10 Ways to Go Green and Save Cash—No Excuses

Everyone is feeling the squeeze right now, with our investments being decimated and our 401(k)'s withering away. Consumers across the country are looking for ways to cut back. Luckily, some of the best ways to save money are also simple steps toward living a little greener. And, as we recently learned, simple steps can have a big impact. So, try these green tips to save some needed cash—no excuses.

• Bike to work. Or bike to public transit.
Excuses: "But bikes are expensive! And I have to look nice for work."

Why Your Excuses Are Lame: Often, you can buy a bike for the price of a tank of gas on Craigslist. It won't be titanium frame, but it will get you around. It's easy to bring a change of clothes and change at work, especially if your office has a locker room. If not, you can bike to public transit if it's available in your area, and walk the remainder. Another way you'll save money: By walking and biking more, you can cancel your gym membership.

• If you have to drive, drive more efficiently.
Excuses: "Hypermiling sounds scary. And I don't want to add anything on to my car."

Why Your Excuses Are Lame: Hypermiling—the strange driving practices that save gas, like driving on the lines in the rain or going into neutral on ramps—can be really unsafe. You don't have to try them to save gas, though; instead, take simple precautions like making sure your tires are blown up, taking off your roof rack to cut down on drag, and boosting your mileage by getting regular tune-ups.

• Cook at home. Buy nutritious ingredients to save money. Eating in will also discourage packaging and food waste.
Excuses: "I don't know how to cook, I don't have the time, and ingredients are as expensive as eating out."

Why Your Excuses Are Lame: Try pricing out the ingredients for a home-cooked meal—you'll find them to be significantly less expensive than takeout or a meal. As for not knowing how to cook—well, you don't have to be Emeril or Bobby Flay to make a decent meal for your family. Try cookbooks for beginners, not only because they're less intimidating but also because the recipes in them don't require fancy, expensive ingredients.

• Put your home on an energy diet. Monitor your thermostat, secure proper insulation, and eliminate all sources of vampire power—the electricity wasted by devices that are always plugged in.
Excuses: "But how will I know what's using up the most power? It's too complicated."

Why Your Excuses Are Lame: For big savings, you can buy devices to time and monitor your thermostat. You can also buy cords that prevent vampire power from being wasted. If you don't want to spend money, just monitor your own use—the oldest advice in the book. Put on a sweater instead of turning on the heat for the first few chilly days. Turn off the lights whenever you leave a room. Unplug appliances when they're not in use. And shut down your computer each night—computers are one of the biggest energy hogs.

• Work from home. Telecommuting saves you money in gas and food and can make your day less stressful.
Excuses: "They need me in the office. How will I stay connected?"

Why Your Excuses Are Lame: There are so many ways to stay connected from home—ask your office about wiring your home for video conferencing. You don't have to work from home every day to see significant savings; even one or two days a week will save you hundreds of dollars over the year in gas and lunches.

• Don't shop—freecycle. Use the net to find free furniture and goods, and swap the stuff you no longer need.
Excuses: "Why would I want someone else's old junk? I don't like hand-me-downs."

Why Your Excuses Are Lame: Just because items are used, it doesn't mean they're junk. Many of the site's offerings are only gently used, and if you end up with an item you don't like, so what? It's free, so just put it back on the site, and keep looking for something else.

• Eat less meat. Even if you only buy a little less each week, you'll save money and make an environmental impact.
Excuses: "But I love burgers."

Why Your Excuses Are Lame: Burgers are great, and if you want them, eat them. But in exchange, try a meatless meal every day, or week, or whatever you can handle. According to the U.N., even slight cutbacks in meat eating have an impact on climate change. So, if you like meat, try a turkey burger, because poultry has less of a carbon footprint than beef. Eat salads or pasta for lunch, and meat for dinner. You'll see the difference reflected in your grocery bill, and also your health.

• Reuse what you can. Get reusable water bottles instead of buying bottled water. If you pack your or your kid's lunch, buy a lunch bag and use Tupperware instead of buying Ziploc and brown paper bags.
Excuses: "But it's convenient."

Why Your Excuses Are Lame: Why spend money continually on stuff you'll just throw away? Cut out plastic utensils, disposable water bottles, paper napkins, and brown bags. They may be just little expenses, but they're still wasteful ones when you can reuse so easily and cheaply.

• If you need to buy new gadgets, trade in your old ones for cash.
Excuses: "But my phone/iPod/computer is really old."

Why Your Excuses Are Lame: Tech trade-in sites that give you cash for gadgets will often take any of them. You might not get as much as if you were trading in a new iPhone, but you can put the cash towards the price of your new tech toys. The sites, such as Gazelle, Cell for Cash, and even Office Depot also keep toxic technology out of landfills, and recycle the parts safely.

