As speculated would happen last week, Congress officially extended and expanded the first-time home buyer tax credit until April 30, 2010. If you want to know specifics on the plan, check out that post, as every detail I highlighted was included in the final version of the bill. I’ve had a few questions about the expansion to existing homeowners part of the bill, so I want to give some more clarity on that part.

Details on the $6,500 Home Buyer Tax Credit Expansion

The new addition to the home buyer tax credit is that buyers who have owned and lived in their current home at least five years out of the last eight will will be eligible for a $6,500 tax credit on the purchase (signed contract) of their new primary residence through the end of April, 2010 (you have until the end of June to close on the house).

The income limits for the existing homeowners is the same as for first-time home buyers – $125,000 for singles and $225,000 for married joint filers.

Is the $6,500 Home Buyer Tax Credit Retroactive?

Contrary to many people’s hopes, the new addition to the home buyer tax credit bill is not retroactive. You must have a signed contract between the dates of November 7, 2009 and April 30, 2010.

Reader Discussion:

• Are you going to take advantage of either the extension OR the expansion of the first time homebuyer tax credit?
• Are you eligible for the tax credit expansion to existing home buyers? Does it make you at least want to look around a little bit?

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You May be Ready to Buy your First Home if…

This is ‘open enrollment’ time of year at many employers. What is open enrollment? It’s basically a window of time that your employer allows you to change your benefit elections for the upcoming year. Since you typically only get one chance to do this, you want to make sure you’re taking advantage of it. Here are some things you should do:

1. Update your Medical Health Insurance: Look to see if the cost or benefits of the plans will change from what they presently are. Sometimes employers will raise or lower premiums, co-pays, and covered benefits for various plans. This might make it worth it to make the switch, but if you don’t at least look at the details, you’ll never know. This year, I discovered that my plan no longer charges a co-pay for preventative health visits.

2. Update your Medical Flexible Spending Account (FSA): During open enrollment you can elect how much to put into your FSA. FSA’s are spending accounts that are funding by deductions from your paycheck. The nice thing about FSA’s is that the funds are not taxed, so you are saving money on your medical expenses.

Check to see how much your employer will allow you to deduct (the maximum FSA amount is often $3,000). If you do opt for an FSA, be careful not to load it with more than you will spend as it is often ‘use it or lose it’ in many plans. Not sure how much you might spend on medical expenses? Check out Kiplinger’s FSA calculator.

3. Update your Beneficiary Information: If you’ve had any major life changes in the past year that would cause your beneficiaries to change, open enrollment is the time to update.

4. Consider Voluntary Life Insurance and Disability Insurance: If you are currently paying for these things on your own, your employer may be able to offer you a better rate through a voluntary group plan. The costs for these voluntary plans would be deducted from your paycheck.

Reader Discussion:

• Have you made any changes to your benefits during open enrollment? What changes?
• How much are you funding your FSA with?

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You may also find the following article of interest:

How does the Economy & your Income Impact your Health

In a poll I took a few weeks back, 30% of you said you would take advantage of the first-time home buyer tax credit if it were extended. Well, it looks like you might get your chance – but, you’re not the only ones. Before we get into the details of the homebuyer tax credit extension AND expansion, let’s review how you voted.

This means that if 100% of you stuck to your word that you would take advantage of the credit, then a whopping 58% of voters will have qualified. Outstanding! On to the news.

First Time Home Buyer Tax Credit Extension Details

If the Democrats version of the Senate bill is passed when it comes to vote in the next few weeks (as it is expected to), the first-time home buyer credit extension would have the following details:

• The credit would be available for homes that go under contract by April 30, 2010. However, you would still have 60 days afterward to close.
• It would be attached to a bill to extend unemployment benefits that is expected to be voted on in the next few weeks.
• First-time buyers (those who have not owned a home for three years) can claim an $8,000 credit, the same as before the extension.
• Income limits would be expanded: $125,000 a year for individuals (up from $75,000) and $225,000 (up from $150,000) a year for married couples who are filing a joint return.
• The proposal will include anti-fraud measures, including minimum age requirements and additional authorities for the IRS.

First Time Home Buyer Tax Credit Expanded to Existing Home Owners

Perhaps the most interesting addition to the bill is that existing homeowners who buy a new principal residence after living in their current home for at least the last five years can claim up to a $6,500 tax credit. Although I don’t know that I agree with the 5 year mandate (I think that’s a bit high), at least some of us who already own homes can now get in on the tax credit. Before you go out and close on a house, make sure that the bill actually passes!

Reader Discussion:

• If the tax credit extension passes, would you take advantage?
• Does this motivate you to want to buy your first home?
• If you’ve owned a home for 5 years, does the tax credit expansion motivate you to move?

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You May be Ready to Buy your First Home if…

An executive from News Corp., owner of online video content provider Hulu, announced that Hulu will start charging for its service in the near future (likely 2010). If you fall into the camp of penny pinching techies, there’s a good possibility that you have ditched cable or satellite television in favor of some sort of Hulu/Netflix/Torrent smorgasbord.

