Posts Tagged 'washington post'

The Power to Prosper: 21 day spending fast

Michelle Singletary at the Washington Post proposes a radical idea to get your financial house in order: a 21-day spending fast.

The idea is to purchase only necessities for 21 straight days.

No eating out. No shopping for non-essential items. Just the basics.

“No matter where you were financially, participating in the fast should help you with everything from addressing serious problems to making the small adjustments that keep your finances running well,” Singletary says. “You might even consider doing the fast over and over again, perhaps once a year.”

The benefits range from spending more time with family to seeing how much cash you can stash away for emergencies. Singletary offers budget templates and guidelines to get you started.

And if you’re thinking about getting started tomorrow, “today is tomorrow,” she says.

Credit union bailout? Not so fast.

Two recent articles – one at the Washington Post and another at the Wall Street Journal – leave the impression that credit unions are receiving a bailout from the government, like banks and insurance companies.

But things aren’t always as they seem, and credit unions are not receiving a bailout. In fact, credit unions are doing much better than banks.

The two stories focus on an institution that services credit unions, U.S. Central Corporate Federal Credit Union, an institution that handles financing and transactions for a big group of credit unions. U.S. Central doesn’t service members, like you or your neighbor. It services other credit unions. Think of it as a credit union for credit unions.

But the way the Wall Street Journal and the Washington Post make it sound (with headlines like “U.S. Aid Goes to Credit Unions”), the entire CU industry is in need of a handout. And that’s just not true.

What happened was U.S. Central took a group of credit unions’ money and invested it those mortgage-backed securities we keep hearing about. When those investments went sour, U.S. Central asked for a $1 billion loan (not bailout) from the National Credit Union Administration (NCUA) – the same government agency that insures your deposits at American 1. This isn’t Congress handing money to a financial institution that made bad decisions – as has happened a lot since September. Instead, it’s credit unions stepping in and helping out one of their own institutions.

Does this affect you or your membership at American 1? Not at all. American 1 is doing well financially. In fact, we trust our deposits with the Federal Reserve because of its reliability.

While newspapers seek to build up interest in stories by writing provacative headlines, the WSJ and Post went a bit too far with their misleading headlines.

With slumping economy, Americans may be saving more

For a while, the national savings rate – how much people save instead of spend – was negative. But that trend may be reversing, says the Washington Post, because of the soured economy.

When people are facing job loss, higher credit bills, and less disposable income, they will seek ways to keep and save their money. Beware the unintended consequences, says the Post:

Ironically, even if consumers are saving more, they could be helping to make the recession worse. The more people save, the less they spend, driving down demand for goods and services, which in turn dampens economic growth. The economist John Maynard Keynes dubbed this “the paradox of thrift.”

Unfortunately for the economy, more Americans are cutting back on frivilous expenses, like hair stylists and dining out, because many fear unemployment and rising medical costs.

What about you? Are you saving more these days, or looking for ways to cut expenses? Let us know in the comments.

How are credit unions doing? Hunky dory, thanks.

Someone wrote into the Washington Post:

Q. What is the impact of the government’s financial rescue plan on credit unions?

A. The impact on credit unions seems quite minimal. These nonprofit cooperatives do not hold many of the investments that are poisoning other financial institutions, so they have weathered the crisis fairly well. Credit unions have kept about 70 percent of their mortgage loans on the books, meaning that they did not sell them off to other institutions, according to the Credit Union National Association. The group said that less than 1 percent of credit union mortgages were in delinquency at the end of the first quarter. Delinquencies on other loans have edged up to 1 percent. “If they’ve got their money in a federally insured credit union, they’re just hunky dory,” CUNA spokesman Patrick Keefe said.

Hear that? Hunky dory!

FAQ about tax rebate checks

The Washington Post has a great Q and A session on some frequently asked questions about the tax rebate.

Here are some good questions a lot of people are asking:

Q: I’m a working veteran with a disability: I am considered 30 percent disabled by the VA. I currently work full time and file taxes. I will be eligible for the $600 incentive payment. I read that disabled Vets may be eligible for $300. Is that in addition to the $600 I will already receive or is that only for vets who do not file taxes?

A: No. The $300 minimum payment may go to veterans who don’t normally file returns, but qualify for the stimulus payment.

A: I’m confused about the tax rebate. My husband and I got a letter saying singles would get $600 and married couples would get $1200. But a friend of ours got a letter saying the amounts were $300/$600 respectively. Which is correct?

A: The actual amount depends on the information contained in your tax return. Eligible individuals will receive between $300 and $600. Those who are eligible and file a joint return will receive a total of between $600 and $1,200. Those with children will get an additional $300 for each qualifying child. To qualify, a child must be eligible under the Child Tax Credit and have a valid Social Security number.

Q: Will we have to claim this as income on our 2008 tax returns next April 15? If so, I’m just going to put 1/3 in my savings account so that I have money set aside for those taxes.

A: No. You will not owe tax on your payment when you file your 2008 federal income tax return. The stimulus payment will not reduce your refund or increase the amount you owe when you file your 2008 return. But you should keep a copy of the IRS letter you receive later this year listing the amount of your payment in the event you do not qualify for the full amount on your 2007 return but you do on your 2008 return. You will need to have the letter as a record of the amount you previously received.

Q: I read somewhere that the upcoming tax rebates will be an advance against 2008 taxes and will need to be paid back in 2009 when we file our 2008 returns. Is this correct?

A: No, this is NOT an advance payment. You will not owe tax on your payment when you file your 2008 federal income tax return.

Be sure to check out the IRS’s information page for more answers to your tax rebate questions. Also, Michelle Singletary’s column in the Post is always a good read, especially if you’re interested in personal finance, budgeting, and getting out of debt.

American 1 Federal Credit Union