Kitchentablenomics

Frugal or foxy?

2009-12-02T11:07:00.004-06:00

We seem to be driving retailers nuts this holiday season.

Last week, on what supposedly is the biggest shopping day of the season, we came, we saw and we demurred, the National Retail Federation reported. Crowds were up, sales weren't. The mixed messages continue this week. Electronics and jewelry sales are up from a year ago, reports MasterCard Advisors' SpendingPulse, but sales of clothing and luxury goods are trailing.

Maybe we are shopping for stuff that is easier to pawn, just in case. Or maybe we really are being more frugal than we were accustomed to before 2008, suggests Creditcard.com's Allie Johnson, who has been tracking some conflicting signals.

Home cooking is suddenly chic again, say the Nielsen ratings people who track supermarket and restaurant sales and bunches of other things in addition to television ratings. And vacations, major home improvements and other easy to cut purchases have been taking hits all year, writes Michael Kahn of Chief Marketer.

So how serious are consumers about living more frugally? Economic consultant Bill Conerly predicts we'll start opening our wallets again when a little more time passes, but not as freely as before the recession. CNBC's Christina Cheddar Berk says it is more likely we'll get something nice for Christmas and then return to hibernation.

I know I may be heading to the mall more often as winter sets in. It's a good place to walk when the wind chill reads like sales reports.

Action heroes are lousy tax advisers

2009-11-27T14:52:00.004-06:00

More tax trouble in Tinseltown this week. (That sounds like a line out of an old movie that I normally wouldn't admit liking as much as I do.) The Los Angeles Times and others are reporting that the IRS has filed a $79,000 tax lien against California Gov. Arnold Schwarzenegger. He's disputing the claim and insists he's paid his taxes.

Lots of celebrities seem to get into tax jams, of course. Wesley Snipes, who allegedly didn't file returns for a few years, is in a big one. Willie Nelson used to be, though that apparently is behind him now. Olympic swimming gold medalist Michael Phelps was thought to be, though that turned out to be a case of mistaken identity. It isn't just Hollywood either. All kinds of literati anad glitterati have been making some dumb financial moves, reports ABC News. It is even an international phenomenon; celebrity chef Gordon Ramsey reportedly is in hot water with British tax authorities too.

Watching celebrities getting into financial jams has become something of a cottage industry. There is at least one blog devoted to the subject, by Cincinnati law professor Paul Caron. Austin, TX writer and tax geek Kay Bell watches too. Even Roni Deutch, the queen of late night TV tax service commercials keeps a list. Though in her line of work, she may be able to write some of that off.

So, if you are starting to pull year-end tax records together soon - and you should be - just remember: action heroes can be lousy tax advisers. Here's a short list of things IRS definitely recommends avoiding and 15 pages of why. The short answer is, they don't work.

Ho Ho Ho or Humbug, What's your shopping plan?

2009-11-25T15:38:00.003-06:00

Are Christmas shopping forecasters secret Scrooges? Some retailers think so. They contend mainstream media tends to deck the malls with doom and gloom in their holiday shopping forecasts.

Holiday shopping forecasts often are moving targets. The National Retail Federation, which last month forecast a basically flat shopping season this year, now predicts 134 million of us will be lining up outside discount stores at O-Dark-30 tomorrow.

What we'll be doing there is anybody's guess. Really. Relatively few of us plan to cut back our holiday spending, but we'll be watching our money more closely, we've told pollsters for Upromise.com. Quite a few of us, though not as many as last year , plan to cut back, but will be freer with our money, we told a joint Consumer Federation of America/Credit Union National Association survey. If you do the math, some of us fibbed.

I think there's another reason it might not seem holiday festive yet. Even though the recession is over, according to the double domes, many communities are cutting back on holiday decorations this year because money is tight. Holiday event planners are feeling a pinch too.

Peaking mentally at 53...is this as good as it gets?

2009-11-23T10:57:00.002-06:00

Age 53 is your sweet spot where handling money is concerned according to some Harvard researchers quoted by Ryan Sager at SmartMoney.com.

That's about when you've picked up as much financial street smarts as possible before aging begins slowing your brain functions, according to the lead scientist, David Laibson, who incidentally is 43.

That doesn't mean best is good, though. I know I made some dumb decisions at 53; technology stocks were hot at the time. Many of today's 53-year-olds - who make up a big swath of the U.S. population -are apparently in the same boat.

Few of us handle all our retirement savings questions brilliantly, reports the online 401(k) Help Center. Throw in the trauma of a layoff or other collateral damage from the recession and we become even more unhinged, adds Prudent Money Financial Services.

Fifty three is a tough age. You are maybe nine years from retirement - planned or otherwise - and reaching your peak earning years, but with probably way too little in life savings. The Employee Benefit Research Institute calculates many 53-year-olds probably have about $44,000 stashed in their retirement plans, which is not a lot of money to stretch over two decades of retirement.

And pulling that money out early generally is not one of the most brilliant moves a 50-something can make, despite some attractions recently listed by John Credule in the New York Post.

Hang on, it's the only nest egg you've got

2009-11-19T16:08:00.004-06:00

You've got three choices about what to do with your retirement plan money when you leave a job. And even though the recession supposedly is over, more of us may be making those choices, according to forecaster Nouriel Roubini, who has been distressingly accurate before.

Basically you can cash in part or all of the plan; leave it with your employer until you retire, even if you no longer work there, or roll it into an IRA of your own where you can tend your investments personally.

Financial advisers generally agree the first choice is the worst choice for most of us, because of the huge tax bite and potential penalties that may be triggered when you cash out too soon. They are more divided about the other two choices.

Hewitt Associate's Pam Hess is among a minority of financial advisers who find good things about leaving the money where it is. It's simple and your plan's investment managers probably know more than you (you hope) about investing as profitably as possible.

More advisers favor rolling the money into an IRA, as CNN's Walter Updegrave reports. It's easier to track and you've got more investment choices. Having more choices is important, because traditional 401(k)s often aren't cutting it anymore, say executives such as Putnam Investments chief executive Robert Reynolds.

Insurers such as Prudential have been imagining some of the changes savers need and are coming up with suggestions that would have been startling just a few years ago. Recently insurance giant Metlife and Fidelity, the nation's largest mutual fund company announced a plan to include annuities in mutual fund retirement plans.

Annuities sound complicated to many people. And we've all heard, or in my case, written horror stories about high costs and other jams investors have gotten into. But in many cases, annuities are getting second looks because lifetime incomes sound reassuring right now.

Belt tightening at Thanksgiving

2009-11-18T15:38:00.002-06:00

"When an economist says a recession is over is different from when a hungry family says it's over," said John Hornbeck of Episcopal Community Services, one of many food assistance providers to hungry Kansas City area residents.

That shows up a lot right now, as supermarket Thanksgiving grocery ads hit our driveways. At least one store offers turkeys at 40 cents a pound with a $25 purchase. Another throws in a free turkey if you buy a featured ham.

Those are good deals, better than a year ago, the American Farm Bureau correctly reports, but the offerings might as well be Beluga caviar as far as many of some 17 million hungry households are concerned. Those are the ones that the U.S. Agriculture Department calculates experienced what delicately is called food insecurity last year.

Hunger is a noticeably growing problem in many suburbs once thought impervious to the problem, reports Newsweek. Count Johnson County, KS, home of the statistically not shabby 19th highest household incomes in the U.S., among them, says Linda Rogers of Johnson County Human Services. Requests for food assistance are up maybe a third from a year ago as more white collar severance packages run out before people find jobs, she said.

"There is a direct connection between rising unemployment and requests for food assistance," said Karen Heren, chief executive of the Harvesters Community Food Network in Kansas City. She's shopping for what's budgeted to be $4 million in additional food purchases to supplement donations.

"Two words that really scare us are 'jobless recovery' " Heren said. "This time last year, our shelves were bare."

There are some tax breaks you don't want

2009-11-16T17:06:00.003-06:00

More than 15 million taxpayers may owe Uncle Sam another $250 next filing season, a Treasury Department Inspector General reports.

Lower payroll taxes passed last spring to pump money into the economy ended up putting too much money back into the checks of workers with more than one job, of which there have been many this recession. Social Security recipients who worked part time may be hit too.

IRS has a free calculator to help you see what your situation is. There are barely six weeks left in the tax year, though, which leaves little time to do anything other than brace for impact.

The recession has produced some really crummy tax breaks you need to prepare for if you qualify. My two favorites? The first $2,400 of unemployment benefits you collected in 2009 are tax exempt. You pay taxes on the rest. Forgiven debt usually counts as taxable income, but not if you lost your home or modified your mortgage.

Yippee.

Lots of roadside help is just a phone call away

2009-11-15T11:06:00.005-06:00

Our seven-year-old Toyota's original battery died suddenly in the supermarket parking lot this weekend. And I found out that much has changed since the last time I called AAA.

For one thing, the auto club sells batteries roadside now, and have been doing that for a couple years at least, according to the technician who answered our call. It's a moderately pricey service; we paid $115 to buy a battery that costs maybe $75 at AutoZone, have it installed and the old dead one taken away for recycling. But paying the extra money also allowed us to finish shopping at the next supermarket on our list and get home before the frozen food thawed.

I also realized we're potentially covered by at least three auto clubs. One is AAA, which was the most universally dependable services when we first signed up four decades ago. AARP offers a slightly reduced price similar service, which we haven't signed up for. Progressive Insurance also throws roadside assistance in with an auto policy we have. Many other insurers do that too; Allstate ramps up the service a notch with a special plan for Blackberry users. Even Subaru offered free help for the first year after we bought that car.

So, is it dumb to continue paying AAA for coverage that overlaps what these other providers offer anyway? That apparently depends on what is most likely to go wrong when we hit the highway, writes Vivian Blackwell at Edmunds.com.

Roadside assistance plans are essentially insurance policies designed to help policy holders deal with what are usually minor emergencies. Some are part of lusher larger services, like GM's OnStar, which costs about $200 a year after a first year free trial. Others are barer bones plans that may limit which vehicles are covered or where you take your car if you need repairs. Some aim for niche markets, such as the Better World Club, which has a roadside plan that covers bicycles too.

Finding the right plan is like finding the best insurance deal. You basically read the fine print and compare the choices.

New Fed consumer protection rules need your help

2009-11-13T09:23:00.002-06:00

New Federal Reserve banking overdraft regulations might help many of us avoid big penalties if we use our ATM or debit cards too enthusiastically after July 1.

It's a big deal. About three fourths of the nation's bank routinely sign up customers for automatic overdraft protection, and collect $37 billion in overdraft fees when we trigger it, reports Kiplinger Personal Finance's Joan Goldwasser. The new regulations stop part of that by ending the automatic enrollment and requiring us to sign up if we want that protection. Meantime, here is a rundown of what the Consumer Federation of America found the nation's biggest banks were doing last month.

But take a close look at the details when your bank mails you an explanation of the changes in a few months. There is less there than meets the eye for some of us.

For starters, the new regulations apply only to ATM and debit card transactions. Banks can still charge for honoring overdraft paper checks or covering automatic bill payments if your account drops too low. Plus, the new rules don't put caps on what banks can charge if you do sign up or prevent them from potentially tweaking the system to trigger more fee income, CFA reports.

So the best way to avoid overdraft fees in July is what is still the best way now. Avoid overdrafts. Basic tactics such as having your paycheck deposited directly into your account, keeping a comfortable cushion there and simply keeping track of what you spend aren't hard and go a long way, the American Bankers Association says.

Not maxing out your plastic gets tougher

2009-11-11T09:55:00.003-06:00

Credit card reform doesn't always go smoothly, we are discovering.

Horror stories abound of how credit card users are being whiplashed by fast changing loan terms. The Federal Reserve reports 75 percent of the nation's lenders might not comply with new regulations that kick in in February. That echoes a Pew Charitable Trusts report two weeks ago that cards offered now by the 12 biggest lenders still fall short of snuff.

Lenders in general are tightening their credit card standards, reports Creditcards.com. Lenders are tightening other lines too, Diane Swonk, chief economist at Mesirow Financial, writes in that firm's latest newsletter; home equity loans have all but vanished.

Borrowers can still get relatively good credit card deals from credit unions, Forbes.com reports.
Even so, tight money and shrinking credit lines make it easier to hit credit limits before you mean to.

Freefalling into an unplanned retirement

2009-11-08T15:34:00.002-06:00

Finding new jobs these days is tougher than it used to be, AP's Jeannine Aversa reports. But so is one of the alternatives - being forced into an unplanned early retirement. Among the nation's younger than 65-year-olds, anywhere from two to six times more workers are taking that route out of the job market than planned to, the Employee Benefit Research Institute found last spring.

Leaving the workforce sooner than you planned is never easy. You worry more about money, EBRI researchers report. Duh. But a small slew of surveys released in the last few weeks suggests more of us have good reason to worry. MetLife reports that more of us really are trying to live within our means these days. But a good three fourths of us aren't succeeding, says Wells Fargo.

But not saving enough money is only one of three reasons why retiring prematurely fails. Investing your savings unwisely or underestimating what retirement living really costs will sandbag you too. There aren't many roadmaps, I discovered last spring. Basically, you look at your resources and try to use them creatively. Or, you try to find a job, as Newsweek's Linda Stern found more 60-somethings are doing. Some 72 percent of the nation's retirees are planning that now, EBRI calculates, up from 66 percent a year ago.

Gimme a (tax) break - I don't want to buy a house

2009-11-06T12:21:00.002-06:00

Now you don't have to be a first time buyer to get a tax credit for buying a home.

New legislation that President Obama is signing, probably today, also provides a potential $6,500 tax credit for homeowners who sell their current homes to buy another one. Get it done by April 30 if you are interested.

Huzzah, say the nation's realtors. Others' enthusiasm is more restrained. The New York Times editorial board calls it throwing good money after bad. Washington Post's Steven Pearlstein grumps that it's a better deal for sellers than buyers and also for real estate agents, appraisers, lenders, brokers and insurers, who also get cuts in the deals. Tha makes sense in a way because there still are a lot more sellers in the market than buyers, the National Association of Realtors reports.

Meantime, don't forget other potential tax breaks you can get without planting real estate signs in your yard. You need to get moving on those too, because the Dec. 31 end of the tax year for most of us is a scant eight weeks away.

If you've got some investments down for the ten count, for example, you may want to sell them and use the losses to offset profits on other stuff you sold. Or if you still have stuff that didn't move at your fund-raising garage sale, donate it to your favorite charity, get receipts and deduct it on Schedule A next spring.

Or if you've been job hunting or running a part time business to make extra cash, as many of us are these days, start rounding up and saving receipts for those expenses too. Many are deductible. And if you are snugging up the house to save energy this winter, don't forget to check out any potential energy tax credits you might qualify for.

If you are still working, you are a god to many of us. But check how the tax withholding in your paycheck may have changed by stimulus legislation flying out of Washington

Savings Bonds warm up to back above zero. Why should I care?

2009-11-04T15:25:00.009-06:00

Series I Savings Bonds, which have been paying some savers zero-percent interest the last six months, are back in the black again. The Treasury Department announced earlier this week that savers who buy the inflation-adjusted bonds will get 3.36 percent interest on any bonds they buy before May 1. Rates will change again after that depending on what consumer prices do.

Calculating what I-bonds pay can be mystifying. Buyers get paid with a combination of interest rates. One is a fixed rate that is calculated on the recent price for government securities when you buy the bonds and stays the same for however long you own them. The fixed rate is 0.30 percent now, but was as high as 3.6 percent a decade or so ago when financial markets were boomier.

The other rate, which changes every May 1 and Nov. 1, is based on the Consumer Price Index. It's 3.06 percent now, thanks in part to some recently spiky energy prices. It's been minus 2.78 percent for the last six months, so anyone with a fixed rate smaller than that has been earning zip.

