How Much Do Reality TV Stars Make?

People are making livings from reality television; a great example is Megan Hauserman, who has gone on 5 different reality television shows in her 28 years.

How much do reality TV stars get paid? Depending on your notoriety, it looks like you could expect to get paid between $750 per week to $75,000 per episode. Let’s take a look at some of the salaries for these types of shows, and then how to apply to be on them (if you wish).

Reality TV Show Pay Rates

• Big Brother. I was actually abroad in Spain living with a family when this show was in its finale, and the teenagers in my host family were glued to the television for it. Then when I came home, the show had moved to the United States! This is a television show about a group of people living in a home together that is closed off from the outside world. Because they cannot work while on the show, they receive a weekly stipend of $750. The real money is if they win the prize at the end, which is a grand prize of $500,000, a second place prize of $50,000 and a Viewer’s Choice award of $25,000. You have to be the last one that was not evicted in order to win.
• Downsized. This show follows the controversial Bruce family as they dig themselves out from a foreclosure and bankruptcy after losing a $1.5 million construction business in Arizona. While the payment has been undisclosed, they were able to pay off all of their debt as well as bank $18,000. Based on the numbers they disclosed to their financial advisor that we were privy to from the first season, I would say they were paid (speculating) $50,000.
• Princess. The premise here is that Gail Vaz-Oxlade comes in to give a “princess” a financial and responsibility wake-up call at the request of family and friends who are tired of loaning out money and are concerned about their financial state. If the Princess reforms her ways to the liking of Gail, they can earn up to $5,000 at the end of the show. The taping takes place over the course of a month.
• ‘Til Debt Do Us Part. This is another Gail Vaz-Oxlade show where she takes a couple who is in dire financial straits and attempts to send them on the right path. They must come up with a plan to pay off all of their debts (except mortgage) within 3 years, and less time is always better. They must live more sustainably (i.e. within their means), and sometimes they have to come up with ways to boost their income as they just don’t make enough money. Once again, this couple has the opportunity to earn up to $5,000 at the end of the month if they complete all of the challenges to Gail’s satisfaction.
• Teen Mom. This is an off-shoot from the show 16 and Pregnant. Several new teenage mothers were given the chance to reveal to everyone the tough issues they face as new parents—this is in-between trying to finish school, deal with immature partners, make money, the realities of adoption, etc. Each of these teenagers reportedly makes between $60,000-$65,000 per season.
• Dancing With the Stars. On this show stars sign on to become semi-dance experts with the help of professional dancers. Each week they work about 20 hours on a routine, and then the show is based around a competition. A couple (the star and his/her dancing professional) is eliminated once per week. The stars who appear reportedly make $125,000, plus $20,000 bonus for every week they remain; the professional dancers have made from $1600 per episode to $5200 (with the show’s growing popularity).

How to Apply for a Reality TV Show

Interested in becoming the next reality television star? You can apply to be a part of many of these shows. TLC offers casting opportunities to its reality television shows, including What Not to Wear, Extreme Couponing, and Say Yes to the Dress.

You can also receive casting notices for a variety of shows in your email inbox and check out the latest casting calls.

More Reality TV Show Finances

• 10 Lessons from the Downsized TV Show
• How to Use Coupons After TLC’s Extreme Coupon Show Fraud
• Deal or No Deal: Gambling With Math!

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The housing crisis came when a number of people tried to sell their houses before the rate reset to an amount that was impossible to pay. Too many houses on the market led to not enough being sold, which led to a number of people being forced into foreclosure. Needless to say, ARMs got kind of a bad reputation for the role they played in our nation’s financial crisis! But in some circumstances, they are still a good choice for someone seeking to finance (or refinance) a house.

What is an adjustable rate mortgage?

An ARM is just what it sounds like – a mortgage whose rate is set for a certain amount of time, and then adjusts when that initial period is over. The rate can adjust once or repeatedly. Some ARM terms that are traditional in the US call for one rate for either three or five years, with an annual reset after that. The rate is usually tied to some index, such as the prime lending rate or the US Treasury bond rate, with the lender using a formula to add additional percentage points to those rates. Most (though not all) ARMS contain two caps: one to limit the amount that the rate can increase in any one year, and one to limit the total amount that it can increase over the life of the loan. Of course if the borrower gets really lucky, the rate might actually decrease! This happened to many people in recent years when interest rates hit nearly rock-bottom.

