By Xin Lu

In my last article I wrote about the one aspect of the $300 billion dollar housing bailout that I thought made sense, but the full text of the bill known as H.R. 3221 is over 700 pages so it is too complex to discuss in any one blog post. Today I shall highlight some of the more questionable and even dangerous aspects of the bill.

Loose underwriting standards for troubled homeowners - In a section called "Flexible Underwriting Criteria", the bill states that The Oversight Board will "ensure that each mortgagor under a mortgage insured under this section has a reasonable expectation of repaying the mortgage, taking into consideration the mortgagor's income, assets, liabilities, payment history, and other applicable criteria, but which shall not result in a denial of insurance solely on the basis of the mortgagor's current FICO or other credit scores, or any delinquency or default by the mortgagor under the existing mortgage or mortgages, or any case filed under title 11, United States Code, by the mortgagor." Basically it says that a troubled homeowner can still qualify for a new government insured loan despite bad credit and past financial mistakes. This is encouraging for those truly trying to get out of their real estate nightmares, but I imagine it will probably result in more defaults because some financially irresponsible people just never change. When those second defaults come in, tax payers will have to eat more loan losses.

Revenue recovery through home sale profits - According to Section 257 of the bill, if the FHA gives a loan to a troubled homeowner then the FHA is entitled to an exit premium. This means that when the homeowner sells the home and makes a profit the FHA can collect all or a portion of the profits. The FHA is entitled to 100% of any profits realized within one year, 80% of any profit realized within two years, 60% of any profit realized within three years, and 50% of any profit thereafter. I can see a lot of ways to get around this provision. For example, sellers and buyers can work out a deal where it looks like the seller is not making a profit, but in actuality the buyer gives the seller cash in the form of a "gift". It also does not seem clear how they will collect these profits.

Credit card and other payment processors must report transactions to the IRS - At first glance, I thought that it was strange this is in this housing bill. Apparently, the government believes that if all credit card and other monetary transactions such as PayPal are reported they are likely to receive more tax revenues. Groups and consumers concerned with privacy are very wary of this provision because many small business owners use their own Social Security Numbers as a tax ID. See more information in this article from Computer World .

More tax credits and deductions for homeowners - There are over 60 sections in this bill related to various different tax incentives. One section describes the $7500 first time homeowner tax credit that I discussed a while back in this article. Another section allows an additional standard deduction on the federal tax return for filers who do not itemize for their local property tax. The additional deduction is $350 for an individual filer or $700 for a joint return so the impact should not be very big. As I said in my previous article, I think there are enough tax credits for homeowners already.

The Treasury gets a blank check to maintain Freddie Mac and Fannie Mae - The Treasury is given the authority to buy stocks and debt in these two giant Government Sponsored Enterprises in order to keep them afloat. In short, taxpayer money will be used to cover losses Freddie and Fannie incurred. This is pretty irresponsible considering that most tax payers did not benefit from Freddie and Fannie financially when their stocks were darlings of Wall Street. Now that these companies are falling down it is the taxpayers that have to pay for the damage.

The national debt limit is raised by $800 billion - All I have to say is, why do they even bother with a limit if they intend to spend and borrow as much as they can? This increase brings the debt ceiling to $10.6 trillion, and that is equivalent to about 75% of America's gross domestic product. This will probably devalue the dollar as America becomes a more risky place for investment.

The Senate is set on voting for this bill this week and President Bush has backed off from saying that he would veto this bill so most likely it will pass. I think this bill will be very costly to every tax paying American resident. It could also have the effect of artificially propping up home prices because lenders will probably jump at the chance of getting whatever they can from the government rather than going through a long and painful foreclosure process. If the government's agenda is to advance affordable housing, then this bill is not the answer.

What do you think of this complex and far reaching bill? Do you think it will help Americans or backfire in a horrible way?

