July 4th, 2009 »

     Happy Independence Day!

 

    

Sphere: Related Content

Official California IOUs »

It has happened. California is handing out IOUs. Officially, they are called warrants and are redeemable at banks. Though some banks are skeptical about accepting the IOUs which have an interest rate of 3.75%. Even so, over $50 million have been issued. Which of the other states entering the new fiscal year without a budget will have the same thing happen to them?

Sphere: Related Content

Can’t Pay? Give an IOU! »

 

 

I will gladly pay you Tuesday for a hamburger, in a cartoon this was cute. For a state in the 21st Century it’s not. California’s budget woes will make the state start handing out IOUs. This is a very dire situation. People who depend on that money can’t give their creditors IOUs. What can they tell their creditors or utilities? We can’t pay you because we’re not getting my money. Even though the money isn’t directly for government salaries the vendors who deal with the state won’t receive payments which are used for salaries and their own business expenses.

 

Some states are notoriously slow in making payments to vendors but regular workers always had priority. Who will be next if the state won’t be able to pay its creditors? Furlough days for government workers is the pejorative buzzword that has been going around. The small vendors and businesses that aren’t getting money from the state will contribute to the further decline in the money problems.

 

If an agreement is reached before 4 p.m. CST then the IOU would just be nothing more than a bad dream. Otherwise, those who deal with the state of California as a customer may have to face some budget woes of their own.

 

The state’s long-term bond rating is in jeopardy, as well. It already has the worst credit rating in the nation.

Fitch Ratings last week downgraded the state’s long-term general obligation bonds to A-, from A, and placed them on a negative ratings watch, signaling the company’s concern about California’s ability to solve its liquidity crisis.

 

Just like individuals, those with the worst credit ratings have to pay more to borrow money which will cost the taxpayers more in the long run.

Sphere: Related Content

State Tax Woes »

 

Illinois, California, Pennsylvania, Connecticut, Arizona, Mississippi, and Ohio.

 

What do these states all have in common? As of today, they have no state budget. July 1 is the beginning of a new fiscal year for many states (and companies) and this group of states has failed to pass a new budget for the next year. The majority of the states are facing budget short falls which make citizens face the realities of two things – fewer services and more taxes.

 

The problem is that budgets are based on taxes which generate income for states. Since there are many more people who are out of work, this affects the income for the state and conversely people need more public services which means that states have to spend more for public assistance and other programs.

 

Several states are raising taxes in order to balance the budget or to close the shortfall gap. No one really likes paying taxes, but if it were between being jobless or underemployed and having a good job, paying additional taxes while being employed would be what people would do.

 

Property taxes also generate a significant amount of money for localities and states. When the housing market tanked, many people were stuck with the same tax rate or higher because they are paying a hidden tax for those foreclosed properties. Also, with more unemployed people using public services such as health care because they can’t afford a direct health plan, or bridge coverage then if an emergency happens, they go to a hospital or free health care facility.

 

Rethinking how tax money will be used at this point will only do so much. But when you have states like California which lost a great deal of revenue because of property taxes and then more people will have to be laid off because of it, this brings to light a different problem – have our taxes been used wisely or can taxes be levied on people in another way?

 

For additional sales tax, there are some ways around that, if you buy things on sale, used or online you pay less tax. Another way, is to go to an area that has a lower tax rate. Generally grocery items have a lower tax rate, so you don’t pay as much, and fewer taxes are collected. Increasing the income tax only works if people are employed and even then if people aren’t gainfully employed there may be very little or no taxes to collect.

 

There are three states that have no shortfalls, maybe the rest of the country can seek their guidance and see what they did in order to have a balanced budget. After all, friends help friends when they are making financial mistakes – states should help each other.

 

Maybe it is time to rethink either Fair Tax or Flat Tax systems.

Sphere: Related Content

Mrs. Madoff’s Millions »

 

 

Poor Ruth Madoff.

 

Bernie Madoff’s wife is now crying broke because she has been stripped of all but $2.5 million in assets. In New York her duplex apartment was worth $7 million.