When to consider an ARM

A fixed-rate mortgage locks you into a rate for the duration of the loan (unless rates drop enough/you build up enough equity to refinance), while an ARM has the possibility of either increasing or decreasing. There is a certain amount of gambling involved in taking out an ARM, but it could also just turn out to be smart hedging if rates do in fact go down years after you find your dream house. An ARM makes sense in certain home-buying situations. Some of these are:

• You know for sure that your pay will increase before the rate resets, and you can therefore afford slightly higher payments in a few years
• You know that your expenses will decrease before the rate resets, potentially due to paying off other debt - again, allowing you to afford higher payments in a few years
• You will be selling your house before the rate resets – this could be true for a military family or other homebuyers in a certain location for a set period of time. In this case, an ARM would make sense because you could take advantage of lower rates now without having to risk higher rates later. Of course you should always make sure that you can afford the increase if and when it does come to pass.
• You are buying your home with a large down payment, therefore beginning with high equity and a better chance of selling or being able to refinance at a later date.
• You suspect that interest rates are high compared to where they will be in the future, and you therefore have a chance to lower your rate when it adjusts. This is of course somewhat speculative – once again, make sure that you can afford the increase if that is what ends up happening.

What to look for

If you are thinking about purchasing a house and taking out an ARM, make sure you look for the following features to help you find a mortgage that is perfect for you:

• An initial interest rate lower than the prevailing rate for a traditional mortgage
• No penalty for making early payments, or payments greater than the minimum
• An adjustable rate with caps on both annual and total increases
• An option to convert to a traditional fixed-rate mortgage at some point in the future, if desired/necessary
• An interest rate that is low enough and a payment high enough that you are paying down principal in the initial period – you do not want a loan that has you paying only interest until the rate resets!

Shopping for an adjustable rate mortgage

Be sure to shop around and compare terms to find the best rates on an ARM. To get started, check out the following interest rate comparisons:

• Current Mortgage Rates
• Pentagon Federal Credit Union Rates

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First there was the $600 check (each) under President Bush, then we had the Make Work Pay $800 ($400 per person for two years), we received $8,000 free and clear for purchasing our first home, and we also received $1500 for replacing our central A/C and Heater which broke shortly thereafter.

Now we are receiving the social security tax deduction, which is approximately an extra $160 in our pockets each month for the next year.

All in all, our household has gained $14,220 for things we were going to do anyway: work, purchase a home, and replace our A/C.

Right Place, Right Time

You could say that for the majority of this money, we were at the right place at the right time. After all, we had just gotten engaged and it is typical for engaged couples to purchase their first home (+$8,000), and we found ourselves in the unfortunate position of a dead A/C unit in Houston, TX within our first year of homeownership (+$1500).

But I did not write this article to boast about all of our new cash; rather, I am fearful of how much it might hurt in the future as the government figures out how to dig itself out of the hole it is in. The reason we accepted this money was because these programs were all ready passed and if it were not my household receiving the extra money, it would be my neighbor’s.

Stimulus Impacts on Debt

However, I am so anxious about the monetary future of this country that I wanted to research how much each of these stimulus programs has added to our nation’s trillion dollar debt.

Please note: Everyone received different amounts of stimulus over the last several years, so I am going to base this on my own household.

 
How do you think our country will climb its way out of debt? Have you received a substantial amount of stimulus money over the last several years, and it so, how did you use it?

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Unemployment Insurance Extension

The good news for you is that unemployment benefits have been extended until December 2011. On December 17, 2010 President Obama signed Bill HR 4853 into law. The law extends federal unemployment benefit eligibility for 13 months, and makes this extension retroactive back to the December 1, 2010 cutoff.

What Happens to the “99ers”?

The potential total maximum number of weeks one can collect unemployment insurance is 99 weeks (also known as Tier 5). There is a growing group of people called the 99ers who have been unemployed for a total of 99 weeks or more.

Unfortunately, this new law only covers the unemployed who have not exhausted the allotted weeks of unemployment benefits allowed in their state.

More Helpful Unemployment Topics

• Do You have to Pay Taxes on Unemployment?
• My First Job Ended in Unemployment
• What to Expect When You File for Unemployment
• Unemployed Tax Deductions
• How to Obtain High Risk Insurance When You Find Yourself Uninsurable

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Even though I wholeheartedly have planned out the next 40 years of my life financially speaking, for some reason I never opened up a side account to stash away the taxes I would need to pay at the end of the year. I also did not pay my quarterly tax estimates.

Tax Deductions to Lower Taxes

Fortunately for me, we had enough tax deductions (home office, small business costs and deductions, charitable contributions, energy saving tax credit, student loan interest, mortgage interest and property tax deduction) to actually get a tax refund.

Because of the anxiety I felt leading up to filing my taxes, I have learned my lesson and have now opened up a separate account to stash away a percentage of my side income for tax payments. But the experience left me wondering: what if I had owed several thousand dollars and could not afford to pay it all at once?

We’ve discussed options for paying the IRS any taxes owed, as well as tax liens the IRS can levy against your outstanding debt.