• Do it yourself. This applies to anything around the home. Grow your own vegetables. Make your own cleaning solution out of baking soda. Hang your clothes out to dry.
Excuses: "What is this, the olden days? Also, I have no idea how to do that."

Why Your Excuses Are Lame: Old housekeeping customs can be big green money savers. Your dryer, for example, is one of the home's biggest energy hogs, so putting clothes on a backyard line every once in a while would be reflected in your bill, and would give your clothes a fresh-air smell. Harsh chemicals comprise many of our household cleaners, and if you think organic cleaners are expensive, make your own here. You can also use things in your fridge for cleaning—vodka removes mildew, lemons freshen a garbage disposal, and onions clean the top of a grill. As for vegetable gardening, if you have the space and a little time, you might find that your produce is cheap and even more delicious than vegetables that have traveled halfway across the country.

READ MORE - 10 Ways to Go Green and Save Cash—No Excuses

Obama to Give 'Muslim Speech' in Egypt: The Significance of Choosing the Arab Street

Barack Obama

will give what one aide has described to me as his "Muslim speech"—a major address to the Muslim world from a predominantly Muslim country that Obama pledged to give within his first 100 days in office—in Egypt on June 4.

The location is significant because Obama didn't have to pick a nation in the Arab street. He could have taken an easier way out.

The biggest Muslim-majority country in the world, after all, is Indonesia, where the president spent part of his childhood. Public opinion polls show that Indonesian attitudes aren't as hardened against the United States as are feelings in Middle Eastern nations, and the president certainly would have gotten a warmer reception in Southeast Asia than he will in the Middle East.

Obama could have picked a North African country like Morocco, another place the United States enjoys more support than in the Middle East. A Gallup analysis last year revealed that most Moroccans approved of the job performance of American leaders.

That same analysis found that only 13 percent of Egyptians approved of the job performance of U.S. leadership. Between 2005 to 2008, the number of Egyptians who said the United States is serious about promoting democracy in the Middle East and North Africa slid from 24 percent to 4 percent. Only one other country saw that steep a decline. This even though Egypt is one the world's leading beneficiaries of U.S. aid, receiving $1.3 billion in military assistance alone.

Obama is going near the epicenter of Muslim antipathy toward the United States. That bold move may speak just as loudly to Muslims abroad as whatever he says during his speech.

READ MORE - Obama to Give 'Muslim Speech' in Egypt: The Significance of Choosing the Arab Street

Obama's Budget: Shortchanging Women's Health?

While women's health activists were pleased to see that President Obama ended funding for abstinence-only education, they're sharply critical of other aspects of his planned budget, leading me to believe that the 100-day honeymoon is over. The Center for Reproductive Rights issued a statement saying the group is "deeply disappointed with President Obama's failure to strike government funding restrictions on abortion." Planned Parenthood says the budget "misses an opportunity to build on one of the nation's most effective programs in reducing unintended pregnancies"—namely the Title X program that funds family-planning clinics for poor women who don't have health insurance. Besides ending funding for abstinence-only education programs and providing $178 million for evidence-based comprehensive sex-ed programs, the new 2010 budget:

• Includes an increase of $10 million in Title X family planning programs. That doesn't keep pace with inflation, according to women's health experts, who were hoping for a $400 million increase.

• Includes an option for states to expand programs for family planning to families who earn too much to qualify for Medicaid but not enough to afford health insurance—up to $37,000 in yearly income. A Guttmacher Institute study finds this option would enable 500,000 women a year to avoid unplanned pregnancies.

• Doesn't allow for federal funds to be used to provide abortions for those in the military or Peace Corps or those covered by Medicaid. "We would have liked for federal health insurance to include all reproductive healthcare, including abortion," Nancy Northup, president of the Center for Reproductive Rights, tells me. "After all, Obama did support it on the campaign trail."

