New York Cuts Fees for College Savings Plan by Almost 50% to Aid Families

The state of New York is giving families who participate in their 529 college savings plan a break, by cutting fees almost in half. Comptroller Thomas DiNapoli claims that the reduction will help families save more for college and assist residences of the states who are strapped financially. Bloomberg published a great piece on the announcement; you can find a snippet of it below or read the full article at Bloomberg.com.

New Yorkers who participate in the state’s 529 college savings direct plan will see fees cut by almost 50 percent, New York State Comptroller Thomas DiNapoli said.

The direct plan’s total annual asset-based fee declined to 0.25 percent from 0.49 percent starting Aug. 29, according to a statement today from the comptroller’s office. The reduction could result in savings of almost $20 million annually for plan participants.

“Family budgets are getting tighter, but families still need to save for college,” DiNapoli said in the statement. “When you’re saving for college, every dime counts.”

The reduced cost means New York’s fees are among the lowest for directly sold 529 plans, said Laura Pavlenko Lutton, editorial director in the fund research group at Chicago-based Morningstar Inc. The New York plan offers investors 16 investment choices from Vanguard including three that change the investment mix as beneficiaries near college. Account fees for age-based options, which are the most popular nationwide, range from 0.20 percent to as high as 2.27 percent, Lutton said.

‘Pressure on Fees’

“There’s pressure on fees, which is a great thing for parents and grandparents investing in 529 plans because that’s more of your nest egg that you get to keep,” she said.

Beneficiaries Can Bank Proceeds, Bypass Life Insurer Accounts

According to Bloomberg.com, some beneficiaries could vastly benefit by banking their proceeds instead of using a life insurer account. As the article explains, many of consumers are confused by ads that convince beneficiaries they cannot make investment choices on their own.

Policyholders may assume when buying life insurance that beneficiaries will get the payouts in a single bank check. That may not be the case, Bloomberg Markets magazine reports in its September issue. Insurance companies such as Prudential Financial Inc. profit by holding onto the money in their own accounts and issuing checkbooks, essentially IOUs, for survivors to access their money.

“The language they use at the time is all couched in reassuring phrases -- let me give you the security of not having to make an investment choice,” said Lawrence Baxter, professor of the practice of law at Duke University School of Law in Durham, North Carolina. “It leverages off of that state of emotional distress.”

After a loved one passes away, survivors must file a claim and provide a death certificate, according to Bob Hunter, director of insurance for the Consumer Federation of America in Washington. The insurer will then contact the beneficiaries with options for payment, which usually include keeping the money in an account with the insurance company, Baxter said.

“It’s very easy for trusted companies to mislead naïve customers, and life insurance companies are trusted,” said Daniel Kahneman, a professor of psychology and public affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University and a Nobel Prize winner. “The fact that they seem to be outside the regulatory reach is shocking.”

Continue reading at Bloomberg.com…

Talk Tax With Your Partner

Maybe you’ve already met the one for you and are either in or on your way to marital bliss. If so, congratulations on being so lucky-in-love! When you have decided to spend the rest of your life with someone, please find the time to have a discussion about finances—including taxes. You’ll be doing your love life a favor for years to come. And you’ll ultimately be doing yourself a favor knowing beforehand exactly what financial situation you are getting into.

Here are five tax topics to discuss with your partner:

1. Tax Debt. Have a candid discussion with your partner about whether they currently owe or will owe the IRS. Really, you and your partner should have a number of conversations concerning finances and debt, but just make sure that one is focused specifically on tax debt. This will also help you determine whether or not you will file jointly or separately.

2. Compliance. Has your partner filed all required tax returns? Failing to file a tax return can result in penalties and ultimately a hefty tax bill. It also is a good clue as to who should and shouldn’t be in charge of taxes moving forward.

3. Easy Money. Weddings can be expensive and the temptation to pull from a retirement account to assist with the cost can be difficult to resist. However, there are serious tax consequences for doing so. Another important question is whether or not your partner has already borrowed from a 401K or IRA account. They will likely have to pay taxes (or even a tax penalty) on this amount.

4. Other federal obligations. The IRS has the authority to collect back child support, alimony and federal student loan obligations. The IRS has the ability to withhold all refunds due and apply the funds to the back obligation; so if your partner owes other federal obligations you may want to file separately.

