Big banks are rejecting California’s IOUs.

Even in January, it was reported that California might have to issue IOUs. Last week the state started issuing IOUs and major banks have made a promise not to cash them after today. There is a $26 billion budget deficit. The only other alternative is to go to a credit union. There are about 60 in the state that will accept them for deposit.

Most major banks reiterated that customers could not deposit the IOUs after today. Others, such as City National Corp., said they would continue accepting the registered warrants but could stop taking them at any time.

The last time the state sent out IOUs, during a 1992 impasse between then-Gov. Pete Wilson and legislators, banks also eventually rejected the registered warrants.

The 3.75% interest isn’t enough of an incentive for the banks to accept the IOUs but the credit unions are hedging their bets to gain a greater foothold in the market since there are larger financial institutions that are not accepting the cash vouchers. Some people have tried to sell them on the internet at a discount because they have no other place to turn.

Additionally…
Another way California is looking to garner income is by taxing marijuana.

Like to read? Summer reading programs abound for children and school aged  young people but once you leave the hallowed halls there are few incentives to read in the summer… or are there? Several cities are promoting adult summer reading programs.

The Brooklyn Public Library offers a prize to each person who enters and readers may also write book reviews. Those who do will be entered into a drawing for a prize.

The Chicago Public Library has Land of Lincoln Readers this summer with suggested titles. All you need to do is complete a form with your name, and the author and title of two books that you between June 15 and Aug 1and you can receive a tote bag.

The Seattle Public Library’s program allows readers to post reviews which will be shared with other readers.

The Manhattan (Kansas) Public Library offers a program where readers enter every book that they read in the summer for a chance at a weekly and grand prize.

Austin, Texas’ library system allows readers to complete an entry form for a prize for each every three books read.

People who are readers will read in the summer, winter, fall and spring too. Though incentives and prizes work for the reluctant reader in all of us. More libraries offer summer reading programs for kids and those programs offer prizes such as t-shirts, end of the summer parties and other goodies. Sometimes even as an adult it’s nice to have a little incentive to read too.

Identity Theft

It’s still an issue especially when people are hurting. There may be smaller crimes taking place through according to statistics crime really hasn’t risen that much. That is because the statistics have been skewed. IF10% of the population was a victim of theft a decade ago, but the population rose along with crime proportionally and 10 years later there is still a 10% rate in robbery or theft, the number are being used to show that there hasn’t been a dramatic rise in crime.

Let’s say you take precautions at home and shred bills, don’t give out your credit card number or any information over the phone for anything that is unsolicited and shop at secure sites. You still may be a victim of identity theft. When you are shopping, someone may be taking a picture of your credit card. The Department of Justice calls this “shoulder surfing.”

Many people do not realize how easily criminals can obtain our personal data without having to break into our homes. In public places, for example, criminals may engage in “shoulder surfing” – watching you from a nearby location as you punch in your telephone calling card number or credit card number – or listen in on your conversation if you give your credit-card number over the telephone to a hotel or rental car company.

Many times, I have overheard people giving their credit card number out in public on the phone. Granted, I don’t want to do anything with this information but a thief definitely would. A thief may also take a picture of your credit card as you hand it over to the cashier taking a picture of all the information they need to do some damage to your credit.

Let’s say you still receive paper statements from your bank or even from an investment account. If it doesn’t arrive on time, be concerned someone else may have intercepted it and can gain access to your accounts.

Scammers may even call your house or send you a realistic looking bill stating that you owe money. If you know that you have had no closed accounts or bills due, call your credit card company or check to see what this is about. When inquiring about fraudulent charge, do not give your social security number to anyone. Ask what the previous address is for the person and the person’s age. There are times when bill collectors are doing skip tracing to hunt down debtors that they find the wrong person.

One recommendation that the Federal Trade Commission makes is staggering the free credit reports that you can receive (one per year, per company) to see what the credit reports are showing.  You can request your free report online, by phone or by mail. AnnualCreditReport.com, call 1-877-322-8228, or fill out the Annual Credit Report Request form and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. No matter how you request your report, you have the option to request all three reports at once or to order one report at a time. By requesting the reports separately, you can monitor your credit more frequently throughout the year.

Unfortunately, twice I have had free credit monitoring offered to me because of breeches in security. One was because of an employer and the other because an online company’s site was hacked. The services were nice, but I probably wouldn’t want to pay $20 or more each month to have credit monitoring. In both cases they were just offering the service so they wouldn’t be liable because of theft.

Unemployed or underemployed and can’t make payments on your loans? You are not alone.

The American Banking Association recently released a report indicating that a lot of Americans are not paying their bills.

…delinquencies on consumer debt rose to a record 3.23% in the first quarter of 2009, up slightly from the previous quarter.

This number does not include credit card debt.

Similarly, the balances on those late credit card accounts rose to 6.6% of all outstanding bank card debt, marking another record high.

The reports shouldn’t be surprising. If you have no money or are making less than you did, paying bills becomes difficult if not impossible.

Don’t dodge bill collectors or anyone you owe. Be forthright and explain your situation or try to make some small payment if you can.

Prioritize your bills. Pay the essentials such as mortgage or rent, transportation to get to work and utilities.

You aren’t the only one. Ask for a restructuring of your mortgage, if you can. If it is true hardship you can ask to reduce the interest rate on your loan with no additional fees. Some income requirements may be imposed but remember companies also want their money too. Late payments and delinquencies also can mar your credit report but making some effort will be better than doing nothing.

Hope everyone had a safe 4th of July weekend. I took a bus road trip and saw quite a few RV dealers in Illinois and Wisconsin and not that many on the road.

For inexpensive overall travel an RV would be a good way for a group to see the country. At a couple of places where we stopped there was parking available for RV and some pretty nice looking ones (from the outside) as well.