So why do we care? Basically, now that I-bonds have a pulse again, they are an okay place to stash any emergency money you won't need for a year or more. Starting at $50, they are cheap to buy. And they currently pay better than money market accounts or comparable certificates of deposit.

Their biggest drawback is that you cannot get your money back for 12 months. Busting a CD and paying a penalty is easier. The second biggest drawback is that after those first 12 months are up, you still lose three-months' interest if you cash out before 5 years are up. I think that's a judgment call. If you really need your money that badly, you've still made better than bank rates for nine months or longer and three months interest at current market rates may not be that big a hit.

Blue Christmas - oldies and some not so goodies.

2009-11-01T16:33:00.005-06:00

Christmas clubs are back. That can't be a great omen for retailers.

Christmas clubs, for those of you who don't remember a president before Ronald Reagan, are savings plans consumers use when they expect financially leaner holidays. Some people think the plans are kitschy and a bad deal. They're wrong.

Sears and Kmart, which are pushing the plans this year, are the same two retailers who resuscitated layaway plans last year. However, Walmart, the nation's largest retailer, phased out its layaway program three years ago and appears to be counting on cutting prices to win customers. Discounts and instant gratification are always winners.

Even that looks a bit dicey this time around. Some retailers ran into a new competitor during the just ended Halloween season, which has become sort of a warm up for Christmas. Home made gifts. Merchants are fighting back.

Plus there is one more Christmas shopping budget stretcher retailers worry about. Shoplifting, already a $30 billion dollar business in the U.S. by FBI estimates, appears to be on the rise, the National Retail Federation.

Remember to turn off the home alarm for Santa.

First time homebuyers get more time. Some will need it.

2009-10-30T15:28:00.003-05:00

Both the U.S. House and the Senate seem likely to vote next week on extending an $8,000 tax credit for first time home buyers, Bloomberg News reports.

The credit originally was scheduled to expire Nov. 30. But at least some hopeful buyers are blowing that deadline already, because closing on a home often is a four or six week process, as About.com contributor Elizabeth Weintraub spells out.

Lord knows Realtors want the extra time. September, which was effectively a beginning of the end getting the credit under the old deadline, was a bipolar month for the industry, writes Businessweek.com's Phil Mintz. Existing home sales shot higher because the credit was ending, he found. New home sales tanked because the credit was ending.

Our heads spin. In any case, there were signs visible at least as early as last July that an extension might be in the works. And there are signs now that home buying will be different than before the economy free fell last year.

The biggest difference? You'll need more money. Lenders who got burned by bad mortgages before don't want to again. Plus, it's more important that you get the purchase right, advises Loan.com. You may see additional paperwork too. Federal auditors already have found more than a whiff of fraud in more than 100,000 claims for the credit already. They don't want to do that again either.

The Angry Mob Platinum Diamond Card is hilarious, but look what's really going on

2009-10-29T20:35:00.003-05:00

I thought John Hodgeman's Daily Show riff on Wall Street reform and the Angry Mob Platinum Diamond Card the other night was a hoot.

But a dead serious report from the Pew Charitable Trust the same day is even more droll. Online credit cards offered by the nation's 12 largest banks won't be legal when new credit card rules kick in next February, Pew found. Better yet, both the Hodgeman bit and the Pew report arrived almost exactly on the 80th anniversary of one of U.S. history's most spectacular market crashes.

You cannot make up stuff this good.

Credit card problems aren't a joke if you have them, I know. And some reform of the worst abuses is both necessary and laudable. But often, our best way out of such jams is mostly things we need to do ourselves,as Associated Content contributor Ray Harris pointed out a few years ago.

CNNMoney.com last year looked at the pros and cons of 10 tools we might use to dig ourselves out of financial holes. And Forbes.com not long ago discovered SmartyPig.com., an online service that also is sort of a support group for the budget challenged. But what many of us figure out, after some trial and more error, is that you need to think beyond money to make it work. Financial-Choices.com outlines one way to do that, starting with protecting what you have before you start messing with improvements.

Small savings and big mistakes

2009-10-28T10:45:00.003-05:00

As savers, we're getting better at the small stuff, the Harris Poll reports. We're buying generics, brown bagging, sipping tap water from our refilled Evian bottles and generally watching pennies more closely.

We aren't doing as well with the big stuff, though. New research from Hewitt Associates shows nearly half of us still cash in 401(k)s when we leave jobs, which is not good if you prefer not to eat cat food when you retire. (Though I must admit that some cat food now on the market sound a lot swankier than what we brown bag some days.)

Blogger Maria O'Brien last year put together a list of Ten Financial Mistakes That Will Put You in the Poor House. I look at this and similar lists every once in a while hoping I haven't made more than half the blunders the authors list. So far, so good. Sometimes barely.

Life insurance is sexy again?

2009-10-26T20:31:00.002-05:00

Life insurance was considered a kind of investment drudge most of the years I covered personal finance for The Kansas City Star. Markets were booming and you could make buckets of money investing in tech stocks and such.

No more. If ever. Insurance giant Prudential kicked out some new research this week that shows the recession has raised investors opinion of life insurance quite a bit since those days. Two thirds of us think it's a safe financial product and half of us now like it better than the stuff we lost money on, Pru reports. At this point, we'd probably like change we find on the sidewalk better than what we lost money on before, but I get the reasoning. In times like these, you can even borrow against whole life policies like one I bought to convert my GI life insurance to a commercial policy when I left the Army.

The Insurance Information Institute, an industry trade group, recently published a quick rundown of what you'll find in the market if you are looking for some of the security that coverage provides. The trick to buying well is figuring out first what you want coverage to do for you, then finding a plan that fits that wish.

Look at whole life policies if you like the idea of building a conservative stash of cash while buying insurance coverage to provide your family income if you die, say advocates such as John Girouard, in Bethesda, MD. Those are more expensive than other choices, but that's manageable if you are young enough. Check out term insurance if you're looking for economical coverage, but be aware of its limitations too. You get no money back if you outlive the policy. Happy hunting.

Winterize your wallet now

2009-10-25T16:46:00.003-05:00

That's a great description I found on an ING website of some of the routine things blogger Jennifer Derrick reminds us we need to be doing about now to save money as weather turns colder. I wish I'd thought of it, but Ms. Ktnomics and I were outside most of yesterday winterizing before it gets nastier outside.

Now a recent jump in oil prices the last couple weeks makes winter preparation more imperative for both our homes and our cars. Here's an enduring list of some basics the federal government recommends every year. Some of the recommendations seem hard core, but take a look anyway. Even simple fixes, such as water damage from frozen pipes, can run a few thousand dollars more than any of us want to shell out right now, the Insurance Information Institute reports.

My credit card left home without me. Now what?

2009-10-23T09:03:00.002-05:00

I try to never use credit cards to buy something that will be gone before the bill comes. It's a quirk, I know, but it probably spared me an awkward moment at the gas pump.

Citi apparently shut down a lot of its gasoline company credit cards without warning. That could be a nasty surprise if you just filled up as gas prices kiss $2.50 again. Leaving you with suddenlly worthless plastic is just one of many things card companies are doing before some new consumer friendlier regulations kick in, says Bill Hardekopf of Lowcard.com. And what is frustrating is that shutting off your credit unilaterally is neither illegal nor even among the worst things card companies can do before the new regulations take effect, consumer advocates say.

But what do you do if you've just pumped $30 in the tank, the only cash you have with you is small change in the ashtray, and your credit card is declined? Most immediately, if you don't have a second card to fall back on, talk to whoever is watching the gas pumps inside, have some photo i.d. ready that might convince them you aren't a deadbeat, and arrange to pay the $30 as soon as you can.

Next step, start some damage control. Cancelled credit cards will change your credit score, even if you didn't do anything to trigger the cancellation. Contributor W. Allen Morris to AssociatedContent.com outlines some of the math you will need to do and some of the ways you can use existing cards to patch any damage. Jim Wang over at Bargaineering.com offers some additional tips, though I'm personally more uncomfortable with debit cards than he seems.

And think about paying cash for your next fill up too. In addition to heading off credit card hassles, paying cash for everyday expenses is great way to control spending too.

Pink slipping Santa's workshop

2009-10-21T10:25:00.004-05:00

I think I just found the mother of all Christmas shopping omens. Santa's workshop pinkslipped its last three elves after disappointing sales last year. The Finnish government since then sold part of its stake in the enterprise to private investors who vow to cut costs further.

I also think my former colleagues still at The Kansas City Star can identify. But whatever the reason, it seems you can't swing a candy cane without hitting a pessimistic Christmas season forecast .

The National Retail Federation is already hanging crepe for the holidays. They've still got recession discounted Halloween stuff to move. Meantime, online comparison shopping provider Pricegrabber.com reports that shoppers are hitting the stores earlier to stretch their even smaller budgets as far as possible.

Also, a K-Mart near Washington, D.C., last week threw a media party to promote layaway plans.
Not that long ago, stores threw those sorts of things to promote their credit cards. That cannot be a good sign, say retail watchers at the Motley Fool.

Our new health plan choice: bleed me now or bleed me later

2009-10-19T12:15:00.005-05:00

If I still had hair, we've got some health plan choices coming up that would have me pulling it out about now. Our premiums for COBRA medical coverage, which have been softened for the last year by my severance benefits and federal stimulus money, are scheduled to jump just north of $1,057 a month after Thanksgiving.

We can't afford that. We can't afford not to be covered either. According to some recent research by the Kellogg School of Management, one good whack by a medical calamity puts maybe 50 percent of our savings at risk.

COBRA, which originally was created to provide stop-gap insurance for workers between jobs, gets hairier when jobs are really scarce. The paperwork is often a mess, says Insure.com, which offers tips for dealing with some of the most frequent challenges. And for unknown numbers of unlucky job hunters, their former employers' upcoming open enrollment periods may jack the job hunters' premiums around in ways that few of us have imagined before, writes Chicago attorney Andy Anderson. Growing numbers of us already are looking for private insurance to replace COBRA coverage, says JustHealthNow.org, a California advocacy website.

More workers worry about financial security than their medical plans, insurance giant Prudential reported last week. But in real life, that often isn't an either/or question.

Are the homeless better investors than the rest of us?

2009-10-18T17:01:00.004-05:00

I know that sounds like a dumb question, but what for many of us is our biggest investment isn't a sure bet, Bankrate.com's Sheyna Steiner reported recently.

Far more people believe their homes are better investment than the stock market, even though the investment return historically is only half as large, she found. Home real estate prices aren't dropping as fast as several months ago, but they are still a long way from whippy.

Remember all that advice we heard about diversifying our investments to reduce risk? We've pretty much blown it, according to a study that researchers at Millman Inc. recently prepared for the Society of Actuaries. Many of have nearly 70 percent of our wealth tied up in one asset - our homes. And there are not many convenient ways to pull that money out, even in the best of times, writes MarketWatch's Robert Powell.

Even the optimists think we're maybe a year away from the bottom of the home and mortgage markets, writes Luke Mullins at US News.com. Meantime, we pulled so much wealth out of our homes when prices were rising that it may be a long time before our homes make us 'wealthy' again, says Bruce Bartlett at Forbes.

So what can a little guy do? Question everything, says Consumer Reports. What was good advice not long ago may be lame now. You may want to spiff up your place too. You may be there awhile if foreclosure doesn't get you.

Credit card reform, can it come quickly enough?

2009-10-16T15:46:00.003-05:00

Junk mail makes for some pretty suspenseful reading these days. Those credit card company notices about fine-print changes in our card agreements that few of us read before, for example, now have more of us asking Congress to speed up credit card reform, a new Credit.com survey reports.

Discover this week sent the Ktnomics house four pages of bifocal-challenging small print legalese. Turns out it's the latest changes in our credit card contract that are being made before new credit card protections kick in. I get the gist of them, but I still have no idea what they've done to the grace period. I'll look more closely later. Yeah. Sure.

Other people are getting more jolting news. Bank of America is 'testing' new annual fees for cards that didn't have them before. Other banks have made other changes too. Some even seem consumer friendly, because banks are thinking about how they can compete after the reforms kick in. Others, not so much, says Consumer Federation of America. Litigation has already hit the court system.

Yahoo Finance contributor Laura Rowley notes that just taking a second look at what seems to be junk mail can help you save a few dollars in these tough times. Push a pencil and you might even find some fees are worth paying.

The Edsel is back

2009-10-14T11:49:00.003-05:00

Auto sales took a big hit after the Cash for Clunkers program ended last month, the government confirmed today. That's no big surprise to analysts or anyone who's been following the post-clunker slump in sales figures for the top sellers.

What's interesting is what's going on inside those numbers too. Luxury car sales are tanking, reports the Detroit Free Press. And the numbers of luxury car buyers who trade up to better cars has dropped a fourth or more, according to Automotive News, which has been tracking some inside numbers. Maybe that's a tradition. Time magazine ran a nearly identical analysis a half century ago. It's 50 years next month since Ford announced it was killing the Edsel.

Join me at the welfare trough

2009-10-12T17:02:00.005-05:00

We home owners are welfare bums. That's a startling thought implied by commentator Justin Fox recently in Time magazine in a discussion of some of the tax benefits available for those of who own the roofs over our heads.

The basic idea has been kicking around since a college professor named Christopher Howard described what he called a hidden welfare state kicking around in tax rules that benefit the middle and upper class.

IRS lists bunches of them just for home owners - mortgage interest, mortgage tax credits, real estate and property taxes, energy credits and more. And owning a home often lets you itemize your deductions, which opens up a whole new roomful of potential deductions, H&R Block points out.

Home owning isn't the only tax perk producer, of course. Owning real estate of any kind gets you some generous tax breaks, CPA Richard Lai found in 2003. Sending your kids to college works too. So does opening a business.

One person's tax boondoggle is someone else's support of a laudable social goal, I guess. Still, it's hard to think of Bill and Melinda Gates as welfare abusers just because they save a bundle on taxes by giving gazillions of dollars to good causes around the world.

More homebuying tax breaks coming?

2009-10-11T12:51:00.004-05:00

Giving away free money is a popular government program. Cash for clunkers boosted car sales this summer, though perhaps only temporarily. Now there are signs that a popular $8,000 tax credit for first time home buyers may be sweetened too.

The House of Representatives in Washington last week overwhelmingly to allow armed forces members in combat zones more time to qualify for the credit, which runs out Nov. 30 for other qualifying home buyers. Both the Senate and White House must also okay the idea before anyone gets any money, but it's hard to fault the logic. Home buying is often a long, complex, highly detailed process not easy to deal with when you are distracted by live ammunition.

Realtors want to extend or expand the credit even further, to all home buyers not just service members or first time buyers. It's good for their wallets too. It helps homeowners who aren't buying too. Our homes are worth more in stronger markets.

But let's check the math before we get too giddy. Contributors to the Calculated Risk blog calculate that each of the nearly two million home sales spurred by the incentives costs us $43,000 as taxpayers collectively. OK, that is split among more than 139 million taxpayers, but it's still way more than I paid for my first house 37 years ago.

Marry for money.

2009-10-09T15:46:00.004-05:00

Marrying well is the smartest financial decision I ever made. Didn't know it at the time though. Young Army privates first class in 1967 earned $38.85 a week and received $12.25 for additional food and housing expenses if we were married. My bride is a saver, and squeaking money out of that income stream boded well for the next 40+ years.

But there is a lot of research out there that shows married people, and especially men, become wealthier than singles. One study finds the difference is as much as 27 percent. The researchers cheerfully admit they don't know why.

Thinking back over nearly 300 families and financial plans I've written about in The Kansas City Star Money Makeover series, I believe there's a bigger question. How? Some University of Michigan research earlier this year found that, as love would have it, tightwads and spendthrifts tend to marry each other. Opposites attract, or as research Scott Rick suggests, people look for partners without personality tics they don't like having themselves.

