Prime Rate Credit

Fears about the safety of individual savings and nest eggs rose with the faltering of Bear Stearns Cos., an investment bank. The Bear Stearns Co. had to sell, at a drastically reduced rate from just several days prior, to J. P. Morgan Chase and Co. for just $2.00 a share.

In a ripple effect, concerns have grown that the problems on Wall Street could effect commercial banks and their individual depositors. The response to this concern is that bank accounts for individuals are backed by the FDIC. The Federal Deposit Insurance Corp. covers up to $100,000.

The coverage by the FDIC includes trusts, IRAs, certificates of deposit and savings and checking accounts. For accounts, such as retirement accounts, the coverage can be as high as $250,000. Customers of brokerages are similarly protected by a different agency.

The Federal Security Investment Protection Corp. protects the assets of investors at the brokerage firms. So, if your brokerage failed, you would still be covered. Some wonder what the limits of coverage would be by the FDIC if banks failed collectively. In 1991,502 banks failed in three years and the FDIC’s reserve ratio slid as low as negative 0.25%. The FDIC still covered all depositors at failed banks.

Last year, the FDIC was following 76 problem institutions compared with 1991 when that number was 1,430. So 76 banks are relatively easier for the FDIC to cover.

What is the tradition that you always probably think of from the Beaver Cleaver era, where home lives were seemingly perfect, almost never dysfunctional, and the guy brought home the bread while the woman was responsible for cooking, cleaning and child rearing. Very few “traditional” families exist these days, and a new role has been formed for both men and women when it comes to both financial responsibilities in the family, and how even the housework and yardwork is divied up between the two.

It used to be the traditional thought that men went out and worked all day to make money for the family to live on, while the woman stayed at home and did the laundry, scrubbed floors and took care of the kids if they had any. As a matter of fact, it was uncommon for women to be in the workforce, and most women were stay at home moms.

These days, it’s harder for women to be stay at home moms, since the financial burdens are shifting greatly to include the women more and more in the financial equation of a family’s success when it comes to the economics of the family unit.

We have more and more dual income homes now - and many mothers have even taken on the role of being the primary bread winner in lots of marriages and relationships, which was very unusual back in the days where they primarily only were employed to do more menial jobs such as secretaries and mill workers.

I talk to more and more families now that have the mother working full time and the man as well, and they are hopefully also splitting the chores at home that need daily attention as well. Speaking of, this has caused tension in many relationships as well according to relationship experts, who say that women feel now they are doing double duty. As a woman though, I do suppose that I’m a bit biased!

Well, I for one firmly believe we are smack in the middle of a recession. A recession is classified as several consecutive months, 3 at the least, where the GDP, or Gross Domestic Product, is reduced, consumer spending is down, and consumer confidence are at record lows. I would say that what has been happening lately classifies as a recession, and not even anything that has happened recently, but I think it’s a collection of what has happened over at least the last year. That’s just my opnion, from the news I read about financials in the paper and from what I’ve observed myself.

Recently me and my best girlfriend went shopping in a more upscale shopping mall out in the Cleveland area, and couldn’t believe not only how packed the parking lot, restaurants, and mall itself were, but also how many consumers were doing just that - consuming. These weren’t all just browsers, they were definitely buyers, as attested by their multiple bags of merchandise.

I have heard that some markets are really suffering though, one of them being the new and used car market. New car sales are at record lows, and manufacturers seem to making special offers on them just to move them off lots and entice people to buy them in this down market.

They are also making special financing offers like low apr credit lines and fixed low apr percentage loans so that consumers can rest assured they are getting a good deal on paying for the new car as well, which is a big ticket item for most people and requires a lot of thought and research (aka shopping around) to decide on what to purchase.

It may be a slight rally as has been seen in the stock market as well, because of the rebates that the government is giving back to tax paying citizens (and from what I understand, even non tax paying citizens will be getting a rebate). People may be going out and spending this money instead of stashing it away, and since no one has actually gotten their rebate checks yet, they are probably anticipation spending since they know they will be getting it soon. It still doesn’t take away the fact that consumers are hurting, our dollar is weak, and home sales are tanking.

Budgeting seems like one of those things that seems like such a great idea, and when written on paper, it seems to make complete and total logical sense, and even seems to be the only way to go if you want to have any hope of running a succesful financial life. However, when we step back into reality after our little budget planning systems, and are faced with both unexpected expenses as well as the occasional temptation to buy things that we know darn well are out of our budget, it becomes a lot less romantic to have a rigid budget.

Take for example by own situation. We just moved into a new house last year, and we’ve been in it for about a year now. The house was only about two years old when we moved in, so we figured we’d have minimal updating or repair to do when we moved in. The problem is that we didn’t account for how much furniture, decor, and other things we would be purchasing as first time homeowner, so it really messed up our budget from the get go.

