The free market is not perfect. We all know of stories about unethical or corrupt businesses, but lately capitalism has been getting a bad rap. I just thought it might be nice to remind ourselves of a few of the benefits of America’s historic economic system – not because it’s perfect or because it was ordained of God or anything – but just to help us realize that capitalism is not all bad:

1. Capitalism generally drive prices lower. Businesses want your business and they know that you want to pay as little as possible. Just think about how the prices of electronics have come down over the years. I recently purchased a laptop for less than $300. A laptop that would out-perform almost any computer built before 2007. Think about it, you can probably list lots of items where the prices have come down over time.
2. Capitalism gives us a choice. I have three grocery stores within walking distance of my house. If I don’t like the prices at one, I can go to another. Gas stations, cable providers, restaurants, furniture stores all competing for my money and if I do not like the taste or the service or the price, I can find a business that I like.  I can even choice where I work or where I do not want to work. There are certainly difficulties tied to changing jobs, but if you want it bad enough and are willing to sacrifice, you have a great chance to earn an income anyway you like.
3. Capitalism drives innovation. Businesses drive profits by coming up with new ideas and better ways to do things. Just think of what life was like before email or air conditioning or microwaves. Someone had an idea and as a result, they became rich. The thing to remember is that the guy who invented the microwave was not the only one to profit from that invention – factory workers, salesmen, investors all profited from the process to heat food quickly. Innovation is all around us, certainly some of it is bad, but the vast majority is beneficial.
4. Capitalism supports charity. I was just speaking with a dentist who donates several weeks a year in Ethiopia. He can do this because his income allows him to give services away. Most charitable organizations depend on individuals to give them a certain percentage of their profits every year. People who make a lot of money, people who invested well and people who just have a little extra because of capitalism give it away to support all kinds of charitable interests. Americans gave two trillion dollars to those hurt by the tsunami disaster of their own free will!
5. Capitalism keeps us honest. Yes, I know, many people have abused capitalism for their own purposes on many occasions. However, crooks are eventually caught, poorly run businesses fail and greedy entrepreneurs almost always end up ruining their lives – that is, unless the government bails them out – but then we all know that is not capitalism! You always have the choice to patronize another company. You can even choose to pay more to an ethical company if that is your desire.

Once again, the imperfections of capitalism are many; I do not defend greed and excess. You may prefer a different type of economic system. That is fine. We can still be friends, but I will take my chances with greed and excess if my freedom is preserved.

Be a good shopper, do your homework, research the best price, frequent businesses with good service, watch every penny and you can help the businesses around you get better. Work hard, think, treat people well and maybe someday you can run one of the good companies that are out there.

Thanks for choosing to read GLBL today!

Article by Stew

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Then Jesus said to them, “Give to Caesar what is Caesar’s and to God what is God’s.” And they were amazed at him. Mark 12:17

I would like to start a discussion. I honestly do not know exactly where I stand when it comes to some of the ethical questions surrounding government controlled economies, confiscatory tax rates, the black market and necessity. Our American economy has traditionally been laisezz-faire. It called for very little government control. Our tax rates have been low relative to the rest of the world and most goods and services can be obtained at a reasonable price.

As we look around the world, we readily see that our economy is out of the ordinary. Most of the world, with few exceptions, has adopted the command economy model where government controls the means of production to varying degrees. Some economies are considered light socialism like the U.K. and most of western Europe, other economies are tightly controlled by the government to the point that they are considered communist – North Korea, Cuba, etc.  Over the past 50 years, the US economy is trending toward more and more government control. From the Federal Reserve Act in 1917 to price controls in the 1970’s to bank bailouts and national health care in the 2000’s, we are on a steady march toward a communal economy.

When government clamps down on profits, either through price controls, high taxes or single payer type systems, goods and services become scarce or so poorly made so as to be worthless. When the necessities of life cannot be provided through legal means, a black market economy inevitably springs up. I am not interested in debating the politics of all of this. Regardless of your political leanings, it is a fact that as government control increases, so does the operation of the black market.

If you are a Christian, to what extent do you or will you participate in the underground economy? Let me give a few scenarios in order to get things started:

Price controls have emptied the shelves of your local grocery store. The store can no longer afford to bring the products to the consumer at the rates set by government. You plant a huge garden in your backyard and begin to sell vegetables to your neighbors. Will you pay taxes on this money? What if in order to sell vegetables, the government forces you to obtain a license that eats into your profits?

