Do You Feel Like We're Riding a See-Saw Every Day?

Wow, now the recession may be over by the end of 2009...but wasn't it all doom and gloom just a few weeks ago with even the President saying the economy might never recover?

See-saw? Feels more like whiplash some days.

Although I'm an optimist when it comes to my belief in our nation's ability to pull together and overcome huge obstacles and challenges, I also am a realist and think the American people are, too. Changing rhetoric isn't going to solve the problems we face. And this economy isn't going to change overnight.

I'm happy to hear more upbeat and positive things coming out of the administration and the news media. But when the message goes from pending doom to upbeat while the realities of what is going on is still in flux - well, that's what will keep all of us on edge and not sure what to believe.

Uncertainty is a big part of what is going on. When people are unsure of what to do or what might happen they hunker down. As long as we keep seeing and hearing conflicting messages and data this economy isn't going to do much more than it has been doing...see-sawing.

New Tax Court Rulings IN FAVOR of the Taxpayer!

As you know, I read lots of business and tax stuff. And I subscribe to The Kiplinger Tax Letter which has two great pieces of information in its most recent edition (March 6th). These could be two very important Tax Court rulings in favor of the taxpayer.

One has to do with Real Estate Professional status for real estate agents (and possibly others) and taking an ordinary loss on an abandoned investment.

Here are portions of the quotes (their copyright policy prohibits me from providing the full entries):

"Real estate agents ... rental real estate losses are exempt from the passive loss rules if they spend more than one-half of their time and at least 750 hours per year materially involved in real estate, the Tax Court says. ... The Service said that agents were not covered, but the Tax Court disagreed (Agarwal, TC Summ. Op. 2009-29)." Copyright 2009. The Kiplinger Washington Editors, Inc.

and

"The loss on an abandoned investment is deducted as an ordinary loss,
the Tax Court says in a case where a couple gave up the $25,000 they paid
for a franchise. ... (Alami El Moujahid, TC Memo. 2009-42)." Copyright 2009. The Kiplinger Washington Editors, Inc.

In This Economy Barter May Become More Commonplace

I was just reading an article from a source that isn't usually very "upbeat." But in these two articles at The Sovereign Society they made me think about something that makes good sense in our current economic situation. Going back to the basic concept of barter. And I loved their title: Using "People Power" To Close Your Lifestyle Gap ©The Sovereign Society, copyright 2009 - I need to see and read upbeat, positive things right now.

Barter has been used forever, and there are plenty of people that have been using it right along. But how many of us really have been involved with it in any significant way?

Rather than try to re-write what they've already written I'm just going to give you the links and suggest you read the two articles. What I really liked, and think we need more of right now, are some reminders of how we can deal with this whole economic mess on a personal and business level. I don't know about you, but I'm looking for solutions and ideas to personal situations. What's happening on the national stage is not as important to me as what I can do individually to help myself, my family, my friends and my community to weather the storm.

To quote from the end of the second article:

But bartering and joint ventures are truly the beating heart of our economy; exactly what "paper money" tries to simulate. And when paper money fails to closely simulate the levels of efficiency and satisfaction you get from barter trades...well, don't be afraid to go back to what works.

So get out there and start thinking outside of the box! ©The Sovereign Society, copyright 2009

So check out the two articles:
Using People Power To Close Your Lifestyle Gap
People Power at Your Place of Business

FICO Scores are Starting to Drop - But Why NOW?

Back on August 10, 2008 I wrote a blog post about the tightening credit and its ramifications and I ended the title of it with "...and Watch Your FICO Scores DROP!"

And it's begun to happen - I just don't understand why it didn't start sooner. When some of your available credit is taken away your ratio of outstanding debt to your available credit changes, for the worse. Whereas you may have had a credit card with a $10,000 credit line and only $2,500 owed on it you had a 25% debt ratio. If they reduced your credit line to $2,500 you would now have 100% debt ratio - not good for your FICO score.

I have monthly monitoring of my credit reports and score and have been surprised to not see any change at all to my FICO score even though as with many others I have had credit card companies reduce some of my credit lines.

