March 5th, 2010
House Passes Job Stimulus Bill—But Is It Enough?
With the national unemployment rate stagnant at 9.7%, lawmakers are hoping to spur more vigorous hiring among employers with a $15 billion bill that gives a temporary tax break to companies hiring new employees. This bill was just passed in the House and is awaiting approval in Senate.
The measure is designed to create jobs and boost employment by exempting businesses that hire unemployed workers (at least 60 days unemployed) from the 6.2% Social Security payroll tax now through December. Additionally, the bill will give employers an additional $1,000 credit if new workers stay on the job a full year.
February 9th, 2010
Dear Credit Karma – Credit Scores & Getting A Job
Dear Credit Karma,
Why is it hard to get a job if your credit report is bad?
In today’s economic climate, employers are being extremely selective in weeding through job candidates and are looking for candidates that demonstrate financial responsibility and financial stability. Once reserved for jobs dealing with significant money or government-related work, credit checks are becoming commonplace in the hiring process for every work sector. The rationale it is that an applicant’s financial history and the way they manage your money is a valuable tool in assessing their personal character and job performance. In addition, employers can compare the credit report to the resume to look for any discrepancies.
November 9th, 2009
Fact Sheet: Home Buyers’ Tax Credit and Unemployment Benefits Extension
When President Obama signed H.R.3548 – Worker, Homeownership, and Business Assistance Act of 2009, popularly known as the Home Buyer Tax Credit, he effectively extended the federal tax credit for first-time home buyers originally set to expire November 30, 2009 to April 30, 2009, and also extended unemployment benefits to bring relief to the current 10.2% of Americans looking for work. Here’s a closer look at the bill and how consumers will be benefitting from it:
HOME BUYER TAX CREDIT
- For whom?
First-time home buyers – You qualify if you have not owned a home in the last 3 years, and must purchase your new home as the principal residence.
Repeat home buyers – You have owned and lived in a home for the last 5 consecutive years at any time during the eight years before your new home purchase. - Deadline
You must purchase the home or have it under contract by April 30, 2010, and close by June 30, 2010. - Benefits
The first-time homebuyer tax credit applies to 10% of the purchase price up to a maximum of $8,000. The repeat homebuyer tax credit likewise applies to 10% of the purchase price up to $6,500. - Qualifications for both tax credits
For homes purchased after Nov. 6, price of the house cannot exceed $800,000. Prior to purchasing a home before Nov. 6 under the First-Time Home Buyer tax credit, there was no price limit.
New, higher income limits for both the first-time and repeat homebuyer credit apply to homes purchased after Friday, Nov. 6, and are $125,000 to $145,000 for individuals and $225,000-$245,000 for joint filers. For homes purchased before Nov. 6, the original income limits for the first-time home buyer credit are between $75,000-$95,000 for individuals, and between $150,00-$170,000 combined income for couples or joint filers.
You must live in your newly-purchased home for at least 3 years, or 36 months, or you will have to repay the entire credit (certain exceptions for military personnel or people who pass away). - Fraud protection
Due to the federal investigations of fraud under the first-time home buyer tax credit, taxpayers will now be required to provide documentation proving they purchased a home and taxpayers must be at least 18 years old to claim the credit.
EXTENSION ON EMERGENCY UNEMPLOYEMENT COMPENSATION
- For whom?
For workers unemployed for an extended period of time and have exhausted regular unemployment benefits that are set to expire before the end of this year. - Benefits
Provides further temporary availability of certain additional emergency unemployment compensation to workers. Unemployed workers are guaranteed a maximum 14 more weeks of unemployment aid, while Congress is working to pass another law to grant an additional 6 weeks—for a totally of 20 weeks—to workers in high-unemployment states where jobless rate is above 8.5%. - Qualifications
Details of unemployment aid program differ state to state although there are federal guidelines; check the level of benefits and eligibility your state allows.
Instead of the usual 26 weeks of unemployment compensation, Congress has extended benefits four times due to the prolonged period of unemployment; with this most recent extension, the maximum length of time an unemployed worker can get benefits in some states to 99 weeks, or nearly 2 years.
In general to qualify, workers must meet minimum requirements for wages earned or time working during the “base period”, which is the first four out of the last five calendar quarters before your claim is filed.
You must be unemployed due to no fault of your own. - Tax cuts for businesses
An additional provision allows businesses of all sizes, hit hard by the boom-and-bust economy of the past years, to get a reduced tax cut to prevent businesses from laying off workers or closing their doors. Businesses can extend the “net-operating-loss carryback” period from two to five years, which allows them to apply losses sustained in 2008 and 2009 against taxes on profits paid in earlier years. The homebuilding industry is expected to benefit generously from this provision by offsetting their recent losses against profits when they were benefiting from the housing boom. - For more information on filing an unemployment claim, head to the Department of Labor.