Taking an RV for a vacation would work but you must remember that you have to do the cleaning, some one has to drive and in order to save, you also need to do the cooking as well. If  that isn’t something you are interested in, then consider another type of vacation.

For some taking a vacation does not include the same things you have to do at home : cooking, cleaning and driving. Although you can control what you eat when you eat and if you have ever been to a not-so-clean rest stop, you will appreciate knowing about the cleanliness of the facilities.

Seeing the open road seems great but if you are thinking of seeing an urban area for vacation you may not need an RV. An RV vacation is for the open road, wide spaces and less congested areas. Then during the highways in the cities, you see very few RVs.

An RV offers the opportunity to see what you want, but there is still gas, food and the driving to consider. Plus,  you need to find where RV parks or places where you can park your RV are located.

Vacation to me spells hotel, doesn’t include driving and not having to cook.

It has happened. California is handing out IOUs. Officially, they are called warrants and are redeemable at banks. Though some banks are skeptical about accepting the IOUs which have an interest rate of 3.75%. Even so, over $50 million have been issued. Which of the other states entering the new fiscal year without a budget will have the same thing happen to them?

I will gladly pay you Tuesday for a hamburger, in a cartoon this was cute. For a state in the 21st Century it’s not. California’s budget woes will make the state start handing out IOUs. This is a very dire situation. People who depend on that money can’t give their creditors IOUs. What can they tell their creditors or utilities? We can’t pay you because we’re not getting my money. Even though the money isn’t directly for government salaries the vendors who deal with the state won’t receive payments which are used for salaries and their own business expenses.

Some states are notoriously slow in making payments to vendors but regular workers always had priority. Who will be next if the state won’t be able to pay its creditors? Furlough days for government workers is the pejorative buzzword that has been going around. The small vendors and businesses that aren’t getting money from the state will contribute to the further decline in the money problems.

If an agreement is reached before 4 p.m. CST then the IOU would just be nothing more than a bad dream. Otherwise, those who deal with the state of California as a customer may have to face some budget woes of their own.

The state’s long-term bond rating is in jeopardy, as well. It already has the worst credit rating in the nation.

Fitch Ratings last week downgraded the state’s long-term general obligation bonds to A-, from A, and placed them on a negative ratings watch, signaling the company’s concern about California’s ability to solve its liquidity crisis.

Just like individuals, those with the worst credit ratings have to pay more to borrow money which will cost the taxpayers more in the long run.

Illinois, California, Pennsylvania, Connecticut, Arizona, Mississippi, and Ohio.

What do these states all have in common? As of today, they have no state budget. July 1 is the beginning of a new fiscal year for many states (and companies) and this group of states has failed to pass a new budget for the next year. The majority of the states are facing budget short falls which make citizens face the realities of two things – fewer services and more taxes.

The problem is that budgets are based on taxes which generate income for states. Since there are many more people who are out of work, this affects the income for the state and conversely people need more public services which means that states have to spend more for public assistance and other programs.

Several states are raising taxes in order to balance the budget or to close the shortfall gap. No one really likes paying taxes, but if it were between being jobless or underemployed and having a good job, paying additional taxes while being employed would be what people would do.

Property taxes also generate a significant amount of money for localities and states. When the housing market tanked, many people were stuck with the same tax rate or higher because they are paying a hidden tax for those foreclosed properties. Also, with more unemployed people using public services such as health care because they can’t afford a direct health plan, or bridge coverage then if an emergency happens, they go to a hospital or free health care facility.

Rethinking how tax money will be used at this point will only do so much. But when you have states like California which lost a great deal of revenue because of property taxes and then more people will have to be laid off because of it, this brings to light a different problem – have our taxes been used wisely or can taxes be levied on people in another way?

For additional sales tax, there are some ways around that, if you buy things on sale, used or online you pay less tax. Another way, is to go to an area that has a lower tax rate. Generally grocery items have a lower tax rate, so you don’t pay as much, and fewer taxes are collected. Increasing the income tax only works if people are employed and even then if people aren’t gainfully employed there may be very little or no taxes to collect.

There are three states that have no shortfalls, maybe the rest of the country can seek their guidance and see what they did in order to have a balanced budget. After all, friends help friends when they are making financial mistakes – states should help each other.

Maybe it is time to rethink either Fair Tax or Flat Tax systems.

Poor Ruth Madoff.

Bernie Madoff’s wife is now crying broke because she has been stripped of all but $2.5 million in assets. In New York her duplex apartment was worth $7 million.

The fascination with money and its excesses are intriguing. Last week, I read an article about the lack of skilled trade workerswho are needed and the positions pay $22 an hour which would be over $45k a year. Additionally there were other engineering positions that employers were having difficulty filling which paid $50k+ a year. In the East, people were crying that you can’t afford anything on that wage. While in other parts of the country $45-50k annually might not get you into a fancy country club but you wouldn’t be broke either.

How far money will go depends on your location in the country. Real estate prices in larger coastal cities may be higher than in the middle of the country, though decent homes in good neighborhoods can still be had for people making $50k a year.

Mrs. Madoff who was allegedly not a part of her husband’s business dealings still gets to keep five times more than the maximum payment that claimants may receive toward their investment losses.

In most parts of the world, $2.5 million dollars does not make you poor. In a relative sense when you had more and lost the majority of your holdings, then a paltry $2.5 might seem like a poverty level when compared to $65 million or more. Yet, for people who lost their live savings to leave with $2.5 seems like a dream.

Ruth Madoff’s salon and florist (among others) no longer want her business, so she may not have to worry about her $2.5 going very fast. Some buildings don’t even want her to live there, so her millions may go a lot farther than originally thought. If people can survive on $50k a year, R.M. should be able to do it as well.