New IRS Tax Lien Rules

In an effort to help struggling taxpayers, the IRS will be revamping its tax lien rules. The changes being made are the following:

• Raising the dollar threshold for when the IRS will place a tax lien on you (the new dollar amount will be determined within the next year)
• Streamline the process for withdrawing a lien so that once a taxpayer requests the withdrawal (after paying all tax obligations) it will occur more quickly
• Allow lien withdrawals for taxpayers who owe less than $25,000 and enter into a Direct Debit Installment Agreement (DDIA)
• Raise the dollar limit (from $10,000 to $25,000) to allow additional small businesses to participate in installment agreements
• Streamline the Offer in Compromise (OIC) program as well as allow taxpayers with an income of up to $100,000 to participate, and increase the threshold of tax liability from $25,000 to $50,000

For more information, check out the IRS press release.

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Now that cities and states are facing unprecedented budget gaps due to the recession and Americans tightening up their wallets, they also have made it their job to find leaks and plug them as quickly as possible. While some tactics have been no-brainers, others are quite interesting, scary, and just plain strange. Here’s a list of some of my favorites:

Creative Government Budget Cuts

1. Closing Rest Stops: New York State is closing six highway rest stops, with a total savings of $490,000 for this fiscal year and $1.1 million in years to come.
2. Early Release of Prisoners: California, Colorado, Illinois, Kentucky, Michigan, Oregon, and Wisconsin have released prisoners early.
3. Tax on Driveways: Mission, Kansas has instituted a driveway tax of $72 for residents and $3,558 per year for small businesses in order to raise $1.2 million per year for future road improvements.  
4. Sales Tax on Digital Downloads: Wisconsin and North Carolina have expanded their sales tax to include digital downloads. Wisconsin has imposed a 5% tax on digital downloads—music, games, books, ring tones and other video entertainment—which will raise approximately $6.7 million annually. New York expected to see a $50 million rise in sales revenue in 2008/2009 fiscal year.
5. Claiming Unclaimed Property: Michigan has passed legislation to sign over unclaimed property—gift card balances, tax refunds, safety deposit boxes—more quickly to generate an estimated $208 million for fiscal year 2012.
6. Sunday Sale of Liquor: Michigan will now allow the sale of liquor on Sunday mornings at establishments that purchase a $160 license.
7. Stop Printing Statutes: Missouri passed legislation to stop printing copies of the state’s ‘blue book’ guide to politics and statutes, saving $1.7 million (and a lot of trees).    
8. No More Toilet Paper: Newark, NJ cut toilet paper supplies to its government buildings for fiscal year 2010. This along with other measures (such as no Christmas decorations during the holiday season) saved the city $10-$15 million last year.
9. Less Snow Removal: The city of Philadelphia will no longer remove snow if less than 12 inches has fallen.
10. Increased Tax on Cigarettes: Arkansas, Delaware, Florida, Hawaii, and many other states increased the tax charge on cigarettes.  

Have you heard of any others worthy of mention?

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• September 7: Freddie Mac and Fannie Mae were seized by the government with approximately $5 trillion worth of mortgages.
• September 15: Lehman Brothers filed for bankruptcy.
• September 16: The government gave AIG an $85 million emergency loan (followed by another loan of $37.8 billion less than a month later as well as another bailout of $40 billion in November).

And from there, things continued to get worse as home values dropped, the unemployment rate surged, and the government’s purse kept getting deeper and deeper.

Former President Bush signed the Emergency Economic Stabilization Act of 2008 on October 3, 2008, allowing the Treasury up to $700 billion to purchase distressed assets, mortgage-backed securities, and make capital injections into banks through the Troubled Asset Relief Program (TARP). From this new program and the money all ready loaned to institutions, Americans were looking at a potential tab of $800 billion+. Gulp.

Since the fall of 2008, the news has moved on to the next best drama and only tidbits of the TARP have been reported.

Of the $700 billion, how much was given out, and how much has been paid back?
      

The Magic Number

The Emergency Economic Stabilization Act of 2008 has actually expired. As of October 3, 2010, no further loans can be made. In all, approximately $387 billion was given out through this program.

The total cost of the bailout to American taxpayers was anywhere from $51 billion to $66 billion, depending on if you are talking to the Congressional Budget Office, the Treasury Department, or the White House. These numbers also continue to change as the Treasury earns profits from some of its stakes in companies, and as others continue to pay the government back.    

Some of the Big Players

• GM: Received $52 billion (only a small portion of this money was considered a loan), and has ‘paid back’ through a 60% stake to the government in the new GM company, $7.1 billion in interest bearing debt, and $2.1 billion of preferred stock.  
• AIG: Has received $182 billion in total since the financial crisis in 2008. The Treasury has plans to recoup some of this money by converting its $49 billion stake into stocks and selling them.
• Citigroup: Received $45 billion and has repaid $20 billion. The government still owns $25 billion of common stock and announced recently that it plans to sell $2.2 billion of its shares.

Money Made by Taxpayers

So how did the government give out so much money in loans and only lose between $51-$66 billion? It’s because they made money on some of the TARP funds. Profits include approximately $13 billion from bank dividends, and $8.2 billion from the sale of preferred stock. And with a 60% stake in GM, and a $49 billion stake in AIG, there is the potential to make back even more money in the coming years.