There's a ton of well meant advice out there about talking to your partner to head off money fights. Or you can learn ways to arrange your finances to keep peace. Good luck with that. Love may be eternal, but so it seems is the leading cause of married arguments - money.

Here's a farm program where we can all make money

2009-10-08T11:31:00.004-05:00

A secret from a past life caught up with me today. I discovered that the University of Idaho Extension Service is launching a new free financial planning course online. Big whoop, you say.

Not many people realize that the U.S. Agriculture Department and a network of state colleges and universities that form what's known as the Cooperative Extension System offers top flight, free do-it-yourself financial planning online. Extension is a free, national non-degree educational network organized more than a century ago to show farmers ways to raise bigger crops and healthier animals.

Extension was just getting into financial planning about the time I switched from being a farm and agribusiness reporter to covering personal finance. The two disciplines aren't that different. People I meet in either one have lots to do and not enough time or money to do it. I just don't use the word bushels as much as I once did.

Rutgers - yes, it is still a farm school - did some of the early work and produced a classic curriculum that is yours for the click of a mouse.

Blue Christmas - credit, debit or cash

2009-10-07T08:19:00.005-05:00

Retailers are bracing for a blue Christmas this year - a one percent drop in sales from last year's miserably low business, according to one report. Some blame part of that on debit cards, which are becoming many consumers' next line of defense against growing credit problems.

Using credit cards and paying them off monthly still seems a better plan, if you can swing it. Debit cards offer fewer consumer protections than credit cards and there are some rules that make easier to inadvertently wrack up huge overdraft fees, as outlined here by Kiplinger.com's Joan Goldwasser. And here's a longer list of pros and cons recently outlined in USA Today. Prepaid debit cards, which might seem the safest, actually can spring the worst traps, reports Consumerloanwire.org.

Also credit card rules are changing and some lenders, including Bank of America, are pledging better consumer-friendly deals on both kinds of cards before the new rules kick in. One thing doesn't change though. You still need to read the fine print, advises Consumer Federation of America.

Big Oct. 15 tax deadlines coming up fast

2009-10-05T09:55:00.002-05:00

Heads up, taxpayers. You've only got 10 more days to meet some important Oct. 15 tax deadlines.

About 10 million taxpayers who requested filing extensions last April face the biggest one. Oct. 15 is their last chance to file their tax year 2008 returns penalty-free. There are a few exceptions. Anyone serving in a combat zone and some disaster victims have more time. You don't want to qualify.

Oct. 15 also is the final deadline that taxpayers in Missouri, Kansas and many other states can qualify for property tax relief, sales tax refunds and other special tax breaks for the poor or elderly, if they haven't already. The applications are part of state income tax returns, due when federal returns are filed.

Oct. 15 also is the deadline for getting a do-over if you flubbed a Roth IRA conversion. Technically, the process is called recharacterization, but it's a chance to turn a turn your converted Roth back to a traditional IRA and get back tax money you paid when markets were higher. And if you have money stashed in a secret overseas bank account, Oct. 15 is your last chance to come clean with the IRS and avoid harsher penalties later.

Finally, there's a soft deadline to be aware of if you hope to collect a potential $8,000 credit for first time home buyers. You probably need to pick your new home by mid October to formally close by the Dec. 1 deadline and qualify for the credit.

When good credit card strategies go bad

2009-10-04T17:18:00.004-05:00

OK, we know don't put porn on plastic. Same way with booze, casino cards and even purchases down at the thrift store. Credit card companies in this recession are watching our spending patterns to see if any changes might suggest we may be bigger credit risks.

But what about inflicting damage on our credit scores the old fashioned way? Nasdaq.com recently ran a list of five ways wealthy people mess up their credit. They are things that any of us can do and probably have at some point.

Now it turns out that even going on the financial wagon can be a bad idea, reports Erin Joyce in a recent post to Investopedia.com. Even though some new, more consumer friendly credit card rules will be kicking in soon, staying out of trouble is still our best bet, advisers say.

Want a good buy on a dead car (brand)?

2009-10-02T10:47:00.004-05:00

We sold our two Saturns - a '93 and a '96 - before the bottom fell out. There isn't much to gloat about, though. They had 115,000 and 153,000 miles on them respectively and were pretty much depreciated out.

But there are better ones out there, along with Pontiacs, Hummers, Plymouths, Oldsmobiles and other vanished or vanishing brands. Prices can be real bargains, as Sylvia Cochrane at Associated Content points out. Many buyers are reluctant to buy vehicles no one is making unless, perhaps, they delude themselves into thinking there is a potentially classic collectible in the bunch.

Orphaned car brands can be good deals for the right buyer, says Jim Henry of Bankrate.com. Parts and servicing won't be a problem, the auto industry tells U.S. News and World Report. Resale value likely will be if you plan to sell in a few years. That won't matter so much if you plan to drive them for as long as they last.

I think a bigger kitchentablenomics level casualty in the Lieutenant Motors meltdown may be home real estate prices in Spring Hill, TN. Good luck trying to move one of those.

Head 'em up, Social Security, and move'em out.

2009-10-01T14:07:00.006-05:00

Look for some new free financial planning help from the Social Security Administration in the future. The agency, along with Boston College and the University of Wisconsin, are forming a $5 million Financial Literacy Research Consortium to help us plan more effectively for our retirements.

I wish they'd spent the money on cattle prods. Inertia remains a problem that investors around the world struggle with, reports a recent Harris Poll. Meantime, groups like America Saves, 360 Degrees of Financial Literacy and the National Endowment for Financial Education already provide tons of top rate information for free.

Much of their advice boils down to two principles anyway. Think through what you want before you act, but act. And be conservative. Presume retirement will last longer and take more money than you imagine now.

Five million dollars isn't a lot of money by Washington standards. But it's pretty impressive compared to the Social Security benefits many of us will get.

Bracing for a boomer bust?

2009-09-30T10:05:00.002-05:00

The stock market has fallen more than 100 points since breakfast. It's my fault apparently.

U.S. News & World Report's Emily Brandon recently looked at a theory that baby boomers - I'm in the 1946-born first wave - threaten Wall Street by potentially cashing in our life savings en masse.
Things are a little more complicated than that, she found. And, as others have been reporting for years now, we boomers haven't been model savers. I think there's a more immediate argument, outlined in the Journal of the American Planning Association, that we may smother real estate recovery for awhile.

Others already resent how boomers' decisions are complicating their lives, AARP found in a 2004 survey. Now discussions of aging America and boomer wars are showing up more frequently in scholarly journals and elsewhere. Skirmishing already is beginning in the currently tough job market, reports Kiplinger.com.

But there may be some new career opportunities here too - putting on seminars about resolving generational conflict.

I know your credit is okay, but check anyway

2009-09-29T14:05:00.003-05:00

Pro-consumer Credit.com today unveiled a new version of its Report Card service, designed to give you near real-time feedback on how well you are managing your plastic. More information is available at www.credit.com.

It's a broad look. You plug in a bit of personal information, including your Social Security number, plus some stuff that only you can answer. Report Card then scans your files, gives you a rough estimate of what your credit score probably is, plus some A,B,C etc grades for how well you handle of the biggest forces that move your score. The price is right. It's free. But you will get pitches to upgrade. It's the same situation over at www.creditkarma.com, another site I checked out. They'll give you your precise score too.

These are both potentially helpful services as more of the credit card reforms enacted last winter start kicking in. Banks and credit card companies are rejiggering a lot of rules that they won't be able to change so easily later, the Consumer Federation of America and other advocates warn. Many also are rewriting your credit scores, which makes it tougher to be sure what your score is, reports USA Today.

Some things haven't changed though. The nation's only truly free credit report website, www.annualcreditreport.com, still delivers one free copy of your credit history from each of three main credit monitoring company. It doesn't give you scores, just what's in your records about you.

And paying on time is still the most effective way to preserve or improve those records, says Consumers Union. They've got more tips and a handy calculator here.

How Mary Lou Retton saves me money

2009-09-28T10:42:00.002-05:00

We use coupons a lot at Kitchentablenomics. Have for a long time.

We don't go back to 1895, when breakfast cereal baron C.W. Post first offered a penny discount on the new cereal Grape Nuts, but General Mills and a campaign featuring 1984 Olympics gold medalist Mary Lou Retton still cuts 25 cents off future boxes of Wheaties we buy. No-expiration-date coupons were a lot more common back in the Reagan era and before.

Knocking anwhere from a few cents to several dollars off the price of virtually everything merchants sell in America is a big deal. We consumers who clip coupons each get a sliver of what the Coupon Council of the Promotional Marketers Association calculates to be $3 billion worth of coupons redeemed annually. We toss even more, because vendors offer $400 billion, the association reports.

New York Times reporter Stephanie Rosenbloom over the weekend ran a story about a coupon clipping renaissance that's been blossoming since the recession hit. But there may be more than a recession reaction going on.

Nielsen Company, the global sales tracking giant, reports affluent shoppers are more likely than less fortunate ones to use coupons more heavily. That could just mean they are shopping more than the rest of us because they've got money to do that with.

But Mack Hoopes, an executive with marketing giant Henkel Consumer Goods, says that company's research shows shoppers fall into three categories - shoptimizers, mainstreeters and carefrees - who all use coupons differently. The shoptimizers are the most aggressive users and may simply be in the stores longer right now.

Back at Kitchentablenomics home base, meanwhile, our Mary Lou Retton coupon collection may be threatened. Technology is changing coupon clipping too and now J.C. Penney is looking to deliver coupons through cell phones instead of the Sunday paper.

Joy.

How do you save for an apocalypse?

2009-09-27T16:48:00.005-05:00

Many people believe the world as we know it will end Dec. 21, 2012. Many more don't.

And predictably perhaps, the idea has spawned a slew of books, movies and other enterprises keyed to the event. There are even T-shirts designed for the occasion. I haven't seen any word yet on what might happen to Christmas shopping.

The potential end of the world makes for some interesting financial planning questions too. Planners conservatively try to help us stretch our money into our age 90s or older. But if we only need to hold out three more years, the calculations are different. About two out of three households don't have a financial plan, Financial-planning.com reported recently. It would be ironic if they don't need one.

Seven in 10 Americans worry they don't have enough money saved for retirement, Bankrate.com found in one of its surveys. And thanks to the near apocalypse that hit our savings these last two years, more of us are getting serious about saving.

After all, 2012 may turn out as normal as Y2k. And FEMA will be on it.

Fuzzy math: it's the cloud in our retirement savings silver lining

2009-09-25T15:19:00.003-05:00

I'm expecting good news when my next retirement account statement hits the mail box.

My retirement savings, which were evaporating by $7,000 a day during the worst of last year's meltdown, have grown back more than $40,000 since then, according to what I've seen following the portfolio online. We'll get the official word after the third quarter closes next week.

Whoopee, right? Not so much. It's tempting to think that if you lose, say, 30 percent of your portfolio when markets fall, you make the money back when they rebound 30 percent later. The reality is your investment need to grow twice as much, or 60 percent in this case, just to break even, says Investopedia contributor Doug Rice. He does the math here.

There aren't any shortcuts back up the hill either, reports Michael Maiello at Forbes.com. He lists 11 you want to avoid. Meanwhile, Howtodothings.com contributor Marc Alexander lists some basic strategies you can follow. Basically you work harder and save more.

But there may be good news too. Kiplinger.com columnist Steven Goldberg reexamines some past recession market statistics and finds recovery may come faster than forecasters commonly think.

Free cars and and at least three legal ways to get one

2009-09-24T11:45:00.009-05:00

My folks, who don't drive as much as they used to, recently decided to give my son the keys to a 21-year-old farm pickup truck they once used to take him on camping trips when he was little.

He's really happy about that. Besides the memories that are involved, the pickup will handle northeast Kansas winter driving challenges better than his Miata. And my parents and I are happy for him because free is a tough price to beat, especially when used car prices are rising.

Auto industry trade publications report that last month's Cash for Clunkers program cut the heart out of the normal seasonal flow of used cars to dealers' lots. That puts more pressure on dealers to sell new cars. It also hurts their profits because, counterintuitive as it might seem, dealers make bigger profits selling used cars than new ones.

But none of that answers another question; why pay anything if you don't have to? There are at least three ways to get a car for free without risking jail time.

You can accept one as a gift from a relative, friend or even an impulsive celebrity. That's hard to plan on, of course. You can go to work for someone who gives you a company car to use. Good luck trying that in today's job market, even if the recession is supposed to be ending.

Or you can go into advertising. There are companies that will either give you a free car emblazoned with their clients' ad messages or pay you to have yours decked out with the ad message and then drive your mobile billboard around town. Read the fine print before you sign anything though. The deals vary widely.

Financial self-help guru Dave Ramsey's organization insists there is another way to get a free car too. Buy the best used car that you can afford for cash. Stash the payments you otherwise would be making into a savings account. Use that cash and your trade-in to trade up in a couple of years. Repeat as needed. This isn't truly free, of course, but it is very thrifty.

Finally, before you do anything, do the math. As Edmunds.com senior editor Karl Brauer points out, keeping even a relative gas guzzler can be thriftier than borrowing to buy a fuel sipper.

Free flu shots - it's more than being thrifty

2009-09-21T17:37:00.002-05:00

We went scavenging for health care this morning.

Ms. KTnomics and I were about 36th in line for this free flu shot offerin g. Despite some heavy rain, and lightning that delayed the scheduled 10 a.m. opening, 500 doses were spoken for before the needle hit my arm. Hundreds of drivers and passengers who filled half the parking lot of a dead mall got zip.

Our experience is a trifle compared to what happened last month when Remote Area Medical opened a brief free clinic in Los Angeles. RAM is a non-profit volunteer's group originally organized to help desperately poor Third World citizens. They get way too much business here.

They aren't alone. Same thing happens in Maryland, outside Nashville and other places where volunteers set up shop. About 46 million uninsured Americans are looking for medical help where ever they can get it, the Census Bureau estimates.

Retail America offers one possibility. The Los Angeles Times reports that Walgreen's, CVS, Walmart and other companies are expanding some of the services they provide in kiosk clinics in their stores. Retailwire.com, an online news service, reports that the in-store clinics provide high quality simple services for less money than traditional medical facilities. The New England Journal of Medicine agrees, but with reservations.

Latte, schmatte - go for the budget jugular

2009-09-20T20:14:00.003-05:00

If giving up pricey lattes at the coffee shop really worked, more of the millions of us who've lost jobs lately would be a lot wealthier. Lord knows, we've given up lattes and lots more to stretch our savings and reduced income as far as we can.

Actually, I always liked the latte factor idea that financial self help specialist David Bach created over at FinishRich.com. Little extravagances you indulge in really do count up in less time than you think. Here's a calculator Bach created to help you measure your damage.

But now that even senior discount half price coffee at McDonalds is a luxury - they pour a tasty Arabica blend - it's obvious that sterner stuff is needed. When you whack your budget, whack big, gaggles of gurus told Yahoo contributor Marcia Passos Duffy recently. Penny pinching may even be counter productive, says Jason Guthrie at Beancounterblog.com. Have a slurp to keep your morale up and make up the costs by cutting something you don't want, he writes.

But that debate suggests you have a choice. That may or may not be true, according to some mid 1990s research published by the Association of Financial Counseling, Planning and Education.
Researchers at Ohio State University found that your inclination to overspend or not more likely will depend on seemingly external conditions such as your age and whether you are married, own a home or have a job.

Cutting expenses is like dieting. The exotic stuff sounds intriguing, but in real life there aren't that many shortcuts.

Confidents, pessimists or realists - Who's talking to economic pollsters now?

2009-09-18T15:41:00.005-05:00

Want to know how weird it gets on the recession front lines?

