Live Debt Free

Pay off debt. Save. Give. Live your mission.

  • Blog
  • Contact Us
  • Credit Scores
  • Spending
  • Investing
  • Earn Money

$8000 Credit extended – $6500 Credit introduced

11.06.2009 by Matt Jabs //

photo credit to Infrogmation
Like this article?  Here are 3 free ways to join the community and follow the progress – Sign up for email updates, Subscribe to my RSS feed, And/or follow me on Twitter.

President Barak Obama is poised to sign a measure today that will extend and expand the first time home buyer tax credit, extent federal unemployment relief, and expand upon available business loss deductions.

The U.S. Senate anonymously approved the measure on Wednesday and the U.S. House of Representatives followed suit on Thursday to pass the extensions by a vote of 403-12.

Is it Retroactive?

**UPDATE** For clarification on exactly who is eligible, read:  Is The $6,500 Homebuyer Tax Credit Retroactive for Existing Non-First Time Home Buyers?

First thing’s first… is this bill retroactive?  A lot of people want to know!

As far as I can tell from the research I have done, the bill is NOT retroactive.  The wording in the amended H.R.3548 goes like this, “shall apply to residences purchased after the date of the enactment of this Act.”

Bummer for a lot of preexisting home buyers who could have used it… including me.

What Credits Did the Measure Extend?

  • The original $8,000 credit given to first time home buyers will be extended for an additional 6 months with a new claim deadline of April 30th, 2010.  The credit benefit deadline was previously set to expire on November 30 of this year.  To claim the credit, use Form 5405 which you file with your original or amended tax return.
  • Unemployment benefits were extended an additional 14 weeks for those who have exhausted their federal aid or will do so by the end of the year.  In states where the unemployment rate is at or above 8.5% the benefits were extended an additional 20 weeks.  The federal aid kicks in after the initial 26 weeks of state benefits are exhausted.

Who Was the Credit Expanded to Include?

  • A $6,500 credit will be extended to include home buyers who have lived in their current home for at least five of the last eight years.
  • The measure also raises income limits for those claiming the credit to include individuals earning up to $125,000 a year and couples earning $225,000 a year.  The previous limits were $75,000 and $150,000 respectively.
  • Please note that… any home owner who sells the home or ceases to use it as a primary residence within three years of purchase must repay the credit.
  • Any struggling business can now deduct losses for 2008 and 2009 from profits in five previous profitable years.  It was originally two previous profitable years and was extended only to small businesses.
To Be Eligible for the home buyer credits… buyers in both groups have to have signed a purchase agreement by April 30, 2010, close on the home by June 30, and must use the home as a principal residence.

Should the Government Have Extended Benefits?

This will be the 4th extension of the original $787 billion stimulus law (enacted in quarter four of last year) passed by the federal government in the past 18 months and will stretch the federal aid from 79 weeks to a record 99 possible weeks!  This amount of government intervention in unemployment aid is unprecedented in all past economic downturns, showing once again the severity of the current recession.

Although most taxpayers will take advantage of the extended credits, many are wondering where the government is getting the money from.

According to The New York Times,

Expanding the home buyers’ credit will cost about $11 billion, and the business loss deductions $10.4 billion. To pay for that, Congress further delayed a 2004 tax break for multinational corporations’ worldwide interest expenses that has never taken effect, “saving” $20.1 billion over the coming decade.

The $2.4 billion cost of the jobless benefits will be paid by extending into 2011 a surcharge on employers of $14 a worker that was enacted three decades ago as a temporary step.

What Do You Think?

Are you happy the tax credits have been extended?  Are you worried about where the money is coming from?  Are you both happy and worried?

Chime in now.

Like this article?  Here are 3 free ways to join the community and follow the progress – Sign up for email updates, Subscribe to my RSS feed, And/or follow me on Twitter.

DFA is passionately dedicated to helping people break the bondage of debt and work toward financial freedom using biblical principles.

Categories // General, Tips Tags // credit, government, homeowner, Taxes

Pay off Credit Cards VS Build Emergency Fund Savings – Me VS Suze Orman

07.17.2009 by Matt Jabs //

Pay Off Credit Cards VS Build Emergency Fund SavingsRecently I had a bit of a “tweet off” with Suze Orman because of a slight breakdown in communication between Suze, my wife, and myself…

What Happened?