But today I checked my daughter's report and saw her score dropped 28 points and yet not one thing has changed in her file since last month and surprise of surprise, last month it dropped 28 points as well! Absolutely nothing in her file had changed over those two months but her score has dropped almost 60 points. She has "excellent" in all the categories except for "length of credit history" because she's only got a few years of history.

I hadn't gotten my monthly notice on my account so I popped over there and lo and behold my FICO score is now beginning to drop as well.

What does this mean? Well, I'm not sure...it should have happened months ago when credit began being shut off, but it didn't.

But now suddenly the scores are adjusting downward. Odd isn't it? The government is pushing for the financial institutions that they gave bailout money to to actually use it to give credit to consumers again, but suddenly all of us don't look as good on paper any more - in some cases for no apparent reason. Are these institutions now going to point to our lower FICO scores and use it as an excuse not to lend?

Just what is going on? Seems like your guess is as good as mine, but it doesn't look good any way you look at it.

5.25% APY on a Free Checking Account? For Real!

Well leave it to my son (just about to turn 20!) to tell me about a deal that sounds too-good-to-be-true, but seems to check out!

He learned early that you want your money to make money, so he's always looking for ways to do that...earlier there were some creative ways that didn't really make sense (LOL!). But talking them through gave him a better understanding of what he could and should look at.

So he and I were talking last night and he told me he found a site that lists the best interest rates at banks and found www.americanetbank.com that is giving 5.25% APY interest on their Rewards Checking Account. So, not wanting him to be "taken" I checked them out. And they seem to be for real.

A totally online bank (no branches) and a part of All America Bank in Oklahoma City, OK that was established in 1969. AmericaNet Bank® is a trade name and trademark owned and used by All America Bank®. A division of All America Bank® - Member FDIC.
There are reviews by both BankRate.com, which I have followed for a number of years for their articles and information, and BauerFinancial.com which was new to me but also seems to be a good resource. I also googled them and couldn't find any complaints, etc. (which some of the other online banks did have, BTW). And here is a link to the most recent FDIC data and report on it: FDIC Report

Both BankRate.com and BauerFinancial.com give it 4 stars out of 5 . The information on BankRate.com which they used to evaluate it is free, the information on BauerFinancial.com is available for a small fee, but the rating is published for free.

Now, there are, of course, requirements in order to get that interest rate - but they are not difficult, you just need to be aware of them (this is from their site):

"The only requirements are:

Make 10 AmericaNet Bank® VISA® CheckCard sales transactions**
All statements are received electronically

At the end of your statement cycle, ATM fees charged by any bank worldwide are automatically refunded in one lump sum. At the same time, you will be paid interest earned by your account. Interest earnings of 5.25% APY* are calculated on your average daily balance of up to $25,000. Amounts over $25,000 will earn 2.25% APY*."

REWARDS CHECKING is a free personal checking account that offers the highest possible interest rate of 5.25% APY*. No minimum balance is required. REWARDS CHECKING offers the added convenience of an AmericaNet Bank® VISA® CheckCard to access ATMs worldwide and for secure debit card purchases. Enjoy all of the great benefits of a REWARDS CHECKING account: 5.25% APY* FREE Online Banking FREE Checking FREE AmericaNet Bank® VISA® CheckCard FREE Customer Service FREE Daily Email Notification if Overdrawn FREE ATM Transactions Worldwide Overdraft Privilege Available NO MINIMUM BALANCE *APY is Annual Percentage Yield **Requirements must be met each monthly statement cycle to receive the rewards. There are no rollover transactions. The monthly statement cycle ends on the 3rd Wednesday of every month. Qualifying VISA® CheckCard sales transactions include each time you use your VISA® CheckCard to make a purchase from a vendor or merchant. ATM and ACH transactions do not qualify. Limit of two Rewards Checking accounts allowed per individual.

Some other places that I found information on them was at http://bankdeals.blogspot.com and at www.bankaholic.com - so check it out for yourself...I'm not a financial advisor so do your own research and make your own decisions.