Permalink | 1 comment | Xin Lu's blog | Channel: Personal Finance, Consumer Affairs, Real Estate and Housing, Taxes

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By Myscha Theriault

Grocery costs continue to rise, and pasta is no exception. While still affordable, the days of being able to easily absorb an “oops” batch of ruined noodles into the family budget are fewer and further between.  So I called up the product rep for Garofalo’s signature pasta line to see if I could score some perfect pasta tips from an industry insider. As it turned out, owner Massimo Menna was happy to oblige. Bonus? The Garofalo folks are also throwing in a selection of their specialty pastas as a contest give away for Wise Bread readers. Read on for details on how to enter, what pasta cuts made the prize list, and of course the pasta tips from Massimo himself.  (Contest deadline is Tuesday, July 29th, 2008 at 9:00 a.m. EST)

Having previously test driven this product for an ethnic cooking blog I write, I was psyched when Garofalo wanted to do this give away. In addition to the more traditional forms of pasta we are all used to seeing at the grocery store, they offer some super sexy shapes for specialty sauces. One in particular I tried was the schiaffoni, a large oval tubular pasta hefty enough to support some seriously heavy sauce. But I digress. On to the details . . .

Massimo’s Perfect Pasta Tips

• Use enough water. Four quarts of water per pound of pasta is what he recommends. (Don’t forget to have a big enough pot on hand.)
•  Celebrate the salt.  No need to be unhealthy about it, but be liberal enough to enhance the flavor of the pasta. A good hefty pinch or two should do the trick.
• Go with the extreme heat until a full boil has been reached. Then reduce to more of a rolling boil for the duration of the cooking time.  (Speaking for myself, I’m for anything that cuts down on the mess and streamlines the cleanup process.)
• Skip the oil. Say what? This was news to me, but apparently if you are disciplined about using enough water and keeping the temperature at a rolling boil, there is no need for the use of oil to prevent the sticking of the pasta. Who knew?
• Do it al dente.  It really should have a bit of a bite, and not be soggy. Different pasta types will have different cooking times, so follow the directions on the package. Something I learned  when I tried the schiaffoni meal I mentioned above. It really is quite a thick and hearty pasta, so my eight minute rule for more basic dried pastas definitely did not apply. I had to keep checking every few minutes, as by the time I’d figured out I was “off”, the package was underneath a pile of goopy kitchen carnage.
• Save the boiling liquid. A cup or so will do you, depending on the size of your sauce batch. Not only is it a good thickening agent for your sauce, but apparently helps it stick to the noodles better. Yeah, baby!
• Don’t rinse.  This again relates to wanting your sauce to adhere to your pasta as much as possible. It’s all about flavor distribution, folks.

What Made the Cut

The prize pack cut, that is. Three different types of pasta from their signature line:

• 1 package of traditional spaghetti
• 1 package of the whole wheat penne rigate
• 1 package of the calamarata

How to Enter

Simply submit either a pasta tip or a sauce recipe by next Tuesday, July 29th at 9:00 a.m. EST. That’s it. You’ll be entered to win. Once the winning comment  is selected, we’ll contact you and put you in touch with the Garofalo product rep to initiate shipping of your prize pack.

For those of you who are interested in trying out some of their other shapes who don’t necessarily live next to a Kings, an A & P store or a Costco, these pastas are also available on Amazon. Oh, and P.S? While all pasta sauce entries are welcome, it might be fun to do this in the spirit of Wise Bread and see how many we can get that provide major yum for minimal bucks. I know you won’t let me down.

Permalink | 43 comments | Myscha Theriault's blog | Channel: Food and Drink, Freebies

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By Xin Lu

The United States House of Representatives just passed a massive mortgage bailout bill that includes many changes to the Federal Housing Administration and the Government Sponsored Enterprises. One particular change in the bill is that seller-funded down payment assistance through a third party is now prohibited in obtaining FHA loans. This in direct response to the unscrupulous behavior of many seller funded down payment assistance charities that sprang up in the past decade.

The way seller funded down payment assistance charities worked was to take a "charitable" donation from a home seller and then pass on the money to a home buyer since laws prohibit home sellers from directly giving down payment assistance to buyers. These gifts were often given to low income or low credit individuals and families and allowed them to qualify for a home loan from the Federal Housing Administration (FHA) that requires a 3% downpayment. The charity would receive a processing fee from the home seller and the home seller often bumped up the price of the home so that the amount of their "gift" would be recovered from the purchase price. Since these charities were non-profits oftentimes the home sellers received a tax deduction for their contribution. The result was that the home buyer gets to get into a home without putting anything down, but eventually had to pay back the money they received in the form of fees or increased home prices.

