It’s officially called the American Recovery and Reinvestment Act. This plan comes in at $787 billion. It won’t make everyone happy, but it will help some people and that’s the best we can hope for given the partisan nature of our government. I’m not going to summarize the entire bill, but here are the key points that will impact many Americans. Visit the New York Times for a complete summary of everything in the bill.

Food Stamps: $20 billion in increased food stamp funding. As food costs rise and more people lose their jobs, food stamps are the thing that stands between families and hunger. Another $900 million is included for other government nutrition programs and food banks.

Pell Grant: The maximum college grant is increased to $5,350, which will help families struggling to afford college.

Social Security Supplement: Recipients of Social Security, SSI, and other government pension programs will receive a one-time payment of $250. These people are very likely to spend the money rather than save it.

Aid to States: Many states are drastically cutting their budgets due to massive decreases in property tax revenue (as well as income and sales tax in states with those taxes.) If states can’t spend money, then people will lose jobs or services. It’s not direct stimulus, but it will keep teachers, cops, and firefighters employed. It will also help with Medicaid funding and other state initiatives.

Energy Spending: Most of the energy spending will go toward creating or maintaining jobs related to modernizing our current energy conduits, developing new energy sources and technologies, or helping people buy more energy-efficient appliances. If you need to weatherize your home (which will reduce your energy costs) or need to buy new appliances, see if you qualify for these programs.

COBRA Supplement: If you became or become unemployed between Sept 1, 2008 and Dec. 31, 2009, the government will cover 65% of your COBRA payments so that you can keep your insurance for 9 months.

Infrastructure: Although you may not use the facilities being upgraded through infrastructure projects, the programs will create many new construction jobs.

Income Tax Credit: Individuals will receive a credit of 6.2% of earned income, up to a max of $400 per individual and $800 for couples for 2009 and 2010. Again, the credit phases out at $75,000 and $150,000 respectively. The credit is refundable, so people with no tax liability will receive money. You may see the credit as additional money in your paycheck (around $13 a week.) You will not receive a stimulus check from the government.

Homebuyer Tax Credit: Individuals earning up to $75,000 and couples earning up to $150,000 will receive a tax credit worth up to $8,000 for the purchase of a new home. The credit is refundable and not repayable unless you sell your home within three years. It phases out after the income limits.

Child Tax Credit: People earning as little as $3,000 will now qualify for the child tax credit.

HOPE Tax Credit: Expands the HOPE tax credit to $2,500 a year for four years of college tuition and textbooks. It’s partially refundable and phases out starting at $80,000 for individual and $160,000 for couples.

Hybrid Tax Credit: If you’re thinking of buying a new car, this increases the tax credit for the purchase a new plug-in hybrid to $7,500.

New Car Tax Credit: If you can’t afford a hybrid, this is a tax deduction for the state, local, and excise taxes for the purchase of a new car up to $49,500. The credit phases out at $125,000 for individuals and $250,000 for couples.

Unemployment: Something for people who’ve lost their jobs: extension of unemployment through the end of the year. Unemployed workers receive up to 20 weeks of unemployment insurance, up to 33 weeks in high unemployment areas. Increases the average payment by $25 a week. It also exempts the first $2,400 from federal income taxes in 2009.

AMT Patch: This is usually passed at the end of the year, but it will affect most Middle Class people who still have jobs. At the very least, it will save the IRS a boatload of money they usually spend redoing all the forms when Congress waits until November or December to pass the patch.

There’s a lot more in the bill, but these initiatives are the ones most likely to impact you or someone you love. I was also happy to see that this bill includes oversight, unlike some programs (TARP). Go to Recovery.gov for reports from the oversight board. I’m sure it won’t be perfect, but some oversight is better than none. Personally, I hope to take advantage of the new home and new car tax credit.

What do you like or dislike about the stimulus package? The comments are open for debate.

Yesterday Citibank emailed me and asked me to share this free money opportunity with you:

Starting this month, Citibank will be offering customers up to $225 in merchant gift cards through the Thank You Network for opening a new checking, money market or credit card account.

