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Home Buyer Tax Credit To Expire

The deadline to qualify for the Federal Housing Tax Credit is this Friday, April 30th.  Many housing markets are in a midst of a flurry of activity as the deadline looms.  This government program provides an $8,000 tax rebate for anyone buying their first home, and up to $6,500 to home buyers who have resided in their previous home at least five years.  To qualify, you must be under contract by this Friday, and close on your purchase by June 30, 2010.

Market Manipulation

While the actual stimulus program can (and should) be debated, it is no accident that this will be a busy week in residential real estate.  Some agents are even trying to capitalize on the momentum by privately extending their own “tax credit” of up to 3% of the purchase price after the government credit expires.  Very creative if you ask me!

I have a personal stake in the matter since my house is on the market.  I know it will help us get showings this week, but I’m not sure if it’s the best use of taxpayer money.

What About You?

Are you trying to purchase a house and beat the deadline?  Was this Federal Housing Tax Credit a good idea?  Should it be extended?  Tell me your thoughts or experiences with the Federal Housing Tax Credit.

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Personal Finance buyer, credit, government, home, real estate agent, realtor, stimulus, tax

Last week I went to Washington, D.C., with my wife and mother-in-law.  As a political science major and later law school graduate, surprisingly I’d never been to our nation’s capital.  I had a wonderful time, and hopefully came up with a few blog posts about my trip.

Waiting In Line

There’s no getting around it — when you go to Washington, D.C., you’re going to wait in lots of lines for tickets to enter museums and tours.  On the last day of our trip, I was in line at 9:00am to see the Holocaust Museum, which opened at 10:00am.  We were cold and hungry, and luckily there is a cafeteria next to the museum, so I went inside to grab some coffee and bagels while my wife held our place in line.

You Want Me To Pay For A Paper Bag?

After getting two coffees, a bagel, a doughnut, and a cookie (I know, I know.. not the healthiest food to eat when you’re out of town!), I realized I needed a bag to carry all that stuff outside.  When I asked the clerk, she said she had to charge me 5 cents for a paper bag.  Seeing the perplexed look on my face, she further explained that D.C. had become the first American city to institute a bag fee.  The effort would help reduce waste, and the money collected by the fee would go to help clean up the nearby Anacostia River.

Rationally Irrational Behavior

Instinctively, I declined to pay for a paper bag.  Why on Earth would I pay extra for it?  But once I realized I couldn’t physically carry two burning hot coffees with sketchy lids plus our snacks, I decided to have a moment of clarity and decided to drop a nickel on a paper bag.

Behavioral Economics

It is funny how even the smallest monetary charge deters us from a purchase.  Reports have D.C.’s plastic bag consumption down 60%!  This means people have gone with reusable grocery bags or just try to carry their groceries out by hand.  Of course, it also can have negative economic consequences — there are some people who have chosen to pick up groceries in nearby Virginia or Maryland, with possible higher sales taxes, just to avoid paying 5 cents for a bag!

I find it fascinating that the deterrence has nothing to do with the amount of the charge, but in confronting citizens and forcing them to choose to accept an additional 5 cents/bag on each transaction.  Similarly, we are manipulated when we use plastic over cold, hard cash.  Plastic is painless to swipe, but cash is more of a physical & mental transaction, and you are likely to spend less money when using cash.

Point is, we are all human beings, and subject to subtle manipulation in our financial habits, which have an effect on our lives in different ways.  If this new bag tax doesn’t affect D.C.’s economy, I think it was a great way for the District to promote conservation & recycling.  Of course, it’s a bit IF, so we’ll see how it shakes down.

What about you — would you pay 5 cents per bag?  Are there other instances of ‘behavioral economics’ where you are encouraged/manipulated into making certain financial choices?

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Politics bag tax, behavioral economics, D.C., lincoln, tax

Welcome to the Yakezie Challenge Carnival!  The Yakezie is a network of personal finance bloggers who are dedicated to improving our individual blogs through selfless promotion and information exchange between fellow members in the group.  The Challenge, at least initially, is to raise our Alexa rankings.  When my site, MyMoneyMinute.com, first began the challenge, my blog was ranked well into the 3 millions; now, as of today, I am ranked #264,844 — and I owe it all to this great network of bloggers!

This Week’s Yakezie Highlights

Here’s some select posts from our Yakezie members:

Free From Broke gives us Different Bank Cards And Their Uses.

Not Made of Money shows us How To Save Money When Buying Plane Tickets.

Eliminate the Muda tells us about Health Care For Kids When You Can’t Afford It!

Jason from One Money Design submitted a video in a contest on how to Save Money Commuting To Work.

Jeff from Deliver Away Debt hosted a carnival of his own — 111th Money Hackers Carnival: Don’t Hassel-the-Hoff Edition!

The Millionaire Nurse gives you 8 Tips To Improve Your Credit Score.

The Simple Life In France asks: Do You Wish You Spoke Any Other Languages? I wish, but I only have to my credit two semesters of American Sign Language and the curse words in Spanish.  I should get moving!

College For 10k tells us How The iPad Could Save Money.

Zordane says Getting Into Debt Doesn’t Solve Another Debt.