The pioneer of these charities is Nehemiah Corp. of America. According to this article from the Columbus Dispatch, Nehemiah received 99 percent of its revenue from donations from home sellers. In particular, it had a partnership with a home seller called Dominion which routed money for thousands of home sales in central Ohio. Some home buyers have filed suit against these companies for the extra costs they had to incur in taking the "assistance".

Some proponents of these programs say that they really do help people who have little savings get into a home, but the cost of these loans to the FHA is very high. In April, FHA Commissioner Brian Montgomery said the following: "Insured loans relying upon seller-funded down payment assistance have been demonstrated to have an unacceptably higher risk of default and foreclosure - harming borrowers they intend to help and risking the integrity of the entire FHA program and its ability to help more at-risk low- and moderate-income homeowners. Data clearly demonstrates that FHA loans made to borrowers relying on seller-funded downpayment assistance go to foreclosure at three times the rate of loans made to borrowers who make their own downpayments. We simply cannot sustain this business." Today in the news item for the bailout bill it was reported that these programs are "largely the reason why the agency's reserve has fallen by $4.6 billion".

From my point of view, it seems that these seller funded payment assistance programs were just a way for home sellers to close deals in the guise of being charitable. True charity is when nothing is expected in return. Personally, I cannot believe that these scams lasted for so long. I am glad that Commissioner Brian Montgomery looked into this problem and actually did something about it. There are legitimate down payment assistance programs such as churches that receive donation from people who are not home sellers. Though smaller in scale, these programs are still around for those who need them. I am sure that schemers are finding new ways to exploit the insured FHA loans, but at least one large hole is plugged with the current bill.

Have you been helped by a down payment assistance program? What is your take on the issue?

Permalink | 7 comments | Xin Lu's blog | Channel: Personal Finance, Consumer Affairs, Real Estate and Housing

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By Linsey Knerl

Without a doubt, there are some components to today’s beds that are just unnecessary. I see things like elaborate canopies or ornate sleigh beds and think, “Cool, but not me.” Perhaps it is the price tag they bear (or the fact that in any given 3-month period a toddler will vomit in it) that keeps me from considering anything beyond my immediate needs. I think that most can agree on the core parts of a functioning bed:

The Mattress – While you can get a little creative with the makeup of your mattress, for budget’s sake, it’s not always prudent. Today’s mattresses have really come a long way, and offer everything from organic, memory foam, pillow-top, extra-firm, and air-filled models. A great way to save money, space, and delivery hassle is to invest in an all-in-one mattress (one that requires no additional box-spring, and uses slats in the bed frame to keep everything supported.) You can pick the mattress size that suits your lifestyle, but remember that bigger is always more expensive (and this includes an increase in frame, sheets, and covering costs, as well.) If you can get away with a double or queen, it can save you a lot in the long run over the cost of that coveted California King (which wouldn’t even fit in most doorways of my home.)

Eco-friendly options are hitting the markets by the gaggle, offering everything from recycled components and organic coverings to their consumers. A recent trip to Keetsa in San Francisco turned out to be a very enlightening stop for me. The mattress (while not claiming to totally eliminate the petroleum problem of memory foam) did make use of recycled materials and tea leaf extracts to counter some of the waste and toxicity. The best perks of the product was that it was uber-comfortable, and had a unique form of odor control (all-natural, of course.) While not the cheapest on the market, they were reasonable, and with free shipping to your door, I could see myself as a customer. (And don’t even get me started on their ingenious method of vacuum-compressing the mattresses into a box that you can carry home on the public transit systems.) Check Yelp for a look at over 50 reviews on this very shoppable store.

The Frame – Unless you plan on convincing your friends that minimalist is best, putting your mattress on a frame is a must. (I won’t even go into all the problems that can occur from allowing your mattress to rest directly on the floor – bugs are enough of a mention for me.) Frames don’t have to be fancy, and some of the most functional and attractive models have come from the collection at IKEA. You can build a frame yourself (check out super-easy instructions for a platform or a simple wooden frame ), but if you can part with $200-250, you can get one ready-made to match any décor.

