I have been using my Vanguard money market account as a place to save part of my emergency (short-term) funds, and when checking it recently I saw that the rate had fallen to a miserly 0.13%! This was the lowest I had seen the rate since opening the account a few years ago, and with most high yield savings accounts providing at least 1%, or more than 6 times the money market account average, I decided it's time to move all my money back to a high yield savings account. I already have HSBC and ING accounts, but there are a number of new and updated offerings out there and as long as the institution is FDIC insured, it's best to get an account with the highest yield. You shouldn't have to pay any account or maintenance fees either. Here's a short-list of recommended savings accounts:

HSBC has historically offered a significantly higher APY than most of its competitors, has no additional fees and no minimum to get its top rates. But what made me choose HSBC a while back was it's global backing (it is the world's largest bank) and physical branch access. This can be useful for folks who prefer to deal with issues face to face, get cash out faster or who deposit a lot of checks.

ING Direct has a very simple and easy to use interface, which along with its strong brand makes it amongst the most popular accounts in the market place. The new electric orange account combines their competitive APY offering along with checking and ATM features that put in direct competition with the established banks, that offer little or no interest on their checking accounts. If you want a steady and simple high interest account, then ING Direct is the one for you.

Everbank pays out higher-than-average interest rates on most of it's savings and money market accounts and pledges to be amongst the top 5% of all providers (which is clearly demonstrated by their recent rates). The minimum opening deposit is $1,500, but after that there's no minimum balance. A bonus for new accounts provides a special interest rate on checking for the first year, and a competitive yield on their IRA, CD and money-market savings accounts.

Ally Bank (formerly GMAC Bank) is a relatively new player in the high interest savings account space, and is providing some strong competition to the market leaders like ING Direct and HSBC Direct. Their offering is quite standard relative to the leading providers but the feature I liked best was that they calculate and compound interest daily, rather than monthly or quarterly like some other big banks. The more often interest is compounded, the faster it grows. They also have the leading Certificate of Deposit (CD) offering which is good for longer term savers that like to use laddering.

ETRADE, not only offers a very competitive brokerage service, but also a top notch savings account with a straight forward multi-function user interface. Having a combined savings, brokerage and IRA account also make things very easy to manage from an administrative standpoint. This savings account is great for those who want a one-stop shop for all their financial activities.

Conclusion: I would suggest you check out the various offerings above to see their latest rates (APY) on offer and if there are any special promotions. Then pick the one you feel that best suits your saving, spending and investment needs. With saving interest rates falling across most money market funds, online high yield savings accounts can provide the best investment to park your short-term cash savings.

Related:
~ How and Why to Buy Treasury Inflation-Protected Securities (TIPS)
~ What NOT to Do With Your 401K and IRA Retirement Plans
~ Breaking Down and Improving your FICO Credit Score
~ FDIC Going Broke and Why Bank Fees will Keep Rising
~ Why Even High-Income Earners Are Not That Far From The Edge of Poverty

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With gold prices soaring, it seems that even central banks around can't get enough of the yellow metal. Recent figures still show the US atop the list, but other nation's are rapidly catching up. After all, every central bank (and the International Monetary Fund) with a large holding of American debt is worried about capital losses if the dollar continues to weaken. Gold offers reassurance and with the 2008 financial crisis still fresh in the minds of many money managers, few want to get caught in the ongoing US dollar devaluation. Another interesting analysis was in a wikipedia entry which showed trends in gold reserves/prices against other key measures like national debt and the US dollar until 2008.

If you use 2009-2010 data most figures would be higher, but the trend remains clear: gold prices seem to be just as correlated to the rising US debt, as to the falling US dollar. Given that the national debt is much more likely to get higher, thanks to two wars and all the stimulus spending, gold prices will also head higher if this correlation holds true. If you factor in higher inflation and underlying fundamentals, gold seems to have many more reasons to go higher than lower.

There are many ways to invest in gold and with all the factors driving it's price up it may be worth considering in your portfolio as a good diversification strategy or even a future growth play!

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If you’ve bought an appliance or electronic gadget in the last few years, the sales person has probably tried to sell you an extended warranty or insurance plan. Often they justify it as a relatively small purchase, and isn’t the peace of mind worth? Unfortunately, many of us are sucked in and end up buying the unnecessary and over-priced extended warranty, without ever using it. The merchant/retailer are the ones who really gain because they end up making a lot from the commission on selling you the warranty and take on no risk if the product doesn’t work (the manufacturer generally bears that). In fact given the extremely competitive electronics market, in some cases, retailers make more of a profit selling the warranty than they do selling the actual appliance or gadget!