Now that we are a one car family — at least temporarily — my wife takes me to & picks me up from work when…  a). I stay up too late blogging.  OR  b). I’m too lazy to ride my bike.  One or the other happens most days!

On our way home the other day she mentioned how she had been watching Suze Orman on Oprah (via our free over-the-air HD digital TV signal since I refuse to pay for television anymore) and was wondering if we were following the specific financial advice Suze was offering that day.  Despite being swayed by the advice Miss Orman was offering, Mrs. Jabs was not able to accurately relay the information to me exactly as she had heard it from the boob tube — probably more my fault than hers since I have been know to be a bad listener from time to time.

Here’s what my wife was trying to tell me, based on advice from Suze:

We should be focusing on building our Emergency Fund savings (and other savings for that matter) before paying off all our credit card debt because…

  1. If you have an emergency, you will have money saved to take care of your needs and will not have to go further into credit card debt.
  2. Many banks are closing your credit cards if you pay them off and discontinue use; so if you pay them all off & have no Emergency Fund built up, then you have NO way to pay for your emergency… not even with a card.

Here’s the way I was interpreting what she was telling me, based on advice from Suze:

We should be retaining at least part of our credit card debt so that the banks don’t shut off our cards.

As you can see there was a miscommunication from the time the information left Suze’s mouth, came through the tube, entered into my wife’s ears, proceeded to be processed through her brain, marinated awhile, passed on to my ears, was processed through what I like to call “my ingenious mind”, then was finally realized as I sat there in the passenger seat on the way home shaking my head in disagreement.

What Did I Do?

I did what any self-respecting personal finance blogger would do… I tweeted Suze Orman!  Here’s how it went down:

As you can see, we were able to resolve our differences… which I’m sure left Suze very relieved!

So What’s The Answer

As you know there is never one right answer for everybody in every situation, however… I’m going to take a crack at it!  Although I do not agree with Suze Orman on all her teaching points, we do agree on the subject of building your emergency fund; but I am going to throw in one additional piece of advice…

In most situations reaching a healthy balance is the name of the game, and the subject of Emergency Funds and Credit Card Debt Reduction is no different.  Based on this precept of proper balance, my wife & I have committed to focus our financial efforts on both.

We attack our credit card debt by focusing 75% of our available funds toward it.  We also strike a balance that works for us by putting 25% into Emergency Fund savings. This way we are simultaneously, and comfortably reducing our high interest debt and building our savings safety net.

What Do You Think?

What works for you?  Do you put all your eggs in either basket… or do you balance your eggs by spreading them out in different baskets so if you drop your one basket you’ll still have another basketful eat for breakfast?

Categories // Debt, Featured, Investing, Money Management Tags // credit, credit cards, Debt, emergency fund

Credit Card Companies Are Raising Your APR – Here’s Why & What You Can Do

05.19.2009 by Matt Jabs //

Isn’t it always a blessing to come home, check the mail, and be greeted by a handful of bills!  Don’t you just love that?

The Problem

Today I had the pleasure of getting an extra special treat from Capital One; one of my ever so thoughtful credit card providers.  Here is the letter I received from them:

apr

According to the literature, Capital One is raising my APR by nearly 7% due to “the challenging economic environment”.  This is an incredibly steep increase in interest that has been implemented in order to pass the brunt of these tough economic times from the shoulders of a credit card company over to my shoulders!  I suppose they assume I have broad, strong, healthy, able shoulders!

I Tried Negotiating

Of course being the extremely frugal chap that I am, I called the powers that be and not only attempted to halt the increase, but actually tried to have my rate lowered from the original amount of 16.24%.  In order to be successful I knew I was going to have to strategically maneuver my way through the carefully constructed deterrents of the CC company’s convoluted phone system before finally getting connected with a “customer service rep” who could “help” me.  Enter Melissa.  Melissa was a charming young lady who most likely has a couple credit cards of her own.  My wife & I tried to imagine what Melissa was like outside of the scope of her CSR job.  Here are some of the things we came up with:

  • She probably brings in around $7-$10/hour to sit on the phone all day and field calls from disgruntle Capital One “customers” such as myself all while worrying about her 6 kids and whether her 1989 Chevy Suburban would break down on the way home from work today.
  • For this measly pay she takes the brunt of the grief for the corporate policy setters a.k.a. “leaders” who are doing one of two things:
    • Sipping brandy and smoking fine cigars on their yachts – or –
    • Finalizing the terms of their corporate “bailout” program compliments of the Federal Government

