The government is looking into extending benefits in the unemployment program for the 5th (that’s right, I said 5th) time since the recession started, just a couple of years ago!  Normally, the benefits are doled out to the unemployed over 26 weeks (aka 6 months), with the option to get a 13 week extension.  Basically, this means that you can draw unemployment for 9 months before you have to go back to work, and a lot of people do just that!  They collect full benefits before even really trying to get a job!  Why, you ask?  Well, I assume for some it’s because they think it’s “free money”, but, as we all know, that’s never the case for anything.  Somebody always pays, be it the company, the taxpayers, the government (which takes its money from the taxpayers) or the consumer (who is almost always ALSO a taxpayer).  Under the new proposed benefits, the pay outs can run as long as 99 weeks…almost 2 YEARS!

The funny thing is that some studies sited in the post indicate that people are most likely to find a job when the unemployment runs out, no matter if that length of time is 2, 26 or 99 weeks.    People seem to think that because they are drawing unemployment, they economy must really be in the toilet for everyone, and so they don’t try.  However, when there is no more unemployment, they “magically” find work.  Amazing!

There are many examples of these programs being run the wrong way and abused by some of the participants.  I’m not going to get into that, because I have a feeling many of you wouldn’t want to read a post that long.  If I’m wrong, say so in the comment section, and I’d be happy to oblige!

Dan Miller draws an interesting observation, drawing a parallel between the way bears hunt and the way we as humans acquire a job.  Bears hunt more efficiently when they aren’t given food from humans…you know, when they have to hunt.  We are the same way with money and jobs.  When there isn’t somebody giving them to us, we get creative and figure out a way to do it.  Be that start our own company, go to work for someone else or sell some stuff, we will make it work.  Can’t find work in your area?  Perhaps you should move.  Think outside the box people!

The article looks at an unmarried couple who make a combined income of $50,000, and a married couple who make a combined income of $50,000.  The unmarried couple will pay only (yeah, only…ha ha) $3,076 a year under the House bill and $3,450 under the Senate bill.  If that couple decides to get married, they would have to pay $5,160 under the House bill and $5,100 under the Senate bill.  That’s a difference of between $2,084 and $1,650 respectively!  Just for deciding to get married.  The individuals that helped write the bill (democratic staff) acknowledged the existence of the penalty, but said that it couldn’t be fixed without creating other inequities.  To me, this seems like a pretty big penalty to be left in place, for fear that you would upset another group, or be unfair to others.  I mean, married couples are a pretty big group to upset!

The article has this quote from a Democratic Senate Finance Committee aide  - “The Finance Committee, along with other committees in the Senate, took pains to craft the most equitable overall structure possible, and that’s what we have here,”.  The MOST EQUITABLE bill.  So, they know it’s not fair for everyone, and one group that will pay will be married people!  This gives people an incentive to stay single.  Great!  Just what we need in this country!  A financial incentive to lose the institution of marriage.  As a country, we’re already doing things that would have been morally wrong just 20 years ago.  Gone on 2 dates with someone?  Ehh, that’s long enough to sleep together.  And we wonder why children in the 6th grade are experimenting with sex…could it be their role models?

I know that legal “mumbo jumbo” is the last thing any of us want to read or look into, but I think it’s important that we know what is and isn’t being approved with the new health care bill, especially since our politicians have a habit of sneaking in extra things when they pass a bill/law.  Be aware of your government!  Watch what they’re doing.  If you don’t, then when things don’t go your way, you have NO RIGHT to complain!

So, today’s article is No bankruptcy help for homeowners

Brief summary: The bill to modify delinquent (foreclosure) loans in bankruptcy court was voted down (51-45) in the senate this week, however, the Foreclosure Prevention Program still allows banks to modify homeowner mortgage payments to 31% of their pre tax income.

So, housing advocates say that the bill would have put pressure on loan servicers to modify loans before borrowers file for bankruptcy, and that is the key phrase here. The part that was voted down is only the part that allows judges to modify loans when people are in bankruptcy. The banks and loan servicers covering 75% of all of the mortgages across the country are already participating in this loan modification program, so they are lowering monthly payments to 31% of pre-tax income for those people who can’t make their mortgage payments.