If you’re in the market for a new bank because your old one has closed or was bought out, this is a great chance to get free money for something you needed to do anyway.

It appears that you earn points through the account activity, and those points can then be redeemed for merchant cards. If you want to learn more, go to Thank You Network.

This week we have three great carnivals to share, so I’ll dispense with all other talk.

First, the Carnival of Personal Finance #191, hosted by Dollar Frugal. My stabby rant about about retail sales growth was an editor’s pick. I also recommend Bret Frolich’s post about common sense being back in style. It’s about time.

Second, the Festival of Frugality #164 at Broke Grad Student. Once you follow my advice to buy a frugal Dutch oven, I recommend this post at Make It from Scratch for quick ideas for cutting food costs. She doesn’t say “Dutch oven,” but it’s implied.

Third, the Money Hacks Carnival #51 at Your Money Relationship. In addition to my post about homemade yogurt, I also recommend The Smarter Wallet’s suggestions for cheap meals you can cook at home.

As you know, my husband and I are tentatively househunting. I say tentatively because we’re not sure when exactly we want to buy. We don’t yet have a real estate agent, but we do have a loan estimate. We also have a dealbreaker list and some neighborhoods we’re interested in. There’s just one major question left to answer: condo vs. house.

We’ve been back and forth on the question. I want a house with a small yard, my own roof, no HOA fees, and no neighbors above, below, or otherwise attached to me. My husband, who is more urban than me, wants a condo. He just likes the idea of it. Plus, condos are bigger than most of the houses in our area. They certainly have better kitchens and closets. (Most of the LA’s central areas were built in the 1920s-1950s. We can’t afford a house that’s been torn down and rebuilt.)

So we’re debating the pros and cons.

Pros and Cons of a Condo
I do see the advantages of a condo, but there also some striking disadvantages that we need to consider.

Pros:
Secured parking/entrance
Instant community
Lower cost of entry – homes usually sell for more than a comparable condo
Possible on-site gym
Shared maintenance costs – you pay the HOA and hopefully it covers most routine maintenance as well as major repairs.
No exterior maintenance
No hiring contractors/repairmen for major exterior work
Lower insurance costs

Cons:
Close neighbors
Potential for unexpected assessments
Restrictions on usage, pets, modifications
Condo boards
HOA fees – you pay in, but don’t control how it’s spent
Communal parking
Tend to be on busier streets
Lower resale value

Pros and Cons of a House
It’s my dream to own a house. Not a big one, but one that’s all my own. I’m still convincing him that it’s the way to go, though. Some of the pros may be restricted by your city or housing development, but in general the restrictions are less than you’d experience with a condo.

Pros:
Land ownership
Stand-alone structure
Freedom to modify as needed
No pet or use restrictions
Higher resale value
Greater privacy
Private parking
Quieter street

Cons:
Responsible for choosing all services
Responsible for full cost of all maintenance
Responsible for all landscaping
Higher cost of entry
Higher insurance cost
Possibly higher property taxes

Depending on where you live, condos may also have newer fixtures and more modern design, however many areas have new home developments with the same features. It really depends on your personal taste and your budget.

I have a bias against condos because of bad experiences with a former employer’s leaky condo and her condo board. In contrast, my husband has friends who love their condos. So, we’ll continue to look at both before we decide.

Where do you stand in the condo vs. house debate? Tell me in the comments.

Earlier this month, a co-worker quit so he could spend a year traveling the world. Then this weekend the LA Times covered a family who spent six months traveling the world with a toddler. It got me thinking: could I ever do something like that? What would I need to do it?

Both my co-worker and the family from the newspaper had two advantages: contacts in foreign locations that allowed them to do some work while traveling, and lots of money saved up.

Now I’m not sure I would actually want to drop out. I’m not really one to spend a year traveling and my goals lie in other areas, but could I if I wanted to? Right now, I’d have to say no.

What You Need to Drop Out
If you want to drop out of life for a year, and have something to come back, you need to have a few things in place.