If Hulu starts charging for content, where does that leave you? Would you <gulp> consider going back to a cable or satellite? Or would you pay for Hulu?

Hulu did offer a legit way to forego the expense of cable/satellite. I had not made the switch, but with Comcast continually raising their rates and annoying the hell out of me with their arrogance, I was strongly considering it. If you have a legitimate way of getting a similar cable/satellite experience without paying cable/satellite prices, please share!

Reader Discussion:

• What combination of services have you used to cut out cable or satellite?
• Will you pay for Hulu if they start charging for content? Take the poll!

Note: There is a poll embedded within this post, please visit the site to participate in this post's poll.
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You may also find the following article of interest:

How has Technology Impacted your Finances Over the Last Decade

How to Send Text Messages (SMS) Via Email for Free

An Unfortunate Side Effect of the Recession

Since the main topic here is personal finance, we talk a whole lot about saving money on this site, but not much about giving it. An unfortunate side effect of the recession is that thousands (if not hundreds of thousands) of outstanding charitable organizations have seen their fundraising dollars go down significantly as well. Makes sense, right? People are having a harder time getting by, so many hunker down and keep every last bit for themselves.

What is most troubling is that it is in these difficult times that 501(c)(3)’s need funds the most, but get them the least. Those who rely on the services and grants that these organizations provide in good times, need them even more in bad times. But with less funds, these organizations are forced to cut back on the services that they provide.

That’s why I wanted to use this post to harness the power of the community on this site and share a store about a disease that I am very passionate about fighting.

Fighting Multiple Sclerosis

Multiple Sclerosis (MS) is a terrible disease. MS attacks the central nervous system and symptoms may include mental and physical fatigue at all levels, headaches, memory loss, temporary or sustained paralysis, and a plethora of other unfortunate effects. There is presently no cure for MS and it impacts people in the prime of their life.

Perhaps what is most devastating about the disease is that it effects everyone differently. You don’t know how you’ll feel tomorrow, and you don’t know how the disease will progress in the years to come. Your entire short and long-term future is at the mercy of the disease.

Bill’s Story

I originally was exposed to MS through two close friends who had been diagnosed. This led to me getting more involved in fighting the disease and meeting some very inspirational people along the way. One of them is my close friend Bill. Bill has been diagnosed with MS and he volunteers significant time to raise funds and organize fundraising events so that others will benefit from the services and support that those funds provide.

Bill recently has been featured on a website highlighting the stories of those living and thriving despite being diagnosed with multiple sclerosis. I’d encourage you to check out Bill’s MS story. If you’re inspired to support the fight against MS, have received any value from 20somethingfinance, or are just in a giving mood, I’d encourage you to support Bill’s efforts in one of two ways:

Support Bill’s Fight Against MS

Here’s how you can support Bill’s fight against MS.

1. Purchase his awesome cookbook, Cooks and Cars, a collaboration with GM, which features 360 great recipes and some amazing vehicles.

2. Donate to his fundraising efforts for the MS Longest Day of Golf, a National MS Society event.

Reader Discussion:

• What experiences do you have with MS. Do you have someone close to you who has been diagnosed?
• What charitable organizations do you support, and why? Feel free to share a link!

Being that this is National Save for Retirement Week, it seems appropriate to share some bittersweet news that I just learned. The IRS has recently made the big announcement regarding 401K maximums for 2010.

The Maximum 401K contribution in 2010 will be…<drumroll>

Identical to 2009. <Cymbals crashing and silence>

That’s right, the IRS maximum allowed 401K contribution will stay the same as 2009’s 401K contribution maximum at $16,500. The 401K catch-up contribution for those over 50 years old will also stay the same at an additional $5,500 over the standard. For reference, 2009’s 401K maximum had increased $1,000 over 2008’s $15,500 maximum. Why is this bittersweet? Read on.

The Bitter Part of 401K Maximum Contributions Staying the Same

This news is a little bitter due to the fact that the maximum contribution level has increased in all but six years going back to it’s beginning in 1987 (almost 3/4 of the time). It’s also worth noting that in that time period the maximum 401K contribution amount has never declined.

The Bitter Part of 401K Maximum Contributions Staying the Same

At the same time, there had been rumblings that the maximum 401K contribution level might actually decrease in 2009 for the first time due to the Consumer Price Index (CPI) decreasing year over year. For all of us who maximize our 401K contributions each year, that would have been a big step back.

Let’s hope that 2011 brings only sweet news of another increase. The maximum 401K contribution limit has never stayed the same three years in a row, so we do have history on our side.

Reader Discussion:

• Are you excited, disappointed, or indifferent to this 401K news?
• Do you plan on maxing out your 401K in 2010?
• Have you ever maxed out your 401K. How did it feel?

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You may also like these 401K posts:

The Complete Guide to Choosing Between a Traditional 401K and a Roth 401K

Choosing Between a Traditional 401K and a Roth 401K, Part II: How will my Choice Effect Early Retirement?

October 18-24 (this week) was recently designated as ‘National Save for Retirement’ week by Congress. Historically, the federal government has always promoted increased spending by consumers to drive us out of recessions. That’s why it’s incredibly interesting that during the largest recession since the Great Depression, Congress would approve of a ‘National Save for Retirement’ week.