I asked Northup to give me a report card on some of the changes in policy on key women's health issues I predicted would occur after Obama was elected. Here's how he's doing so far, in her opinion:

1. No more federal funds for abstinence-only education.
Grade: A

2. No more global gag rule. On George W. Bush's first day as president in 2001, he reinstituted the "global gag rule" that restricted federally funded clinics in foreign countries from performing abortions or even providing referrals for abortion. Obama rescinded the rule soon after taking office. Grade: A

3. Better coverage for family planning. Federal coverage for abortion services has been a disappointment to Northup and others. But discounted birth control pills may soon be available again on college campuses, and health insurers have indicated they may stop charging women higher insurance premiums, thanks, in part, to Obama's efforts. Grade: C

4. Reversal of the " conscience " regulation that threatens women ' s access to birth control. Obama has taken steps to reverse a rule put in place during Bush's last days that allows doctors and other healthcare workers to opt out of certain practices that some of them find morally objectionable—like prescribing birth control pills, inserting IUDs, or dispensing emergency contraception to rape victims—without fear of losing their jobs. The rule was opposed by most medical organizations. Obama has issued a rule deleting the Bush one; the new regulation could go into effect later this year. Grade: A (for effort)

5. Increases in funding for reproductive health clinics that serv e the uninsured. Obama's measly increase in Title X funding is disappointing. Grade: D

6. Improved access to pills and abortions for U.S. military women serving overseas. Grade: F

Grade average: C-plus

It goes without saying that Northup's grades don't necessarily represent the majority view, since Americans have varying opinions on all of these issues. How do you think Obama is stacking up so far when it comes to women's health issues? Is he passing or failing? Would he make honor roll?

READ MORE - Obama's Budget: Shortchanging Women's Health?

Obama Makes Push for Credit Card Legislation

WASHINGTON (AP) — Putting himself on the side of fuming consumers, President Obama is pushing Congress to send him legislation by Memorial Day that would put a tighter rein on the credit card industry.

"Americans know that they have a responsibility to live within their means and pay what they owe," Obama said in his weekly radio and Internet address released Saturday. "But they also have a right to not get ripped off by the sudden rate hikes, unfair penalties and hidden fees that have become all-too common."

Obama has prominently lobbied for a bill calling for a credit card crackdown. It already has cleared the House and awaits action in the Senate.

"I'm calling on Congress ... to pass a credit card reform bill that protects American consumers so that I can sign it into law by Memorial Day," Obama said. "There is no time for delay. We need a durable and successful flow of credit in our economy, but we can't tolerate profits that depend upon misleading working families. Those days are over."

But there's no certainty Congress will deliver by the end of the month.

The banking community is fighting back. Credit-card executives maintain that new restrictions could backfire on consumers, making it harder for banks to offer credit or put credit out of reach for many borrowers. They also contend that the sweeping rules already ordered by the Federal Reserve, beginning next year, address many of the consumer-protection concerns expressed by the president and members of Congress.

The bill's boosters are tapping into public anger over corporate excesses and the conduct of companies receiving billions of dollars in taxpayer money.

The House measure, called the Credit Card Holders' Bill of Rights, passed on a bipartisan vote of 357-70 following lobbying by the Obama administration. It would prohibit so-called double-cycle billing and retroactive rate hikes and would prevent companies from giving credit cards to anyone under 18.

If they become law, the new House provisions won't take effect for a year, except for a requirement that customers get 45 days' notice before their interest rates are increased. That would take effect in 90 days.

Obama spoke to the public's frustration with credit cards.

"You shouldn't have to fear that any new credit card is going to come with strings attached, nor should you need a magnifying glass and a reference book to read a credit card application," Obama said. "And the abuses in our credit card industry have only multiplied in the midst of this recession, when Americans can least afford to bear an extra burden."

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Basking sharks to return to Manx waters this month

Researchers have discovered where basking sharks – the world's second largest fish – hide out for half of every year, according to a report published online on May 7th in Current Biology, a Cell Press publication. The discovery revises scientists' understanding of the iconic species and highlights just how little we still know about even the largest of marine animals, the researchers said.

"While commonly sighted in surface waters during summer and autumn months, the disappearance of basking sharks during winter has been a great source of debate ever since an article in 1954 suggested that they hibernate on the ocean floor during this time," said Gregory Skomal of Massachusetts Marine Fisheries. "Some 50 years later, we have helped to solve the mystery while completely re-defining the known distribution of this species."

Using new satellite-based tagging technology and a novel geolocation technique, the researchers found that basking sharks make ocean-scale migrations through tropical waters of the Atlantic Ocean during the winter, traveling at depths of 200 to 1,000 meters. Their data show that the sharks sometimes stay at those depths for weeks or even months at a time. "In doing so, they have completely avoided detection by humans for millennia," Skomal said, emphasizing that as one of the very largest of marine animals, the sharks grow to over 10 meters and weigh as much as seven metric tons.

Skomal said they were "absolutely surprised" when they first received a signal from the tagged sharks coming from the tropical waters of the western Atlantic, in the vicinity of the Caribbean and Bahamas. After all, basking sharks were always believed to be cool-water sharks, restricted to temperate regions.