You have to buy lawn mowers, many tools and other accessories that you didn’t have, including shovels, rakes, gardening things, maybe some landscaping items, and tons more stuff for the inside. Today, I still haven’t finished half of the rooms, and it won’t be another year before I intend to do so. It would simply break the bank if we were to try to force all of it into such a small time frame.

People are faced with these kinds of choices every day. What to wear, what to eat, and how to accessorize your home are only some of the ways that we can so creatively throw money down the prodigal toilet, so to speak, and I for one can be very good at doing that, especially if something strikes my fancy as being a “necessity” right away. For example, we are trying to take it slow and buy things that we really like that will also last a long time for our new home.

I made a trip to Bed Bath and Beyond the other day, fully intending to not really buy anything, just browse on my lunch break from work. However, I ended up purchasing a hundred dollar painting that I just had to have, because when was I going to find a deal like that again? These are the types of temptations that can sabotage your budgets, so it’s best not to go out just to “browse” as I’ve learned many a times.

Well, it seems like many states, at least with progressive-thinking leaders at the helm, are thinking about initiating their very own stimulus program, modeled after the Federal government’s tax rebate stimulus package, but of course on a smaller scale, to help boost the economies in their respective states as well as help individuals out financially in their respective states.

While the federal tax rebates range from several hundred dollars to almost a thousand dollars, and more for married couples who are eligible, the state rebates are looking to give anywhere from under one hundred dollars to a couple hundred dollars to help stimulate their local economies, and perhaps even lend a hand to the broader national economy.

Many states are also looking at helping out people who cannot pay for their mortgages, or are even having trouble paying for health insurance (like the current program Oregon is trying to promote to help subsidize it’s citizen’s health plan payment options). Some states are looking at paying for their own little stimulus packages by perhaps scaling back on certain projects, or even by forgoing some of their future investments (state economies do invest in certain things to generate money for the government).

Of course there will be some that are better able to help out their citizens, but that all depends on how their local economy is structured, as well as the local leadership since they can put the kabosh on the whole thing if they think it may be detrimental in some way. Of course, these ideas that some states have also has its critics, since some say that because state’s economies and systems are set up differently from how the federal government runs, they should leave this type of fiscal policy up to the federal government so they do not mess with other areas that need attention, like the schooling systems, roads, and other items that are left up to state government.

I just recently became re-interested in investing money, and although most people are running scared from the stock market at times like these, I
realize that it can be a truly great time for bargain hunting for securities and boning up one’s retirement portfolio, priming it for the
next bullish economy and stock market. What this means is that you can buy good stocks at a cheap price (of course, depending on what the stock
is), and can enjoy some profits if you choose to cash them in (sell them) when the market again enjoys a strong run.

But that is not the point of this writing, we wanted to talk about the,importance of diversifying one’s investment portfolio, since this
aspect of creating a safer portfolio is important, even in the best of economic times, because it lessens the likelihood that you will lose large
chunks of your retirement fund at a time, or even worse, lose it all in one shot at some point.

It’s like the old cliche goes, you shouldn’t put all your eggs in one basket. Same thing goes for investments. Your investment portfolio
should never just contain one security, or just one type of security. When I say “type” I mean the technology sector, or the retail sector, or all your
stocks shouldn’t just be in the real estate or banking sector. This way, if one sector is broken for a while, your whole investor portfolio
doesn’t completely break down with it.

Unless you feel like you are an incredibly lucky person, all your “eggs” or money, should definitely not all be in one stock. Yes, you may get
incredibly lucky and have that one stock turn out to be the next Berkshire Hathaway, which has hatched many millionaires who started with them as
a fledgling investment, but let’s face it, this is a case that is few and far between, and if the odds were stacked against your one investment you
could potentially lose your entire nest egg in one fell swoop.

Diversifying your portfolio into different stocks and types of investments is pretty easy these days, since there are so many ways to invest and
so many companies that can be purchased on the NYSE publicly and fairly easily, so it is a practice that even the most savvy investors should
adhere to at all times, even when they think they have the hottest stock tip around.

Whether you’re preparing your own taxed or have an accountant prepare them for you, you want to be sure not to miss any deductions you may be entitled to. In the medical expenses area, they are considered deductible when they exceed 7.5% of your adjusted gross income. Besides doctor’s, dentist’s and optometrist’s care, there are many less obvious items that you may overlook.

The often forgotten expenses can include blood sugar test kits, childbirth classes, drug and alcohol addiction treatment, crutches, guide dogs, wigs for individuals with medical hair loss, fertility treatments and lead based paint removal.

Taxes paid by you can be deductible also and can include sales taxes on aircrafts, boats, mobile homes and home building materials. Work related expenses may also be deductible. Some examples of these would be work related conventions, work related cell phone service costs, any fees paid to an employment agency, passport fees, if required for work, and also security clearances.

