Debt Help

Make Your Tax Dollars Work for You - Take the Credit!

noreply@blogger.com (Greta) — Thu, 28 Jan 2010 16:48:00 +0000

It’s tax time again, and every day I hope my W-2 will come in the mail. I am anxious to see how much my husband and I owe the state of Arizona, especially since we didn’t pay any state taxes in 2009. Rather than having state taxes deducted from our paychecks, we decided to give that money to the elementary school run by our church. That’s right – we donated our tax dollars to a school! The money we donated will be used to provide tuition assistance to students in need. We love the school and believe in the work that it does, which is more than we can say about many of the government programs run by the state.

We were able to do this through something called the CTODP - Catholic Tuition Organization of the Diocese of Phoenix. Arizona allows residents to donate up to $500 ($1,000 for married couples filing jointly) to a Catholic school of their choice and get a tax credit. The first time we heard about the CTODP it was late in the year, so we didn’t participate because we had already been paying state taxes all year and couldn't shell out more money. The next year, however, we changed our withholdings so that no state taxes were withheld, and the extra money in our paychecks we donated at the end of the year. We know we might owe Arizona some money if our tax liability is more than the $1,000 we donated, but we are prepared for this. And even though we might still owe a little, we were able to help kids who wouldn’t otherwise be able to attend a great private school, rather than funding the state government. Now that’s using my tax dollars the way I want to!

Until hearing of the CTODP, I didn’t know what a tax credit was; I was only familiar with deductions, and I never contributed enough to itemize at the federal level. However, I have learned that there is a significant difference. Tax credits are much more beneficial to taxpayers than deductions. It works like this:

Deductions reduce the amount of income on which you pay taxes. If you make $60,000 and deduct $1,000 for a charitable donation, you will then be taxed on an income of $59,000. Though helpful, this won't make a huge dent. A credit, however, is applied after your taxable income is calculated, and reduces the amount of taxes you actually owe. So if you make $60,000 and owe the state $600 in taxes, and you have donated $500 to a qualified charity, you will then owe the state only $100. You’re shelling out the same amount of money, but you’re getting to choose where it goes, and you’re paying that much less in taxes. (Credits like this currently seem to only be available at the state and local levels, and not at the federal level. Charitable contributions can be deducted at the federal level, though to do this, taxpayers need to itemize deductions greater than the standard deduction determined by the IRS.)

Arizona also offers the Charitable Tax Credit, sometimes referred to as the Working Poor Tax Credit, where you can donate to many different charities and get a dollar for dollar state tax credit - up to $200 for individuals, and $400 for married filing jointly. A list of qualifying organizations can be found at http://www.azdor.gov/TaxCredits/CharitableTaxCredit.aspx. You can get both the CTODP and the Working Poor credits – what a great way to redirect your tax dollars to organizations you want to support! It also seems possible to donate to other private non-Catholic schools in Arizona, though you’d need to investigate this.

Though my experience has been in Arizona, other states offer such credits, to varying degrees. In my research I have come across Idaho, Michigan, and North Carolina, though one article I read claimed that about 20 states offer them. There are restrictions on the types of charities you can support – most are required to help the poor – so if your state offers a credit, get a list of qualifying organizations before donating somewhere. To learn about what your state offers, ask your tax professional, or if you’re doing your own taxes, the IRS has a link to each state web site at http://www.irs.gov/businesses/small/article/0,,id=99021,00.html. If you are in Arizona, information about the CTODP is at http://www.ctodp.org/, and information about the Working Poor Tax Credit can be found at http://www.azdor.gov/TaxCredits/CharitableTaxCredit.aspx.

It may be obvious, but state tax credits like this only benefit you if you pay state taxes. It’s important for you to know your tax liability, because the credit will only benefit you to that extent. For example, if you are only required to pay $350 in state taxes, and you donate $500 to a qualifying charity, you will not get that extra $150 back. In Arizona, however, you can carry forward any unused credit for up to five years. If your income has remained steady, you can look at last year’s state tax return to get an idea of what your tax liability is this year.

If your state offers credits you qualify for, this is a good time to change your paycheck withholdings since we just started a new year. It’s also a good time to make a resolution to support some good work!

If you’re curious about the history of this type of tax credit, some articles of interest can be found at http://pewforum.org/publications/articles/charitytaxcredits.pdf or http://learningtogive.org/papers/paper63.html.

Take the credit!

We Listened To A Lender Go From Making Homes Affordable To Making Modifications Impossible

noreply@blogger.com (Augustine Diji) — Sun, 24 Jan 2010 03:41:00 +0000

I would not have believed this if I did not hear it for myself. I listened while a banks’ “home retention” representative refused to let a homeowner pre-qualify for the federal government program, Making Homes Affordable aka Home Affordable Modification Plan aka HAMP. THE LENDER’S REASON for the refusal: The home owner was “contesting” the foreclosure action started by the same lender. They would not accept his HAMP pre-qualification app over the phone. Mind you, the HAMP program let’s homeowners enter into a temporary 3 month lower payment trial period. During the trial period the homeowner sends the lender the required financial documentation in order to get a permanent modification. The application and approval for the 3 month lower payment trial period usually happens over the phone. The approval is given within minutes after a homeowner provides the lender with his or her income and expense info over the phone. Basically the lender’s “home retention” rep enters the income and expense info into a computer program…then POOF!!!...the home owner can be approved on the spot. However, in this case, the lender refused to let a homeowner apply over the phone because the homeowner hired a lawyer to defend the lender’s foreclosure case.

At times, people will ask me to conference in during phone calls with their lenders. In this case, Paul (name changed for privacy) asked me to assist him with a loan modification, so we called the lender together. It was America's Servicing Company, a division of Wells Fargo Home Mortgage. The “home retention" rep went through the standard verification procedures: name, social security, property address, & phone no#. Paul explained to the rep that he was in foreclosure. Paul told the rep that he was advised by his lawyer to call the lender for a loan modification. Paul then asked the rep about the HAMP program. The lender’s rep said “Yes, we provide modifications under HAMP, however you cannot apply over the phone because we were advised that you are contesting the foreclosure action.” Paul and I were totally stunned. I then asked “are you telling Paul that he can’t apply for the HAMP program and get an immediate 3 month pre-trial modification JUST BECAUSE he is defending himself in court” Initially, the rep said the software program would not allow Paul to apply. Then the rep got hung up on the word “contesting”. The rep tried to raise a distinction between “contesting” a foreclosure and “defending” a foreclosure. The rep implied that Paul was trying to claim he “should not be in foreclosure” that’s why Paul is “contesting” the foreclosure. The rep kept asking “Are you trying to say ‘you should not be in foreclosure’”...

Now let’s cut to the chase. It is clear that the lender’s “home retention” rep didn’t truly understand what was going on. Why would the lender deny Paul this option for a loan modification? Why would the lender’s be advised about defending a foreclosure case? What does it mean to “contest” a foreclosure and why does it affect Paul’s ability to apply for HAMP over the phone?

These are my thoughts: The lender wanted to discourage Paul from aggressively defending the foreclosure. It always benefits a homeowner to defend a foreclosure case, even though they owe the lender money. When a homeowner defends a foreclosure case, they invariably gain some leverage and extra time. There are more courts requiring mandatory settlement conferences between homeowners and lenders thus this creates pressures for settlement. It becomes a time consuming, costly affair for the lender. It comes to mind that phone conversations are recorded, so perhaps these recordings can be admissible in foreclosure cases? What if Paul said to the rep “I am not contesting the foreclosure” or “Yes, I should be in foreclosure, I owe you the money”.

If Paul were approved over the phone for the 3 month pre-trial modification, then the foreclosure action would be stalled. Most important, Paul could tell the judge he received a 3 month pre-approval and he expects to receive a permanent modification. This flies in the face of the abysmal record regarding lenders and HAMP. Beginning March 2009 up to including December 2009, there were 787,231 homeowners in a pre-trial period and only 66,465 homeowners with a completed permanent modification. Hmmm let’s see, what if the lenders collect monthly payments during the trial period and the homeowners ends up not receiving a permanent modification. What’s 787,231 homeowners times $1400 per month mortgage payment? That’s about $1.1 billion a month. Now let's multiply that by 10 months. You do the math and read between the lines.

I wonder how lenders treat homeowners who DON'T defend themselves in foreclosure. Are lender's denying the 3 month pre-trial mods to these homeowners? Hmmm.

I want to add that the “home retention” rep was respectful to Paul. In fact, I believe that this rep believed that his employers’ policy was wrong. He was sympathetic and supportive, however he had to do what he is ordered to do…he had to do his job.

At the end, Paul was unable to get the 3 month pre-approval, so Paul will bring it to the judge.

Now you know so take control.

Heart + Sweat = Cutting Student Debt

noreply@blogger.com (Greta) — Fri, 08 Jan 2010 18:27:00 +0000

For five years in my late twenties, I didn’t work what most people refer to as a “real job” (though the emotional and sweat equity I expended begs to differ). I was a volunteer in Arizona, and the work I did was as real as it gets! I lived and worked with pregnant women who were homeless or alone, serving as a staff member of a wonderful community called Maggie’s Place. Day after day, I had the extraordinary privilege of watching expectant mothers grow – and not just in their middles! Women came to us uncertain and scared, often having experienced violence, substance abuse, abandonment, or other forms of suffering. In the shelter of our welcoming home, made up of 20+ women and up to eight babies, mothers who lived at Maggie’s Place could learn about parenting, health, education, employment, housing, budgeting, communication, setting boundaries, and a myriad of other subjects in which skills are needed to make it as a single mom. These mothers were the strongest women I had ever met. How was I so blessed to get to share in their lives?

In 2004, I was three years out of college, and growing restless at my job in Pennsylvania. I knew I was fortunate to have grown up in a stable home, and I wanted to do something to help others who hadn’t. I had considered volunteering somewhere full time after high school or college, but didn’t know how it would be financially possible; I had about $13,000 in student loans. I also wasn’t sure where my skills could best be used. However, after several years of feeling unfulfilled in my work, I decided to finally give volunteering a shot.

Though not sure where to start, I discovered a web site for Catholic Network of Volunteer Service (http://www.cnvs.org/), an organization that matches volunteer hopefuls with places that need volunteers. Shortly after I submitted a profile about my background and the type of work I sought, a staff member from Maggie’s Place contacted me. I couldn’t believe it - the community sounded perfect for me! It was in the southwest (I needed a break from the northeastern winters), and seemed to offer most of what I was looking for. The application process began, and I was invited to fly out to Phoenix for an interview in April 2004. The five days in Arizona solidified my desire to volunteer at Maggie’s Place, and upon my return to Pennsylvania, I arranged for a year-long leave of absence from my job. I was sure that I would get the volunteer bug out of my system within that year. Little did I know that I would stay with the Maggie’s Place community for five years!

After a busy summer of tying up loose ends, I loaded down my ’93 Saturn for the long-dreamt-of drive across the country with my best friend. Our week on the road was everything such adventures should be, and I arrived in Phoenix refreshed and excited for this new chapter in my life.

The work of Maggie’s Place was right in line with my values, and my gifts were a good match for the young and growing organization. I loved working with the moms and babies, and I knew I was truly making a difference. Mothers and their babies could stay in our homes for up to six months after the babies were born, so there was time for the moms to really get on their feet. I had thought I was the one who had something to teach, but I learned so much from the moms of Maggie’s Place! Our community was rich and diverse, with each member bringing a unique flavor to the mix. The other volunteers came from around the country, each wanting to use her abilities for the good of others. I was surrounded by a supportive community of people who shared my goals and ideals, and each day brought new joys. The work was hard – don’t get me wrong – but it was meaningful, and I went to bed each night knowing that I had given all I could to whatever challenges the day had presented.

Occasionally I was able to fly back east for family gatherings. Each holiday I was home, relatives would ask how on earth I could afford to be a volunteer. After all, I didn’t earn a salary, I had no 401K, and I had student loans to pay off. What was I thinking? How did I buy stuff? Wasn’t I wasting my hard-earned degree in English education? How could I live without a job? When was I going to rejoin society?

Despite my best attempts to explain, I don’t know if my extended family ever completely got my situation. While volunteering is not possible for everyone, it is often a more viable option than most people think. Here’s how it can work:

The country is full of non-profit organizations that provide services to various populations – families, youth, children, elderly, women, and men; people who are homeless, abused, hungry, disadvantaged, or in crisis due to any number of circumstances. There are projects in education, health and medicine, disaster relief, environmental protection, and community and economic development. There is more than enough work to go around.

