Christian Finance Blog

Great news! The Treasury Department said Thursday that the special economic stimulus rebates would be distributed five days earlier than first said. The first round of rebates are expected to be sent starting Monday, April 28 rather than May 2 as previously thought.

About 800,000 tax filers will receive rebates on Monday, Tuesday, and Wednesday. An additional 5 million will be distributed on Friday. The economic stimulus plan signed in February by President Bush will distribute more than $110 billion to 130 million taxpayers.

So what are you going to do with the money? Most people I’ve talked to and read about seem like they aren’t spending it but rather paying down debt and/or boosting their emergency funds and not necessarily the economy. I’m doing the same.

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The IRS will begin to send approximately 130 million tax rebate payments to boost the economy starting on May 2. Most people will receive their rebates by July 11 if tax returns are filed by the April 15th deadline. The IRS takes about two weeks to process a return. Here’s a full schedule for the special rebate payments:

You can use the IRS’s own online calculator to figure out exactly how much of a rebate you’ll get and whether or not you’re eligible.

I’ve written about this special stimulus rebate here and here.

Source: IRS

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Warren Buffett is now the richest man in the world with an estimated $62 billion mostly due to the stock price of Berkshire Hathaway (his company). Mexican Carlos Slim is now at number two with an estimated $60 billion fortune. He was number one for a little while. Bill Gates is now number three with $58 billion. He was the world’s richest man for 13 straight years.

Buffett seems to have been born with an entrepreneurial spirit. The most well-known investor bought his first stock at age 11 and he filed his first tax return at age 13 while delivering newspapers.

What can we learn from Warren Buffett? People with wealth don’t necessarily have to flaunt it. He still lives in the same house he bought in 1958 for $31,500 and drives a Cadillac DTS. He will give away most of his fortune at his death to charity with 83% going to the Bill and Melinda Gates Foundation. He currently gives 5% of his shares in Berkshire Hathaway to charity every year.

The principles of biblical finances applies even to unbelievers. The principle of sowing and reaping applies because it is God’s law. God blesses those who give, but that shouldn’t be the reason we give! We give because we love God.

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Today President Bush is expected to sign the now $170 billion economic stimulus passed by Congress recently. He hopes that this will prevent a recession or lessen the impact. I’m not sure if it will work or not, but it sure will help a whole ton of low to middle income people. I’m not complaining about the free money!

Some changes to this bill from the $150 billion one was that tax breaks for equipment purchases by businesses, payments to disabled veterans and senior citizens were added. That’s where the extra $20 billion came from.

The rebate checks still range from $600 (for individual taxpayers) to $1,200 (for couples) plus $300 tax credit per dependent child under 17. The income cap (AGI - adjusted gross income) is also still at $75,000 for individuals and $150,000 for joint filers. If you don’t owe any income tax but had at least $3,000 in earned income or Social Security benefits you can qualify for $300 per person or $600 per couple. Also, you might be able to receive partial money if you go over the income limits. You will lose 5% over the income limit up to a certain amount.

You must file a federal tax return for the year 2007 to be eligible for the tax rebate even if you are not required to. You can expect the checks to start showing up between May and early July if you meet the April 15th tax deadline!

So what are you going to do with your tax rebate? Just leave a nice comment! I’m going to pay down debt and save some of it!

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The Fed recently cut the federal funds rate (the rate that affects consumer loans such as home equity lines of credit, auto loans, and credit cards) by a half percent after cutting it by three-quarters of a percent on January 22 in an emergency meeting. The federal funds rates now stands at 3% which is the lowest it has been in two years. The discount rate (the rate at which banks borrow from the Fed) was also cut half a percent to 3.5%.

What does this mean to you and me? The rate cuts means lower rates for borrowers but also lower rates for savers. Average 30 year mortgage rates now stand at 5.49% which is also the lowest in two years. If you’re looking to buy a home, it seems like now’s the time to buy with home prices considerably lower than even a couple years ago in some markets. It may also be time to refinance your existing home mortgage if you can save at least one percentage point or more.

You should also see lower rates for your variable credit cards. If you don’t, give your credit card company a quick call and ask them to lower the rate. If they don’t, ask for the retention department and threaten closing your account and transferring balances elsewhere. The retention department has the power to lower the rate for you. Of course, this doesn’t affect you if you pay off your credit balances off each month.

But these rate cuts also mean lower rates for your emergency cash savings in CDs and savings accounts. ING Direct now stands at 3.40% and Electric Orange is at 2.25% for balances up to $49,999 (if you want a free $25 for opening an account, let me know). FNBO Direct (which is where most of my emergency fund now sits) is at a still-great rate of 4.30%. WaMu’s online savings account now stands at 4.25%. HSBC Direct stands at 3.80%. You can check out Bankrate.com for the latest rates. But your emergency fund is not designed to make you money; it’s just there for an emergency and it’s nice to earn a little interest on it. But if you already have your 6 to 9 month emergency fund in place, it may be time to look at longer-term investments in the stock market. I absolutely love Roth IRAs and an index fund within a Roth IRA is perfect for most people! If you have a 401K offered by your employer, it may be time to increase your contributions.

