As budgeters we scrimp to save money, but when it comes to food you should think about your health, too, and not just whether adding fries to your meal will cost an extra buck fifty. I confess, I love fast food – I know, it’s so American of me to admit – not because of the prices, but because it tastes so fabulous…maybe it’s my penchant for salt and sugar.
Enter the Treasury Department. Today the Treasury announced it will launch a new, revamped bank bailout program that would include the option of allowing the government to increase its ownership in financial institutions. Translation: The government wants more of a say in how banks are run, because they are (obviously) doing a crappy job thus far. As you can see by today's steep stock market slide, this news did little to bolster investor confidence.
But there's a difference between the government running a bank, and the government having a say in how it runs itself. The first would be nationalization (which was a hot stock market rumor last week, but turned out to be false when the Obama administration said there would be no bank nationalization and that "private banking is the way to go").
The Treasury said today that beginning on Wednesday, the 20 largest U.S. banks will be required to undergo a new “stress test," which will determine whether each institution has enough capital to survive any further economic spirals.
More details surrounding the stress test will be released on Wednesday by the Treasury, though it did divulge today that if any banks fail the test, the government will require it to raise capital from private sources. If any bank is incapable of raising the money, the bank will be required to swap out the government’s existing, non-voting preferred shares and replace them with new preferred shares that are convertible to common stock with voting rights. Um, what? Basically, as I said earlier, this will give the Obama administration a say -- and not complete governing power -- in the business of each bank, if it comes down to that.
If you answered “yes” to any of these questions, it may be time to re-evaluate your attitude toward money and budgeting. A healthy attitude is one that enables you to indulge now and then, but also helps you prepare for unanticipated expenses that inevitably arise.
Here are some key ways from Women & Co. to get on a healthier track with your personal finances and stay in control of the relationship:
We remember the days when buying a gallon of milk was about as much (if not more) than a gallon of gasoline. Shudders, while flashing back to daydreams of filling car up with milk, eating bowl of cereal with crude oil. Thankfully milk prices have fallen, thanks to waning demand for the product. But wait -- you ask -- does no one drink milk anymore with cookies? Eat ice cream? Make pudding? It's not quite that dire...yet.
Demand has fallen for milk because of the limping economy (i.e., people are buying cheaper alternatives), and this in turn has deeply hurt dairy farmers, which are selling their dairy cows in droves to slaughterhouses to make up for the lack of money coming in from unsold milk.
Things I don't want to think about the next time I my quarter-pounder at In 'N Out.As prices are falling, feed costs remain high, and farmers are getting back only about half of their costs. Obviously, that's not sustainable. As a result, nearly a fifth of America's 9.3 million dairy cows might be turned into steaks and hamburgers this year.
The situation is only projected to get worse:
In 2008, the average price of 100 pounds of milk traded at the Chicago Mercantile Exchange was $17.44. Now the price is just above $10, and most observers think it will go even lower. In December, the price of commodity cheese fell by 40% in just a couple of weeks.
So what's the best fix for the milk melodrama? You guessed it -- a bailout! This, in the form of stronger price supports and government purchases of surplus milk. Think bailout prayers will be answered? [TheBigMoney]
It's rumored that Albert Einstein once said that "the most powerful force in the universe is compound interest" -- a bold claim, considering most are unaware of the virtues of such a phenomenon. But to truly understand this "8th wonder of the world," or so Einstein called it, you need a basic understanding of what it is, like everything else in finance!
If you're saving, compound interest is literally your best friend. Granted, you may not be able to call it on the phone to grab the occasional lunch with or gossip with it over a manicure about a pair of shoes you saw at Bloomingdale's, but in terms of your money, compound interest really is your new BFF. It's like the Ethel to your Lucy, the Robin to your Batman, the Nicole Ritchie to your Paris Hilton. Okay, enough with the examples (especially that last one).
According to the Merriam-Webster Dictionary, compound interest is defined as "interest computed on the sum of an original principal and accrued interest." Zzzzzzzz (cue crickets chirping in background). "What in God's name does that mean?" you ask -- either that, or you're already nodding off with boredom at your computer, and if the latter is the case -- snap out of it.
