Forecasters are bracing for unemployment rates to hit a 15-year high 9-percent-plus when the numbers come out Friday. And real estate watchers are nervously looking to see how many previously solid home mortgages might hit the fan as a result.
It's scary stuff. Authorities have sensed for years that many of us really don't know much about the mechanics of those loans that put roofs over our heads. Now we may need to use some of those same loan mechanisms to fight to keep them there.
But what else can we do? The best defense is a good offense. The cheapest, least time consuming and most successful defense is to not get into that particular jam in the first place. Mortgage payments should be among the very last you cut when you go onto your emergency budget.
There are still things you can do of avoiding foreclosure isn't a choice anymore. I recently found a new blog with the unfortunate name of Living Lies that includes a pretty good pared-down-for-consumers version of what lawyers study when they fight foreclosures.
Seek out other foreclosure fighters too. The 37-year-old People Improving Communities through Organizing, or PICO, is just one of many groups marshaling strength in numbers to fight on behalf of homeowners, including those in Kansas City.
Sunday, May 31, 2009
Friday, May 29, 2009
There may be extra cash hiding in your pay stub
Need extra cash? Now is a good time to check your pay stub to find it.
Many U.S. wage earners already have piled up refunds for next April, reports Kiplinger's Kevin McCormally. If you are among them, now is a good time to dial down your withholding and bring home a little more of your money in your next paycheck.
It's not hard work. At the simplest, you check last year's tax return to compare the taxes you owed then against what your pay stub says has been collected year-to-date. Then, if your income and tax situation hasn't changed much from 2008 and year-to-date is bigger, go ahead and ask your employer to reduce your withholding.
Don't forget to scope the same numbers on your state income tax returns too. Budget problems have delayed 2008 refund payments in both Missouri and Kansas. We don't know that will happen again, but it's another good reason to get your money now instead of later.
The IRS provides free online instructions, forms and a quick calculator to help you figure how much to change to keep up with stimulus plan tax changes.
And while you are wonking out anyway, why not give all your finances a midyear once over, asks Bankrate Monitor's Kay Bell. Her basic 2003 rundown of what to look for is still good, but some tax rates and other details have changed since then.
Many U.S. wage earners already have piled up refunds for next April, reports Kiplinger's Kevin McCormally. If you are among them, now is a good time to dial down your withholding and bring home a little more of your money in your next paycheck.
It's not hard work. At the simplest, you check last year's tax return to compare the taxes you owed then against what your pay stub says has been collected year-to-date. Then, if your income and tax situation hasn't changed much from 2008 and year-to-date is bigger, go ahead and ask your employer to reduce your withholding.
Don't forget to scope the same numbers on your state income tax returns too. Budget problems have delayed 2008 refund payments in both Missouri and Kansas. We don't know that will happen again, but it's another good reason to get your money now instead of later.
The IRS provides free online instructions, forms and a quick calculator to help you figure how much to change to keep up with stimulus plan tax changes.
And while you are wonking out anyway, why not give all your finances a midyear once over, asks Bankrate Monitor's Kay Bell. Her basic 2003 rundown of what to look for is still good, but some tax rates and other details have changed since then.
Tuesday, May 26, 2009
Looking on the bright side of poverty level...
So, who's better with money, Warren Buffett or Slumdog Millionaire?
The answer might be surprising, say some contributors to The Economist, who found some (to them) unexpectedly sophisticated financial decision making by people living on less than $2 a day.
It makes sense when you think about it. None of us want what we eat tonight to depend entirely on what we earn or find today. So we all engage in what economic deep thinkers call consumption smoothing. That's the set of tricks we play to try saving money as we juggle replacing drafty windows against upping our retirement plan contributions next year.
Some of the smoothing and saving techniques in the $2-a-day world may seem strange. Savers there pay someone to hold money for them instead of collecting interest. But don't sneer. Check cashing is a $1.6 billion industry in the U.S. according to the trade group Financial Service Centers of America. Nearly three in four of us who filed income taxes last April got refunds, IRS reports.
Borrowing microloans from third world developers isn't that strange either. We tap our relatives. And like third world borrowers, many of us put sweat equity into some of our investments too.
So, Slumdog or Buffet? Much as I love Buffett-backed Dairy Queen, I'm voting Slumdog. They're plowing more of their profits into infrastructure for better long term results. More of their kids will likely graduate high school than their parents did. More of our kids may not, reports the Education Trust in Washington.