September 28th, 2009
Financial Emergencies Don’t Need To Panic Your Credit Score
People with good and even great credit can, at times, find themselves in a bad financial situation. Whether it’s a home loan gone upside down, unemployment lasting longer than expected, or medical bills piling up from a recent accident, the unexpected can take control of your financial plan and often your credit score. While there is no simple cure, here are a couple tips to keep in mind when you face some of the more common financial emergencies.
- For many, purchasing a new house meant an opportunity to make money by watching their home value blossom. Due to risky loans and low or zero down payment requirements, many now find themselves upside down on their home loan, owing more on their mortgage loan than the home could sell for in the market. Walking out on the mortgage may seem like a simple solution, but the foreclosure on your credit report will have significant impact on your credit score for several years to come. If you can continue to make your monthly mortgage payments, try to stick with it. Now that many of the speculators and real estate investors have pulled out of the market, there is some stabilization in home prices and increases in home purchase volume.
- Divorce is never easy on the heart or pocketbook, but oftentimes it’s bad for your credit health as well. An important part of divorce proceedings is making sure your name is removed as an accountholder on any mortgage, credit card, loan, or even banking account that you will not be responsible for going forward with. While closing old credit cards will definitely affect your credit score, it’s better than leaving your name on the accounts and the risk that your ex-spouse will have late payments, default, or have balances charged off – all of which will affect your credit if your name is still on the account. Take the opportunity to open new credit cards and banking relationships so you are in control of your credit health and once again standing strong and independent.
- With unemployment lasting on average of over 25 weeks, many are finding their emergency funds running dry. Don’t give a credit card issuer any reason to cancel the card or reduce your limit; use your credit regularly and wisely if you find yourself unemployed. Credit cards can become the lifeline to covering daily expenses in periods of extended unemployment.
- It’s easy to become overwhelmed quickly when medical bills start stacking up in your mailbox. Unfortunately, they are not going to go away. The best thing you can do is get a sense of your total medical obligations and call the hospital or medical service accounts to see if you can work out a payment plan. Past due or unpaid medical bills can show up on your credit report and will negatively affect your credit score.
Financial emergencies are hard on the family, hard on your finances, but they don’t have to be hard on your credit health. Be proactive in determining the best way to protect your credit in any financial crisis; a good credit score helps you keep your credit costs to a minimum and provides you with better options and offers when you go in for a loan, a new mortgage, or new credit line when you’re ready to start rebuilding your financial life. These tips aren’t foolproof nor will they guarantee that life will be easier after a major life trauma like divorce or unemployment, but it can help you minimize the financial strain as much as possible and help your credit survive till the sun comes out tomorrow.
September 24th, 2009
5 Reasons Why It’s (Not) the Worst Time to Be A College Grad
The Class of 2010 is probably all too familiar with hearing doomsday-esque warnings about Graduation Day from everyone including the guy sitting beside them at Starbucks to close relatives and even their nosy neighbors, saying, “We’re in a recession”, “Unemployment is still on the rise”, “Your liberal arts degree isn’t very useful, is it?”, and, “What are you going to do after you graduate, in this economy?”
Getting ready to graduate and move on to the “real world” is not as promising as it seemed when this year’s soon-to-be college grads were eager freshmen back in the day. And in the face of fears like unemployment, large student loans, and nosy neighbors, there are lots of reasons to think this year may be the worst time to be a college senior.
Don’t let these reasons depress you–these are five reasons why you should see the college senior’s half-empty glass as, actually, half-full:
- Jobs– Yes, the unemployment rate will probably hit 10% by graduation next June and you will probably experience the average 6-8 months of unemployment that many young professionals are currently going through. No, you do not need to despair. First off, unemployment is a natural part of the cycle of a career; it is not a failure and it does not stall your life–looking for a job is still actively progressing towards your career. What is going to be important five years from now isn’t that you were unemployed at this time, but how you handled being unemployed. Remain persistent and ambitious about the job you want and keep sending out resumes daily because you will come across opportunities. For many it may be better to settle for a lower-paying job in the field you actually want, instead of getting stuck in a career path you have no interest or passion in. As a college graduate, you do have a job right after you graduate and that is to look for a job, so approach your job search with as much work ethic and dedication as you would your first job.