Several factors had made basking sharks a challenge to study. On top of the fact that they disappear for long periods of time, they also feed exclusively on plankton. That means they can't readily be captured with traditional rod-and-reel methods. And even when the sharks are found closer to the ocean surface, they spend their time in the cool-temperature, plankton-rich waters that limit underwater visibility and make diving difficult.

The findings could have important implications for the conservation of basking sharks, which have shown some signs of dramatic decline in the last half century and are listed as threatened by the International Union for Conservation of Nature.

"Coupled with recent genetic data, our finding indicates that the Atlantic population – and perhaps the world population – are connected and may constitute a single population," Skomal said. "Hence, the global population of basking sharks may be even smaller than previously thought." Efforts to boost basking sharks' numbers will therefore need to be coordinated at a global scale.

Global conservation

Key questions remain: why do the northeast Atlantic sharks differ in their holiday plans from their transatlantic cousins? What are they actually doing on their trips: gorging on foreign food or indulging in a holiday romance?

One thing that is clear, say both Sims and Skomal, is that the research shows that basking sharks — which are listed as 'vulnerable' on the International Union for Conservation of Nature (IUCN) 'red list' of endangered species — travel internationally and therefore need global protection.

"It throws into sharp focus that there needs to be more international attention on the protection of these animals," says Sims.

Sarah Fowler, outgoing chair of the IUCN shark specialist group, said that these "fantastic results" reinforce the importance of the international Convention on the Conservation of Migratory Species of Wild Animals (CMS).

She says that finalizing a memorandum of understanding and action plan to conserve migratory sharks under the convention is vital.

"This instrument will enable range states [with jurisdiction over the shark's waters] to coordinate actions for the conservation of the basking shark, which is listed on the appendices of CMS," says Fowler, managing director of NatureBureau International, a UK-based ecological consultancy. "We hope that the memorandum of understanding will be completed and opened for signature at the end of this year."

• References

  1. Sims, D. , Southall, E. J. , Richardson, A. J. , Reid, P. C. & Metcalfe, J. D. Mar. Ecol. Prog. Ser. 248, 187– 196 (2003).
  2. Skomal, G. et al. Curr. Biol. advance online publication, doi:10.1016/j.cub.2009.04.019 (2009).

READ MORE - Basking sharks to return to Manx waters this month

Adjust withholding on W-4 to keep tax credit on track

Your next paycheck will probably be a little fatter than usual, but it's not because your boss thinks you're swell. Instead, the increase reflects the Making Work Pay credit, part of the economic stimulus package enacted this year.

Most taxpayers will receive a credit of about $400, or $800 for married couples. Unlike last year, you won't receive a check in the mail. Instead, the credit will be spread out over the year. Most taxpayers will receive an extra $10 a week.

VIDEO: Tax tips from Sandra Block

That's not exactly a windfall, but a little something extra in your paycheck sure can't hurt, right? Well, actually, it could. Some taxpayers could end up with a smaller-than-average tax refund next year or — horrors — discover they owe the IRS money. You can avoid problems down the road by adjusting the withholding allowances on your W-4. Consider reviewing the number of allowances you claim if:

•You're a dual-income couple. The IRS withholding tables are designed to provide a maximum tax credit of about $400 for single taxpayers, and about $600 if you are married and file jointly, says Bob Trinz, senior tax analyst for Thomson Reuters. That could cause some working couples to receive a larger combined credit than allowed by law.

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For example, suppose you earn $75,000 a year, as does your spouse. Both of you claim two withholding allowances. You'll each get a $614 credit, for a combined credit of $1,228, according to Thomson Reuters. However, the maximum credit a married couple is eligible to claim is $800. Unless one or both of you increase the amount of taxes withheld from your paychecks, you could end up owing the IRS money when you file your taxes next year, Trinz says.

Conversely, Trinz says, if only one spouse works, the couple could end up with a smaller credit than they're entitled to. Here's an example, from Thomson Reuters: A married man earns $100,000 a year and claims four withholding allowances. His wife is a homemaker. He'll receive a credit of $614, even though the couple are entitled to an $800 credit. This couple can claim the balance of the credit when they file their taxes, or they can get the money sooner by reducing their withholding.

•You have more than one job. If you're working two jobs, both of your employers will adjust your take-home pay to reflect the new credit. The combined credit from both jobs could exceed the maximum $400 credit for individual taxpayers, says Michael O'Toole, director of government relations for the American Payroll Association.

•Your total income exceeds the thresholds for the credit. The Making Work Pay Credit phases out for single taxpayers with modified adjusted gross incomes of more than $75,000, and married couples with modified AGI of more than $150,000. Singles with modified AGI of more than $95,000 and couples with MAGI of more than $190,000 are ineligible for the credit.