It turns out that they have good reason. According to the Employee Benefits Research Institute’s 2009 Retirement Confidence Survey, 53% of workers in the U.S. have less than $25,000 in total savings and investments. The typical American household (headed by a 43 year old) has just over $18,000 in savings! That’s a scary number.

With pension plans being a thing of the past, saving for your own retirement is increasingly important. The government is starting to realize that if it doesn’t begin encouraging savings now, the expense of completely supporting tens of millions of retirees who have zero retirement savings will be catastrophic for the country. Now is the time for action.

These statistics get me absolutely fired up! My employer matches 50% of my 401(k) contributions up to the IRS maximum 401(k) contribution. That is an incredible benefit that I would never take for granted. However, a number of my colleagues don’t take advantage of this free cash while having no home, no kids, and no major expenses. If they aren’t taking advantage of this benefit, it’s easy to see why workers who aren’t getting a nice match are not saving at all. It kind of makes me sick on behalf of their future self looking back with regret.

I have the feeling that a good many of you are exceptions to these statistics. But why? How are most Americans not getting the message?

Reader Discussion:

• How much have you saved for retirement and what is your age?
• Why have you decided to save?
• If you could tell peers of yours why they should start saving, what would you say?

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Hey all. I noticed that TradeKing is presently running a special promotion through affiliates (of which I am one) that I thought looked pretty good, so I wanted to share. Basically if you sign up for a new account and make a trade, you get a $50 bonus!

Here are the TradeKing Promotion details:

• Sign up for a new Tradeking account by October 31st via clicking the link below (this special is only offered through affiliates).
• Deposit $2,500 into your TradeKing account
• Make one trade on TradeKing
• $50 bonus then gets deposited into your TradeKing account

My Thoughts on TradeKing vs. Other Discount Brokers

It sounds like a very good deal, especially considering that TradeKing trades only cost $4.95 per trade, just slightly more than Zecco’s $4.50 per trade. So, in this promotion, you basically spend $4.95 and get $50 free. I am not a TradeKing customer myself, but I have heard some very good things about their service. They were rated #1 in customer service by Kiplinger for online brokers last November and have been voted the #1 discount broker by SmartMoney as well. Also, in looking at their sites, it looks like they don’t charge anything for account inactivity like a lot of brokers do.

Here’s the link:

Readers:

• If you have used TradeKing, what was your experience like?
• What is your favorite discount broker?

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Also, don’t forget to subscribe to my new blog, MicroFrugality.com!

I’m very excited to announce that I have launched a second blog – MicroFrugality.com. This blog will be all about the most controllable part of the personal finance equation – your expenses – and how you can dominate them!

The vision is to build out a strong community of ‘Frugalheads’ who are insanely focused on discussing, sharing, and executing on living frugally to cut their expenses and work towards complete financial freedom.

The site is brand spanking new, but you can already view a set of posts, including one explaining the launch and focus of the site. Essentially, we’re going to keep the focus on frugal cost cutting techniques for just about anyone – expanding the reach of 20somethingfinance, while making the content material sharp in focus.

I’d love to have you join!

You can subscribe to get MicroFrugal tips delivered to your email or RSS feed!

I just read an article on CNN that highlighted 8 companies that are great to retire from. One stood out to me, Nustar Energy. Their commitment to their employees was so generous, I had to share.

An Amazing Pension Plan

Beyond any other benefit, I love the fact that Nustar, which started in 2001, has bucked the corporate trend of moving away from pensions and offers their employees a very generous defined benefit pension plan. If you don’t know what this is or why it’s so awesome, check out my rant on the unfortunate decline of pensions.

According to Nustar’s site, their Pension Plan provides a benefit equal to 1.6% x Final Average Pay x Years of Credited Service. It’s important to note that the final average pay, which is defined as the highest three consecutive calendar years, includes base pay, overtime and bonus. Additionally, NuStar’s pension gives retirees their full salary for one-and-a-half times their years of service: work 20 years and get 30 years’ worth of your full pay.

This is amazing!! You would be crazy to leave their company.

But That’s Not All!

Additionally, Nustar offers the following:

• Annual bonuses to all employees.
• A thrift plan (401k): NuStar matches $1 for every $1 contributed by the employee up to 6% of pay.
• Educational reimbursement program to support employees’ efforts to further their education. The program pays 80% of tuition, fees and books for full-time employees who are pursuing continuing education or undergraduate or graduate degrees.
• Fitness plans, etc., etc., etc.

Oh, did I mention that they have never had layoffs?

You can check out their entire employee handbook.

I applaud Nustar for their commitment to keeping their employees happy. This is a company who gets that attracting and keeping high level talent keeps everyone happy. Way to go guys.

Discussion:

• Does your employer offer a pension?
• Would you leave an otherwise similar company that doesn’t have a pension for one that does?

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You may also find the following articles of interest:

Roth IRA Basics

IRS Maximum Allowed 401K Contribution Increases in 2009