Home Equity Loans

Sometimes people take out a home equity loan to pay credit card bills and turn their credit card debt into a secured loan on their home, putting it at risk.

Term Life Insurance

Term life

Bailout Suggestions

Bailout or Boondoggle?

It is estimated by most experts that the minimum total cost of the bailout will be between 5 and 9 trillion dollars. That is trillion not billion. How much money is that?

Let's look at this in terms of people in an effort to understand the enormous amount of money we are talking about. According to the IRS there are 140 million people who file tax returns counting those who file joint returns. According to the Census Bureau, there are 300 million people in the United States and 112 million households.

So, taking the low minimum of 5 trillion dollars, if that money were divided up among those who file tax returns or each resident of the United States or each household in the United States, what would it amount to?

• $35,000 for each tax filer or
• $16,000 for each resident or
• $44,000 for each household

If we take the higher minimum of 9 trillion dollars, if that money were divided up among those who file tax returns or each resident of the United States or each household in the United States, what would it amount to?

• $57,000 for each tax filer or
• $26,000 for each resident or
• $71,000 for each household

Or even if we take the amount already spent, 1 trillion dollars, if that money were divided up among those who file tax returns or each resident of the United States or each household in the United States, what would it amount to? 

• $7,000 for each tax filer or
• $3,000 for each resident or
• $9,000 for each household

Since spending that 1 trillion dollars, there has not been much of a real difference in the economy. If that kind of money were put into the pockets of everyday Americans, don't you think the economy would takeoff?

Auto Loans

Auto loans have dried up. An inexpensive way to prime this pump would be to allow a tax deduction for the interest on an auto loan. It is simple and yet not very costly, certainly less expensive than the current solutions being discussed. 

Foreclosed Properties

Foreclosed properties are not being purchased even with today's depressed prices. A simple and inexpensive way to solve this problem might be to eliminate the capital gains tax on the foreclosed properties purchased for the person who originally purchases the foreclosed property. 

It seems that the politicians in Washington just want to spend money. Here are a couple of suggestions that may be effective without costing a lot of money.

What Do You Think?

Political Wisdom on Taxes

Political Wisdom, is that an oxymoron?

Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it. (Ronald Reagan, 1986)

We want to take money and put it back in the pocket of middle class people, anyone making over $250,000 is going to pay more. It’s time to be patriotic. (Senator Joseph Biden, September 2008)

When asked what to tell friends whose taxes would be increased, “It’s time to be patriotic, that’s what you say to them.” (Senator Joseph Biden, September 2008)

Taxes, after all, are dues that we pay for the privileges of membership in an organized society.  (Franklin D. Roosevelt)

The taxpayer - that's someone who works for the federal government but doesn't have to take the civil service examination.  (Ronald Reagan)

My attitude is that if the economy's good for folks from the bottom up, it's gonna be good for everybody. I think when you spread the wealth around, it's good for everybody. (Senator Barak Obama, 2008)

The nation should have a tax system that looks like someone designed it on purpose.  (William Simon)

Did you ever notice that when you put the words "The" and "IRS" together, it spells "THEIRS?"  (Author Unknown)

What at first was plunder assumed the softer name of revenue.  (Thomas Paine)

The point to remember is that what the government gives it must first take away.  (John S. Coleman) 

From each according to his ability, to each according to his needs. (Louis Blanc, popularized by Karl Marx in The Communist Manifesto)

Death and taxes may be inevitable, but they shouldn't be related.  (Congressman J.C. Watts, Jr.)

The income tax created more criminals than any other single act of government. (Senator Barry Goldwater)

Collecting more taxes than is absolutely necessary is legalized robbery.  (Calvin Coolidge)

People try to live within their income so they can afford to pay taxes to a government that can't live within its income.  (Robert Half)

We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle. (Winston Churchill)

I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents... (James Madison)

To lay with one hand the power of government on the property of the citizen, and with the other to bestow it on favored individuals .... is none the less robbery because it is .... called taxation. (US Supreme Court in Loan Association v. Topeka, 1874)

This [preparing my tax return] is too difficult for a mathematician. It takes a philosopher. (Albert Einstien)

There is no such thing as a good tax. (Winston Churchill)

The hardest thing in the world to understand is the income tax. (Albert Einstein)

It would be a hard government that should tax its people one-tenth part of their income. (Benjamin Franklin)

We don't have a trillion-dollar debt because we haven't taxed enough; we have a trillion-dollar debt because we spend too much.  (Ronald Reagan)

The same prudence which in private life would forbid our paying our own money for unexplained projects, forbids it in the dispensation of the public moneys. (Thomas Jefferson)

If you would not confront your neighbor and demand his money at the point of a gun to solve every new problem that may appear in your life, you should not allow the government to do it for you. (William E. Simon)

People who relieve others of their money with guns are called robbers. It does not alter the immorality of the act when the income transfer is carried out by government. (Cal Thomas)

And so, my fellow Americans: ask not what your country can do for you. Ask what you can do for your country. (John F. Kennedy)

I think of lotteries as a tax on the mathematically challenged. (Roger Jones)

Nothing in life is certain except death and taxes. (Benjamin Franklin)

A billion here, a billion there, pretty soon it adds up to real money. (Senator Everett Dirksen)

How many zeros in a billion? This is too true to be funny.