Many of these non-profits are run primarily by volunteers, individuals from various backgrounds who commit to work for the organization for a certain amount of time – typically ten to twelve months. If both the volunteer and the placement site desire, these commitments often can be extended. In exchange for their work, volunteers do not earn a salary, but rather receive living stipends. These stipends can range widely, depending on the other benefits the organization offers - I have heard of monthly stipends from $50 - $800 - but basic needs are provided for, one way or the other. If an organization provides housing and transportation for its volunteers, the stipends might be lower. If volunteers are expected to pool their money for a shared apartment and utilities, their stipends will be higher.

For example, during my volunteer time at Maggie’s Place, my monthly stipend was $350. In addition to that, I received room and board, health insurance, access to community vehicles, and auto insurance while driving those vehicles. My only monthly bills were for my cell phone, personal car insurance (since I had chosen to bring my car), and asthma medication. Granted, there weren’t wads of cash left over, but I was still able to afford a few plane tickets home and the occasional meal out. The community was committed to living simply, so it didn’t matter that I couldn’t buy the latest trends or newest gadgets. I was living with formerly homeless women who might have given birth on the street if not for Maggie’s Place; how could I complain about what I didn’t have? Besides, with so many housemates, we could always borrow from someone!

Clearly, I did not choose to volunteer for the financial perks. However, volunteering offered one huge bonus that I wasn’t initially aware of – AmeriCorps Education Awards. AmeriCorps is a federal program in which non-profits can participate, allowing a year or two of full-time volunteering to be possible for many people. At the end of a ten to twelve month term of service, AmeriCorps members are eligible to receive an Education Award of up to $4,725. This money is a voucher that can be used to repay federal and state student loans (Stafford and Perkins loans are common ones), and you may receive two awards in your lifetime - a total of $9,450! This amount is for full-time service; smaller awards are available for part-time service.

You may ask “How do I pay my student loans while I volunteer?” Most federal and state loans qualify for forbearances, which means the borrower doesn’t make payments while volunteering. And while interest accrues while you volunteer, the government will pay that interest when your loan comes out of forbearance. So with two AmeriCorps Awards, plus over $600 of interest that was paid, I was able to knock over $10,000 off my student loans! After applying that money, my loans were paid up for the next seven years, and my remaining balance was quite manageable. Additionally, my husband Jim, whom I married after my first two years of volunteering, served as an AmeriCorps member in the Maggie’s Place office after our wedding. The combined $20,000 off our student loans made it possible for me to continue serving with the community long after I thought I could.

If you have gotten by without student loans, or if you haven’t been able to afford higher education, AmeriCorps Education Awards can also be used to pay for schooling after you have completed your volunteer time. And some schools will even match your award! Not a bad deal, eh?

Before you quit your job, ignore that student loan bill, and commit to your favorite cause, you’ll need to do your homework. Know that:

Not all non-profits have volunteer programs or offer AmeriCorps Education Awards, so investigate.

There are requirements on the number of hours of work volunteers must log, and regulations on the types of work that can count as AmeriCorps hours; these should be explained to you by the organization you go through to volunteer. I was required to log at least 1700 hours between 9-12 months of service; getting those hours was not a problem.

AmeriCorps Awards typically cannot be used to repay private loans, so know who your lenders are.

Education Awards are considered taxable income in the year you use them, so be prepared to part with a bit of the money.

Awards must be used within seven years of earning them.

You don’t have to use the award all at once, and you can split the money between different lenders and/or schools. Full information about AmeriCorps programs can be found at http://www.americorps.gov/.

As a volunteer, my days were full, often with tasks I never thought I could do. I managed a fleet of used, donated vehicles; sorted hundreds of maternity and baby donations; became equally comfortable with the wealthy and the impoverished; assembled and disassembled all kinds of furniture; grew in public speaking, problem solving, and time management; learned all about the social services in the greater Phoenix area; pulled off great celebration parties with little money and donated items that always arrived at the right time; witnessed the births of three babies (and even gave birth to my own!); and saw some of the best and worst characteristics of humanity. Though we did not grow rich monetarily, Jim and I grew rich in so many other ways.

Don’t know where to start searching for a service site that matches your interests? In addition to the AmeriCorps web site, I recommend visiting http://www.cnvs.org/ and http://www.pallotticenter.org/. If you choose the hard but rewarding road of service, you won’t regret it. Happy hunting! I wish you the best.

Paying for Someone Else's Mistakes

noreply@blogger.com (Iridian) — Thu, 07 Jan 2010 16:25:00 +0000

I was a log home designer for over five years when the housing market imploded and the credit lines dried up. Once that happened, my job, along with countless others, was cut. I was fortunate enough to qualify for state unemployment compensation (UC) benefits, having worked and earned many times over the minimum requirements. The initial application process was easy enough; I answer employment history and salary questions, and they go back to my former employer to confirm it. All it took was a few days of waiting, and I was sent my Notice of Financial Determination, congratulating me on qualifying for benefits.

My job search started immediately, but with the housing market in a state of disrepair, no one in my area was looking for drafters. Countless resumes and cover letters went out, but next to nothing came back. When it did, I was told either that I was overqualified for the position or that they had decided to restructure from within. The months ticked by and having no firm offers, I became very concerned that I would be left without any form of income to help support my family. A few weeks before my benefits ran out, the President signed into law a bill extending UC benefits for millions of people like me who were in jeopardy of losing them. I was ecstatic, thankful for the lifeline that would help keep my family afloat.

While filing for EUC, I received a notice in the mail from the state saying that my benefit year would be ending, and that I would need to file a new application to continue receiving benefits. I went through the same application process, and within a few days got a letter in the mail with my Notice of Financial Determination. Everything seemed in order; it gave my weekly benefit rate and length of time I qualified for, but it also had some new information. It said that my qualification of benefits hinged on additional information.

I placed another call to the state asking what additional information they needed, and without asking any questions simply told me that I did not qualify for any more state UC benefits and would be kicked back to the EUC program. Once the EUC funds ran out on my claim, there was nothing else that I could do because I no longer had enough credit hours worked to support the claim. I was devastated, having just been told by the state that I qualified for six more months of benefits only to have them take it back.

So I filed my bi-weekly claim the Sunday after that depressing conversation, watching my funds deplete, wondering if I would ever find a job. I checked my bank statement that week, and to my surprise I found two deposits made. One was the EUC deposit, the one that I was expecting. The next was the regular UC from the state; you know the one I didn’t qualify for a few days before...

By this time I had the UC service center on speed dial, and immediately called them up to ask what in the world was going on. The person that I talked to said that I re-qualified for the state UC benefits and never should have been told otherwise. They also stated that I should have been taken off of the EUC program list to avoid overpayment. They proceeded to tell me that with people being laid off and filing for unemployment in record numbers that they had to add extra staff to support all the claims being filed. They told me that the UC service center employees basically train for a week, and after that they are on their own. A week is plenty of time to learn all the ins and outs of the entire UC system, you know.

The lack of knowledge of the people that I was interacting with at the UC service center coupled with a computer glitch that allowed both of the payments to be processed made for a huge mess that could have easily been avoided. I asked what exactly the overpayment meant for me, and all they would tell me was that sometime in the future they would expect it to be paid back. I told them I thought that was fair. After all, it was a mistake and the money did not really belong to me. I asked to make sure that they had taken me out of the EUC program to avoid this happening again, and they assured me it had been taken care of.

Fast forward two weeks when I filed my next bi-weekly claim and the same thing happened. I checked my bank statement to see if they had corrected the error, and alas, they did not. So now I had two more weeks of overpayment to worry about. Another call was placed to the center, but this time I was not as happy. I told them the whole story, about how I was in the wrong system and was overpaid the last time I filed. I explained that I was told that the problem was taken care of and that the overpayment would not happen again. But it did… The only reply I received was that they were terribly sorry, but the money would still need to be repaid.

I thought about that for a moment, and asked why I should have to pay back someone else’s mistake. The first time it happened I had no problem with it. It was an oversight/computer glitch and I was told it was taken care of. The second time, however, was not my fault. If the people that they have on the phones handling the claims knew what they were talking about I would not be in this mess. It was frustrating to basically hear “I’m sorry but too bad… It will still need to be repaid…” They told me that it would be several months before they got the information sorted out, and not to worry about it until then. So I didn’t.

About four months after all of this went down, I was finally sent an informational letter stating that the repayment of benefits would begin with the next time I filed. There was also something about an appeal form, but that was not sent with the packet of papers I received. I called the center again, but they told me that my time to appeal the repayment had passed and there was no way to get out of it. I explained to them that it was their oversight that caused the headaches, but they would not hear it. All in all, I was overpaid a total of seven weeks, which totaled about $2500. So in the end, my checks were cut in half to repay the amount that never should have been as high as it was. The balance has finally been repaid and life goes on, but what a headache it was getting here.

Move Your Money

noreply@blogger.com (Steve Brown) — Tue, 05 Jan 2010 22:33:00 +0000

Came across a great video clip from the folks @ MoveYourMoney.info. Clip features scenes from one of the greatest American films of all time -- It's A Wonderful Life -- and it really helps to make their message as compelling and convincing as possible. I was going to describe the clip here, but I think I'll just post a quote from the final seconds of the four-minute movie instead:

"...If you leave your money with the big banks, they will use it to pay lobbyists to keep Congress from fixing the system..."

Yup.

Here's the clip:

Expect the Unexpected: How Life Insurance Can Actually Save Your Life

noreply@blogger.com (I.C. Jackson) — Sat, 02 Jan 2010 22:24:00 +0000

Many individuals who need to secure life insurance policies for themselves and their families neglect to do so because of the dreaded health screening. Not wanting to be gouged for higher premiums based on pre-existing health conditions that may or may not justify the price difference, many roll the dice on the financial security of their families and go without. However, very few people consider that the health screening required by most life insurance companies could actually be a blessing in disguise. Sure, the results of the testing may cause you to pay more than you wanted for life insurance, but what if the same health exam that you have been avoiding could play a role in actually improving your health, or even saving your life?

I know first hand that such a thing is possible – my husband might be dead today if we had not applied for life insurance two years ago.

When I became pregnant with our second and third children (twins) I began to press my husband to get the life insurance that he knew we both needed. We had been married for four years and had one child already, so life insurance should have been a priority long before then. However, my husband, like many others, hated the invasiveness of the required health screening, assuring himself that he was as healthy as a horse and did not need anyone trying to prove that he wasn’t. The reality was that we needed to be taken care of in case of his untimely demise, and knowing that eventually pierced his heart - we soon called a life insurance agent about policies for him and me. The application process went very smoothly; our agent was kind, helpful, and prompt. We even scheduled an in-home health screening for our convenience. Everything about this insurance company and their representatives was impressive – that is, until the nurse came to our home for the health screening.

Our first impression was positive - the nurse was friendly, professional, and surprisingly not preoccupied with trying to discover hidden illnesses or ailments that we had not disclosed. She asked some basic health questions, drew my husband’s blood, and took his blood pressure reading. The reading, however, seemed to confuse her, as if she had not been nursing for very long. Eventually she became convinced that her gauge was broken, and left to get another. Upon her return visit, she still could not figure out what was going on with the blood pressure reading and had to consult with one of the insurance company’s doctors. As a former athlete and someone who knew that he had elevated blood pressure levels in the past, my husband was surprised that this nurse could have botched such a standard procedure; no one else he had ever encountered found such a simple task to be so frustrating. Later that day we got a call from the insurance company. Their doctor advised my husband to be seen by a medical professional immediately. The nurse was no novice – she had just never seen a reading that high before and assumed there must have been a problem with the meter. My husband’s blood work proved that what she had seen was no mistake, but a crisis for an unsuspecting family.

After getting a second opinion from a local clinic, my husband rushed to the hospital for emergency care. Although he felt fine, my husband’s blood pressure was so high that the emergency room doctors were astounded; they had never seen anyone with such high numbers who was not having a stroke. One of the doctors actually asked him, “Did you walk in here?” The reason that they were so shocked was because his blood pressure had been measured consistently at approximately 290/185 – according to the American Heart Association, a normal reading for a healthy adult is a less than 120/80. My husband was immediately hospitalized and placed in the intensive care unit (ICU). Having no experience at all with hospitalization, he asked me why he was constantly being monitored by nurses and visited by different doctors. I explained to him that the ICU is where hospitals treat people who are facing extreme health deterioration and may not have much longer to live. That week he spent in the hospital was a very sobering time; it made us appreciate not only life, but the need to be prepared for the unexpected in life.

