Bad economy? It's worth a laugh

Today the stock market was hit hard by a batch of horrid economic reports that were released this morning. If you didn't follow the news today, here's an abridged run-up of what happened:

• Unemployment claims rose to 588,000 (slightly above the forecast).
• Really troubling was the number of Americans forced to file for continuing unemployment benefits because they can’t find a job. That number grew to 4.77 million, the highest figure on record. Um, yeah. Aaaand we haven't seen the worst of the jobs situation yet. Just sit tight.
  
• "New home" sales dropped 14.7% to an annual rate of 331,000 – way below the forecast of 400,000. This was the worst "new home" sales reading in more than 40 years of data compilation.
• Many argue that the housing crisis started this economic meltdown and that we won’t pull out of it until the housing market turns around. Today’s report on new home sales did not reinforce the hope that we might be pulling out of the maelstrom.
  

Now that we have that bad news out of the way, what better way to deal with the crisis than by having a good laugh? If you haven't already seen this E*Trade "outtakes" reel from the baby commercials they've been running, you must watch -- it's hilarious. I just had to post. My favorite part is when one of the babies asks: "What did I think of the economy in 2008?" and commences to vomiting all over himself in response. Priceless:



(Thanks Julie over at Beef Up Your Piggy!)

How to open an IRA account (and other goodies)

Now that you know almost everything there is to know about IRAs (well, almost), there's one little problem standing in the way of your post-retirement dreams of lounging in a Parisian cafe, partaking in brie, baguettes and Bordeaux: How do you sign up for an IRA?

Simple! If you thought IRAs were a piece of cake to understand in my last post, the process of signing up for one is even more straightforward -- think cake with all the calories taken out of it. All it takes to sign up is a little time, your social security number, employment information (again, you can only contribute earned income to an IRA), bank account info and money to deposit (obvi).

Unlike 401(k) accounts that employers generally set up for their employees, an IRA is usually something you need to do on your own. I can already hear you panicking, eyes glossing over at the thought of tables and tables of complicated numbers you couldn't possible begin to understand. Scratch that visual right now. I take it most of you have filled out student loan forms? Well, filling out an IRA form is even easier -- much like filling out a credit card or job application. No hand-holding needed!

The hardest part of opening an IRA account is choosing which brokerage firm you'll want to sign up with. These include many big names that I know you've heard of: TD Ameritrade, Sharebuilder, Vanguard, Fidelity Investments, E*Trade Financial and T. Rowe Price are all prominent in the IRA world. I can't advise which place is the best to go with (as I'm not a financial adviser), but when researching each firm, make you sure you watch out for how much trading commissions are and if there are any annual fees. Many places have no fees (rock on!), but may have higher trading commission costs (i.e., fees charged for every trade made with your money). Also, be cognizant of what the minimum IRA contributions are for each, as you'll want to be able to make them on a monthly basis. Do your homework when choosing who will be the lucky firm to house your money.

Once you've found who you want to sign up with, you can download forms off their website, fill out the info (very straightfoward questions are asked, trust me), either include a check or direct deposit from your bank account, and plop in the mail. Or, if you prefer doing it digital, many places allow you fill out all forms online. And that, chickadees, is how you sign up for an IRA.

Again, just putting your money into an IRA doesn't mean it's accumulating much of anything. Think of it as a glorified savings account. Yes, you've taken the necessary steps to put money aside every month for the good of your golden years, and yes, the tax benefits are nice, but you have to invest the money once it's in the account. Use it as a vehicle to reap big rewards for your future. You have the ability to tell your brokerage firm how you want them to invest your monthly cash. Are you more of a mutual fund maven? Stock sistah? Or an index .... well, you get the idea. Generally, if you don't know much about the stock market or don't have the time to learn and do research, mutual funds and index funds are a fabulous option as they pad your portfolio with diversification.

Don't worry if you decide you want to change the kind of IRA you are enrolled in. Once you sign your name on the line, it's not written in blood. If you sign up for a traditional IRA, for example, and realize you'd rather be in a Roth (or vice versa), it is possible to make the switch, just be aware that it may have a large impact on your taxes when it's time to withdraw the money from your account. (Because, as I've mentioned before, one of the main differences between the two IRA accounts comes down to when and how you are taxed on your contributions.)

And, if you've found a dazzling new job opportunity and the only thing standing between your current job in hell and climbing the corporate ladder to paradise is confusion over what to do with your IRA account, don't fret. You can transfer your IRA funds to different IRA accounts (such as from Roth to Roth), but the transfer has to happen between plans, meaning you (as the retirement account holder) don't get to touch any of the money ... yet. Think of it as something to look forward to when your hair begins to gray!

Learn the lingo: IRA

Ah yes, the IRA, or individual retirement account, another way to reap the benefits of saving early for a lavish retirement!

But wait -- before we go any further -- I know I've probably already lost you. If you're anything like I was at the wee age of 24, your eyes have already glazed over with boredom at the mere sight of the word "IRA," and I don't blame you. Unless you were a finance or business major in college, terms such as IRA were relegated to people like our parents, who are at an age to be concerned with all that stuffy money talk. Right? To put it bluntly, it's very, very relevant to people our age. Sorry to pop your head-in-the-clouds fantasy, but if you're thinking: "I'm only ___ (insert whichever age you are), so I don't have to worry about that stuff yet," then you're dismissing ways to plan for your life that can make you very comfortable (and dare I say rich) in the future.

Guess what? Unless you end up relying on someone else to learn about these things for you and rely on them to carry your deadweight in the future (which I've written about here), it's time to start teaching yourself! What's more attractive than a very stylish girl who's also very financially saavy? Don't worry, IRAs are not, I repeat not, complicated to understand. Cross my heart and kiss my elbow. In fact, they're actually quite simple, like most things in personal finance when you strip away all the technical mumbo-jumbo. Just remember not to feel intimidated by the lingo and the numbers, because if I can understand it (with an English/Journalism background), then you definitely can too.

To strip it down simply, there are many types of IRAs, but people generally choose either the traditional IRA, for any level of income, or the Roth IRA, mainly for people making under $95,000. Both serve the purpose of an "individual retirement account," thus the name "IRA." You can only contribute to an IRA with earned income, so birthday money or Christmas checks don't count, unfortunately.

In a traditional IRA, you can contribute up to $5,000 of your annual income to the account. All money you put into your IRA is sheltered from taxes so, for example, if you put $5,000 into your IRA in one year. That would be $5,000 off your overall income that will not be taxed by the government. When you do decide to pull the money out, though, it will be taxed. And, if you withdraw the money before you're 59 1/2, you'll get charged a 10% fee. The fee acts as a way to curb your temptation of dipping into your budding nest egg; it comes as no surprise that it's highly advised against to pull your money out prematurely.

But what if you want to buy a house -- and the money you've been saving in your IRA would make a nice down payment on a mortgage? Good news! The exception to this 10%-fee rule is if you're using the money to buy a house or pay for higher-ed costs. If you're new to the world of saving and have a rough time saving in general, than having an account that rewards you for saving for the big purchases in your life, like a home, would be perfect for you!

The Roth IRA, though, is an even better match for the fiscally responsible ladies (or gents) out there. Why? Well, unless you're a high-power, corporate executive -- you know, the kind driven around in Lincoln towncars, sipping scotch and balancing million-dollar checkbooks -- you're probably making under $95,000 per year, which is perfect because it's the cutoff point to qualify for a Roth. (You can also make under $110,000 and still qualify, but you'll only be allowed to make "partial" contributions.)

Unlike the traditional IRA, the Roth IRA is not tax-deductible, but you have greater flexibility over your money. In a Roth can withdraw your savings after five years (regardless of how old you are), without being charged a fee. Any interest you accumulate in the account, though, can be taxed. Not making sense? Say after 10 years you have $20,000 saved up of your own money, with $5,000 earned in interest on the money. You can withdraw your $20,000 tax-free, but only have to pay taxes on the $5,000. Not too shabby.

If you're still at a crossroads as to which IRA (traditional or Roth) would be the best for you, a rule of thumb is that the Roth IRA is generally a better bet if you're younger.

Simply put, by saving your money earlier, the younger you start saving, the more you end up with in the long run (with the interest accrued).

It's important to note that an IRA, Roth or otherwise, isn't an investment, per se -- it's just a place to keep a chunk of your savings to use as investing in whatever you choose. That could include bonds, mutual funds, real estate, or even just one stock. Again, an IRA is another way, like the 401(k), that the government is rewarding you for saving for your retirement.

At this point, you're probably asking, "What's the difference between an IRA and a 401(k), then?" I admit, they do sound strikingly similar, but the fundamental difference is that one is employee-sponsored (the 401k, where your contributions are usually matched annually by your employer), while the other (IRA) is completely up to you to create and manage.

Both are fabulous ways to shelter income from taxes, though, so contributing to at least one is in the best interest of every savvy financier!

"Going out of business" doesn't mean the lowest prices

When I heard that Circuit City was filing for bankruptcy and shutting down all of its nationwide stores, it was a bittersweet day.

On one hand, I've grown up with Circuit City -- it's where my parents bought our first VHS player and subsequently our first DVD player; where I bought my first stereo system for my car when I was 18; where I splurged on a record player for Love's birthday present; and where I bought many a discount CD or DVD (Aretha Franklin's Greatest Hits? Yup, that was a CC purchase). On the other hand, store closures equal super sales, right? Visions of deeply discounted surround sound speakers and Golden Girls DVDs began to pervade my dreams following the announcement ... until I found out about the dirty little secret behind "going out of business" sales.

Someone mentioned to me recently that most stores going out of business don't, in fact, handle their own store closings and merchandise selling -- they hire liquidation firms to take care of that dirty work. I started doing research online. Just like Mervyn's, Whitehall Jewelers and Linens 'N Things before it, it turns out Circuit City has hired a firm -- well, four, in fact -- to peddle the last of its dwindling inventory.

How it works is that Circuit City (or whatever company is going out of business) sells its inventory to a liquidation firm, who sets the final discounted prices. The liquidation firm makes its money by paying back the store's creditors first and then reaping the rewards of any gains made from the sold merchandise.

And we all know how the discounts go that are notorious with going-out-of-business sales, i.e., the first couple weeks it's 10% - 30% off, then 20% - 40% off, etc., until the remaining days of the store's existence hold the best deals. Waiting till the very end does have its risks, like there may not be much to peruse, but it's a risk that works well for many.

Take my experience at Linens 'N Things. When Linens 'N Things was in the process of closing its stores, I remember meandering through the aisles of giant salad bowls and garlic presses, trying in vain to remember what I needed to buy for my apartment. After all, the store was closing, there were red and yellow sale signs everywhere, why not pick up what I needed? That was in the first two weeks of store closures, and I remember thinking that even with the 10% to 30% discount, I'd never pay the inflated prices. Nope, not even for that Pilgrims 'N Pinecones Thanksgiving centerpiece.

I returned to the store many weeks later, when it was in its final stages of shutting down. The shelves were barren at this point, partly because most of the merchandise was opened and either broken or strewn about on the floor. But the prices were better, and that's when the magic (or what some may call the curse) began. I started eyeing everything with the wanton hope that maybe, possibly I needed it or could use it. Giant framed black and white Elvis poster? I've always been a fan of The King. Pink soup ladle? Sure, why not? White cloth chef's hat that I'd never realized I really really wanted until that point? All of a sudden, this last stab at Linens 'N Things was beginning to make sense -- until Love caught up with me voraciously wading through safari-themed bathmats and I realized that I had let the sales dictate my purchases, and not my needs.

And the sales aren't always the best -- even in the final throes of a store's end. Liquidation firms can set their discounts based on manufacturers' prices (aka "the suggested retail price", which is always a rip-off) rather than the price at the store when it closed. What's worse is that the items you purchase in a going-out-of-business sale are non-returnable, so you may end up having to eat the cost of that new sound system you just bought if it has some sort of mechanical glitch.

Before you head into the local store closing of the week (or so it seems, in this economic climate), do your homework. Before you go, check out other stores online and see what they've marked the prices of items you know you want, such as tvs, stereos or digital cameras, among other things. If you find a great deal in a liquidation sale, make sure the manufacturer's warranty will still be honored, and double-check that all the accessories and instruction book are included.

Oh, and my Linens 'N Things adventure? I ended up putting (almost) all the merchandise back on the nearest empty shelf. No framed Elvis poster or pink soup ladle. But I did buy the chef's hat. Sometimes you never knew you wanted something until it was sitting infront of you, marked 80% off.

Fashion on a Budget: Alexander McQueen for Target

The British are coming, the British are coming! And in this case, it's a fabulous thing. Alexander McQueen's Target line is almost upon us, with an official release date of March 1!

We can now add this to our "Why recessions rock" list we've been mentally keeping track of. As I've written before, every girl should have a little McQueen in her closet, and with the economy in the tank and people being laid off in droves, owning a piece of the pie is now an (albeit bittersweet) option. Ironic how things work out. Anyway, if you're new to the game, Brit fashion designer McQueen is known for his impeccable tailoring, eye for detail and out-there designs, which often seem influenced by the punk persuasion. Although McQueen has his own, high-end label, he also designs for Gucci and can now cross off "design Target line" from his to-do list.

I think that this is Target's best designer line by far, and am impressed with most of the outfits, especially the first two dresses I've posted below (although leggings and booties are definitely not my thing, I'd trade for bare leg and peep toe pumps). Interestingly, Target has opted not to include the McQueen collection in their traditional GO! International category, but rather has dubbed the new line part of its "Designer collaborations" unit. Is the GO! series not worthy enough? Does this mean we may see more higher-end designers now feature diffusion lines through Target? I'm crossing my fingers for Cavalli.

Behold some of the new McQueen looks:


These are only nine of the 18 looks that were released this week; to see the rest, visit Nylon Magazine's slideshow. Although no pricing info is out yet, rest assured that all looks will be priced under $100, probably around $50 for the dresses (this is Target, after all).

What do you think?

Money and marriage, the women's edition

A few months ago I blogged about steps women could take to protect themselves financially if faced with divorce, or even worse, a spouse's untimely death. Some people liked the article, but most felt that I had a negative view of marriage and allowing one's self to fully depend on their spouse in a marriage. Quite the opposite.

As a woman, safeguarding your assets (to a degree) or money savvy talents does not mean that you don't trust your partner, don't love them with all your heart, or see a relationship demise as an inevitable thing. For the record, I believe in true love, fully trust my husband, and am beyond a romantic sap (I've seen The Notebook 20 times and still cry every time).

Which is why I was happy when I came across an Oprah article trumpeting "What Every Married Woman Should Know About Money." Like Oprah says, "No one wants to live as though she's just waiting for her relationship to implode, but you should know that there are simple, effective—and not at all hostile—ways to protect yourself…just in case." Some of her tips are the same ones I wrote on:

Carry your own plastic.
If every bank account and credit card is in your husband's name, you will be a financial nobody without him. Before you do anything else, open a bank account and get a credit card in your name.

Read the fine print.
Look over all tax returns, investment agreements, real estate contracts and legal documents carefully. Get a credit report annually so that there are no surprises in your family's debt situation.

Define what's yours, mine, and ours.
A postnuptial agreement can protect assets accrued after the marriage, such as an inheritance. Make sure that you're listed on the deed to your home as joint owner or that the house is classified as community property.

Don't give up bill-paying duties.
Sometimes women who aren't working feel uncomfortable participating in financial decisions. For your protection, be aware of how the money comes in and where it goes out. Some couples take turns paying bills on an annual basis.

Get to know your financial advisers.
Attend any meetings with an investment planner, lawyer or accountant. Should there ever be a problem, you'll have the network you need to make important decisions.

Make plans for the future.
Make sure you and your spouse each have adequate life insurance, a will and a living trust. Consider putting aside money for long-term care (women tend to outlive men). Don't neglect your own retirement—if you and your husband file a joint return, you can contribute up to $4,000 a year to a spousal IRA.

Keep your professional hat in the ring.
Even if you plan to stay home for good, maintain your networks and stay in touch with colleagues. Whether through divorce or widowhood, the odds are real that you'll be financially responsible for yourself again. At the nonprofit Women's Institute for Financial Education (WIFE, wife.org), they have a slogan: "A man is not a financial plan." It's the truth. [Oprah.com]

They win a lawsuit, we win free makeup, revisited

Hello, chickadees. I wanted to remind all of you that beginning on Tuesday, January 20, many department stores will be giving oodles of free makeup on a first-come, first-serve basis due to a lawsuit that was filed a few years ago in regards to cosmetic price-fixing. I've re-posted my article on the topic that I published a few months ago just to let you all know what's exactly going on. Don't forget!

Being married to a future litigator, I catch wind of many happenings in the legal sphere. Much of it is fascinating, a teensy bit of it is dull, and once in a while there will be truly fabulous gems that stand out. And so, I thought it be only apropos that I share some great news! Don't worry, I'm not about to lose you in a legal diatribe, but how does free makeup at Nordstroms, Macy's or Lord & Taylor sound?

As you all know, those big-name department stores and more (including Bloomingdales, Neiman Marcus, et. al.) always charge the same price for every kind of cosmetic, right? Clinique and M.A.C. products, for example, never go on sale, and usually in-store coupons never comply with the cosmetic counter. Well apparently that's called price fixing and apparently it's highly illegal! How so? The suit alleges that shoppers (meaning moi, and all of you) were cheated by the big, bad retailers (along with specific makeup brands, such as Chanel, Prescriptives, Clinique, etc.) who all made a pact (i.e. price fixed) that the stores would only sell makeup at the retail price suggested by the brands. That's why, as I mentioned a second ago, no coupons or discounts ever applied to the long-coveted YSL lip gloss you had your eye on at Nordstroms or to the Dior makeup you wanted at Macy's. Well as it so happens, price fixing is a volation of anti-trust laws! You learn something new everyday, no?

The suit started back in 2004, so it's all old news, but a verdict finally came to fruition recently: Beginning in 2009, the retailers and brands involved in the whole debacle will have to give away $175 million worth of makeup to consumers who were taken advantage of (along with paying $24 million in attorney fees).

The metaphorical gauntlet has finally been thrown down and (obviously) no more price fixing will happen at these stores or with these brands.

I know what you're all thinking: Point me to the free makeup! One caveat is that each consumer only gets $25 back in cosmetics, but that's $25 in powdered bronzer that I'm fully entitled to! Although it's not 2009 yet, start bandaging those vulnerable "I-paid-way-too-much-for-Chanel-lipstick" scars by taking proactive steps to earn back what's rightfully yours.

To be eligible for the money, you must "currently be a resident of the United States who purchased department store cosmetics in the United States between May 29, 1994 through July 16, 2003."

For a list of which stores are involved in the suit, and how you can redeem your $25, visit the official lawsuit website at http://www.cosmeticssettlement.com/ .

Guess it really does pay to be in the know, huh?

Stay warm and save money

This morning, I woke up promptly at 8:26am, migrated from the bed to the couch, turned my laptop on, got "settled" so I could start working and began work at 8:30 a.m. on the dot.

About two hours later, just I was considering getting off the couch so I could brave the frigid temperatures outside and commute in to the office, Love trudged into the living room from the bedroom (must be nice waking up at 10 a.m.) and looked perplexed and parched.

"LOVE!!!" he said, as he rounded the corner into the room. I was so startled that I immediately thought something bad had happened, like he saw an ax murderer standing behind me or Lola had pooped on the carpet. Nope. He was facing the thermostat and I instantly knew the cause of his outburst.

"No wonder it's so hot in here," he said. "You've got this thing set to 87!!" Yes, I can't lie. I, like most girls, prefer being warm over cold, and lack the thick skin that I should probably have already grown by living through more than a few East Coast winters. Well there's more to the story too. I guess I failed to mention that getting "settled" on the couch for work also means wrapping myself up like a taquito in a blanket with just my arms sticking out, and putting my space heater on full blast in front of my legs. Hey I was cold, and I'm from California. Zero degrees fahrenheit (which was the temperature outside this morning) is not a part of my vocabulary. At least I can admit that of all my cavalier utility delights, I'm most guilty of consuming electricity for heat (as evidenced).

And so I'm stuck at the tail-end side of a giant region of the country that is currently swathed in sub-artic temperatures. It is currently -2 degrees here in downtown D.C., for example, and someone I know in Minneapolis recently lamented that the high there was -12 (the low? -32. He couldn't even start his car). If that doesn't make you, too, want to wrap yourself up like a giant taquito in a sleeping bag, then I don't know what would.

I like my thermostat on at 87, my myriad layers of blankets and foot heater warming my tootsies, thankyouverymuch, but I suppose I should be more budget-concious about staying warm and saving money. What better place to research energy info than the U.S. Department of Energy? I found some fabulous tips, and hopefully they'll help you all stay warm too!

• Take Advantage of Heat from the Sun. Open curtains on your south-facing windows during the day to allow sunlight to naturally heat your home, and close them at night to reduce the chill you may feel from cold windows.
  
• Cover Drafty Windows. Use a heavy-duty, clear plastic sheet on a frame or tape clear plastic film to the inside of your window frames during the cold winter months. Make sure the plastic is sealed tightly to the frame to help reduce infiltration. Install tight-fitting, insulating drapes or shades on windows that feel drafty after weatherizing.
  
• Adjust the Temperature. When you are home and awake, set your thermostat as low as is comfortable. When you are asleep or out of the house, turn your thermostat back 10°–15° for eight hours and save around 10% a year on your heating and cooling bills. A programmable thermostat can make it easy to set back your temperature. See ENERGY STAR's June 5, 2008, podcast for video instructions on operating your programmable thermostat.
  
• Find and Seal Leaks. Seal the air leaks around utility cut-throughs for pipes ("plumbing penetrations"), gaps around chimneys and recessed lights in insulated ceilings, and unfinished spaces behind cupboards and closets. Find out how to detect air leaks. Add caulk or weatherstripping to seal air leaks around leaky doors and windows.
  
• Reduce Heat Loss from the Fireplace. Keep your fireplace damper closed unless a fire is going. Keeping the damper open is like keeping a window wide open during the winter; it allows warm air to go right up the chimney. When you use the fireplace, reduce heat loss by opening dampers in the bottom of the firebox (if provided) or open the nearest window slightly—approximately 1 inch—and close doors leading into the room. Lower the thermostat setting to between 50° and 55°F.

If you never use your fireplace, plug and seal the chimney flue. If you do use the fireplace, install tempered glass doors and a heat-air exchange system that blows warmed air back into the room. Check the seal on the fireplace flue damper and make it as snug as possible. Purchase grates made of C-shaped metal tubes to draw cool room air into the fireplace and circulate warm air back into the room. And don't forget to add caulking around the fireplace hearth.

Lower Your Water Heating Costs. Water heating can account for 14%-25% of the energy consumed in your home. Turn down the temperature of your water heater to the warm setting (120°F). You'll not only save energy, you'll avoid scalding your hands. [U.S. Dept. of Energy]

Got charged by Adele Services? It's a scam

I know most of you regularly check your debit and credit card statements (right?), but for those who haven't checked in a while, a scam has emerged that may make you want to pull up your old statements and skim all charges from the last few months.

What are you looking for? Any charge from Adele Services. Why Adele? Well, because the company doesn't exist. And it looks like it intended to stay that way, flying under the radar of most consumers by withdrawing $0.25 from millions of people's accounts across the nation so that the charges would go unnoticed. Ugh. I hate scams -- they make you feel so vulnerable.

The bright side to this predicament is that there are people out there who routinely scrutinize every last cent on their bank statements, therefore they noticed the $0.25 charge right away and became concerned that their credit identity had been comprised, the Boston Globe writes. The paper reports that the charge shows up on statements as coming from "Adele Services" in Melville, N.Y. There is no business by that name listed in Melville, or registered to any business anywhere in New York, for that matter.

The Better Business Bureau surmises that the Adele Services scam is meant to build a large sum from many small charges. Consumerworld.org owner Edgar Dworsky told the Globe that the scam reminded him of the old saying "It's easier to steal $1 from a million people than $1 million from one person."

So while 25 cents is a pittance in the grand scheme of things, what's more troubling is that some random Joe (hopefully not of "the Plumber" persuasion) out there has access to your card numbers and personal info and can use them at will. Like I said earlier, go over all your statements from the last few months and note any suspicious charges under $1. The Globe says to file a dispute with your credit card company, and lodge complaints with the Federal Trade Commission (www.ftc.gov) and the Internet Crime Complaint Center (www.ic3.gov), so the crime will not go unpunished.

Download a free copy of Suze Orman's new book

Another year, another Suze Orman book ... or so it seems.

People tend to love her or hate her (I think she's pretty fabulous), but regardless of your sentiment for the fair-haired vixen of finance, Orman is currently offering free downloads of her new book, Suze Orman's 2009 Action Plan, at Oprah.com.

I watched Orman promoting the book on Oprah's show recently and was intrigued by the concept behind it. She sets it up as a true action plan, in that she lists various financial scenarios any of us could find ourselves in (i.e., should I pay off credit or save for an emergency fund, how should I pay for my rising mortgage, etc.) and responds to each scenario with realistic solutions. If your New Year's resolution was money-related, consider this book a manual for sticking to your goals and getting your fiscal life back in order. Especially since 2009 will be so economically pivotal in the wake of the subprime mess, credit crunch and stock market collapse of 2008.

"This is the year that will make you or break you," Orman told Oprah on the show, explaining that her new book "sets up a foundation to deal with everything that happened last year."

The complimentary downloads expire January 15th, so don't wait. And with it being free and all, now you can't argue that you don't have the money to buy a book about managing money!

What is a Ponzi scheme?

By now, the news of the carefully brewed Ponzi scheme concocted by Bernard Madoff (the old bear) is so 2008. But, in case you haven't followed this stock market soap operetta play out, Bernard Madoff -- who many refer to as a decades-old force on Wall Street -- was charged in December for running a $50 billion Ponzi scheme, the biggest fraud case ever. How? Let's break it down in an abridged form of the 3-act Shakespearean tragedy that it is:

Act I: Enter one Bernard Madoff, 70, a prominent mover and shaker in the stock market world. Madoff is a former chairman of the Nasdaq Stock Market, founded Madoff Investment Securities LLC in 1960, and ran a hedge fund on the side. He was the chairman of Madoff Securities until Dec. 11, 2008, when the merde hit the fan (more on that in the next act). When you think of a life of excess, Bernie comes to mind. Vacation homes around the globe, private yachts and lavish day-to-day living were Madoff's modus operandi. How very 1980s of him. I can just picture he and his wife partying it up on Carnival Cruiselines in the thick of 1986, he donning a white Miami Vice suit and she in an ill-fitting Bea Arthur-esque dress replete with shoulder pads, both dancing to whatever Lionel Ritchie Top 40 hit was in at the time. But just how did he amass such significant wealth? Onward, to Act II!!

Act II: The day before he was arrested by the FBI, Bernie told his senior executives -- which included his two sons -- that his hedge fund was "all just one big lie" and that it was "basically a giant Ponzi scheme." His sons immediately went to police and the next day, Madoff was arrested and charged with a single count of securities fraud. Prosecutors say he faces up to 20 years in prison and a fine of up to $5 million. The SEC (government watchdogs of all things stock market-related) filed other civil charges against Madoff.

Act III: Although Madoff is currently holed up in his $7 million Manhattan penthouse after posting bail, his life will be missing that je ne sais quoi it once had. I'm not sure how drastically different Bernie's relationship must now be with his two sons (who I've affectionately dubbed "the narcs"), but there's no doubt -- even if he eludes jail time -- that things will be different going forward. The SEC said it appeared that virtually all of the assets of his hedge fund business ($50 billion) were missing. Yup.

The next logical question is "What the heck is a Ponzi scheme?" (Not be confused with anything related to "Fonzi" a la Happy Days.) Hey, it's okay not to know -- what's not okay is to pretend to know what people are talking about, nodding cluelessly in agreement with those around you as they discuss current events.

The term Ponzi scheme comes from one Charles Ponzi, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s, according to the SEC.

Translation: A Ponzi scheme is essentially an illegal pyramid scheme. Charles Ponzi thought he could take advantage of differences between U.S. and foreign currencies used to buy and sell international mail coupons, the SEC says. Ponzi told investors that he could provide a 40% return in just 90 days compared with 5% for bank savings accounts. Um, right. Well people bought in to the pyramid, hoping to make bank by giving Ponzi their money. At one point, Ponzi took in $1 million during one 3-hour period, and this was in the '20s, people!

The SEC says that a few early investors were paid off to make the scheme look legitimate, but an investigation found that Ponzi had only bought about $30 worth of the international mail coupons.

Illegal Ponzi schemes are everywhere, from small outfits to frauds that are historic in proportion (case in point: Bernard Madoff's ... situation). Eventually the schemes collapse, which is where Madoff is currently at.

So just where did that $50 billion go? It may be a while until we get a legitimate breakdown, but in the meantime, an angry ex-office manager named Julia Fenwick who worked in the Madoff Securities London office, divulged to the Daily Mail just how much Bernie would drop on various decadent delights:

• Madoff collected vintage watches ($2,900 to $72,000). He also bought wedding bands to match the color and design of each watch ($525 to $1950). During his two or three visits a year to the London office, Madoff would often take advantage of his office's proximity to Savile Row by asking his tailor, Kilgour, to see him in the boardroom (average of $6,000 per suit).

• According to Fenwick, he purchased a black and gray Brazilian-built private jet last year for $29 million. "There were sofas and beds behind curtains at the back of the plane," she said. "He'd installed a cappuccino machine [$1,650] and under all the seats were pockets full of biscuits and sweets. Bernie's initials were on the front of all the crockery." In London, Madoff liked to stay at the Lanesborough Hotel (up to $11,600 a night). Madoff also refurbished the London office last year for $726,000, including handmade desks and a new IT system, for $116,000.

• Madoff enjoyed Davidoff cigars (around $160 a box). Last year, Fenwick attended a barbecue at Madoff's home in Montauk, a million-dollar party with about 400 guests. "There was an oyster bar. And you'd dine on either lobster or fillet steak," she told the Daily Mail.

• Fenwick also went on a golfing trip to Mexico with Madoff and a dozen of his friends for his 70th birthday this past May. "We were all given hooded sweatshirts to mark the occasion. His initials and the year of his birth — 'BLM 1938' — were stitched on to them."

The bright side of recessions

Here's a guest post from my friend, freelance writer Trisha Wagner, on the hidden benefits of the "R" word. Enjoy!

Hidden benefits of a recession? What could possibly be good about a recession you might ask. I'm fairly certain I am not alone in being dreadfully tired of hearing all the dooms day speak about the economy, bailouts and all the other negative information floating around on the Internet and other news mediums. For a change of pace, let's take a look at how a recession can lead to positive benefits or at the very least, favorable outcomes.

People become less wasteful.

Thank goodness! We are a society of consummate consumers to the detriment of our planet and in some cases our moral integrity. Ok-that might be an over dramatization but I don't think it is too far of a stretch from the truth. When the economy is good and people are thriving financially there tends to be less interest in living a sustainable life and people become very careless with how they use and dispose of objects as well as money. When the economy takes a turn for the worse, people tend to step back and rein in their spending and try to make their money and “objects” last longer.

People get back to the basics.

Along the same road as being less wasteful a recession sparks long buried instincts in families. People tend to refocus on the importance of loved ones and appreciate what they have due to the fear of an uncertain future. Families may be forced to cut some social activities which can result in a renewal of familial relationships. Dinner might again be served at the family table instead of everyone grabbing something after work or school as they rush around filling social obligations. In addition to reconnecting with loved ones most people take the time to sit back and re-examine their lifestyle. A recession is an excellent time to remember the difference between the “needs” and “wants” in our lives.

People get creative.

Have you heard the saying “necessity is the mother of invention”? Truer words could not be spoken during an slowing economy. What used to be a “given” in our lives is no longer so. Unemployment is rising at a rapid pace, homes are in foreclosure and retirement accounts are taking some hard hits. For some people recovery will seem impossible, others will dig deep and discover ways to not only survive the recession but come out ahead.

People NEED a wake-up call.

It would be ideal if people could learn about good financial planning another way, but the fact remains for far too long our society has become used to overspending. For some people the last few decades have been spend living beyond their means. Consumer debt, huge houses, new cars and keeping up with the Jones' have left many families holding the short straw in the current economic climate. A recession will remind people about the importance of living within or below their means as well as having an emergency fund for unexpected expenses.

Trisha Wagner is a freelance writer for DestroyDebt.com, a debt community and debt forum. Trisha writes regularly on the topics of getting out of debt and personal finance.

"Free" and "Photoshop" not synonymous...until now

I've entered Week 2 of my two-and-a-half-week vacation in Santa Cruz, California, visiting family over the holidays, far away from everything and everyone DC-centric. It's been a welcome respite to laze around every morning, getting out of bed when I feel like it -- usually around 11am -- and not when the stock market forces me to, as a usual work day consists of.

Sauntering down to the beach in flip flops for a plate of fresh chicken nachos is more inviting than standing on a crowded subway car during rush hour at 5 pm, my face defenselessly planted in a fellow commuter's armpit. But I digress. The point is that as much as I love hanging on for dear life in 3-inch heels as my subway car takes a tunnel turn at 60 mph+, I've had all the time in the world here to do whatever I want -- bargain shopping and nacho eating included -- and to catch up on the things that have evaded my normal, busy life, such as organizing my photos.