 

The fascination with money and its excesses are intriguing. Last week, I read an article about the lack of skilled trade workerswho are needed and the positions pay $22 an hour which would be over $45k a year. Additionally there were other engineering positions that employers were having difficulty filling which paid $50k+ a year. In the East, people were crying that you can’t afford anything on that wage. While in other parts of the country $45-50k annually might not get you into a fancy country club but you wouldn’t be broke either.

 

How far money will go depends on your location in the country. Real estate prices in larger coastal cities may be higher than in the middle of the country, though decent homes in good neighborhoods can still be had for people making $50k a year.

 

Mrs. Madoff who was allegedly not a part of her husband’s business dealings still gets to keep five times more than the maximum payment that claimants may receive toward their investment losses.

 

In most parts of the world, $2.5 million dollars does not make you poor. In a relative sense when you had more and lost the majority of your holdings, then a paltry $2.5 might seem like a poverty level when compared to $65 million or more. Yet, for people who lost their live savings to leave with $2.5 seems like a dream.

 

Ruth Madoff’s salon and florist (among others) no longer want her business, so she may not have to worry about her $2.5 going very fast. Some buildings don’t even want her to live there, so her millions may go a lot farther than originally thought. If people can survive on $50k a year, R.M. should be able to do it as well.

Sphere: Related Content

Job Opportunity & Investment Scams »

 

 

Ponzi schemes. When things sound too good to be true, they usually are. Even if someone is a friend, check out what they are telling you.

 

Bernie Madoff received the maximum sentence for his crime. Yet, his incarceration won’t bring back the life savings to those that he bilked out of millions of dollars.

 

He apologized.

 

“I live in a tormented state for all the pain and suffering I created,” Madoff said. “I left a legacy of shame. It is something I will live with for the rest of my life. Saying I’m sorry is not enough. I turn to face you. I know it will not help. I’m sorry.”

 

The Securities Investor Protection Corporation already has over $61 million in claims made by nearly 9,000 Madoff investors. The SIPC will also pay up to $500,000 for eligible claimants who lost money to Madoff.  The SIPC works with a trustee in the even that a brokerage firm fails and owes money to investors.  Hardship cases are also being given priority and their claims are being expedited.

 

The worst part about this is that with so many people out of work, it is possible that there are more similar illegal schemes like multi-level management and Ponzi schemes just looking for more gullible folks to participate. The unemployed need to be wary of “great opportunities” offered by a company seeking salespeople for their products and require that you bring in more people to sell or asking you to refer friends to a great opportunity.

 

When something is great or horrible you want to tell your friends. It is when things are mediocre that you say nothing. When you have a great experience anywhere you tell others – a great return of your income or a great chance to make more money. Good or bad, check it out.

 

Investigate on your own, if something doesn’t seem right even if it legitimate, then don’t go any further with a “job opportunity” or investment.  Investments are not mandatory, they are optional. When you want to work and have been out of work for a while, some work opportunities seem great – this does not mean that they are legitimate. With investments, the best option is not to put all of your money into one type of account. Nothing is certain and sincere is are many way that people have spent their money. For a job opportunity ask how much you have to spend in order to get a position. If you are required to recruit a certain number of people or do something that you are uncomfortable with, leave the opportunity.

Sphere: Related Content

Friends and Money »

 

Still want to enjoy things that you used to like vacations? Dinners with friends or vacations keeping you from some social activities? If you are un- or under-employed you might not have the same amount of money you formerly earned. Or if you were forced to take furlough days or a pay decrease then there is just less money to go around.

 

As you parents used to say when you were younger, if they are really your friends then they won’t have a problem. True friends don’t want their friends to have financial problems. If you can’t afford to go on a vacation with friends then tell them. If  you were living a larger lifestyle funded by credit cards and are trying to pay down debt, be forthright. People who only like you for your money or won’t accommodate plans occasionally so that you can do something with them aren’t your true friends.