After researching for and writing this article, I came away surprised at the low cost to American taxpayers compared with the nightmare scenarios proposed two years ago.

With the media and political campaigns touting the $700 billion number so much, I assumed that most of that money was gone, and that we were lucky to get some of it back.

Are you surprised at the actual taxpayer cost?

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However, one comparison you can draw between the two time periods is that both had an almost immediate and lasting effect on consumerism in America. This could be in the form of regulations—such as the establishment of social security during the Great Depression—or in a paradigm shift in people’s shopping habits.

Take a look at 5 ways this Recession has permanently changed consumerism in America.

1. Shocking Credit Card Disclosures: Do you remember when those first pharmaceutical ads came on the air that had to disclose their side effects? I was around 10 years old, and remember my jaw dropping as one touted “headaches, nausea, diarrhea, occasional memory loss…” I had the same reaction the other day when I opened up my BillMeLater account statement ($123—long story) with the following information: “If you make no charges using this account and each month you pay only the minimum, you will pay off the balance shown on this statement in about 14 months, and you will end up paying an estimated total of $139.00”. Let’s take a moment to really let that sink in. The new credit card laws require the credit card company to calculate for me how much they will rip me off by paying the minimum payment only—a payment that they, themselves, set. As if that were not enough, the statement also includes the following Minimum Payment Warning, in bold, “If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance.” No longer can Americans put a cloak over their heads because the credit card companies are now calculating your minimum payment and interest rates for you.
2. Freebies a Cost of Doing Business: Freebies have always been a way to get a consumer into the doors of a business and hopefully spend on other merchandise, such as VS free panties, or free Ben and Jerry’s Cone Day. But now giving away free products has become an expectation on the side of consumers—a cost of doing business. Don’t expect consumers to try your new product unless you offer a rebate, a free gift, or give the first one away, period. We’ve seen this in the last three years for everything from new music out by famous artists, to free meals from KFC and Boston market, hundreds of free digital photos, and free 5-lb. bags of dog food. Also, now consumers expect to be paid for their loyalty by giving reward points for buying everything that they need, including toilet paper, coffee, and diapers.
3. Pay Later, Buy Later: There has been a hike in consumers who want to buy the item only when they can pay for it, instead of “buy now, pay later”.  Although you might think layaways are from your mother’s generation, they are now being advertised on commercials for Sears, Kmart, and other stores.
4. Eruption of Do-It-Yourself Culture: Doing things yourself saves a lot of money, but it has become big business in the last several years. Home Depot, Lowe’s, HGTV, and DIY Network are major players now. Never before did I think my husband and I could (or would attempt) to retile our bathroom, refinish our wooden cabinet, or remortar our fireplace, but thanks to this growing culture and information, I have confidence in our abilities to do so.
5. We’ve Taken the Personal out of Personal Finances:  Have you noticed how un-personal Personal Finances has become? With so many people in debt and out of work, Americans are much more open about disclosing their information. It has become quite savvy to be frugal and to save money, and so people are eager to share not only their bargain finds, but the price tag as well. Pretty soon it will be “single, white female, aged 27, $XX debt, $XX,XXX income, $XX assets”, and seeing each other’s salaries could be the norm on social media sites such as Facebook. Companies who keep co-workers’ salaries private in order to keep overhead costs down beware!

What other changes have you noticed?

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Along with permanently increasing FDIC insurance limits, the financial reform bill regulates investment and trading practices, hoping to prevent the practices that led to bailouts and banks that are “too big to fail.”

The financial reform act also takes steps to regulate the way these institutions interact with consumers. Below, find some of the provisions with the biggest impacts on individuals.

Financial Reform Consumer Impacts

• New Consumer Protection Agency: The Federal Reserve will create a new independent Bureau of Consumer Financial Protection, which will consolidate oversight previously conducted by various agencies across the government.

  What it means for you: One body will oversee products such as mortgages, credit cards, and payday loans, making them easier for consumers to understand.

• Free Credit Scores: If you are turned down for any kind of credit or loan, or offered an interest rate that is higher than the best-available, you are entitled to view your credit score. This is an addition to a current law that allows you to see your credit report in these situations. If you just want to do regular checkups on your credit score, you will still have to pay for a service like My Fico or turn to a free alternative such as Credit Karma.

  What it means for you: If you are denied credit, you can access your credit score for free. This will in turn help you recognize and correct mistakes on your credit report and understand how you can qualify for the best interest rates in the future.

• Cash Discounts: Businesses are now legally allowed to offer discounts to customers who pay with cash rather than credit or debit cards. This has already become widespread at gas stations but you may start to see it other places as well. Businesses will also be able to offer discounts for using certain brands (e.g., Visa instead of Mastercard).

  What it means for you: If you’ve gone all-plastic in recent years, you might want to start carrying cash again to help you get the best prices on everyday items. But if the discount is 1-2%, you may break even by using a cash rewards credit card.

