech, such as a Credit Card Bill of Rights and revamping bankruptcy laws, but we’ll have to wait until next week for details on some of the more long term economic plans. Stay tuned…


 Government 
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The Little Footnote on the 2008 Tax Stimulus Package

If you weren’t a fan of President Bush and believed he, and politicians in general, only pushed for tax breaks for the rich then you’ll want to pay close attention to a recently Fortune that sheds some light onto the little footnote on the 2008 tax stimulus package. Most people focus on the tax stimulus check they’ll be receiving in a month or two, I know I did because that’s what affects us and most Americans. Fortunately, we have people like Allan Sloan focusing on all parts, including the little piece about raising the “maximum size of a ‘conforming’ mortgage to $729,750 from the previous cap of $417,000.”

What the heck does that mean? A conforming loan is one that Fannie Mae and Freddie Mac can buy. Since they can buy them, the interest rates on the loans are generally lower because they’re less risky. If a bank knows it can sell it to Fannie Mae and Freddie Mac, they can charge less in interest. The spread these days, according to Fortune, is a significant 1.27%.

My friends that share a half-million dollar mortgage, and those who own homes that are worth more than $417,000 but less than $729,750, benefit the most from this. Borrowers have access to lower interest rates and thus are able to purchase “more house.” (Nothing changes for those above the $729,750 amount)

For example, for the monthly mortgage payment of $1,500 can get you a $250,188 loan at 6.00% or a $219,448 loan at 7.27% – that’s a difference in the purchase price of $30,740! And, it obviously gets bigger as your amounts get higher. This makes homes in that range more affordable and thus helps increase their value. That’s stimulus people!

Allan goes on to recognize that the boost will expire at the end of the year, since it was designed to help stimulate the economy, but he suspects it will remain. I just wanted to highlight this piece of the package since very few people discuss it and Allan does a great job. His ending quote is a gem as well – “The one thing I liked about the stimulus package was that the government had enough sense to not send money to people like me. But then it turns around and hands me a housing subsidy. I’ll gratefully accept the gift. But that’s no way to run a country.”

###

The 149th Carnival of Personal Finance is now available, I submitted my post on laddering CDs for your emergency fund.


 Government, Taxes 
217
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How To Get Your 2008 Stimulus Rebate Check Faster

Have you been awaiting word on when you expect your stimulus package? First, check the stimulus calculator located near the end of my original 2008 Stimulus Package Explained article. If you are eligible for a check, when you can expect it will depend on the last two digits of your social security number.

If they have your direct deposit information available on file, then you follow this schedule:

  • 00 – 20: May 2
  • 21 – 75: May 9
  • 76 – 99: May 16

If they do not have your direct deposit information, then this is your schedule:

  • 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

So if your social security number is 000-00-0034 then you will receive the stimulus package amount on May 9th if you have direct deposit and you will receive the stimulus package check on June 6th. As you can see, you get the money nearly a month earlier if they have your direct deposit information.

How do you give them your direct deposit information? You give it to them when you file your return. Be sure to input your direct deposit information on your 1040 on line 74 (a-d). Once they have it there, you can get your check considerably sooner. Don’t be a fool, direct deposit. :)

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 Taxes 
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2008 Tax Stimulus Package: Senate & House Differences

If you’ve been following the latest on the economic stimulus package (or tax stimulus package), you’ve probably learned that we’re all waiting on the Senate to approve a bill that is similarly worded to the House’s H.R. 5140, the Recovery Rebates and Economic Stimulus for the American People Act of 2008 (great bill name!). Rather than outline the Senate version and assume you’ll be able to tell the difference, let me just explain the differences.

Incidentally, the latest news is that Senate Democrats can’t get the 60 votes necessary to move past debate (a step known as cloture) on the bill they’ve outlined so a vote will likely have to wait until next week – if ever. If things stall, they will accept the House version.

Latest news is that the Senate has passed its version of the bill, explained below!