Like all things that have in the past been strictly print, all of my photographs are now digital, which means that organizing these puppies not only means slapping a date and title on each photo folder, but photo-shopping the ever-errant wrinkle or stray hair that seems to permeate many of my pictures.

The problem is that for someone like moi on a budget, the cost of Adobe Photoshop to smooth out any...imperfections...on said pictures is high. One thousand dollars on a bundle of software? No thanks. At that price, I convinced myself, I could learn to live with having striking red pupils reminiscent of Bram Stoker's Dracula, or tolerate a few strands of hair cross-hatched on my face, as if I had been caught in a wayward tornado.

So aside from the very basic editing software programs that don't even include the "clone stamp" feature -- something vital to my photoshopping needs -- I was relegated for a long while to slightly touching up my photos using pirated copies of Photoshop. That is until I came across an article in The Daily Gyan pointing out some fabulous and free -- yes, the combination of "airbrushing" and "free" can titillate even the most vain of budgeters -- alternatives to Photoshop. I've checked out each of the recommended sites and they all work well. Some are more powerful than others, but all are most importantly free and very easy to use.

Pixlr

This is by far my most favorite non-Photoshop, Photoshop-esque website. The layout looks almost identical to Photoshop and it includes the ever-elusive "clone stamp" that many sites lack. Relatively new into the arena, it has made quite a big fan fare in a short time. Pixlr is described as Photoshop in a browser, and it continues to amaze many. Although it lacks features such as importing from other sites like Flickr, you can still open an image by specifying its URL.

Picnik

Picnik seems to be the most popular online image editor in this list. The interface of the site is beautiful, responsive and can put many desktop applications to shame. You don’t need to know anything about photo editing to use Picnik. Most noteworthy feature is its integration with other Web 2.0 services. You can pull photos directly from most photo-sharing sites such as Flickr, Picasa Web Albums, Facebook, Photobucket and pretty much provide any image URL to start editing it.

Splashup

Splashup, earlier known as Fauxto, is a web-based photo editor that looks just like a desktop application. Users coming from Photoshop should feel right at home with this editor. You can open files from your computer or from all popular photo sharing sites. You can open multiple images in a tabbed environment. It supports the concept of layers, like Gimp and Photoshop, and has the ability to import images from your webcam

Snipshot

Unlike the three editors mentioned above, Snipshot is not a flash-based editor. It’s a highly responsive, Ajax-powered image editor, so this should be your choice if stranded with a computer that doesn't have any flash plugins. You can import photos stored in your computer or from the web by mentioning its address. You can also import photos from Flickr using a bookmarklet. Snipshot allows you to export and save your photos in a number of different formats - JPG, PNG, TIF, BMP and even PDF and Photoshop PSD.

Pixenate

Pixenate is a simple but intuitive application. With a straight-forward interface, it lets you play with all its features relatively easily compared to others. You can edit photos stored in your computer or import from a website and save, and also save the edited photo back to your Flickr account.

Picture2life

Picture2life is just another online image editor. But what makes it stand apart is the radical UI design for an image editor. Unlike all classical picture editors with toolboxes and a number of buttons, Picture2life has a descriptive side panel stacked into four vertical tabs – Quick Fixes, One Clicks, All and Featured. Selecting any tab replaces the sidebar with a new sidebar that contains a number of options like Brightness, Color, Contrast, etc. But, instead of showing them as buttons, it takes your picture and shows you how the picture will look if the effect is applied and uses this as thumbnails for the buttons. Pretty useful for beginners who don’t know the difference between stuff like hue and saturation.

LunaPic

LunaPic isn’t as jazzy as the other image editors in this list. However, this one provides ability to convert your images to animated GIF files, which differentiates it from others. There are a couple of ready-made fancy animation effects that you can apply to your photo. This is an apt tool for creating your social network profile image – for Facebook, MySpace, etc.

FotoFlexer

Want to have a Picasa running in your browser? Try FotoFlexer. It describes itself as the most powerful online digital photo editor in existence. If you are searching for a feature in online picture editors, then FotoFlexer has it.

Adobe Photoshop Express

Photoshop express, apart from being an image editor, also acts as a photo organizer and online photo storage. It provides up to 2 GB of online space and ability to create and share albums which distinguishes it from other online image editors. Although it's nice to get a semblance of something free from Adobe, I actually some of the aforementioned sites to offer more tools and goodies to doctor pictures than Adobe's Express.

Aviary

Aviary is a suite of 4 tools among which Phoenix -- an online image editor -- is the one which is the best right now. Phoenix is a very powerful image editor that can be said as a true competitor for Photoshop, just that this one runs from a browser. The Phoenix page contains many videos on using it to produce some stunning photo effects. [The Daily Gyan]

Go forth and play, my pretties, sans any ecru-tinged teeth or unsightly crow's feet.