And obviously, there is a very nice spike for a while.  Incentives do make a bit of a difference.  And, in all honesty, if we had been in a situation where we felt we could afford a new home, we would have jumped at the opportunity to take advantage of those incentives.  But the spike was just that.  A small percentage of people taking advantage of an incentive that made it very attractive to buy a new house.  What it didn’t do was return home sales to anything like previous numbers.  In fact, it didn’t even get the numbers back to 50% of what they were in 2000!  And now, after the incentives have expired, they dropped 33% to an all-time new low. The last time the numbers were this low was in 1981!

I think everybody has the right to purchase a home.  You shouldn’t be dis-allowed from purchasing a home.  But, you still have to pay for it!  Owning a home is not a right.  The ability to purchase one if you can afford it is.  Years and years of politicians buying votes by pushing lenders to finance houses to people who couldn’t afford them is what caused the housing market (and our economy as a whole) to be in the condition it is in.  And that crashs’ ripples are still being felt throughout the country and the world.  Creating incentives to buying a home just extends that streak.  People see that $8000 and think that they can afford a home that they really can’t because they will get a nice $8000 check to help pay it down.  But, when that money comes around, what are they going to do with it?  Spend it.

And in five years, when those mortgages adjust, we’ll have a nice little mess to figure out again.  Sure, it won’t be anywhere near as bad as the current one, but it’ll be there.  If only we could teach people to be responsible consumers.  To not buy what they cannot afford, and to only spend what they earn or less.  If we could do that, then they wouldn’t need those incentives to buy a home.  They might actually be able to afford it without them.

New Home Sales Down is a post from: Beating Broke, if you enjoy it, please visit us and subscribe to the Feed.

No overdraft fees. If you have no money immediately available, we will draw down your savings. If you don’t have any savings, we may extend you credit. It doesn’t cost us very much to provide this, so we don’t charge you for it.

What about other fees?  According to their FAQ, they plan on passing on their cost only.  So, if an international wire costs them $15, it’ll cost you $15.  Simple.  Of course, if you’re like me, you’re wondering how they are planning on making money.  They answered that one as well.

We make money from two sources: interchange and interest margin. Interest margin is the revenue earned from lending, less what they pay on deposits. For example a bank may charge a customer 12% to borrow money, but pay 5% interest on a savings account. The difference, less any defaults on the loan, is revenue to the bank. Interchange is a small revenue source that card issuing banks earn whenever that card is used at a store. Typically banks earn less than 1% for each time the card is used to make a purchase. These are both great revenue streams, but banks got greedy and started charging additional fees to bolster their revenue. Our operation is low cost, so we don’t need to rely on extraneous fee revenue.

I have to admit that I’m a bit skeptical.  It’s just not normal operation procedure.  Hell, even Credit Unions, who are supposedly owned by their members, charge overdraft fees and other fees.  The problem is that what is now normal M.O., hasn’t always been.  There was a time when banks actually operated the way that banksimple says they are going to.  Honestly.  Making their money from interest margins.

If it works the way they claim it will, I’m a bit excited.  The problem at the moment, is that they aren’t open for business.  I couldn’t find an exact date; all they say is “later this year”.  (I’ve got an email in to them asking for clarification) All you can do right now is sign up for an invite when they do open their doors.  Might be worth a check when they do open up.  I’m all for transparency in banking.

Anyone else got any more information on banksimple?

UPDATE: You can read a couple of interviews that the guys behind banksimple did with the New York Observer at the New York Observer site.

banksimple is a post from: Beating Broke, if you enjoy it, please visit us and subscribe to the Feed.

Now, let’s look at insurance companies.  We, as the insured, pay the insurance company our premiums in return for insurance against some sort of event.  With health insurance it’s against some sort of health event.  With car insurance, it’s against some sort of accident.  In any case, it’s a payment.  Or a return on the premium.  Very seldom will you actually come out with your entire investment.  What would happen if the premium payers dried up?  It would get more difficult for the insurance companies to pay any claims.