5. Filing status. Jointly or separate. Again, this is an important talking point. Although, the most advantageous filing status for married individuals is married filing jointly, there are instances in which spouses should opt to file separately. See the chart below:

File Married Filing Jointly if:

• All of your financial information is comingled and easy to access
• Neither spouse has a preexisting tax debt or other federal obligation
• You want to take advantage of every tax credit and deduction available

File Married Filing Separate if:

• One or both spouses have pre-existing tax debt or other federal obligation
• Both partners earn equitable income
• One partner has significant itemized deductions that are subject to the AGI floors (e.g. medical expenses, casualty losses, miscellaneous itemized deductions
• One partner has a tendency to use questions tax-filing decisions

Is the 401(k) dead?

Are 401K plans still a good investment vehicle and an adequate way to prepare for retirement? Money Magazine’s Ask the Expert sheds some light on the issue. Here are some of the concerns people have:

• participants aren't particularly adept at investing their contributions
• account balances can get whacked hard during market setbacks
• turning one's 401(k) stash into a lifetime income is a major challenge

However, Mr. Updegrave, who is also the author of “How to Retire Rich in a Totally Changed World: Why You’re Not in Kansas Anymore,” points out that no one has a better alternative. He explains that we might be better off if companies stuck with the check-a-month pension plans that have disappeared in recent decades. Or, maybe we would do better if the government stepped in and guaranteed a retirement check on top of our Social Security. What are your thoughts on these ideas?

No matter what you think, use whatever vehicle you have to save for retirement. If all you can do is contribute to your employer sponsored 401(k)—make a date for yourself in the future and advantage of investing pre-tax dollars and gaining free money in the form of an employer match.
Lastly, Updegrave makes an important recommendation for older adults: You will want to protect your money from downturns in the stock market as you get older by shifting some assets to the less volatile assets like bonds and cash. Take the time to do it.

Read the full article here. Let me know your thoughts on the 401 (k) on Facebook or Twitter.

15 most hated fees

Fees. No matter what they’re for, they are not very popular. Unfortunately, fees aren’t going anywhere. We will probably encounter more than the expected in the coming years. CNN Money discusses 15 fees we should be on the look-out for:

1. Forking over new charges for overdrafts: Often banks allow you to link a savings account to your checking account so that funds can be pulled from the former if you overdraw the latter. This workaround can help you avoid nonsufficient-funds fees, now averaging $30, according to Bankrate.com. But many banks have found a workaround for your workaround: They'll charge you $10 to $20 every time they transfer your money between the accounts. Meanwhile, it costs the bank next to nothing to move the funds, says Bryan Derman of Glenbrook Partners, a financial services consulting firm. "They're charging you for what's essentially an automatic transfer!" echoes reader Zoe Dowling, whose bank (Wells Fargo) levies the fee.

How to fight back: Sign up on your bank's website or Mint.com for e-mail or text-message alerts that tell you when your checking account balance is below a certain amount. That way, you can make transfers for free, yourself--before an overdraft is triggered.

2. Paying to use your frequent-flier miles: Can it really be called "reward travel" if you have to pay for the reward? To redeem your miles for any flight on US Airways, you must pay a $25 to $50 fee. ("It's an effort to recoup a portion of the overhead of the program," says spokesman Todd Lehmacher.) American, United, and Continental, among others, usually make you pony up $50 to $500 one way to use miles for upgrades.

How to fight back: Stick to one airline, and try to achieve gold or platinum status (which generally involves flying at least 25,000 miles a year). That way you'll escape redemption fees, says Randy Peterson of WebFlyer.com. Don't travel that much? Consider a credit card that lets you earn miles -- specifically "elite qualifying miles" -- such as Platinum Delta SkyMiles American Express (800-223-2670). Just be sure to weigh the annual fee against the benefit you'll get.

3. Paying to shut a brokerage account or IRA: No matter how unhappy you may be with your broker, you may be even more unhappy to discover that you'll have to shell out money to sever your relationship. Many of the major firms -- such as Fidelity, Schwab, and WellsTrade -- charge transfer fees, generally between $50 and $200, if you close your account and move your money to a different firm. Reader Eric Nix finds it "outrageous" that he had to lay out $50 to switch brokerages. Benjamin Poor of Cerulli Associates, a financial services market research firm, agrees. "It's like having a bad meal at a restaurant, then being charged to leave the building."