- Housing– You might be homeless post-graduation when your college apartment lease expires, but fear not! You could move back into your parent’s house and save yourself some money; its the life of “being taken care of” and blowing your money on things like shopping and entertainment, but just remember that Mom still makes the rules. Opting for rentals is expensive because no one is buying new homes, but you can cut costs by doing what you’ve been doing for the last four years—rent with roommates. Sharing appliances, furniture, utility bills, rent, and space will be beneficial to all of you and will help your household adopt a frugal and cost-conscious mindset.
- Student Loans– Student loans will begin repayment period within 6 to 9 months of graduating, so be prepared to pay by then. Regularly budgeting it into your monthly expenses will make it less of a stress and more of an accepted part of your finances and your life to be dealt with as efficiently as possible. As long as you pay at least the minimum payment (more if possible!) on-time, your credit report will stay healthy.
- Budgeting– It will no longer be as simple as budgeting for eating out, movies, clothes, and other fun stuff. Graduating takes away Dad and Mom’s monthly checks; you will soon be responsible for rent, utilities, car insurance, food, internet, transportation, and more. Since this will take some help and getting used to, check out personal finance management sites that can do all the work for you: they automatically pull your accounts together and calculate your spending so you can see how you’ve been spending your money and where to cut back. If you want to keep it simple, sit down with a pen and paper and write your monthly income, subtract all necessary expenses like bills (don’t fool yourself—eating out twice a week is not necessary), and whatever is left over after is what you can spend or save.
- Debt– The average college student graduates with just over a $3,000 balance on their credit card, and tack on student loans in a few months, and you can end up spending most of your 20s trying to dig yourself out of debt from college instead of saving up for your first house or investing in a 401(K) plan. The best way to start dealing with the burden of debt is to start paying it off NOW so you don’t have to fear dealing with it later when more interest will have accrued. Another plus side to paying off debts now is that your credit report will become healthier and healthier, which means a healthier credit score that will help you when it comes time for a home mortgage, auto loan, or new credit card.
August 12th, 2009
Credit Checks Can Hurt Consumer Job Opportunities
Forget the impeccable suit, the strong handshake, and the perfectly crafted resume—nowadays, your credit report has to be as sharp as your first impression if you want to pass that job interview with flying colors.
According to the Society for Human Resource Management, up to 50% of employers run credit checks on potential new hires. Initially, credit checks were used by financial service companies and the government as part of pre-screening for employment; however, the practice has spread across all sectors of industry and every rung of the corporate ladder.
The theory behind employers running credit checks assumes that how you manage your finances can predict your job performance and character. Employers primarily look at two key components: financial responsibility and financial stability. Companies survey your payment history, amount of debt, and other details of your credit report to judge how responsible you are with your personal finances. This glimpse into a potential employee’s past financial behavior is especially important to small businesses, where a single incident of employee fraud or on-going employee theft could be a significant risk to the business. Companies would also assess your financial stability through specific credit data like your level of debt, past issues of paying off credit cards, and even an incident or risk of bankruptcy.
There are rumblings on Capitol Hill that using credit checks to pre-screen possible employees is penalizing those attempting to work their way out of their financial troubles. Lawmakers are also looking to provide additional consumer protection as we know there are times when consumer’s financial health takes a turn for the worse for reasons beyond their control. The Equal Employment for All Act which would bar employers from using credit checks as part of pre-employment screening, unless it is necessary and relevant to the employment position. Currently, most state laws allow employers (with the applicant’s permission) to pull a candidate’s credit history and refuse to hire or deny a promotion based on the credit checks.
If you are one of the nation’s 14.5 million unemployed consumers and you are turning to your credit card for life support, a future employer may judge your ever-expanding credit as too great of a risk to hire. With the average job hunt lasting anywhere from six to twelve months, you need to be prepared when any job becomes available. Work to keep your financial resume intact by using a credit card regularly, responsibly, and always paying on-time, develop a repayment plan for any significant outstanding debts, and check your credit report for errors at AnnualCreditReport.com.
Like your resume and references, a credit check needs to be buttoned up before you walk in for that first interview. Don’t let bad credit stand in the way of your next job. For the time being, managing your credit may be the fine line between a new job and the unemployment line.
July 22nd, 2009
Standing Side By Side With Consumers In Rough Economic Times
What started as an innovative automaker’s marketing ploy, which helped move inventory by offering purchase protection plans for jobless customers, is now becoming a standard level of consumer support across many different markets. Companies are coming up with more creative solutions—rebates, penalty-free refunds, special offers should you become unemployed—to get consumers back into stores and opening their wallets again.
Hyundai kicked off the recession trend of buyer incentives with its Assurance plan launched in January, which gives customers who are laid off within a year of purchasing a new Hyundai the option of returning the car and being absolved of the remaining payments (up to $7,500).