Where the key difference lies is that if you stop paying your premiums, they stop paying any claims for you.  Also, as a premium payer, you never really expect your money back unless you have a claim.  You’re paying for the “in case”, if it were to happen.  In a Ponzi, you’re investing your money specifically for the return.  You’re not going to stop investing as long as the returns are stable.  And a Ponzi only really dies when the new investors stop coming.  If new insured stopped coming to the insurance company, they would still have their current insured to collect premiums from.

So, no.  Insurance companies are not Ponzi Schemes.  But, it sure feels that way sometimes.

Photo Credit: Showmeone @ Flickr

Are Insurance Companies Just Big Ponzi Schemes? is a post from: Beating Broke, if you enjoy it, please visit us and subscribe to the Feed.

• Beating Broke Rules
• Budget
• Financial Truths
• Guru Advice
• Personal Finance Education
• Financial Mistakes

That should get you started.  J.D. over at Get Rich Slowly has a great collection of the posts that he’s done that you should check out as soon as you’re done reading those ones from Beating Broke.

While we’re celebrating, let’s share a story or two.  And while we’re at it, let’s make it a Giveaway!  The lucky winner will receive a $10 Amazon Gift Card.  Tell us a story of how you’ve improved your financial literacy in the last year.  You can do it with a comment here, or a blog post on your blog if you like.  If you do a blog post, though, please come back here and leave a comment so I can find your post and count your entry.  We’ll run it through Monday the 5th.  On Tuesday the 6th, I’ll compile all the comments here, and use random.org to pick a winner.  Please restrain yourself to only one entry each.

Now, let’s hear those stories!

UPDATE!  We have  a Winner!  Comment #3 wins the $10 Gift Card from Amazon!  Congratulations Mike from Personal Finance Ninja!  I’ve dropped you an email and we can sort out the details.  Thanks for everyone for participating!

Financial Literacy Month and A Giveaway is a post from: Beating Broke, if you enjoy it, please visit us and subscribe to the Feed.

In one of the largest FTC-state coordinated settlements on record, LifeLock and its principals will be barred from making deceptive claims and required to take more stringent measures to safeguard the personal information they collect from customers.

“While LifeLock promised consumers complete protection against all types of identity theft, in truth, the protection it actually provided left enough holes that you could drive a truck through it,” said FTC Chairman Jon Leibowitz.

“This agreement effectively prevents LifeLock from misrepresenting that its services offer absolute prevention against identity theft because there is unfortunately no foolproof way to avoid ID theft,” Illinois Attorney General Lisa Madigan said. “Consumers can take definitive steps to minimize the chances of having their personal information stolen, and this settlement will help them make more informed decisions about whether to enroll in ID theft protection services.”

Since 2006, LifeLock’s ads have claimed that it could prevent identity theft for consumers willing to sign up for its $10-a-month service.

There’s a laundry list of other things that they were fined for that includes data security holes and just overall misrepresentation.

It’s been widely reported that most of the stuff that LifeLock does is easily done by yourself without having to pay the $10/month membership fee.  It’s no surprise that they got hit with this, really.

LifeLock Hit With $12 Million Fine is a post from: Beating Broke, if you enjoy it, please visit us and subscribe to the Feed.

Apparently, the European company that owns the US based ING Direct took some bailout money from the European government and, as part of it’s repayment, is being required to sell of the ING Direct part of their business.  Unfortunately, there don’t appear to be too much in the way of details as to whom they may be sold to or what may happen to the bank after it is sold.  Much like Flexo, my main concerns revolve around whether the new owner will maintain the same offices, workforce, and overall quality of service that we’ve all come to love.  My understanding was that ING Direct has weathered the storm pretty well and should be an attractive purchase for many banks stateside.

I guess, at this point, all we can do is cross our fingers and hope for the best.

ING Direct to be Sold Off is a post from: Beating Broke, if you enjoy it, please visit us and subscribe to the Feed.