How to fight back: If your current brokerage is holding you hostage with its fee, appeal to the company where you want to move your funds. Many will reimburse you. To prevent these problems down the road, when you first sign up at a brokerage, ask that it waive such fees. "These things are negotiable, especially if you have a sizable account," says Mason Dinehart, a securities expert witness. (Sizable means six figures.)

4. Plunking down to hang up on your cell carrier: Agreeing to a cell phone contract is sort of like signing over your soul to the devil: You know there will be hell to pay if you break your end of the deal. In this case you'll owe $200 to $350. Such fees usually subsidize the cost of the handset you bought at a low price, says Bob Sullivan, author of Stop Getting Ripped Off.

How to fight back: Try to talk your way out of the fee, mentioning examples of poor service you've received (keep records and cite them). Customer rep won't budge? If you can stand it, stick with the carrier a while longer. Termination fees are generally pro-rated, so the longer you hold out, the less you'll pay. Next time consider a prepaid phone, which doesn't require a contract. It's generally a good deal if you use it less than 400 minutes a month during peak hours, says Sullivan.

See all 15 fees and how to fight back here.

Weigh Pros, Cons of Debt-Relief Strategies

Depending on your unique financial situation, getting yourself out of debt is usually feasible with hard work and a tight budget. Even if doing so requires you to get help from a family member, or a company specializing in debt relief. Earlier today, I came across a great article from USA Today with a list of debt recovery strategies, as well as the pros and cons of each. I have included one of the tactics listed in the article (debt settlement), but be sure to read the full list at USA Today.com.

Debt-settlement companies negotiate with creditors to reduce the amount of debt you owe. You're typically directed to make monthly payments into a savings account. When a certain amount has been saved, the company will go to your creditors and offer to pay off a percentage of your debt. Debt-settlement companies say they often succeed in reducing their customers' debts by 50% or more.

Pros: Debt settlement is an alternative to bankruptcy for people who are struggling with large debts from financial setbacks, such as a serious illness or divorce, says Don Goldberg, a spokesman for the Consumer Credit Rights Campaign, a coalition of debt-settlement companies. It allows them to reduce their debts without losing their cars and their homes, he says.

Cons: Some debt-settlement companies charge large, upfront fees that reduce the amount of money available to negotiate with creditors. If you stop paying your bills — which some debt-settlement companies tell their customers to do — interest and penalties will increase the amount you owe. Your creditors could take you to court, and your wages could be garnished. Even if you're successful, your credit score will take a serious hit.

Where to learn more: Don't respond to advertisements promising fast relief from your debts. These are often placed by marketers that receive a commission for referring customers to debt-settlement companies. Instead, check out companies that belong to the Association of Settlement Companies or the United States Organizations for Bankruptcy Alternatives. Both are trade groups that require members to adhere to certain standards. Ask for a free consultation, and make sure you understand how much of your payments will go toward fees.

Our Money Survey Reveals What Matters

According to Kiplinger.com, 1000 Americans have participated in a money survey through Synovate eNation and the results regarding Americans and their money are very interesting. Knowing these answers could help you understand your customers or clients if you have a business or a product to sell. While over half of those surveyed said that recent economic challenges had caused them to better align their personal values with their financial decisions, on the flip side, the recession has taken its toll on their charitable activities. Asked if they give back either financially or through volunteer efforts, a whopping 34%said no. The survey reported some other information as well, take a look:

Americans seem to be "struggling," at least that’s how one-third of the 1,000 respondents replied when asked to describe their financial situation. Another 24% said that they were worried, versus 29% who described their financial situation as stable. What's more, 43% said their finances had gotten worse over the past two years.

Their concerns have shifted. "Not enough retirement savings" continues to top the charts, cited by about one-fifth of survey respondents. But Americans now worry more about losing their job than they did two years ago -- 18% versus 15% -- and are less concerned about credit-card debt -- 13% versus 18% two years ago.