Money. Yeah, it’s not cheap to travel the world, even if you do it frugally. The traveling family spent $30,000, but they were able to trade work on a llama farm in New Zealand for three months of room and board. It helped that they were llama farmers here in California before they left. I’m not sure how much money my co-worker saved up, but I’m guessing it’s more than $30,000.

No Mortgage. If you own a home, it’s much harder to drop out because you still have to pay the mortgage and take care of upkeep. If you’re a renter, you can sell your stuff and leave when the lease is up. It’s really not feasible to sell a house for just a year, although I suppose you could rent it out.

No Car. Unless you’ve got a friend who will let you leave your car with them for a year, or plan to lease it out for a year, you’ll have to sell your car before you jet off.

Transferrable Skills. In this economy, it’s not a good idea to quit your job to travel unless you have skills that will allow you to quickly get a job when you return. On the other hand, if you’re about to be laid off or working in a shrinking industry, it’s probably a great time to drop out. No one will bat an eye at a gap in your resume during 2009.

Bravery. It’s easier for men to travel alone. I think it requires a certain bravery, or naivety, for a woman to set out on her own for a year. However, if you plan ahead and choose relatively safe destinations, it can be done. Unfortunately, safer destinations are usually more expensive to visit or live in.

Gregariousness. If you’re an introvert like me, then traveling alone for a year could be difficult. This is definitely something better suited to outgoing people who network and make friends easily. Otherwise it will be lonely on the road.

Good Guidebooks. This one is key. Before you buy that round-the-world ticket, invest in good guidebooks to ensure that you don’t drop yourself into a warzone. Check out potential destinations and find locales that are both interesting and stable (unless you specialize in landmine removal.)

Internet Access. This one’s pretty easy. Yes, you could swear off all communications for a year, but what if there’s a family emergency? What if you just want to stay in touch with family and friends? What if you need to move money between bank accounts or pay bills to further fund your trip? Fortunately, there’s an internet café just about everywhere on the globe. Staying in touch has never been simpler.

So, are you ready to drop out? What would you do if you did? If you’re considering dropping out, I recommend reading The 4-Hour Workweek. I don’t normally recommend the book, but he has great advice for setting up your life for some time away from it.

First, let me say that I’m not opposed to personal bankruptcy. Every year, millions of people lose jobs, suffer major illnesses, or experience family losses that decimates their finances. These are the people bankruptcy was invented for. However, there is a new bankruptcy trend that really makes me stabby: filings by people who could pay their bills, but choose not to because they’d rather spend the money on something else.

Personal Bankruptcy Is the Latest Get-Rich-Quick Scheme
A friend told me that her friend proudly announced that he was filing for bankruptcy to eliminate his credit card debt. He decided he wants to remodel his house instead of paying his bills. He figured now was a good time to file for bankruptcy because so many other people are filing that “it won’t hurt you as much.” He also claims to know 10 other people doing the same thing. That makes me sick for so many reasons!

Unwarranted Bankruptcies Cost the Rest of Us
Bankruptcy was intended for people who are legitimately suffering. It’s not a system to be manipulated just because you don’t feel like paying your bills. When people take advantage of the system, it costs the rest of us more. Credit card companies charger higher fees and interest rates to those who do carry a balance. Businesses pay higher costs for credit because the banks have to make up for the loss somewhere else. When businesses pay more, we pay more for the goods we buy from them.

Unwarranted Bankruptcies Make Credit Less Available
We’re also in the midst of a massive credit crunch. Most of it is a result of the collapsing housing market, but defaulting credit cards also play a role. Those people who could pay their bills, but choose to take advantage of the system instead, are making it more difficult for honorable people to get loans that would stimulate the economy.

Unwarranted Bankruptcies Clog the Courts
According to Reuters, December 2008 personal bankruptcy filings increased 44% over the year before. Even if only 5% of those are unnecessary bankruptcies, that’s still a lot of extra workload for cash-strapped courts and cash-strapped creditors. It also delays relief for families that really do need the help.