Dame Vera Lynn, an iconic World War II era vocalist, topped Britain's music charts last month, outselling both the Beatles and the Arctic Monkeys. It's not surprising maybe. Slews of recent surveys of our confidence in our economic future are all over the map. I think that suggests recession fighters on jobs and home fronts now feel as stressed out as the Greatest Generation was 65 years ago.

Consumer confidence rose in August, but pollsters find that many of us are still pretty edgy out here. We have reason to be, New York Times editorial writers declared recently. And six in 10 households surveyed by Country Financial fear their retirements will be as bad as or worse than what their parents are going through now, the Illinois insurance insurance and investment management company reports.

Plus, remedies that used to work don't seem to now, reporters Janet Novack and Stephanie Fitch find in an upcoming Forbes magazine piece outlining how the economy is roughing up the middle class. That in turn makes what we think is a traditional recovery all that more difficult, say researchers at the University of Michigan and elsewhere.

That brings us back to Dame Vera Lynn. If you are a movie fan, hum along with the final moments of the classic Dr. Strangelove, or: How I Learned to Stop Worrying and Love the Bomb.

So, first-time home buyers, do you feel lucky?

2009-09-17T11:10:00.006-05:00

The White House is kicking around the idea of extending deadlines for this year's $8,000 tax credit for first-time home buyers. About 1.4 million home buyers already have applied for the credits, which essentially are super-sized tax refunds, the Internal Revenue Service said Thursday.

No big surprise there. The idea has been kicking around since Cash for Clunkers arced through the economy this summer. Bankers, builders and Realtors are all for it; they're sweating the recession too. And U.S. Sen. Johnny Isakson, a Georgia Republican and one of more than a dozen lawmakers proposing their own extension plans, wants to sweeten the deal by nearly doubling the credit, to $15,000. However, that may be tough to sell to deficit hawks, Bloomberg News' Dawn Kopecki reports.

But this leaves first-time home buyers - anyone who hasn't owned a home in the last three years - with an $8,000 wager to consider. Do you hustle now to catch a tax break you know is on the table? Or do you wait to get maybe either the same deal or an almost twice better tax break next year, or maybe nothing at all if the credit runs out?

There isn't much time to decide either. Taking the most conservative bet, and grabbing the tax break that's on the table now, requires closing the deal by Dec. 1. That's a daunting process for first timers, as outlined here by Bankrate.com. It's no picnic for those of us who've done it before either.

It's not a quick process either. Under ideal circumstances, buyers can close on their new homes in as little as two weeks after they reach an agreement with sellers, writes About.com's Elizabeth Weintraub. But nearer 30 days is more common and it may take longer.

Count on longer. Tighter lending practices and recession-thinned financial services backshops are stretching the closing process to nearer two months in some places, reports The Wall Street Journal's Amy Hoag. You may want to aim for no later than the last week before Thanksgiving to be sure you don't miss out. Thirty day closings are still happening in the Kansas City area, where I live, but plan on 45 days just to be safe, suggests the Kansas City Regional Association of Realtors.

Falling inflation has some hidden traps too

2009-09-16T14:38:00.007-05:00

Lord knows I don't miss $4 gas.

But the latest round of flat and falling consumer prices reported by the government may hold some perils for the unwary too.

Near-zero inflation means Social Security beneficiaries won't get cost-of-living increases for the next couple years, for the first time since COLA adjustments became automatic in 1975. Some Medicare prescription insurance premiums will rise, however, so some retirees will take a pay cut. The big question, outlined as clearly as I've ever seen by Felice Baker at Northwestern U.'s Medill Washington Project, is whether lower prices for other stuff will outweigh the higher premiums.

Your ability to put extra money in your 401(k) may be crimped too. Just as workers are feeling secure enough for the first time in nearly a year to increase contributions instead of cutting them, federal inflation adjusting formulas point to a $500 cut in maximum contributions, to $16,000. That won't make much difference to many workers, who only put maybe $4,000 or $5,000 a year into their plans. IRS is expected to announce Oct. 15 whether it will cut the limit or simply freeze it at the current $16,500.

And think about low inflation now when you next fill out your federal and state income tax returns. Senior economist Gerald Prante of the Tax Foundation says the current year-over-year monthly average 0.19 percent uptick in the Consumer Price Index effectively freezes personal exemptions, standard deductions, how much you can itemize, tax bracket boundaries, and virtually everything else on which you base your calculations.

This follows the largest increase in nearly two decades last year. You decide if the turnaround means stability or hitting the windshield.

Eating really gross food on a budget

2009-09-15T14:06:00.003-05:00

We've missed the national canned Spam boomlet at our house. The precooked canned pork shoulder product is a hard-times staple, The New York Times' Andrew Martin reports. I just haven't really cared for it much since a lowest-bidder version, packed two years before I was born, showed up in an Army field rations kit I got 40 years ago.

But Ms. KTnomics put Velveeta processed cheese on our grocery list this week for what may be the first time in all the years we've been married. Velveeta, if you aren't familiar with it, is made of vegetable oil, whey, seaweed extracts and other chemicals and stabilizers. Its distinctive taste has been compared to cheddar, though not always favorably.

"Don't sneer," she told me. Our favorite Jaarlsberg costs $4.56 a pound at Sam's Club. Our Price Chopper card and a manufacturer's coupon knock the normally similarly priced Velveeta down to below $3. Plus it's good in casseroles and works okay in nacho dips.

But is it worth it? Foodies on budgets offer mixed opinions. Basically, when you calculate serving sizes and other variables, the economics blur a bit. And there are ways to eat cheap using the good stuff. Skip value-added prepackaged products as much as possible, suggests blogger Susannah Nofziger. TheStreet.com's Althea Chang recommends checking out the generic brands.

Planning ahead widens your choices and saves money, says About.com's Fiona Haynes. And the simplest solution of all? Eat less. You'll lose weight and save money. Maybe that's how Spam and Velveeta will work for me.

Omens on the rack at the thrift store's half price sale?

2009-09-09T09:34:00.003-05:00

I counted 100 cars in one of our neighborhood thrift store's fog shrouded parking lot when the doors opened 7 a.m. Monday for a half price Labor Day sale. One day later, the Federal Reserve reports the biggest drop ever in consumer borrowing in July. I don't think it's a coincidence.

Consumers are tapped out, writes Seekingalpha.com commentator Jason Kelly. And there's more anecdotal evidence that frugality is becoming more than a passing fancy, reporters Jeff Harrington in St. Petersburg, Fla. and Ashley Heher in Chicago found in their one-year retrospectives of the nation's financial near meltdown.

We don't yet know how main line retailers fared over the holiday. Many were sweating it though, reports TheStreet.com's Janine Poggi. Labor Day is one of the last big holidays before Christmas shopping starts and August's back to school sales weren't booming.

But business is getting brisker around the nation's 25,000 thrift shops, according to the National Association of Retail and Thrift Shops. About one in six shoppers, something between 16 percent and 18 percent - surveyed by the group has either visited a thrift shop or plans to this year. That's more than factory outlet malls are expected to draw and almost as many as the 23 percent headed to big name department stores.

Thrift store buying also is a potential second income source, eBay coach Suzanne Wells writes on www.examiner.com. She offers advice on reselling your thrift store treasures online. Just be aware that shopping thrift stores is labor intensive whether you plan to resell or not. Here are some tips Parade magazine recently offered to help get you started.

Keep your hands on the wheel if your retirement plan goes on autopilot

2009-09-06T10:20:00.004-05:00

President Obama made a big change in how workers save for retirement over the Labor Day weekend.

Here are some of the details. Briefly, more employers will be offering automatic enrollments in 401(k) and other retirement plans, taxpayers get new opportunities to use tax refunds for retirement savings or to buy Savings Bonds, and some workers with unused vacation or paid sick leave can throw that money into the retirement pot too.

Automatic enrollments have been around - and generally applauded - for several years, but making them nearer to universal makes it more important for savers to watch for potential problems too. One of the advantages that employers may like, for example, is that the new rules make it potentially easier to offer smaller matching contributions and to cut back on traditional pension funding that they also might be on the hook for.

Meantime, back at the payroll window, the changes also may hurt some lower income workers that are supposed to be helped, writes USNews.com's Emily Brandon. It's tough to save for retirement if you need payday loans to buy groceries. You can unenroll from the plans if needed, but that just makes it tougher to save.

Also, while more of us might be saving money by being automatically enrolled, there is no guarantee any of us will be saving enough. We probably won't, Vanguard, the mutual fund company, found in a 2007 study. Many of us will need to increase our contributions to more than the automatic enrollment offers.

The 401(k) Help Center offers links to lots of specialized Web sites that may be helpful when the new rules kick in.

IRS cops taking a closer look at home mortgages

2009-09-02T08:56:00.003-05:00

IRS will be watching those deductions we take for interest on our home mortgage payments more closely, the Treasury Department's Inspector General said recently.

The service's aim is to catch tax cheats who either don't file or who report low incomes but are making McMansion-sized mortgage payments with money they may be hiding. There already is a Form 1098 that will help track these discrepancies, but IRS hasn't been using it much, Treasury investigators found.

This could get complicated for all the estimated 51 million home owners making mortgage payments though. That's because no one appears to know how to accurately calculate how much we should be deducting, the Government Accountability Office reports. An estimated 12 percent to 14 percent of the taxpaying public writes off either too much or too little, GAO found. But IRS, the tax industry and individual taxpayers often don't have enough information to catch those errors when they happen.

Tax audits are rising again, Syracuse University reports, so keep good tax records and file accurately. And if you are among the small contractors, free lancers and other non W-2 workers whose returns may be watched most closely, remember your Sept. 15 estimated quarterly tax payments need to hit the Post Office in just less than two weeks.

Now, maybe Money for Manors?

2009-08-31T14:18:00.003-05:00

It's tough to come up with a catchy phrase for potential government stimulated home-buying. Cash for Cabins sounds like vacation property development. Scratch for Shelter, which I used the last time I thought about who might be next in line for help, just sounds nasty.

No matter. Really smart people are having even more trouble coming up with real solutions to the underlying problem too. When economists Edward Leamer of UCLA and Brad DeLong of Berkely duked it out on The Los Angeles Times op-ed pages recently, the choices they offered ranged from praying that this year's $8,000 home buyers tax credit will work to drafting Fannie Mae and Freddie Mac to convert every mortgage in America to a 30-year fixed.

Few of us realize how big and self feeding the problem is, reports Economist.com. Even Hugh Hefner lands on a list of senior citizens unable to pull all the equity he hoped from his house, the online magazine discovered. Meantime, even good borrowers may run into unexpected trouble buying home we want to sell, The New York Times found recently

And recovery may take awhile. Real estate prices in much of Texas still haven't recovered from tanking in the early 1980s, when J.R. Ewing was wheeling and dealing at Southfor k. Southfork ironically wasn't hit as hard as other properties. A lot of fans so far are still willing and able to pony up extra dollars to live the dream everytime a tour bus stops.

Saving money in theory vs. real life

2009-08-30T20:02:00.003-05:00

Quicken has come up with nine ways to really waste money. I think it's a hoot. I'm only guilty of one of them. I'm not telling which, though it's obvious from my picture that overspending on hair care or plastic surgery isn't the culprit.

But it points out something else I've noticed since I was downsized last year - the kind of money saving advice you look for changes when you've had a setback. I used to ride with some basic stuff financial planners recommend, which are still good rules to follow. But when you've been on both sides of the unemployment statistics, you can pretty much tell who has first hand experience squeezing a dollar and who doesn't.

I look for really practical tips and things I haven't tried already. Kiplinger.com is always a reliable source.

A contributor to savingadvice.com recently echoed one principle I've been following almost without thinking. Pick reusable choices over disposable ones. I refill water bottles from the tap many times before finally putting them out with the recycling. And I just gave away which of Quicken's money wasters I've committed.

Debit card holders outspend credit card holders...and have more at risk

2009-08-28T15:32:00.007-05:00

Thieves prefer stealing debit cards -or debit card identities- over stealing credit cards, reports NACSonline, an electronic newsletter published by the National Association of Convenience Stores.

The reason why, apparently, is approximately the same reason bandits Clyde Barrow and John Dillinger allegedly preferred V-8 Fords. They outran virtually every cop car on the road in the 1930s.

Debit card fraud is harder to detect because debit card companies by and large don't track suspicious transactions as closely as credit card companies do, writer Odysseas Papadimitriou reports on Examiner.com. And with debit cards outnumbering credit cards 176 million to 173 million by one federal count, more than half the nation's users of plastic are taking greater risks.

If someone swipes your credit card or your credit card identity, current federal law currently limits your loss to essentially $50. If the same thing happens to your debit card and you don't report it fast enough, you could be on the hook for whatever the thieves spend, the Federal Trade Commission says.

FTC and other authorities outline a bunch of ways to protect yourself against debit card theft. But many of them miss what I think is an obvious solution. Forget about debit, use credit and pay off the balance each month. You get the same results as with a debit card and you're only risking $50.

From cash for clunkers to greenbacks for green machines

2009-08-25T17:37:00.003-05:00

Okay, the cash for clunkers car deals are history. Next up, forecasters believe, the next consumer cash incentive program coming out of Washington will be cash for appliances.

The prevailing predictions currently are that the plan will provide rebates of $50 to $200 to consumers who buy Energy Star rated fridges, freezers, washers or other appliances, Business Week and other sources report.

Details are still being worked out, but you don't have to trade in your old appliance to qualify for the cash, just buy a new one. Some Maytag owners of some potentially dangerous refrigerators might want to anyway. A national recall was expanded Tuesday.

You probably won't have to scramble for the shiny green replacements either. More than half the appliances on the market now are Energy Star rated.

Appliance rebates are a mixed blessing for retailers , reports an organization called the American Council for an Energy Efficient Economy. They boost sales and encourage conservation in the short run, but can also cause manufacturers to wildly misread what consumers want in the long run.

Sellers like rebates for two reasons. They make it easier to raise prices when sales improve - you just end the rebate. Plus many consumers haven't been claiming rebates much, before now at least, because they don't like the paperwork involved, US News and World Report found recently.

Converting your 401(k) into a pension

2009-08-24T18:32:00.009-05:00

Old fashioned pensions look a lot more attractive after some of the damage our retirements took during the last couple years. And now some companies are looking to add some old-fashioned pension benefits to retirement plans, reports Kiplinger.com

You already can do this yourself if you've got time and can wade through some potentially eye-glazing insurance calculations. You can even do a lot of it more simply just by stopping the damage we inflict ourselves saving too little too late.

But Kiplinger outlines something informally known as a DBk plan, which is a 401(k) with a dollop of pension benefits. Employer matching would be more generous too in exchange for some streamlining that also would mean sweeter deals for upper echelon execs, writes Kiplinger's Joan Pryde.

It's too soon to tell how popular the new plans might become. But look for employers to restore some sort of improved retirement plans as soon as they can, suggests WorldAtWork.org. They value the plans as much as workers do, a new study found.

Out of cash, not clunkers. Now what?

2009-08-23T15:56:00.008-05:00

If you think about it, you can still make a buck off the government's cash for clunkers plan, even though the formal program ends soon.

Just go back to what you were doing before. Wait for prices to drop or your income prospects to rise into your comfort zone. Your selection is smaller now, but better deals and bigger rebates are dead ahead, according to SmartMoney's Aleksandra Todorova.

The new cars will still be there. Edmunds.com chief executive Jeremy Anwyl predicts sales may drop back to what they would have been anyway for 2009. After selling months' worth of cars in just a few weeks, traffic will become very s-l-o-w around your neighborhood car lot, according to forecasters from New York to Los Angeles.

The program has changed how cars are sold, at least for awhile, say analysts at Edmunds.com who poked beneath the initial sales numbers. What's next, they aren't so sure.