And where one good offer goes, many were sure to follow:
AutoNation, the largest U.S auto dealership chain, pledged to cover car payments of the recently unemployed for 6 months through its Protection Payment program; Ford’s Advantage Plan covered monthly car payments of $700 for a year for customers who bought a vehicle between March 1 and June 1 and lost their job by the end of 2009; GM’s Total Confidence program covered payments of $500 for up to 9 months for customers who purchased between April 1 and June 1 and lose their job within 21 months of purchase.
With unemployment creeping to near 10% nationally, job-loss protection offers are a smart strategy to give nervous consumers a sense of security to spend money while also easing consumers’ fear of possible unemployment. The idea to provide offers based on possible future job loss spread quickly from carmakers to financial service companies to airlines and even to drug companies.
Nowadays, a little peace of mind has become a way of business.
- Need that new dishwasher or stove but concerned about losing your job? Sears’ Buyer Protection Plan gives consumers a safety net in these troubled times. Use your Sears card to purchase a major home appliance totaling $399 or more and you are protected if you are involuntarily laid off. If consumers lose their job after 60 days and up to one year from the date of purchase, 1/12 of the entire purchase price is credited to your account each month until it is paid off or you are employed again. The Buyer Protection Plan is in a nationwide testing period from July 6 to August 1, 2009.
- Want to get the high rates of a CD but concerned about the penalties that could come with locking up your money in a CD? Discover Bank aims to help you earn more while worrying less. Their new Penalty Free 12-month CD earns consumers 2.00% APY, and if customers loses their job, they can withdraw their savings principal plus interest without any penalties or fees.
- JetBlue wants you to plan your vacation free from the worries of your employment status. If you are involuntarily laid off, The JetBlue Promise Program will fully refund your fare as long as your travel plans are prior to December 31, 2009, you are over 18, and you paid for the itinerary. JetBlue also offers a Getaways Vacation Package Refund as part of the Promises Program. The Promise Program was originally slated to end in June, but has been extended through 2009.
- Don’t let unemployment stop you from staying healthy. Pfizer’s MAINTAIN (Medicines Assistance for Those who Are in Need) program is a free medicine program for the newly unemployed. Pfizer‘s MAINTAIN program gives away 70+ types of prescription drugs for up to a year or until you become re-insured. To be eligible, you must be taking a prescribed Pfizer medication for 3 months prior to becoming unemployed; enrollment is open through December 2009.
- K-Mart is running the Smart Assist Savings card pilot program, in which unemployed customers can save 20% on all Kmart private label goods for 6 months. This discount program is being run first in Michigan, where unemployment is at the national high of over 14%.
In these rough times, it’s great to see companies reach out to meet consumers half way on the risk scale of unemployment. Not only are companies going to drive additional sales by providing consumers the confidence to shop, but there’s a significant amount of good karma these companies are building with both unemployed and employed consumers alike.
February 16th, 2009
Planning Ahead For Financial Emergencies
Are you prepared to handle a surprise disability or a serious illness, the loss of your job, a natural disaster, legal problems or some other financial industry? There are too many people out there that simply are not preparing themselves for the unexpected expenses that may be incurred over time, even those that are as minor as a home or vehicle repair. By planning ahead for financial emergencies you can significantly minimize the amount of stress that normally occurs when these types of emergencies rear their ugly heads.
There are a lot of different ways that you can plan ahead for financial emergencies. Many of these tactics are small and do not take a lot of time or money, but they have a grand impact on your financial readiness, should an emergency ever occur that requires you to tap into savings or other sources of financing.
>> One of the best defenses that you can possibly mount against emergencies is to acquire adequate insurance. You should take the time to check and see if you have the right amount of insurance for Life, Property, Disability and Long Term Care insurance for some much needed peace of mind.
>> You should take the time to prepare an emergency budget so that you can determine the minimum amount of income and the minimum amount of expenses that you would need should a financial crisis occur.
>> You should be aware of potential loan sources, or establish potential loan sources like personal lines of credit or home equity loans so that you can get the emergency funds that you need, when you need them, without worrying about whether or not you will be approved when there is no time to waste.
>> You should put together an emergency savings account fund, so that you always have easy access to savings account money that will help you get through an emergency when there is no other source for lending or financial aid. The more you have in savings, the more readily you will be able to weather the storm when a financial emergency occurs.
>> You should remember that good times do not last forever, and neither do bad times. By creating solid investments and building up your investment portfolio you can significantly reduce the need for a much larger emergency fund in the long run. By varying what different protections you have, you can create a much stronger protection plan, should a financial emergency ever occur.