I digress…

In reality, as expected Melissa did have a script she was expected to follow, so I immediately switched into CSR communication guy and worked to create a distinction between the CSR and the company in an attempt to get her on my side and perhaps increase the chances of getting my rate lowered.  It didn’t work this time.  Melissa was thoroughly unable to help me lower my APR.  The only thing she could offer me was a Balance Transfer at 0% APR for six months, but even that would have cost me 3% of the transfer with a $50 minimum, so I graciously passed.

When I directly asked her why Capital One was raising my Annual Percentage Rate by a total of 7%, she only had this answer:  “Capital One is doing this as a benefit to our customers.  During these tough economic times we need to raise our rates so we can continue to be around and serve our you our customers.”

What??  Uhghh, yack, che heh heh uhhhal…

Sorry I just threw up in my mouth a little there.  If you’re going to blatantly raise my rates from 16% to 23%, at least have the decency to elude to the fact that I’m getting screwed over.  Don’t condescend me or insult my intelligence!  **RANT OVER**

So What’s The Answer?

There are only two options we have at this point:

  • “You can choose to decline the changes to your rates and close your account.” – As stated in the wonderful mailing I received.  Going this route will terminate the card and forfeit any rewards you had accumulated.  Another potential negative is the effect this could have on your credit score.  Normally if you pay down the balance of a credit card to zero, it is in your best interest to leave that card open which will help boost your score.  If the card is closed, you are not provided that opportunity.
  • If possible just pay off any remaining balance on the card before the rate goes up. This is the option I will be pursuing.  Because I am able to eliminate my existing balance within the next 2 months, I will pursue this route which will end up having a positive effect on my credit score.  The bible advises us to, “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”  Romans 13:8 –  This is good advice and we would be wise to heed and follow it.

APR_Decline

There you have it folks, one more reason we should be doing all we can to eliminate our debt and spend less than we earn, thus granting us freedom from the likes of companies and situations like this!

DFA is passionately dedicated to helping others break the bondage of debt using biblical principles.

Categories // Counsel, Debt, Expenses, Spending Tags // apr, cards, credit, credit cards, interest, rates

  • « Previous Page
  • 1
  • 2
  • 3

Popular Posts

  • Understanding & Improving your Cash Flow
  • Credit Card Debt Reduction Handbook
  • Our Monthly Debt Reduction and Savings Statements
  • Pay off Credit Cards VS Build Emergency Fund Savings - Me VS Suze Orman
  • Credit Cards - Close 'em Shred 'em & Forget 'em!
  • More Reasons to Pay Off Credit Card Debt
  • Wise Use of Paid off Credit Cards? You Decide.
  • The Whole Armor of Personal Finance
  • One World Currency - New World Order
  • Debt Testimonials - Encouraging Success Stories!

Disclaimer

Content on Debt Free Adventure is for entertainment purposes only. Rates & offers from advertisers shown on this website may change without notice: please visit referenced sites for current information. Per FTC guidelines, this website may be compensated by companies mentioned through advertising, affiliate programs or otherwise. We respect your privacy. Privacy policy.

Popular Posts

  • Lending Club - My Review of Social Lending
  • Understanding & Improving your Cash Flow
  • Credit Card Debt Reduction Handbook
  • Our Monthly Debt Reduction and Savings Statements
  • Pay off Credit Cards VS Build Emergency Fund Savings - Me VS Suze Orman
  • Credit Cards - Close 'em Shred 'em & Forget 'em!
  • More Reasons to Pay Off Credit Card Debt
  • Wise Use of Paid off Credit Cards? You Decide.
  • The Whole Armor of Personal Finance
  • One World Currency - New World Order
  • Debt Testimonials - Encouraging Success Stories!

Disclaimer

Content on Debt Free Adventure is for entertainment purposes only. Rates & offers from advertisers shown on this website may change without notice: please visit referenced sites for current information. Per FTC guidelines, this website may be compensated by companies mentioned through advertising, affiliate programs or otherwise. We respect your privacy. Privacy policy.

Copyright © 2023 · Modern Studio Pro on Genesis Framework · WordPress · Log in