Simple box-like frames with clean lines will cost you the least, and they will allow for you to get a little creative with your headboard choices. (They also take up much less room than sleigh beds or elaborate frames with storage systems.) Keetsa (mentioned above) also offers a bed frame that folds in half for easy storage and transportation (and it’s made from recycled metals.) You may find a daybed frame or super-sturdy futon frame can also meet your needs.

The Head and Footboards – I never had headboards on my beds. Space almost never allowed it, and I found them to be more trouble and expense than they were worth. Since doing my recent bed-shopping experience, however, I’ve been convinced that there may be a headboard out there for me (although I’m still convinced that a nice cedar chest or ottoman makes the best foot furnishings.)

If you decide to go with a headboard, simple will cost you less. Try to avoid anything covered in cloth (unless you are a very, very neat person.) With three drooling toddlers and a proclivity towards bed rest with each pregnancy, I find that the less porous surfaces are better. Easy cleaning and maintenance leave them looking better, longer.

Very clever individuals can avoid commercial headboards altogether, using creative juices to mount most any solid, attractive, or personal object directly to the wall (just behind where the bed will be.) I’ve seen surfboards, vehicle grills, and canvas paintings used at the “head” of various beds – all giving off a sense of style that just can’t be manufactured in an offshore furniture assembly plant.

Bedding – Blankets, sheets, duvets (and duvet-covers), shams, comforters, quilts, and the like can really make a bed the place to come home to. Buying new isn’t always necessary (I love picking up handmade quilts at auctions and flea markets) but layering is helpful to regulate temperatures in areas where hot vs. cold is an hourly battle. Styles can change as often as you wash your bedding, so go bold and pick something that says “this is your room!”

Do you have a bed that screams who you are? Or do you prefer to crash anywhere (including your best friend’s couch?) Let us know what you’ve done, where you shop, and how you’ve kept it under budget. I’d love to hear from you!

(And thank you, Roger, for sharing 6 hours of bed-shopping fun with me in San Francisco – next time, let’s shop online.)

Permalink | 12 comments | Linsey Knerl's blog | Channel: Frugal Living, DIY, General Tips, Lifestyle

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By Philip Brewer

One of the most universal bits of advice from financial planners is to track your spending.  It's also one of the most universally rejected bits of financial advice--rejected by people who find it tedious and fiddly.  In the interests of making everybody happy, I'm going to come down squarely on both sides of this issue.

Anybody who's actually developed the habit of tracking their spending will assure you that it takes virtually no time at all.  So, I think the reason that people object to it is not really that it's tedious or fiddly.  The real reason that they object is that they're not the sort of person who needs to worry about every penny.

And, of course, they're right.  Although the pennies do add up, nobody makes or breaks their finances with the little indulgences here and there, whether they're $5 microbrews at the bar or splurging on the name-brand facial tissues.  What breaks your finances is usually either a huge, unavoidable expense (the uninsured loss of something you simply have to replace, medical bills, a lawsuit) or else a sharp drop in income in the face of fixed expenses that had previously been manageable.

Neither of those situations is really helped much by tracking your spending.  You know what your major fixed expenses are, and you know what your huge unavoidable expenses are.  What's to track?

Given that, why does every financial book suggest tracking your expenses?  

There's gold in your small expenses

They aren't the expenses that break your finances, but they are the expenses that make it hard to accumulate capital, which is a key step toward the security and independence that your financial planners want for you.

I'll spare you yet another overhyped example of how much money you'd have if you saved an extra $7 or $70 a week and let the interest compound, except to note that if the timeframe is the rest of your life, it amounts to quite a bit of money.

This is really the less important reason, though.

You have no idea what you spend your money on

Even if you've tracked your spending in the past--but especially if you haven't--you actually have no idea how much money you spend on that second tier of stuff, after your ten or twelve biggest expenses.  And if you knew, you'd spend that money differently.

That's the reason that all the experts want you to track your spending.  I can guarantee you that, if you actually go through the exercise, you'll discover that there are things that you spend way more money on than you realize.  Maybe it's nights out with the boys, maybe it's sodas bought out of the machine at work, maybe it's nice clothes from the department store.  I don't know--and neither do you.  That's why everybody suggests that you track your expenses.

More fundamentally, though, your spending doesn't match your true values.

If you're already tracking your spending, you've no doubt already discovered this.