(Click to continue reading…)


 Taxes 
23
comments

5 Ideas For Your 2008 Tax Stimulus Check

While the 2008 tax stimulus check has not yet become a reality (in fact, it’s far from it), I wanted to share five ideas you should consider for this new “found money.” The bottom line is that you should take care of yourself, first and foremost, and use this money to make your life a little easier.

#1. Spend It On Essentials

If you’re at the point where you need the $300 to continue, by all means spend it on the essentials you need to survive. If you’re at this point, this is a much needed breath of fresh air… take it. Don’t let anyone tell you that you should save it for the future when you need to put food on the table now. However, you must take stock and decide whether you’re spending this on needs or just spending this on wants. You also need to look down the road at your own personal finance decisions because you’re in a tough spot – this stimulus check may not come! Cut back on some of the wants in your life and you can create your own $300 savings for the year very very easily.

#2. Pay Down Credit Cards

I know many people carry credit card debt from their years of indiscretion and that’s perfectly fine. Life is about learning, it’s about making mistakes, and since you’re still standing then hopefully the lessons have taken, right? So, if the stimulus check comes through, please do the responsible thing and pay down some of this ridiculous 20%+ interest rated debt because it’s holding you back. Hey, if you’re reading this, chances are you’ve already realized this so good for you.

#3. Pay Down Other Debts

The government wants you to spend this tax stimulus check to lessen or eliminate the effects of a potential recession, don’t listen to that crap. Take care of yourself. That means taking this money, paying off any other high interest debt (I called out credit cards specifically because of their high interest rates) because that enables you to be more efficient with your money in the future. If you lose $50 each month to interest payments, that’s $50 you can’t spend on gas, groceries, whatever.

#4. Pad Your Emergency Fund

Let’s be honest, if there is going to be a recession then your $300 (or whatever it turns out being) isn’t going to save the country. Do the selfish thing and pad your emergency fund. If you have 6 months (or a year) of expenses in there already, good for you – put more. Whatever you planned for your emergency fund was in a non-recession-threatening world right? The environment has changed so you might want to put a little more into that emergency fund.

#5. Fund Retirement Accounts

$300 today, appreciating at a conservative 7% a year, will turn into $1,160.91 in twenty years. If you have 40 years, it’ll become $4,492.34. Retirement will be a beautiful time in your life if it’s adequately funded. Do you need to spend the $300 right this minute or can you spare it to fund your happiness when you don’t have to work 40 hours a day?

Anyone else have any good (responsible) ideas for this (potential) tax stimulus check?


 Taxes 
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Getting Your Tax Stimulus Check

If you’re wondering where your stimulus check is, try this IRS tool.

Update: The bill has passed, the checks will be mailed out based on this stimulus tax rebate check schedule, so file your returns (even if you didn’t need to) to get your check.

I wanted to make an addendum to the article I wrote about the 2008 Tax Rebate Stimulus package that was recently passed in the House of Representatives. There have been a lot of questions as to how much someone would get, what tax year the rules are applied to, what counts as a “child,” etc.

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First off, I think we are still too early in the game to be discussing those things because the Senate still needs to pass a similarly worded bill, the two bills have to be married, and then the President needs to sign it. Then the number crunchers have to do the math and then finally checks will be mailed out in May or June or July. The biggest of the hurdles will come in the Senate but ultimately there still are many hurdles. This “economic stimulus package” (I put it in quotes because there is fierce debate as to the effectiveness of the package) is still far from a certainty. Preparing as if it will appear in a few months would be a mistake.

Secondly, since you won’t have to do anything (you don’t file a form, you don’t call anyone), there isn’t really much you should do. If it goes through, a check will arrive in the mail one day in May or June or July and you’ll find yourself a few hundred dollars richer. If you’re just treading water, maybe that gets you some breathing room. If you’re more financially stable, maybe you put that towards some debt or pad your emergency fund. If you’re looking to make a purchase that’s contingent on getting that check, I’d wait until after it clears before swiping your card.

lastly, don’t believe the mainstream media when they say that a deal has been struck and that you will definitely be getting money. A deal was made in the House, the other chamber has yet to pass something, and Congress’ idea of breakneck speed leaves much to be desired. Do not count on this money!


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