 

Sphere: Related Content

Dress Up Your Water »

 

 

In hot weather, water is your friend.  But after a while, plain water can get boring. No problem! In the summer many stores have lemons and limes on sale. This past week I saw limes on sale, 15 for $1. One lime wedge can give you a little zip to your water.  Limes aren’t the only fruits that add extra flavor to your water. You could also use some frozen mixed berries. Also, there are single serve packages that you can add to a pint or 20 ounce glass or bottle of water, which are convenient for people who have their own bottles of water on the go.

 

Freezing your own water so that you can take it on a picnic or to have with you at work is a nice treat as well. Some containers you cannot freeze but don’t fill the bottle to the top. Add your lime wedges or other fruit before you freeze your water and you will get a nice little lift to your water for less than the price of packets.

 

Ever notice how the water in a restaurant always seems like a treat because it is extra cold? Add ice and a wedge of fruit. Even a splash of juice like cranberry, grape or grapefruit will convince you that you aren’t just drinking ordinary water.

 

There are some good unsweetened water additives, but many are not unsweetened. Check the label. Sugar free does not mean without sugar. Sugarless means no sugar. For people who want a little more zip to their water, try unsweetened beverage mixes (i.e. punch mix) and just use a dash or two. A package that is supposed to make a half gallon or so will work for several quarts of water – this is for flavoring not to make punch.

Sphere: Related Content

Keep Cool »

This morning before 8 a.m., it was 80 degrees.

 

Last week it was on the cool side for June. This mean it is time to turn on the air conditioner.

 

To save money but still stay cool, close the blinds or drapes and run the fan. This way the air conditioner doesn’t have to work as hard. The newer more efficient energy star air conditioners make a difference in your electric bill. Just because it is 90 outside, doesn’t mean that you need to have your air conditioning set at 68. Air-conditioning units also remove humidity from the air so a 72 or 74 degree setting with a fan going and shades drawn will make it very comfortable inside.

 

If you have peak periods of sun near your home, keep the curtains drawn during that time. Even if it is early, the sun can really heat up your home and your air conditioner will have to work harder. Generally, there is enough outside light, so you don’t have to turn the lights on either.

 

Fans do not use as much electricity as air conditioning units. If you aren’t home during the day, use a timer to turn the ac on an hour or so before you get there, so the house will be cooler. Keep the shades and blinds closed during the day so that your home won’t be as hot.

 

For walkers, runners and bikers, don’t go out in the peak of the day unless you have to, and drink plenty of water.

 

Stay cool!

Sphere: Related Content

Complain Assertively »

 

 

Be a pest.

 

When you notice that something in wrong on your bank statement or credit card statement, politely ask for an inquiry. Sometimes you may have to ask twice but ti will work. Two months ago I found fraudulent charges on a credit card statement, then I found double billing from a company I actually placed an order with. The fraudulent charges, I had to place an inquiry twice, but while the charges were being investigated, I didn’t have to pay interest on those and checked frequently to see how the status of the inquiry was going.

 

The squeaky wheel gets the grease. Persistence pays off, but politeness along with assertiveness helps. An overly aggressive person can escalate a situation and make it difficult to get someone to help you.

 

Assertiveness and aggressiveness are two sides of the same coin but can evoke reactions from different ends of the spectrum. A polite assertive person might be able to get a situation rectified in their favor. An aggressive person who seems to be a bully or boorish (think ugly American) may not be able to have a situation resolved in their favor.

 

Assertive behavior also deals directly with the person or company that can resolve the issue. You may feel aggravated by having to repeat a situation but by maintaining a pleasant demeanor and you will be able to have your situation resolved. Recent situations where people called 911 because of problems in fast food restaurants or other retailers indicates that shoppers weren’t using assertiveness, they were being aggressive.

 

Complain to the right person. Generally, the cashier or first person you speak to isn’t the person who can help you, if you have a serious issue. Ask to speak to a supervisor. Keep asking until you get the right person to help you. When calling on the phone, take notes including the time you called, and the name of the representative. Ask for what you want – a refund, a repair, a new item. You may not get it but by asking politely, you are closer to getting what you want than if you are aggressive and get angry quickly.

 

Telling your problem to someone who cannot help you, such as on an anonymous complaint site does nothing to resolve your problem. Using the sites will help warn others of potential problems, but many situations are different.

              

Sphere: Related Content