What’s worse is that you may have to jump through hoops to actually take advantage of the warranty. For example, most extended warranties require you to mail or take the gadget/appliance to a specific repairer (and not the store you bought it from) and in many cases only refund you the “current” cost of the product - rather than when you bought it. Which in the world of electronics and gadgets could mean a significant drop in just a few months. I firmly believe that additional or extended warranties for most electronic and small appliances are a waste of money and basically overpriced insurance. In the long run, you'll do better taking on the risks of product damage myself. What’s more is that with a number of credit cards (like my Platinum American Express) you actually automatically get an extended warranty by buying the product on their card. So in addition to a standard 1 yr warranty or buyer protection on most electronic items, you can get an extra one for free. I got my Amex card before buying my big-screen TV and the annual fee was cheaper than the card's annual fee! This is a feature that most folks don’t realize and so fail to take advantage of.

Now, there are some cases when an extended warranty may be worth it. After all getting a warranty is like buying insurance and you should get it if the potential loss from a defective item would be severe. Here's the rule I would use for when to determine if I should buy an extended warranty: If the cost of replacing the item is very expensive and vital to your family or work/business, you should cough up the cash for the extended warranty. For example, if you're starting your own business and buy a $5,000 server or specialized equipment that your business cannot run without, you should cough up the cash for the extended warranty. Also, I would read the warranty terms very, very carefully, especially the process and time frame to inspect and replace defective goods.

But, if someone tries to sell you an extended warranty for a consumer discretionary item like a Laptop, Netbook or iPod, you shouldn't buy it: It's a risk you can afford to take and most of the time you'll come out ahead by not buying the warranty. Besides most discretionary gadgets and appliances nowadays come with a standard manufacture warranty (1 year in most cases) and are not that expensive to replace, so buying an extended warranty is simply not worth it.

So don’t caught up in the should or shouldn’t I debate for getting an extended warranty. Simply put, If you can afford the risk of having to buy a new one, skip the warranty. If you can't, buy it.

Related:

~ Saving Money on Calling Costs Via VOIP Phones
~ $300M Cash for Appliances Stimulus Rebate Program Covering Air Conditioners to Refrigerators to Washers
~ New 2010 Entertainment Book Review - Up to $20,000 in savings for Less Than $30
~ Why I hate shopping at Walmart
~ Five Things To Look For in Getting Low-Cost Auto Insurance Rates
~ Buy Now versus Interest Free or Pay Later (Deferred) Plans

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Despite a more stable economy, many Americans are still finding it hard to make ends meet and find that they are having to tap one of their most important and final saving vehicles – their company sponsored 401k or 403b (tax advantaged) retirement plans. There are 3 ways that cash can be taken out from a 401K account: A regular 401k loan, hardship or non-financial hardship withdrawal. Each is explained below with the applicable provisions.

401(k) Loan

The primary benefits of 401k loans is that the proceeds are not subject to taxes or the ten-percent penalty fee except in the event of default and no credit check is required to qualify. It is up to your employer and plan administrator (like Vanguard, Fidelity for larger corporate plans) to determine the minimum (normally $1,000) and maximum (up to 50% of balance) loan amounts. The government does not set guidelines or restrictions on the uses for 401k loans. The 401k loan must be paid back over the subsequent five years with the exception of home purchases, which are eligible for a longer time horizon. If you are married, your spouse will need to consent to the loan as well.

401k Loan Interest Expense - Even though you’re borrowing from yourself, you still have to pay interest on the loan amount. Most plans set the standard interest rate at prime plus an additional one or two percent. The benefit to your retirement account is that you will eventually get this money back in the form of qualified disbursements at or near retirement, and the interest you pay back into your 401k plan is tax-deductible.

The biggest disadvantage of taking out a 401k loan is that it will disrupt the dollar cost averaging process. This has the potential to significantly lower long-term results. Another consideration is employment stability; if an employee quits or is terminated, the 401k loan must be repaid in full, normally within sixty days. Should the plan participant fail to meet the deadline, a default would be declared and penalty-fees and taxes assessed.

Hardship withdrawal

If you cannot take out a 401k loan, you may still be able to get a hardship withdrawal from your plan. Many 401k plans allow employees to make a hardship withdrawal because of immediate and heavy financial needs, but the IRS has strict guidelines as to what the funds can be used for. To qualify for a hardship withdrawal, you must demonstrate (with supporting evidence) to your plan's administrator that the withdrawal is necessary due to an immediate and severe financial need which cannot be funded elsewhere. You must also confirm that the loan does not exceed the amount of the need (i.e. cannot borrow extra) and you have already obtained all distributable or non-taxable loans available under your 401k plan. If these conditions are met, the funds can be withdrawn and used for one of the following purposes:

- Costs directly related to the purchase of a principal residence for the employee (excluding mortgage payments). Certain expenses relating to the repair of damage to the employee's principal residence can also be justification for the withdrawal. Also, the new home buyer credit can still be claimed after the house is purchased.