If you're not tracking your spending, each small extravagance stands alone as something that gives you pleasure that's worth the price.  It's only when you start keeping track and aggregating those small extravagances that you see that they don't really stand alone--each one stands in relation to all the others.  One soda from the machine is no big deal.  A soda from the machine every day begins to add up.  But it's not the dollar total that really matters, it's the things you didn't buy, that could have been bought with that money--things that might have made you happier than the things that you did buy.

So, track your spending.  Or not.  But understand that the question is not whether you're the sort of person who needs to worry about every penny.  The question is, are you the sort of person whose spending aligns closely with your true values?  Or, are you the sort of person who doesn't know whether your spending aligns with your values or not?

Permalink | 14 comments | Philip Brewer's blog | Channel: Personal Finance, Frugal Living

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By Andrea Dickson

Open the pages of almost any magazine, or turn on the TV, and you're bombarded with ads that claim (if indirectly) that their products will make your life fuller, more rewarding, and all-around better. The message is pretty simple: spend, and you'll be so much better.

There are, however, a few beauty methods that are nearly guaranteed to make you look and feel like a million bucks, and you don't have to smash your piggy bank to get them. It's tired to talk about how beauty comes from within, so rather than worrying about the purity of your soul, here are a few ways to bring out an inner glow that don't involve liposuction or deep contemplation.

1. Get Laid

There's something about regular sex that makes people beautiful. I don't know if teenagers still talk about this stuff today, but back in my high school days, we believed that sex cleared up acne. It was probably an excuse to start having as much teenage sex as possible, but although there doesn't appear to be any direct correlation between sexual activity and zits, people who have regular, satisfying sex tend to have a glow about them.

It's not just about love, although people who are in the throes of a new, passionate relationship frequently have that shining, happy face that everyone comments on. But even if you aren't falling head over heels in love, you can still get off, be it with a partner or alone. That's right, I said it - masturbation is good for you. Not only are orgasms like little happy pills, but self-exploration is good practice for when you are no longer flying solo.

Sex gets your blood flowing. Orgasms reduce stress and increase pain tolerance due to a natural boost in oxytocin and endorphin levels. Sexual satisfaction also helps you sleep better at night, and who couldn't use a good night's sleep? In short, orgasms are good for your brain, and when your brain is happy, the rest of your body will respond in kind.

Although it's anecdotal, I have seen firsthand how being sexually satisfied can lead to attraction of the opposite sex. I'm not a remarkably pretty girl, more average than anything else, but during the times when I am experiencing a particularly happy sex life, I tend to get approached by flirtatious men no matter where I go, without any conscious change in behavior (or dress, for those of you who think single, sexually active women are harlots). It's probably related to pheromones or a general sense of well-being that attracts people to others who are happy and satisfied, but it's outwardly noticable, and it's better than any skin serum or clay mask on the market.

Sex shouldn't be one of those things that is relegated to the young, beautiful and fit. Be you fat or boney, pretty or pathetic, old or young and inexperienced - everyone needs to get off. There are magazine articles devoted to helping women pose properly in the sack so that they look more appealing to their partners - bollocks. It doesn't matter how unfortunate your 'O face' is, it's sexier than worrying about sucking in your gut or posing so that your waist looks smaller. Let it all hang out with someone who doesn't care. It's not difficult these days to find partners who are as desperate to get laid as you are. Not all online personals are geared towards people who want long-term relationships. I'm not advocating for irresponsible sex with multitudes of partners; I'm just pointing out that sexual satisfaction is an important part of a normal adulthood.

The main point: taking safety and possible consequences into consideration, get off as much you possibly can.

2. Get Some Exercise

Something about that bordering-on-Zen feeling that follows a vigorous workout is really lovely. Wrinkles get smoothed out, endorphins flow, skin is lightly flushed and smooth. Sweating clears out your pores and helps to avoid acne. Even though I personally regard the gym as a chamber of torture, I find that I look like a million bucks about an hour after huffing and puffing through a weight routine, or 30 minutes of tripping over the elliptical machine.

But it's not like you have to push yourself to the limit to get benefits from exercise. A short routine of yoga will get your blood pumping, as will a long, meandering walk around a park or city street.

Being healthy isn't necessarily about being thin. One of the prettiest women I know is plus size, but she practically leaps through the city of San Francisco with her boundless enthusiasm and energy. Men always look twice as she goes skipping past them with a big grin on her face.

