Economy Archives - Smart On Money

Will There Be A Second Stimulus Check?

There’s a good chance that you’ve already received your stimulus check, courtesy of the federal government’s CARES Act.

If you haven’t received your check yet, head to the government’s Get My Payment web page. (Some people have had problems on that form, but after the IRS made updates to the Get My Payment database, it's much more helpful.)

This is a page that helps you check on the status of your stimulus check funds. If you haven’t received your stimulus check yet, it could be that your check is being mailed. Or it could be that you didn’t file your taxes for 2018 or 2019.

The 2018 and 2019 filed tax returns are the primary gauges the Fed is using to determine stimulus check eligibility.

Note that if you did not need to file a 2018 or 2019 tax return, you can go to the non-filers page and get information on how to receive your stimulus check.

Note that the non-filers form will not help you if you are required to file your taxes but didn’t. This page is only for those who are not required to file tax returns for those years. If you still need to file your 2018 tax returns, your best bet is to get that done as soon as possible.

will there be a second stimulus package?

CARES Act Second Stimulus Check

The stimulus checks are a much needed boost for most families during the COVID-19 shutdown period, as many businesses are completely closed down. That means many working Americans are now out of work.

When the government was working out details of the stimulus package, there was talk of a potential second stimulus check distribution as well. But will Americans see a second stimulus check due to the COVID-19 shutdown?

As the COVID-19 events began to unfold, the government rolled out a series of aid packages to help individuals and businesses deal both with the virus itself and with the economic impact the virus has had on our country.

The three aid packages Congress and President Trump have worked together to approve and sign into law so far include:

An $8 billion aid package designed to fund testing, treatment, prevention (i.e. vaccine development) and other medical related expenses associated with COVID-19. This law was enacted in early March.
A $100 billion aid package that included a limited expansion of unemployment benefits. This package also included paid sick and family leave protections and funds to accommodate free testing for COVID-19. This law was enacted mid-March.
The $2.2 trillion CARES (Coronavirus Aid, Relief and Economic Security) Act, which includes stimulus checks, expansion of unemployment benefits including $600 extra each week to unemployed persons, unemployment benefits to self-employeds and “gig” workers and more.

As far as stimulus check details go, the law approved for each adult to get a$1,200 stimulus check, as long as they couldn’t be claimed on someone else’s taxes. Parents who had children under 17 years of age would also get an additional $500 per child.

Income Limits For Receiving A Stimulus Check

There were income limits for the stimulus check payout as well. The following individuals would get stimulus checks for the fully approved amount.

Single persons who had an adjusted gross income of under $75,000
Head of households who had an adjusted gross income of under $112,000
Married couples who had a combined adjusted gross income of under $150,000

If you made over that amount, you might still qualify for a stimulus check. Those who made over the maximum income limits to receive a full payout still received a reduced check amount based on their income.

However, if you made over the maximum income limits as listed below, you got nothing.

Single persons who had an adjusted gross income of at least $99,000
Head of households who had an adjusted gross income of at least $136,500
Married couples who had an adjusted gross income of at least $198,000

The income numbers the government used to determine eligibility were based on your 2019 tax return. If you haven’t yet filed your 2019 tax return, they’ll use 2018 numbers to determine your eligibility.

As stated earlier, those who are not required to file tax returns can use the non-filers form linked to above to get their stimulus check.

However, if you are required to file your taxes and simply haven’t yet filed for 2018, you’ll need to get those taxes filed before you can talk to the government about getting a stimulus check.

Stimulus Check Amount Examples

To further clarify, here are some examples on what an individual or family might get for their stimulus check based on the income limits set for this first round.

Example 1: A single mom with four kids aged 12, 14, 16 and 19, and with an income of $105,000 (head of household filing) would get $2,700. That amount would include $1,200 for herself, and $500 for her three kids that are under age 17. There would be no stimulus funds for her 19-year-old, either directly or indirectly, provided the mom still claims the 19-year-old as a dependent on her taxes.

Example 2: A married couple with one child aged 6 and with an income of $145,000 would get $2,900. This would include $1,200 for each marriage partner and $500 for the 6-year-old.

Example 3: A single woman with no dependents has an income of $85,000. She would be eligible for a $700 stimulus check. The amount would be reduced by $500 because her income is over $75,000 but under the $99,000 limit.

Of course, there are hundreds of varying simulations we could give here. However, if you visit the H&R Block Stimulus Check Calculator, you can find out for yourself how much your stimulus check will be.

How Does the IRS Determine Stimulus Check Payment Route?

So, how will you get your check if you haven’t yet received it? If you file your taxes and include your bank account information for receiving a refund, the IRS will plan on sending your stimulus funds via Direct Deposit to that bank account.

If you still receive your tax refund via mailed check, you can plan on receiving any stimulus funds you’re eligible for in the same manner.

The first stimulus checks were deposited to individuals’ bank accounts starting on or around April 15. If you think you are eligible for a stimulus check but haven’t received one, check on your money by using the Get My Payment tool from the IRS.

What About That Second Stimulus Check?

So, if you’re eligible for a stimulus check, you might be wondering whether or not a second stimulus check is coming. There are a few different ideas and plans Congress and President Trump are throwing around in terms of a second stimulus check.

Both the President and members of Congress have mentioned that one stimulus check may not be a big enough help in getting the U.S. economy back on track.

From President Trump during an April 6th news conference:

“We could very well do a second round,” Trump said. “It is absolutely under serious consideration.”

The President seems to be committed to allocating more funds to help Americans stay afloat or get back on track if necessary.

Emergency Money for the People Act

More recently, Congress members have made two separate proposals regarding additional stimulus funds. The Emergency Money for the People Act was introduced by representatives Tim Ryan (D-OH) and Ro Khanna (D-CA).

This act, if approved, would allocate funds of $2,000 per month for every qualifying American over 16 years of age, for up to 12 months. The proposed income limits for this package would be much higher, up to $260,000 for married couples.

And there would be additional funds for people with minor dependent children.

Rent and Mortgage Cancellation Act

Another act, the Rent and Mortgage Cancellation Act, was introduced by representative Ilhan Omar (D-MN). This act would effectively cancel all mortgage and rent payments for qualifying Americans on their primary residences for up to one year. Or during the duration of the pandemic.

The act includes features such as:

Full rent or mortgage payment forgiveness
No accumulation of debt for renters and homeowners
No negative impact on their credit history
A relief fund for landlords and mortgage holders to cover losses

While neither of these acts have been passed as of this writing, they are both on the table as Congress and President Trump consider additional ways to get more money to struggling Americans.

And if the American economy and the Coronavirus continue on the way they have been for the past couple of months, we can have some confidence that additional stimulus funds in some form will be approved. Or, at the very least, strongly considered.

Don’t Wait for Another Stimulus Check

So many Americans have been impacted tremendously by COVID-19 and the economic fallout from it. With the most recent GoBankingRates survey showing that more than 70 percent of Americans have less than $1,000 in savings, it’s obvious that additional stimulus funds would help the people.

However, you can create your own stimulus package as well. You could start selling items you own and no longer need, pick up a food delivery job or start your own side hustle gig. Here are some articles that can give you some ideas about how you could start earning more money.

Keep Your Sanity, Even During Tough Financial Situations

By Miranda Marquit 3 Comments

When you are faced with a financial disaster, or when the economy worries you with its performance, it's important to keep your sanity. Some of the worst decisions that we make are based on fear. You can't make good decisions about your finances if you are ruled by worry.

Market analyst and mathematician Lambros Klouvidakis has been watching markets, and he has developed a formula (Semathy) for predicting ups and downs. While I'm usually skeptical of formulas that claim to provide market predictions, Klouvidakis does have some good advice about maintaining your sanity even in times of financial difficulty. Here are his 5 tips:

1. Focus on Problem-Solving

“Rather than wasting energy trying to blame someone or something, focus your efforts on problem-solving,” says Klouvidakis. It's tempting to wallow in self-pity in tough times, and blame losses on external factors. Even if your financial situation is in upheaval because of outside forces over which you have no control, don't just through your hands up. Make a plan to solve the problem.

2. Look at What You Have

It's not just about your net worth. Klouvidakis points out that you have human assets, including skills and expertise, that are about more than just your bottom line. Tote up your human assets, and then figure out how to use them to help you get through this time.

3. Ask for Advice

“During times of stress, the support of friends and acquaintances is critical,” says Klouvidakis. Not only can you receive support and encouragement during this time, you can also receive solid insights from those who might be able to offer valuable advice. The help of someone who has been in the same position before can be especially valuable. Even though it's hard to reveal your shortcomings and vulnerabilities, getting help can be one of the best ways to retain your financial sanity.

4. Be Flexible

It's hard, during times of uncertainty, to be flexible. “We often cling to the very things that hold us back,” says Klouvidakis. Don't dig into a position or course of action that limits your choices and that can potential damage your finances further. Now is the time to be flexible. “Income changes require that we prepare for a journey of uncertainty,” Klouvidakis points out. Be ready to go with the flow and seize new opportunities as they arise.

5. Remember Your Family

Rather than pulling back from your family, Klouvidakis recommends that you draw closer. “Stay involved with your family and create stability at home,” he says. Quality family time can take your mind off your financial woes, and it can also help you clear your head and figure out our a game plan. If you don't pull together as a family during the tough times, there is a good chance that things will get worse for your relationships. Now is the time to create a strong front.

Bottom Line

Nearly all of us have to worry about money at one time or another. Rather than succumbing to the concerns, take steps to remain connected to your loved ones and make a plan to get out of your mess.

More Consumers Feel They Are Reaching Their Financial Goals

By Miranda Marquit 4 Comments

Do you feel like you are in a good place financially? Are you reaching your financial goals? According to a survey by Citi Economic Pulse, more consumers feel positive about the economy — and their own improving financial situations.

Here are some of the results from the survey. How do you stack up?

Learned From Financial Mistakes: 74%

According to the survey, many people feel like they are learning from their financial mistakes. Many of us have made financial mistakes in the past, and learning from them is essential if we expect to make progress in the future. Have you thought about your financial mistakes and then learned lessons as a result?

Set a Budget: 69%

While I'm not a big fan of the budget (I prefer a spending plan), I do think it's a positive development that more people are planning their finances. Whether you have a budget and stick to it, or whether you have some sort of spending plan that reflects your financial priorities, it's a good idea to know where your money is coming from, and understand where it's going.

Build an Emergency Fund: 60%

According to the Citi survey, quite a few people have some emergency savings. The real question, though, is whether the emergency fund is adequate. I doubt that 60% of people have three to six months' worth of expenses saved up — much less enough saved up to get them through nine to 12 months of unemployment or some other disaster.

But something is better than nothing, and even if all you have is $1,000 saved up as part of your Dave Ramsey-related efforts, that's not a bad thing.

Long Term Financial Plan: 60%

Do you have a long term financial plan? This is essential if you want to make sure that some of the “big” goals are covered. Your long term financial plan should include such items as saving for your child's college and planning for retirement. It's important to think about how your priorities now will interact with your long term goals later.

Pay Off Credit Card Balance: 59%

The Citi survey indicates that 59% of respondents claim to pay off their credit card balances every month. This is a great thing for finances. Rather than paying interest right into someone else's pocket, these consumers are making sure that they only spend what they can afford. Plus, with this type of planning, it's possible for consumers to make the most of their credit cards, racking up the rewards and cash back, but avoiding the interest.

Put Enough Money Into Savings: 56%

This is one of the areas where I wonder if delusion is playing a part in the response rate. Yes, many consumers might be saving their money in retirement accounts and in other accounts. But is it really enough? You might be saving $150 a month, and feel good about it. But once you run a calculation related retirement, you quickly discover that, unless you are still a teenager, $150 a month isn't likely going to cut it later on. You may think you're putting enough into savings, but you probably aren't.

What do you think of these findings? Do they seem reasonable to you? Or do you think they are off base?

Supreme Court Upholds The Affordable Care Act Health Care Law. What Does It Mean For You?

By Mr. Money 2 Comments

Earlier today the Supreme Court came back with a 5-4 decision upholding most of the key provisions of the Protection and Affordable Care Act (PPACA) that was passed by Congress and signed into law in 2010.

The law has been an extremely contentious, but no matter where you stand on the issue, with today's announcement the only way the act won't go into effect is if it is repealed by Congress. Because of that the election seems to have just taken on added importance this year.

So with the law being upheld, what does the decision mean and how will it affect health care and the economy in the U.S.?

Health Care law Upheld By Supreme Court

Pros And Cons Of The Law

So what are some reasons people are happy about the law being upheld?

More people will have health coverage.
Folks with pre-existing conditions can get coverage.
People can stay on their parents coverage until age 26.
More people can take advantage of care.

Others are unhappy that it was upheld, and cited a variety of reasons it should be repealed now.

Individual mandate is a loss of freedom forcing people to buy coverage.
Increased cost to business, which could hamper recovery from recession.
Higher costs for many people.
Government bureaucracy will weaken health care.

So let's review what some of the things that are in the health care law that have now been upheld.

Individual Health Care Coverage Mandate

One of the most controversial aspects of the health care law was the individual mandate. That part of the law required that individuals have some form of health insurance, either on their own or through an employer. If you don't have coverage, you pay a penalty. The court upheld the individual mandate, and people will soon be required to have insurance or pay the penalty.The court clarified that the the requirement is not a mandate, but a tax, and as such is constitutional and falls under the government's taxing authority.

So what is the penalty for no health care coverage? It will be whichever is greater of:

(In 2014) 1 percent of a household's taxable income, or $95 per person in the household, up to three people.
(After 2016) 2.5 percent of a household's taxable income, or $95 per person in the household, up to three people.

Some have suggested that if you don't pay the tax/penalties for not having coverage you could be subject to the same penalties as non-payment of taxes (jail time).

Upheld Provisions Of Obamacare

Most of the main provisions of the Affordable Care Act were left intact after the Supreme court made their ruling. Obamacare provisions that remain in effect:

Pre-existing conditions: Insurers may not deny coverage based on pre-existing conditions, one of the key planks of the overall insurance industry reform outlined in the bill.
Coverage up until 26: The ACA had a provision that required companies to offer coverage for the children of policyholders up until the age of 26.
Medicare coverage gap closed: There is something called “donut hole” in Medicare Part D coverage. Basically after people have paid their deductible Medicare kicks in to cover 75% of the cost of meds. After a threshhold is reached the patient is 100% liable to pay the costs. After the donut hole is crossed, costs are 100% covered by Medicare again. The gap will gradually be eliminated so that it will be closed by 2020.
Cadillac insurance plan tax: People with high end “Cadillac” insurance plans can expect a 40 percent excise tax beginning in 2018.
Tax on indoor tanning: There is a 10% tax on indoor tanning that will now remain in effect.

Medicaid Provision Limited

The Affordable Care Act when it was passed had a provision that said families earning as much as 133 percent of the federal poverty line would be eligible for Medicaid. If states failed to comply with the expansion of Medicaid the government would be able to withhold all Medicaid funds.

The court allowed for the expansion of Medicaid, but denied the government's ability to withhold all funds, but not the ability to withhold new funds. Because of this ruling the expansion of Medicaid is now thought to be optional for states.

Health Care Will Be A Major Election Issue This Year

While the ruling today was certainly a big win for Obama, and will have major ramifications for this country, the debate surrounding health care is far from over.

Already you're seeing how the election season will be shaping up, and I guarantee that the health care law, and the repeal thereof, will be one of the main issues people will be focusing on, right after the struggling economy.

What are your thoughts on the Supreme Court's decision today and what effect it will have?

Obama Offers Up New Mortgage Relief And Refinance Plan

By Mr. Money 1 Comment

President Obama announced this week that he would be seeking passage of a new updated mortgage relief plan aimed at helping underwater homeowners to refinance their properties and take advantage of historically low rates. The bill has an uphill climb, however, as Republican legislators have announced their opposition to the plan as another waste of money, and a drag on business and hiring.

This isn't the first time we've heard of a mortgage relief program to help underwater homeowners as Obama has floated ideas like this in the past. The programs have had decidedly mixed results, however, with the Making Home Affordable home modification program seeing over half of the people enrolled in the program dropping out. Other programs have had mixed results as well in part because of homeowners unable to fulfill obligations and largely in part to banks not participating in the programs or making it extremely difficult.

Obama Mortgage Refinance Plan

So what are the details of this new refinance program? How does it differ from previous programs? From the Washington Times:

Only three months after proposing a mortgage-relief plan, President Obama went back to the drawing board Wednesday with another proposal, paid for by a new tax on big banks, that would allow millions of “underwater” borrowers to refinance home loans.

The president’s latest plan, which he outlined in his State of the Union address last week, would allow underwater homeowners – those who owe more than their homes are worth – to refinance their mortgages into loans backed by the Federal Housing Administration (FHA). Borrowers could not have more than one late payment in the past six months, and banks would be required to reduce mortgage balances for homeowners who owe more than 140 percent of their home’s value.

The administration says about 3.5 million borrowers would likely qualify for the plan. While the effort last year applied to homes financed through mortgage giants Fannie Mae and Freddie Mac, this latest proposal would help borrowers with private-sector bank loans.

So approximately 3.5 million borrowers may qualify for the program – and you don't have to have a loan that is backed by Fannie Mae or Freddie Mac, as with previous mortgage relief programs.

People looking to refinance under this program would have to meet the following criteria:

Be current on their loan payments with no late payments in the last six months – and only one in the past year.
Have a credit score above 580.
Their loan would also have to be within the FHA’s limits of $271,050 to $729,750.
Loan To Value ratio of below 140.

The program would cost between 5 and 10 billion dollars, and Obama proposes to pay for it by levying a tax on large banks. Because of that many banks and mortgage giants have come out against the proposal.

Reactions To The Plan

Reactions to the refinance plan have been mixed. Based on the lackluster response to past programs many folks doubt that this plan would have much effect either.

Others say that it doesn't matter much either way as the plan has too much opposition in the Congress, and isn't likely to pass.

Douglas Holtz-Eakin, president of the American Action Forum, says the plan is more politics than anything.

“The President’s proposal appears to be more politics than policy. As structured, an expansion of FHA subsidies to refinance does not appear likely to pass Congress, so its policy effectiveness is in doubt. Moreover, even if passed, $10 billion or so would have no serious impact on underwater homeowners when the overall negative equity exceeds a half trillion dollars. The White House must know this, leading one inevitably to conclude that this is campaign rhetoric and not real help for real people.”

David Stevens, president and CEO of the Mortgage Bankers Association, says that the program has some appeal to underwater homeowners, but a tough battle to be passed:

“The mass refinance proposal will have appeal to those that are sitting in homes, underwater, and feel like they have been left on the sidelines during this interest rate rally that has brought mortgage rates to near historic lows. I think the refinance announcement’s biggest hurdle is going to come when it faces the reality of needing congressional approval. The funding mechanism, the moral hazard, the re-default risk, and the role of government intervention in housing will likely create divides on both sides of the debate that will make the likelihood of this moving forward an uphill climb.”

Still others say that the program is a positive one that could help jumpstart the housing market.

What are your thoughts on President Obama's new housing plan? Will it be passed, and if so, will it help people as promised?

Would You Use A Local Currency Instead Of A Federal Reserve Note?

By Miranda Marquit 6 Comments

As the economy continues to limp along, and with the recent announcement by the Federal Reserve that low interest rates are likely to continue into 2014, an increasing number of people are skeptical of the currency that we accept as legal tender. Federal Reserve notes are starting to fall out of favor. But what can take their place?

Some investors decide to invest in precious metals as a way to hedge against inflation and the loss of value expected of the U.S. dollar. Others, though, have decided to turn to local currencies in order to transact business.

local currency

Local Currencies

Local currencies have almost always been a part of the economic landscape in the United States. Indeed, even in Colonial times individual colonies, cities and even banks issued their own currency notes. The tradition has continued throughout the years, although the practice hasn't been much in vogue — until recently.

Since the most recent recession, local currencies have been on the rise again. Localities issue notes that can be used at businesses in a specific area, creating an economy that is more insular than that of the wider U.S. And, of course, because the currencies aren't accepted outside the retailers and tradespeople willing to accept the currency, more of the money stays in the local economy. There are even some digital currencies (beyond the money seen in virtual worlds like World of Warcraft and Second Life), used online amongst members who agree to honor the currencies.

Local currencies range from paper notes, to digital currencies, to metal-based. In some cases, states are drafting legislation that opens up the ability to use alternative forms of currency, usually gold and silver coins.

Most local currencies have a set exchange rate so that you can turn in your Federal Reserve notes for a specific value in local currency. You can then use the currency to make purchases, and choose to accept the currency for your own products or services. If you use the local currency, and amass value in the local currency, you will be protected to some degree in the event that the U.S. dollar as we know it now collapses.

Would You Use a Local Currency?

The idea does sound nice: You boost the local economy, and create a situation where a currency has more perceived value. Plus, you keep your options open — just in case the Federal Reserve System falls to pieces sometime soon.

However, there are downsides to a local currency. One of the biggest issues is that any system of exchange relies on the idea that people have faith in it. Even something tangible, like gold, requires that people agree on its “value.” All forms of money and investment are subject, in some degree, to public perception. If the public perception of a local currency falters, then it could become worthless. And, if you have exchanged a large number of your Federal Reserve notes for a local currency that tanks, your losses could be quite large.

What do you think? Would you use a local currency?

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