Unwarranted Bankruptcies Chip Away at Society’s Morals
Each year, we seem to be moving further away from a national sense of personal responsibility. More and more people consider only how their actions affect them. They don’t consider how their decisions could affect their friends or even strangers. If we keep moving in this direction, all those futuristic movies will come true and we’re all doomed.

Okay, that might be a stretch. But the gist is still true – each time an unethical choice becomes acceptable, our ethics as a nation weaken and there’s no telling where it will end.

What Should Be Done?
Unfortunately, I don’t think there’s a way to punish people who file for bankruptcy for personal gain without inadvertently hurting the people who really need the help. My hope is that this jerk will be forced into Chapter 13, where he’ll have to repay most of his debt under a court-ordered system. I also hope that his credit will be trashed. I’m guessing that lenders are going to take a hard look at any bankruptcies when they’re ready to lend again. I also hope lawyers who choose to represent these *$#%@Q%Q# (sorry, the stabbiness overtook me) will be disbarred for abusing the court system.

Actually, if I’m hoping for things, I hope this guy and his lawyer are covered in honey and strung up by their toes over an anthill. But that’s just me.

Although the bankruptcy laws were made stricter at the behest of credit card companies and other creditors, people like this were part of the underlying reason. If this sort of deceitful, greedy, manipulative, so many words I can’t say on a family blog, behavior continues, we may have to get rid of bankruptcy entirely. Ultimately, that will only hurt the people who are genuinely suffering and who could genuinely benefit from a fresh start.

What do you think of people who manipulate the bankruptcy system for personal gain? What do you think should be done to punish them?

With all this talk of cuts to the economic stimulus package, I started to wonder if there were any other ways I could cut my personal spending 10% (which is about how much they cut from the package.) So here are 50 simple, not-so-simple, and sometimes silly ways to cut spending by 10%. This assumes an income of $50,000 a year, so a cut of $5,000.

  1. Quit Smoking. Boom, you just saved $1,800 a year (assuming a pack a day habit.)
  2. Write down everything you spend to curb your urge to waste money.
  3. Only use your own bank’s ATMs.
  4. Sign up for direct deposit. Save $5-10 a month on account fees.
  5. Pay off debt. Not paying interest can save thousands.
  6. Use free online bill payment if your bank offers it.
  7. Drink less. Don’t give it up, but drink at home instead of at a bar. Switch to cheaper wines. You can find great stuff for less than $8 a bottle (the equivalent of one bar drink.) Save $600 a year.
  8. Brew your own coffee. Save $1000 a year over Starbucks.
  9. Bake your own muffins/bread for breakfast. Save at least $500 a year over fast food or Starbucks.
  10. Start using grocery coupons.
  11. Cook at home rather than ordering out at least once a week. Save $500 a year.
  12. Make dinner from scratch. Raw ingredients are usually cheaper than boxed food, unless you have a great coupon and sale combination
  13. Take your lunch to work. Save $1300 a year.
  14. Make homemade freezer meals for those days you know you’ll be tempted to order out.
  15. Keep the freezer full. Place half-filled water jugs inside when you run low on food. The more frozen stuff it contains, the less energy it requires to stay cool.
  16. Plan menus to avoid letting food go to waste.
  17. Make your own baby food.
  18. Switch to cloth napkins and dish cloths.
  19. Practice CVSing to save on personal care items.
  20. Host potluck dinner parties instead of going out to eat.
  21. Go out once a month instead of once a week.
  22. Borrow books and DVDs from the library.
  23. Return borrowed books and DVDs on time.
  24. Cancel the newspaper and check the mailbox for the coupon inserts instead.
  25. Put yourself on a music download budget.
  26. Drive less.
  27. Get rid of your car – switch to mass transit.
  28. Get a roommate.
  29. Cancel your landline phone (if you don’t live in a potential disaster zone or need a landline for safety reasons.)
  30. Buy a cheap cell phone/phone plan. No text messages, no internet access or email, no Bluetooth.
  31. Use the ringtones your phone came with.
  32. Cancel Premium Channels or DVD subscriptions. Save up to $480 a year.
  33. Cancel cable. Get a converter box or download shows from network websites.
  34. Buy clothes that don’t need to be dry-cleaned.
  35. Go deep in the closet to find old clothes. If they still fit and are remotely fashionable, update them with a simple belt or accessories. Note: the belly shirt you wore to spring break ten years ago cannot be rescued.
  36. Turn down the heat/AC.
  37. Buy a thermostat with a timer. Avoid heating the house while you’re asleep or at work.
  38. Go bigger and turn them off – use a fan and a blanket instead.
  39. Weatherize your home.
  40. Unplug unused electronics, phone chargers, etc.
  41. Turn the power strip off when appliances aren’t in use.
  42. Turn off the lights when you leave the room.
  43. Get rid of the garage refrigerator. Save $280 a year.
  44. Don’t leave your computer on overnight. Save $150 a year while you sleep!
  45. Cancel your gym membership. If you don’t use it at least 15 times a month, there are cheaper options out there.
  46. Cancel most automatic subscriptions. You may not even realize what you’re paying for. Scour your credit-card bills for anything that can be cancelled.
  47. Lose weight. Plus-sized clothes cost more because they require more fabric.
  48. Buy fewer gifts.
  49. If you don’t already plan to buy enough to qualify for free shipping, wait or pay the shipping fee rather than buy extra stuff you don’t need.
  50. Ditch expensive friends. If you can’t hang out without spending money, maybe your friendship isn’t that strong. It’s a hardcore step, but sometimes it must be done.