The answer might be surprising, say some contributors to The Economist, who found some (to them) unexpectedly sophisticated financial decision making by people living on less than $2 a day.
It makes sense when you think about it. None of us want what we eat tonight to depend entirely on what we earn or find today. So we all engage in what economic deep thinkers call consumption smoothing. That's the set of tricks we play to try saving money as we juggle replacing drafty windows against upping our retirement plan contributions next year.
Some of the smoothing and saving techniques in the $2-a-day world may seem strange. Savers there pay someone to hold money for them instead of collecting interest. But don't sneer. Check cashing is a $1.6 billion industry in the U.S. according to the trade group Financial Service Centers of America. Nearly three in four of us who filed income taxes last April got refunds, IRS reports.
Borrowing microloans from third world developers isn't that strange either. We tap our relatives. And like third world borrowers, many of us put sweat equity into some of our investments too.
So, Slumdog or Buffet? Much as I love Buffett-backed Dairy Queen, I'm voting Slumdog. They're plowing more of their profits into infrastructure for better long term results. More of their kids will likely graduate high school than their parents did. More of our kids may not, reports the Education Trust in Washington.
Sunday, May 24, 2009
Finding a new financial row to hoe
Mrs. Ktnomics and I spent $6.78 at our favorite garden center this morning - a lot less than the $180 or so we've spent for plants and supplies other years.
That's a bargain at either price, say gardening advocates who tout some significant health benefits from puttering around in the back yard. But we've got less money coming in right now, so we're going with the lower price and making up the difference by dividing and transplanting perennials we've added in the past.
We aren't yet going the vegetable gardening route like some other families whose jobs have changed recently, though about half of what we spent this morning is for herbs we'll cook with later. But even putting in flowers and other non-edible ground cover can be economically rewarding. Make it part of an ongoing landscaping plan to preserve or increase your home's market value.
Gardening can save you money on health care costs, authorities say. Probably so, but as an old news guy, I've gotta think that organizations like the American Horticultural Therapy Association have vested interests in making us think so.
Our new challenge is figuring how to do this on the really cheap. Gardening economically is always challenging. But this time around we've really got to do more with a lot less, even though some costs are coming down. Recycling and using found objects kicking around the garage are becoming big parts of our plan. And, like many things we've learned since being downsized, this also often requires spending time to save money.
Oh, and about that nude gardening website I linked to a paragraph back. I suspected when I checked it out that it wouldn't be what you first think of. After all, there are chiggers out there too.
That's a bargain at either price, say gardening advocates who tout some significant health benefits from puttering around in the back yard. But we've got less money coming in right now, so we're going with the lower price and making up the difference by dividing and transplanting perennials we've added in the past.
We aren't yet going the vegetable gardening route like some other families whose jobs have changed recently, though about half of what we spent this morning is for herbs we'll cook with later. But even putting in flowers and other non-edible ground cover can be economically rewarding. Make it part of an ongoing landscaping plan to preserve or increase your home's market value.
Gardening can save you money on health care costs, authorities say. Probably so, but as an old news guy, I've gotta think that organizations like the American Horticultural Therapy Association have vested interests in making us think so.
Our new challenge is figuring how to do this on the really cheap. Gardening economically is always challenging. But this time around we've really got to do more with a lot less, even though some costs are coming down. Recycling and using found objects kicking around the garage are becoming big parts of our plan. And, like many things we've learned since being downsized, this also often requires spending time to save money.
Oh, and about that nude gardening website I linked to a paragraph back. I suspected when I checked it out that it wouldn't be what you first think of. After all, there are chiggers out there too.
Friday, May 22, 2009
You can't afford to be poor. Avoid it now
Rats. I wish I had written this.
It's a Washington Post piece by DeNeen L. Brown outlining how and why our neighbors below the poverty line pay many dollars more for stuff that those of us who are merely financially inconvenienced can buy on sale. If you've been there, you know.
Researchers at the Brookings Institution and elsewhere have been watching this situation for a long time. The progressive leaning Center for American Progress estimates some 12 million more of us will get an unfortunately first-hand look at the problem in the next 12 months unless unemployment trends improve a lot faster than anyone expects.
Our own individual personal solutions to that problem are obvious. Don't become poor. Doing that with really limited resources, like when you are out of work, is possible. Not easy, but possible. The trick is building a cash reserve. You may not be able to build a big one. But you only need enough to buy a little more time.