3. Laugh Until You Cry

You'd never know it from the popular media, but smiling is such a simple way to immediately look better. We spend so much of our days grimacing at the computer screen, or glowering at the line in the post office, that it can be tough to bring ourselves to smile in a genuine, open manner.

When was the last time you doubled over in laughter? Laughter, like orgasms and exercise, releases hormones that reduce stress and lower blood pressure. In fact, just anticipating a good laugh can help to reduce your overall stress levels. Both hot tempered anger and laughter cause blood to flow to the cheeks, which is probably where the whole 'You're so beautiful when you're angry' saying came from.

Some people avoid smiling because they don't like their teeth, but even a genuine close-lipped smile on a normal face is more attractive than a blank stare or a glaring model with perfect features. Think about how wonderful a face that is shining with laughter looks. It doesn't matter if you laugh like a hyena or snort like a pug (like me), laughter enhances your beauty. Rent your favorite movies or watch comedy clips online. Hang out with your goofy friends. Stick duct tape on the bottom of your cat's paws and giggle at his antics. Whatever it takes. Laughter is infectious, and it is gorgeous.

4. Get Some Sun

No, I'm not talking about baking on the beach, because I'm an advocate of avoiding skin cancer whenever possible. But a daily dose of sunlight helps regulate your vitamin D levels, prevents depression, and UV light can kill acne-causing bacteria. As we all know, too much sun can damage your skin and lead to loss of elasticity, but even a leathery old woman with a happy countenance is better than a grumpy one with perfectly dewy skin.

5. Have a Glass of Wine

Assuming you're not allergic to alcohol or prone to rosacea, having a glass of wine not only gives your cheeks a healthy glow, but can give you a good dose of resveratol, a polyphenol with antioxidant properties. Sure, I might be looking for an excuse to have a glass of champagne with lunch, but as long as I'm not driving around or performing open-heart surgery after a lunchtime aperitif, what's the harm?

If you're not much of a drinker, you can get the same health benefits by enjoying fresh fruits and veggies, but you won't be nearly as fun to be around.

6. Stay Hydrated

I don't believe in drinking great quantities of water if you don't want to, and it's probably not necessary to take in the 8 daily glasses that were randomly recommended to the general public for no reason. But drinking a little extra filtered water helps keep your kidneys happy, your skin cleansed (again, the sweating helps here) and plumped, and the toxins flushed out of your system.

7. Go Easy on the Medication

It can be so easy these days to pop a pill for every little ache and pain, or to take meds when conditions start to trend in the wrong direction. As someone who has to deal with a multitude of incredibly boring conditions, I usually trust my doctors to do what's right for my health. Sometimes, though, doctors seem too busy to deal with the source of your problems and are more than happy to push a prescription across the counter at you. A couple of years ago, I counted the number of daily medications that I was taking, and they numbered eight, five of which were either unnecessary, redundant, or causing MORE problems that required other medications to combat. Overnight, I switched from a regimen of 8 medications to 3, and found myself feeling better, looking better, and experiencing none of the previous side effects that I had been plagued with.

Obviously, you should consult your doctor before changing your diet or medications, but don't be afraid to push your doctor to help you find ways around taking more medicine; on the flip side, be sure to listen to what your doctor tells you. If s/he tells you to lose weight or change your diet to avoid taking cholesterol medication, you had better take the advice seriously rather than to simply continue on as always.

So, you might be asking, I'll be better looking if I stop taking so much Ibuprofen, drink more water, and laugh uproariously while having drinking champagne and having sex in the sunshine?

Well... yes. But don't quote me on the outdoor sex part.

Permalink | 16 comments | Andrea Dickson's blog | Channel: Health and Beauty

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By Xin Lu

On July 24th, 2008, the Federal minimum wage in The United States will increase from $5.85 per hour to $6.55 per hour in accordance to the 2007 amendment to the Fair Labor Standards Act. This is a 70 cent or approximately 12% increase from last year. Are You getting a pay raise?

I am guessing that for most people the answer is "no" because many businesses already pay more than the Federal Minimum Wage to compete for workers. Additionally, more than 20 states have their own minimum wage laws that give workers higher minimum wages than the Federal rate. For example, in California the minimum wage is already $8.00 per hour this year .