Your employer will base the withholding calculation on the amount of income from your job. But if you have other sources of income — from a second job, for example — your total income could "bump you out of the range to be eligible for the full credit," says Amy McAnarney, director of H&R Block's Tax Institute.

Likewise, some dual-income couples could run into problems if one spouse receives the credit but the couple's combined income exceeds the income cutoff.

Reviewing your W-4

Even if you have no tax-credit worries, take a look at your W-4 anyway. Tax preparers recommend reviewing the number of allowances you claim on your W-4 whenever you have a major life change, such as the birth of a child, marriage or a home purchase. But a recent survey by H&R Block found that 44% of workers haven't adjusted their W-4s in at least three years.

If you had to write a big check to the IRS this year, that's a sign that you're not having enough withheld and need to reduce the number of allowances on your W-4. Likewise, taxpayers who receive a large refund should consider increasing the number of allowances they claim.

Many taxpayers resist this idea because they like receiving a check from the IRS. But in these economically challenging times, giving the government an interest-free loan makes no sense, says David Bergstein, a tax analyst for CCH CompleteTax, an online tax software program. When you file your taxes, he says, "You should break even."

There are several Internet calculators to figure out how many allowances you should claim. CCH offers one at completetax.com/calc.asp.

Sandra Block covers personal finance for USA TODAY. Her Your Money column appears Tuesdays. Click here for an index of Your Money columns. E-mail her at: sblock@usatoday.com.

READ MORE - Adjust withholding on W-4 to keep tax credit on track

You might qualify to extend your health benefits if you're laid off

Even if you've done everything you're supposed to do to prepare for a layoff — built up an emergency fund, paid off your credit cards, set up an account on LinkedIn — losing your employer-provided health insurance could demolish your finances. Your health could suffer, too.

While many insurers offer individual policies, they're primarily targeted at the young and healthy. Individuals who are older or have medical problems are often turned down or charged prohibitively high rates.

The economic stimulus package enacted this year seeks to address this problem by lowering the cost of continuing your former employer's health insurance. Unfortunately, many laid-off workers are discovering that they're ineligible for this subsidy. Others may need to take extra steps to demonstrate they're qualified.

Under the federal Consolidated Omnibus Budget Reconciliation Act, or COBRA, laid-off workers can continue their former employer's health coverage for up to 18 months. In the past, participants had to pay 102% of the premiums, making COBRA unaffordable for most unemployed workers.

The stimulus package subsidizes 65% of COBRA premiums for up to nine months for individuals who were laid off between Sept. 1, 2008, and the end of this year. With the subsidy, the average family will pay $377 a month or $140 for an individual, according to the Kaiser Family Foundation.

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That's still more than most employees pay for insurance while they're working. But if you're eligible for the subsidy, you should try to take advantage of it, says Ron Pollack, executive director of Families USA, a health care advocacy group.

Signing up for COBRA will allow you to continue the same coverage you had when you were working, even if you or anyone in your family has medical problems. In addition, it will preserve your ability to get insurance in the future, even if you have a pre-existing medical condition.

Reasons you may be ineligible for the COBRA subsidy:

•Your former employer has gone out of business or terminated its group coverage. These companies are no longer covered by COBRA, says Michael Langan, principal at Towers Perrin, a human resources consultant.

•You lost your job because of gross misconduct or left voluntarily.

However, recently issued guidelines from the IRS "take a very liberal position" on what constitutes involuntary termination, Langan says. For example, if you're unemployed because your employer closed your branch, that counts as an involuntary termination, Langan says, even if your company offered you a job in another part of the country.

Similarly, employees who accepted a buyout because their employer said the offer would be followed by layoffs qualify for the subsidy, he says.

The Labor Department has an appeals process for unemployed workers who were denied the subsidy. For more information, go to www.dol.gov/cobra.

Mini COBRA laws

Some individuals who worked for small companies may also be ineligible for the subsidy. The federal law applies only to companies with 20 or more workers.

More than 39 states and Washington, D.C., have enacted "mini COBRA" laws that require small companies that provided health insurance to allow former employees to extend their coverage. Jobless workers who are covered by a state mini COBRA law could qualify for the subsidy.

But if you worked for a small company and are out of work, there are a couple of things you should keep in mind. First, mini COBRA laws — and the subsidy — apply only to workers who had group coverage in the first place. Most companies with fewer than 20 workers don't provide health insurance, Langan says.

In addition, not all state mini COBRA laws are as comprehensive as the federal law.