Compound interest is a simple and painless way to make tons of cash back on your savings. How? Well, it's simple. Compound interest is money that you gain not only on your initial investment, but also on the interest that's already accumulated on it. If it sounds confusing, here's an example to assuage your "huh?":
Say you have two 22-year-olds . . . let's call them Simon and Garfunkel. Simon makes the most of his 20s and saves and invests $2,000 each year until he's 31, then stops. Lackadaisical Garfunkel, who enjoyed his 20s spending money instead of saving, starts investing $2,000 per year starting at 31 until he's 65. Both have identical rates and both allow interest to grow. Forward-thinking Simon will earn $50,000 more than Garfunkel by the time he's 65, even though Garfunkel will have put $50,000 more into the account over an added 25 years.
You know that saying "a rolling stone gathers no moss?" Well in the case of compounded interest it does, and it's a good thing. Compound interest acts like the moss your savings accumulates throughout the years. Shine on, you crazy diamond!
The two most important factors to remember when daydreaming about compound interest on a sunny afternoon, are:
If you want to figure out how many years it will take to double your money at a certain interest rate, all you have to do is divide the rate into 72. Say you want to see how many years it will take to double your money with a 6% interest rate -- you'd just divide 6 into 72 and get 12 years time to double your money. Come for cocktails, stay for the deviled eggs, chickadees!
The Rule of 72 also works in reverse. If you want to see what kind of interest rate you'd need for a set amount of years to double your money, you'd take the number of years (let's say 8), divide that number into 72 and poof! You'd need a 9% interest rate to double your money in eight years. The Rule is fabulously simple yet timeless, just like a Chanel suit. As long as the interest rate is less than 20%, it's generally quite accurate.
With compound interest, just remember that the name of the game is to invest young and often (time is a key player here), in an investment with a high rate of return. Picture your money as a snowball you start patting together in your 20s. The older you get, the more snow gets patted onto it that by the time you're ready to retire, the snowball is so big from years and years of fresh snow, that it's more of an igloo than a snowball. And it will be ready for you to call it home!
People who grew up without much money and later earn a comfortable living sometimes spend too much to make up for what they didn't get as children. ... People who feel entitled to the good life, or are unconsciously copying a mother or father who lived beyond her or his means. ... If you feel the need to impress people with what you have rather than with who you are, you are at high risk for credit card abuse."This from a woman who spends $500,000 a year chartering private jets and who sells 'Cruise With Suze' packages on an Italian luxury liner. (She has also hawked for GM, claiming that leasing a luxury car — you know, the kind that people drive to impress others — is a terrific financial decision," says the article.
What we're supposed to love about Suze Orman is not her knowledge and certainly not her prescience, but her ability to turn circumstances to her advantage, the resilience of a waitress-turned-bank-vice-president who squandered a great gig only to make a fortune off of you and me by having the courage to be rich. Despite her obvious flaws, we admire Suze so much that millions of us will fork over more of our dwindling dollars for her new [$50] FICO kit because she now assures us that a high FICO score is the key to our financial future. True, her previous book promised us that we would never be a financial victim again. Not only that, but we would receive the life we deserved, which sounds suspiciously like one of those insidious credit card offers, but whatever."When was the last time an evangelist predicted anything correctly or the phone psychic told you something that you didn't already know? So what if we cannot retire because Suze has been telling us to buy stocks and trust the fat cats? Suze possesses the courage to be rich. The rest of us are suffering from a collective emotional roadblock," posits the story.
Your eligibility for this credit begins to phase out if you’re an individual with an adjusted gross income over $75,000 or a couple with income higher than $150,000.
Unemployment: Normally, you pay federal income taxes on federal unemployment benefits. In 2009, however, you won’t have to pay taxes on the first $2,400 in benefits you receive.
Health Insurance: If you get fired, your company is required, thanks to a law known as Cobra, to allow you to pay to keep your health insurance, generally for up to 18 months.
The problem is, it can cost you $1,000 a month or more to keep the coverage.
Now, the federal government will subsidize 65 percent of the premium for up to nine months. To be eligible, you need to have been forced out of your job between Sept. 1, 2008, and Dec. 31, 2009. Also, your income in the year you receive the subsidy cannot be more than $125,000 for individuals or $250,000 for married couples filing their taxes jointly.
If you lost your job after Sept. 1, 2008, and declined Cobra coverage, you’ll now get another chance. Call your former company in the next two months to find out how this will work.
Social Security: In 2009 a number of retirees and disabled people, including Social Security recipients, will receive a $250 refundable tax credit. The money would arrive within 120 days of the bill’s signing.
First-Time Home Buyer Credit: First-time home buyers are eligible for a refundable tax credit equal to 10 percent of the purchase price of their home, up to $8,000, if they made the purchase after Jan. 1, 2009, but before Dec. 1, 2009. (This gem is for singles who make under $75,000, or a married couples who make under $150,000).