Now, after two years of consistent treatment and monitoring, we are ready to search for a life insurance provider again. My husband’s health has improved, but not so drastically that it will not negatively affect our insurance premiums. However, we are extremely thankful that the entire ordeal took place – had it not been for the life insurance company’s health exam, my husband might have lost his life. He recalls how by the time he arrived in the emergency room he had begun feeling a little light headed. Had we not applied for life insurance, that day I might have just advised him to lie down and get some rest, not knowing that he was in grievous, mortal danger.

Now I have a much more meaningful understanding of the old adage, “Expect the unexpected.” Our family can expect this: 2010 will be the year that we find a life insurance provider to suit our insurance needs, even if we have to shop around and pay slightly higher premiums than most.

No E-File for Those Taking Advantage of The New Homebuyer Tax Credit

noreply@blogger.com (Steve Brown) — Wed, 23 Dec 2009 00:13:00 +0000

I hate doing my taxes. I loath it. It's a huge waste of my time dealing with a tax code that seems to be bloated just for the sake of being bloated (to keep tax attorneys and accountants fat.) I don't hate tax attorneys, nor do I hate accountants. I just hate the tax code and the system that perpetuates it's insanely oppressive nature.

I'd pay someone or a firm to do my taxes for me, except I don't want to spend the money. Even more critically: if there's one thing I want to have full control over in my business life, it's my taxes.

I use the online version of TurboTax. Been using it for many years, and have been quite happy with it. However, there was an unexpected problem last year. TurboTax screwed up my state taxes, and when I contacted Intuit on 3 separate occasions about a refund, they made excuses, and I'm almost certain that they lied to me. I had to contact my credit card company to get a chargeback. Needless to say, I don't use Turbo Tax to do my state taxes anymore, and if a competitor comes out with a better product, I'll use it for my federal taxes.

If anyone has any experience with the HR Block offering, or any other competing tax software, please post a comment!

You Can't E-file if You Took Advantage of the New Homebuyer Tax Credit

E-file is great, as it makes the whole crappy business of doing your taxes a bit more efficient. However, for those who want to take advantage of the generous First-time Homebuyer Tax Credit which Uncle Sam instituted to help the struggling housing market, you won't be able to e-file your taxes. You'll have to print out your docs and sign and mail stuff the old fashioned way. Yuck! Sucks, but that's just the way the IRS wants to do it. Here a short clip from the folks at TurboTax:

Before I go, just wanted to add this: if you're worried about getting audited, and you make less than $200,000, you should really stop worrying. Click here to read this article.

Land Contract: A Great Alternative When A Traditional Mortgage Isn't An Option

noreply@blogger.com (Leslie James) — Tue, 08 Dec 2009 12:32:00 +0000

No one understands the current state of the U.S. housing market more than the citizens of California, Florida, Illinois, and Michigan. Recent statistics show that the combined foreclosures of these four states represent 52% of all foreclosures in the nation (Grand Rapids Press). Americans living in these states are experiencing a housing crisis like this country has never seen, primarily due to a combination of high-risk mortgages, negative equity, and unemployment. This perfect financial storm brooding over the U.S. economy has rained heartache and headache upon countless families over the past few years, and reaches far beyond the realm of only the fiscally irresponsible. I ought to know – I lost my own home to foreclosure in 2008.

When I got married in 2004 I moved to West Michigan with my husband, a first-time homeowner who had acquired a low-cost property and performed major renovations himself in order to keep a low monthly note and gain equity fast. By the time we were married he was enjoying the fruits of his labor and, as far as he knew, doing well. He was the first person in his immediate family to own a home with a 30-year mortgage. His father, a General Motors retiree, had always lived beneath his means so that he could pay cash for almost everything, including his home. The short-term mortgage that his father did have was paid off early, so loans were not his specialty. That’s why my husband had made a fatal mistake before we got married – he refinanced his home during the big predatory refinance boom.

Borrowing against the additional equity in his home, my husband refinanced with a low introductory interest rate on an adjustable rate mortgage (ARM) with an option to refinance again in two years. His plan was to refinance again in two years and acquire a fixed rate mortgage at as reasonable rate as he could get. The money he was able to pull out of the house was used to pay off bills and theoretically create a better financial situation for him and the family he hoped to build soon. With a degree in Business Finance, my husband was not a novice when it came to loans and how they worked. Unfortunately, caught up in all of the advertising and marketing hype of that time, he forgot that he did not have a crystal ball or a prophecy ensuring his financial security two years down the road. Like so many other borrowers in Michigan at that time, he allowed emotions and predatory lenders to convince him of future financial security that was not promised. Subsequently, the house of cards began to fall.

Soon after refinancing we were married and were blessed with our first child within a year. This addition coupled with disappointment in the lack of upward mobility at his job created a great strain on our finances because bills were growing but income was not. A few missteps with his credit plus a bursting housing market bubble and before we knew it, our chances of refinancing when we wanted to were ruined. We were stuck with the balloon payments and a monthly note that we could no longer afford. We succumbed to foreclosure in 2008 and had to move into an apartment that cost more per month in rent than my husband’s original mortgage payment.

The funny thing about it all was that my husband remained optimistic that something would work in our favor soon. While the media was predicting doom and gloom henceforth and forever because of the mortgage industry ‘crisis’, my husband had some foresight that would soon become a sigh of relief – but not without a little intermittent pain to endure. We had to live in a cramped duplex for a year with then three children (twins were born while we were going through the foreclosure process) and although our living space was nice, it was simply too small. However, after gaining a more solid foothold on our finances, with badly tarnished credit and a foreclosure to boot, my husband began looking for a new home to live in. He was able to sense what many economists could not – the changes in the housing market would cause other subsequent changes that would essentially benefit even buyers with bad credit. It was obvious that buyers with good credit would be able to scoop up great properties for pennies on the dollar because of the spike in foreclosures. However, what most market watchers did not predict was the need for property owners who wanted to sell to adapt in order to survive. In the states with the highest amount of foreclosures there are more properties than buyers, and seller who own their properties free and clear or who have good credit but own more property than they are willing to manage now find themselves needing to liquidate these assets without losing too much money.

In comes the land contract, here to save the day!

In his quest for a home to rent my husband found a nice homeowner who was eager to sell, and had no one to sell to. After a few honest, productive conversations, we found ourselves in a position to get a new home that was bigger and worth at least $50,000 more than the one we had lost, without having to rely on a bank for a mortgage loan. The seller was willing to make an arrangement where we could rent with an option to buy, with no interest added to the selling price of $107,245. The deal works well for both parties. The seller is an older man who can no longer maintain his properties the way he needs to. The house we now occupy needs a little maintenance and aesthetic work as well as a new roof in a couple years. So, the option consideration clause of the lease/purchase agreement that requires a non-refundable payment of $3,000 is absorbed by the repair allowance which totaled $7,250. This exchange empowered us to move into the home without paying the lofty contract fee; we maintain control over the repair costs and we will schedule for the renovation work that needs to be done. If for any reason we were to default on the agreement, the renovation that we perform adds equity to the home, not to mention the extra $750 per month the seller stands to make as long as we stay, putting him in a better position than when he entered into the contract. This causes his risk to be minimized and our benefit to be maximized, so long as we maintain our end of the agreement, which we have done and will continue to do. Without good credit and without the help of a lending institution, we have a better home to live in and are on the road to financial recovery.

Although this arrangement is not the conventional road to home ownership, in the State of Michigan, where unemployment is the highest in the nation at a rate of 15.1% (as of October 2009 - Bureau of Labor Statistics) and foreclosures are in the top five U.S. states for number of filings (RealtyTrac), it is a welcome alternative. Prospective buyers in similar positions may find that there are more flexible sellers and renters out there than they thought. It takes some struggle, some research, and some faith, but when the market changes this drastically, buyers can still find sellers who are willing to do what banks and economists thought was virtually impossible – adapt and accommodate.

"Can You Fear Me Now?" One Family Learns Verizon's Definition of a Payment Arrangement is Paying to Talk to a Supervisor

noreply@blogger.com (Edible Consumer) — Mon, 16 Nov 2009 17:21:00 +0000

I remember my parents stealing cable when I was a kid. I was too young to worry about the dubious morality of stealing entertainment. I didn't know anything about digital rights management, Napster, or the landmark legal case that kept video cassette recorders on the market. All I knew was that all the pay-per-view movies were free now and that was just awesome. It would be many years before my parents bought their first computer and started paying for access to an Internet that was very small and completely controlled by their service provider, Prodigy. Spending too long in certain parts of what was then laughingly called “online” meant additional charges, similar to what now happens when you run out of minutes on your cell phone. Looking back, I remember that my parents paid over a hundred dollars to an East European neighbor for their magic cable-stealing box(along with the standard monthly charges for basic cable and HBO to keep up appearances). In today's world, they could have spent the same amount of money for a year's worth of Netflix rentals and a clean conscience.

I signed up with Verizon last Christmas after almost weekly visits from their well-heeled, door-to-door pitchmen. $99 a month for cable, phone and Internet service sounded very tempting and after months of troublesome service with our then-current provider, Bright House, my wife and I agreed to give Verizon a try. I made the call and found out that the impressive $99-a-month offer was even sweeter than I thought. For three months, we would get all the premium cable channels along with phone and high-speed Internet service. Just like that, I was sold. More specifically, I was obligated as signing up with Verizon cable service is strangely like signing up for cell phone service or a credit card. I was given a credit check, one that I miraculously passed despite the certain knowledge that I had an outstanding bill for a prematurely canceled Verizon cell phone. Then I was subjected to five or more solid minutes of “fine print,” as the woman read me pages and pages of legal disclaimers. Just as I was starting to have a funny feeling about all of this(and wondering if my first-born child had just been promised to the Verizon corporation), the woman congratulated me on my one-year contract with Verizon FIOS.

Just like that, I had another contract with Verizon, complete with penalties if I decided I didn't like their service and wanted to cancel. On the upside, I had every channel and a new phone line along with some incredibly fast Internet. Contract cable was a cage, but it seemed to be a very nice cage.

Then the telemarketing calls started. Within two days of turning on our phone, we started receiving three to five calls a day from unknown or inexplicable numbers. Unlike our previous cell and land line numbers, the Verizon cable phone number somehow made it into every call center in the country. At first, we simply turned the ringer off and scanned the Caller ID list every so often for a familiar number, but the sheer volume of calls quickly filled the Verizon voice-mailbox and friends and family grew too frustrated to bother calling.

After three months, we decided to see if we could change our plan to keep some of the premium cable channels and drop the useless phone service. Verizon politely informed us that the phone service was the only part of our contract that was non-negotiable. We could add additional lines and pay for a service that blocked anonymous numbers, however(a service that was later discontinued).

Even more incredibly, our bill had gone up as they canceled the premium channels. By the next billing cycle, our bill climbed to $150 a month for basic cable, a phone that was only useful for outgoing calls, and Internet.

One of the things we signed up for with Verizon was a Digital Video Recorder, which allowed us to record movies and television shows for later viewing. At about $5 extra every month, it was a minor expense we were glad to pay for(unlike the phone). After losing the upper tier cable channels, however, anything recorded from a premium channel mysteriously disappeared. Our Digital Video Recorder was apparently a Digital Video Borrower and Verizon could take back our recordings whenever they felt like it.

While losing recordings was infuriating enough, the DVR began behaving strangely. From the beginning, we noticed a slight delay between pressing a button on the remote and the box responding. After several months, the box began to freeze up when trying to access On-Demand programming or shows recorded on the DVR. The video would blink out and nothing short of unplugging and resetting the box could restore service to normal. Verizon's helpful tech support sent us a new remote that did the same thing and told us to reset our box whenever it froze. (Yes, they actually suggested that the remedy to constantly having to reset the box was to reset the box.)

A lightning strike in our neighborhood shorted out every phone in the house and we learned that Verizon does not repair or replace equipment damaged by lightning unless you pay for their lightning insurance plan. Was this information buried in the legal disclaimer monologue I received on signing up? Probably not, but it's impossible to be sure. Tired of dealing with the Verizon phone altogether, I bought a MagicJack(a portable phone line that can be plugged directly into your computer if you have working Internet) for $20. For such a low price, I wasn't expecting miracles but the device performed as advertised and had no hidden costs. I did, however learn that Verizon imposes strict limits on their Internet service. Specifically, you can download as much as you like at the best possible speeds but your uploads are capped. What this means is that devices like MagicJack and Skype function very poorly. You'll hear the person on the other end with crystal clarity but they may not hear you at all. I find it hard to believe these technical problems are unintentional on Verizon's part, as they pay a great deal of money to lobby for tighter control of the Internet and to impose restrictions on VOIP (Voice-Over-Internet-Protocol, the technology that allows Internet users to use their computers as Internet phones).