Some states require companies only to provide extended coverage for three months. Others don't give individuals who declined to enroll in COBRA when they were laid off a second chance to sign up. The federal law gives such individuals 60 days to re-enroll.

Several states are considering legislation to adopt or expand mini COBRA laws. For more information, contact your state's insurance department. The National Association of Insurance Commissioners provides links to state insurance department websites at www.naic.org.

Sandra Block covers personal finance for USA TODAY. Her Your Money column appears Tuesdays. Click here for an index of Your Money columns. E-mail her at: sblock@usatoday.com. Follow on Twitter: www.twitter.com/sandyblock

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commnet:

This is a 2005 study. Obviously the 2008 figures would be much higher:

The most direct way in which the insured are affected by the lack of universal health care is illustrated by a 2005 study that surveyed people who filed for personal bankruptcy. In this study, 46.2% of those surveyed cited a medical cause for their bankruptcy. Of note, only 32.6% of those citing a medical cause of bankruptcy were uninsured at the time of filing, meaning that almost 7 out of 10 people in the survey were insured when they filed. In other words, high medical bills and lost income due to illness can lead to bankruptcy even for the insured. A society that believes that people should pay a lot of money for the privilege of having health care is a society in which only the extraordinarily rich are truly immune to the threat of medical bankruptcy. (amsa.org)

READ MORE - You might qualify to extend your health benefits if you're laid off

Inflation-adjusted Savings Bonds hit 0% rate for first time

For the next six months, a new inflation-adjusted Savings Bond will provide exactly the same investment return as the space beneath your mattress.

Treasury announced last week that inflation-adjusted Savings Bonds purchased from May through October will earn 0% for the first six months they're held. This is the first time I Bond returns have fallen to zero since Treasury started issuing them in 1998, says Daniel Pederson, author of Savings Bonds: When to Hold, When to Fold, and Everything In-Between.

Consider this the downside of $2 gasoline. The I Bond consists of two components: a fixed rate that stays the same for the life of the bond and an inflation rate that's adjusted every six months. The inflation component for I Bonds issued from May through October is based on the change in the consumer price index from September through March.

Primarily because of sharp declines in the cost of energy, consumer prices fell at an annual rate of 5.56% from September 2008 through March 2009. The decline in the inflation rate will vaporize the 0.10% fixed rate for I Bonds issued from May through October. The drop will also wipe out the interest on older I Bonds with much higher fixed rates, says Tom Adams, author of Savings Bond Advisor. The 0% interest rate will affect "every I Bond that's ever been issued," he says.

The only good news is that I Bond owners won't lose any money. Under the Treasury formula, the earnings rate on I Bonds will never fall below zero. If you already own I Bonds, you won't earn any money during the relevant six-month period, but you won't lose any of your principal.

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This may come as small consolation to I Bond owners who are facing six months of oblivion. But before you ditch your I Bonds, there are a couple of factors to consider:

•When your inflation-adjusted rate will reset. The inflation component of your I Bond is adjusted every six months, depending on when you purchased your bond. If you own an I Bond that was purchased in April, for example, your rate won't drop to zero until October, Adams says. Until then, the bond will continue to earn an inflation-adjusted rate of 4.92%, plus the fixed rate that was in effect when you purchased your I Bond. Sell now, and you'll give up five months of above-average interest.

•The fixed rate for your I Bonds. If you purchased an I Bond in 1998 through 2001, you should hold on to it, even during this fallow period, Pederson says. Those bonds carry fixed rates of 3% or more for the life of the bond.

When high gas prices led to a surge in the inflation rate last spring, some of these older I Bonds earned more than 8%. Even if inflation rises to a modest rate of 2% to 3%, these bonds will earn 5% to 6%, Pederson says. But if you sell, you'll lose that fixed rate forever.

"Don't do something knee-jerk because you see a 0% rate," Pederson says. "Over the long haul, you could still have a very attractive investment."

On the other hand, if you own some I Bonds with lower fixed rates, the six-month 0% rate offers an opportunity to ditch them without paying a penalty. When you buy an I Bond, you can't redeem it for a year, and if you sell in less than five years, you'll forfeit the last three months of interest. But if your interest rate for those last three months is zero, cashing out early won't cost you anything.

While the recession has kept prices in check, many analysts believe large-scale government borrowing will eventually ignite inflation, which would increase the I Bond's return. But even if you agree that inflation is a looming threat, it's probably not a good idea to buy I Bonds now, Pederson says, because of the low fixed rate.

The 0.10% fixed rate Treasury is offering for I Bonds purchased in May through October means you'll earn only a hair above the inflation rate on any I Bond purchased from now through Oct. 31. If you believe I Bonds are a good long-term investment, Pederson says, "There's no risk to waiting until Nov. 1 and seeing if they do better with the fixed rate."

