Has The National Debt Killed The American Dream For The Next Generation?

The recent downgrading of the nations credit worthiness, by the credit rating agency Standard & Poors, has many more people thinking about the federal debt. It used to be something many of us didn't understand and didn't think we needed to be aware of. We worried that it might affect us with higher interest rates in the near term, though that hasn't happen yet. But today the threat has grown large enough that the future generations are going to have to pay for this debacle.

It reminds me of how I used to be in credit card debt. I went along casually spending and buying things over the years. Always thinking just a few more payments it would be paid off. But there always was that emergency like the car needing tires or repair work. The kids needing something. The washer or dryer breaking down. It was always something. The years passed and the payments on the credit cards were so much I couldn't pay my regular bills. It was a scary time with 3 kids, a wife, and a big mortgage. I was worried my kids would have to do with less because of my mess.

This is how I relate to the current debt crisis. To much free spending, all being borrowed and not seeing ahead to the future. Like me, the government has reached it's tipping point where something has to be done. But the government's problems are much larger and the family affected, is not three kids like I had, but 250 million people.

The solution to this incredible problem is to cutback spending and pay down debt. It's simplistic and many people, smarter than me claim that it's OK for the government to have debt. But wouldn't we be better off if the Federal budget was smaller, so Washington needed less of our money to function. The other side of the coin is to raise taxes. It should be on the table if necessary but lets try cutting back spending and see what the results are.

It hasn't occurred yet, but all this money printing and borrowing economists claim, is inflationary. I agree with that because I have been to the supermarket and the gas station, prices are rising. This is one of my concerns for the future generations. Basic costs of food, fuel and goods are rising. The electric bill, water bill, and other necessities are increasing. All these basic needs are competing for the dollars from your paycheck.

What other problems will arise from the debt crisis? Will interest rates go up so the interest for future borrowing will be even costlier. State and local governments have debts to pay also. If their interest rates rise, won't we have to pay more taxes. Between Federal and State governments, taxes are definitely going to go up, taking more from peoples budgets.

We can be sure that the governments free spending will be paid for by future generations. There will be higher taxes eventually taking more money from their families budget. It seems to me we are moving towards a time where the next generation will be burdened with the problems of the current generation. If you factor in the future problems with Social Security and state pensions, the problems are much worse. I am afraid we have dug a large hole that our children and their children will have to clean up.

I hope the days of this massive borrowing is over but I am afraid it may not be. I read Paul Krugman's column titled "The Hijacked Crisis" in today's New York Times Online. The article was a typical Paul Krugman column, but something he wrote at the end worried me and I wondered if this comment, was the general theory of the current administration in Washington. Here is an excerpt from his August 12 column:

"What would a real response to our problems involve? First of all, it would involve more, not less, government spending for the time being — with mass unemployment and incredibly low borrowing costs, we should be rebuilding our schools, our roads, our water systems and more. It would involve aggressive moves to reduce household debt via mortgage forgiveness and refinancing. And it would involve an all-out effort by the Federal Reserve to get the economy moving, with the deliberate goal of generating higher inflation to help alleviate debt problems."

        Paul Krugman, New York Times, "The Hijacked Crisis"

Paul Krugman has a PH.d in Economics, he should be the one knowledgeable in getting the country back on track. It seems to make sense, but to do it would mean another larger stimulus plan with more debt. This kind of thinking just seems wrong.

All these decisions of what to do about the economy must be put in perspective of how it will affect future generations and not just today.

What are your thoughts?

Cable Company Comcast to Offer Discounted Internet Service

Image via WikipediaCable and Internet company Comcast is offering a discounted Internet service package to low income families. The new Internet service will be called Internet Essentials. It will provide low cost Internet access and also offer a netbook computer at a discounted price. To be eligible for the new service your child must also be eligible for the National School Lunch Program.

Internet service provided through Internet Essentials features download speeds of up to 1.5 Mbps and upload speeds of up to 384 Kbps. The plan costs $9.95 per month (plus tax) and is available for families that:

• Are located where Comcast offers Internet service (currently in 39 states)
• Have at least one child receiving free school lunches through the National School Lunch Program
• Have not subscribed to Comcast Internet service within the last 90 days
• Do not have an overdue Comcast bill or unreturned equipment

After you are enrolled you will have the opportunity to purchase a netbook style laptop computer for $149.99 plus tax. The computer comes with wired and wireless ability and the Windows 7 operating system and Internet browser software.

The program will continue for 3 years and is available now.

How to apply:

• Call 1-855-8-INTERNET (1-855-846-8376) to request an application
• Complete and return it, along with lunch program documents from your child's school
• You will notified by mail about the status of your application. Allow 7-10 days for a response
• Once you are approved, you will be mailed a welcome package with everything you need to set up your Internet service and receive free Internet training. If you choose to purchase a low-cost computer, your welcome package will provide details.