If your child needs an operation and he is on a government waiting list. You hear of a physician who is willing to do the operation “off the books” for cash. Can a Christian participate in an underground health care economy?

You need gasoline for your vehicle. You cannot afford the gasoline from the state-sanctioned provider, but you know that your neighbor gets fuel “tax free” from a farmer who has his own tank and is allowed to purchase gasoline wholesale as long as it is used for crop production.

You start a home daycare that is not licensed by the state because you cannot afford the license, the reqired upgrades to your home and the accompanying taxes. Nonetheless, you care for your friend’s children in exchange for cash under the table every day.

You need to send a package to a relative in another state. There is only the government run package service and you know that in order for your package to be delivered, you must bribe the worker who processes your order.

Do you report every bit of income and pay taxes on it?

The government requires everyone to use the pharmaceuticals provided by the state-run healthcare, however the drugs are in scarce supply, furthermore, you read about a drug that might be much better for your situation. You find out that some people are smuggling that particular drug from Canada and you can get some medicine for a small, under the table fee.

I cannot answer every one of these questions/scenarios completely. God makes it clear that Christians are to submit ourselves to government, but does that include when the life or well-being of a child or loved one is at stake? I would like to hear from you because in order to set my ethics in these matters, I need to hear as many perspectives as possible. And if you do not share my view that we are headed for a culture where the black market is a big part of our lives, that’s fine – I would still like to hear your perspective on how a Christian should deal with the issue of the underground economy. - Article by Stew

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Given our current economic trend, people are looking for all kinds of ways to save money and reduce expenses.  One such way that is being highly touted by the media is Recession Gardening.  Recession Gardening is such the fad lately, that even major news outlets like CNN and MSNBC are publishing stories about it.

We started a vegetable garden this year.  We’ve wanted a nice one for years but never had the room.  When we purchased our current house in October, we finally had the room the grow the garden we had been wanting to for years.  Has it helped cut a food bills?  Maybe a little, but its been more fun and rewarding than anything.

I was reading an interesting perspective on recession gardening recently and I’ll have to say I agree with the perspective.  For many, growing a garden is a fad.  Vegetable gardening is something that they’ll do while times are tight, but once the economy recovers and things get back to normal, the vegetable garden will grow over with weeds and just become part of the yard again.  Some I’m sure are finding that the garden is saving them money, and I really hope that others are finding that it’s more than a money saving effort, but it’s fun.

My wife and I love working in the garden, and so do our kids.  Sure, they can’t stand tiling it, and weeding it but they absolutely love going up each to check on the growth and picking the vegetables that are ready.  While not big vegetable eaters, something about growing them and picking them themselves has changed their appetites for eating them.

My favorite part of the recession gardening perspective provided by the article was:

While I know that to our ancestors, an abundant garden meant survival, I hardly think we’re in that boat now. Nor do I think we will be again. Do I think we should grow as much of our own food as possible? Yes, of course. Do we need to know where our food comes from? Absolutely. But anything done out of fear is doomed to retain a negative connotation, especially for those who try it and fail (as so many of us fail, both at the beginning and throughout our gardening lives).

Are you gardening out of fear? If life returned to normal today would you continue gardening?   Don’t make that mistake.  Make the focus of your garden more than just a money saving opportunity.  For us, it’s time spent together as a family.  It’s hard work and the fruits of our labor.  It’s a reminder of times before a grocery store on every corner, when families relied only on themselves to survive.  Our garden is fun, and even if we had all of the money in the world we would still grow one.

Here’s a few articles on gardening that I’ve enjoyed from other personal finance bloggers that enjoy gardening:

• Square Foot Gardening Intro | Frugal Dad
• Squawkfox » DIY: Getting Dirty with Square Foot Gardening
• Square Foot Garden
• Home Gardening : What, How, And When To Plant In Your Growing …
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My family and I were driving somewhere the other day and my 14 year old started asking me some questions about the recession.  Questions like: What exactly is a recession?  Is it normal?  Will the recession stop? After answering his questions he got quiet as he thought about my answers.  A few minutes later he said: “Dad, so a recession is sort of like a financial flood.”  Whoa.