Another deduction to look at is interest paid on your home or a second home. Included in this area are first or second mortgages, home equity loans or refinanced mortgages. Gifts to charity may be itemized for deductions. You must have documentation in the form of a cancelled check or a receipt from the charity.

Some other miscellaneous deductions include alimony, day camps for children while you’re at work, fees for safety boxes used for storing taxable income stocks and bonds or investment documents. The decision to itemize will be based on whether your standard deduction against your income will be greater than the sum of all of your allowable itemized deductions. It’s worth pulling out your calculator and comparing the two figures to see which route you should take.

In recent news, if you haven’t already heard, supposedly home foreclosures have hit a 23 year record high, which means people are still having a hard time paying their mortgages, and the subprime mess may still have some long lasting effects on the banking industry, and more importantly, on the economy as a whole.

They are talking about the closing final quarter of 2007, since these statistics take time to gather, but as you know, news like that always affects the economy as it is today, because it may be a sign of things to come. The rate is pretty high too, that about almost one full percent of all homeowners are defaulting on their mortgage loans.

Even a higher and more alarming percentage in housing is that almost a whopping 6 percent of homeowners fell behind on their mortgage payments. It’s really crazy right now, because you see a lot of mortgage lenders adding a relief option to their websites, meaning they have basically been forced to offer some sort of settlement option to homeowners who are struggling to pay their mortgage payments on time, or at all. It’s truly a sign of the times, and mortgage companies are being forced to offer mortgages and determine eligibility criteria a bit more stringently now so that this crisis does not repeat itself.

I’m not sure if I am one who thinks this is going to correct itself any time soon. I like to be an optimist, but at the same time I can’t say confidently that I believe the whole housing market will bail out of trouble in the year 2008. We may be waiting a while folks, it seems a series of factors have not been on the people’s side for quite some time on this one.

I didn’t realize how important it was to find a good accountant until recently I ran into some more intricate tax situations such as investments
as well as business expenses. Up until tax year 2007, my tax situation was fairly simple, and I needed minimal guidance on how best to structure
my business and life so as to get the best tax breaks while still maintaining proper records and of course paying the proper taxes.

So, since my tax situation was pretty simple, I went for a simpler, more bare bones accounting service, and that was fine for that time, however
once I realized that I needed an accountant that I could really spend some time with strategizing for the year, as well as a business that had a tax
attorney on hand who knows all the ins and outs of the tax system so that I could do everything correctly and legitmately while still maintaining a tax
bill that wouldn’t turn my hair grey every year.

Now that I’ve gone with a more specialized and professional accounting service (again, not that I’m slamming my prior accountant, it’s just that
my situation got more complex this year), I realized that the advice seasoned and experienced accountant could offer was something that you just
couldn’t put a price on because the advice and information they had to give are so valuable, especially if you do own a business or if you make a lot
of investments that are taxable in the end.

Accountants with extensive backgrounds in handling taxes for businesses, or even just more complex tax cases are worth their weight in gold, many
times over when it comes to getting the best tax breaks and making sure more of the money you work so hard for stays in your pocket rather than sent to Uncle Sam every year. After all, you can put it back into the economy like a good citizen and help spur this weak economy!

I, for one, hate even putting this type of headline on this weblog, however, it seems to be what all the news outlets are screaming lately.
That is, among all the doom and gloom about our overall economy here in the US, there is a newly surfaced report that the Fed has announced the
outlook has gone from bad to worse. Call me crazy, but should they just maybe underplay that, or even not broadcast it so broadly?

After all, we as humans can’t help but follow the path we think we should be by what’s going on in the news, so in essence, is all this news
really furthering the depressed economy? Don’t get me wrong, I’m all for the information age and freedom of speech, but I’m just asking, when is all
this information just too much, to where it begins to set itself in our subconscious minds and actually create the economic bed we lie in for the
next several months?

With the Federal Reserve, headed by Ben Bernanke who succeeded legendary Fed chairman Alan Greenspan, authorizing two back to back cuts in the
interest rate, and then coming back and saying that the GDP, or Gross Domestic Product, which is considered to be the figure by which the health
of our economy is measured, is still going to be lower than previously forecasted, it seems that many people are losing hope that 2008 may be our
year to rebound.

Add into all this fiasco that the stock market has been pretty volatile for a while, and you’ve got people running scared from stocks and other
securities, and also taking their money out of the economy in other ways that would actually benefit it, making the whole thing a worse situation by
pulling money that might have been spent and invested in businesses which drive the economy, and exacerbating an already festering situation that is
ready to come to a head.

Many economists have said that we are already knee deep in a recession, but some other still feel we’re on the “brink” of one. Where do you stand?
How are you dealing with the recession, if at all? Economists may be split on their recession standings, but I for one believe we are already in one.
It’s difficult to tell whether a recession actually occurred until it’s over though.