Posts belonging to Category Finances

Unemployment Prompts Large Increase in Living Together

Regular readers at this blog know that I get a steady stream of comments on my Living Together Before Marriage Series. Many of the comments come from people who agree in principle that living together before marriage is not right, but who then offer reasons why they feel it is okay for them. Now add a bad economy and unemployment to the list. From The Christian Post:

The number of unmarried couples living together rose 13 percent from the previous year, according to the U.S. Census Bureau.

This year, there are 7.5 million opposite-sex unmarried couples living together – up from 6.7 million in 2009, reported the bureau on Thursday. The year before had witnessed a two percent drop after a five percent rise in co-habiting couples between 2007 and 2008.

Demographers say a poor job market is likely a factor in the rise of co-habiting couples in 2010.

According to 2010 data, unmarried couples who recently began living together usually have one partner unemployed. Only 49 percent of cohabiting couples this year are ones where both partners are employed. This figure is down from 59 percent in 2008 and 52 percent in 2009.

As I try to share with people in the comments section, if you will trust God and put Christ first in your situation, I believe God will always open up another option for you. If you or your boyfriend/girlfriend are unemployed: check with family, check with friends, check with your local church, and see what living arrangements you can find. But please don’t make the mistake of moving in together before marriage. You can read more about why in the articles below.

Living Together Before Marriage Series:
    ● Statistics on Living Together Before Marriage
    ● Scriptures on Living Together Before Marriage
    ● Living Together Without Sex
    ● What If We Already Lived Together Before Marriage?

One-Fourth of Nonprofits to Lose Tax Breaks

From The New York Times:

At midnight on May 15, an estimated one-fifth to one-quarter of some 1.6 million charities, trade associations and membership groups will lose their tax exemptions, thanks to a provision buried in a 2006 federal bill aimed at pension reform.

“It’s going to be an unholy mess once these organizations realize what’s happened to them,” said Diana Aviv, president of the Independent Sector, a nonprofit trade group.

The federal legislation passed in 2006 required all nonprofits to file tax forms the following year. Previously, only organizations with revenues of $25,000 or more — or the vast majority of nonprofit groups — had to file.

The new law, embedded in the 393 pages of the Pension Protection Act of 2006, also directed the Internal Revenue Service to revoke the tax exemptions of groups that failed to file for three consecutive years. Three years have passed, and thus the deadline looms.

Wow. This sounds huge. Does anyone know how this affects churches?

Update (4/28/2010): I just got an email from a friend (who is a CPA and church treasurer) informing me that this does not apply to churches. He referred me to the Instructions for Form 990 which states the following:

For annual tax periods beginning after 2006, the law requires most tax-exempt organizations, other than churches, to file an annual Form 990, 990-EZ, or 990-PF with the IRS, or to submit a Form 990-N e-Postcard to the IRS. If an organization fails to file an annual return or notice as required for 3 consecutive years, it will automatically lose its tax-exempt status. (Instructions for Form 990, page 1; under the section What’s New: New Penalty Provisions for Nonfiling)

That’s good news. I’m glad to know this won’t be catching any churches by surprise. Now, hopefully the other nonprofits can catch up on time.

Check Your Federal Tax Refund Status Online

Wondering when you will get your Federal Tax refund from the IRS? You can easily check your refund status online at the official IRS website here: Get Refund Status. Just enter your Social Security Number, your Filing Status and the refund amount as shown on your tax return, and the IRS will tell you your status in a matter of seconds.

I checked my status yesterday, and the site told me that my refund would be direct deposited into my bank account today. I just checked my bank account, and sure enough, the full amount is there. Now I can pay my state taxes and my estimated quarterly taxes for January through March. Yay.

HT: Get Rich Slowly

Poor Are the Most Charitable

According to a recent analysis of U.S. Bureau of Labor Statistics data, America’s poor donate more, in percentage terms, than higher-income groups do.

Chart: Those in the lowest U.S. income group give the largest percentage of their incomes to charity.

As pastor I make it a point not to know who gives what at church, but I can still testify to the generosity of many people with lower incomes that I have known over the years. Why do you think the poor tend to be more generous with their giving?

Scripture: As he looked up, Jesus saw the rich putting their gifts into the temple treasury. He also saw a poor widow put in two very small copper coins. “I tell you the truth,” he said, “this poor widow has put in more than all the others. All these people gave their gifts out of their wealth; but she out of her poverty put in all she had to live on.” (Luke 21:1-4)

HT: Christian Personal Finance

Madoff Finally Admits Guilt

The New York Times quotation of the day:

“I knew what I was doing was wrong, indeed criminal,” he said. “When I began the Ponzi scheme, I believed it would end shortly and I would be able to extricate myself and my clients.”