The biblical flood

Seven days from now I will send rain on the earth for forty days and forty nights, and I will wipe from the face of the earth every living creature I have made – Genesis 7:4

We all know the story of Noah and ark.  During Noah’s time, the earth was corrupt and full of violence.  God spoke to Noah, a righteous man in God’s eyes and said: I am going to put an end to all people, for the earth is filled with violence because of them. I am surely going to destroy both them and the earth. God commanded Noah to build an ark so that him, his family, and many different species of animals could survive the great flood that would soon consume the earth.  At 600 years of age, Noah began construction of an ark, a boat if you will, that was huge, even by today’s standards.

When the rains came, Noah loaded up his family and all kinds of animals into the ark and survived the flood.   The world started anew.  God said: Never again will I curse the ground because of man, even though every inclination of his heart is evil from childhood. And never again will I destroy all living creatures, as I have done. A rainbow is a sign today of God’s promise.

The recession a financial flood?

Is the recession a financial flood similar to the one experienced by Noah?  No, but there are some similarities and frankly I was taken aback by the insight of my son.  Do your kids ever do that?  I love it when mine do.

How is the recession a financial flood:

1. The recession is the result of financial “corruption”. Companies with no accountability, greed, people with huge amounts of credit use and associated debt, people purchasing more than they could afford….Well the list goes on.  The recession is a result of people going crazy with their money and honestly acting irresponsibly.
2. The recession is causing a financial cleansing. Similar to the great flood, the recession is causing a financial cleansing of sorts.  The recession is causing people to reduce their spending, live on budgets, stop using debt, and even downsize.  The recession is “cleaning” America of the poor financial practices that got us into this recession in the first place.
3. The recession is going to last a while. The great flood from the Bible lasted 40 days and 40 nights.  That’s a long time with non-stop rain.  The recession is no different and will be here for while.  How long?  Who knows, but I honestly feel we’re not even close to half way yet.  But like the flood, it won’t last forever.
4. Initiated by God. While I am sure a great many of you may disagree, I firmly believe that the recession is a tool used by God to rein us in as His children.  A recession is a way of reminding of us of how we should live and to not only improve our finances in the long haul, but to bring us closer to him as well.   I also believe that if we all lived and practiced biblical financial practices, there might not be recessions…or at least if there were they would be much smaller.  Today’s economy is just  like a huge pendulum swing with huge extremes in each direction.

In all fairness, comparing the recession to the great flood is like comparing apples to oranges, but the analogy is sound.  A recession is just a normal part of the ebb and flow of an economy.  If you just look at the history of the American economy, you will see that there are periods of highs and periods of lows (recession).

What are your thoughts?  Do you see a similarity?  Do you believe the recession is a tool used by God to train us and guide us?  Let me know what you think: Add a comment!

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My family and I are out of town this week, I am posting from my parent’s house. We are traveling to spend time with family and friends in another state. As we visit and reminisce, more than once, the conversation has turned to the state of the economy. Everyone is worried and we are all looking for strategies for surviving if things really get bad.

Let me emphasize – I am not in panic mode! My God is more than able to provide for my family and I through any financial difficulty and if He should decided not to provide? That is His will. However, we must be realistic. Proverbs says that “the wise man foresees the evil and hides himself”. The wise man does not panic, but neither does he take foolhardy risks. He is realistic about the problem and seeks a solution. That is the attitude that I tried to take as I interacted with various individuals. Positive, optimistic, but proactive. Here are some of the strategies for dealing with a “really down” economy that I overheard during the last few days:

Become a collector

One of my relatives said, “You know, I’m not really a packrat, but I have been holding on to more odds and ends these days. I’m not as quick to run to the store for a solution.” Obviously, this is not for everyone, but our grandparents and great grandparents survived the depression by finding uses for every little piece of metal or wood that was lying around. I was brought up to value a neat, clean yard and garage. Anyone who kept piles of stuff in the garage or on the back porch was considered a hermit, a miser or a redneck. As a result, we were conditioned to throw away anything that looked like junk – even though some of those items might still have value down the road.

If our economy continues to worsen, odds and ends might become valuable. Those hermits and misers and rednecks might have the last laugh . . .