>> You should take the time to completely and fully plan out your estate. This way, if you should happen to pass away unexpectedly the remainder of your family will remain financially secure even when they cannot count on your income to support them. A fully thought out financial estate plan should include where your assets should go, and should also include adequate life insurance so that your mortgage and other bills and debts can be paid without requiring your loved ones to struggle any harder than they have to in your absence.
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October 24th, 2008
Recession Proofing Your Life
Right now there is a lot of talk about a recession. The financial buzzword that is out there this month is “Recession” and for good reason. It has become increasingly vital that as American citizens, we begin to understand how we can properly safeguard ourselves against the risk of a potential downturn in the economy. Obviously there are no real guarantees in life, but there are numerous healthy and advantageous steps that can be taken in order to mitigate your losses during any financial turbulence that should occur in the near future. Here are some steps that you can take to recession proof your life.
Clean your finances up.
It is time for you to get serious about your financial health. Look at your budget this month and start cleaning everything up. Decrease your debt slowly but surely, and work to find friendlier credit lines and ways to increase your cash savings and emergency fund savings. By reducing unnecessary expenses and increasing cash savings, you can safeguard against the occurrence of becoming financially strapped.
Focus on creating a financial plan.
If you have a plan, focus on it. If you do not have a plan, put together a one year, five year and ten year financial plan and tweak it over time to ensure that it is meeting your needs.
Make yourself invaluable in your profession.
If you become invaluable at work, it will be much harder for you to find yourself laid off during a recession. Some people are laid off without any warning, but if you can increase your role at work in any way, do so now and you may be spared.
Figure out a way to earn real money.
Can you further supplement your income in any way? If so, now is the time to start thinking long and hard about these opportunities. Consider obtaining a second job, or some other form of part time work that will allow you to increase your bottom line. This is the best way to prepare yourself for a recession, in case you have no idea where you’ll be when the economy takes a turn for the worst.
Think ahead and plan accordingly.
Above all, keep in mind that “this too, shall pass.” Think about the future and work on learning from the past. Think ahead and plan accordingly and you should have no difficulty overcoming the recession with the shirt still on your back. A recession does not automatically mean that your finances have to go south, but the more prepared you are, the better off you will find yourself when the waves die down and things go back to normal, so keep that in mind when recession proofing your life.
There is no way for you to completely and fully protect yourself from a dip in the growth of the economy, but there are plenty of ways to ensure your survival during this period with as little turbulence as possible.
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October 17th, 2008
The 6 Most Important Financial Milestones
Whether you are tying the knot, purchasing your first home or just beginning a new career, all of these milestones are worth thinking long and hard about because they can have important impacts on your overall financial picture. As you approach each of these important financial milestones, it is vital that you take the time to consider just what financial consequences will exist for each situation. You can continue to make educated financial decisions, but you may find that you need to adjust your spending habits in order to reach the new goals in your life. Here are six of the most important financial milestones and what they may mean for your financial picture:
1 – Tying the Knot –
One of the most exciting times in your life is getting married. It is thrilling to begin the necessary planning and preparation for the wedding, and afterward you will begin your financial life coupled with someone new. Money is one of the most difficult concepts within a marriage, so it is vital that you address financial planning at the very beginning of your marriage if you want to tackle all the hard stuff first. This will help you and your spouse work toward the same goals through open communication and strong financial planning, which will allow your marriage to be prosperous and successful.
2 – Buying a Home –
Buying your very first home is another big and exciting time in your life. This is a very large decision to make and a commitment that you cannot easily get out of once it’s made. You will need to be sure that you are absolutely ready to purchase a new home before you do it. Additionally, you are going to need to have a firm understanding of the terms of your mortgage if you want to handle it correctly. You should absolutely have extra money set aside for the purpose of dealing with emergency home repairs and other potential disasters.
3 – Changing Careers –
After having been in the workforce for a few years, it may be time for a new career. Look for promotions within the company that you already work for, or look elsewhere to find benefits that are better, or a salary that is more lucrative. This is a vital step in your life and a real financial milestone.
4 – Buying a Car –
You may also eventually reach a point in your life where buying a new car is important. Cars are necessary in most cities. Make sure that you are properly preparing yourself for such a purpose. Pay cash when possible, or shop around for the best possible loan that you can obtain.
5 – Getting Out of Debt –
If you have any debt, you need to start working to get out of it as soon as you have properly settled down in the working world. Use your money wisely, and you can begin to accumulate true wealth once you have eliminated debt from your life.
6 – Investing Your Money –
Now you should begin to invest your money as wisely as possible. You are going to be solely responsible with the costs associated with retirement, so you absolutely must begin to plan now. If you want to live comfortably, you have to start saving as soon as possible and for as long as possible.
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