As our Verizon bill continued to creep upwards, it became more and more difficult to make our contractually obligated payments. Our service was disconnected once or twice, always reconnected remotely once we paid(a remarkable technological feat, but just as expensive as sending someone to manually connect or disconnect service, as the $30 reconnection fee seemed to indicate). Our last two bills somehow topped $200, which would have been the breaking point if our contract was not so close to ending anyway.

Taking the advice given on a previous call to Verizon, I decided to use their payment website to make a payment arrangement so our service would not be disconnected in the weeks it would take to put together enough money to pay our insanely high bill. I chose the maximum offered date, agreed to allow the website to debit my bank account for the amount owed on that date, and then I pressed “submit.” Verizon emailed me a receipt:

Confirmation of payment arrangement
Dear verizon.com customer,

Thank you for using verizon.com to make a payment arrangement for one installment payment. Please keep a copy of the confirmation below for your records.

Your Payment Information
Today's Date:
10/17/2009
Time:
4:20:16 PM EST
Scheduled Payment Date:
11/18/2009
Scheduled Payment Amount:
$270.32
Last 4 Digits of Your Phone Number:
XXXXXX****
Your Confirmation Number:
10746***

Please be sure to adhere to this schedule in order to avoid any interruption in service.

Questions about your service? We're here to help, so please visit us online and we'll be happy to assist you.

Thank you for allowing us to serve you.

Sincerely,
Verizon

Imagine my surprise when Verizon disconnected my service on November 16th, two full days before I had agreed to pay them and they had agreed to wait. A payment arrangement is, after all, a contract between two parties and Verizon is definitely a fan of contracts. I received an email from them confirming the arrangement. Since the payment date was only two days away, I drove out to a wireless hotspot and paid online(the website informed me that I could restore my service by only paying $47 and change, but I went ahead and paid the full $270). Then I went home and plugged in my Verizon phone line so I could speak directly to the fine young cannibals at the Verizon Call Center and find out what was going on. Even when your phone service is disconnected, Verizon conveniently leaves a direct line straight to their payment call center if you follow the prompts correctly.

James, Verizon's finest, informed me that I owed $270.32 and could have my service turned back on as soon as I greased his palm with the green(the $47 bill promised by the website was, as I suspected, too good to be true). Curiously, a payment made online and a payment made to the call center are not the same thing. James had no record of my payment, but he said that my service would be back on within 24 hours if I did indeed make that payment. When I asked why my service had been interrupted a scant two days before our arranged payment date, things took a turn for the bizarre.

“A payment arrangement will not actually debit your account,” James said. “What you made was an agreement to pay. Your service can still be disconnected if you've made an agreement to pay.”

Aside from being patently illogical, that wasn't what I'd done. I explained that I had an email confirmation(shown above) of a payment arrangement, not an agreement to pay, and it made no sense to me that my service was disconnected before the arranged date.

James repeated that one was not the same as the other, and I realized he wasn't even responding to my question. He was still trying to explain the difference. I reiterated that I had a payment arrangement(and would email him the proof just as soon as he turned my Internet back on) and asked why my service was disconnected prematurely. He ignored my question again to explain the difference between agreement to pay and payment arrangement. Yes, if I had made a payment arrangement, they would not have disconnected my service, but that was not the case if I merely created a payment agreement. Very calmly, I explained that he was either calling me a liar, deeply confused about my grievance, or Verizon intentionally deceived me when it approved my payment arrangement. I didn't care which; I just wanted to speak to a supervisor.

“I can't put a supervisor on the line, but I can have a supervisor call you back if you'd like.”

“A supervisor can't call me back. You've disconnected my phone.”

“I understand that, sir. Would you like a supervisor to call you back?”

“Please connect me to a supervisor as you've just agreed that having one call me back is impossible.”

“I can't do that, sir.”

Long silence.

“So what you're telling me is that you can't help me and you have no useful information whatsoever?”

Longer silence.

“...your service will be reactivated within 24 hours.”

I thanked him and wished him all the best. Several hours later I spoke with another customer service agent and asked about their supervisor policy.

“If my service has been interrupted and I make a payment, a payment that your website shows but your call center does not register, you will not reconnect my phone service, correct?”

“Correct.”

“And your policy is that supervisors will not get on the line. They have to call the customer back, even if you've disconnected their phone.”

“That's correct. The customer must pay their outstanding balance in order to reconnect their service.”

“Just so I understand you, your company's policy is that a customer will not be allowed to present a grievance to a supervisor unless they pay, even if the grievance is that they have paid and their service is still disconnected?”

“That's correct.”

I no longer believe that a contract with Verizon is a gilded cage. It's just a cage, and like any other prison cell, it exists to protect your jailors from you, whether or not you're actually guilty. My parents stole cable when I was a kid, but what I call stealing involved paying their monthly cable bill. Who among Verizon's customers now feels that time and unprecedented corporate growth has reversed that quaint irony. We pay our cable bills, but in turn it feels as though something is being stolen from us.

I signed an agreement with Verizon, an agreement in which they seemingly handed my personal information to every telemarketer in the United States, stole movies from me that I'd paid for but not actually watched yet, and reneged on a payment arrangement because their power is so great that they can make two plus two equal five and reverse the meaning of payment arrangement by simply reversing the order of the words. If I want to speak to someone with the power to answer my grievances, I need to pay my bill twice so they can call me back or try to squeeze a message into my spam-filled Verizon voicemail. My payments to the Verizon website eventually posted, but what if they didn't? Do I take my MagicJack down to the library and patiently wait for Verizon's customer service supervisors to call me back on a public terminal(where I'll hear them with crystal clarity while they can't hear a word I say because of bandwidth limits)?

My next payment to Verizon will be almost $200 for roughly the same services originally promised at $99. I will be released from Verizon no sooner than the week after Christmas, as I am ineligible for parole under existing terms and conditions.

Don't Fall Prey To Money Transfer Scams

noreply@blogger.com (Steve Brown) — Thu, 29 Oct 2009 18:07:00 +0000

With the global economy in the shape it's in, it comes as no surprise that money transfer scams are on the rise. The Federal Trade Commission (FTC) has produces a very informative video that everyone should watch then pass on to their friends and family. Even if you think you know all there is to know about all the money transfer fraud schemes out there, watch this anyway. You may be surprised at how clever the scammers are getting, and how their scams are evolving. Here's the clip:

As you might have guessed, I gave this clip 5 stars.

Prime Rate & Credit Cards: Another Timebomb?

noreply@blogger.com (CCF) — Wed, 28 Oct 2009 21:00:00 +0000

In 2007, the Pew Charitable Trust launched the Safe Credit Card Project; an ongoing study which analyzes industry practices and how they affect consumers. On October 28th, the project released their monthly report which discusses an alarming trend among bank-issued cards: circumventing the Credit Card Reform Act of 2009 by shifting to variable-rate APRs which are tied to the Prime Rate. This practice allows issuers to raise interest rates under circumstances which would normally not be permitted.

Data on Variable Rate Cards
According to the study – which encompasses over 400 credit cards – as of December 2008, 31% of bank-issued credit cards had fixed rates. The current report states that number is now less than 1%.

For now, this trend does not apply to cards issued by credit unions; as of July, 64% of their cards continue to offer fixed interest rates on purchases.

Minimum Rate Requirements
Furthermore, a growing number of creditors are implementing Minimum Rate Requirements (MRR). This practice sets a minimum benchmark APR; preventing the variable rate portion from falling below a predetermined level, even if the index it is tied to (such as the Prime Rate) moves lower.

Future Implications
Considering that the U.S. Prime Rate is at a historically low level of only 3.25%, interest rates on almost all bank-issued credit cards are poised to increase in the future. During rampant inflation in the seventies and eighties, the Federal Funds Rate reached double-digits; peaking as high as 21.50% on December 19th, 1980. Although that event was an anomaly, the historical median prime rate is 8.75% and the cumulative average is 9.842%... both of which are significantly higher than today.

Similar to the adjustable-rate mortgage collusion which has recently unraveled, consumers are now leveraging credit cards to pay for tuition, medical bills, and other expenses with the assumption their APR will remain relatively consistent as they pay down the balance. Although the economic consequences of this problem dwarfs in comparison to the mortgage debacle, it is a potential time bomb nonetheless. In turn, some of today’s credit card reviews and marketing campaigns are not only misleading the public, but also perpetuating the problem.

This American Life on The Health Insurance Industry

noreply@blogger.com (Steve Brown) — Tue, 27 Oct 2009 16:36:00 +0000

My favorite radio program This American Life recently had two episodes about the American healthcare system in general, and the health insurance industry in particular. Very informative and entertaining, as usual. If you want to understand how we arrived at the crazy system we have today then listen to these shows.

The first part can be found here.

The second part can be found here.

NB: When you visit the above webpages, Look for the Full Episode link to listen to the above programs for free. They'll stream over your live Internet connection and play on your computer.

Enjoy!

I Spent $125 On A Pair of Sneakers, but I'm OK With It

noreply@blogger.com (Steve Brown) — Thu, 24 Sep 2009 21:53:00 +0000

I am currently without health insurance.

Very recently, I was experiencing some serious pain in my right Achilles tendon whenever I went out running. The pain started weeks ago, and gradually got worse over time. It got so bad that I had to stop running, and a developed a slight limp.

Being without insurance, I tried my best to see if I could fix this problem on my own. I visited webpage after webpage, from high profile sites like WebMD to small forums dedicated to running. I found all kinds of advice, but one recommendation stuck out as the best place for me to start. I found a forum where a doctor recommended to someone with the same symptoms (Achilles Tendonitis) to change his running shoes right away.

So, reluctantly, I went to my local mall to shop around for a pair of running shoes. This was not easy for me, as I go shopping for clothes and shoes once every 5 to 7 years. Moreover, I already had a perfectly fine pair of running sneaks at home.

I tried on countless shoes, but most were made for people who have an arch in their feet so they weren't any good for my extremely flat feet. Eventually, I found a pair of Nike MAXAIR running shoes that were perfect: light, comfy and not even a hint of an arch. They cost $125 plus tax, a price that actually made me sweat a little, but I bought them. The salesman assured me that I could return them if they did not work out.

So, after giving my tendon a few days rest, I was back to running in my new kicks. The pain subsided after a few runs and is now completely gone. I had no problem running with the diminishing pain, as, for me, it's even more painful to be without exercise. I simply don't function right without it. Keeps my body fit and strong and my mind sharp and resilient.

I used to tap into my "internal pharmacy" by biking a lot, but I had to give that up completely after I developed a pinched nerve in my neck. Though I love cycling, it doesn't suit my body type at all. And yes: I've tried lots of different bikes. Eventually, I'll give a recumbent bicycle another try, but for now, I'm sticking with the running.

Run Naturally: Don't Listen to Other People's Bad Advice

Many years ago, when I was a teenager in boarding school, my physical education teacher used to tell me that my running style is no good. When I run, I naturally lean forward, and with each step I land on the balls of my feet. For long distance runs, my gym teacher -- we'll call him Mr. WW -- used to try to get me (and others) to run more upright, which would cause me to land on my heels. I resisted his advise, because I never really trusted him, and his advise just didn't seem to make sense to me. He was from an era when runners would run very upright, and lifting the knees as high into the air as possible was considered good form.

Turns out I was right to trust my instincts.

A few months ago, I caught an excellent broadcast of Radio Times on NPR about running. Marty Moss-Coane interviewed Christopher McDougall, author of the book Born to Run. McDougall spent time with the Tarahumara Indians of Mexico’s treacherous Copper Canyons, a group with some astounding runners. These natural runners are able to do 100-mile ultramarathons barefoot by running exactly the way I run naturally: leaning forward and landing on the balls of their feet. Of course, these folks run at an easy pace, but I think most would agree that 100 miles is amazing at any pace.

For more on Born to Run, visit this link.

To listen to the Radio Times interview with Christopher McDougall, visit this link (mp3.) Highly recommended!