They're less willing to take risks. A whopping three-fourths of those interviewed say recent market volatility has affected the way they handle money at least a little. And 55% are less willing to take risks with their money. "Ironically, by shunning stocks and thinking they are avoiding market-volatility risk, people are assuming the risk of simply not having enough growth in their retirement portfolio to reach their long-term goals," says Patrick Egan, director of asset management for Thrivent Financial.

To see more take a look at the article here.

What to Consider Before Retiring Overseas

Ever considered living abroad in your golden years? Many Americans not only consider it, they actually do it, buying beautiful homes in great climates overseas and never looking back. Some even find lower health care costs to boot. However, because of the global economic and political changes, retirement hot spots across the globe may be losing their luster.

As New York Times article points out, although places like Ireland, Thailand and Costa Rica were the most recommended countries in the past to retire, they are not any longer. But why? Well, Ireland is said to have a high cost of living, Thailand is said to have increasing anti-foreign sentiments, and the Costa Rican capital, San José, has growing crime rates.

Retirees are now urged to consider places like Panama, Uruguay, and Argentina – as well as France, Croatia, and Malaysia when looking for a place to settle during retirement. “It has very good tax breaks, although the cost of living can be high,” Ms. Hannah Coppersmith, managing director of Pure International, a global property company in London said.

Wondering how you would be able to afford to live abroad when you retire? Kathleen Peddicord of Panama City, Panama, and author of “How to Retire Overseas” recommends selling nearly everything you own. “Seriously. Think about it this way. If you were to liquidate every asset you have, where would that leave you? What lump sum of capital would you net?” Then, the next step is to take a look at your investments. What level of yields and dividends might those give you on a monthly basis?

Some countries are quite affordable. “In Panama, for example, your rent could be $1,500 a month for a two-bedroom apartment in a nice building in Panama City with a doorman and a pool,” Ms. Peddicord said, “or it could be $200 a month if you choose instead to settle in a little house near the beach in Las Tablas, a beautiful, welcoming region.”

Read the full article here for more tips and information.

Get the most from your Social Security

The Social Security system has been on the minds of many people these days. It has been speculated, for many years now, that Social Security won’t last. With an estimated 77 million Baby Boomers on their way to retirement, something simply has to be done to ensure that those that have contributed to social security receive their share in full.

Social Security is a mandated supplemental retirement system in the Unites States that was established in 1934 as a part of Roosevelt’s New Deal. The intent of the program is to ensure a threshold sustenance level to senior citizens who previously faired way below poverty during the Great Depression. (http://www.wisegeek.com/what-is-social-security.htm).

See six tips from WalletPop.com that can help get you more from Social Security when you retire.

7 Ways Moms Can Boost Their Financial Security

As Mother’s Day quickly approaches, I thought it’d be a great time to share this article from Klipinger.com with the fantastic moms and women out there. Take your finances into your own hands and take the advice.

1. Schedule a money date with your spouse and talk things out. Many women want their spouses to talk about money issues more, so try starting that conversation yourself! Write out your financial goals together and see whether or not you’re on the same page.

2. If you aren’t saving for retirement already, start. Small amounts set aside now will compound and grow over the years. The earlier you start, the more time your savings have to grow. If you are working, sign up for your company’s retirement plan. Aim to contribute at least enough to qualify for your employer’s match. It’s free money! In 2010 you can contribute up to $16,500 to a 401(k) or other employer-based retirement account, or $22,000 if you’ll be 50 or older by year’s end.

Never cash out your company plan if you switch jobs. Instead, roll the money over to an IRA or new employer plan so that you continue saving and do not get hit with tax penalties.

3. No company or employer plan? Then set up your own retirement account, such as an IRA. If you’re a stay-at-home mom, you can have an IRA so long as your spouse is employed. In 2010 he can contribute up to $5,000 to an account for you ($6,000 if you’re 50 or older) in addition to his own $5,000 contributions. This doubles the tax breaks to you as a couple!

4. Life insurance is always advised. Once you have children it should become a priority so your children do not suffer financially if you’re not around any longer. The rule of thumb? Coverage should equal eight to ten times your annual household income, including any benefits covered by your employer. Buying term life insurance is said to keep things simple and inexpensive. Several hundred thousand dollars’ worth is just a few hundred dollars per year.