Craig from Money Help For Christians gives us a double-dose of high-quality posts this week:  The Best Personal Finance Software for 2010 and Can Kids Open A Roth IRA?

The Yakezie, Death & Taxes!

April 15th was last week, which can mean only thing — taxes!  Here’s some great articles from the Yakezie archives that are tax-related.  Enjoy!

20s Money — What Is The VAT Tax?

Beating Broke — What We’re Doing With Our Refund

Bible Debt — Legalize Marijuana: The Answer To Our Budget Problems?

Buck$ome Boomer — How To Spend $1,100 On Medical Expenses…Fast!

Budgeting In The Fun Stuff — A Rebuttal to Washington Times article, 5 Myths About Your Taxes

Canadian Finance Blog — Book Review: Make Sure It’s Deductible

Car Negotiation Coach — Done With Taxes? Stop And Check Your Auto Finance Health

Christian Common Cents — What Is Tithing? (Okay, this is more of a God-tax, but I liked it.  If only Uncle Sam’s taxes were voluntary like God’s…)

Clarifinancial — Insurance Crucial In Irrevocable Trust

Conquering PF — PF Defined

Consumer Boomer — How To Check The Status Of Your Federal And State Income Tax Return

Cool To Be Frugal — Should I Put My Emergency Fund Into A Roth IRA?

Couple Money — Our Tax Return Plans

Credit Card Chaser — Are You Sure You Want To Pay Your Taxes With A Credit Card?

Darwin’s Finance — My Effective Tax Rate Is Under 5% – That’s Just Wrong

Downturn Living — Fifty Four Billion, Awww That’s Nuthin’!

Early Retirement Extreme — Marginal Earnings, When Working Is No Longer Worth It

Ending The Rat Race — Being Ready For Tax Season (Canadian blog)

Engineer Your Finances — Financial Lessons From Running

Eventual Millionaire — Highlights the Carnival of Personal Finance: Famous People With Tax Troubles

Evolution of Wealth — Gives you his Finale post in a series titled Tax Savings.

Financial Samurai — Tax Refunds Are Good For Most People, Because Most People Can’t Save

Fiscal Fizzle — Why Tax Refunds Are Bad

Foreigners Finance — Reader Question: Roth & U.S. Taxes While Working Abroad

Frugal Zeitgeist — Cheapest Places To Live: Texas

Girl With The Red Balloon — State Politics And Student Loan Repayment

Inexpensively — The Library – A Fantastic Tool For The Budget Minded

Learn Save Invest – Teach Your Kids About Money With The Family Tax

Little House In The Valley — Choosing A Neighborhood Based On Schools

Monevator — Do You Realise You’re Paying More Income Tax? (U.K.)

Money Beagle — Taxes Are Done

Money Crush — http://www.moneycrush.com/a-comedy-of-tax-related-issues/

Money Funk — Taxes 101: 3 Ways To Reduce Your Taxes

Money Reasons — The Catch With Winning A Free House

My Financial Objectives — 4 Part Series on Tax Savings

My Journey To Millions — Why Doesn’t Anyone Feel Remorse When It Comes To High Earners And Income Taxes?

Narrow Bridge — Would a 20% Tax Make You Give Up Candy And Soft Drinks?

Out Of Debt Again — I’m Surprised More People Don’t Cheat With Tax Problems

Peak Personal Finance — Can’t Pay Your Taxes? Get An Installment Loan From The IRS

Personal Finance By The Book — The Fair Tax: Is It Too Good To Be True?

Personal Finance Firewall — The World’s Worst Credit Card Spenders

Personal Finance Journey — Should I Tithe Off My Income Tax Return?

Personal Finance Ninja — Why You Don’t Need To Rush Out And Take Advantage Of The Expiring Housing Credit

Planting Dollars — How Much Will My Paycheck Be After Taxes?

Punch Debt In The Face — Taxes Are Funny!

Rainy Day Saver — Finally: Our Tax Refund Has Arrived

Redeeming Riches — What You Need To Know About Roth IRA Conversions

Saving Money Today — 7 Smart Things To Do With Your Tax Return

Single Guy Money — Taxes Filed – Results Not As Bad As I Thought

Single Mom, Rich Mom — If You’re Getting A Tax Refund, You’re Doing Something Wrong And The Government Is Playing With Your Mind

Stay At Home Mom CFO — Getting a BIG Tax Refund Was Keeping Us In Debt

Sweating The Big Stuff — Funniest Tax Return Ever? (LOL!)

The Amateur Financier — 10 Ways To Celebrate Tax Day!

The Centsible Life — You Win Some, You Lose Some

The Saved Quarter — Why It Doesn’t Pay For Me To Go To Work

The Debt Hawk — Opening A SEP To Lower My Taxes

Ultimate Money Blog — I Still Haven’t Finished My Taxes

Wealth Pilgrim — 9 Overlooked Tax Tips For Self-Employed Fools Like Me

Well-Heeled Blog — I Like Getting A Tax Refund

Young And Thrifty — Tiger Woods: Here Are 16 Last Minute Tax Tips For Year End (hey! same number as your mistress count!) [Canadian blog]

No Refund Needed

Read articles from my fellow Yakezie members – it’s the gift that keeps on giving!  Thanks for stopping by this week.  For an entire world of selfless personal finance bloggers, continue to follow my fellow Yakezie members.  Last week’s Yakezie Challenge Carnival was hosted by Don at Money Reasons, while next week’s carnival will be hosted by Austin from Foreigner’s Finances.