COBRA Subsidy Will Expire On December 31, 2009

noreply@blogger.com (Steve Brown) — Thu, 17 Sep 2009 18:23:00 +0000

If you've ever been laid off from a job, then you've probably heard of COBRA. COBRA is short for the Consolidated Omnibus Budget Reconciliation Act of 1985, a law that let's a recently unemployed worker extend the group health plan their employer provided for them for up to nine months.

COBRA was a good idea, but it practice it really doesn't help much. That's because the cost of using COBRA is just too high. I remember being asked to pay more than $400 to continue on my former employer's group plan back in 1999. I can only imagine what I'd be asked to pay if I wanted to use COBRA today.

The American Recovery and Reinvestment Act of 2009, or ARRA, which was signed into law by president Obama back in February of this year, includes help for those who want to use COBRA, in the form of a 65% premium reduction. 65% is a big deal. It can reduce a $400 COBRA premium down to a far more affordable $140.

Two important things to note about this subsidy:

Help comes in the form of a tax credit, so you'll still need to have enough cash available to pay for the full COBRA premium amount if and when you sign up for the program.
The subsidy ends on December 31, 2009.

For more info on the COBRA subsidy, visit this webpage.

Poverty Rate Surged During 2008

noreply@blogger.com (Steve Brown) — Fri, 11 Sep 2009 19:22:00 +0000

The Commerce Department just released stats on poverty and health insurance coverage for 2008. As you might have guessed, the numbers for the wealthiest nation that has ever existed aren't pretty. Poverty rose last year, as did the number of Americans who don't have health insurance. Here's a clip from the U.S. Census Bureau report:

"...The U.S. Census Bureau announced today that real median household income in the United States fell 3.6 percent between 2007 and 2008, from $52,163 to $50,303. This breaks a string of three years of annual income increases and coincides with the recession that started in December 2007.

The nation’s official poverty rate in 2008 was 13.2 percent, up from 12.5 percent in 2007. There were 39.8 million people in poverty in 2008, up from 37.3 million in 2007.

Meanwhile, the number of people without health insurance coverage rose from 45.7 million in 2007 to 46.3 million in 2008, while the percentage remained unchanged at 15.4 percent..."

And how does the Commerce Department define poverty? Here you go:

"...As defined by the Office of Management and Budget and updated for inflation using the Consumer Price Index, the weighted average poverty threshold for a family of four in 2008 was $22,025; for a family of three, $17,163; for a family of two, $14,051; and for unrelated individuals, $10,991..."

Money In Motion

noreply@blogger.com (Steve Brown) — Mon, 07 Sep 2009 20:21:00 +0000

The other night, I was both bored and restless, and feeling a bit burned out. So I decided to take a long walk with my camera and see if I could find interesting things and/or people to photograph.

I was one block away from the Federal Reserve Bank of Philadelphia when I came across a group of homeless folks sitting on the sidewalk. One guy was very busy, working very hard scraping dirt from coins and other metallic objects. I stopped and asked him what he was doing. He introduced himself as Danny (pic to the left), and told me that he was recently homeless. He said that he made an arrangements with a friend of his who owns a local laundromat. Danny explained that his friend lets him stop by the laundromat every once in a while and collect whatever he can from the numerous washing machine drains, and Danny can keep whatever he finds. Danny told me that he finds tons of coins, from pennies to quarters, and often finds jewelry and other valuable items. He showed me a clutch of gold necklaces. He let me keep a very worn out penny.

At this point, a small crowd formed around Danny, attracted by the bright flashes from my camera. One passerby asked Danny why he didn't simply wash all the items at once with water. Danny explained that he liked scrapping the coins on the ground. Kept him busy.

After chatting with Danny for a few minutes, I thanked him for his time and for letting me take a few pictures. I then walked over to the Philly Federal Reserve Bank. The bank was advertising a "Money in Motion" exhibit from a large banner at the corner of Arch and 7^TH streets. Admission was free.

I was embarrassed for the Bank.

Here we have the most powerful central bank in the world, a bank that has been printing money out of thin air in an effort to "save the American economy," a bank that wants the world to believe that giving money away to people who have amassed much of their obscene wealth by figuring out ways to get very rich without providing useful goods or services, is the best way to extricate America from the Great Recession. I see "Money in Motion" and I think, "Hmmm, our central bank actually wants to show off how it helps the masters of greed who caused the financial crisis get even richer by sucking untold billions from taxpayers pockets. Hmmm...."

Many Americans know that the federal government spent hundreds of billions of dollars to bailout the insurance giant AIG. What many don't know -- because most mainstream media outlets don't want to go there -- is that the investment bank Goldman Sachs got about $12.9 billion from AIG's bailout bundle. Don't believe me? Read about it here. Just as sickening: foreign banks got billions of that bailout cash as well, including Barclays PLC, Societe Generale, and Deutsche Bank. Money in Motion, baby.

The AIG bailout was a crony capitalism, plain and simple. Goldman has never been a vital part of the American financial landscape. Without AIG's bailout money, Goldman would have taken a huge loss, but would have survived. Meanwhile, countless commercial banks, the ones that lend money to businesses and consumers and help keep Americans employed, are still failing at an alarming rate.

A laundromat owner -- someone who makes money by providing a useful service to her community -- lets a homeless guy clean out washing machine drains and keep whatever he finds: that's my idea of money in motion. It's honorable, civilized and far more American than any multi-billion dollar crony bailout.

Here's an idea: why doesn't the Philly Fed Bank open a small office that's open to the street where people like Danny can connect with business owners who are looking for simple services like cleaning laundromat drains or sweeping floors. They could call it the Informal Services Marketplace. Could help a lot of people who can't find work in the formal economy, or people with mental issues who aren't mentally fit enough to hold down a solid job. Criminal background checks would be mandatory, of course.

I'm glad I bumped into Danny that night. It's so easy to feel overwhelmed by an anemic and dwindling income, healthcare inflation and child support payments. It's good to get some real perspective every once in a while. Helps to rejuvenate the entrepreneurial spirit.

Citi® Raises My Interest Rate from 8.24% to 14.99%

noreply@blogger.com (Steve Brown) — Thu, 23 Jul 2009 21:28:00 +0000

As a consumer with an 800+ FICO® credit score, I find it very vexing when a credit card bank raises my interest rate to that more suited to a subprime borrower, or someone with a limited or nonexistent credit profile. This has happened with a number of my consumer credit card accounts since the credit crisis peaked last year. In each case, I've opted out of the rate increase, which resulted in each account being closed by the bank.

Though I have the option to opt out of the latest assault on my credit -- an APR increase on my Citi® Dividend Platinum Select card -- I'm not going to. That's because this card has a relatively high credit limit, so closing this account would cause my FICO credit score to drop considerably. Keeping it open will not be a problem, as I haven't carried a balance on this card in years.

Change of Terms Notice

Since I will be accepting the change of terms. My APR will increase from 8.24% variable (Prime + 4.99%) to 14.99% variable (Prime + 8.99%, with a minimum of 14.99%) at the beginning of next month. In other words, in reality, my APR will rise to Prime + 11.74%! Simply outrageous for someone with my credit history. So why didn't Citi just note the change as Prime + 11.74% in the literature they sent me? Very good question. Perhaps it's because they know how uGlY it looks?

I'm betting that two years from now, when the Fed will be raising short-term rates to tame runaway inflation, the rate on this card will be close to 20%, if not higher. Just have a look at where the U.S. Prime Rate was at its most recent high: 8.25% from mid-2006 through September 2007.

8.25% + 11.74% = 19.99%.

Even more telling, let's plug in the median U.S. Prime Rate:

8.75% + 11.74% = 20.49%.

Yikes! Ouch! Just looking a those numbers makes me cringe.

Ok, so here is the reason I was given for the rate increase:

"...In this economic environment in order to continue to provide consumers with access to credit, we have had to adjust our pricing..."

Actually, the way I see it, the rate increase has more to do with the really bad mistakes Citigroup made during the recent housing/credit boom than it does with this recession we're in. Of course, the banks that messed up want consumers and taxpayers to pay for their mistakes, while top executives continue to take home massive bonuses. Seems to be the new American way of doing business on Wall Street.

Citi's excuse is not so bad, however, when compared to the one Advanta gave me when they closed my business credit card account. That bank actually tried to paint me as a credit risk despite my high credit score, perfect payment record and my habit of paying at least three times the minimum amount due each month. Advanta has a lot of small business owners very angry, and I think that lawsuits and settlements are only just beginning for that company.

Ok, here's another quote from the change of terms notice:

"...If you opt out of these changes, you may use your account under the current terms until the end of your current membership year or the expiration date on your card, whichever is later..."

This is actually a much better policy than I've seen with other credit card banks. With other banks, when I opted out of rate increases, the bank either closed my account right away, or closed it within 30 days of my opting out. So, I will give some kudos to Citi for giving customers time to pay down their debt before jacking up their APR.

As soon as I am done posting this blog entry, I will take my Citi® Dividend Platinum Select card out of my wallet, blindfold it, march it down to my crosscut shredder, give it its last cigarette and destroy it. I'll keep a record of the card's details, of course, just in case.

I'm actually grateful that banks like Citi exist. Why? Because my income varies so wildly that my credit union won't give me a credit card, despite my stellar credit rating. So, yeah, I like to complain when they're up to no good, but these banks actually play a vital role in providing credit to folks with undulating income, like me.

My Brother Died Without A Will

noreply@blogger.com (Steve Brown) — Sun, 12 Jul 2009 17:52:00 +0000

I hate getting surprise letters from lawyers I've never heard of. I got one the other day, from a lawyer in Massachusetts. I took a deep breath (yeah, I really hate these letters) and opened it.

The letter was from a lawyer who is currently representing my brother's wife. We'll call her Jane. My brother -- we'll call him Larry -- died a couple of months ago. He had heart disease. He'd had quadruple bypass surgery years ago after his first heart attack. Back in May of this year, he was sitting at his desk at work, when he suddenly started to complain about pain in his chest. He collapsed, and died before the paramedics arrived. He was a good man and he will be missed by many.

So, back to this letter. It was a "General Assent" document that needed my signature in two places, and I needed to find a witness who would be willing to sign this letter as well. I'm an intelligent guy, but I never went to law school, so I sometimes find legal wording and phrasing somewhat esoteric. I was not able to comprehend what this lawyer wanted from me. The letter might as well have been written in Cantonese. I will now transcribe the important parts of this document:

"...In the mater [sic - I guess this lawyer doesn't check for typos] of the 'Estate of [LARRY]'

I [ME], of [MY TOWN], [MY STATE], being a party interested in the above matter hereby consent to the allowance of the same by the Probate and Family Court for this County and request that the same be granted without further notice..."

In the document, I am asked to sign off on the above statement.

What?

On the same page, but in a separate statement, I am then asked to sign off on this:

"...I [ME], of [MY TOWN], [MY STATE], do hereby release and forever discharge the said 'Estate of LARRY' from all debts and liabilities whatsoever which I now have for or on account of the 'Estate of LARRY' and further consent to the allowance of the Petition-account and appointment described above..."

After reading the letter, I search around the Internet to see if I could find pertinent and instructive information about General Assent matters. I didn't find anything useful. I then called the lawyer who sent the letter and got an answering machine three times. The next day, I tried calling again, and, thankfully, the lawyer who sent the letter answered.

I asked what the letter was about and he explained that the letter was asking me to agree to letting Jane have control of and execute Larry's estate, or, in other words, to agree to make her the executrix of my brother's estate. I was confused as to why this was necessary, since I was certain that my brother had all his estate matters sorted out after his first heart attack. The lawyer then told me the unsettling truth: my brother died without leaving a will, also known as dying intestate.

This revelation was a shock to me because my brother was a financially savvy guy. He would often complain about how our father, who had a decent amount of knowledge regarding money and finance, never took the time to teach his kids about money. He saw this as my dad just being lazy, which vexed Larry quite a bit. It motivated Larry to take financial matters -- big and small -- seriously. So, no will? Doesn't make sense.

OK, so I asked the lawyer why I needed to sign off of this executrix appointment and he explained that all blood relatives must do so. He told me that Jane won't be able to get access to Larry's bank accounts until all the probate stuff had been sorted out.

And that's why it's so important to have a will, especially if your total assets exceed your debts and liabilities. By the time all is said and done, and all the lawyers have been paid, the cost of my brother dying intestate will probably be enormous. Yup. Even if you're under 30 years old and have a net worth of $10,000, make a will, even if it's a simple one. Unless, of course, you like the idea of paying lawyers and judges to make your estate decisions for you when you are gone, and you like the idea of having a significant portion of your estate eaten up by court/legal fees.