Some have argued that a raise in minimum wage would hurt small businesses, but according to a survey conducted last year , only 3 percent of the small businesses they surveyed paid their workers only the Federal minimum wage, and 6 percent paid only the state minimum wage. The remaining 91%, of small businesses already pay their workers more than the minimum wage so there is not much for them to worry about.

Next year the Federal minimum wage will rise again to $7.25 and stop there until there is more legislation. Some states already index their minimum wage increases to inflation and adjust it annually so the next increase also may not have too much of an impact on businesses that already pay above the minimum wage.

As always, you should know your rights as a worker no matter where you work. If you earn close to the minimum wage, then you should check your state's labor laws for the most updated minimum wage rates. If the law says that you are supposed to receive an increase in pay then you should make sure that you are paid the right amount on the effective date. If applicable, your workplace should also display a new poster informing you of the new minimum wage rates.

Are you getting a pay raise due to this law?  Will it help you significantly in this economically challenging year? 

Permalink | 19 comments | Xin Lu's blog | Channel: Personal Finance, Career and Income, Consumer Affairs

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By Jason White

I'm pretty good around the house.  I can make most small, household repairs, and have even been known to take on a larger DIY project or two to save a buck.  However, I know my limitations, and will gladly call in the experts when I am out of my league.  Some guys just can't stand the idea of asking someone for help, because they think admitting they don't know how to do something is a sign of weakness. In fact, I think being able to admit you don't know something is a strength.  There are times when we have to push frugality aside and call in a professional, or pay for a service, because it is not practical, or not safe, or because we just plain don't know how to do something.

Injuring the Hand that Feeds You

I read an article on Yahoo Sports recently about Miami Dolphins quarterback, Josh McCown.  McCown and his brother were chopping wood and Josh injured his hand, requiring six stitches and jeopardizing his availability for the start of NFL training camp, set to open in a few weeks.  I don't know why they were out chopping wood, but I have to imagine two NFL quarterbacks would know better than to do anything that could injure their hands.  After all, a quarterback with an injured throwing hand is just about useless on an NFL roster.  Surely they could afford to have someone chop wood for them, or buy pre-split firewood.  Who knows--whatever their reason for engaging in wood-chopping activity, it has proven to be a career-threatening move, at least in the short term.

Spend More Time Earning, and Less Time Working

In some cases it makes more financial sense to pay someone to do something rather than take on a project yourself.  For example, if you need your house painted, but work in a job where you are not able to take paid leave, painting it yourself could result in a week's worth of lost wages.  But if you hired someone to do the work for you while you continued to work, chances are you will come out ahead, financially.  This is a difficult concept for the most frugal of us to understand, because the idea of paying someone to do anything evokes fear in frugal households.  It is still important to work with the person you hire to get a lower rate, perhaps by negotiating aspects of the project, or offering to do prep or clean up work.

Often times I hear stories of entrepreneurs hiring someone to read their emails, or run errands, or handle their shopping, and I think, "What a waste of money!  Why don't they just do it themselves?"  Well, it could be that "doing it themselves" takes them away from what they do best--earning money.  I often emphasize the importance of living frugally, but don't be so afraid to spend money that it costs you more in the long run.

Permalink | 10 comments | Jason White's blog | Channel: DIY

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By Philip Brewer

This post is about repurposing a trick that grown-ups use to manage a child's wants.  You know the one.  It starts with pointing at a substitute.  Then, the grown-up frames one of two questions, such that the answer is always "you don't need one."

Whatever the child wants--let's call it X--the adult can always ask one of two questions:

1. You've got a perfectly good X--you use it all the time!  Why should I buy you a new one?
2. You never use the X you've got!  Why do you need a new one?

Now, I'm going to say in a minute that this is a useful way to think about things, but before I do, I want to acknowledge that grown-ups often use this structure to play what amounts to a cruel trick.  Until the child learns the structure, there's the implication that the child could get his or her wants fulfilled by switching--abandoning use of something needs to be replaced in the one case, or going through the motions of using something that's not really useable in the other.  This, of course, is a futile maneuver, because the adult then merely switches to the alternate question.