It has probably hurt consumers, argues Steve Petty, a California clergyman who calculates consumers went $6 billion deeper into debt to pick up $2 billion in rebates. He likens the program to enabling an alcoholic --Detroit, not consumers.

Meantime, retailers who don't sell cars may be glad the program is over. Both the National Retail Federation and the International Council of Shopping Centers have reported dismal retail sales for July, when their customers started heading for car showrooms instead. Some believe that will be hard traffic for retailers to rebuild now that 700,000 motorists or so all have new car payments to make.

I thought about that when I bought some socks earlier today. I didn't need them right away, but I had a $10 use-it-or-lose-it coupon that was expiring. The $10.95 package of socks seemed reasonable. There were no lines at the checkout and lots of parking around the store. It could be another hard candy Christmas at the mall.

What's not in 58 million wallets and what you can do to fight back

2009-08-21T15:23:00.004-05:00

Credit card issuers really whacked cardholders, FICO, the credit score people told the Associated Press recently. They've dropped some 58 million cardholders in the last year, including many with really good credit histories.

They're looking for a sweet spot in their customer base that will generate more profit with little risk, says the Gerson Lerhman Group consulting firm. Finding it is a bit tricky just now.

You can fight back, said John Ulzheimer, the consumer education chief at Credit.com with whom we talked recently. If you've got a decent credit history and a card you don't use much, blow the dust bunnies off those cards and pop for a few things - gas for the car or a dinner out -that you would spend for anyway and put those on the cards.

Just be sure to pay off the balances on time. Even though some consumer friendly credit card rules kicked in this week, one thing has't changed.

"Due dates are due dates, not suggestions," Ulzheimer said.

If your credit records are really skimpy, you even might want to open an account or two to stake out a history before further reforms kick in next February. Whether you're doing that or just trying to recover what you lost in the 58 million card flush, brace yourself for more paperwork, says Florida financial adviser Jean Mascary. These are challenging times on both sides of the loan desk.

Freeloading is just one way to stretch a budget

2009-08-20T15:26:00.004-05:00

I picked up a lot of free pens and other office gizmos at a job fair today. Picking up freebies gets to be a habit quickly when money is tight. Heck, I've even mapped out when our supermarket puts out free food samples so I know when to run grocery errands.

More important, though, there are a lot of free things you can do to save money more effectively too. You already know many of them: plan your spending, pay bills on time to avoid late fees, live within your means, and things like that.

Money pros know them too. And recently three of them - coming from widely different vantage points -popped out their lists of some of the biggest money mistakes many of us make. Some of the candidates may surprise you.

Forbes, once required reading for aspirants to the uber-rich, cautions against hitting the snooze alarm. Ken and Daria Dolan, nice folks who would welcome you to their upscale suburb, talk about managing your credit carefully. And GenXfinance.com, written by and for the kids that our kids went to school with, offers some timeless tips that some of us may wish we'd listened to.

Start planning ahead and you'll come up with your own list pretty quickly. Meantime, I've got to find someplace to stash the little paper cup that my chicken salad sample came in.

Use your credit cards or lose them

2009-08-19T13:12:00.004-05:00

Watch your wallet - and the mail - if you keep a spare credit card for emergencies. Another round of new credit card reforms, kicking in tomorrow, may snarl your planned financial lifeline.

Most of the changes are consumer friendly, Massachusetts regulators and other authorities conclude. What we don't know is what rate hikes or other changes credit card companies might make to finish molding their customer bases before some final and stricter rules take effect in February.

"Think Play-Doh," suggests John Ulzheimer, consumer education chief at Credit.com, an on-line consumer education and advocacy service.

Card providers basically will use the time between now and Feb. 23 to craft the most profitable customer bases they can, by cutting out slabs of their most likely-to-default overextended borrowers and their most unprofitable customers, who carry cards but seldom use them, Ulzheimer said.

Counseling, debt consolidation and other help abound for overextended borrowers. But hanging on to an emergency card you don't want to use requires different action. Your best bet will be to use the card enough to keep your account active but not enough to punch holes in your cash flow.

And if you do carry a balance, be conservative, authorities recommend. Two guidelines that are still good despite the change: Keep your total borrowing below 35 - 40 percent of your total credit limit. Keep your payments within 10 percent of your cash flow.

Keeping a card active won't take much, Ulzheimer said. Just a few transactions -and the fees they generate from merchants - will do the trick.

"We're not talking about buying a flat screen TV," he said. "Go out for dinner. Fill your tank. Then pay it off in full at the end of the month."

To leave someone money, leave instructions too

2009-08-18T13:33:00.005-05:00

Don't count on insurance companies to track down your loved ones to deliver a benefits check when you die. Insurers must pay claims as called for in the policy if beneficiaries ask, but no one forces the companies to hunt for beneficiaries if they don't know you are dead.

State treasurers across the U.S. offer one backstop of sorts. They all run unclaimed property programs in which, after enough time passes, they crack open dormant lock boxes and try to find lost owners or heirs for an estimated $33 billion of stuff accumulated there. The treasurers, including Missouri's Clint Zweifel, often use state fairs to highlight their programs if you want funnel cake with your share of the fortune.

Now Glenville, Ill., entrepreneurs Joe Palmer and Tej Shah offer another solution to the problem. They've set up a free online registration service, WeRemember.org to leave instructions for our loved ones about where to find insurance policies and other important documents needed for them to receive the benefits we intend for them. When we die - and WeRemember verifies that independently - the service calls our beneficiaries and delivers the information we left for them.

Theoretically, we're doing a lot of this already in heart-to-heart conversations with loved ones or instructions we leave with trusted advisers. In real life, that doesn't happen as often as it should. "As a nation, we spend more time planning our next car purchase than dealing with estate planning documents," Palmer said.

We need to do some homework too. Our loved ones are going to need a ton of information when we die and some of it - where to find military discharge papers, birth or marriage certificates, or precise family information to reconstruct anything missing - won't be easy to find without help.

Taking time now to sort out what's important and organize an easy way for someone else to find it. That will make it easier for loved ones later.

My next home buying decision gets complicated

2009-08-17T14:56:00.003-05:00

We hired a friend to paint some trim along the roof of our house last week. I'm not as good on ladders as I was a couple decades ago and Ms. Ktnomics is not thrilled with our medical coverage since the layoff.

We expect to face such decisions more frequently as time passes. Turns out that one logical solution -moving into a maintenance free retirement or continuing care community - may be more challenging than we imagined.

Canada's Atlantic Seniors Housing Research Alliance already reports that few communities are equipped to handle hordes of first wave baby boomers that are demographically projected to start knocking soon on the front doors. That's scary because other observers believe Canada may be better prepared than we are in the Lower 48.

There is a solution. Move in early to beat the rush. Some people already are starting, Coldwell Banker, the real estate concern, found earlier this year. Not many numbers have come in yet, but retirement communities appear to be becoming some of the perkiest real estate markets around. Just as in traditional suburbs, the most economically priced properities are going fast, say data base crunchers at Clear Capital, a Truckee, Calif., information seller.

Developers already are planning some big changes in the way future retirement communities will be built. Don't count on much shuffleboard.

How to pick a good retirement community when you are still relatively young and active gets interesting too. Web sites such as HomeInsight.com and the Gilbert Guide outline hosts of things to look for, including crime rates, personal safety, the proximity of colleges or other senior-discount friendly educational and social outlets, and good medical care.

Oh, and one other thing. Look for part time job opportunities in the area too, the mavens say.
Someone apparently has to pay for all this stuff.

Putting rejected clunkers back on the road.

2009-08-16T13:53:00.004-05:00

This weekend marks the new model year for the people who buy cars we donate to charity.

The cash-for-clunkers program in Washington on Friday changed some of the models that qualify for the federally-created trade-in plan. The feds are scratching 78 models off the list for which they'll pay as much as $4,500 and adding 86 others in their stead.

Officials at www.cars.gov also tweaked guidelines for consumers' rights and dealers' obligations under the program to keep things humming while dealers worry about how soon they'll be repaid for money they fronted to buyers.

Charities who previously relied on donated clunkers have been worried the last couple weeks that those contributions might nosedive because drivers will trade their aging bolt-buckets into the government program instead. Some low-income Californians even called a protest to call attention to harm they expect to suffer as a result.

Some donations have fallen off, but the Associated Press reports that other charities find some contributions are increasing because people are turning in vehicles that the CARS program rejects. More than 150 agencies, including at least three in the Kansas City area, count on clunkers to help low income families find affordable cars for getting to work and basic needs, says Opportunity Cars, a national clearing house for such groups.

Drivers looking for cash-for-clunkers trade-in money also need to watch out for a widening variety of scams involving the program, warn the Federal Trade Commission and the Better Business Bureau.

As always, do the math before you commit to any cash-for-clunkers deal and crank your changed insurance, tax and other costs into the equation. It's your best defense against disappointment at best or a ripoff at worst.

Are 401(k) matches coming back?

2009-08-14T18:28:00.002-05:00

The short answer is maybe. Some new survey results reported by Financial-Planning.com show that nearly two in three employers who stopped matching workers' 401(k) contributions are planning to restore them soon.

We can use the money. Market losses and last year's reduced contributions dropped the national average 401(k) balance to a five-year-low $26,578, according to the Employee Benefits Research Institute. Losing the contributions permanently would be potentially devastating for many savers' retirements, as Shelley K. Schwartz of Bankrate.com reported recently.

Watson Wyatt consultant Laura Sejen, whose firm conducted the new survey, suggests that many of the new deals may not be as sweet as the old ones. Employers are still vague about when the cuts will be restored; some reportedly aren't even telling employees of the change just in case the economic recovery doesn't work out. And, as happened with our health plans, employers like the idea of us carrying more of the total load.

So when your employer announces its plans, be ready to push a pencil to recalculate what you need to contribute to hit your retirement goals. CNN's Jeanne Sahadi offers some guidelines to help calculate what you need to make up lost ground.

When does it pay to stick with an expensive mortgage?

2009-08-13T08:22:00.005-05:00

Nearly half the home mortgages in the U.S. will be underwater in less than two years, predicts Karen Weaver, a senior Deutsche Bank research executive. Her reasoning, outlined by Fortune's Scott Cendrowski, is pretty compelling. Zillow.com reported separately that 23 percent were already there when the second quarter ended, which puts the fall a tad faster than Weaver projected.

Ours won't be among them. Ms. Ktnomics and I already paid ours off in anticipation of what I expected would be retirement in a few years. We could still feel some ripples though. Declining home values that are feeding the mortgage tsunami, and which Yale economist Robert Shiller predicts may be with us a long while, will further shred one of our potential safety nets.

The more interesting question is how to brace for such a calamity. Turns out there may be times in this current economy where our first impulse - to shed debt by paying down the mortgage as quickly as possible - is wrong.

Briefly, we need to to think through all the alternative uses for the money we would plan to throw at the mortgage, as MSN Money contributor Liz Pulliam Weston outlined in a recent article.

And especially if your mortgage starts going underwater, it probably makes sense to first build up your emergency funds, make some extra retirement plan contributions or buy some health or disability coverage before you plump up your mortgage payments. That way you'll still get good out of money that otherwise would just go to the bank if you lost the house anyway.

Now credit card traps run two ways

2009-08-12T12:56:00.003-05:00

Used to be you only got in a credit card jam if you ran up a tab and didn't pay. Now you can get in trouble if you don't run up a tab too. And you still have to pay. That's progress.

I know it sounds screwy, but that's one outcome of a bunch of changes that credit card companies have been making ahead of new reforms kicking in next February, according to USA Today's Kathy Chu, ConsumerAffairs.com's Mark Huffman and other reporters.

The reforms shut off a lot of ways that card companies have been making money off regretably improvident consumers the last several years. So the companies are working between now and February to rejigger revenue streams from our accounts and, more equitably perhaps, tap prudent consumers too. That's why, for example, some are adding annual fees and various inactive account charges on cards we don't use much.

I can see their point. It probably costs the people at one my credit card companies more money to mail me zero-balance-due statements than they'll ever make off that account. We pay in full on those rare occasions we use that card. But I don't buy the point either. I don't want to pay $30 just to carry a spare card. Nor do I want to charge something just to avoid the $30.

Blogger Jim Wang at www.bargaineering.com offers one solution to this dilemma that seems emotionally satisfying if nothing else works. Order up enough of those hard-to-peddle circulating $1 coins from the U.S. Mint to meet your credit card company's transaction threshhold and pay with plastic. Then deposit the coins in your bank to help pay your credit card bill when the statement comes.

And don't forget your reward points on the way out.

Retail therapy...hook your kids now

2009-08-11T13:55:00.003-05:00

Retailers have a lot riding on back-to-schools sales. They're hoping we'll stimulate their revenues by $17.4 billion this year, the National Retail Federation reports.

Both the Federation and America's Research Group say they expect consumers to cut back-to-school buying by about 8 percent this season. Good luck if you are trying, say the gnomes at Huntington Bancshares in Ohio, who are tracking the prices of stuff going into kids' back packs this year. Those are up $400 or more, according to Huntington's back pack index.

Resolving this conflict produces some some pretty interesting spin on dealing recession from folks interested in separating you from what's left in your wallet. Both Capital One and K-Mart, for example, point out that times like these provide good opportunities to help our kids learn to spend wisely. That's probably true, though you might also wonder what the coupon offers in the K-Mart package teach. All kinds of retailers are incorporating prudence into their pitches this year, writes MarketWatch's Andria Cheng.

Back-to-school shopping trips are the biggest annual commitment many of us make to our kids' educations, according to GreatSchools, an online advocate of greater parental involvement in education. That's wrong, says founder Bill Jackson. He lists more than a half dozen things we can - from simply meeting teachers to reading with our kids more often - that will have a far more significant impact.

Sex, money and sleeping on the couch

2009-08-09T11:16:00.002-05:00

Who watches the money at your house? Reporting more than 300 feature stories involving couples and their finances over the years, I've found that generally one partner is more of a money maven than the other. Despite what tradition and old grade school primers imply, women seem the money hawks in more than half the households I know. Predicting who assumes that role remains a crap shoot, however.

Now a slew of new surveys in the last few weeks show that this recession we're going through is changing these new relationships, even before we have them completely figured out. More women are becoming their families' primary bread winners, reports the Center for American Progress, but that still doesn't always determine who calls the shots.

TD Ameritrade researchers report that 86 percent of women they recently surveyed have been cutting expenses in the recession, compared to only 78 percent of men. They've been cutting deeper too, some of the details suggest. Fidelity Investments researchers found that approximately half the couples they surveyed don't appear to be on the same financial planning page anyway; fewer than 40 percent believe their spouse could successfully take over their household finances if needed. Click here for a quick check to see how you might be doing.

Throw in a lost job, shattered retirement account or similar setback and those fragile foundations tremble. Nearly three Americans in 10 report recession worries have seriously hurt their relationships with loved ones, ING Direct found. The same thing is going on in Canadian, French and German homes too, but not as much as in the U.S., pollsters reported.

Give IRS a piece of your mind

2009-08-03T15:04:00.004-05:00

I'm a bald guy, but my barber needs a license to trim the fringe. My tax situation is complicated by self-employment, part time W-2 work and big IRA changes, but my tax guy doesn't need a license to sort any of that out.

Does that make sense? I don't know. More interestingly, IRS doesn't know either. The service is formally asking us to chime in on that question this summer. It's already held one public hearing last month on the topic. Click on the witness names here to see what was said. Another one is in the works this week, and two more are in the works later this summer. Or if you can't make any of those, the agency will take written comments this month too.

The issue is worth following, even if it isn't your first choice for light summer reading.

Basically, more than half of us turn to someone for help with our taxes each year. But neither the IRS's enforcement arm, its consumer friendlier Taxpayer Advocate's office, nor its operations overseers at the Treasury Inspector General for Tax Administration office know enough about those preparers to know how to monitor them.