Jane and I don't get along at all. Never have. But, of course, that's no reason to hold up this particular legal process. There are two boys involved, my nephews, and both are still at an age where they are relying on Jane financially.

I am hoping that my brother at least had a decent amount of life insurance before he passed.

Now, regarding the General Assent letter: I find it very annoying that Jane's name was not mentioned anywhere in the letter. That's what confused me. Had her name been inserted into the sentences of the above-transcribed statements, logically and appropriately, I would have understood what the document was about. Lawyers! They write documents like this so that non-lawyers have to pay them to decipher the text. Ha! What a racket! What I really don't like is that even if this attorney was a inept ambulance chaser who wrote a bunch of garbage while drinking Jack Daniels with his college buddies, I may not have been able to detect his incompetence. I guess I should have gone to law school!

A special note to lawyers: don't take anything in this post personally. I don't hate lawyers. I have many lawyer friends who I admire and respect. I guess I'm just a bit envious of your power!

Proof of the Need for IRS Reform

noreply@blogger.com (Olivia Sage) — Mon, 08 Jun 2009 20:26:00 +0000

An April 15, 2009 Reuters article includes Barack Obama's campaign promise about IRS reform. Obama says, "We need to simplify a monstrous tax code that is far too complicated for most Americans to understand...we will make it quicker, easier and less expensive for you to file a return..."

Someone should warn the President, negotiating lasting peace in the Middle East may be easier than simplifying the Internal Revenue Services. And I've just learned this (again), the hard way.

Some of you may remember my earlier blog entry about getting a back taxes bill for 2006 due to a short sale of my home that took place during that year. I tried to fight the bill, but it turned out that I really did owe the money (about $800), so I decided that the right thing to do was to face it and pay the tax. I also decided that paying $800 all at once was too burdensome for me (more than one month's rent). I thought it best to set up a payment plan with the IRS, and then when I got the amount down to something more manageable - say $400 - pay off the rest in full. After all, the IRS did offer me the option of setting up a payment plan. It seemed like it would be an easy and fair route.

So begins my personal adventure with the IRS that has taught me where the expressions "pulling out my hair" and "banging my head against a wall" came from. This should have been easy! Here's my timeline of events (be warned, it's scary and complicated):

December 5, 2008: Take all my paperwork/ bill from the IRS to their local office. Meet with IRS Representative #1 who tells me I can set up a payment plan right there. Yes, $40 a month will be fine! No, I do not need to do any further paperwork or sign any of the papers that the IRS has sent me. We can just do this whole thing face to face. I give him a voided check and fill out a form, and he gives me the (unbelievable) news that I will have to pay a $52 fee to set up the payment plan/ direct withdrawal. And, it will take the IRS at least two months to set up the direct withdrawal, so during that time I'll have to run my checks in person down to the local office on the first of each month.

December 5, 2008 - 1 hour later: I had just gotten home from the whole ordeal and was relaxing with a cup of coffee. (Remember this whole thing was extremely emotional as the short sale of the home was due to divorce and foreclosure.) I told myself at least it was over with. Phone rings. It is IRS Representative #1. He says, "You have to come back down here right now!" His tone is full of panic and that makes me panic. (When you've been through a financially devastating divorce, as I have, it doesn't take much.)

"What's wrong?" I ask.

"There's a problem with your check!"

"What?" I was sure there was no problem with my check, and since it was just a voided check there couldn't have been a problem with insufficient funds. "What's wrong with it?"

"You need to get down here right now!"

Okay - even in my panic, I could tell that this guy had no right to order me back down to the IRS office in the middle of a work day. "I'm busy now," I said. "Why, specifically, do I have to come back down there?"

Silence. After a few minutes of talking with him, I finally asked, "Did you make a mistake with entering my check into the system?"

It turned out, he had! And he had the nerve to call me and order me back down there without apologizing or explaining what had gone wrong. Talk about use of power to intimidate!

December 6, 2009: I make a second trip to the IRS office and deliver a second voided check.

December 29, 2008: I drop my first payment off at the IRS office.

January 22, 2009: I get a notice from the IRS that states, "Your next payment of $40.00 will be automatically withdrawn from your checking account on March 1, 2009." I feel relief - everything is set up and I won't have to worry anymore!

February 1, 2009: I drop my second payment off at the Providence IRS office.

March 1, 2009: I notice that $40 has not been withdrawn from my checking account. Something may be wrong....

March 3, 2009: I go back down to the Providence IRS office, by this point rather frustrated and annoyed. I ask to speak with anyone but IRS Representative #1 who I have now realized is incompetent. The receptionist sits me down with a very competent looking woman. The woman, IRS Representative #2, looks at my account. She's puzzled. Evidence of my payments is there. My checking account information is there.

"Hmmmm," she says, taking my certified letter from me. She goes to talk to a supervisor. They figure out that because I hadn't signed the paperwork agreeing that the debt was rightfully mine, the IRS will not begin the automatic withdrawals.

Arrrrrrggggg! This was the very same paperwork that IRS Representative #1 looked at on December 8th and pretty much told me I could throw away. He definitely said I did not need to sign it. Now, three months later, I sign. Representative #2 says she will fax it to the appropriate office and I should be all set. She advises me to just check if $40 is withdrawn from my account in April. If it doesn't work in April, it will work in May. Also, if it doesn't work in April, I can just mail the check to the local IRS office. There's no need to trek all the way down here over and over again. That's ridiculous and IRS Representative #1 should have told me that. Oh, and while I'm here on March 3rd, I make another $40 payment.

March 30, 2009: I get a letter - a certified letter (yikes!) - from the IRS. It states that it is a "notice of deficiency" and names a court date!!!! I am now panicking. I thought that this had been resolved back in December! Plus, I've been making regular payments - now totaling $120.

April 3, 2009: I notice the set-up has not taken effect yet, so I mail a $40 payment to my local IRS office.

May 3, 2009: I notice that the $40 has, once again, not been withdrawn from my account. I decide to mail a check and wait.

May4, 2009: Great news! I get a letter from the IRS that my 2006 account has been changed - I now officially owe them $714.40 (this reflects the original amount minus the $120 that I paid between January and March, plus the interest and fees). IRS Representative #2 had been right - it was apparently necessary for me to sign that paperwork, indicating that I acknowledged the amount owed as accurate.

May 20, 2009: I get a letter from the IRS inviting me to set up a payment plan with them. Here's the catch - there will be a $52 fee!!! I am a healthy 31 year-old woman, but the way my heart raced when I got this notice, I thought I might need to call an ambulance. I had already paid $52 - in December - to set up the plan! I decided that it may have just been a processing error - I would wait to see if the $40 would be withdrawn from my account on June 1st. After all, I'd been assured in DECEMBER (and then again in MARCH) that I was all set.

June 1, 2009: Nope. No money withdrawn from my account.

June 4, 2009: I call Representative #2 to ask her about this. She does not return my call.

June 5, 2009: I wake up early and am first in line at the IRS office. The receptionist tries to send me to still a third representative although IRS Representative #2 is sitting in her office without a client and I can SEE her from where I'm standing. I insist on seeing either her or her supervisor. IRS Representative #2 takes me into her cubicle. She pulls up my file again and examines the paperwork I've brought. We both realize at kind of the same time that IRS Representative #1 had not put the original $52 towards the fee to set up an automatic withdrawal, but rather had put it towards the amount I owed. Utter incompetence.

So, here I am, six months later, assured that this will work for July 1. IRS Representative #2, to her credit, was really just undoing the first guy's inaccurate information and inability to use the computer system to set up a payment plan. But on that last day, I sat in her office close to tears, my hands shaking and I said to her, "I have a master's degree in English! I'm good at reading forms and letters. I'm organized and honest. Why is this happening to me????"

Don't get me wrong - I know that having a master's degree doesn't make me incapable of making errors or misreading. But this situation has been so bewildering and stressful, if I weren't a good self-advocate, I think I would have just given up. How is someone with lower literacy, and/or less time, and/or less self-confidence supposed to deal with an organization where a representative can't even accurately set up a payment plan? I mean, your cell phone company can do that in about fifteen minutes! You can even do it yourself on-line for most large utility companies! The level of complexity and the amount of time and effort that this has taken is shameful. I have been trying to pay! Trying to do the right thing! I have probably spent a total of 15 hours just trying to get a payment plan set up. Not to mention the frequent trips downtown, the need to pay for parking, and the couple of times that I took time off from work to meet with these people.

The IRS mission statement is as follows:

Provide America's taxpayers top quality service by helping them meet their tax responsibilities and by applying the tax law with integrity and fairness to all.

In this case, mission failed. And, yes, IRS reform is desperately needed.

Cheap Internet Phone Calls

noreply@blogger.com (Steve Brown) — Wed, 27 May 2009 12:39:00 +0000

I'm very embarrassed to admit it, but I was paying more than $60 per month for a landline provided by Verizon. I recently dissolved my relationship with Verizon and am now using T-Mobile's @ Home voice over Internet protocol (VOIP) system to make calls via my Comcast Cable broadband Internet connection, @ $9.99 per month. Unlimited local and long distance calling, call waiting, call forwarding, 3-way conferencing, caller ID and voice mail are included.

I've been making moves to save money everywhere I can, and my landline was very close to the top of my list.

Last week, I called Verizon to cancel my phone line, but I also wanted to hear what the company was willing to do to keep my business. We discussed trimming all the extras like call waiting, unlisted phone number, etc., but the saving were negligible. I explained to the retention department rep' that this recession has hurt my business and income in a significant way, and that I needed to cut back as much as possible. But she wasn't able to offer anything worthwhile. So I told her to cancel my phone line. I was told that my line would go dead at around 6:00 am the next morning, and it did so, right on schedule.

After my line went dead, I made a few calls to certain important contacts who needed to know about my terminated landline right away. I used my cell phone, which is serviced by T-Mobile. I am on the individual Get More plan, which gives me 600 weekday minutes each month, with nights and weekends free. It costs me $39.99 per month plus taxes and fees.

I'd been researching various VOIP services for some time (MagicJack, Vonage, Phone Power, etc.), and decided to investigate T-Mobile's @ Home service first, since it seemed like the perfect fit for my situation. The hardware -- the Linksys (Cisco) HiPort home phone adapter (Model #URA200-TM) situated below my D-Link cable modem in the above image -- was free. Moreover, I was able to get the activation fee waived. I realized right away that the "waived activation fee" was probably just a trick to get cheapskates like me to sign on, but I was OK with it. The monthly fee for the service: $9.99.

Before I signed on the dotted line, I voiced my concern that the system may not work with my home network, as I use a software router (WinGate) and I also have a wireless access point box plugged into my wired network (I use a Netgear Ethernet hub.) I use a 2.4 Ghz Belkin 802.11g Wireless Range Extender/Access point box (model# F5D7130 -- highly recommended!) so that anyone can surf the web from any location in my place. The salesman called some tech support folks @ T-Mobile; I explained my setup to them and they said that I should have no trouble using their hardware with my setup. They told me to plug the HiPort adapter box directly into my Ethernet hub, as opposed to setting it up between my cable modem and my Wingate computer. After I was told that I could bring everything back within two weeks (they call it the "buyer's remorse" period) I decided to give the system a try. The salesman programmed and installed a new SIM card (free) into the HiPort adapter, and I was on my way.

When I got home, I tried setting up the HiPort home phone adapter by plugging it into my Ethernet hub, as instructed by the T-Mobile tech support folks. Didn't work. I then tried setting it up the way the instruction manual recommended -- hooking up the box between the cable modem and my router computer -- and, after I rebooted all my machines twice, including the cable modem, it worked.

I was able to browse the web and make phone calls without any problems for about 6 hours. Then calls started breaking up and going dead, and my Internet became unbearably slow.

I called up T-Mobile and, after running a few tests, they recommended that I go back to the cell phone store where I signed up for the VOIP service and upgrade my hardware to the Linksys WRTU54G-TM Wireless-G Broadband Router (with 2 Phone Ports!). They told me that I'd have to pay a fee for the upgrade, and I said no thanks!

I ran my own tests, and found that the call quality and connection problems had nothing to do with T-Mobile or the HiPort hardware. The problem was with my Comcast broadband connection. Not too hard to figure this out. I pinged Yahoo.com from my Windows 2000 machine that's directly connected to my cable modem. With the Hiport adapter in the mix, the Time to Live (TTL) was OK, with an average round trip time of 49 milliseconds. But the connection would timeout quite often. When I removed the HiPort adapter and pinged Yahoo.com, I experienced the same timing out problem.