Here are some things that have worked for me since September.
First, write down everything you spend. That helps you identify stuff you really don't need to buy, of course. And that, in turn, will help you map out a workable budget if you haven't already. But for me, it also helps curb spending. I really have to want something to go to the extra step of logging the purchase.
Second, give yourself a pay cut. Again it's a budgeting aid. The only way I can think of to save stashable cash, realistically, is to hold spending to 5 percent or 10 percent less than what's coming in.
Third, plan your spending carefully. There are lots of ideas how out there. But, for example, we're stretching our sub-$50 a week grocery budget noticeably by planning how to use leftovers, building menus around supermarket loss leaders, buying store brands instead of big names, and stocking up on staples when those are on sale.
And, goofy as it might sound, buy gas often. We try to not let our tanks drop below half full. Again, what you are really buying is time - to take advantage of the best price you see on the way to wherever you go normally, or to ride it out a little longer if other expenses run high. That beats scrounging change from the cup holders because you are really, really low.
It's a Washington Post piece by DeNeen L. Brown outlining how and why our neighbors below the poverty line pay many dollars more for stuff that those of us who are merely financially inconvenienced can buy on sale. If you've been there, you know.
Researchers at the Brookings Institution and elsewhere have been watching this situation for a long time. The progressive leaning Center for American Progress estimates some 12 million more of us will get an unfortunately first-hand look at the problem in the next 12 months unless unemployment trends improve a lot faster than anyone expects.
Our own individual personal solutions to that problem are obvious. Don't become poor. Doing that with really limited resources, like when you are out of work, is possible. Not easy, but possible. The trick is building a cash reserve. You may not be able to build a big one. But you only need enough to buy a little more time.
Here are some things that have worked for me since September.
First, write down everything you spend. That helps you identify stuff you really don't need to buy, of course. And that, in turn, will help you map out a workable budget if you haven't already. But for me, it also helps curb spending. I really have to want something to go to the extra step of logging the purchase.
Second, give yourself a pay cut. Again it's a budgeting aid. The only way I can think of to save stashable cash, realistically, is to hold spending to 5 percent or 10 percent less than what's coming in.
Third, plan your spending carefully. There are lots of ideas how out there. But, for example, we're stretching our sub-$50 a week grocery budget noticeably by planning how to use leftovers, building menus around supermarket loss leaders, buying store brands instead of big names, and stocking up on staples when those are on sale.
And, goofy as it might sound, buy gas often. We try to not let our tanks drop below half full. Again, what you are really buying is time - to take advantage of the best price you see on the way to wherever you go normally, or to ride it out a little longer if other expenses run high. That beats scrounging change from the cup holders because you are really, really low.
Wednesday, May 20, 2009
When credit cards are outlawed, will only outlaws have credit cards?
All Hades will break loose when the credit card reforms now whistling through Congress become law, our banking friends imply.
Worthy borrowers may find it harder to get loans, the American Bankers Association frets. The estimated 60 percent or so of us who pay off our monthly balances in full may be whacked with annual fees and other irritations like eliminating interest-free grace periods, other industry sources worry.
Yeah, maybe. But I'm not betting on it.
First, this isn't a new debate. It wasn't even new when Kiplinger quoted commentators mewling on it 11 years ago. The end of that world is a long time coming.
Also, card users who pay full balances on time are significant revenue sources for financial services providers. Each time we swipe a card, the financial services industry collects what's known as an interchange fee, usually equal to between 2 percent and 3 percent of the transaction's value. When I paid $173.83 for some auto maintenance a couple weeks ago, about $4.35 of the money went to some guy halfway across the country to cover handling.
We, and specifically the merchants who actually collect the money, paid the banks almost twice as much in interchange fees as the banks collect on penalties that Washington wants to crack down on, the Government Accountability Office calculated in 2006.
And while our two to three cents worth is far smaller than the interest banks collect on card balances, it's also far more dependable. Borrowers can welsh on loans. We pay the fees to use the cards. Lenders aren't going to walk away from easy money like that, say commentators such as Barbara Kiviak at The Curious Capitalist, Rick Newman at U.S. News & World Report and others.
Plus we have good repayment records, which means we generally get some first cracks at the best new offers the lenders make. So if someone tries to slap an annual fee on our cards, we'll walk. And if all the lenders start charging annual fees or abolishing grace periods, that's not a big problem either. Mrs. KTnomics and I are old enough that we get free checks from our bank anyway. They often have free pens in the lobby too.