The enforcers want to put preparers like Joyce Marie Simmons out of business. She's a former Texas snow cone stand operator who went into the tax business and, IRS alleges, fudged about $13 million in improper deductions. She disputes the allegations and the matter may be in court for some time.

One danger is that clamping down on egregious abuses may make it harder for your tax pro or mine to claim legitimate deductions too. The definition of what's iffy moves closer to us.

So, speak up while you have a chance. And keep those receipts just in case.

Free advice and real value

2009-08-02T10:58:00.005-05:00

Sometimes free help seems worth what you pay for it. One exception - and a real value if you are in the market- begins later this week. The National Association of Personal Financial Advisors on Aug. 7 is launching a series of free webinars designed to help us mere mortals get a grip on our personal finances.

NAPFA, as the organization is known, is an association of fee-only planners and one of many groups advocating stronger consumer safeguards in the profession. Members in the webinars starting Friday will be offering 40-minute courses in a variety of subjects you might be talking about around the kitchen table, plus 20 minutes of interactive questions and answers, the group promises. Sessions also will be archived if you can't tune in live.

Other financial planners groups have long offered free online help for consumers too. More recently, some new groups have launched as well. Kiplinger.com checks out three of them here.

And yes, some budgeting will be required if you aren't doing that already. A relatively new website, www.mint.com, that helps with budgeting has been getting good reviews from users.

There also are scams to guard against, of course. eHow.com offers a half dozen basic tips for reducing potential exposure to those, but at least one of the tips - don't use credit cards - has limited value, I think. Planning your spending and being very wary of stuff you don't understand seems a more useful approach to me.

Good luck out there.

Our top 10 consumer complaints, plus one from the watchdogs

2009-07-31T10:21:00.003-05:00

The good news - none of the minor consumer hassles I've had recently are among the horror stories in the Consumer Federation of America's latest list of top 10 consumer complaints for 2008.

The bad news...while complaints are up - thanks to recession-fueled jumps in beefs about debt collectors, bogus loan and job opportunity scams, and sudden business closings - resources to help consumers are down.

Sixty two percent of the public agencies that helped CFA pull together its annual list reported complaints were on the increase, said Susan Grant, the federation's consumer protection director. Forty seven percent of the same agencies also reported budget cuts.

"It's ironic that at the same time more people are asking state and local consumer agencies for help, their budgets are shrinking," said Grant.

Hassles over cars, home repairs and credit again generated the most complaints that consumers filed last year. Gripes about cable and utility companies, retailers and retail service providers, both online and in real life, and landlord/tenant problems also put in their perennial appearances. Complaints about misleading health products and services made the list too. They didn't last year.

The federation's suggested best defenses against potential ripoffs looks familiar too. Check the Better Business Bureau or online complaint forums for potential problems. (But don't believe everything you find. BBB reports often seem bland and earth-scorching online forums don't have time or resources to separate legitimate complaints from screaming rants.) Look deeper and wider if something smells. Get terms in writing and don't pay all your money upfront.

And if you still have problems, here are some places that might be able to help.

Beer and profiling outside the White House too

2009-07-30T16:33:00.004-05:00

Trying to settle a beef over a public beer has got to be tough. White House watchers were snarking because nobody bought American. That changed at the last minute, though. I don't think that's a big deal in a global economy, but then I drive a Subaru built in Indiana.

What's more interesting is what happens if President Obama, Professor Gates or Sergeant Crowley were to pay any part of the tab with plastic. Someone's credit rating could take a hit.

Alcohol, it appears, seems to be one thing on a growing list of purchases that credit card company gnomes are watching these days for warnings that we might flee to Tahiti with the remaining uncharged $13.29 or whatever on our credit card limits.

They watch what you buy, where you buy it and, increasingly, whether you buy enough. If they don't like what they see, they cut your credit and you get closer to being caught in a credit jam.

The gnomes like to think of this analysis as data mining, which they can do to help provide credit more efficiently and profitably. But as CreditCard.com's Connie Prater reported recently, critics say it is a lot like redlining too. To some, such mining seems a long way from the five basic credit habits that Fair Isaac Co. bases its FICO scores on.

So how do you protect yourself? Use all your cards regularly, but sparingly. Pay off your balances each month. And pay cash for stuff you don't want the gnomes, or your significant other, to know about.

Gimme shelter ... and maybe tax credits up front?

2009-07-29T15:41:00.002-05:00

Auto industry forecasters are starting to sound almost giddy about cash for clunkers. Some predict that an estimated 16,000 sales in the few-days-old plan may push July's annual sales rates into 10-million unit terri tory.

Now some real estate executives are urging ramping up the current potential $8,000 tax credit so that first-time homebuyers can come up with more scratch for shelter. A $4,500 tax break on a median price $28,000 auto works out to a 16 percent subsidy for car buyers. An $8,000 tax credit on a median $198,000 home only equals four percent.

Fair's fair, say proponents of expanding the credit. But raising it to even $15,000 might seem greedy, worries National Association of Realtors President Charles McMillan. They likely will talk amongst themselves for a while.

There is another approach to consider. First-time buyers in 14 states, including Missouri, but not Kansas, can use bridge loans from state housing commissions to collect the $8,000 credit now, in time to increase their down payments. Mechanically, it works like tax refund loans that consumer advocates gripe about.

HUD Secretary Shaun Donovan said a couple months ago that his agency was exploring a national expansion of the program. Officials will be racing the calendar though. Depending on where you live, you may need to buy by mid-October to complete all the necessary paperwork in time to close before the Dec. 1 tax credit deadline.

I think that raises another question. Will HUD overhaul national lending rules for what effectively would be a 10-week or shorter lending window? Or will there be an expanded Scratch for Shelter plan to buy garage space for clunker replacements?

Consumer confidence fell...that's a surprise?

2009-07-28T14:23:00.003-05:00

We splurged on dinner last night. $5.35 for the two of us from a value meal menu down the street. It was hot. We were tired.

And we apparently were not alone. An unexpected drop in consumer confidence rattled the financial markets Tuesday. Confidence had fallen flatter than bird splat, but some forecasters thought improved home sales and more chattering about the end of the recession would perk up our spirits and spending.

It might have once. But as CNN's Paul R. La Monica points out, look at what we do, not what we say. And what we're doing, by several accounts, is cutting our spending as much as we can and looking for ways to cut more. If we as consumers are still going to be driving 67 percent of the economy, that will have consequences.

Restaurants, for example, are being hit harder than anytime in the last 28 years, researchers at NPD Group, a major consultant to several industries. Convenience Store News finds we're spending more of that money on value menu items and private label products.

Deep thinkers still wonder if such shifts are short-lived reactions or signs of a bigger change.

Exorcising a money leak

2009-07-27T11:40:00.002-05:00

We've got a ghost flusher. An older flapper valve on one of our toilets began leaking over the weekend, draining enough water to partly flush it every three or four hours.

It's an easy fix. The valves wear out every four or five years. We've repaired them often enough that I'm confident it won't turn out like scenes from a World War II U-boat movie. I've also learned to call in professionals when I think things might get tricky.

But is it worth it? EPA estimates that a leaky toilet can waste as much as 200 gallons of water a day. A quick peek at our latest water bill and some back-of-the-envelope calculations show we pay the water company about three-tenths of a cent per gallon. So the leak costs us about 60 cents a day.

New parts run $5.69 at the hardware store. Stopping the leak,we recoup that investment in about nine and half days. I haven't run a similar check yet on the new eco-friendly toilets that people are recommending. Some of those cost more than the first car I bought. In this economy, it's easier to keep the old stuff working longer

Beyond credit reports...our darkest secrets revealed

2009-07-24T14:13:00.007-05:00

You remember that overdue library book in fifth grade. Does your potential employer know? Here's how to find out.

Most of us know about our right to look at free copies of our credit history and correct any mistakes lenders might find there. But the same Fair Credit Reporting Act that guarantees that right also requires other consumer reporting agencies to similarly show you their records of your insurance history, banking records, residential history, motor vehicles and other titled property you've owned and criminal past, if you have even a hint of one.

Employers look at this stuff. So if you are among the more than 10 percent of us for whom filling out job applications is becoming a job i tself, you might want to pull your own records to see what they see. As with credit reports, you get one free copy a year, and more if you are rejected for a job, loan or something else because of information on the reports.

LexisNexis ChoicePoint is a good place to start. It provides a whole slab of personal information about you, based on public records plus the information you authorized when you clicked an ''agree to terms" box sometime in your life. LexisNexis also compiles what it calls Accurint reports that dig beyond obvious public records into more detail about where you live and what you own .

ChexSystems at www.consumerdebit.com drills into your banking history to look for blemishes.
And finally, there is the Insurance Services Office, which tracks your insurance claims history for the last seven years.

Start sooner rather than later if you want to review these records. Many providers send reports by traditional mail only, which may take anywhere between two and eight weeks to reach you.

HAL from 2001 is my new insurance agent

2009-07-23T15:45:00.004-05:00

Okay, not really, but I thought of the malevolent computer from the science fiction classic 2001 when I tried renewing the insurance on Ms. Ktnomics' Vespa earlier. It may be quicker mailing in the $23 than resetting my password on the insurance company's site.

It also reminded me we've all been seeing a lot more commercials recently for online auto insurance providers stressing their really low premium costs. Recently about one in five new auto insurance sales has taken place entirely on the Internet, according to JDPower.com, the nation's premier tallier of everything automotive.

Online seller Progressive Direct is the 7th biggest carrier in Kansas and 11th largest in Missouri, though giants State Farm, Allstate, Geico and Farm Bureau have more than half the market in both states. The big companies work the web too, but in coordination with brick and mortar stores that online providers like eSurance and Insurance 21 shun entirely.

Someone is selling enough low cost, no frills auto insurance to help pull premium costs down from levels earlier this year, though we are still paying more than a year ago. How good is it? As always, it depends on the specific company. Asking your friends and checking complaint reports filed with regulators is still a good move.

And while you are driving, watch out for drivers who are trying super hard - and illegally - to save money. Maybe one driver in six currently on the road might be driving without a license, the Insurance Research Council estimates.

Cashless clunker buyers prepare to fight back

2009-07-21T12:51:00.007-05:00

Uncle Sam's cash for clunkers program officially kicks in later this week, but you can test drive some deals now. Two different things are happening that make comparison shopping a lot more interesting than it was just a few weeks ago.

First, those remarkably nimble marketers at Hyundai are already offering clunker cash along with $1.49 a gallon gas and other incentives. The South Korean auto giant has been fronting dealers money for almost a month to spur market share. It's working, The New York Times and trade press report. Other automakers are waiting to make sure how they'll get money back from the program. Meantime, Chrysler said it is doubling the government offer on some of its cars.

Second, Detroit, which still is surfing a tsumami of foreign competitors on various best buy lists, appears to have some additional new competition. AutoRemarketer.com, among others, reports that bankruptcy-jilted Chrysler and -General Motors dealers now selling used cars as independents, will be working to snap up their share of pent-up consumer demand.

So for consumers, we're back to square one in the buy-new-or-used-debate. Do we go with new car perks and incentives or money saving, depreciation adjusted, used car values? The rules haven't changed. The numbers might. Gentlemen, start your calculators.

Oh, crap. Retirement looms

2009-07-19T13:42:00.005-05:00

Ever notice how many of the kids in your high school yearbook have goofy haircuts?

I thought of that recently when I ran across a 10-year-old AARP survey of what I and my fellow first-wave baby boomers expected retirement to be like. It's a hoot. Eight in 10 of us planned to work, at least part time, after we hit 65 just to keep active and perhaps to provide breaks between some serious recreational plans.

Reality is different, of course. First, growing numbers are being pushed into retirement sooner than we planned, the Employee Benefits Research Institute recently reported. Second, many of us aren't financially ready for that shock. Our savings rates, until recently, have been abysmal. And a $6 trillion housing market meltdown threatens to leave many first wave boomers with little more than Social Security and Medicare to get by on, the Center for Economic and Policy Research calculates.

So, chances are many of us will try staying in the workforce longer, but not for the reasons we told AARP back in 1999. More of us than we imagined will be trying to pay off credit cards that we haven't yet maxed out, say pollsters at Securian Financial Group.

I already posted a few months ago how this changed the way I'm handling some of my own plans for retirement income. Now, The Motley Fool's Robert Brokamp, posting on the Get Rich Slowly site, finds that this situation may be changing the whole notion of retirement. But we've heard that before too. And the future didn't work out the way Merrill Lynch expected either.

I wonder if our haircuts now will look funny maybe 20 years from now.

Reverse mortgages -- strangling on a life line

2009-07-17T10:42:00.006-05:00

Like many of us, I sometimes thought about using a reverse mortgage as a backs-to-the-wall post-recession defense against old age poverty. Then I did the math. Stockpiling cat food is more appealing.

That won't be true for everyone, of course. Reverse mortgages can be nifty way for homeowners who are 62 or older to pull equity out of their homes to meet living expenses. How nifty depends on their ages, the value of their homes and what other choices they have to meet their income needs. Those are different for each of us. AARP has a handy calculator to help you run your own numbers.

But if you are a 63-year-old thinking of pulling, say, $190,000 out of a modest suburban home, the numbers are not pretty. After you lop out closing costs, mortgage insurance and other fees - which can be hefty, as critics warn - what's left is either a lump sum or credit line somewhere between $55,700 and $84,920 or a monthly payment between $417 to $524. The difference depends on whether you go with a fixed rate or variable loan.

The money is tax free, which is good. But where I live the low end of my potential monthly payout barely covers property taxes and upkeep needed to get the loan in the first place. And pulling money out of your house might complicate your eligibility for Medicaid or other programs that might be more valuable.

Those are just some of many questions you need to think through before considering such a loan. Bottom line - using our homes as ATM machines didn't work out before. We don't want to get stuck in a similar jam again.

Chump change from the credit card companies.

2009-07-15T13:37:00.008-05:00

Our credit card cash-back earnings hit 63 cents this week. I expected rewards to go down as lenders and borrowers brace for new credit card regulations to kick in a few months from now. But 63 cents barely gets you change back from a senior-price cup of coffee. Sheesh.

Actually, there's more than the new credit card regulations going on here. We consumers are becoming more frugal, whether by choice, as Harris pollsters recently found, or because we have to, as the Federal Reserve reports.

Banks and credit card companies are scrambling to save as many billions of potentially lost dollars as they can before the full changes kick in, writes David Lazarus of The Los Angeles Times. So watch your mail the next several weeks for big changes and small ones that are in the works.

And start planning now how you might change some credit card habits as the new rules start kicking in. Many of our first impulses may actually make things worse, says John Ulzheimer of Credit.com. What you may want to do instead is diversify your credit card usage, adds Mark Huffman of ConsumerAffairs.com.

But don't go nuts, advises CNN Money. As always, you want to keep a healthy distance between the amount of credit you use and the amount that is available but which you don't use.

Cars that no one wants are worth buying

2009-07-13T14:51:00.003-05:00

OK, maybe not Hummers so much. Gas prices are still dodgy. And I don't get warm and fuzzy about anything that reminds me of riding in Army trucks.

But analysts at Consumer Reports and elsewhere are arguing that the auto brands that General Motors and Chrysler are tossing into their financial scrap yards are good deals for anyone who wants to buy a new car and keep it.

We've been through this before, as Bankrate Monitor's five years ago elegy for Oldsmobile buyers reminds us. Someone will be around to provide parts and service, though some warranty work might require driving farther.

The killer for many car buyers is resale value. It drops like stone when dealers start ripping auto names off their walls, report services such as Edmunds.com or Kelley Blue Book.

You can make that work for you, say observers such as Sylvia Cochran at Associated Content. Buy cheap now because dealers are really motivated to move discontinued models. Realize you won't get squat for a trade-in. Drive it until the wheels come off.