In addition to the I Bond, Treasury offers an EE Bond that pays a fixed rate for the life of the bond. Treasury said last week that EE Bonds issued from May through October will pay a rate of 0.7%, down from an already measly rate of 1.3% for EE Bonds issued from November through April. Even in this low-rate environment, Adams says, "It's just really hard to come up with an argument for investing in EE Bonds."

Sandra Block covers personal finance for USA TODAY. Her Your Money column appears Tuesdays. Click here for an index of Your Money columns. E-mail her at: sblock@usatoday.com. Follow on Twitter: www.twitter.com/sandyblock

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If you converted IRA to Roth in '08, you can still save on taxes

If you converted your individual retirement account to a Roth last year, you probably feel like someone who got married during a weekend in Vegas. It seemed like a good idea at the time, but now you're having serious second thoughts.

When you convert to a Roth, you're required to pay taxes on all pretax contributions and gains. The taxes are based on the value of your IRA at the time of the conversion. That makes an IRA conversion a smart move in a bear market — unless the market continues to plummet after you convert. When that happens, you could end up paying taxes on money you no longer possess.

For example, suppose you converted an IRA valued at $100,000 last spring. On April 15, you'll owe taxes on $100,000, even if your Roth is now worth less than half that amount.

Fortunately, reversing an ill-timed IRA conversion is a lot easier — and less expensive — than getting out of a madcap marriage.

You can undo the damage by "recharacterizing" your Roth. That process turns your Roth back into a traditional IRA, wiping out your tax bill.

If you don't think you can get the job done by Wednesday, you can buy yourself some time by filing for a six-month extension to file your 2008 tax return, says Barry Picker, an accountant and financial planner in Brooklyn, N.Y. After you recharacterize, you can file your tax return, and you won't owe taxes on the conversion, he says.

Just make sure you recharacterize by Oct. 15, which is the deadline for reversing IRAs converted in 2008. Otherwise, you'll be subject to steep penalties.

Back to the future

Recharacterizing doesn't mean you have to abandon your quest to convert your IRA to a Roth. If you recharacterize an IRA you converted last year, you can convert back to a Roth once 30 days have elapsed, says Ed Slott, an IRA expert and certified public accountant in Rockville Centre, N.Y.

Converting your IRA back to a Roth is a smart move, Slott says. Tax rates are likely to rise in the future, he says, so converting now will allow you to take advantage of current tax rates.

Once you convert to a Roth, withdrawals are tax-free, as long as you're at least 59½ and have owned the Roth for five years or more. "If the market comes back and values go way up, all of those gains will be tax-free forever," Slott says.

And converting now — or reconverting if you recharacterized your IRA last year — is a risk-free strategy, Slott adds. If the market continues to slide, you have until Oct. 15, 2010, to recharacterize your Roth.

Income limits lifted

Unfortunately, if your modified adjusted gross income exceeds $100,000, you can't convert a traditional IRA to a Roth.

That cutoff applies to both single taxpayers and married taxpayers who file jointly. Married couples who file separately are ineligible to convert.

But next year, the income restrictions on Roth conversions will disappear. Taxpayers who convert will also be allowed to postpone the tax bill. If you convert in 2010, you'll be allowed to pay half the tax bill in 2011 and the other half in 2012, Slott says.

Picker says he's advising his high-income clients to stash as much as possible in non-deductible IRAs this year so they'll have more money to convert in 2010.

Non-deductible IRAs are the only IRAs available for taxpayers who don't qualify for a Roth or a deductible IRA.

Many financial planners aren't big fans of non-deductible IRAs because withdrawals are taxed at ordinary income rates.

And if you own a non-deductible IRA, you're required to take minimum annual withdrawals once you turn 70½.

But once you convert your IRA to a Roth, those drawbacks disappear. Withdrawals are tax-free (as long as you meet the aforementioned requirements), and Roths aren't subject to the required minimum withdrawal rules.

You have until Wednesday to invest in a non-deductible IRA for 2008, Picker says.

You have until April 15, 2010, to invest in a 2009 IRA, but investing now will give your money more time to grow.

You'll still, of course, have to come up with the money to pay taxes on any gains you earn on your IRA. But allowing investors to postpone the tax bill — and then spread out the payments — will make that aspect of converting a lot less painful, Slott says, adding: "The government is giving everyone an interest-free loan to build a tax-free savings account."

Sandra Block covers personal finance for USA TODAY. Her Your Money column appears Tuesdays. Click here for an index of Your Money columns. E-mail her at: sblock@usatoday.com.