I called Comcast and we went through all the possible causes for the timing out issue. Everything on my end was fine, so the tech support rep' recommended that I upgrade to a cable modem that supports the DOCSIS 3 standard (my D-Link modem uses DOCSIS 2.) He recommended that I get a modem from Comcast, but I declined that offer since renting from them would mean a monthly charge: a ripoff in the long term. He said that I could find a DOCSIS 3-compatible modem at Wal-Mart for less than $50. I thanked him for his counsel and ended the call.

Next, I tried shutting down everything on my home network, which would reboot all my hardware. I included a visit to my fusebox and cut power to my home office, and I manually turned off my 3 uninterruptible power supply (UPS) devices (2 x APC and one TrippLite) to be sure that every ounce of juice drained from everything. After firing it all back up, my Internet was back to normal speed and the quality of the voice calls improved.

So I think I'll be keeping this T-Mobile @ Home VOIP service. I've been conducting VOIP speed tests here:

http://whichvoip.com/voip/speed_test/ppspeed.html

and all has been OK since I rebooted everything in my home office.

I called T-Mobile tech support again to see if I could somehow configure my HiPort adapter to prioritize my voice calls over the streaming of data. The support rep' told me that the HiPort adapter is already configured for voice priority. She said that even the T-Mobile @ Home service at her house has problems with voice calls sometimes, and it's always due traffic jams with the broadband connection provided by her Internet Service Provider (ISP). She said she uses a DSL connection to the Internet, provided by Quest.

I can live with some lagging every once in a while. If I have an important call to make, I can simply shut down my router computer, or stop the Wingate service, or temporarily put the PC in standby mode, then bring the PC back online when I'm done with the call. I doubt I'll ever have to do this, but it's an option.

If you don't have a T-Mobile cell phone account, you can try Phone Power, which offers cheap Internet calling @ $14.95 per month. Some key features with the Phone Power service:

Unlimited free calls in USA and Canada. And, of course, unlimited free local calls
You can keep your current phone number (free transfer) or you can request a new one
Online orders get free activation
Free lease for the phone adapter hardware
Free Caller ID, voicemail, call waiting ID, voicemail to email, call log viewer, call forwarding, 3-way conference calling, E911, 611, 811 and 311 service.

Why I Didn't Choose Vonage

A close friend of mine uses Vonage and she is very happy with it. You get unlimited local and long distance calling to the USA, Canada and Puerto Rico @ $24.99 per month, whereas I'm paying $9.99 per month for my T-Mobile @ Home service. For my friend, Vonage makes sense because she has lots of friends and family in England, and with Vonage, unlimited calls to landline phones in the United Kingdom, France, Spain, Italy and Ireland are included at the $24.99 price point. If I called Europe often I might have chosen Vonage myself, but I don't, so going with T-Mobile @ Home made sense to me.

Why I Didn't Choose MagicJack

First of all, I don't like the commercials. It's like that pitchman is trying to sell poisonous toys to preteens. The way he counts that money at the start of the commercial: like that's going to convince me to open my wallet? It's a low quality ad and it probably reflects either a low quality product, or low quality customer service, or both, in my opinion.

It's like those "make money on the Internet" scams -- I mean "seminars." I attended one in New York City once, because I was curious and it was free. The whole thing was so stupid that I couldn't contain my laughter. Lots of "raise you hand if you want to make a lot of money" and "repeat after me: I am going to change my life, and work for myself, and make lots of money on the Internet, and it's all going to begin right here and right now," crap. All guff and no substance. I left after 3 minutes.

Another thing about MagicJack: the hardware is a box that connects to your computer via USB. That's not practical, in my opinion, since I would have to leave my computer on all the time. Leaving my computers on 24/7 is something I used to do, but these days I'm in frugal mode, so I shut them down at night.

If you're thinking about going for MagicJack, be sure to read all the comments at this USNews.com article.

T-Mobile @ Home: The Drawbacks

As with any VOIP service, if your Internet goes down, your phone goes down with it. If you do go for VOIP, be prepared for the worst. Buy a high quality uninterruptible power supply (UPS) and plug your cable/DSL modem power cord into it. You don't want to be in a situation where the power is out and you can't make an emergency call, especially if you have kids. And keep your cell phone charged.

I have 3 UPS devices in my home office: two by American Power Conversion (APC) and one by TrippLite. I rank the APC devices above the TrippLite because they've been flawless in catching both major and minor brownouts, and blackouts.
I don't like the idea of a two-year contract, but you can't signup for the T-Mobile @ Home service unless you commit to a two year deal.

That's it for now. Hope this review was helpful. Comments are always welcome and appreciated.

Social Security Projected to Go Bust in 2037

noreply@blogger.com (Steve Brown) — Wed, 13 May 2009 12:06:00 +0000

Over the years, I'm sure you've been told many times that you shouldn't rely on Social Security to take care of you when you are old, tired and done with working. Today's news from the Social Security Administration (SSA) seems to bear that out.

By 2016, SSA programs will cost more than the taxes we all pay to keep them going. Moreover, by 2037, it's now projected that SSA coffers will contain nothing but dusty cobwebs. Here's a clip from the SSA press release:

"...The Social Security Board of Trustees today released its annual report on the financial health of the Social Security Trust Funds. The Trustees project that program costs will exceed tax revenues in 2016, one year sooner than projected in last year’s report. The combined assets of the Old-Age and Survivors, and Disability Insurance (OASDI) Trust Funds will be exhausted in 2037, four years sooner than projected last year. The worsening of the long-range outlook for the Social Security program is due primarily to the recent economic downturn and faster reductions in mortality than previously assumed..."

Cutting Back

noreply@blogger.com (Steve Brown) — Tue, 12 May 2009 06:54:00 +0000

When news about the economy is bad, individuals and businesses cut back; they cut jobs, budgets, forecasts, etc. These cutbacks in turn cause the economy to worsen, as we spend less and take on a defensive financial posture. The bad news and the cutbacks mutually reinforce each other, and can produce a long and painful recession, or a depression.

Are we in a depression? In my opinion, no, we're not, and we aren't headed for one either. The American economy is simply too robust, and today the government has a lot more power to get growth back on track than it did back in the 1930's. The main difference between now and then is that back then money was backed by gold -- the gold standard -- whereas today we have a fiat currency. Fiat currency means that the Fed and the Treasury Department can literally pump trillions of dollars into the economy, as they are doing now, without putting the real treasure -- American gold -- at risk. Soon, everything will be OK. All our government has to worry about is inflation down the road, which it will tackle by raising interest rates. Easy.

I'm still trying to figure out what the next bubble is going to look like. During the Clinton years, it was technology in general, with the Internet leading the charge. Earlier this decade, it was, of course, housing and easy credit. But how is America going to prosper after the Fed has raised rates? Can the green movement really generate serious wealth for you and your neighbor? Will American innovation be a big enough engine that can raise the standard of living for a large swath of American households? I'm still trying to figure it out, so I can prepare for it and ride that wave when it comes.

For now, my prediction is that this recession will last until at least the second quarter of 2010. Fed Boss Ben Bernanke, America's most powerful economist, recently said that he thinks a return to growth will happen by the end of the year. Here's a clip:

"...We continue to expect economic activity to bottom out, then to turn up later this year. Key elements of this forecast are our assessments that the housing market is beginning to stabilize and that the sharp inventory liquidation that has been in progress will slow over the next few quarters. Final demand should also be supported by fiscal and monetary stimulus. An important caveat is that our forecast assumes continuing gradual repair of the financial system; a relapse in financial conditions would be a significant drag on economic activity and could cause the incipient recovery to stall. I will provide a brief update on financial markets in a moment.

Even after a recovery gets under way, the rate of growth of real economic activity is likely to remain below its longer-run potential for a while, implying that the current slack in resource utilization will increase further. We expect that the recovery will only gradually gain momentum and that economic slack will diminish slowly. In particular, businesses are likely to be cautious about hiring, implying that the unemployment rate could remain high for a time, even after economic growth resumes..."

I think Bernanke's prediction is too optimistic. In my opinion, the housing problem needs more time to stabilize. I'm hoping Uncle Ben is right, and I'm wrong. But I understand where he's coming from. Bottom line: The best way to break the self-reinforcing, downward spiral is to dump as much cash as possible into the financial system, and inject as much optimism as possible into the collective American psyche.

No More TV

Since the peak of the credit crisis in October 2008, I've been cutting back in many ways, but yesterday I did something I never thought I'd ever do: I canceled my cable TV. I kept the High-Speed Internet service, but canceled all cable TV options. I'm no TV addict -- I never watch TV during the day -- but there are certain programs I enjoy when I need to take a break from work. Here's a list:

Nightly Business Report
Nature
NOW
Bill Moyers Journal
Secrets of the Dead
Frontline
Masterpiece (they should run I, Claudius every year)
Modern Marvels
How It's Made
On The Money
Suze Orman
Kudlow and Company
for the occasional laugh: Family Guy, Robot Chicken, American Dad, (that alcoholic, drama queen alien cracks me up) and South Park.

Digital TV is just around the corner, and I'm hoping it will work in my area. Conventional TV never worked where I live. I think it's because the cable company is sabotaging it. When I had cable installed years ago and asked why I couldn't get any free TV through the airwaves, I was told that it was because I'm too close to the airport. Nonsense!

I won't miss Comcast. I don't like the way the company operates. They treat their customers like suckers: all those ridiculous fees! For example, why should I be forced to pay a monthly fee for a cable box? Should be a one-time fee. Moreover, the more channels you have, the more they charge you for each cable box! It's BS and I can't stand it.

It's all good, really. Fact: all the smartest and most accomplished people I know either don't own a TV or they have a TV set but only use it to watch rented movies. Yep.

I really need to play catch up with my reading list anyway.

Expanding My Culinary Repertoire

I've also been expanding my skills in the kitchen so that I don't get the urge to eat out as often as I do. I need to learn how to cook dishes that don't require a lot of preparation, cook fast and taste great. I'm middle-aged, so eating right is important. Besides, I have no tolerance for grilled cheese, Ramen noodles and the like.

An old boarding school friend helped me perfect what has become my most common meal: London Broil. This cut of meat is always reasonably priced at my local market, and, thankfully, it goes on sale quite often. There is no need to marinate this steak for hours as many pro chefs will tell you. I make an extremely tasty meal from this cut like this:

List of Ingredients: London Broil steak, Lea and Perrins Worcestershire Sauce, one yellow onion, olive oil.
Preheat your conventional oven to 375 degrees.
You want to caramelizing slices of a yellow onion in a pan with olive oil while the meat is cooking in your conventional oven. Begin by heating the olive oil on high heat, add the onion slices then turn the heat down to medium-low. Turn slices every 5 minutes or so until nicely browned. Meat will be done a few minutes after your onions are ready.
While the onions are caramelizing, place the steak on a glass Pyrex® baking dish. (FYI: all Pyrex bakeware is manufactured in the USA!)
Poke holes on one side of the meat with a standard fork. The more holes, the better.
Shake up a bottle of Lea and Perrins Worcestershire Sauce and flood the perforated meat with plenty of sauce. Don't be stingy. Important: Don't use any other brand of Worcestershire sauce.
Flip the meat over and repeat steps 5 and 6.
Place meat in oven, middle rack, and cook each side for 12 minutes.
Remove meat from the oven and cut into the center. You should have a thin, brown outer layer and plenty of pink in the middle. This meat is best when it's medium-rare. If you don't like all that rawness in the middle you can stick in back in the oven for a few more minutes, but be warned: if the meat is brown right through to the center, it will be tough and won't taste as good.
Add your carmelized onions to the pyrex dish with the meat and let the meat stand for 3-5 minutes. Makes sure the onions are submerged in plenty of drippings. Also, use a spoon to spread plenty of drippings on top of the meat to keep it moist. And you're done!

You can save even more time by forgoing the onions. Meat will still taste great.

While the meat is cooking, the smell of the cooking meat will probably make your mouth water. I always snack on a raw carrot while cooking.

I get plenty of carbs from my other meals during the day so when I cook this dish I have it with a side of salad and a couple of raw carrots. This roughage is very important if you want your gut to last a good long time (i.e. avoid colon cancer.) I also eat plenty of fruit during the day to keep my pipes happy.

One bite of this and all my cravings for a savory restaurant meal quickly melt away.