Live together

This one could be tough for many of us, but the reality is that we could all survive with less living space. This does not just mean dwelling in smaller homes but many of us may be forced to move in with family members . . . parents, siblings, grandparents or :shudder: even in-laws! We have grown up in an independent culture. A culture that valued independence and retirement accounts – 401K’s, IRA’s and Social Security were supposed to take care of our parents and grandparents so that we would not have to be bothered. Retirement savings accounts are not necessarily bad, but we might have to change our lifestyle expectations. We could eventually be in a place where two or three generations are living in one household and all things will be held “in common”.

In preparation for such a time as this, most of us might want to begin cultivating better relationships with all members of our family. We never know when we might be forced to humble ourselves and depend on each other for survival. Forgiveness, loving communication, and gratefulness are all habits that we are going to have to cultivate in our lives.

Grow your own food

When I was a child, my family grew almost all of our own vegetables during the summer and even though we lived in the city, most of our neighbors did the same. Today, gardening is almost a lost art in our culture and for the last fifteen to twenty years, grocery store food has been cheaper than food we can grow ourselves. Food shortages and/or inflation could change this fact very quickly. Better be prepared.

Church

There was a time in this country where one’s church was the focal point of life outside of the family. The local assembly was a place that truly met physical, educational, and spiritual needs. Those not fortunate enough to have a family could find aid within their body of believers. Boy Scouts, sports clubs, hobbies, and entertainment venues like the local bowling alley and amusement park might become a thing of the past.

Economic hardship is not all bad

Personally, I pray and hope that our economic troubles do not worsen. Our country has been greatly blessed with unparalleled economic freedom. And while it is true that we have grown fat and lazy and imprudent with such blessings, our country has also exhibited generosity toward those in need. Our lifestyle and technology has improved the lives of millions of people all over the world. As our lifestyle shrinks, we may not be as able to help those in need all over the world, but we will be forced to reconnect with our communities, our churches and our families for survival.

This is a good thing. Out of suffering comes blessing. Our riches have made it possible for us to neglect family relationships and abuse our neighbors while assuaging our conscience by sending money to Africa or southeast Asia. Our riches have made is possible for us to purchase the love and affection of our kids by giving them “things” in lieu of actually doing any real parenting. Hopefully our children will come to value time spent with them more than the Wii’s and fancy vacations that we will no longer be able to afford to give them.

Once again, I am optimistic that things can turn around, but if they do not, what plans are you making?

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Last night I attended a Dave Ramsey Town Hall for Hope at my church. It was an outstanding presentation and I would like to offer a summary to those of you who missed it.  Ramsey is a great speaker and this presentation was no exception. He mixed sound principles with humorous, pithy sayings to create an end result that was both calming and inspiring.  The key word for the entire meeting was obviously hope and Ramsey started things off by saying that real “hope” comes from the people of our country – not necessarily Washington D.C. or our media.

Over the past twenty-five years our country has experienced unprecedented prosperity, but as a result of our financial blessings, we started to get a little fat.  Things were a little too easy and many people in our nation became careless with their finances.  Another result of this prosperity was that even when people made stupid decisions, things worked out because of the free flow of money and credit.  As Ramsey said, “Stupid was not getting a stress test, any idiot could make it.  Even a turkey can fly in a tornado.  But last year the American family had a car wreck.”

Mr. Ramsey said that the panic started last fall with some of the big banks, then it spread to Wall Street, then to Washington D.C. and finally there was a media meltdown.  He personally did not believe the panic was warranted at first, but after a trip to New York, where he spoke with friends of his in the media first-hand, he started to believe the panic.

He had encountered the spirit of fear.

As Ramsey reflected on this new found fear, he realized that he needed to claim the truth of II Timothy 1:7, “For God has not given us the spirit of fear, but of power, and of love, and of a sound mind.” As a believer, he could not allow himself to be dominated by fear, but rather to embrace hope.  “Fear is not a fruit of the spirit; fear is the antithesis of hope. Fear is false evidence appearing real.”

Later on during his presentation, Ramsey pointed out that our current economic conditions are nowhere close to how bad things were during the Great Depression, furthermore, we have had at least two recessions, one in 1975 following the Nixon resignation and the second in 1981 following the Carter administration that were worse than current conditions. We have been here before.

Our culture needs a resurgence of a short, simple word: NO!