Already have life insurance? Remember, you’ll need to re-evaluate your coverage periodically to ensure it still meets your current life circumstances. For instance, you may need more coverage if you have another child but less when the children are grown and out of the house.

5. Write a will. When you don’t have a will, your state’s one-size-fits-all estate plan kicks in and you might not agree with it. The state will also choose the guardian of your children. With a will, you can make these decisions, divide your property and even design trusts for your children for specific purposes. Review your will after the birth of additional children.

6. Make sure you specify a guardian. If you don’t choose a guardian for your children officially, then the choice you informally made with a friend or family member won’t stand up legally. Avoid any hassle or expensive court battle by naming a guardian in your will.

7. Review your beneficiary designations on insurance policies, IRAs, 401(k)s, and other retirement plans such as pension and profit sharing plans at various life stages. The assets in these accounts go directly to whomever you have named as a beneficiary; these are not covered by your will. If you handle these issues now, you won’t have devastating consequences if something was to happen.

Read the full article here.

The “Perfect” Time To Save

Everyone has an excuse to put off saving. You’re waiting until after the holidays, or until you pay off your credit card, or until the economy improves. Does this sound like you? The article, There’s No Perfect Time to Start Saving on Banks.com, states what I’ve been telling people for years. So many individuals of every age and income level are waiting for that “perfect” time to save, but the truth is, the perfect time to save is NOW. No matter what your income level I bet you can put a few dollars into an interest-bearing account each month.

Waiting for interest rates to rise again? Don’t hold your breath. I’ve only seen mine go down in the last few years. While interest is a wonderful way to make your money work for you, the main point is to get in the habit of saving. The “perfect” time to save will most likely never arrive. While financial experts recommend saving 10% of your income, every bit helps. Make a goal to put something into savings every month and you’ll be well on your way to a healthier financial future.

Read the full article here.

If He Can’t Put a Ring on it, He Can’t Sign For it!

It’s spring time! It’s generally this time of year, when many people say “I do”. Finding someone to spend the rest of your life with is fantastic, and often times the subject of finances is seen as a “buzz kill” when it comes to love and relationships. Budgets are Sexy contributor and Financial Planner, Tahnya Kristina, put together some financial advice for couples:

Moving in together can be an exciting time. It can also be quite stressful if you don’t discuss beforehand how the money will be spent. Think about it. You are merging two separate budgets into one—household bills and groceries! This is an important time to sit down and discuss finances with your significant other, and draft a personal and couples budget. In the article, Ms. Kristina recommends:

Budget for Necessary Expenses
Only merging together the necessities to ensure an equal share in the participation of monthly expenses. For example, in a joint account you would each put money in for essentials like food, shelter and related expenses. When it comes to a budget, first, determine your total monthly bills as a couple. Then, add those bills as an expense to your personal budget. What you have left over, as Ms. Kristina states, is yours to keep individually.

Think Twice about Joint Credit
If one partner can’t commit to the other and sign on the dotted line for happily ever after, then don’t allow him/her to sign the back of your credit card!

Joint Savings Account
Start a joint savings account as part of your couple’s budget. Each of you should contribute an equal amount into a savings account in both names for other joint expenses such as a couple’s vacation, new furniture, or a weekly eating out budget. It helps to break down budgets into shorter amounts of time such as a weekly budget. Read the rest of the article here.

No Federal Estate Tax, but What About your State?

Everyone is talking about the lack of a Federal estate tax this year, but as this New York Times article points out, there are still 20 states that levy a local estate tax. It explains how state estate taxes can complicate the process of dealing with a recently deceased family member’s finances, and provides advice on how to plan for local estate taxes.

The first quarter is nearly over, and the federal government has made no move to reinstitute the estate tax. So dying today seems free, right?

There is just one problem: If you live in one of 20 states with a state estate tax, you could find your existing estate tax plans causing more harm than good.

State estate taxes are not new. They had just been a secondary element in the course of figuring out the much higher federal estate tax.

Now, the issue is sorting through wills written to maximize the old federal exemption from estate taxes — $3.5 million in 2009. In states with their own estate taxes, some of these provisions could distribute money and incur taxes in ways the deceased never expected — or maybe not if the federal estate tax is reinstated. As Jerry Weihs, director of advanced planning at Sun Life Financial, said: “We’re in a state of ambiguity.”