You can access the website at http://www.internetessentials.com/

Summer Camp Fees Can Qualify for a Tax Credit

Image via WikipediaSummer time is coming to an end and it's time to get the kids ready for the new school year. But before you put away the summer fun and start to get ready for the new school year, get out those receipts for the summer camp you sent the kids to. If you have enrolled your kids in summer camp and they attended while you were at work or while you were looking for work, you are eligible for a tax credit.

According to the IRS website, at IRS.gov, under the existing rules up to 35% of qualifying camp expenses is allowed to be claimed as a federal child care tax credit for children under 13.

The IRS wants the public to know that a summer day camp does qualify for a tax credit. It's looked at as the same as a day care center or even hiring a baby sitter does just like during the school year. The federal child and dependent care tax credit allows a 35% credit. For incomes above $43,000, it's 20 percent. Qualifying expenses for the tax credit are limited to $3,000 per year for one child or $6,000 for two or more. So if you're eligible for the maximum 35 percent with one child, you could claim a credit of $1,050.

Also note that overnight camps do not qualify toward the tax credit. Only expenses that occur when the parent is at work or looking for work.

6 Money Rules For A Successful Retirement

Retirement is a fact of life, an event that someday will happen to all of us. We budget and plan for other situations like college costs, home purchases and life events but often we put off preparing for the longest lasting time of our lives. 

If I told you that you would be unemployed for more than 25 years of your life, wouldn't you prepare for such an event. Yes you would, but being it's so far away when we are younger we tend to put it off. I have listed 6 money rules that must be considered to have a great retirement.

Save Early For Retirement. Waiting to save for retirement is the biggest mistake you will ever make. When you get that first job always be putting money away for the future. Paying off debt is a a top priority, but don't let it get in the way of your long term goals. If your employer offers a 401(k) with matching, save at least enough to get the matching. It's free money and you can't get a sweeter deal than that. 

Your ideal goal is to save 15 % of your income. If you have maxed out the 401(k) then start a Roth Ira. Start small with a 3% contribution and work your way up slowly to 10%. As you eliminate debt bump up your savings.

Cut your debt, but not your credit cards. Cutting your debt to zero is a great idea. But don't cancel your credit cards, you could take a big hit on your FICO score. You still need to maintain a good credit score even in retirement. Also the cards are a safety net of last resort. Sure having a large emergency fund is important, but your credit cards are a second line of defense in an emergency. But never to be used unless for dire emergency.

Reasonable housing, not Beverly Hills mansion. Let's face it your home is not an investment and the less you put into it the more you will have for investing and retirement. The typical rule of thumb used to be, you could afford a home 3 times you annual salary. But that rule went by the wayside,  your house payment including principle, interest, insurance, and taxes should be no more than 28% of your gross income. This also goes long with a 20% down payment. 

You will find many mortgage brokers allowing you to borrow a lot more but you have to be smart and stay away from a too large home. You will end up putting too much money into your payment and don't forget all the never ending maintenance of your home. After making the mistake of not saving for retirement, buying a to expensive home will crash your financial plan leaving your retirement sorely lacking.

An emergency fund built for your individual situation. It was always called a savings account but it's better known as your emergency fund. We all can agree an emergency fund is a necessity, but how large a fund is the the question. If you work on a commission basis, have irregular income, or think your job is going to be eliminated you need a larger fund. It should be at least 6 months of expenses. If your job is stable then you only need 3 to 6 months of expenses. The goal is to keep enough cash available to see you through the emergency with out having to cash in investments or use credit cards. 

Renting is sometimes better than buying. In a environment of rising home prices, buying a house is better. If prices are falling or flat, like they are today, then only buy if you can get the house for a steal. Renting may be an option if you don't want to deal with the extra costs of home ownership or maybe you are tired of the constant work of owning a home. 

Renting does have it's advantages in lower costs and hassle. Find a renting vs. buying calculator and do the math before doing either. But home ownership is the American dream, but with the extra costs and hassle it does come at a price.

Quit your mortgage when you quit your job to retire. It makes sense to lower costs in retirement and finishing your mortgage when you retire would be the right thing to do. Many people argue that having all your money tied up in a paid for house is the wrong thing to do. They think you need to have your money working for you in investments. 

But for many, not having a mortgage gives a sense of peace that your home will never be lost through foreclosure. But mathematically, we all agree that reducing expenses in retirement is the safest thing to do.

Making good retirement decisions means following a plan. The plan must be based on a good financial foundation. 