Still, the underlying logic is entirely valid.  For pretty much anything you've got, you're either using it--which proves that you've got one that works and therefore don't need another, or else you're not using it--which proves that you certainly don't need another one.

I've had good luck in using this trick to manage my own wants.  And, since I'm a grown-up, I can do it without being obliged to go on and turn it into a cruel trick.

There's all kinds of stuff I want.  But, when I think of some new thing that I'd like to get, I can say to myself, "You don't need an iPhone--you've got a perfectly good cell phone."  I can then let my inner child and inner adult argue for a while, with the child explaining that my old cell phone has crappy internet features and the adult pointing out that I spend plenty of time accessing the internet on my computer, so why would I need to access it on my phone as well?

As the argument rages on, I can pay attention to either (or both!) sides of the adult's trick questions:  If I've got a perfectly good one that I use all the time, why do I need a new one?  If I've got one that I hardly ever use, why do I think getting a new one would make me any better off?

Since I'm in charge of my own spending, I'm in a position to let myself be convinced by my arguments.  After all, there are sometimes good answers, even though they don't work for children.  Some things that I use all the time need to be replaced because they've worn out.  Some things that I never use need to be replaced because the reason that I never use them is that I foolishly bought a crappy one that never worked well.

When I take just a minute, now and then, to treat myself like a child, I find it a little easier to make the grown-up choice.

Permalink | 4 comments | Philip Brewer's blog | Channel: Frugal Living

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By Xin Lu

Most of my highschool classmates came from middle class families that were not extremely rich. During senior year, I noticed a situation where families were not wealthy enough to reasonably pay for the costs of college, but not poor enough to receive significant financial aid. As a result, some of my classmates who got into prestigious colleges were forced to make a different choice.

Personally, I was accepted to the University of California, Berkeley with a Regents Scholarship. After filling out a FAFSA , I was determined to have no financial need so I received an honorarium of $500 per semester. On the other hand one of my classmates was determined to have a financial need because his father lost his job. The scholarship covered his tuition and even rent for him and his parents since they lived together. I thought that was great for him because he needed the support, but at the back of my mind I thought it was a bit unfair because I received the exact same scholarship, but my financial reward was about 1/20th of what he received.

My situation was not that dire because my parents could readily afford the fairly low in state tuition of Berkeley at that time. However, a couple of my other classmates chose their second choice schools because their parents were not rich enough and not poor enough to afford their first choices. One girl I knew was accepted into Harvard, but ended up choosing UC Santa Cruz because her parents could not reasonable afford the costs of Harvard, and yet at the same time the forms said that they do not qualify for financial aid because her parents could technically afford Harvard by spending every penny of their income. Another girl chose Berkeley over MIT for the same reason even though she really wanted to go to MIT. Basically, those who can afford college easily had no problems, and those who could not pay also had no worries. It is only those families that could barely afford the fees and tuition of colleges that had to make their children make a difficult decision.

At that time, I thought that the situation was extremely unfair because these classmates of mine were very bright and earned their spots at their top choice of schools. The only reason they had to give up their positions was that their parents were hardworking middle class Americans. Since all of the financial aid documents are so tied to our parents' income and assets there was not much a 17 or 18 year old could do about it. Lately, some colleges like Stanford, Harvard, Princeton, and Yale have extended their aid to middle class families because they finally realized that they are losing great students in families who are barely able to afford these schools. Regardless of these reforms, I think every year thousands of middle class students are still forced to forgo their first choice schools because of the way financial needs are determined.

However, looking back now I think that my classmates made the right choice by not choosing an expensive undergraduate education that their families could not finance. Since they are exceptional individuals they are still exceptional regardless of which college they went to (their second choice schools are great anyway). The girl that gave up MIT during her undergraduate years is now at MIT anyway in a PhD program which is financed by fellowships. Her family also does not have any debts because she chose a school that was much more affordable during her undergraduate years. Now I understand her maturity and wisdom in forgoing her first choice.

If you are a teen who had to give up your top choice school because your family is in the middle class and could not get financial aid, then I understand your angst. All I have to say is that as long as you excel in whichever college you choose, you can still be successful and perhaps end up in your first choice school again.

Permalink | 50 comments | Xin Lu's blog | Channel: Personal Finance, Lifestyle

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