Mr. Ramsey challenged all of us to embrace hope, but he pointed out that our way of life might need to change a little. The Great Depression was a terrible time in our nation’s history, yet the children of the Great Depression developed the virtues of creativity, thrift, self-reliance and self-control and put them to great use throughout their lifetimes. Those virtues are no longer a part of our society and it is possible that this present financial crisis will inspire a return to those valuable ideas and habits.

Perseverance is the #1 quality of successful people.

In further comments on our culture, Ramsey pointed out that we have developed an unhealthy insulation from failure:

There is an idea that no one should ever have pain, but the truth is we need to love people enough to allow them to fail. Failure is cleansing, it is corrective. Failure will turn you toward excellence. If there is no chance you can fail, there is no reason for you to be your best.

He quoted, John Maxwell, author of the book, Failing Forward,   “Success is merely a pile of failures, that you are standing on.”  We need to go back to personal responsibility. Work harder, think better. Ramsey himself faced a severe financial trial in his life and after going broke, he spent six months whining and feeling sorry for himself.  Finally, one of his friend said, “You know whose fault it is? It’s your fault – you have to fix this mess.”

Work like it all depends on us, pray like it depends on God.

Prayer is sometimes code for “I don’t want to face reality”. There are some believers who even hide laziness behind prayer. Like Dave said, “You can pray while you’re working.” Proverbs 13:4, “The diligent prosper.”

Practical advice from Dave Ramsey as we move forward

One-hundred percent of fifteen year periods in the stock market history have made money.  The stock market has come back 22% in the last seven weeks and Ramsey believes that well-run companies will be worth money in the future.  He is continuing to invest in the stock market and the the real estate market.

A fifty year low in interest rates plus pent-up demand in the housing market plus huge inventory means that the real estate market is set to come back in a big way.

“I don’t do business with big banks. I support small banks and credit unions; the small banks are safer and more personal than the big banks.”

“We need to get Congress to slow down spending; they are burning money.  Our money is becoming worth less, but our economy is not fragile enough for inflation to break us.”

“Gold is the snuggie of investments: it is a crummy investment.”

I came away from Mr. Ramsey’s presentation with renewed confidence and energy to find a way to make things work. There are hurting people in our country and we need to do everything we can to spread hope and help each other dig out of this mess.  Ultimately, God is in control and He has promised to meet our needs – but as you put this promise to the test, do it with your boots on.

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My mother in-law received word the other day that more than 10% of the people in her medium sized law firm were being laid off.  Fortunately, she wasn’t one of them but it did get me thinking about companies and they types of things I see them doing to cut back.

Here are 7 ways ways companies are cutting back this year:

Layoffs

While we as employees don’t like to admit it, the number one expense most all companies have is employees and thus the most effective way to reduce costs is eliminating jobs.  The news is currently full of announcements of companies laying off thousands of employees.  Right now, more than 12.5 million American’s are unemployed and the numbers are expected to rise, driving the unemployment to a 25 year high of 8.1%.

Travel

Another large expense for most companies is employee travel.  If you work in a company and travel frequently or work with people that do, expect to see travel budgets significantly decrease this year.  Companies are encouraging the use of technologies such as video conferencing, Live Meeting, and conference calls in lieu of travel.  Additionally, if you are traveling, expect lower caps on hotels, food, rental cars, and flights.  The days of flying first class are over.

Training

A recent survey by Wayson Wyatt showed that 35% of employers have reduced or eliminated training all together.  If you had planned on company training this year, you might want to go ahead and expect that it may be canceled.  Instead, consider self training by reading books and utilizing the internet to keep your skills sharp.

Health care

Over the past few years, I’ve seen my portion of my health care costs go up as my employer pays less and less.  I expect this trend to continue especially as health care costs continue to sky rocket.  Another way employers are cutting health care costs is by raising deductibles.  More than 18% of employees had deductibles of at least $1,000 recently, an increase of 6% since 2007.

Raises and Bonuses

Don’t expect a raise this year and if you do receive one, expect it to be low.  More than 65% of employers have reduced their raise or merit increase budgets within the last few months.  Average expected employee raise amounts for 2009 is 1.7%, 2.15% less than the current rate of inflation.  This is a great reason to look at ways to cut your spending.

Used to get a bonus each year?  Might want to set your expectations to not receive one at all this year.  Many companies have all but eliminated bonus programs or a the very least have slashed bonus budgets significantly.