• Minimum Charges: In a similar provision, businesses will be allowed to require a minimum credit card charge of up to $10.00. This was previously forbidden.

  What it means for you: You will have to start carrying cash if you usually put your $2.00 coffee on a credit or debit card. Theoretically prices could fall as businesses avoid fees, but the reality of that happening remains to be seen.

• Mortgage Regulations: The new law makes a variety of changes to mortgages, but one of the biggest requires lenders to accept additional payments on adjustable rate mortgages without charging prepayment penalties. In addition, banks cannot pay bonuses based on the type of mortgage a broker sells you. Finally, mortgage lenders must fully document your income and your ability to pay back the loan.

  What it means for you: A mortgage you can understand and afford and the right to pay it off or refinance it with no penalty. On the other hand, it may be harder to qualify for a mortgage since they will be less profitable for banks.

Other Finance Reform Changes

In addition to the personal impacts listed above, you might also be interested in the following:

• Financial Literacy: A new Office of Financial Literacy will come up with a plan to teach Americans the basics of personal finance topics such as savings, loans, retirement and investments.
• Lower Interchange Fees: The Fed can now cap the rate that companies such as Visa and Mastercard are allowed to charge businesses for processing credit and debit card payments. This will mean lower costs for businesses, which theoretically could (but probably won’t) mean lower prices for you. It will help small businesses who have higher costs than their major corporation counterparts.

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Witnessing a frenzy of people trying to get into banks and claim their money became all too common in the 1930s. Thankfully, this does not occur today as the Federal Deposit Insurance Corporation (FDIC) was brought to life by Franklin D. Roosevelt in 1933 to insure the deposits of customers.

Recession Brings Changes to FDIC Limits

Since 1980, the FDIC insurance limits on insurable bank accounts were $100,000. But when the stock market crash occurred in the fall of 2008 and 25 banks became insolvent, fears among customers and small business owners started to rise and for good reason: only 63% of deposit accounts were protected with the $100,000 limit.

The FDIC insurance coverage amount was raised temporarily in 2008 to $250,000 in order to calm fears in the wake of the largest bank failure of all time, Washington Mutual, followed by 140 other bank failures in 2009 (to date there are 100 banks on the bank failure list in 2010).

The financial reform bill, officially named the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law on July 21, 2010, made this $250,000 FDIC coverage limit permanent. The FDIC 2010 limits are retroactive to January 1, 2008, and because of this the FDIC is in the process of reimbursing money from the accounts of 9,500 people who held more than $100,000 in a single account.

FDIC Insurance Coverage

Not all types of bank accounts are insured, and not all banks carry FDIC insurance. Make sure your bank is covered by FDIC (typically there is a sticker on their door or teller window, or you can call the FDIC to check at 1-877-ASK-FDIC). Also, you should know that investments are not covered by FDIC insurance, even if they are through an FDIC-insured bank. FDIC-insured bank accounts for individuals include single accounts, joint accounts, POD/ITF accounts, living trust account and irrevocable trust accounts (for a complete list of accounts that are covered, check out the FDIC Information Page). For an estimate on how much of your accounts is covered check out the FDIC EDIE calculator.

Money Exceeding FDIC Limits

If you have more than $250,000 to deposit, you need to pay special attention to how you deposit this amount in order to minimize your risk should your bank become insolvent. The FDIC explains that “All of your single accounts at the same insured bank are added together and the total is insured up to $250,000.

For example, if you have a checking account and a CD at the same insured bank, and both accounts are in your name only, the two accounts are added together and the total is insured up to $250,000.” However, “you may qualify for more than $250,000 in coverage at one insured bank or savings association if you own deposit accounts in different ownership categories.

The most common account ownership categories for individual and family deposits are single accounts, joint accounts, revocable trust accounts and certain retirement accounts.”

You can also open separate accounts at different banks to get more than $250,000 in FDIC insurance coverage. If you’re looking for a different bank to open an account to get additional FDIC insurance coverage, see our list of FDIC insured banks.

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And their influence and determination has paid off for a segment of Americans: how many of us now can shout out “we’re debt-free”, confidently reach our early retirement or on-time retirement goals, and pay cash for all of our expenses? However, the majority of America has still remained enslaved to debt, living paycheck to paycheck from incomes of $200,000+ all the way down to the poverty line, and saving only a pittance towards retirement.

That is, until the recession hit in 2008. Suddenly when the economy tanked, many of the Americans on the other side of the ledger began to act like those of us who have listened to the advice of the financial gurus all along. And quite honestly, I could not be more excited! But will this trend last? Let’s take a look.

Debt Repayment Has Become More of a Priority

As the country’s debt continues to soar at levels of over $13 trillion along with the unusually high unemployment rate, Americans have taken it upon themselves to pay down their own debts with more urgency than before. The amount of non-mortgage debt is now at $2.44 trillion, whereas in March of 2009 it was $2.54 trillion. According to Money Magazine, this is due largely to the fact that consumers are paying down credit card debt, and have paid off approximately $82 billion of it over the last year.  