Stay tuned this week for some observations on personal finance from my recent trip to Washington, D.C.!

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Carnivals carnival, taxes, Yakezie

Welcome to MyMoneyMinute!

SCL Readers — Welcome to MyMoneyMinute! I’m Jason — thanks for stopping by to read the guest post marathon from Jon Acuff from Stuff Christians Like.

I’m an attorney from the great State of Texas, where I live with my beautiful wife and 3 dogs. MyMoneyMinute is all about “Personal Finance and all that Implies… In Minutes a Day!” I like to write about how all aspects of our lives — family, spiritual, career, politics — intertwine with and reflect our financial behaviors.

Did you know Jesus talked about money more than any other topic during his ministry? There’s a lot we need to learn about money, and none other than Jesus himself knew how entrenched it is in our daily lives.

Take a look around! If you like, you can receive FREE UPDATES. Just enter your e-mail address on the top-right to become a subscriber, or add me to your RSS feed.

Favorite Posts

Here’s a handful of some of my favorite posts to check out:

What We Learn From Tragedy

Unemployment Benefits – Denied!

The 200,000 Mile Club

A Spirit of Fear

There’s An App For That: 35 Ways To Slash Your Household Budget

Thanks for stopping by! Here’s Jon’s guest post:

The “Is that contestant on American Idol a Christian? Scorecard”

119. They say that they feel “called to sing.” = +1 point

120. They request that the song Fox plays when people get kicked off is “Friends are Friends Forever.” = +1 point

You can see the entire guest post from Jon Acuff at Stuff Christians Like HERE. Thanks, Jon!

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Guest Post

April Fools!

It’s April 1st, which means you have to read everything twice to make sure it’s real and you weren’t the victim of an April Fools prank, like the ones that Baker at Man vs. Debt pulled, or the light-hearted piece PT from ptMoney penned today.

“I’m From The Government, And I’m Here To Help.”

Not quite as funny is the increasing level of dependency we have on the government to care for us when the chips are down.  With the “Great Recession” and a concerns of a double-dip housing collapse, there have been numerous federal incentives to stimulate and inorganically sustain the economy.  The necessity of these programs are debatable, but programs like Cars “Cash for Clunkers”, Appliances “Cash for Clunkers”, and the First-Time Homebuyer Tax Credit have brought extra money to the pockets of consumers.  It is redistribution of wealth at its finest!

Don’t Depend on Government!

Incentives from the government are nice to those benefiting from it, but the minute you begin to expect the assistance, you run into the problems, which at least are minor inconveniences and at worst horror stories.  Here’s a few examples:

• Home Buyer Tax Credit — A buddy of mine just bought a house last year, after living in his previous home for 5 years.  When tax time came around this year, he expected that $6,500 rebate from the government.  Awesome, right?!?  Wrong, because he bought the home before November 6, 2009, which means he doesn’t qualify.  Luckily for him, he has a decent emergency fund and wasn’t depending on the money.

• Appliances “Cash for Clunkers” — There was a fellow Personal Finance blogger who had a parent that purchased a new dishwasher under the guise of the Appliances “Cash for Clunkers” program.  Turned out, their state was not a participant in the program.  So an old appliance was replaced, but no tax rebated given.  I couldn’t find the link to save my life, so forgive me this once for poor journalism.  Just remember to check local laws and stipulations on which appliances qualify for tax rebates.

• State Pension Plans — Government jobs used to be looked at as secure jobs even if the pay was below market value.  Now, teachers are being laid off by the thousands, and pension plans are going broke.  Chickens are coming home to roost with the excessive benefits offered to public employees, and aren’t sustainable at current levels.  If you are a public employee, you can’t solely rely on a pension to provide for your retirement.

• Income Tax Refunds — Ahh, there’s nothing like getting a HUGE tax refund, right?  All that money that would’ve been spent is now saved up and sent directly to you in one fell swoop from the IRS and your state government… unless, of course, you live in California.  Last year, the Governator and his Golden State legislative compadres faced a budget shortfall, and considered issuing IOUs because the state had no money.  Maybe that’s a good reason to argue that “Size Does Matter” with Tax Refunds.

• Social Security — The jokes about Social Security have been around for at least an entire generation now.  The bottom line is, you simply can’t depend on Social Security to be there for your retirement.  Consider it a nice bonus, but don’t rely on it, because it may not be there when you retire.

• Unemployment – I can’t forget my recent battles with being denied unemployment benefits.  Just remember, you don’t always qualify for the benefits.  Pay close attention and follow all the proper procedures, otherwise you may end up with nothing to fill the gap between employment.

Conclusion

What do you think?  Have you expected something from the government and it didn’t come through?  Do you budget or plan to include government incentives, or consider them an added ‘bonus’ if they come through for you?

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Politics, taxes