One last thing to remember. Just because the rates are lower doesn’t mean you have to borrow. Remember that the goal is to save more and not spend or borrow more. But at the same time, there may be some opportunities to save some money. God Bless!

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The proposed $150 billion “economic stimulus package” by President Bush is promising rebates of between $300 and $1200 or more to the low and middle class people of the United States to help kickstart the economy by giving money to those who are most likely to spend it. Why don’t you go against the current and actually save it instead of spending it?

Here are the quick facts on the proposed plan:

1. Most single taxpayers will receive a $600 check
2. Dual-income households will receive $1200.
3. For each child (dependent) you will receive $300 each.
4. Workers who made at least $3,000 but didn’t pay taxes will receive $300 ($600 for those married and filing jointly).
5. Income limitations are $75,000 for single taxpayers and $150,000 for couples.
6. Apparently all of this is based on your 2006 tax return.

The legislation has not passed yet, although it most likely will and is being pushed strongly by President Bush. But if and when it does pass, you can expect your rebate checks to come in May or June of this year (2008). Just file your 2007 taxes just like normal.

All I can say is to not act like you’ve already got the money and spend an extra $600 on something you don’t need! I’ll probably get $600 as a single taxpayer and I’ll most likely just boost my emergency savings or pay down debt or both. All I know is that I’m not going to act like I have it and spend it before I get it. It will be a welcome surprise in my budget come May or June!

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Since ING Direct purchased and acquired ShareBuilder on November 19, 2007 for $220 million, everyone was wondering what changes would come about. Well, there’s good news! Not only did they change the color scheme, but the price for real-time trades has gone down to $9.95 per trade rather than the old $15.95. That’s a 35% discount! This price brings ShareBuilder in line with other discount online brokers, but it still does not beat free stock trades with Zecco. Contact me if you want to open a Zecco account for a FREE $25 bonus!

ING Direct is the country’s largest direct bank with assets of $77 billion with about six million customers. I contacted media relations for ING regarding the changes that would come about due to the acquisition but they have not gotten back to me yet. I’m interested to see if there will be more changes since I am a customer for both ShareBuilder and ING Direct. It would be great if there were instant transfers from ING accounts to/from ShareBuilder just like the transfers between Electric Orange (checking) and Orange Savings.

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ING Direct recently dropped their Orange Savings rate from 4.30% to 4.20% due to the recent Fed rate cut. You can still get their $25 for opening an account. If you’re interested, send me an email!

WaMu’s online savings account also dropped recently from 5.00% to 4.75%. It’s still a great rate from a reputable bank with the advantage of having local branches.

As of this post, FNBO is still at 5.05% and HSBC’s at 4.50%.

Since the Fed lowered the discount rate (the rate at which it lends money to banks), many online savings accounts have followed and have lowered their rates. FNBO Direct was offering a 6% promotion but is now offering a still-respectable 5.05%. Here is an interest rate round-up from around the web:

ING Direct: 4.5% to 4.3%

ING Electric Orange: 4% to 3.5%

HSBC Direct: 5.05% to 4.5%

FNBO Direct: 6% to 5.05%

Emigrant Direct: 5.05% to 4.75%.

Bankrate has some more interest rates from online savings accounts and more. Check it out.

Expect other banks to follow. Also as of right now, Washington Mutual’s online savings is still at 5%. So your emergency funds will be earning a little less interest but loans should be cheaper. Money market accounts may seem like a better alternative if you want higher rates but some aren’t FDIC-insured. I’m still not quite sure what I going to do with my emergency fund right now. I may keep it at FNBO but I’ll keep my options open. I’m going to wait a little bit while all the banks catch up and lower rates and then see who has the best rate.

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The Dow took a huge hit today! It was the second largest point drop so far this year (-311). The biggest was -416 on February 27, 2007. The largest point drop in history was when the market opened back up on September 17, 2001 after September 11th (-685).

The thing about any drops (or gains) in the market are that they’re just paper losses (or gains). They are unrealized losses (or gains) “on paper” and they don’t really matter until you sell your investments. It’s always wise to keep things in perspective. People tend to get emotional and scared when the Dow drops. It’s never wise to be emotional when investing. That’s why many people buy high, and sell low. I had a co-worker who stopped his contributions to his 401k after a big drop a few years back. That’s also not wise. You’ll miss out on the the employer match as well as any gains that usually come after a big drop.

Remember that investing is for the long term. It’s never good to look at the short term when investing (unless you’re a day trader). Just leave your 401k or IRA’s alone and review them quarterly.

So what can you do to survive a market crash? (From a CNN Money article):

Amp up your 401(k). It is true that a down market can be a time when stocks are on sale.

Adjust your risk. If your mutual funds went down more than you’re comfortable with, you may need to adjust your risk.

Determine your deadlines. As you near retirement, you need to adjust your stock/bond allocation so that there’s less risk as you near retirement. The common method is to subtract your age from 120 to figure out what percentage you should have in stocks (some say 100 if you’re more conservative). So if you’re 30 years old you should have approximately 90% of your investments in stocks.

Spread your bets. Owning an international or overseas fund can be a hedge against big drops here in the U.S. Often when the U.S. market suffers, the international markets are doing well. Being diversified is the key!

Source: CNN Money