- Expenses for medical care previously incurred by the employee, the employee's spouse, or any dependents of the employee or necessary for these persons to obtain medical care.

- Payment of tuition, related educational fees, and room and board expenses, for the next 12 months of post-secondary education for the employee, or the employee's spouse, children or dependents.

- Payment necessary to prevent the eviction of the employee from the employee's principal residence or foreclosure on the mortgage on that residence.

- Burial or funeral expenses

All 401k hardship withdrawals are subject to taxes and the ten-percent penalty. This means that a $10,000 withdrawal can result in not only significantly less cash in your pocket (possibly as little as $6,500 or $7,500 if you are in a high income tax bracket), but causes you to forgo forever the tax-deferred growth that could have been generated by those assets. 401k hardship withdrawal proceeds cannot be returned to the account once the disbursement has been made, and in most cases you're not permitted to contribute to your plan for six months after the withdrawal. The IRS also requires that the amount withdrawn be reported as gross income.

Non-Financial Hardship 401k Withdrawal

Although the investor must still pay taxes on non-financial hardship withdrawals, the ten-percent penalty fee is waived. There are five ways to qualify:

1. You become totally and permanently disabled

2. Your medical debts exceed 7.5 percent of your adjusted gross income

3. A court of law has ordered you to give the funds to your divorced spouse, a child, or a dependent

4. You are permanently laid off, terminated, quit, or retire early in the same year you turn 55 or later

5. You are permanently laid off, terminated, quit, or retired and have established a payment schedule of regular withdrawals in equal amounts of the rest of your expected natural life. Once the first withdrawal has been made, the investor is required to continue taking them for five years or until he/she reaches the age of 59 1/2, whichever is longer.

If you do need money from your 401K account, then a loan is preferable to a 401k hardship withdrawal because you start paying it straight back and incurs no penalties. As soon as your financial situation is more stable you should start contributing back into your 401K plan, which is the most tax efficient investment over the long term. Remember, your 401k is meant to provide retirement income,and should be a last-resort source of cash for expenses before then.

You can also withdraw funds early from an IRA and in many cases is more cost effective. For example, an IRA has a lifetime withdrawal exemption of $10,000 for a house with no strings attached. I’ll cover the IRA early withdrawal criteria and rules in an upcoming post, which you can get directly sent to you if you subscribe (free) via Email or RSS.

References : IRS, About.com

Related:
~ What NOT to Do With Your 401K and IRA Retirement Plans
~ New Roth IRA Conversion Rules and Contribution Limits
~ Retirement 401k and IRA Accounts - Have You Rebalanced and Reallocated based on Changing Market Conditions and Contribution Limits?
~ How to Invest in the Stock Market via Stocks, ETFs and Mutual Funds

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Following my recent post on Tips for Selling your Home, I received a reader email asking me to clarify the tax consequences of selling their home and what the potential liability/capital gain implications would be. Based on what the IRS says, here are the key tax facts to keep in mind around figuring your gains. taxes and exclusions on the sale of your home:

Amount of Taxes You Can Exclude. When you have gain from the sale of your home, you may be able to exclude up to $250,000 of the gain from your income (single filers). Taxpayers filing a joint return, the exclusion amount is $500,000. However, to claim the exclusion you need to meet the ownership and use test. The ownership test requires you to have owned the home for at least two years during the five year period ending on the date of the sale (the 2 years do not need to be consecutive). The use test requires you to prove that you have lived in the house and used it as your primary (main) residence for at least two years during the five year period ending on the date of the sale. This 2-out-of-5 year ownership and use test rule mean that you can only exclude your residential selling profits only once every two years (this is to prevent flippers from taking advantage of this tax provision).

Partial Exclusion. As with most tax deductions and credits, partial criteria also apply. If you lived in your home less than 24 months, you may still be able to exclude a portion of the gain. Exceptions are allowed if you sold your house because the location of your job changed, because of health concerns, or for some other unforeseen circumstance (e.g. natural disasters). But you will need to prove this if you are ever audited by the IRS. You calculate your partial exclusion based on the amount of time you actually lived in your home.

Reporting Requirements and Capital Gains. If you meet the ownership and use test and are able to exclude all of the gains up to $250,000/$500,000 from the sale of your home, you do not need to report the sale on your federal income tax return. However if you have gain which cannot be excluded, it is taxable and must be reported on your tax return using Schedule D as a capital gain. If you owned your home for one year or less, the gain is reported as a short-term capital gain. If your owned your home for more than one year, the gain is reported as a long-term capital gain.