I don't worry about cholesterol since a) it's never been a problem for me, b) no problems with it in my family history and c) I believe in the Blood Type Diet.

The above is a great meal for a bachelor. When my daughter visits, we usually enjoy pasta with low fat meat sauce (I brown the meat, dump it in a colander then run it under hot then cold water to get rid of the fat) with a salad on the side.

Second Lien Plan Will Help Homeowners Struggling with Second Mortgages

noreply@blogger.com (Steve Brown) — Wed, 29 Apr 2009 18:06:00 +0000

The Obama administration has a new plan to help homeowners who are struggling to keep up with their second mortgages. It's called the Second Lien Program, and it will be active in about a month. Here's a clip from the Treasury Department website:

"...The Second Lien Program announced today will work in tandem with first lien modifications offered under the Home Affordable Modification Program to deliver a comprehensive affordability solution for struggling borrowers. Second mortgages can create significant challenges in helping borrowers avoid foreclosure, even when a first lien is modified. Up to 50 percent of at-risk mortgages have second liens, and many properties in foreclosure have more than one lien. Under the Second Lien Program, when a Home Affordable Modification is initiated on a first lien, servicers participating in the Second Lien Program will automatically reduce payments on the associated second lien according to a pre-set protocol. Alternatively, servicers will have the option to extinguish the second lien in return for a lump sum payment under a pre-set formula determined by Treasury, allowing servicers to target principal extinguishment to the borrowers where extinguishment is most appropriate..."

And here's some more insight from a Bloomberg article:

"...Mortgage delinquencies increased to a seasonally adjusted 7.88 percent of all loans in the fourth quarter, the highest in records going back to 1972, according to figures from the Mortgage Bankers Association in Washington. Loans in foreclosure rose to 3.3 percent, up from 2.04 percent a year earlier.

Obama’s overall plan to reduce foreclosures by modifying mortgages targets as many as 4 million homeowners. As many as half of the participants in the mortgage-modification program may be eligible for the second-lien assistance, administration officials said.

Congressional Action

The administration also intends to urge action by Congress to make Hope for Homeowners easier to use and more accessible, the administration officials said. The program is primarily aimed at borrowers who are “underwater,” owing more on their mortgages than their homes are worth.

No other legislative changes are required for the administration’s revised housing plans to take effect, the officials said.

The new measures may ease mortgage investors’ concerns that the biggest banks and servicers would be tempted to rework too many loans under the program in order to bolster their home- equity portfolios, Laurie Goodman, an analyst at Amherst Securities Group LP in New York, said in a telephone interview.

“Certainly, it appears that the Treasury has listened to first-lien investors,” Goodman said. Today’s announcement “goes a very long way toward addressing their objections,” she said.

Second-Lien Program

The second-lien program should be up and running in about a month, the officials said. They estimated that about 75 percent of all U.S. mortgages are managed by servicers that already have agreed to participate in the government’s modification programs. Servicers are administrators in the relationship between lenders and borrowers.

The mortgage initiative offers subsidies to servicers and lenders, including bond investors, to help lower borrowers’ housing payments to 31 percent of their income. Because modifications are voluntary, the Treasury is offering incentive fees to encourage participation in the program.

The $12,000 in possible incentive fees has several components. Many of the fees are paid over time, as an incentive for borrowers and servicers to strike deals that will last.

When modifying first mortgages, servicers can receive $1,000 up front, and $1,000 per year for three years. If the mortgage being modified is eligible and not yet delinquent, they can also receive $500, for a maximum possible total of $4,500.

Reducing Principle

Then borrowers who make their new payments can get up to $1,000 per year for five years, up to a total of $5,000. This money is paid to the lender or investor who holds the first mortgage, and it reduces the borrower’s principle.

When a second mortgage is also modified, the servicer on that mortgage can get a $500 up-front fee, plus $250 per year for three years, for a maximum possible total of $1,250. The borrower also is eligible for an additional $250 per year for five years, again paid toward the principle on their primary mortgage..."

"...The Treasury announced today that second-mortgage holders will be given a subsidy to reduce the borrower’s interest rates to as low as 1 percent. Alternatively, the lien holder could receive as much as 12 cents on the dollar to retire the debt. There also are incentives in place for first-mortgage holders.

In the case of a sample borrower with a $250,000 interest- only first mortgage with a 6 percent rate, leading to housing expenses equal to 40 percent of the borrower’s income, the government may pay about $2,625 annually to help reduce those payments for five years, according to an Amherst Securities Group report in February.

If that borrower also had a $43,942 second mortgage with an 8.6 percent rate, the government may bear half of the $2,336 annual cost of reducing the payment for five years under the plan announced today, according to data released by the Treasury..."

Even more insight from a recent Associated Press article:

"...During the housing boom, lenders readily gave out "piggyback" second loans that allowed consumers to make small down payments or avoid them entirely. While home prices soared, such mortgages were even extended to borrowers with poor credit scores and people who didn't provide proof of their incomes or assets.

But those loans, which are attached to about half of all troubled mortgages, have been an obstacle to efforts to alleviate the housing crisis. That's because borrowers who are trying to get their primary mortgage modified at a lower monthly payment need the permission of the company holding the second mortgage.

The new plan aims to get rid of that roadblock, administration officials said. "We're offering even more opportunities for borrowers," Treasury Secretary Timothy Geithner said in a statement.

The new incentives are estimated to help up to 1.5 million borrowers with second mortgages, Housing Secretary Shaun Donovan said. While data on how many household have been helped by the Obama administration's housing plans are not available, Donovan told reporters there have been "hundreds of thousands of applications."

The administration's second mortgage initiative will be funded out of $50 billion in financial rescue money already allocated. As an incentive to modify second loans at lower interest rates, mortgage companies would get $500 upfront for each modified loan, plus $250 a year for three years as long as the borrower doesn't default.

Similarly, borrowers would get up to $1,000 over five years applied to the principal balance of their primary mortgage, and the government would pick up part of investors' costs as well. Lenders would also be given the ability to remove second mortgages entirely in exchange for larger government payouts.

The administration also plans to give mortgage companies $2,500 payments to entice them to participate in the "Hope for Homeowners" program. It was launched by the government last fall but has so far has been a failure, proving unattractive to banks required to absorb large losses.

It was supposed to allow 400,000 troubled homeowners to swap risky loans for traditional 30-year fixed-rate mortgages with lower rates. Instead only one loan has received final approval, with about 50 more in the works and fewer than 1,000 applications.

The program has been stymied by high fees, complex regulations and a requirement that banks absorb large losses. The Obama administration supports legislation in Congress to ease those restrictions.

Meanwhile, the faltering economy is causing the housing crisis to spread. Nationwide, nearly 804,000 homes received at least one foreclosure-related notice from January through March, up from about 650,000 in the same period a year earlier, according to RealtyTrac Inc., a foreclosure listing firm..."

A Family Affair: How Economic Crisis Can Truly Hit Home

noreply@blogger.com (Leslie James) — Fri, 17 Apr 2009 03:28:00 +0000

The state of the nation's economy is a bit enigmatic; on one hand, an 8.5% national unemployment rate still means that there is a 91.5% employment rate, so the economic outlook is obviously not all bad, despite the doom and gloom reported by the media. However, the 8.5% and those who love them are seeing some of the worst economic times facing Americans since the Great Depression. Millions of Americans are tightening their belts, but the 8.5% are losing their shirts, and when they do, many of them have to call on family and friends to help. According to the Wall Street Journal, rising costs are causing many Americans, even those with jobs, to begin moving in with family and friends, even elderly parents, just to keep their heads above water.

I ought to know; I have a sibling living with me for that very reason.

One of my sisters knows the hardships of the economic downturn, and even the dark side of financial despair. Less hours at work and an almost non-existent job market meant that she had to find other ways to make money. She lived alone and was always very independent, so she didn't like asking for help. So unfortunately, like many other Americans facing economic hardship, my sister turned to crime. She had some brushes with the law when she was young, and desperation caused her to be tempted to revert to her old ways. One minute she was living in a nice suburban townhouse, and the next she was calling to cry on my shoulder because she was losing it all. She had even taken advantage of one of our older relatives who allowed her to get a cell phone on her account. In an inside job gone bad, she ordered over 30 phones in 4 months for resale, and ended up on the hook for all of them. She was supposed to get coupons from an employee of the wireless company so that she could make a profit by buying the phones for a reduced price and selling them at close to retail. The employee stiffed her on the coupons, and she couldn't manage to save the money that was supposed to pay for the phones in the first place. So, she racked up a total wireless bill of $12,000 in someone else's name because her world was spiraling out of control. My sister does not do drugs or alcohol, and she does not have a gambling problem. She turned to fraud to pay her rent and buy groceries.

I know that many of you may find it easy to judge her and may even be eager to judge me for taking her into my home. However, the fact of the matter is that it is difficult to say what you won't do when you feel like your back is against the wall and you stand to lose everything that you have worked for. The family member sought legal advice and is working to protect herself, and my sister is going to pay the entire debt. All of it. However, she won't be able to do it alone. The problem was that she could not survive on her own with the income that she was making, so unless I wanted to see her drown, my husband and I had to step in.

For those of you who are still questioning my sanity, know that she is under strict rules living here; she has chores, my husband has to manage her income, and she cannot have a car or any company that we do not approve. We have small children, so she also babysits. Despite what you might think, the situation is actually working out. There were some tense moments and misunderstandings during the first month as we all got adjusted to the new living arrangement, but now that my sister has stopped blaming others for her circumstances, eaten a slice of humble pie, and begun to understand that we are sincerely trying to help her change her life, she has gotten with the program. It's kind of like a drug rehab, except for someone who makes poor financial decisions. It's hard enough surviving with poor decision making skills in a stable economy; when the chips are down, only the strong survive. In the absence of great mental and emotional strength and a resourceful spirit, a declining economy can ruin some of the best of us, so those who already have questionable living skills are just hardship cases just waiting to happen. However, with a little help from our friends (homage to Joe Cocker), even the worst of us can make a turnaround.

A 7.5% APY Certificate of Deposit In This Interest-Rate Environment? Yes, But One Week Only!

noreply@blogger.com (Steve Brown) — Thu, 16 Apr 2009 00:21:00 +0000

Sometimes, junkmail is cool.

I was going through the day's mail, placing the important stuff to one side and shredding the junk. I was just about to destroy a large postcard when I noticed the numbers 7.5 in huge letters on the front of the card. Upon further examination I found that it was an unbelievable offer from a local credit union: 7.5% APY on a one-year certificate of deposit (CD) or a one-year IRA CD!

I know this is hard to believe, so I've attached a scan of the postcard to this blog post. Proof, baby!

According to BankRate.com, the average rate on a 1-year CD is 2.34% APY right now. Not bad really, considering that most banks can borrow money via the Federal Reserve at no more than 0.25%. I understand that other factors influence CD rates, but still: 7.5%? That has to be the best rate in the country! If you can find any better anywhere in the United States, please post a comment below and let us all know.

Of course, the deal comes with some tight restrictions. It's a one-week special from the Freedom Credit Union, which is about a 15 minute walk from my place. They're celebrating their 75^TH anniversary (get it? 7.5 APY / 75 years.) The minimum deposit is $500 and the maximum is a disappointingly timid $1,000. If they get 350 new members before the promotional week is up, the offer is rescinded and no one else gets the deal.

A restriction I don't get: if you're between the age of 13 and 25, you can only deposit $250. What's up with that? I'm an old man so it doesn't affect me, but I think this particular dictate is unfair to young, money-savvy savers and investors.

The Freedom Credit Union is easy to join: if you work or live in my local area, you can become a member. I really like credit unions that are easy to join.

Want a piece of the action? Well, if you live in Pennsylvania you may be able to take advantage of this deal. Here are the requirements:

"...Freedom [Credit Union] personal Memberships are for anyone who lives, works, worships, performs volunteer service, or attends school in Bucks, Chester, Delaware, Montgomery, and Philadelphia Counties..."

The 7.5% APY promotion runs from April 18 through April 24. Since the offer ends if/when they get 350 new members, better not procrastinate if you want in. I have a feeling some folks are already setting up camp. To get started, click the [JOIN NOW] button on this page. Enter code C2 at the bottom of the Applicant Details page (you'll see a text field for Promotional Code.)

And this is why I choose to keep shredding junkmail instead on opting out of receiving it. You never know what kind of shiny nuggets you'll find amongst the Chinese restaurant menus and supermarket circulars. Yep.