Got more ideas? Post them in the comments.

Two weeks ago, the Los Angeles times reported that landfills are filling much more slowly now. The owners say it’s because fewer people are buying stuff, eating out, and throwing stuff out. That started me thinking: how could this recession benefit the environment? Could it even set a trend that’s good for the economy in the long-term?

Less Shopping = Less Trash
We have become a disposable culture. If something breaks, we throw it out and replace it. Everything we buy comes wrapped in layers of plastic, Styrofoam, and cardboard. This year, tons of TVs will wind up landfills because people replaced them instead of buying converter boxes. At the very least, our reduced buying levels will result in the creation of less trash.

Less Trash = Happier Planet
While less trash may make landfill owners feel the pinch, no one can argue that trash is good for the planet. It produces methane, it pollutes our oceans, and it uses up land. If we can make a permanent switch to producing less trash, especially non-recyclable trash, we can perhaps slow the negative impact human life has on the planet.

Fewer Exported Recyclables = More American Innovation
I also heard a report on NPR about the problem American innovators are having getting ahold of recycled metals, cardboard, and paper. Apparently, it was more profitable to ship our recyclables to China than to sell them to U.S. recycling companies. Now China doesn’t want to buy our recyclables because we’re not buying the packaged goods they make from them. That gives American firms a chance to create innovative energy, packaging, and product solutions that require those very materials at more affordable prices.

Unfortunately, recycling sorting centers are seeing lower profits and are closing down or reducing their hours. The excess ends up in landfills. In order to help the planet and allow for American innovation, we need to reverse that trend.

Desperate Times = More Innovation
Obama included green proposals in both his campaign and his stimulus plan. In good times when everyone has money, it’s easy to ignore our impact on the environment. Desperate times, like now, actually make room for more innovation because there’s less risk to taking chances, especially if the government is willing to support new initiatives that will create jobs.

Less Packaging = Cheaper Products
This is probably a stretch, but I hope that the reduction in purchased goods will spur producers to take a look at their methods. If they can cut the packaging on those goods, they’ll cut their cost to produce it. If that translates into a lower price at the store, then maybe people will decide it fits into their budget. At the same time, a reduction in packaging (which must be thrown out or recycled) is a boon for the planet.

This recession/depression is terrible. It’s hurting a lot of people. It’s also an opportunity to change our culture, our country, and our planet. If we change our ways, we could turn this disaster into something positive that will last for generations.

This week’s blog carnival selection includes just two fine carnivals.

First, the Festival of Frugality #163 hosted by My Journey to Millions. He called out my Valentine’s Day post, as well as Bargaineering’s similar take on the romantic holiday.