The bill that was voted down, on bankruptcy reform, was a key part of President Obama’s foreclosure prevention plan. The plan includes a lot of incentives for banks and loan servicers to modify loans including incentive payments. One of the program’s incentives is that these loan servicers get $1,000 for each loan they modify, and even more if the borrower doesn’t redefault. That is a lot of encouragement right there!

Overall, I don’t know how I feel about this plan. I am happy that banks are lowering interest rates and and changing the type of loan (ARM to fixed rate or 15 year mortgage to 30 year mortgage) to help people stay in their homes. If the adjustment of payment rates to 31% pre tax means that the loan principle amount is not changing, (i.e., that a $200,000, 30 year loan at a fixed 7% is still a $200,000 loan, but that payment went from $1330 to $1100 because they adjusted the length of term from 30 years to 40 years and the interest rate from 7% fixed to 6% fixed), then I am completely happy for the banks to step in and help. However, that is where I draw the line. People should not be “told” that if they take on more than they can afford in the future, the government will step in and fix it for them. They need to learn personal responsibility.

Since today is April 15th, “Tax Day”, I wanted to share some information with our readers. There are 2 main sides to the “tax situation” for the average person…taxes that we pay in, and what the government does with the revenue (taxes) it collects. I will only be focusing on income taxes for today’s discussion, although there are many other ways the government collects revenue (sales tax as an example).

Every year, people pay their income tax out of every paycheck, and look forward to their “big, fat tax refund”, which is one of the worst things a person can do! First, a person elects to pay their income tax throughout the year (and usually claim dependents so that more is taken out) but they do not have to. When you pay all that money to the government throughout the year, you are giving them an INTEREST FREE LOAN! That “big, fat tax refund” is them giving you back YOUR money, that they have used all year, without paying you a dime! You should adjust your taxes accordingly, so that you are not receiving a large refund every year…keep more of your income throughout the year and use it to help you with your monthly bills, or save it, so that you, and not the government, are earning interest on your money!

Now, for the revenue the government collects…what are they spending it on? Are they using it all, or saving some? If they’re using it all, are they spending more than they have? Well, they are all good questions, and I found some interesting information in the article, Uncle Sam won’t make ends meet on CNNMoney.com. Clearly, the government is spending our money, and lots of it. The budget has rarely been balanced in the last 40 years, and this year is no different. The whole country was up in arms over the previous administrations record breaking budget deficit of $455 billion dollars, but the current deficit is on track for 3 times that number, at $1.67 TRILLION dollars. Hold onto your hats, cause this is going to be a bumpy ride! So, what are they spending the money on? Well, as the graph on the page from the link above indicates, the 4 major spending areas are the new T.A.R.P. Program (isn’t that fun) at $290 Billion, Defense at $317 Billion, Social Security at $321 Billion and OTHER at $546 Billion. The other spending areas are Medicare, Medicaid, net interest on public debt and GSE payments…but T.A.R.P., Defense, Social Security and OTHER and the big spenders. Now, the problem with all this spending is that as a nation, we are in a recession. We are paying in less money (as the article indicates) in taxes because a lot of us are out of work…so, they are spending $1.94 TRILLION and only taking in $986 BILLION! That is almost TWICE the money we’re giving them! On top of that, the proposed budget is weighing in at $3.5 TRILLION dollars, and we are still paying the same…and they wonder how we get into trouble. If individuals ran their finances like that, they would ALL be bankrupt.

So, what should you be doing? Don’t look forward to big “refunds” and instead, use this money throughout the year to better YOUR finances. Pay attention to what the government is doing! They are not only spending ALL the money we are giving them, but they are spending double that amount, while we “common folk” are in a recession. Considering that 24% of people think the government has it’s own money (meaning they don’t get it from the taxpayers…ridiculous I know…find this info at Good Government) we have not been as diligent as we should be about where our tax dollars go, and we should, because a government that is ignored by its people can do what it wants without any accountability.