Retirement Contributions

A few major companies, including General Motors have stopped contributing to employee 401k programs.  While this is currently an extreme measure, I do think you’ll see an increase in companies reducing their 401k contributions.    The good news is that in the past companies that did this only did so during periods of extreme cutbacks and lower profits.  They returned to contributing once their bottom lines improved.

Regardless of company contributions, employee 401k programs are still one of the best ways for long term savings.

Employee furloughs

One of the more extreme measures I recently read about is employers forcing employees to take unpaid furloughs in an effort to reduce overall costs.  These furloughs require employees to take days off without pay.  Furlough programs have been implemented by 11% of surveyed employers, and 6% said they planned to this year.

Furlough programs are hitting employees hard due to already tight economic conditions.  Employees impacted by furlough programs are having to find temporary employment at of often significantly reduced salaries in order to try to make ends meet.

Have you been impacted by any of the above cutbacks?  What other additional cost cutting measures have you seen or heard of?  Add a comment!

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Yesterday, President Obama rolled out another portion of his economic recovery plan, the eagarly anticipated:  Homeowner Affordability and Stability Plan (also called the Making homes affordable program).

The $75 billion dollar program which runs through June 2012 does two things: 1) Helps more home owners refinance  at new low interest rates 2) Provides incentives to lenders and mortgage servicers to restructure mortgages to more affordable levels.  Details of the program include:

• Mortgages for single-family properties worth more than $729,750 are excluded.
• Homeowners whose mortgage values exceed home value by more than 5% are not eligible.
• Interest rates can be lowered to as low as 2 percent and then if necessary, the term of the loan can be extended to a maximum of 40 years.
• The home must be a primary residence and the home may not be investor-owned.
• The home may not be vacant or condemned.
• Borrowers must provide their most recent tax return and two pay stubs, as well as an “affidavit of financial hardship” to qualify.
• Borrowers in bankruptcy are not automatically eliminated from consideration for a modification.
• Borrowers in active litigation regarding the mortgage loan can qualify for a modification without waiving their legal rights.
• Borrowers are only allowed to have their loans modified once, and the program only applies for loans made on Jan. 1, 2009 or earlier.
• Eligibility is restricted to loans originated on or before Jan. 1, 2009.
• Incentives are provided to extinguish second liens on loans modified under the program.
• Homeowners are eligible for up to $1,000 of principal reduction payments each year for up to five years.
• Separately, up to 5 million borrowers who have mortgages held by government controlled mortgage finance giants Fannie Mae and Freddie Mac should be eligible to refinance through June 2010.

Refinance at lower rates

The program targets homebuyers who have kept current on their mortgages, but have been unable to refinance due to severely falling home prices nationwide.  But here’s the catch, your loan must be owned by Fannie Mae or Freddie Mac currently. The government is working with other loan providers to get them to participate, but it’s unclear on how long this will take.  The administration is encouraging borrowers who think they qualify to call their lending institutions for more information.

Administration officials expect this program to help more than 5 million homeowners.

Incentives to Lenders and Servicers

The government is also providing incentives to lenders, servicers and borrowers to enter into “short sales” or “deed-in-lieu of foreclosure” agreements for those who can’t afford to stay in their homes. For these types of situations, the bank will agree to take back the home for less than what’s owed without filing for foreclosure.

The new program also includes a new provision to eliminate borrowers’ second mortgages, which will reduce their overall debt levels. Investors in those mortgages, who at times have blocked modifications because they don’t benefit from the adjustments, will be paid to eliminate those concerns about benefiting. Details on how much they’ll receive are yet to be announced, but are expected in the next few weeks. Lenders and servicers that get second-mortgage holders to participate will receive an additional $250.

You can contact your lender starting yesterday (March 4th) to see if they are participating in the program. Federal officials have also posted additional information for at www.hud.gov.  The site includes a self-assessment tools to see if you qualify.

What are your thoughts on the program?  Will it help?  Are you concerned that people will take advantage of this program?  Should the government even be interviening?  Add a comment and share your perspective.