Second, the Carnival of Personal Finance #190 hosted by Funny About Money. In addition to my post about 100 ways to go green, I recommend Wide Open Wallet’s 100 uses for vinegar.

Finally, it’s not a carnival, but Everday Finance created a list of the best personal finance posts of 2008. Check it out for some great tips.

Everyone knows that yogurt is good for you, but buying a lot of small containers of yogurt can get expensive, even with coupons. You also have no control over what goes into your yogurt, and all those plastic containers are bad for the environment. I asked for a yogurt machine for Christmas and have used it weekly ever since. Discover the advantages, and minor disadvantage of homemade yogurt.

ADVANTAGES
Homemade Yogurt Is Easy to Make

homemade yogurt ingredients

If you have a yogurt machine, this is everything you need to make yogurt. If you don’t have a yogurt machine, see Alton Brown’s slightly more complicated method. For mine, I just microwave the milk, let it cool, add the starter, and then leave it for 9-10 hours. When it’s cooked, pop it in the fridge for 3-4 hours to set, then it’s done. You can either use store-bought starter or already made yogurt with live cultures. I trade off – one week with fresh starter, and then one week with two tablespoons of yogurt from the previous batch. I find that pushing it to three weeks can make the yogurt lumpy and a bit sharper in taste.

The total process takes about 10 hours, but only 5 minutes of that is actual effort.

The Yogurt Is Cheaper
A one-quart container of yogurt costs at least $2 in most areas. Small containers of yogurt range from 30 to 90 cents. Many of those containers have shrunk to as little as 4 ounces, which means you’re paying around $2.40 for a quart of yogurt.

I can buy a half-gallon of whole milk (non-organic) for $1.79. That’s enough to make two batches of yogurt.  A box of starter costs $4.50 for six packs. That comes to 37.5 cents per batch (using the one week starter, one week yogurt method). The total cost per quart is then $1.27.

Homemade Yogurt Is Better for You
Most commercial yogurts are packed with sugar, flavorings, stabilizers, and chemicals. My yogurt contains milk and live cultures. That’s it. I also found that commercial yogurts tended to set off my lactose intolerance. I’ve had no problems with homemade yogurt.

You can choose to use whole, 1%, or even non-fat milk. They do recommend adding powdered milk to lower fat milk, which will increase the total cost slightly, but it’s still not exorbitant and you still know exactly what’s going into your milk. You can also use organic milk to make it even healthier at a lower cost than store-bought organic yogurt, which can be very pricey.

You Can Flavor It Yourself
Don’t like plain yogurt? You can add a different flavor to each individual serving after it’s made. Try fresh berries, granola, honey, or anything else that tickles your fancy. I like to use a half teaspoon of raw sugar. It adds a touch of sweetness without being overpowering.

It’s Better for the Planet
Each little container of yogurt is made of plastic. That plastic is made from petroleum. As we all know, oil-drilling is bad for the planet. Processing it into plastic is also bad for the planet. Then those plastic containers must be delivered to your store, which consumes more petroleum. And then the empty containers must be recycled or stuffed in a landfill where they will never break down.

When you make homemade yogurt, you’ll still need to buy the milk, which may well come in plastic that was delivered to the store, but you cut out the last step. Homemade yogurt containers are reusable, so they don’t have to be recycled or thrown out. Some machines include glass containers if you really want to reduce the plastic in your life.

DISADVANTAGE
Homemade Yogurt Requires Advance Planning
This is the primary disadvantage. You can’t just enjoy the yogurt minutes after you return from the store. It takes about 14 hours to make a batch. I make a fresh batch every Sunday around noon. I transfer it to the fridge before bed and it’s ready for breakfast in the morning. If your family eats it faster, you’ll have to remember to make it before the last jar is used up.

Currently, I don’t use organic milk in my yogurt, which keeps my cost down. If I was pregnant or had a child eating the yogurt, I probably would switch to organic milk. For now I’m happy knowing that homemade yogurt lets me be a friend to my body, my budget, and the planet.

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