Personal Savings Rate is Up

Another thing Americans are doing instead of spending is saving money. According to the Bureau of Economic Analysis, the personal savings rate in January of 2008 was just 1.3%, but in January of 2009 it was a promising 4.4%. While the current personal savings rate in May 2010 is down a bit at 4.0%, it is still much better than the pre-recession 1.3%.

Frugal is Fashionable

There are promising signs all around us that people are being more frugal with their money. In general, people are more often opting to spend cash rather than to charge on their credit cards.

Even layaways have become more popular again as people look for a way to buy what they want without putting it on plastic. Major news sources have daily frugal and saving money articles such as Good Morning America’s “Mom Feeds Family of Six on $4 a Week” and MSN Money’s “Need an Odd Job? Give Blood or Watch Porn”, which appeared as front page stories.

Even higher-end brands have picked up on this new consumer mood and are advertising heavily with coupons, sales and clearances. Off the top of my head I can think of a few surprises I found in the Sunday coupon inserts or on television commercials over the last two years: $20 rebates for Bissell vacuum cleaners and Phillips Norelco Electric Razors, coupons for Vita Herring or Salmon, Godiva Chocolate, Oikos Greek Yogurt, Tom’s of Maine body products, Burt’s Bees body products…the list could go on. In fact, Oprah Winfrey has just come out with “The Big Deals Issue” for its new August O Magazine that is all about saving money.

Will This Last?

I think many of us who are frugal and financially savvy have been asking ourselves if this is all going to continue, or if after the economy comes back to life, so will America’s spending habits.

After analyzing the history of the personal savings rate from the Bureau of Economic Analysis, Dave Manual states the following:

In the early 70s, the average savings rate started to spike, hitting a peak of 14.6% in May of 1975. The spike in personal savings rates from 1973 to 1975 coincided with the deep recession that was ravaging the country over the same period of time. As you will see, recessions (usually) result in increased personal savings rates as people tend to dramatically scale back on their purchases in times of economic distress.

He goes on to discuss the personal savings rate during other recessions, and how after the recession is over, it generally plummets. Other financial analysts predict that the personal savings rate will remain in the measly range of a few percentage points, or even decrease back to pre-recession percentages due to low interest rates and because some people are having to use their savings to live on right now.

I would love to think that people are going to continue the trend of saving more of their money, spending less, and socking away extra towards their retirement—all things that excite me—but I am skeptical. I am sure there will be some who were so impacted by the recession that they will forever change their ways, such as those who had their homes foreclosed on or who declared bankruptcy. However, I predict that most will likely go back to their old habits once the economy comes around.

What are your thoughts?

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© My Dollar Plan

During the 2000s we saw stock market highs and lows, companies collapse and new ones form, hurricanes, earthquakes, terrorist attacks, and a war. While the economic growth and prosperity of the early part of the decade was substantial, it’s the economic crisis and recession that’s in our recent memory.

A special thanks to all the personal finance writers who contributed to our walk down memory lane.

2000: The Dot Com Bubble

By: Mike, Four Pillars

Year 2000 was the year starting with the dreaded Y2K – supposedly at midnight of December 31, 1999 all the computers in the world would unite and overthrow their human masters. Like most stock analyst predictions – that never happened. Although the Y2K scare ended up being a non-event, something else was going on that was real and much bigger. The Dot Com bubble!

Although the internet itself has been around since the 60′s – it only existed as an electronic passage way for selected geeks to communicate with each other over the wires. In 1995 the world wide web became popular. This was the beginning of what we know as the internet with email and websites to visit on your dial-up modem. Yes, it was slow but it was there.

One of the economic questions when the web first started was how was anyone going to make money from it? After a few years the idea of online shopping started to catch on and there were a multitude of websites that were intended to be online stores. Somehow the investing community got caught up in the idea that most brick and mortar shopping would move to the net where profits would be a lot higher since they didn’t need to have stores, cashiers etc. After a while the general public started getting internet fever and any website that had any idea at all was getting money thrown at it from investors. Internet stocks were jumping higher and higher and it looked like it would never end.

But then it did. Although analysts and investors swore that “this time was different” and “the old stock valuation methods don’t work anymore”, it turned out that the more things changed, the more they stayed the same. At some point people clued in that selling toilet paper online with free delivery wasn’t a money maker no matter how low your costs were.

Many investors were hurt in the eventual crash – day trading had become a popular occupation and there were many stories of people who borrowed to invest in internet stocks and/or switched large amounts of their retirement portfolios to equities which would end up losing 90% or more of their value. It was a tough investing lesson that many people learned the hard way.