AUTOMATIC MISTAKES

The biggest issue with the state estate taxes is wills that contain so-called formula clauses. Many wills were redrafted in the last decade to take into account the increasing federal estate tax exemption. Instead of rewriting the will every few years, clauses were put in to reflect the rising exemption amount.

Continue reading at NY Times…

Harmonic Tax Advice for Musicians

Last week the RDTC Tax Help Blog posted this entry with advice for professional musicians. You can find a section of the entry below, but be sure to checkout the full text at Harmonic Tax Advice for Musicians.

Classify Yourself

You need to decide exactly what type of musician you are before you can even begin thinking about taxes. What course is your career taking? Are you in a band? Are you interested in being a music teacher? Or, do you offer lessons from your home or at a nearby music shop. Once you have classified yourself, if will be easier to keep track of your finances and tax liability.

$600 Rule

No matter what type of musician you are, if you make more than $600 in a year doing something then you will need to report your income to the IRS. Whether you make that much in tips from performing at clubs, or from teaching the piano to a family friend, it will need to be reported to the IRS.

Teaching Advantages

If you are a music teacher at a school, you may be able to take advantage of several tax deductions available to teachers. One of the most useful tax advantages for teachers is the educator expense deduction that allows qualifying teachers to deduct $250 worth of out of pocket expenses for classroom supplies. For more information on tax tips for teachers, including the educator expense deduction check out this article on CEO Roni Deutch’s personal blog.

The Business of Music

If you teach music classes from home or a business, you may be able to classify yourself as a small business owner. Speaking of teaching from home, if you have a separate room used to run this business then that room may qualify for a home office deduction. If you have not already, you may need to get a small business license from your city or country, and if the business expands you may even need to get a federal ID.

Quarterly Payments

If you are earning income from your music, either teaching or performing then you might want to consider making estimated quarterly payments. If you wait until the end of the year, then you might end up with a massive tax bill, and possibly even penalties and fees.

The New Estate-Tax Math: Give to Charity or Your Children?

With the estate tax on a hiatus in 2010, many experts are warning that the missing tax could result in thousands of U.S. charities seeing fewer donations this year. In previous years, it was considered a smart tax move for wealthy taxpayers to leave a portion of their estate to various charities, in addition to their heirs. However, since the IRS will not assess any tax on estate in 2010, it is likely that more Americans will leave all of their wealth to heirs.

According to this article on Wall Street Journal, before the repeal of the estate tax, leaving money to charities was not really a choice for wealthy Americans, but a generally smart financial move.

With the government taking a large chunk for the estate tax, the choice was to leave a portion to heirs after the IRS took its chunk, or leave the full pretax amount to charity. In other words, for each $1 of the estate, the wealthy could leave $1 to charity, or they could leave 55 cents for their heirs and 45 cents to the IRS (with various caveats for spouses, thresholds etc).

As of Jan. 1, however, there is no estate tax, at least for a year. So the wealthy now have a more equal choice: $1 for heirs, or $1 for charity. Guess which one they probably lean toward?

“I’d like to think we’re all altruistic,” Sanford J. Schlesinger of Schlesinger Gannon & Lazatera LLP, told Financial Planning. “But especially in a dreadful economy, repeal will have a devastating effect on charity.”

Adds Ben Harris of the Brookings Institution and Urban Brookings Tax Policy Center: “With repeal, the price of charitable giving is more expensive. This is a monumental change in the estate-tax rate. We’re not talking about going from a 45% estate tax to a 35% tax. We are talking about from 45% down to zero. Does this mean people won’t give to charity anymore? No. Of course they’ll give to charity; just less.”

2009 vs. 1999: Are you Better off?

Earlier this morning I came across an interesting article from MSN Money discussing how the financial situation of most middle class families has not improved over the past decade. When comparing the year 1999 – the peak of the dot-com boom – to the recession of 2008 and 2009 it is easy to understand why so many families feel their finances are worse off now than they were a decade ago.

"This hasn't been a sterling decade," says Isabel Sawhill of the Brookings Institution and the author of "Creating an Opportunity Society." She argues that the American dream of prosperity and advancement has turned into a myth. "The average American family hasn't been able to improve its financial situation."

