Goodbye Universal Default

Credit card companies are beginning to announce that they will no longer jack your interest rate if your credit score goes down. This practice of increasing your interest rate if you have a decline in your credit score is covered under what the credit card companies call the 'universal default clause'. Many people have had their credit card rate increased under this clause even when their repayment history was perfect with the credit card company that was increasing the interest rate. Here is a great write up which answers the question What is a Universal Default Clause

CHASE announced in November that they're discontinuing the practice, and Citibank made the same announcement earlier in 2007.

This is great news for people with credit cards. Fees will be less! Although this isn't necessarily 'new' news, it appears that it will get more attention in 2008 with the subprime crisis receiving even more attention from our government. Now, I'm no fan of regulations, but maybe the oppressive credit card fee structures will finally get some federal oversite!

Bush's big gift to Wal-Mart - MSN Money

In this post, Michael Brush talks about how you might spend the money that you might get in the mail. He thinks that this stimulus package will be like a windfall for retailers like Wal-Mart.

I still believe that most people will use any money that they get to pay off some of their accumulated revolving debt, as I wrote about in this post.

If people do go on a buying spree, it could have the effect of stimulating the economy. If a TV is sold, then another will be manufactured. Another person in the chain gets their paycheck, spends it, and the beat goes on (dada da da dada) and the beat goes on! We call this the 'mulitplier effect'.

The multiplier effect -- money spent that gets spent again -- means the ultimate impact on the economy would be bigger than $100 billion. Chris Varvares, the president of Macroeconomic Advisers, thinks each rebate dollar spent would increase growth by $2.

The rebates and recent Federal Reserve interest-rate cuts "should keep the consumer spending right through the spring and into the summer," says economist Ed Yardeni, the president of Yardeni Research. "I'm sure marketing departments are already coming up with ways to get those rebate checks spent in their stores."

Bush's big gift to Wal-Mart - MSN Money

Talk about a Blogroll!

Talk about a blogroll! You need to look at Dollar Frugals Insanely Massive Blogroll. I found a bunch of new sites that I like, and I was very pleased to see Money and Credit listed there!

Here are a couple more that I read regularly....

Blueprint for financial prosperity

Journey to Financial Freedom (finandom.com)

Five Cent Nickel

The Frugal Law Student

The Simple Dollar

UPDATED- How many allowances should you claim on the W4?

I've heard from many of you that this previous post didn't give you the information that you were looking for. So, let me offer my apologies and try to do a better job of it this time.

I am not a tax planner, or tax specialist, so PLEASE consult with a professional if you have questions.

Now, with that out of the way, let's see how having too many or too few allowances can effect your withholding.

How many W4 allowances do you claim?

Are you getting a refund from the IRS this year? If so, you're having to much money withheld from your paycheck. For some people with cash flow problems, adjusting your W4 allowances is a great way to get more cash into your pocketbook each payday to help with those cash flow problems.

The IRS has a worksheet that will help you calculate how many allowances you can take. Just follow this link to the worksheet.

Another great way to do some what if scenarios is by using one of the many free calculators like this one at H&R Block

What happens if you claimed just two allowances on your W4, when in real life you have four, and you claim those four allowances when you file your taxes? Chances are you would get a refund.

As I wrote in my first post about how many allowances you should take, the simple answer is not too many, and not too few. If you have too few, then you're getting more money in your paycheck each pay period. If on the other hand you're paying into the IRS, then you have too many allowances. Remember, the BIGGER the allowance number, the bigger the paycheck. The smaller the allowances, the smaller the paycheck. If your allowance number is too big, then you'll pay in to the IRS. If your allowance number is too small, you'll likely receive a refund from the IRS.

If you want to increase your take home pay, increase your allowances. If you want to increase your refund, decrease your allowances.

Now, keep in mind that if you want to increase your take home pay by increasing your allowances, BE VERY CAREFULL! If you claim too many, you could end up paying in at the end of the year.

Your goal for changing your allowances should be easy. You should be paying what you owe; not any more, and not any less.

Here are a few more resources that I hope you find helpful:

How to adjust your withholding - Kiplinger

Exemption Allowance Amount - H&R Block

Tweak Your Income Tax Withholding - About.com

Adjust your withholding so you don't get a big refund - Bankrate.com

Paycheck Calculator - Paycheck City

Carnival of Personal Finanance CXXXVIII and Super Superbowl XLII

Be sure to check out this weeks Carnival of Personal Finance hosted by I've Paid For This Twice Already...


Hats off to the NY Giants! Congratulations on winning a very well played game. We were in the New England camp here in the kingdom so we were sad to see the streak come to an end. We were simply outplayed.

Now for some much deserved R and R!