2001: Terrorist Attacks Close the Stock Exchange

By: Lynnae, Being Frugal.net

2001 is a year that will always be remembered for the September 11 terrorist attacks on the World Trade Center and the Pentagon. The attacks not only had a devastating effect on our sense of national security, but they also had an immediate negative effect on the economy.

On September 11, 2001, the opening of the New York Stock exchange was delayed in the wake of the first plane hitting the World Trade Center. When the second plane hit, the NYSE closed down all together and remained closed for six days, marking only the third time in history the NYSE was closed for a prolonged period of time. When it reopened the Dow Jones Industrial average had dropped 684.81 points.

The stock exchange wasn’t the only part of the economy negatively affected by the terrorist attacks, though. Gold prices went up, the value of the dollar went down, and the airline industry hit serious financial trouble, as people were afraid to fly. Insurance losses from the attacks were around $40 billion. In addition, it is estimated that around 146,100 people lost their jobs, directly due to the September 11 attacks.

2002: Enron and Worldcom Corporate Scandals Emerge

By: PT Money

2002 was a year marked by investigations into corporate financial scandal, as well as the introduction of the Euro coins and banknotes.

In 2002 the U.S. Department of Justice announced it would pursue a criminal investigation of Enron, the Houston-based energy company. Enron had used many irregular accounting practices to hide loses and give the appearance of constant growth. Also in 2002, Worldcom filed for what was at the time the largest bankruptcy ever after finally succumbing to declining earnings they tried to hide through fraudulent accounting schemes.

In both cases, corporate employees everywhere learned a big lesson about the risk of relying on company stock options and investing in your own company through a 401(k). Some workers at Enron and Worldcom lost their jobs and their retirement at the same time.

Finally, in 2002, the Euro was introduced in coin and note form. At the time a Euro was valued at around .90 compared to the U.S. Dollar. It’s risen since that time and currently trades at 1.50 to the U.S. Dollar.

2003: War in Iraq Begins While Martha Stewart Gets Insider Information

By: Pete, Bible Money Matters

The foundations of our faith in corporate America were shaken loose in 2002 when Enron and Global Crossings (among other large companies) were found out to be engaging in unscrupulous and illegal behavior. 2003 was supposed to be the year that corporate America and Wall Street cleaned up their acts and restored public confidence in our economy. It was not to be.

There were a lot of big financial stories that hit the front page in 2003. First of all, there was the launching of the Iraq War in March 2003. Whether you agree with the war or not, it has an undeniable impact on the economy with the billions in dollars spent to wage the war every month.

Corporate scandals continued in 2003, most notably with the legal troubles of Tyco’s former CEO Dennis Kozlowski who was on trial for bilking his company out of $600 million dollars. Kozlowski famously billed his former employer over $1 million dollars for his own anniversary party in Italy.

The year was rounded out by Martha Stewart becoming the subject of an investigation for insider trading. The domestic diva ended up under federal scrutiny when an associate of hers pleaded guilty to insider trading – of which she had taken part. She was later convicted and spent time in prison.

2004: Tsunami Drives Charitable Contributions

While the war continued on in 2004, Martha Stewart was convicted, and we experienced the second Presidential election of the decade, it was the event in the last week of the year that would forever be stamped in our minds from 2004.

The tsunami in Indonesia, Thailand, and other nations bordering the Indian Ocean killed 230,000 people. The charitable response that followed was one of amazing proportions. Donations from the world were more than $7 billion.

Many nations, corporations, and individuals all united to donate to the humanitarian aid. The fundraising efforts reminded us all that the basic necessities of food, shelter, and clean drinking water were more important than our own personal spending.

2005: Gasoline Prices Skyrocket after Hurricane Katrina

By: Amanda, My Dollar Plan staff writer

In 2005 Hurricane Katrina hit, unraveling the lives and personal finances of thousands of Americans who were directly in its path. But Hurricane Katrina also had huge impacts on everyone else’s lives, showing America that we are all interconnected financially.

Roughly 400,000 jobs or one percent of the labor force were lost directly due to this natural disaster. The storm also caused a rise in gasoline prices nationwide (around $3 a gallon of petrol, which was roughly twice the price from a year earlier) due to damaged pipelines and ports from the Gulf running well below their capacity. Katrina also led to a sharp decline in consumer confidence; Conference Board’s Consumer Confidence Index went from 105.5 in August 2005 to 86.6 in September 2005.

2006: Mint Changes Online Personal Finance

By: WC, The Writer’s Coin

Mint.com won’t release its web-software for another year, but Aaron Patzer gets the company off the ground in 2006. It marks the beginning of what will soon become the way to manage one’s finances in the 21^st century.

Mint allows users to track all their credit cards, investing accounts, and bank accounts in one centralized place on the web. Because it’s “in the cloud,” users can access their information anywhere there’s an Internet connection. But it goes beyond mere tracking: it seeks out inefficiencies across your portfolio of accounts to spot changes you can make to maximize your money, like pointing out an ING Account that earns higher interest. It’s via these partnerships that Mint makes its money—everybody wins.