But finding an exit “proved difficult, and ultimately impossible,” he continued, stumbling slightly in his prepared remarks. “As the years went by I realized this day, and my arrest, would inevitably come.” (Bernie Madoff, pleading guilty to a Ponzi scheme involving billions of dollars)

This quote is a sad reminder of how yielding to sin seems like a small thing in the beginning but eventually can take over and ruin a life. It also brings to mind Proverbs 21:6: “A fortune made by a lying tongue is a fleeting vapor and a deadly snare,” and 1 Timothy 6:9: “People who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge men into ruin and destruction.”

Those are some hard verses to come to terms with. My prayer is that Madoff would also come to experience the truth of these precious verses from the Psalms:

“Blessed is he whose transgressions are forgiven, whose sins are covered. Blessed is the man whose sin the LORD does not count against him and in whose spirit is no deceit. When I kept silent, my bones wasted away through my groaning all day long. For day and night your hand was heavy upon me; my strength was sapped as in the heat of summer. Then I acknowledged my sin to you and did not cover up my iniquity. I said, ‘I will confess my transgressions to the LORD’ — and you forgave the guilt of my sin.” (Psalm 32:1-5)

Budget Calculator

Check out this nifty budget calculator. Simply enter your monthly take-home income, and the calculator instantly gives you a pie chart breakdown of suggested allocations. For example, the following chart is based on a monthly take-home pay of $2500.
Budget Calculator | Carmen Wong Ulrich | CNBC
The calculator is based on CNBC personal finance expert Carmen Wong Ulrich’s budget advice. I noticed Carmen does not have a category for giving. So, if you are a Christian committed to regular, proportional giving, then let me suggest that you take your giving out of the take-home pay first, and then enter the remainder into the budget calculator. All in all, this seems like a pretty simple device to help a family or individual get started with a spending plan.

HT: Lifehacker

How Big Is a Trillion?

With Congress debating the current trillion-dollar stimulus package, it might be good to stop and ask ourselves, “Just how big is a trillion?” Yes, it is a “1” followed by 12 zeros, (1,000,000,000,000), but how big is that in dollars? Here are some numbers from The Family Research Council:

  • If you stack up $1,000 bills, $1 trillion would need a pile that is 80 miles high.
  • $ 1 trillion is more than the combined gross revenues of Wal Mart, Exxon, General Motors and Ford Motors.

With a trillion dollars:

  • We could pave the entire U.S. interstate highway system with 23.5-karat gold leaf.
  • We could buy 16.6 million Habitat for Humanity houses
  • We could hire 1.9 million additional teachers

Amanda Shaw notes the cost of other large items in our past:

* The Marshall Plan cost $12.7 billion ($115.3 billion, adjusted for inflation)
* The space race cost $36.4 billion ($237 billion with inflation)
* The Korean War cost $54 billion ($454 billion with inflation)
* The New Deal cost $32 billion (estimated; $500 billion with inflation)
* The invasion of Iraq cost $551 billion ($597 billion with inflation)
* The Vietnam War cost $111 billion ($698 billion with inflation)

So, the total cost of the Marshall Plan, the Korean War, and the New Deal—using all figures adjusted for inflation—is less than that of the current economic stimulus package. That’s how much $1.1 trillion is.

And Mary Rose Ryback points out that $1 trillion is more than $1 million spent every day since Christ’s birth.

So, yes I know we are in a time of economic trouble, but we should think very carefully about whether and how we are going to spend a trillion dollars that we don’t even have. What do you think?

HT: In Light of the Gospel

Related post: Bailing Out the Bailout

A Letter of Thanksgiving

I found this letter of thanksgiving from a Methodist minister particularly encouraging. I pray you find it encouraging, too! (The letter was actually written several weeks ago, but it is very appropriate for today.)

What a Great Day This Is! This morning, as I was driving to work, I heard that the market had gone down another 500 points. It has now dropped from a high of over 14,000 to 9,000. This is not good news. It has messed with my retirement plan and made my net worth go from pride to hide. It has turned easy street into a mean street. The bottom line is that I do not have nearly as much money or assets as I had just a short while ago. Let me share with you what I also discovered this morning:

  1. I was breathing and, in general, feeling pretty healthy.
  2. My wife gave me a kiss and told me she loved me.
  3. I was driving to WORK! I have a job.
  4. All of my children have jobs and are safe and well.
  5. My two grandchildren still light up my life and give wonderful hugs and sugars.
  6. I am a citizen of the greatest nation on the face of the earth and I will get to vote soon on how to make it better.
  7. A good friend called and wants to go out to dinner and a show. (I have a friend.)
  8. I am still a United Methodist minister.
  9. My home is safe, warm, secure and nearly paid for.
  10. I got an e-mail that told me my new book was changing their church for the better (someone is reading it).
  11. I ate breakfast and lunch and will have dinner later. (Many won’t get three meals today.)
  12. I am actually sitting down in a building I own, at a desk I bought, typing on a $2,000 machine I can barely use.
  13. I have a big huge bottle of wonderful fresh clean water right down the hall or I could choose to drink right from the tap all I can hold.
  14. I am wearing clean clothes today, and tomorrow I will wear something different. In fact, I could wear something different every day this month if I wanted to.