Worthy borrowers may find it harder to get loans, the American Bankers Association frets. The estimated 60 percent or so of us who pay off our monthly balances in full may be whacked with annual fees and other irritations like eliminating interest-free grace periods, other industry sources worry.
Yeah, maybe. But I'm not betting on it.
First, this isn't a new debate. It wasn't even new when Kiplinger quoted commentators mewling on it 11 years ago. The end of that world is a long time coming.
Also, card users who pay full balances on time are significant revenue sources for financial services providers. Each time we swipe a card, the financial services industry collects what's known as an interchange fee, usually equal to between 2 percent and 3 percent of the transaction's value. When I paid $173.83 for some auto maintenance a couple weeks ago, about $4.35 of the money went to some guy halfway across the country to cover handling.
We, and specifically the merchants who actually collect the money, paid the banks almost twice as much in interchange fees as the banks collect on penalties that Washington wants to crack down on, the Government Accountability Office calculated in 2006.
And while our two to three cents worth is far smaller than the interest banks collect on card balances, it's also far more dependable. Borrowers can welsh on loans. We pay the fees to use the cards. Lenders aren't going to walk away from easy money like that, say commentators such as Barbara Kiviak at The Curious Capitalist, Rick Newman at U.S. News & World Report and others.
Plus we have good repayment records, which means we generally get some first cracks at the best new offers the lenders make. So if someone tries to slap an annual fee on our cards, we'll walk. And if all the lenders start charging annual fees or abolishing grace periods, that's not a big problem either. Mrs. KTnomics and I are old enough that we get free checks from our bank anyway. They often have free pens in the lobby too.
Tuesday, May 19, 2009
Cheap car keys...a deeper personal finance puzzle
Good luck if you are thinking of buying a new car anytime soon.
Finding deals won't be a problem. Vanishing and merging GM and Chrysler dealers presumably will offer acres of them. Figuring out which are best in the long run could be tougher. Last winter's often complicated rebate offers seem simple compared to what's merging in the on-ramp now.
First, Detroit seems to be trying to borrow Japan's strategy for selling more cars through fewer dealers more profitably. The problem is that this only works when car sales are going up, long time auto industry observer Jerry Flint writes in Forbes. That isn't happening now.
Second, car prices already are so cockeyed that some new models sell for less than comparable year-old trade-ins. Getting rid of what you are driving now could get trickier when acres more new cars hit the market.
Third, new higher fuel economy standards may be kicking in starting in 2012. If so, you already may be driving your best deal until then. Your maintenance, taxes, insurance and similar costs won't go up as much before you buy a new gas sipper. We're already driving our cars a record median 9.4 years, reports auto statistician R.L. Polk & Co. It may be 2012 before sales rebound to pre crisis levels anyway, Polk estimates.
So plan ahead if you're thinking of doing any tire kicking soon. Check out Web sites such as Carbuyingtips.com to scout what broadly is out there. And shop around. Stimulus plan creators of cash-for-clunkers programs still may offer more for your trade-in someday than Bud's Auto Auction will.
Finding deals won't be a problem. Vanishing and merging GM and Chrysler dealers presumably will offer acres of them. Figuring out which are best in the long run could be tougher. Last winter's often complicated rebate offers seem simple compared to what's merging in the on-ramp now.
First, Detroit seems to be trying to borrow Japan's strategy for selling more cars through fewer dealers more profitably. The problem is that this only works when car sales are going up, long time auto industry observer Jerry Flint writes in Forbes. That isn't happening now.
Second, car prices already are so cockeyed that some new models sell for less than comparable year-old trade-ins. Getting rid of what you are driving now could get trickier when acres more new cars hit the market.
Third, new higher fuel economy standards may be kicking in starting in 2012. If so, you already may be driving your best deal until then. Your maintenance, taxes, insurance and similar costs won't go up as much before you buy a new gas sipper. We're already driving our cars a record median 9.4 years, reports auto statistician R.L. Polk & Co. It may be 2012 before sales rebound to pre crisis levels anyway, Polk estimates.
So plan ahead if you're thinking of doing any tire kicking soon. Check out Web sites such as Carbuyingtips.com to scout what broadly is out there. And shop around. Stimulus plan creators of cash-for-clunkers programs still may offer more for your trade-in someday than Bud's Auto Auction will.
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