The analysts don't say so, but I can see one big challenge to preplanning a future clunker. That's selling the idea of a fuel-sipping Saturn to a 16-year-old new driver in your house. Guaranteed eye-rolling, no matter how you pitch it.

Tres chic, tres cheap

2009-07-12T16:46:00.003-05:00

Here's another head-scratcher from the recession front. Better stuff is showing up in second-hand and thrift stores these days. Some shoppers complain it's getting pricey.

Ms. Ktnomics and I checked out some familiar stores and a couple new ones this weekend. It was too hot and wet outside to garden or tackle some house painting I need to get to. We saw a $6.99 designer sports jacket that looks a lot better than a no-name I need to replace, a virtually new Brooks Brothers suit for under $10 and whole lot of other stuff for $5 and under that we would have snapped up not long ago. But not now. We also saw stuff priced for almost what department stores charge on closeouts.

Time magazine, among others, has been tracking many changes that thrift and the recession are bringing to retailers. Suburban malls that once lusted after names such as Saks or Macy's now hail organizations like Savers or Maj-R Thrift instead.

Shopping second hand is a bit different than hitting the mall used to be, though I don't agree with some of the advice Reader's Digest recently published. It suggests focusing on stores in nice neighborhoods. I usually have better luck looking for relative clusters of stores and going with first impressions among the choices there. Shopping second hand stores also is a lot like going to farm or household auctions when I was a kid. Some days you see bargains and some days you simply need to wait until another time.

Two things have changed. The Internet makes it a lot easier to find both for-profit resellers and non-profit resale centers. Unfortunately, the same wired-technology also makes it easier for lenders to see where you shop if you use plastic. Some reportedly get antsy if suddenly words such as Salvation and Army pop up. So pay cash. It's also a good way rein in impulse spending if you stumble into a bargain bonanza.

Nail down your income tax refund now

2009-07-10T13:13:00.004-05:00

Now is a good time to tweak how much money comes out of your paycheck for taxes in order to be surer of getting the refund you want, tax pros say.

With almost half the 2009 tax year still ahead for most of us, increasing our withholding just a few dollars now will help assure a bigger refund later if we want that. It also is a good time to have a bit less taken out to improve cash flow now if you are willing to settle for a minimal refund later.

There's a catch, of course. To make the change, you need to file a new Form W-4 Employers Withholding Certificate with your company's payroll people. Research shows most of us know we can and, from time to time, should do this, but almost none of us ever do that, says Jackie Perlman, a Tax Institute research analyst at H&R Block.

We probably know why too. The simple two-page form - one page of instructions and one with a few blanks to fill in - can be a little intimidating for anyone who doesn't deal with it often. Knowing that the IRS will provide a free 24-page booklet of supplemental instructions in Publication 919 doesn't make you think it gets easier.

There are faster ways to cut through the clutter, Perlman said.

"Start by figuring how large a refund you want," she said.

It can be larger than what you got back last time, smaller, or the same. It doesn't matter which. Each of us has our own good reasons for choosing any of those three. The point is, it is a target and you can manipulate your paycheck withholding to hit it.

Next, don't confuse exemptions - which are those $3,500 dollops of tax exempt income you, your married partner and the kids get every April just for being there - with withholding allowances, which are what you claim on the W-4. Withholding allowances are basically accounting guidelines that IRS and your payroll department work out to help calculate your take-home pay.

Most W-4 calculations start out based on one withholding allowance for each exemption you claim, but you can bump those allowances up or down to fit your circumstances. In fact, you probably should, especially if you or your married partner's incomes have changed recently, because some of the IRS formulas are easily knocked out of whack when life happens, researchers report.

There is an easy way to adjust your calculations for that too, Perlman said. Go online and plug your numbers into one of the good online withholding calculators that tax professionals and others offer for free. Those will ask questions designed to help you get handles on all the tax issues that may affect your refund. Maybe you'll qualify for a homebuyers or energy conservation credit, for example, which could help reduce what you need to withhold now.

Perlman, not surprisingly perhaps, said she's partial to an H&R Block calculator on the bottom half of this page. There's a similar calculator next to it for self employed people facing similar issues.

IRS also provides similar calculators at its site that get high marks from users. Just Googling for withholding calculators fetches up fistfuls others such as this one.

Who are the worst drivers?

2009-07-09T10:17:00.005-05:00

Yikes. Roughly three fourths of the nation's drivers are worse than the ones who headed to work this morning on Kansas City area roadways, according to a new report from Allstate.

The Northbrooke, Ill. insurance giant's fifth annual Safest Drivers surveys ranks Kansas City and selected suburbs in the top fourth of 200 cities and suburbs where it studies a rolling two years worth of accident statistics. Sioux Falls, SD came up as the safest place to drive; Washington, DC came in the worst. Wrong kind of gridlock, I suppose.

We all have our own nominees for the nation's worse drivers. Cable TV is even thinking of making a reality show based on them. GMAC pollsters look at how much we know about rules of the road and puts Wisconsin on top, New York at the bottom. Don't get cocky, though. The auto lender also estimates one in five of us, or 41 million drivers, would flunk a basic road rules test if it were a pop quiz now.

Authorities are divided over why some groups of drivers are worse than others. Where you drive makes a difference. That's why car insurance rates can vary a lot by zip codes. Some focus on age as a factor, though it seems a tossup whether very young drivers or very old ones are most at risk.

One Toronto outfit even looked, tongue in cheek, at zodiac signs. No word yet on whether traffic stops are planned to take offending Libras off the road.

Tax audits - the midyear tax review you don't want

2009-07-07T14:35:00.002-05:00

Uh, oh. H&R Block is beefing up its plans to help clients with income tax audits. The world's largest tax service calculates that our individual chances of being double-checked have roughly doubled, to one in return in 99 from one in 202 previously.

That's not a surprise. New IRS Commissioner Doug Shulman has been warning for months that service will be getting more adamant about collecting an estimated $345 billion in taxes we may have fudged on. Now, twin plans to increase compliance and step up enforcement are the twin top priorities for IRS' 2019-2013 strategic plan.

We don't know yet how much pain stepped-up enforcement may cause. Negligence messes up most tax returns, Alvin Brown, a former high ranking IRS attorney told Congress a few years ago. Those mistakes are usually easier to fix than intentional cheating attempts. But either way, Brown already lists a wide array of potential audit magnets on his Web site.

IRS has some pretty explicit procedures for both its agents and audited taxpayers to follow. You need to know them, both to get through the audit as successfully as possible and, increasingly, to avoid phishing and other scams that are expected to perk up as enforcement revs up.

National Taxpayer Advocate Nina Olson vows to step up her office's efforts to make IRS more accessible to taxpayers in order to help reduce unintended abuses. Reconciling the need to collect what taxpayers really owe with the increasing difficulty that many have with everyday bills will be one of the service's biggest challenges this year, Olson predicts.

Hunting and gathering, recession style

2009-07-06T13:39:00.002-05:00

We bought two $1.59 packages of hot dogs on sale for 97 cents this weekend, but got an even better deal. We used a manufacturer's coupon that knocked $1 off the purchase price of the two packages as well.

Ms. Ktnomics and I have always been coupon clippers. At first we had to, in order to stretch the princely $150a month that the U.S. Army paid back when. We continued because it became fun on those semi-frequent times when the subsequent savings were larger than what we paid the checkout clerk. Now, we're flirting with have to again.

So apparently is more of America, reports Anna Vander Broek at Forbes.com. Coupon redemptions, which it a 2.6 billion milestone last year, are running between 17 percent and 50 percent ahead of a year ago, depending on whose data base you check. KFC has even become the target of a class action suit filed on behalf of disappointed consumers who weren't able to redeem Oprah coupons for free chicken recently.

Most of us use traditional strategies for piling up coupon savings. We look for offers on stuff we buy anyway and clip them either from papers, magazines or online sources. Then we wait for sales on the stuff we want to buy with them to make our money go as far as possible. Sometime we wait a while. I've got fistfuls of old no-expiration-date Wheaties coupons celebrating Mary Lou Retton's Olympic success.

Some of us go further, which alarms the industry when fraud is involved. The industry-funded nonprofit watchdog Coupon Information Corp. reports there were only two coupon fraud cases prosecuted in the U.S. between 1986 and 2001. There have been maybe 93 in the last 18 months now that the stakes are higher and higher-quality and vastly more affordable computer printers are available.

Authorities don't know how much money coupon scammers actually make. But they allege that one group, indicted in a recent major bust in Milwaukee, stole at least $250 million in the last decade. So bear with me if you're behind me in at the checkout and I'm trying to convince a kid at the register that my 25-year-old Mary Lou Retton coupon with no bar codes is legit. It may take a few minutes.

Here's a sneak peek at your next income tax form

2009-07-05T15:43:00.002-05:00

Ford Motor Co. redesigned its Model T pickup trucks a lot between 1925 and 1927. In the end, the newer ones looked a lot like the older ones.

Same way with the IRS, which recently asked for public comment on its proposed new Form 1040 income tax form, pictured here. It looks remarkably like the 2008 version, pictured here. Mostly, some of the numbers, for standard deductions and the like, have been adjusted for inflation.

Some of your calculations may be way different, though, because of all the economic stimulus changes that are kicking in. You should eyeball your tax situation, and specifically check what's being withheld from your pay stubs against the taxes you paid in 2008, to see if you are on track toward where you want to be at filing time.

And if numbers aren't your thing, try this.

The founding fathers cut deals too

2009-07-03T12:26:00.004-05:00

Money mavens love our nation's founding fathers.

Many, such as J.D. Roth over at Get Rich Slowly, are particularly fond of Benjamin Franklin. He was pithy, to the point, and always quotable. But as Kiplinger's Tina Korbe writes, many of our most revered 18th century icons have offered advice about handling personal finances that still holds up more than two centuries later.

There is one financial founding father we don't hear as much about. William Duer, a delegate to the Continental Congress and an assistant to the nation's first treasury secretary, Alexander Hamilton, became a financial speculator who ripped off investors so spectacularly in 1792 that Hamilton had to step in, like Tim Geithner today, to stop an economic panic. It was the most aggressive intervention of its kind until modern markets tanked in 1987.

Playing financially fast and loose happened a lot in 18th and 19th century America. George Washington, in addition to his many other accomplishments, was a legendary land speculator. Thomas Jefferson, Abraham Lincoln and fistfuls of less well known historical icons dabbled too.

Many of the schemes failed. Ironically, some of the suddenly worthless shares in those failed enterprises are worth hundreds or thousands of dollars as collectors items now because some of the same promoters also signed the Declaration of Independence and other bits of our historical DNA.

Duer died in debtor's prison in 1799, leaving a legacy that remains with us today. When traders and investors stung by the schemes met under a buttonwood tree near what now is 68 Wall Street to organize what became the New York Stock Exchange, they laid down ground rules to curb insider trading and other abuses specifically inspired by Duer's career. We're still following those rules, some days more successfully than others, Right, Mr. Madoff?

Happy Independence Day, everyone

Cash for clunkers - you can't just go in and kick the tires

2009-07-02T10:50:00.003-05:00

Unloading that beat-up late '90s Ford Explorer or other gas guzzler in the government's new Cash for Clunkers program may be a lot easier if you have a calculator, Internet access and a flexible schedule.

Basic rules are already posted on the program's official www.cars.gov Web site. But some auto industry analysts say waiting until about July 23 might get you the best deal. That's the the National Highway Traffic Administration's deadline for coming up with detailed rules spelling out how auto dealers get paid for fronting us $3,500 to $4,500 and making sure our clunkers actually make it to the scrap yard and not some underground resale market. Some dealers may be more cautious until they know those details

But you may not want to wait too long either. The program is scheduled to end Nov. 1 or sooner if buyers hit a 250,000 sales limit set by federal spending caps.

Meantime, Detroit, its competitors and camp followers are revving up some sales pitches now. General Motors, Ford, Toyota, Nissan and Hyundai already have added Cash for Clunkers sections to their Web sites. Other auto makers and related outfits such as finance companies seem likely to follow.

Financing the new fuel-sipper you buy with your clunker cash gets interesting too.

Lenders to auto buyers are just as antsy about loan quality as home lenders. According to some indicators, it takes maybe a 720 to 760 point credit score now to get the same comfortable interest rates that a 600 to 700 point score fetched six months ago.

700 points is going to be stretch for a bunch of us with foreshortened income prospects. Outfits such as MoneyNowUSA.com, which collects loan applications online and coordinates them with payday and other lenders, offer to seek loans for borrowers with scores ranging as low as the upper 400 to low 500 range. Rates depend on the lender who agrees to actually make the loan, but won't be cheap. Or you may need a co-signer.

Torching your credit cards won't make you rich, but it might help

2009-06-30T18:57:00.005-05:00

Credit cards begin melting at 360 degrees Fahrenheit, but don't actually start burning until 455 or higher. Never mind how I know.

I thought of that recently when Jim Wang at Bargaineering.com shared a nifty illustration from Mint.com, an online budgeting help provider, that tracks the descent into credit card hell. It's only funny if you haven't been there, however.

The bad news is that while new credit card legislation is changing some of the ways you want to manage your credit cards, which Leslie McFadden outlines at Bankrate.com., there aren't any new shortcuts out of a jam once you are in it. In fact, some once instinctive moves, like stashing away a card you don't use much, requesting lower interest rates, or bailing out of a card contract if the issuer offers an unwanted change in the terms, all can backfire now, she writes.

Basically, you have three ways to work your way out of a credit card pit. You can take out a consolidation loan. You can start using a secured card --on which you set the credit line with your own money until your records improve. Or if you have a decent low rate card on which you aren't maxed out or you can get one, you may be able to transfer some balances around to save a few dollars.

In any case, you need a systematic plan to pay down the debt as soon as possible. It probably will look a lot like this rolling down plan DePaul University once suggested.

You also may think at some point that credit cards seem tougher to deal with than the mortgage. That may be true. As Ray Bradbury vividly told us years ago, paper burns at Farenheit 451.

Keeping the clunker - what it costs and when to let go

2009-06-29T09:32:00.003-05:00

Consumer Reports a couple years ago calculated that you could basically save the price of a new car by driving your old one longer -- 15 years and 200,000 miles.

Lord knows, I've tried. Ms. KTnomics, who took the Vespa to work today, and I have had two vehicles in our lives that we've pushed to within an oil change of 150,000 miles. Thieves stole and wrecked our '85 Jeep Wagoneer, which easily would have made 200K or more otherwise. The '96 Saturn just wore out.

You learn a lot keeping a car that long. Regular maintenance is critical, of course. But you also find yourself prioritizing maintenance and repair as time passes. Edmunds.com outlines the priorities succinctly here. Your first money pays for safety- your own or others. Next you spend what you need to avoid breaking down. Keeping the car running comes after that.

Where you save money is obvious. There are no more car payments when your loan is paid off. Your property taxes, licensing fees and insurance costs drop when your car gets older. On the flip side, you'll probably make some major decisions about repairs as time passes too.

People who are better with wrenches than I am say repairing generally is more economical than replacing for the first decade or so. But think hard and do the math when Kelly, Edmunds or comparisons on Autotrader.com estimate your car's value is approaching the $2,000 or $3,000 range or its mileage nears 150,000. You can do a lot of the work yourself, but remember that many of the jobs may not be as fast or easy as the instructions say.

The cash for clunkers plan to stimulate car sales adds a new calculation to the works, says CBS News consumer reporter Ray Martin. The plan's tax credit for up to $4,500 might offset the depreciation that will occur when you drive your new car off the dealer's lot.

Again, do the math. Come replacement time, buying a good used car may be even more cost efficient.

Michael Jackson's financial Thriller still climbing the charts

2009-06-26T13:36:00.004-05:00

Michael Jackson has long been a source of awe and wonder for financial planning types.