The next time you hear a politician use the word 'billion' in a casual manner, think about whether you want the 'politicians' spending YOUR tax money.

A billion is a difficult number to comprehend, but one advertising agency did a good job of putting that figure into some perspective in one of its releases.

1.  A billion seconds ago it was 1959.
2.  A billion minutes ago Jesus was alive.
3.  A billion hours ago our ancestors were living in the Stone Age.
   
4.  A billion days ago no one walked on the earth on two feet.
5. A billion dollars ago was only 8 hours and 20 minutes, at the rate our government is spending it.
   

While this thought is still fresh in our brain... let's take a look at New Orleans. It's amazing what you can learn with some simple division. Louisiana Senator, Mary Landrieu (D) is presently asking Congress for 250 BILLION DOLLARS to rebuild New Orleans.  Interesting number... what does it mean?

1. Well... if you are one of the 484,674 residents of New Orleans (every man, woman, and child) you each get $516,528.
   
2. Or... if you have one of the 188,251 homes in New Orleans, your home gets  $1,329,787.
   
3. Or... if you are a family of four... your family gets  $2,066,012.
   

Washington, D. C <> Are all your calculators broken??" (Pastor Paul)

What Have I Missed?

Financial Indicators

Happy New Year

This new year may not be happy for everyone. I hope that for you it is a happy one. There are a number of economic conditions that could make this a difficult year for many.

Some Indicators

According to Bloomberg:

$61,871 - Maximum amount that it could cost each taxpayer for the bailout. This is based upon the number of tax returns filed last year.

$613 Billion - The amount of liabilities when Lehman Brothers filed for bankruptcy

1.7 Million - Households that owe more on their homes that they are worth

2.7 Million - The number of people unemployeed in the last year

Back To The New Year

Whether you make new years resolutions or not, now would be a good time to make a goal/resolution to get out of debt, to save a little each month, to become financially secure or whatever would be an appropriate goal for you to put your financial hous

e in order.

Have A Prosperous New Year

The Price of Gas

The Price of Gas

Back in June, 2008, when the price of gasoline was running nearly $4.00 a gallon, I ask the question Who is happy about the price of gas?. There are those who want the price of gas to be at least $4.00 a gallon.

The New York Times ran an editorial titled The Gas Tax on December 26, urging the Obama Administration and the Democratic Congress require that the price of gasoline be maintained between $4.00 and $5.00 a gallon.

The use of government power to enact such a policy would be very damaging to middle class American families. What it would do is increase the tax burden of the middle class and would encourage people to buy more fuel efficient cars. However, such social engineering would also prolong the economic crisis because families would have less disposable income and it would slow the recovery of the the investments of the retired and those nearing retirement.

Merry Christmas

Merry Christmas

We wish you a very merry Christmas and/or a happy Hanukkah.

This time of religious observance is very important to me and I hope you have a wonderful holiday.

Co-Signing Dangers

Dangers, What Dangers?

Most people want to be helpful to friends and relatives when possible. One of the ways you may be asked to help someone is to co-sign on a loan for your friend or a member of your family. However, if the borrower defaults on the loan, such a noble gesture can place you in financial difficulty. Therefore, there are some Questions to Ask Before Co-Signing. 

There are some potential risks and you should consider before you co-sign. You are not just vouching for a person, you are agreeing to satisfy the loan if the borrower cannot.

Under federal law, the lender is required to notify you of the following before you co-sign on a loan.

"You are being asked to guarantee this debt. Think carefully before you do. If the borrower does not pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility.

You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to pay late fees or collection costs, which increase this amount.

The creditor can collect this debt from you without first trying to collect from the borrower.* The creditor can use the same collection methods against you that can be used against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, that fact may become a part of your credit record.

This notice is not the contract that makes you liable for the debt."

You Should Consider The Loan as Your Loan.

When you co-sign on a loan you become personally accountable for the repayment of the loan. If the borrower is unable to make the payments, the co-signer must make those payments. Before co-signing, you should ask yourself, can I affort to make the payments if my relative or friend cannot? Studies have shown that three out of four co-signers are required to pay off the loans that go into default.

Some people in co-signing think they have only recommended the borrower to the lender. They do not understant that the co-signer has legal obligations. Co-signers should understand that they have become legally liable for the payment of the loan and treat the loan as their own.

Consult An Attorney

Seek the advise of an attorney so you will be aware of your rights as a co-signer. Consider having an attorney draft an agreement between you and the primary borrower. In some states the lender is authorized to contact the co-signer before contacting the primary borrower when a loan payment is delinquent.

Make sure you know your rights and obligations as a co-signer.

How Will It Affect Your Credit

A co-signer's credit is adversely affected if the borrower does not make the payments on time. 

Monitor The Loan

The co-signer is liable for the loan. Therefore, you, the co-signer should take personal responsibiltity to see that the loan payments are made. Monitor the status of the loan online if possible. Ask the lender to send you a monthly statement. Request the lender to notify you if the account becomes past due. 

Act as if this is your own loan, because it is and you are on the hook for repayment.

Relationships Are Often Damaged

If your friend or relative is unable to honor the the agreement, he/she may be embarrassed to face you than try to avoid contact with you. Your relationship may become awkward and difficult because of the loan status. Family relationships have been damaged and friendships have been ruined over deliquent co-signed loans. 

Read The Basics Of Co-Signing A Loan before doing anything.

What Did I Miss?