Privacy (or lack of!) and the Internet

I've always been amazed at what information you can get online about people; it's unnerving! I was just told a little secret...at least it was to me. Go to google.com and type in "phonebook:your name and state" - it would look like this: phonebook:john smith wyoming - important - don't put a space after the : but do put a space between your first and last name and the state.

Did you find yourself? Maybe not just your phone number but also your home address? And a google map button if your address was shown?

If you did, you can click at the bottom of the page to remove your information - but as they point out it won't get rid of your information in a variety of other places where it can be found, just in Google.

The information you need to get rid of information on you that is floating around the internet is in a great little e-book. I bought it ($27) and they say they'll be sending updates and videos as well to show how to do it. For me it is money well-spent. If you want the e-book here's a link: Privacy e-Book

President Obama's Taxes on the "Wealthy"

Is it just me or is there is something wrong with calling people "wealthy" who make $200,000 a year when in the United States there are about 400 billionaires (and a single billion is 1,000 times a million - and not many of those people have a single billion, but many billions) and over 9 million millionaires! I found quotes that put the richest 1% of households in the United States owning between 34-38% of all of the wealth in the country.

Consider that Warren Buffet pays about 15% in tax but his secretary (who only makes about $60,000 a year) is in the 35% tax bracket. He issued a challenge to members of "The Forbes 400" billionaires saying he would donate $1 million to charity if the collective group of richest Americans would admit they pay less taxes, as a percentage of income, than their secretaries. That's very nice, but I would have liked to have had him voluntarily pay the same percentage in taxes as his secretary and challenged the other wealthiest Americans to do the same.

Meanwhile it looks like it's time for a divorce for a bunch of Americans...as a married couple your taxes will go up if your income is over $250,000 a year, but if your spouse turns into your "significant other" you can each make up to $200,000 a year before your taxes will go up. That's a combined income of $400,000 without an additional tax hit.

I came upon this old interview from 2003 that I found interesting...here is a portion of it and I've given the link if you'd like to read the entire thing.

May 2003 - VOLUME 24 - NUMBER 5

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The Wealth Divide
The Growing Gap in the United States
Between the Rich and the Rest

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An Interview with Edward Wolff

Edward Wolff is a professor of economics at New York University. He is the author of Top Heavy: The Increasing Inequality of Wealth in America and What Can Be Done About It, as well as many other books and articles on economic and tax policy. He is managing editor of the Review of Income and Wealth.

http://www.multinationalmonitor.org/mm2003/03may/may03interviewswolff.html


"If you think about taxes that reflect a family's ability to pay, a family's ability to pay is a reflection of their income, but also of their wealth holdings. A wealth tax would not only produce more tax revenue, which we desperately need, but it would be a fairer tax, and also help to reduce the level of inequality in this country."

MM: Do you favor a wealth tax?
Wolff: I’ve proposed a separate tax on wealth, which actually exists in a dozen European countries. This has helped to lessen inequality in European countries. It is also, I think, a fairer tax. If you think about taxes that reflect a family’s ability to pay, a family’s ability to pay is a reflection of their income, but also of their wealth holdings. A broader kind of tax of this nature, would not only produce more tax revenue, which we desperately need, but it would be a fairer tax, and also help to reduce the level of inequality in this country.

MM: In broad outlines, how would you structure such a tax?
Wolff: I would model it after the Swiss system, which I think is a pretty fair system. It would be a progressive tax. In the United States, the first $250,000 of wealth would be exempt from the tax. That would exclude 80 percent of all families. The tax would increase at increments, starting out at .2 percent from about $250,000 to $500,000. The marginal rate would go up to .4 percent from $500,000 to $1 million, and then to .6 percent from a $1 million to $5 million, and then to .8 thereafter.

It would not be a very severe tax. In fact, the loading charges on most mutual funds are typically of the order of 1 or 2 percent. It would not be an onerous tax, but it could raise about $60 billion annually. Eighty percent of families would pay nothing, and 95 percent of families would pay less than $1,000. It would really only affect very rich families.