Don't forget the language isn't final, but the above is the gist of it all. Ah, I love the sound of money in my pocket (thank you U.S. government!). [NY Times via CNBC]
Valentine’s Day is my favorite holiday of the year, narrowly beating Thanksgiving. I know, I know: “Brunnie, how can you love V-Day? It’s a Hallmark holiday driven completely by consumerism!” Whatever. It’s so trendy to hate Valentine’s Day that I have to retort: “Be original!” Yes, you should tell people you love them every day of the year, but Valentine’s Day not only reminds you to love those around you (wow, I sound like Delilah), it also sets the perfect stage, what with red and pink paper mache hearts hung in every store window and your tummy full of conversation hearts...cinnamon hearts...sour gummy hearts. Four words: Get in my belly.
Love it or hate it, Feb. 14th is a fact of life. You don’t need to buy into it and drop money on flowers, candy or cards if you don’t want to (although Love just had a bouquet of flowers and balloon delivered to my office, which made my day!), but your 1-800-Flowers purchase may be just what the economy needs.
According to the Washington Post, the National Retail Federation's spending survey found that Americans plan to put up a total of $15 billion in the name of Cupid this year, or $103 per person. Granted, that's $20 less than last year, but it's still a far cry from macaroni-necklace territory, the paper says.
But if you’d rather take your left eye out with the nearest ballpoint then spend a lot of money on anything even remotely related to Pink Paper Heart Day, here are some of my favorite low-key, budget friendly ideas from MSNBC:
Stay in and relax. Valentine’s Day conveniently falls on a Saturday this year — and that means you could put your heads together and dream up the most ideal day at home ever. This Thursday or Friday, you could stock up on your favorite foods and drinks and rent movies that you both want to see. Tidy up the house ahead of time so you’ll be able to resist the urge to wipe down countertops and fold laundry all day long. If you have children, make baby-sitting arrangements for at least part of the day if at all possible.
Dinner doesn’t have to cost a bundle. There’s really no need to drop $90 to $250 on a romantic dinner at a restaurant. In fact, with some advance planning, you could have a fabulous candlelit dinner at home — and, heck, you could even get all dressed up for it! Again, be sure you have every single food item on hand before Saturday. You don’t want to be bothered with having to run out to the store to pick up lemons or onions.
Get all gussied up for a low-budget night out. If the two of you really want to hit the town on Saturday night, you could simply have coffee or a drink and dessert at a dark, romantic bistro or an expensive cafe or restaurant. At any time of the year, this avoid-the-entrée trick is a surefire way to savor the atmosphere — and your date — without busting your budget.
Write your feelings down. With the help of a package of inexpensive Valentines from the drugstore or grocery store — or, for that matter, any kind of paper — you could write out dozens of reasons why you love your mate. Leave the messages all over the house, in both noticeable and hidden-away places. This is another one of those gifts that could keep on giving for several weeks, if not months, down the road. [MSNBC]
And if you’re feeling the love but single, the International Falls Daily Journal has some fabulous ways to show someone you care:
Enough already with the saving that many of you have suddenly begun doing. This very moment, Congress and President Obama are preparing to send you a tax rebate, to inspire you to stimulate the economy. So go out and stimulate. Spend as if the future of your country depended on it.Come again? The idea is that now of all times is not the time to save. It may be okay for you as an individual, but it is ruinous for our collective economy. If there ever was a time to spend, then that time is now.
[People] eat just one more doughnut and put off exercising until tomorrow and tomorrow and tomorrow. They fail to set aside enough for retirement. Again and again, they choose a bird in the hand — be it dessert, convenience or a little extra cash — over three or four in the bush. Most people could save themselves a good bit of money by giving proper respect to their future self. They could spend a little now and save a lot later.[New York Times]
"Mothers' mean age at their first childbirth fell to 25 years in 2006, the most recent figures available, from 25.2 in 2005. Women ages 20 to 24 led the shift, with a 5% increase in the rate of first births."There are a bevy of factors as to why the age is beginning to decline for the first time, but overwhelmingly experts see a shift in attitudes. "More young women today just assume they'll have both a career and a family, and on their own timetable," one source told the WSJ. "Young women feel less compelled to spend a decade proving themselves on the job before kids." People, the feminist movement happened to give women the freedom of choice, that is, the choice to have kids, a career, and/or both. Not to choose one in lieu of the other, therefore stigmatizing you by your decision.
Reasons against buying a house:
