Terry Savage

Taxes: Will raising tax RATES increase Revenues?

Mon, 20 Jul 2009 10:13:39 -0600

Raising tax rates above a certain level, actually reduces tax revenues! It's a fact of history, and those facts are in my Sun-Times column, Monday, July 20th.
We want our government to provide more for us -- everything from health insurance to mortgage restructuring. But how will we pay for all of this? The lessons of history show that cutting taxes increases economic activity --and brings in more tax revenues.
Please read the column http://www.suntimes.com/business/savage/1674096,CST-NWS-savage20.savagearticle -- Then feel free to post your comments.

Who's to Blame for CreditCard Debt: Shoppers, Banks, or Congress?

Mon, 13 Jul 2009 08:18:18 -0600

Was it the banks, for extending too much credit?
Was it Congress -- for encouraging consumer spending to keep the economy going, and delaying credit card reforms until 2010?
Or was it the people who used their credit cards to get into debt?
And before you answer that --what would you be doing if you lost your job, ran out of unemployment benefits and needed money to feed your family?
Your thoughts are welcome here!
UPDATE 7/21/09:
Bank of America, the largest bank in the country, reported its default rate
jumped to 13.8% in June from 12.5% in May. Defaults, or charge-offs, are the
debts that a lender believes it will never collect.

No wonder they're raising rates, fees! Lots of people aren't paying!

Healthcare Reform

Mon, 15 Jun 2009 10:00:01 -0600

This great debate will impact YOU -- whether you're a young worker or a retiree hoping Medicare will cover everything (it won't). The subject is complicated, the solutions are incredibly difficult. And the fix will be created by politicians who are impacted by all the money involved in the industy.

It's tempting to just close our eyes and let "them" solve the problem. Let's not do that! Please post your thoughts on Healthcare Reform. Here are just a few things to think about:

Are we willing to make choices?
• Will we ration healthcare, based on age, or condition or ability to pay?
• Will we strike a balance between diagnostic medicine and "lawsuit prevention" medicine?
• Can we even agree on an electronic system for healthcare records that provides adequate security and privacy?
• And can we cut healthcare costs if the insurance system doesn't create a reason for people to know and care about the costs?

I look forward to your comments, and will use them anonymously in a future column. And here's a link to find your Congressional representative's email address, so you can let them know how you feel!
https://writerep.house.gov/writerep/welcome.shtml
http://www.senate.gov/general/contact_information/senators_cfm.cfm

BRIGHT START

Mon, 19 Jan 2009 16:39:59 -0600

ONE FUND within theI llinois Bright Start College Savings plan suffered a huge loss not directly related to the stock market decline. It was a bond fund that should have provided low, secure, and positive returns. Instead, it appears that the Fund Manager took extreme actions with the portfolio, resulting in a loss of more than 30 percent of the value of this fund, which is included in the age-based portfolios.
State Treas Alexi Giannioulias is threatening to file suit to recapture the $85 million lost because of this bond fund.
IMPORTANT: Losses in stock market funds are to be expected in a bear market. So thisis not an attempt to recoup market losses in the stock funds.
Please post your comments here, and I am sure the Treasurer and AG will be looking at these personal stories!
Here's a link to that column: http://www.suntimes.com/business/savage/1376279,CST-FIN-savage14.savagearticle

Dear Mr. President, here's our wish list!

Mon, 19 Jan 2009 16:33:56 -0600

On Monday, January 21st I posted a column with a "Dear Santa" wish list for our new President. And I asked you to join in, adding your ideas to the list!
Here's a link to the column: http://www.suntimes.com/business/currency/1384986,CST-FIN-terry19.savagearticle
I'm looking forward to your comments!

Minimum Required Withdrawals

Tue, 23 Dec 2008 11:44:46 -0600

Congress has passed and the President signed (on Tuesday, Dec 23rd) H.R. 7327, the Worker, Retiree and Employer Recovery Act of 2008, a bill that places a one year moratorium on required minimum distributions from Individual Retirement Accounts and defined contribution plans for 2009.
To Clarify my earlier post (and thanks to a sharp-eyed reader who caught my unintended error as I posted in December, before knowing details of the bill):
The suspension of required minimum distributions applies to 2009 distributions, NOT 2008. Therefore, you should have taken the 2008 required distribution before year end. If you did not, you may face a 50% penalty on the amount you "should" have withdrawn.
There may be some exceptions made because of the confusion at year end. BUT, if you did not take a 2008 RMD, you should immediately contact your plan custodian and arrange to do so!
.

Auto Bailout?

Mon, 15 Dec 2008 11:53:11 -0600

Monday, December 15th -- Should we use taxpayer money to bail out the automakers?
If you subscribe to my free newsletter (www.TerrySavage.com -- just fill in the little "pop-up" box) you'll know that I have mixed feelings on that issue.
One thing is sure: Like a parent coddling a spendthrift young adult, you can't keep throwing good money after bad, jeopardizing your own retirement plans, without demanding some CHANGE! What do YOU think?

Bailout Expectations

Tue, 25 Nov 2008 08:28:32 -0600

The President-elect is naming his economic advisors -- a very smart group. And he has demonstrated determination to face the problems squarely and comprehensively. But are we expecting too much in the way of a bailout or stimulus plan?

What worries me most is that many people seem to expect miracles, instant miracles. I was on a local call-in show Monday evening, and found that people in this particular audience were expecting a check to arrive in the mail. That was their vision of the upcoming economic plan.

One caller complained that a few hundred dollars a person wasn't going to make much difference. Instead, he proposed that a check for $50,000 be sent to each American for the "bailout." He was serious! Asked where the money would come from, he responded quickly: "From the paychecks of all those rich CEOs that have been ripping us off!"

I guess that balanced off the outrage of last week - the utter stupidity of the top auto execs private-jetting their way into Washington to ask Congress for money, without even presenting a plan. Were their expectations any more ridiculous than the sentiments of the guy on that phone call?

Can this get any more ridiculous, any more extreme? And, by the way, where are we going to get all this money for the "bailout" that everyone is expecting?

Stock market: What do do now?

Tue, 11 Nov 2008 10:26:48 -0600

I have received so many questions about why the stock market is down, when it will recover, who to blame, and most importantly, what to do NOW! So I'm posting a real email I just received, and my response.
What do you think of my advice? And what are YOU doing now?

Worried About Financial Safety Net? Especially Annuities!

Tue, 16 Sep 2008 13:29:49 -0600

I have received many questions about the financial safety net in the wake of Tuesday's front page articles on the market woes, struggles of financial institutions,and possibility of bank and insurance company failures.
I will post responses to all those questions below.

However, let me make a few things clear:
1. There is a link directly to the FDIC rules on the home page at www.TerrySavage.com (right column, halfway down the page).
2. INSURANCE contracts, such as annuities, are not covered by Federal insurance. They are covered by "state guarantee funds" that are basically a "call" on other insurance companies doing busiiness in the state.
Many of you own AIG annuity contracts through companies like VALIC. My answer is
"I believe that even if AIG files for bankruptcy, these profitable subsidiaries like Valic will be sold to other, stronger insurance companies -- and tht your annuity contracts will remain safe." That is my firm belief -- though there is no guarantee!

I would not try to "break' these contracts, possibly incur penalties or taxes now. It would take a while to roll over any contract --and then you'd be caught up in the paperwork of a transfer --just when another insurer is likely trying to buy the entire portfolio.

I'll update this thought as news breaks!

Political Economic Scorecard

Sun, 07 Sep 2008 22:45:53 -0600

Are you keeping track of the promises the Presidential candidates have been making?
Tax Cuts and Tax Increases, Spending Programs, Trade Policy, Jobs Policies -- all are making headlines -- but do they make sense.

This is an economic blog, not a political one. So let's keep track of both candidates' promises and their true costs and benefits. Start by reading my column for September 8th at www.TerrySavage.com --

Then please feel free to add your thoughts. Terry

Fannie & Freddie: Profit-making companies or "Do Good" Govt Agencies?

Mon, 11 Aug 2008 13:45:24 -0600

In today's column I explain how Fannie Mae and Freddie Mac have been asked to do two completely incompatible things: help subsidize the housing market and make profits for shareholders. Top management is compensated on the latter goal: higher profits meant higher share prices, more compensation for top management. Unfortunately, they got those higher profits by guaranteeing questionable loans! Now what???

Is Bankruptcy Your Way Out?

Wed, 11 Jun 2008 22:27:33 -0600

It seems like "everybody" is doing it -- or talking about it. More than 91,000 Americans filed for Bankruptcy in May. By year end, the American Bankruptcy Institute estimates that more than 1 million Americans will file. That means one in every 100 families will be affected. And nearly 10 million Americans have filed since the turn of the century!

Is bankruptcy the way out? Not for student loans, back taxes, child support and some other obligations. But are YOU considering bankruptcy?
Do you worry about the "moral" aspects of defaulting on your borrowings?
I'd like to hear from you!

SNEAK PREVIEW: Student Loan Rates to Drop

Fri, 30 May 2008 09:24:52 -0600

Attention New College Grads: Consolidation rates on some student loans will drop to 3.61 percent after July 1, 2008. Read my column in the Sun-Times on Monday, June 2nd column, and post your comments and questions here!

Have a Personal Finance Question?

Fri, 23 May 2008 09:31:22 -0600

If you'd like me to answer your personal finance question, please send it along. I'll delete your email address, and use only your first name. Only questions of general interest, please. I cannot give individual stock recommendations! Thanks for participating in my blog!

Remember, you do NOT have to leave your name or email. Just click in the large box to post your question!