Calculating Your Homes Adjusted Cost Basis: When figuring how much you have profited or lost from you home when selling you need to first work our the (adjusted) cost basis you can use in your taxes (this is different from the purchase price). Just like calculating capital gains on stocks, the adjusted cost basis for your house includes the purchase price, plus purchase costs (title, legal fees), improvements made during your stay (like a new bathroom), Selling costs (title & escrow fees, real estate agent commissions, etc.) and depreciation. Refer to the IRS guide for a listing of allowable costs.

When you include all these costs your cost basis will be at least 10 to 25% higher than the price you paid for your home - which benefits you when calculating your taxable gain or exclusion. So your final profit/gain on the house is calculated as Selling Price minus Cost Basis

Deducting a loss. You cannot deduct a loss from the sale of your home. However, under new rules if you short sale your home you may not have to pay taxes on the lower sale price or forgiven loan. Normally, mortgage debt owed to a financial institution that is cancelled or forgiven (e.g. in a short sale) is taxable. However, under the Mortgage Forgiveness Debt Relief Act of 2007, taxpayers generally can exclude income from the discharge of debt on their principal residence or mortgage restructuring. As an example suppose you borrow $300,000 to purchase a home and default on the loan after paying back $50,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $250,000, which generally is taxable income to you. However, under the new forgiveness debt relief act, you will not have to pay tax on this amount

Rules for multiple homes. If you have more than one home, you may only exclude gain from the sale of your main home and must pay tax on the gain resulting from the sale of any other home. Your main home is generally the one you live in most of the time.

An Example of Figuring the Gains and Taxes on your Home

David and his wife, Amy, bought a house in July 2002 for $290,000. Closing costs and other fees were $7,000. While they lived in their home time they replaced the roof and finished their basement for a total cost of $15,000. During the 5 years they owned the house, David and Amy moved overseas on a work assignment for one year, and rented out their home in that period. They sold the home in August 2009 for $470,000. Based on the above, here is how you would calculate their gain and potential tax liability from selling their home:

Purchase Cost = $290,000
Closing Costs = $7,000
Home Improvements (basement, bathroom) = $15,000

Cost Basis for the House: $312,000
Sale Price : $470,000

Profit/Gain on the house : $158,000

Tax Implications : Despite having left the house for 1 year, David and Amy meet both the ownership and use test. Because they file as a married couple their allowable exclusion is $500,000, which means that they owe no taxes on the sale of their home. To have any tax liability there home sale price would have had to have been over $812,000!

For more information and details on all the rules around selling a house see IRS Publication 523, Selling Your Home.

Related

~ 2010 Tax Brackets and Standard Deduction Changes
~ New 401k Contribution Limits for 2010
~ Updates & Taxes on the 2009-2010 Economic Stimulus Credits and Payments

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I recently completed the application process and got started trading with my OptionsHouse broking account (bought CAT Shares), and so far has been a very smooth trading experience. The reason I switched trading from my current brokers – E*trade and Zecco (with whom I will continue to maintain accounts) – to this relatively new online broker, is simply for the cost. They offer flat $2.95 stock trades and $9.95 all in option trades (with no minimums!), and using this special new customer promotion I got 100 free trades, which means that for the next few months my trading is all free. Signing up with them was pretty straight forward (give yourself about 20 to 30 mins) and a day or so later they FedEx you the final forms to sign and return in their pre-paid envelope. If all the paperwork is good, you should then have your full account access in a couple of days.

The best thing is that as soon as you sign up online you get a virtual account, that you can try their trading platform with (using virtual money off course). This is a good way to get an idea or their trading platform before committing any funds and also a good way for new investors to learn about trading. As you can see their online trading platform is great and for an ultra low discount broker their available research was excellent. I also had to use their live online help feature to confirm a fund transfer and found it really easy to use, and unlike a lot of helpdesk's they were able to answer my questions. If you are looking for an alternate or cheaper broker - they are definitely worth trying.

Getting Rewarded For My Costco Shopping

After moving to my new home, one store I have been visiting a lot is Costco (equivalent to Sams Club or BJ's wholesale clubs). Have never shopped there much before buying a house, I now seem to be there every other weekend and despite their low prices (which they can do because of their volume sales and in-store brands) I have probably spent over $5000 with them in under 3 months! And with the upcoming holiday season I can see myself shopping there even more. So when I found out about their expanded and upgraded no fee Amex-Costco card, I quickly signed up for it. You can earn 3% cash back for annual gasoline purchases, 3% cash back for restaurants, 2% cash back for travel, and 1% everywhere else. If I am going to spend money there, I might as well get back as much cash back/benefits as possible. Even without the Costco related benefits this card has a decent rewards program, which is hard to find following all the new credit card regulations. A final thing – make a list when you go shopping. It may not lower how much your essential spending, but at least it will reduce the amount of impulse shopping at these big warehouse stores.