Anyone would be who, as The New York Times reported a while back, builds an estimated fortune of $500 million, then runs it into the ground by outspending income by maybe $20 million to $30 million a year until some serious head-scratching by big banks and private equity companies is needed to figure it out.

Now another chapter is opening. Hours after Jackson was stricken - and even before his death was confirmed - online prices for his memorabilia began jumping. Tee shirt hawkers seized opportunities too.

But the big money may still be ahead. Celebrities, and particularly pop and film stars, often continue making money after their deaths. Elvis led a list of 20 that Forbes compiled a few years ago. Observers of the glitterati have been speculating for years how Jackson might compare.

Given both the complexity of Jackson's financial affairs and an astonishing array of memorabilia that may be poised to hit the market, the only sure prediction seems to be that the headlines will be breathless.

There are lessons for us mere mortals in all this too.

Income must exceed outgo or upkeep will be our downfall, an old saying goes. We get that. We're all somewhere in the same boat Jackson was before his death. We simply see fewer zeroes on the loan statements and payment checks we deal with.

And many of our financial lives will continue after our deaths too. We have spouses to provide for, kids to put through college or grandkids, maybe a business to pass on or a good cause we'd like to help. Fewer than half of us have made any plans to do any of that, estate planners estimate. More than 75 percent of us worry how our families will fare financially if we were to die now, the Life and Health Insurance Foundation for Education calculates.

Both are easy fixes. Start now.

Kicking tires...when older is better at your auto dealers

2009-06-23T11:48:00.002-05:00

Some commentators like Washington's emerging cash for clunkers plan. Others hate it.

I think there are some car-buying basics we need to look at before each of us decides which camp we belong in. Car and Driver's Jared Gall recently outlined some rising pressure sales tactics buyers are likely to encounter when they visit car lots. Some, like artfully steering our attention around different corners of price worksheets, seem elegant. Others, like 'misplacing' your trade-in's keys, just seem wrong.

Either way, forecasters tell us to brace for some potentially head-swimming sales incentives both from Washington and Detroit. Whether we should bite depends, for each of us, how much it pays or not to buy new cars now.

We need to look at some of the hidden costs of owning a car to answer that. You know the big ones - depreciation, insurance costs, property taxes and licensing fees, and maintenance - which all go up when you spiff up your ride. Analysts at Edmunds.com offer a nifty online calculator that lets you check specifics for almost any car you might drive in the U.S.

Two new wrinkles to consider are tax breaks, which may be limited, and the growing availability of hybrids, for which you need to balance your potential fuel savings and scheduled maintenance costs against big ticket bills when, say, the batteries go dead.

Do your own math. But I suspect many of us will find that keeping what we've got, or buying used to avoid the depreciation hit taken by the first owner, will go farther than the $3,500 to $4,500 price break the government's offering.

Shell shocked by the economy? Or is it just post-traumatic stress?

2009-06-21T15:51:00.004-05:00

Comedian George Carlin isn't the first person many of us think of when we try to figure out economic trends. But his classic riff on the evolution of shell shock, about one minute into this YouTube video, popped into my head as I tried to sort through Kansas City Fed president Tom Hoenig's estimate of our coming inflation prospects last week on CNBC.

Economic forecasters worry that all the stimulus money that no one is spending fast could send inflation rates skyrocketing when enough of us feel confident enough to start spending again. Some of them fret about rerunning the bad old days of stagflation 30 years ago, when prices soared but the rest of the economy sputtered along. Something like that could happen again, though blogger Steve Saville, among others, argues we should call it an 'inflationary recession.'

I don't care as much about what to call it as much as I wonder how to deal with it. Last time around, former Fed chairman Paul Volcker slammed on the monetary brakes to stop the price increases. It worked, though a lot of us went through the windshield. I really don't want to do that again because bouncing back now seems tougher than 30 years ago,

But maybe we won't have to do that. When you think about it, surviving a recession is pretty good street-level training for dealing with inflation too. Either way, your most pressing problem at the kitchen table level is that your dollars don't go as far as you need them to. The Bureau of Labor Statistics has a calculator to help you measure how well you're keeping up or not. Many financial planning websites across the country also offer this calculator to help you tweak your own consumer price index projections.

Many of your basic strategies for dealing with recession or inflation are the same too. Jilian Mincer, a former Kansas City colleague now at The Wall Street Journal outlines the basics. You need to control spending, clamp down on debt, build a cushion and regularly review your investments to make sure they are appropriate what's happening at the moment. And those second, third and other income sources we cultivated to get through the recession will become more valuable if prices start going nuts again.

Of course, they're behind you all the way. It's closer to your wallet.

2009-06-18T11:28:00.008-05:00

I counted maybe eight references in President Obama's 89-page outline for regulatory reform to one of the most important questions consumers and investors need to ask. How well do you trust financial advisers?

We'd all like to believe that advisers always make recommendations with our best interests in mind. That's what many of them tell us they do, after all. Truth is, financial services providers have been using a double standard for more than a half century now, which President Obama's plan may or may not abolish.

Financial advisers who are regulated by the SEC or by state securities commissioners must apply what's called a fiduciary standard when they deal with our affairs. That means they are required to consider the client's interests above all others, including their own, when they work.

Brokers and others who are self-policed by independent industry groups such as the Financial Regulatory Authority, or FINRA, apply what's called a suitability standard, which increasingly is regarded as looser than the fiduciary standard.

Suitability standards require only that a recommended action be appropriate in your situation and whoever is making that recommendation isn't required to tell you, for example, that you can get the same thing cheaper or better from a competitor down street. Fiduciary standards require an adviser to tell you that too.

President Obama's recommendations Wednesday call for a "harmonization" of the two approaches to meet a more uniformly fiduciary standard. Financial planners groups, the brokerage industry, insurance providers and consumers' groups generally are clapping politely and elbowing each other for dibs on who specifically gets to write expected new rules.

Harmonizing may be difficult to pull off, Diahann Lassus, chairman of the National Association of Personal Financial Advisors, told Kitchentablenomics, because "fiduciary standards fundamentally are concerned with the providing of service while suitability primarily involves product distribution."

Both long time fiduciary advocate NAPFA and the larger national Financial Planning Association, a more recent convert, favor putting the Securities and Exchange Commission in charge of enforcing the standards.

But FINRA chairman and chief executive Rick Ketchum argues that his independent regulators would be a good choice too because, he claims, they have better track records than the federal agency handling consumer complaints.

I'm still agnostic on those arguments. But I still think our best tactic is to do some homework and ask all the questions we can think of to anyone who wants our business.

Getting real about retirement, part 2: You're on your own

2009-06-16T14:15:00.002-05:00

eBay lists gold watches for less than $25. That has got to be a sign that your retirement package might not be all you hoped for someday.

Authorities estimate maybe one-third of the companies that offered matching contributions to our 401(k) plans 18 months ago have stopped matching now. Another third may pull the plug this year. And there are some pretty big names on the list, reports the Pension Rights Center, which keeps a running tally.

Many employers used to kick 50 cents into our 401(k)s for each $1 we put in, up to about 6 percent of our salary. Stopping that saves small companies maybe a couple million a year and bigger companies can save ten times that, human resources consultants calculate.

But the cuts also threaten to throw many of us individually into poverty when we retire, say authorities such as Rockefeller Foundation vice president Janice Nittoli, who explains how in a Wall Street Journal op-ed piece.

The reasons - and the remedies - seem clear. We as individuals don't save squat. And when our employers cut contributions, our two most frequent reactions - either to cut our own contributions too or to do nothing - are the wrong ones, writes Katy Marquardt in U.S. News and World Report.

Fellow freelancer Mark Miller says your better move is to seize control of the situation and use your own money to replace what the boss stopped providing. Few of us are maxing our 401(k) contributions anyway, so you can put more there and get the same tax-deferred growth you have now. And Kimberly Lankford of Kiplinger's Personal Finance adds, you also might put some of the extra money into a traditional or Roth IRA if that provides you a better deal.

It's time to get real about retirement

2009-06-14T18:54:00.006-05:00

Career choices get even tougher when potential early retirement is on the table too.

Older workers who get downsized often say finding new jobs is harder for them than for younger workers. But tapping your retirement savings too early is risky too, even if you are old enough to avoid some potentially hefty penalties, researchers say. Retiring before you are ready roughly triples your chances of a bleaker future, insurance giant Prudential reports.

Few of us appear to be ready. Charles Schwab finds that nearly four in 10 of us are saving nothing for retirement, which seems to be something that someone reports every year. That's not just a U.S. phenomenon either. Researchers in the United Kingdom not long ago calculate that half the savers in 23 countries aren't salting away enough money for secure old ages either.

Solutions in those countries are basically the same as here, say contributors to the British-born www.six-steps.org website. Take control. Know yourself. Save a little and often. Invest for the future. Get advice when you need it.

Things get trickier if you are pressed for time. The Ohio Patrolmen's Benevolent Association recently listed some suggested priorities for its members, whose jobs often make time horizons shorter than those of us who've worked office or assembly line jobs. You know the drill, though. Cut debt, live within your means, save for emergencies and invest for your future.

The rules change if you have no time. Borrowing may be smart - The Wall Street Journal's Brett Arends recently ran some ideas about when red ink might be your better choice. Liz Pulliam Weston at MSN Money Central offers suggestions about which bills you don't pay if you are squeezed that hard, but also writes that, financially, you can cut into the bone too if you really need to.

Take the cash or keep the clunker? It's a toss-up

2009-06-12T15:23:00.008-05:00

Mission auto dealer Tim Doherty insists its just a coincidence he switched to selling fuel-sipping Nissans from gas-guzzling Chryslers just as Congress appeared to be putting final touches on a cash for clunkers plan to encourage buying higher mileage cars.

"We could see a year ago that Chrysler wasn't going to be a viable stand-alone franchise for much longer," said Doherty, who a few weeks ago became one of 789 Chrysler dealers axed by the company in its bankruptcy proceeding. So, when an opportunity to buy the O'Neill Nissan franchise in nearby Overland Park arose, Doherty moved. And, with the formal opening of his new Keystone Nissan franchise Friday, the business continues what has been a series of dealerships 50 years in the same downtown Mission location.

And cash for clunkers? Auto dealers are optimistic. Similar plans have been boosting sales in Europe. Skeptics are less sure. Basically, here's the deal as it stood Friday.

You would trade in a clunker, EPA rated at less than 18 miles per gallon and get $3,500 to $4,500 to buy something that gets a minimum 2-4 more miles per gallon. How much you get depends on what you buy and how much the rated mileage improves.

Critics see a lot of problems. Michigan automotive marketing consultant Mike Karagozian forecasts less than spectacular results and a bad deal for taxpayers. Automotive special equipment makers worry that their jobs and businesses are threatened.

Other observers just don't see how the math works out for motorists who, by AAA's calculations, are spending about $9,400 a year to own an operate their cars. Time's Brad Tuttle is just one commentator who figures that even $4,500 is a crummy trade-in price for some gas guzzlers.

Here are two links to help you crunch some of your own numbers. One is is to the Kelley Blue Book, and a list of the sometimes surprising cars most likely to qualify for the payments. The other is to an AAA worksheet to help you compare potential before and after operating costs.

Happy motoring.

ID thieves feel the recession too

2009-06-11T13:47:00.008-05:00

Identity thieves aren't making as much money as they did a few years ago, say consultants at Javelin Security and Research in Pleasanton, Calif.

Thievery is up -nearly 10 million Americans lost $48 billion to identity thieves last year. Online merchants lost maybe $21 billion more in potential sales when scam-shy consumers sat on their wallets, Javelin calculates.

However, thieves aren't making money like they used to, researchers found. That's partly because potential victims are getting savvier about guarding information online . But there's a recession on too and those of us who aren't spending anything until it's over are presenting potential thieves with fewer targets of opportunity.

There is at least one exception to that observation, other consultants say, and it is in a wedding aisle near you.

Nothing this year says I love you so much as a good cross-cut paper shredder, say execurives at Kroll Fraud Solutions. The New York financial services industry security consultant is hitting publicity circuits this week to warn that peak wedding season is also a prime time for identity theft.

Gift registries, online wedding planning services, honeymoon sweepstakes and giveaways and the like are all venues that scam artists potentially can hack or set up to pry important personal information from where we stash it, Kroll warns. Cell phones, laptops and similar personal gear that we may be careful about during a whirl of wedding and honeymoon preparations also are identity gold mines.

All are easy to overlook when there are seemingly more immediate potential scams to worry about. But to be safe as possible, be as stingy with personal and financial information as you can, Kroll recommends. And when you must provide it - to Social Security and the department of motor vehicles if you are changing names, utility companies if you are moving to a new home, and the IRS - keep good track of everything and store originals, such as new Social Security cards, someplace safe.

Paying more car insurance to drive fewer miles

2009-06-09T15:46:00.008-05:00

My car insurance is going up $10 for the next six months.

It's not a bad deal. We're still only paying $370 to cover two claims-free, suburban-driven compacts. I don't know what to think of what we're getting for the money. We've been driving a lot less on our now tighter budget. Mrs. Ktnomics is using her 70 mpg Vespa more when the weather is nice.

The insurance company said, when it told us the new premium, that our bail bond coverage is higher, we get more money to replacement income if we need to take time off work to testify in court, and it will pay higher first-aid costs if someone is injured in our accident. I've never used any of those things in the 47 years I've been licensed.

Turns out that a lot of us are paying more to drive less, though Insurance Information Institute statistics show the amounts vary widely. So far this year, State Farm, the nation's largest auto insurer, has increased rates in 25 states and trimmed them in 12 for an overall average increase of 1.2 percent. And the Missouri and Kansas hikes, 3.8 percent and 2.2 percent respectively, are mild compared to what some competitors are posting, said spokesperson Tamara O'Connor in Kansas City.

Insurance companies say claims experience drives the changes. Vehicle repair costs, medical bills, lawsuits and everything else that my now $370 helps cover are creeping higher. Others say the recession is a force too. Insurers reportedly worry they'll get burned by pent-up claims demand as the economy improves.

Some may worry they'll be scorched by consumers too. We're getting pickier about what we buy. New on-line competitors are grabbing market share from traditional agents. And one group of industry watchers, at Marketscout.com, suggests that some traditional agents' competitive elbows are getting sharper too.

Smokey Robinson and the Miracles offered some of the best advice for consumers 40 years ago. Who knew?

When should I save and when should I spend?

2009-06-07T19:48:00.004-05:00

Kmart has a heck of a deal on work pants right now, which provoked some debate around the ktnomics table on spending versus saving. That's a decision made differently when money is tight.

On the one hand, I could really use the pants. They're cheaper than blue jeans; they're pretty useful for some of the part time work I've been picking up, and the 10-year-old pair that I'd replace are two inches too big around the waist and looking ratty. Plus if the inflation hawks are right, this may be the best deal I'll get for a long time.

On the other hand, I could use the $16.99 too. I may need it more for something else later. I can make the old ones last longer, and an adjustable web belt from Mickey's Surplus will take care of that waistline adjustment. Plus, if the inflation hawks are right, that's already almost seven gallons of gas.

Some commentators say dilemmas like this help prolong the country's economic problems. They believe that, laudable as our new found commitment to thrift might be, somebody needs to spend something to get money flowing again. That's the whole point of economic stimulus.

Could be. But here on the home front, having a cash reserve becomes even more reassuring when income is unpredictable. Six months or more - to be tapped only in spurting-blood priority emergencies is ideal. But even having just a $500 stash will get you a long way through most jams.

The real question may be what will happen when we feel comfortable about spending again? There's a lot of money out there not circulating much. If prices rise because we try to spend it all at once, will we still be saving because we can't afford stuff? Maybe Yogi Berra would know.