Overcoming security concerns, Mint will soon become so popular that Intuit will buy it and ask Patzer to run their personal-finance group, which includes one-time competitor Quicken. With Mint’s help, you might even get your credit score up close to mine. If you’re lucky…

2007: Housing and Stock Markets Hit All Time High

By: Jill, My Dollar Plan staff writer

Financially, 2007 was a very good year for most folks – in fact, the last very good year most of us remember! Housing prices were high and the stock market was rising. Yes, personal savings rates were a little low, but nobody cared, because credit was free-flowing! Life was good, and we had no reason to believe things would change in the near future.

On October 1, 2007, one analyst wrote, “it’s looking like all systems are go again for the bulls.” Indeed, the market did keep rising for a few more days. Then, on October 9th, we saw the landmark financial moment of 2007 –the Dow hit an all-time high of 14,164.53 and the S&P 500 reached 1,565.15. Other record highs had been set that year, only to be eclipsed within a few months. I had graduated from college that May, started my job in July, and opened my 401(k) at the end of August. I made four contributions, and saw immediate growth. Then, the stock market topped out, and I faced declining prices for the rest of the year just like everybody else. We had no idea that this all time high was truly one to be remembered! Of course, we would find out soon as 2008 was just around the corner…

2008: The Economic Crisis and Financial Meltdown

By: FS, Financial Samurai

On September 15th, one of Wall Street’s most well known institutions, Lehman Brothers went *POOF*. Hank Paulson’s decision to allow a company with 26,000 employees drown caused a cataclysmic chain of events. Bond spreads widened, stocks plummeted, banks stopped lending and hundreds of thousands of people lost their jobs as a result.

Why save Bear Sterns earlier in the year, and not Lehman Brothers? Nobody will really know. Perhaps Dick Fuld, the then CEO made too many enemies to be saved.

Unlike the year 2000, everybody was affected by the financial meltdown and not just tech and internet investors and employees. We realized the importance of financial institutions and their ability to provide liquidity in the system. Without liquidity, things stop working and people suffer. Everybody suffered, except John Paulson, who made a reported $3.8 billion for himself for shorting financials and sub-prime assets!

If we can survive 2008, we can survive anything. There will never be a bigger financial downturn in our lifetimes than in 2008!

2009: Economic Stimulus Plan Aids Recession

By: Daniel, Sweating the Big Stuff

The market hit lows in early March, and after Congress passed the $787 billion stimulus bill in February, the market rebounded tremendously, up over 60% over its lows.

However, the Dow Jones Industrial Average remained down over 25% from its October 2007 highs and unemployment hit a high of 10.2% in October, the highest level since 1982.

Of course, 2009 isn’t over, so there’s still a chance another big financial event could happen before the end of the year, but it’s going to be hard to top the size of the economic stimulus plan of 2009.

What will the 2010s bring? Only time will tell…

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Credit Card Bill of Rights

Here is a summary of the changes included in the new credit card bill:

• Bills can be paid online or over the phone without incurring a processing fee.
• Customers must be over 60 days late on payments before their interest rate can be raised on balances; if the rate is raised, it will go back to the lower rate if customers make the minimum payment on time for six months in a row.
• Overlimit fees can’t be charged unless cardholders are told that the purchase will put them over their limit and they authorize it to go through anyway.
• If your card has more than one interest rate on balances, then payments must be applied to the highest interest rate first.
• Gift cards can’t expire for five years, and issuers can’t charge dormancy fees for unused amounts left on the card.
• Credit card statements must be mailed out 21 days before they’re due.
• Individuals under 21 will need a co-signer on their cards unless they can prove that they have the means to make payments on their own.
• Credit card agreements will have to be posted on the internet.

There is a lot of speculation about what this will do to rewards cards, and other credit card perks. I think we’ll have to wait and see!

In the meantime, you can read the full text of H.R. 627: Credit Cardholders’ Bill of Rights Act of 2009.

Source: Consumer Reports

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A reader, Keith, left the following comment about the $7500 First Time Home Buyer Tax Credit:

I just read that the $7500 home buyer tax credit is going to be jumping up to $15000. I wish I was buying a house this year!!!

Good catch Keith! The Senate voted yesterday to expand the $900 billion economic stimulus package to include the $15,000 home buyer tax credit. Here are some of the key points of the tax credit.

$15,000 Home Buyer Tax Credit

• The tax credit is for 10% of the purchase price of a primary residence up to $15,000.
• It will be for homes bought within one year of the date of the enactment.
• The tax credit would be available to all home buyers, unlike the $7500 home buyer tax credit, which is only available to first time home buyers.
• It would not have to be repaid as long as a buyer lives in the house for at least two years.
• The idea came from a similar successful tax credit in the 1970s.

We’ll have to stay tuned to see what happens next! If you are in the market to buy a house, this could be a terrific help!

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