I participated in the carnival of personal finance @ the Canadian Finance blog this week, and also liked these articles I came across over the last few days:

~ Travel Hacking for Noobs: How We Save Hundreds on Airfare, Get Free Accommodation, & Make Money while Overseas @ Man vs Debt
~ How to Spend Smarter This Holiday Season @ Consumerism Commentary
~ Increased efficiency – Good for earnings, Bad for workers @ Keep My Dollar
~ Is Saving for Old People? @ The Simple Dollar

Have a Good Week Folks!

Past Weekly/Weekend Updates:
~ Weekend Review: Dude - Where's My Stimulus Jobs Gone?
~ Weekly Wrap: Jobs, Housing to Buying Gold in a Low Dollar Environment
~ Moving Words on Living Life in a Presidential Eulogy

Read More...

No doubt everyone who has a company sponsored retirement account (401K, 403b) or self managed plan (IRA, Roth IRA) has read about all the right things to do like regular investing, diversification and choosing low fee funds. However, it is just as important to consider what NOT to do with your retirement accounts so that you avoid the various pitfalls and traps ahead of you, and to ensure you have enough in retirement.

1. Do NOT Borrow from your plan. A plan loan may be a convenient way to pay for a big expense—but it is not free money. You have to pay back the principal plus interest to your plan account—usually within 5 years. Loans also reduce the amount of money that's available to compound and grow. Worse, if you leave your employer before you have repaid the loan, you may be forced to repay it quickly. If you cannot, the outstanding balance is considered a taxable distribution. If you are under age 59½, you have to pay a 10% early withdrawal penalty as well. Consider the following example: Jack, who had $50,000 in his 401(k) plan account, took a $25,000 loan for a new sports car. A month later, he left his job and had to cash out of the plan. After the required 20% withholding and automatic loan repayment, Jack, who is 45 years old, received a check for only $15,000. He had to pay income taxes on that sum plus a 10% early withdrawal penalty. He was left with less than $10,000, a new car, and no retirement savings. Make sure you explore all of your borrowing options before taking a loan from your retirement account. With interest rates so low a personal bank or credit card loan may be cheaper – especially if the need is only for the short term.

2. Do NOT Contribute only as much as your company match. If your company offers a match, it is important to take full advantage of it. But contributing just enough to get the company match may not be enough. A good goal is to contribute a minimum of 9% to 12% of your income to your retirement plan, which would include any employer contributions. Ideally, higher-income workers should consider contributing 12% to 15%, including employer contributions, to maintain their current standard of living in retirement.

3. Do NOT Chase hot-performing funds. It is a mistake to chase hot performance. Just because gold or any other investment is performing well now does not mean that it will in the future. Instead, select a diversified mix of stocks, bonds, and short-term reserves that's right for you—then stick with it for the long term.

4. Do NOT Avoid risk. There's a risk to devoting a large portion of your retirement savings to short-term reserves—the risk of inflation. Inflation eats away at your investment return, giving your bucks less "bang" over time. How you invest should always be based on how long you can keep the money invested and your tolerance for taking risk. While a short-term reserve fund does offer stability, these investments do not offer much opportunity for growth. Stocks and bonds, in comparison, have historically had higher average annual returns over long periods of time, with stocks offering the greatest long-term return potential. If all, or most, of your assets are invested in a short-term reserve fund, such as a money market, you may want to consider reinvesting some of this money in stocks and bonds. No matter how conservative a long-term investor you are, consider allocating a portion of your savings to stocks to help defend your portfolio from inflation's ravages.

5. Do NOT Cash out of your plan if you leave your employer. You may be able to cash out, but you'd take on a potentially large tax liability. You would owe ordinary income tax on the distribution plus a 10% premature distribution penalty if you were under age 59½. Instead, Consider a direct rollover into a low cost IRA account (Get 100 Commission Free Trades in an E*TRADE IRA) or into your new employers 401K plan.

6. Do NOT Try to "time" the market. It's impossible to predict with any consistency the market's ups and downs and how they'll affect your account. By frequently transferring money in and out of the market, you'll likely miss out on some growth potential and increase the fund's expenses. Leave market timing to the portfolio managers. They get paid to make informed decisions about buying and selling the securities within the fund.