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With the recent announcement of President Obama’s $787 billion economic stimulus bill, there are probably at least 787 billion different questions.  One of the top ones is “Will there be another economic stimulus check?“.  The answer is No, but…

Tax Impact

The President’s new bill takes a different approach to stimulus efforts.  Instead, the new economic stimulus bill will utilize tax cuts as one of many approaches to stimulating the economy.  Millions of US workers will begin to see about $52 extra per month in their paychecks, starting in June.  This is from a $400 tax credit that will be given out through the remainder of the year.

Couples will receive up to $800, or $104 per month.  For 2010, the tax credit would be right around $38.80 per month and $77.60 for couples per month, assuming the credit was spread out for the entire 2010 year.

Other key features of the bill that will directly impact you

The tax credits are just one of the many stimulus efforts included in the bill.  Others include:

• Sparing middle-income and wealthy tax payers from having to pay Alternative Minimum Tax.  AMT was designed 40 years ago and never adjusted for inflation correctly.
• Extension of the $1,000 child tax credit to more low-income families
• First time home-buyers who purchase homes before December 1st, would be eligible for a $8,000 tax credit
• People who buy new cars before the end of the year can write off sales tax
• Homeowners who make their homes more energy efficient can write off 30% of the costs, up to $1,500
• College Students (or parents) are eligible for tax credits up to $2,500
• If you lose your job and utilize Cobra to continue your coverage, the government will pickup 65% of the total premium for the first 9 months of coverage.

This is just a very few small highlights of the bill which covers health insurance, state funding, education, increased assistance for the poor, the environment, and law enforcement.

Will the economic stimulus bill work?

Will it work?  The jury is still out, and probably will be for some time. Although the initial reaction of the stock market didn’t make me feel real warm and fuzzy.  Regardless of whether it does or not, the bill will significantly increase our national debt.  How is that being covered?  By tomorrow’s tax payer.

Most forecasters expect the 2009 deficit to hit 1.6 trilliion dollars.  That is about 3 times the short fall from last year!  According to Fox business, “The national debt — the sum of all annual budget deficits — stands at $10.7 trillion. Or about $36,000 for every man, woman and child in the U.S.  Interest payments alone on the national debt will near $500 billion this year. It’s already the fourth-largest federal expenditure, after Medicare-Medicaid, Social Security and defense.”

The overall impact?  Hard to say, but most likely this will impact us, our children and our grandchildren through higher taxes and reduced government services (personally I think that’s a good thing).  The impact will also force additional borrowing from other countries.

What are your thoughts on the economic stimulus bill?  Do you think it’s a good thing?  When do you think we’ll start seeing any benefits, if any at all?  Share your thoughts by adding a comment!

Photo by: Lisa Brewster

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I’m pretty sure I don’t have to tell you that the price of gas is WAY down compared to a month or two ago.  Unless the soaring price of gas in the summer forced you to sell all your vehicles and ride a horse and buggy to work, you have surely seen and felt the relief at the gas pumps already.  In my area of the country we just dipped below $2 per gallon and are now in the $1.89 range.  I couldn’t be happier as I am finally able to fill my tank in one shot without feeling nauseous when I see the total cost.

Along with gas prices, the price of heating oil is also lower than it has been since I purchased my home three years ago.  Those two things alone make my life significantly less stressful as I’m not worrying about freezing and able to make it to and from work in drive instead of neutral.  Now if my memory serves me correctly, when the price of gas was on the rise, the price of….well…everything went up.  If we follow the same path as the price of gas falls, shouldn’t we be seeing relief elsewhere?

Apparently, these things take time as well.  There are several factors that go into the price of items on our shelves and gas prices are not the only thing determining cost.

• Technically most items are shipped on trucks with use diesel fuel, the price of which has not come down as quickly as gasoline.
• You must also take into consideration many larger companies purchase by contract and what is going on the shelves today may have been “bought” at a time when gas prices were considerable higher.
• Another consideration, the cost of items used to make the items we purchase everyday.  Corn and wheat prices are not lowering at a rapid rate and crop supplies are affected by weather, specifically hurricanes, floods, and drought.
• Some stores that reported a loss as they tried to keep prices low during the surge in gas prices are somewhat hesitant to change prices now until they have a better idea of how stable the oil market will remain.  Still other stores claim that pricing is really out of their hands and largely controlled by the manufacturer.

With all things considered, I look forward to seeing prices drop in other areas, but for now I will be satisfied with the relief at the pump.  How have the lower gas prices affected your day to day living?

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

Photo by: slopjop

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