It is a shame that it took losing so much money for me to realize how rich I really am! This week may be one of the best weeks of my life.

Click here for more Thanksgiving related posts.

All the Candidates’ Tax Returns

Gov. Palin released her 2006 and 2007 tax returns last week. Paul Caron over at the TaxProf compiles the main information from all four candidates onto one handy chart.

John McCain | Sarah Palin | Barack Obama | Joe Biden | Tax Returns

There seems to be a fairly wide spectrum in both reported income and charitable giving.

Related posts:

A History of Home Values

Here is an interesting graph from the New York Times showing the history of home values from 1890 to the present adjusted for inflation.

A History of Home Values | Chart | Graph | Robert J. Shiller | New York Times
    (Click on the image for a larger picture. Click a second time to zoom in.)

The Yale economist Robert J. Shiller created an index of American housing prices going back to 1890. It is based on sale prices of standard existing houses, not new construction, to track the value of housing as an investment over time. It presents housing values in consistent terms over 116 years, factoring out the effects of inflation.

Or, if you prefer, you can view the same chart plotted on a roller coaster graph below. (HT: Between Two Worlds)

(Video length: 3:41)

Bailing Out the Bailout?

I have mixed feelings over the recently defeated bailout bill. I would like to see the American economy succeed without it, but there are strong indications that some sort of bailout is necessary to keep the economy afloat. Still, no one seems to know whether the bailout will succeed in fixing our problems or only delay the inevitable, perhaps even making things worse.

I can see why Congress is so divided on the bill. $700 billion ($700,000,000,000) is a lot of money to throw around when you are not sure if it will even work. As Bob Krumm writes:

How big is $700 billion? This source reports that to date America has spent $583 billion to fight the war in Iraq. That’s right, we taxpayers are being asked to add an immediate expense to the federal budget that is more than $100 billion greater than has already been spent on more than five years of war. (Bob Krumm: Call me a skeptic)

Of course the $1.1 trillion ($1,100,000,000,000) lost on Wall Street yesterday cannot be ignored either, although thankfully we are seeing some of that made back today. Thomas Sowell at Townhall recognizes the difficulties but still ends up arguing against the bailout:

Fannie Mae and Freddie Mac do not deserve to be bailed out, but neither do workers, families and businesses deserve to be put through the economic wringer by a collapse of credit markets, such as occurred during the Great Depression of the 1930s.

Neither do the voters deserve to be deceived on the eve of an election by the notion that this is a failure of free markets that should be replaced by political micro-managing.

If Fannie Mae and Freddie Mac were free market institutions they could not have gotten away with their risky financial practices because no one would have bought their securities without the implicit assumption that the politicians would bail them out.

It would be better if no such government-supported enterprises had been created in the first place and mortgages were in fact left to the free market. This bailout creates the expectation of future bailouts.

Phasing out Fannie Mae and Freddie Mac would make much more sense than letting politicians play politics with them again, with the risk and expense being again loaded onto the taxpayers. (Thomas Sowell: Bailout Politics)

Meanwhile Terence Corcoran at the Financial Post argues that we should let the market correct itself.

It would be unwise to read too much into the Dow plunge, or to link it exclusively to the political circus in Washington. Stocks appeared to be heading lower no matter how Congress voted. Indeed, from the moment congressional leaders announced Sunday they had a deal, filled with anti-market schemes and regulation, stock prices began falling in Asia and Europe. Early yesterday, when it was expected the bailout would be approved, the Dow was down 500 points.

Bailout or no bailout, the stock markets were heading lower as financial markets continue to undergo massive asset revaluations. No matter what elaborate new rescue packages Congress, the Bush administration and the U.S. Federal Reserve bring to the party, the market is going to continue marking stock prices and other assets down until values reach realistic levels.

This is not, nor can it be, the beginning of the end of the U.S. or world financial system. It’s simply how the financial market works, how it should work. And it is working, whatever the games being played out in Washington and whatever their belief that governments can resolve the crisis. (Financial Post: Financial markets go up and down as they should)

So, what do you think? Should we be bailing out the bailout? Or let the economy run its course?

Related posts:

Scary Financial Movie Trailer

Here’s a great quote from Jared Bernstein on Treasury Secretary Paulson’s announcement earlier this week on the $700 billion bailout.

“The situation is like that movie trailer where a guy with a deep, scary voice says, ‘In a world where credit markets are frozen, where banks refuse to lend to each other at any price, only one man, with one plan can save us,’” said Jared Bernstein, senior economist at the labor-oriented Economic Policy Institute in Washington. And yet, the more he looked at the data, the more Mr. Bernstein became convinced the financial system really does require some sort of bailout. “Things are scary,” he said.

I am pretty much a free market guy, but I must admit I am at a loss on this one. What do you think is the best solution at this time?

Note: Here are a few articles dealing with the economic crisis from a Christian perspective.

Related post: Bailing Out the Bailout?