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comment:

I wonder why in the world financial advisors tell investors to open qualified accounts and then wait for a bear market (LOSE money) to convert to roth? Or I'm slow? Say you have $100K @25% tax is $25k so you get to convert $75K. Wait, now there is a bear market and you are down to $70K value @25% tax is $17.5K so you get to net 52.5K. - How in the world is that BETTER?

READ MORE - If you converted IRA to Roth in '08, you can still save on taxes

Adjust withholding on W-4 to keep tax credit on track

Your next paycheck will probably be a little fatter than usual, but it's not because your boss thinks you're swell. Instead, the increase reflects the Making Work Pay credit, part of the economic stimulus package enacted this year.

Most taxpayers will receive a credit of about $400, or $800 for married couples. Unlike last year, you won't receive a check in the mail. Instead, the credit will be spread out over the year. Most taxpayers will receive an extra $10 a week.

That's not exactly a windfall, but a little something extra in your paycheck sure can't hurt, right? Well, actually, it could. Some taxpayers could end up with a smaller-than-average tax refund next year or — horrors — discover they owe the IRS money. You can avoid problems down the road by adjusting the withholding allowances on your W-4. Consider reviewing the number of allowances you claim if:

•You're a dual-income couple. The IRS withholding tables are designed to provide a maximum tax credit of about $400 for single taxpayers, and about $600 if you are married and file jointly, says Bob Trinz, senior tax analyst for Thomson Reuters. That could cause some working couples to receive a larger combined credit than allowed by law.

For example, suppose you earn $75,000 a year, as does your spouse. Both of you claim two withholding allowances. You'll each get a $614 credit, for a combined credit of $1,228, according to Thomson Reuters. However, the maximum credit a married couple is eligible to claim is $800. Unless one or both of you increase the amount of taxes withheld from your paychecks, you could end up owing the IRS money when you file your taxes next year, Trinz says.

Conversely, Trinz says, if only one spouse works, the couple could end up with a smaller credit than they're entitled to. Here's an example, from Thomson Reuters: A married man earns $100,000 a year and claims four withholding allowances. His wife is a homemaker. He'll receive a credit of $614, even though the couple are entitled to an $800 credit. This couple can claim the balance of the credit when they file their taxes, or they can get the money sooner by reducing their withholding.

•You have more than one job. If you're working two jobs, both of your employers will adjust your take-home pay to reflect the new credit. The combined credit from both jobs could exceed the maximum $400 credit for individual taxpayers, says Michael O'Toole, director of government relations for the American Payroll Association.

•Your total income exceeds the thresholds for the credit. The Making Work Pay Credit phases out for single taxpayers with modified adjusted gross incomes of more than $75,000, and married couples with modified AGI of more than $150,000. Singles with modified AGI of more than $95,000 and couples with MAGI of more than $190,000 are ineligible for the credit.

Your employer will base the withholding calculation on the amount of income from your job. But if you have other sources of income — from a second job, for example — your total income could "bump you out of the range to be eligible for the full credit," says Amy McAnarney, director of H&R Block's Tax Institute.

Likewise, some dual-income couples could run into problems if one spouse receives the credit but the couple's combined income exceeds the income cutoff.

Reviewing your W-4

Even if you have no tax-credit worries, take a look at your W-4 anyway. Tax preparers recommend reviewing the number of allowances you claim on your W-4 whenever you have a major life change, such as the birth of a child, marriage or a home purchase. But a recent survey by H&R Block found that 44% of workers haven't adjusted their W-4s in at least three years.

If you had to write a big check to the IRS this year, that's a sign that you're not having enough withheld and need to reduce the number of allowances on your W-4. Likewise, taxpayers who receive a large refund should consider increasing the number of allowances they claim.

Many taxpayers resist this idea because they like receiving a check from the IRS. But in these economically challenging times, giving the government an interest-free loan makes no sense, says David Bergstein, a tax analyst for CCH CompleteTax, an online tax software program. When you file your taxes, he says, "You should break even."

There are several Internet calculators to figure out how many allowances you should claim. CCH offers one at completetax.com/calc.asp.

Sandra Block covers personal finance for USA TODAY. Her Your Money column appears Tuesdays. Click here for an index of Your Money columns. E-mail her at: sblock@usatoday.com.

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comment:

Letting the government have use of your hard earned money, interest free, for a whole year is STUPID. Through adjusting my own W4 and having a few dollars each pay additional withholding taken out - I and the government break even at tax time. It's great as far as I'm concerned.

READ MORE - Adjust withholding on W-4 to keep tax credit on track