Reference Source: Vanguard

Related:
~ Simplifying 401K and IRA Rules Around Automatic Enrollment, Unused Vacation Contributions and Rollover Payments
~ A Statistical Economic Recovery - Is America's Recession Really Over?
~ Getting the 2009 and 2010 $250 Social Security Payment
~ Why Even High-Income Earners Are Not That Far From The Edge of Poverty
~ Smart Move: Claiming Social Security Benefits Later Rather Than Earlier

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Government incentives like the new home buyer credit and a weak economy definitely make this a buyer’s market. However thanks in large part to all the home buyer and mortgage assistance programs, people are still buying houses. But the key for any seller is to make their home stand out to prospective buyers, which involves having a good sales strategy before and while selling the house. Here are simple, but often over-looked, tips that make the difference between selling your home at the price you want or taking the only price you can get.

Prior to Listing Your Home : Prepare the Right Way

Hire a real estate agent: It may be tempting to list your home on your own to avoid paying a sales commission, but selling your own home is a full-time job itself. A real estate professional represents the best opportunity to earn the maximum amount from your home’s sale. An agent will recommend the best listing price, market your home effectively and show your home to buyers. An agent also recognizes what buyers are looking for in a new home

Get your home inspected. You are required to disclose any problems with your property to prospective buyers. Failure to do so will lead to further complications, even if you weren’t aware of the flaws ahead of time. Hire a professional inspector to identify and document any problems with your property. Also, make sure your home has a clean bill of health from termites.

Make repairs ahead of time. A long list of necessary repairs is a major put-off for most buyers, who may decide to move on rather than deal with the headache of fixing up the home. Do as many repairs yourself as possible, then hire a contractor to complete the rest. If you decide not to make major repairs beforehand, hire a reputable professional to provide cost estimates that you can show to any interested buyers to put their minds at ease.

Showcase your home. Curb appeal and first impressions are valuable assets when selling your home. Clear unnecessary items from your yard and maintain the landscape to welcome visitors. Keep the interior of your home clutter-free to maximize your home’s livable space.

Price it right. The original asking price of your home has a huge impact on the ultimate sales price. If you price it too high, buyers will look for better values and your home will remain on the market longer. The longer your home is on the market, the less desirable it becomes to buyers—even if you eventually lower your asking price— because most buyers will avoid a home that others are avoiding. Conversely, pricing your home too low may result in a quicker transaction but will yield you less money in the end

While Your Home is Listed : Make It Attractive to Buyers

Clean. Clean. Clean. A tidy home is a loved home. Wipe fingerprints and other smudges from glass, mirrors and other shiny surfaces. Wax and polish your hardwood and tile floors and vacuum your carpets often. Keep your oven, stove and kitchen counters clean and free of clutter.

Clean up the yard. Make sure your landscape is well maintained to increase curb appeal. A more conservative yard is often a better showcase for your home, so be generous with your trimming and pruning. Pare down bushes and trees that block windows. Pull weeds out of your flowerbeds, lawn and sidewalk cracks. Repair minor asphalt and walkway cracks if necessary. If your home has gutters on the roof, clean and clear them frequently.

Let there be light. Natural light is the best light to cast your home in. Replace faded and heavy curtains with sheer ones or install blinds. Opening the shades when showing your house will also make your home seem larger. Temporarily replace energy-efficient fluorescent lights with high-wattage incandescent bulbs to give your home a warmer glow. Make sure darker rooms are well lit. Display lightly scented potpourri or candles to give a fresh and homely aroma around the house.

Add a few little touches. Replace worn or outdated doorknobs, doormats, cabinet handles and light switches. Buy fresh new towels for the bathrooms, but don’t use them (keep the towels you use out of sight in a cabinet). Place flowers in windows that are walked by often. Display a seasonal decoration, such as a wreath or wood ornament. Buy new pillows for sofas and replace torn window screens

This was an edited guest post by Sherri Krohl of McEnearney Associates, Inc. You can contact her for a free consultation @ 703-850-6461. See her previous post - 10 Deadly Mistakes Buyers Make When Purchasing a Home and How to Avoid Them - for more home buying and selling information.

Related
~ Job, Home and Stimulus Tax Breaks and Traps in Difficult Financial Times
~ Record Home Price Drops May Signal Housing Market Bottom
~ Approved! Extra Unemployment Benefits and Home Buyer Tax Credit Extension into 2010

Read More...

America now has a 10.2% unemployment rate. Ouch. Even though this was expected it was still a shock to see double digit figures, espically when it looked like the economy was on the mend. For many workers in the current generation, this is a definitely an alarming top line figure. What's worse is that the real unemployment rate (which includes part-timers and the like) is probably even higher. I foresee unemployment reaching 11% mid next year and I hope the economic recovery we are seeing right now stays the course so that more jobs get created.