I can only imagine that Intuit will be melting the Mint service into it’s line of Quicken software.  Maybe making it an advanced version of the Quicken online free service that is subscription based?  Or maybe using the service to enhance the PF programs.  I tried Mint for a while, but became frustrated as my Credit Union isn’t one of the financial institutions that Mint could interact with.  Of course, Quicken doesn’t either, but Mint didn’t really give me the ability to input my own data.

Overall, I can’t see this as changing the online personal finance landscape that much.  There are still a few other options to use, although none as popular as the Quicken and Mint programs.  It’s a smart purchase by Intuit and could be a brilliant one if they properly integrate the service into their company and line of software.

Quicken Parent Company Intuit to buy Mint is a post from: Beating Broke, if you enjoy it, please visit us and subscribe to the Feed.

The Great Piggy Bank Adventure features five stations, each of which allows kids to play on their own, or work as a team with other kids or adults. (We saw lots of parents and grandparents joining the fun.)

It’s good to see some of the bigger entertainment names (like Disney) get involved in smarter finances learning.  Sure, if they reach enough people, they might end up with fewer visitors, but they also realize that they could also end up with a bunch of repeat visitors who have budgetted and saved for their trip and have no guilt in spending every dime they came with.  I’m not sure about you, but I’d rather have a customer who isn’t afraid to spend their money.

I’ve been a big proponent of financial education at an early age, and this is a good step in the right direction.  It isn’t a cure by any means, but it is a very good step.

You can plan an online version of The Great Piggy Bank Adventure and read the T. Rowe Price page with details.

Disney and T. Rowe Price Team Up is a post from: Beating Broke, if you enjoy it, please visit us and subscribe to the Feed.

UPDATE: I did some digging and found the following on the community forums on Dave’s site.  It would seem to be a preliminary idea for the Town Hall for Hope.

You know as well as I do that the economy is causing a lot of fear among Americans. We are exploring the possibility of holding a one-time national event called Town Hall for Hope to offer true hope for the future. I would address the nation live, speak briefly about the history of the American economy and provide biblically based answers to the real financial issues facing the average American family. I would then take questions from live audiences gathered all around the country.

Any guesses or theories out there?  Share them in the comments!

If you want to follow some folks that work for Dave Ramsey and have the inside scoop, here’s the list of the twitter accounts that I have been following:

• B_Dubs
• katiecrenshaw
• joeleavitt
• chrismefford
• melissaczech
• christhomas
• lancetosborne

And of course, there’s always DaveRamseyLIVE and TownHallForHope too.  You can also do a search for the hash tag for Town Hall for Hope (#THFH).

UPDATE 2: Dave couldn’t hold it in until tomorrow.  He announced it during the live show today.  You can visit http://www.townhallforhope.com to see further details.  Looks like a pretty cool event.

Big Announcement Coming From Dave Ramsey is a post from: Beating Broke, if you enjoy it, please visit us and subscribe to the Feed.

What they aren’t telling you is that it isn’t really a reduction.  Sure, they’ll be taking less out of each paycheck.  But they didn’t reduce the tax bracket rates any.  All they’ve done is reduce the percentage of your wages that will be withheld from your paycheck.  You’ll still owe the same amount on your taxes at the end of the year.

Here’s how it will work.  If you got a return this year, and are planning on getting one next year, it will be reduced by the extra taxes that didn’t get taken out of your check.  $13 less withholding dollars means $13 (or more) less refund.  Where it could really hurt people is where the person is already expecting to send a check with their tax forms.  Their check will have to be much bigger because of all this.

Now, to avoid all of this, you could instruct your payroll department to take that $13/week out anyways.  You could adjust your withholdings on your W-4 so that more is taken out.  Or you could take that $13/month and stuff it away in a shoebox so you’ll still have it to pay Uncle Sam with come next April 15.

Any way you shake it, it comes down to a publicity stunt to make all the other needless spending in the bill look better.  It’s the proverbial spoonfull of sugar to make a whole lot of pork go down.

Stimulus Bill Tax Credit, Isn’t. is a post from: Beating Broke, if you enjoy it, please visit us and subscribe to the Feed.