Of course, it's impossible to compare 1999 with 2009 without noting that in 1999, the economy was still floating happily in a dot-com bubble, while this year we've been mired in the worst recession since the Great Depression.

But experts say these are just details. They argue that dozens of indicators -- after adjusting for 30% inflation since 1999 -- have been marching in the wrong direction for years, in ways big and small:

In 1999, 67% of workers had to pay part of their health care benefits cost, says the Bureau of Labor Statistics. In 2008, that had risen to 75%.

According to the Census Bureau, 10.3% of U.S. families lived under the poverty line in 2008, versus 9.3% in 1999.

Households in the bottom 10% made $12,181 or less in 2008, which was down 8.1% from 2000. But the threshold for household incomes in the top 5% was $180,000, down just 0.9% from 2000.

Continue reading at MSN Money.com…

Report: Americans More Stressed About Finances

Even though the housing market seems to be improving and the trouble on Wall Street has settled down, reports are showing that Americans are more stressed now about their finances than they have been in nearly a year. As such, consumer confidence is at a yearly low (38.1) according to the September Consumer Reports Index. Check out the following article explaining why confidence is continuing to decline courtesy of Biz Journals.com.

Increased credit card, health care and personal loan issues are the drivers behind their dour demeanor.

When the index is greater than 50, more consumers are feeling positive about their situation. When it is below 50, more consumers are feeling worse.

On a positive note, shopping for big-ticket items such as a home or car looks strong for September, the report noted.

"Despite the negative forces consumers are facing, we have seen some stabilization and improvement in key indicators that suggest we could see an improvement in consumer sentiment over the next month," said Ed Farrell, director of the Consumer Reports National Research Center.

Consumer Reports Trouble Tracker found almost 38 percent of Americans have experienced at least one major negative personal finance event in the last 30 days.

In Debt, Do They Part? Recession Delays Divorces

Yesterday I came across this interesting article from Philly.com discussing how more unhappy couples these days are deciding to stay together for financial reasons. According to the author, the recession has made it difficult for many couples that would like to file for divorce, but simply cannot afford to do so.

Breaking up is hard to do, but during a recession, it's even tougher.

Couples who want to split up often are handicapped: by the high cost of attorneys' fees, because they can't sell their homes or can't afford to set up two households.

So some of them are stuck living together - miserably.

"Some are agreeing to be roommates and stay at separate ends of the house," said attorney J.J. Dahl, who handles about 65 divorce cases each year. "And we have some who have gotten divorced and they're staying in the house together until the market improves and they can sell it."

This is new territory for Dahl, who says that none of her clients was doing this two or three years ago. But today, she finds that 25 percent of her clients are living together to make ends meet until they sell the house - and another quarter have given up and are losing their homes to foreclosure because they couldn't stand living together anymore.

Nationwide, the divorce rate appears to be the lowest since 1970, according to preliminary numbers from the National Center for Health Statistics.

"There is a lot of fear, so people are staying put," said Gary Nickelson, president of the American Academy of Matrimonial Lawyers. "People look at their assets and their liquidity, and they realize they don't have any."

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Refinance Program Expands to Cover Mortgages 25% Under Water

Earlier in week it was announced that the Home Affordable Refinance program would now accept applications from homeowners who are up to 25% under water on their mortgage. Meaning that you can still qualify to refinance your home even if the current value is up to 25% less then what you still owe.

Financial expert Suze Orman took to her blog to explain what this change means to the average American. You can check out a clip from her entry below, or click here to check out the full text and links to more information.

If you have a mortgage that is either backed or held by Fannie Mae or Freddie Mac, and you are still on-time with the payments, you may be able to refinance into a low-rate mortgage to help you stay in the home. When the program was launched in the spring your mortgage could be as much as 105% of the home’s current value (or to put it another way, you could be 5% under water) and still be eligible for the program But the government realizes that it needs to reach more people at risk of losing their home, so it has now expanded the acceptable loan-to-value (LTV) to 125%.

What to Do:

If you have were already turned down for a Home Affordable refinance because your LTV was too high, I want you to go back and try again. Make sure the lender knows about the new rule. Hey, print out this official release and show them.

If you hadn’t bothered to try and refinance because you knew your mortgage was over the old 105% limit, well, now’s your chance.