If you are one of the 10.2% unemployed Americans, there was at least some relief this week with an extension of unemployment benefits (which are now up to 99 weeks in some states). While it won't solve your longer term problems, it will at least provide some respite over the holiday season. For new home buyers there was also good news with the expected extension of the $8,000 home buyer credit. The credit was also expanded to existing home buyers who want a new place ($6,500 credit now available) and income qualification limits were raised. Unfortunately for me and others who bought a house this year, the updated income provisions are not retroactive and only for homes purchased after November 9th. However, I do that think that in the broader scheme of things, the home buyer credit extension is good for the US economy despite it adding to the deficit.

Another question I get asked a lot, and is the subject of some of my more popular posts, is what's going to happen with the US dollar and "Should I invest in Gold?" With a falling US dollar which is correlated with rising gold prices (now well past $1000 an Ounce), my advice is to have some exposure to these trends which don't look like going away but to make sure you still diversify your portfolio. If you want to profit from a falling US dollar then invest in big US multinationals and foreign country ETF's (I like Brazil based ETF's now, which I will cover in an upcoming post). You can also try your hand at currency trading - sign up free for a practice eToro account - but be aware that this is a time consuming and high risk/return strategy. There are many ways to invest in Gold as outlined in this article, but the best way for most non-professional investors is to invest via an ETF.

In another update to a previous post on buying a Mac or PC for my next laptop, I just saw some of the upcoming (Black Friday like) deals where Dell and HP laptops with Windows 7 are going for less than $400. This is about one third the price of a Mac, which makes buying a PC very cost-compelling. What's more netboooks (mini-laptops) are retailing for less than $200! This holiday season is going to be a great time to buy Electronics - just check out some of the Amazon or Best Buy deals on right now!

Carnivals and Festivals I participated in over the last couple of weeks:
- Carnival of Personal Finance Edition #227 @ Fabulously Broke (belated mention!)
- Carnival of Personal Finance #229: candy edition @ Centsible Life
- Carnival of Money Hackers #89 – My Favourite Coffee Edition @ The Financial Blogger

Other goods reads from around the blogosphere
- A simple explanation of HSA vs FSA @ PT Money
- Why are you asking about my salary again? @ Budgets are Sexy
- What’s The Average Credit Card Debt In America? @ Amateur Asset Allocator
- Are you preparing for the worst? @ GLBL
- A Second Stock Market Crash in 2010-2011? @ Money Energy
- Don’t Be Tempted By The Glitter Of Gold @ The Dough Roller

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Congress and now the President have approved a $45 billion plan to expand a tax credit for first-time home buyers, extend jobless benefits and provide tax refunds to money-losing companies. The bill (H.R.3548) will be funded from the $787 billion stimulus originally approved in Feb 2009.

Unemployment Benefits Extension

The government is proposing to spend $2.4 billion to extend unemployment benefits for between 14 to 20 weeks, enough to cover the upcoming holiday season. States with the highest unemployment would get the highest unemployment benefits. The extension will benefit nearly 1 million out-of-work people who will run out of benefits by the end of the year. If HR3548 passes with the proposed amendments unemployed workers would generally get the following additional benefits:

- 14 weeks extra for everyone in any US state (up from the 13 initially proposed by the house in the unemployment compensation Extension act, S. 1699)
- An additional 6 weeks, for a total of 20 weeks, for those in states with unemployment at or over 8.5% (3 month average)

With enactment, the jobless in the hardest-hit states could receive up to 99 weeks of benefits, which average about $300 a week

Extended Home Buyer Credit

The $8,000 home buyers’ tax credit enacted earlier this year and slated to expire on November 30th 2009, will now continue until April 30 and contain the following new provisions.

- First-time home buyers who close before April 1 would get the full $8,000, and the credit’s value would be reduced by $2,000 in each successive quarter until expiring at the end of the year.

- The plan would extend the credit, due to expire Nov. 30, to home purchases under contract by April 30, 2010, with borrowers allowed another 60 days to close the sale, according to a person familiar with the details of the agreement.

- Current Homeowners looking for a new home could also qualify for a $6,500 credit if they have lived in their existing primary residence for at least five years

- The home buyers’ credit would be available to individuals earning up to $125,000, or $250,000 for couples, up from $75,000 for individuals and $150,000 for couples under the current law.

- Tax Credit Exclusions: Homes that cost more than $800,000 aren’t eligible for the credit and you must be over 18 years old to claim the credit. Those who sell their new home or stop using it as their main residence within three years would have to repay the credit.

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The Treasury Department estimates that more than 1.4 million Americans have taken advantage of the home buyer credit at a cost so far of about $10 billion. Democrat leaders say expanding the credit to those who already own homes would help create jobs because “the move-up buyer is more inclined and capable of buying that furniture, maybe building a porch, putting a garage on, a new roof” and making the “kinds of investments I think is going to be a job-creator across the country.” Republicans, called the tax credit a waste of money, saying studies show that most of those claiming the break would have bought homes anyway.