It's Tax Free Weekend, Time To Get Ready For School

Image via WikipediaIn 8 states this weekend you will not have to pay sales tax on back to school items. During the month of August eight other states will also have tax free weekends. During this tax free holiday the items allowed to be tax free are clothes, school supplies, books, and computers. Each state has certain limits to the amount of the purchase and which items are allowed to be tax free in the particular state.

Originally the weekends were meant to get junior outfitted with new clothes and shoes for returning to school but the items covered by the tax free rules have expanded. Now you can purchase computers, school supplies, and even appliances. The amount of the items can go as high as $2,500 as in Louisiana.


The Louisiana Sales Tax Holiday provides an exemption from state sales tax on the first $2,500 of the purchase price of most individual items of tangible personal property for non-business use. The state sales tax is payable on the portion of the purchase price of any individual item in excess of $2,500.This Means you can buy anything except vehicles that require a tag and title.

Missouri allows you to buy software up to $350 without paying tax and computers up to $3,500 without paying sales tax.

Check out this chart for purchasing rules and links to specific states information.

State	Items and Maximum Cost (Per Item)	2011 Dates	More Information
Alabama	clothing – $100 computers – $750 school supplies – $50 books – $30	August 5-7	revenue.alabama.gov
Arkansas	clothing and footwear – $100 Clothing accessories – $50 school supplies, art supplies, school instructional material	August 6-7	www.dfa.arkansas.gov
Connecticut	clothing and footwear – $300	August 21-27	www.ct.gov
Florida	school supplies – $15 clothing – $75	August 12-14	dor.myflorida.com
Iowa	clothing – $100	August 5-6	www.iowaccess.org
Louisiana	all TPP – $2,500 hurricane preparedness items – $1,500	August 5-6	revenue.louisiana.gov
Maryland	clothing and footwear – $100	August 14-20	www.marylandtaxes.com
Massachusetts	TVs, clothing, personal items – $2,500	August 13-14	www.mass.gov
Missouri	clothing – $100 computers – $3,500 school supplies – $50	August 5-7	dor.mo.gov
New Mexico	clothing – $100 computers – $1,000 school supplies – $15	August 5-7	www.tax.newmexico.gov
North Carolina	clothing – $100 school supples – $100 instructional material – $300 computers – $3,500 other comp. – $250 sports equip – $50	August 5-7	www.dornc.com
Oklahoma	clothing – $100	August 5-7	www.tax.ok.gov
South Carolina	clothing school supplies computers other (Check SC site for explicit items’ exemptions)	August 5-7	www.sctax.org
Tennessee	clothing – $100 school supplies – $100 computers – $1,500	August 5-7	tn.gov
Texas	clothing, backpacks, and school supplies – $100	August 19-21	www.window.state.tx.us
Virginia	clothing – $100 school supplies – $20	August 5-7	www.tax.virginia.gov

Washington's Debt Crisis Is Over With Social Security and Medicare Spared - For Now

Image via WikipediaThe Congress and the President have come together and deflected the debt crisis. They have worked out a solution that both parties can hold their noses and live with. These last two months have been nerve racking for the folks dependent on Social Security. Not only for them, but the rest of the country is finally seeing how close we are to the precipice of default.

Unconscionable spending over the last 30 years by both parties has led to an environment of thoughtless borrowing. President Obama is the unfortunate president who will take the brunt of the anger of the American people over this insane borrowing and deficit. Luckily for him, the deal that was worked out will spare him another debt crisis before the next election. But before the end of 2012, we will be back where we started.

One point of the debt deal that was made is, Social Security and Medicare are off the table on budget cuts. This is not forever and when the next round of deficit discussions come around Social Security and Medicare could be on the chopping block. The gloves are off for Social Security activists and recipients. They will have to fight long and hard to keep their benefits in the years ahead. It' almost funny that our so called guaranteed benefits will have to be fought for.

What happened to the sacred promise made to the American people by our government about the Social Security Trust Fund. It seems with the stroke of the pen all that could be over. Washington says they might have to reduce benefits to keep the fund viable.

All Americans have paid faithfully to the Social Security Fund only to have it mishandled and raided for it's funds over the years. Now the raiders want to balance the budget on the backs of retiree's. We all know that Social Security and Medicare have not caused this economic crisis and we do not support cutting these programs to pay down the debt. Then why are important programs on the table as bargaining chips as a way to balance the budget?

For over three decades, millions of older Americans have counted on annual Social Security benefit increases to help them afford their basic needs. Unfortunately, the benefits they've earned will again be frozen next year, leaving millions who are struggling in this economy without money they depend on to make ends meet.

I suggest you contact your representatives in Washington DC and let your voices be heard on this matter.

Click Here for a list of your Representatives Email and Phone numbers.