Goldman Sachs Group Inc. said in a research note yesterday that the credit probably spurred 200,000 home sales that otherwise wouldn’t have occurred. Extending the credit to people who own homes wouldn’t reduce the excess housing blamed for the slump because “every buyer taking advantage of the move-up credit would necessarily be a seller,” Goldman Sachs said. It said the plan may increase housing prices by 1 percent because “sellers are likely to incorporate a fraction of the credit amount in their sale prices.”

The senate approved legislation also would expand provisions in the stimulus package allowing companies to apply their losses to previous years’ income, thereby reducing their tax bills and allowing them to claim refunds. Banks and other institutions receiving assistance from the Treasury Department’s TARP program wouldn’t be eligible.

Lawmakers are still considering whether to extend several other elements of the stimulus package, including subsidies to help the jobless buy health insurance and increased funds for food stamps. Obama has also called for sending seniors $250 checks because they won’t get a cost-of-living increase next year in their Social Security checks. I will provide updates on these and progress of the above bill through Congress, and encourage you to subscribe (free) via Email or RSS to get the latest news.

References : Bloomberg

Related:
~ FHA vs Conventional Home Loan - Comparing the Difference
~ Should I Refinance my Mortgage and Do I Qualify
~ Top ten myths about buying a franchise

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As Mark Twain once said, "There are three kinds of lies: lies, damned lies, and statistics." To me, this nicely sums up recent economic figures that suggest America has escaped the clutches of another great depression and is on the way to a sustained recovery. Government reports say that GDP rose at an annualized rate of 3.5% in the third quarter compared with the second. This was the first increase since the second quarter of 2008. However, as GDP grew consumers grew more skeptical as indicated by a fall in the consumer confidence index. A poll in The Economist found that 35% of respondents think the economy is getting worse; just 28% think it is getting better. Unemployment is still rising, and even a White House adviser, Christina Romer, predicts it will remain “severely elevated” throughout next year.

A lot of the third-quarter GDP growth was the result of temporary government stimulus like the cash for clunkers and new home buyer tax credits (which were recently extended into 2010). Consumer spending grew by 3.4%, the best since early 2007, largely because people were buying new cars in July and August under the CARS and new car tax deduction programs. Sales have since fallen back. Residential construction leapt by 23.4%, the first advance since the end of 2005, helped by an $8,000 tax credit for buyers of new homes. But new-home sales dipped by 3.6% in September, as the deadline to qualify for the credit loomed. Of course the statistics the government and Obama administration officials discuss are the positive ones.

Similarly, the Obama administration released the most detailed information yet on the jobs created by the stimulus. Of the 640,239 jobs recipients claimed to have created or saved so far, officials said, more than half — 325,000 — were in education. Most were teachers’ jobs that states said were saved when stimulus money averted a need for layoffs. Yet many have cited the high unemployment figure, at 9.8 percent, as proof of the failure of the stimulus, which they voted overwhelmingly opposed. This is countered by supporters of expanding the stimulus programs, who say that these payments helped avert a second Great Depression.

Many polls and anecdotal evidence show that most Americans are more worried about the economy more than anything else. After all it hits closer to home than any other macro issue. To appease this, it is likely the Obama will keep the stimulus spigots flowing - case in point, another $250 social security stimulus in 2010. Other programs would extend health insurance and unemployment-insurance benefits by 14-20 weeks for some jobless workers, while providing more food stamps to many struggling families. These measures are ones taken in a struggling economy and not in a robust one.

It’s still too early to tell if growth in the third quarter reflects the dynamics of a genuine recovery. Until housing and unemployment show a sustained recovery (3 or more quarters), it’s premature to say that the country and the world are out the dark economic woods. While more stimulus are probably needed to keep economic growth moving along this year, they will add to an already dangerously high deficit. The upcoming Federal reserve meeting will provide an interesting gauge of where officials think the economy is headed (look for a big stock market reaction on that day), but I hope that lessons learnt over the last couple of years are heeded. Statistics tend to provide a partial picture and as we have seen in the past can vary sharply from one quarter to another. From a personal perspective, I think it is worth taking a few more risks as a long term investor, but still keep up a conservative approach to managing your day-to-day finances and career.

Related:
~ $1K Gold - Fundamentals, Speculation or a Dollar-Inverse Play Driving Gold Futures
~ Retirement 401k and IRA Accounts - Have You Rebalanced and Reallocated based on Changing Market Conditions and Contribution Limits?
~ Will there be More Stimulus Checks, Social Security Payments and Tax Credits in 2010, 2011 and Beyond
~ Obama's 2010 - $3.6 Trillion - Budget and My Money from Taxes to Health Care
~ Pop goes Last Week's Bubble as Stocks Plunge

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