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Here's a quick look at some of the tax breaks the new stimulus plan authorizes (for a more detailed look see the Wall Street Journal):

1. Making Work Pay tax credit.  An eligible worker would get 6.2% of earned income up to a max credit of $400 (for two income earners it's $800).  What this means is that workers would see an extra $12-$20, per pay check.  If you make more than $95,000 (single) or $190,000 (couples) you will not qualify.

2. New homebuyers will get a tax break in the form of a $8,000 subtraction from the income tax they owe (on a principle residence purchased through 11/31/09).  There is a phase our for individuals earning between $75,000 - $95,000 and couples with an income of between $150,000 - $170,000.

3. The Alternative Minimum Tax increases exemption to $46,700 for individuals and $70,950 for couples.

4. If you've lost your job you will be able to forgo taxes on the first $2,400 of unemployment compensation (in previous years, all income from unemployment was taxable).

5. Cars buyers get to deduct sales tax on a new car purchase. (for purchases up to $49,500 from the day the stimulus starts through the end of 2009).  Of course, the deduction phases out for singles with a salary between $125,000 - $135,000 and couple earning between $250,000 - $260,000.

6. If you've lost your job, maintaining insurance through your old provider got easier in the form of a 65% reduction in cost.  Cobra costs also get cheaper.  There are also qualification in terms when you got laid off.

7. The American Opportunity education tax credit allows for a $2,500 partially refundable tax credit to cover all four years of college. (this goes until 2010 and thereafter the Hope Credit comes back into play).

8. If you have a 529 college savings plan you can use withdrawals in 2009 and 2010 to purchase a computer or "computer technology" (previously the college needed to stipulate that a computer was needed for study). 

The Wall Street Journal's Personal Finance blog, "The Wallet" recently posted an article on how to save money on rent.  The article also offers a free template on how to approach your landlord about reducing your rent, which goes to show that you can haggle about anything, even in one of the most expensive cities on Earth (thank to Rich for the FYI):

In yet another move away from its core business, and to curtail increasing losses, Starbucks introduced special breakfast pairings such as a tall latte with coffee cake and a tall coffee with a breakfast sandwich, all for $3.95.

The Wall Street Journal's Karen Blumenthal has a highly relevant article on "Bill Creep" that is a must read.  Bill Creep is associated with auto renewing services that are purchased ala carte, such as adding cell phones to a plan, moving to a data plan for a Smartphone, premium channel upgrade to a cable subscription, increasing your Netflix subscription from 3 movies to 4 movies out at once, and moving from a basic gym membership to personal trainer and dietary services.  

The dangerous thing about Bill Creep, as Blumenthal argues, is that it happens over time yet delivers a financial hit every month due to the use of a credit card.  How do you keep Bill Creep under control?  Try the following three bits of advice:

1. Evaluate whether you truly need the service or product and side with simplicity when it comes to the latest gadgets and services.

2. Just get the basics.  Do you really need a Smartphone, Netflix subscription, and a gym membership? Pick a few basics and stick with them.

3. Say no to pressure from the service provider to upgrade.

Most people live beyond their means because they want to feel and be perceived as being wealthy.  A Coach handbag or Mercedes-Benz sedan screams, "hey, look at me I can spend money and feel good about it!"  Feeling good about buying stuff or a particular type of high-end lifestyle is not inherently a bad thing, afterall we all want to live well and be exposed to nice things (even your most extreme cheapskate feels this way - it's not a Western thing or a by-product of materialism, but rather just human nature).  However, there is a trick to feeling "wealthy" but not hopping on the luxury purchase bandwagon; that is, concentrate on items and things that don't have a high premium or cost of entry.  So, for example, purchasing a luxury car or watch requires a large sum of money yet purchasing high end foods, although still a bit expensive, does not have the same high cost of entry.  My parents, for example, have never driven a luxury car, worn designer clothing, or lived in a highbrow neighborhood, though they spend a considerable amount of money on quality food each week.  Eating well provides my parents with their own "luxury lifestyle" at a fraction of the price of most "luxury goods."   

I've adopted the same mentality in terms of food and I often splurge on organic meats, vegetables, and fruit.  I also aim to buy fresh fish each week and enjoy quality cheeses, breads, and wine.  Spending a bit more on food and wine each week makes me (and my family) feel as though I am living a good, high quality, life.  And the bonus is that I'm not overextending my weekly budget or taking on any debt to buy my free range whole chicken or bottle of Southern Italian red.  

So, try cutting back on obvious luxury buys like jewelry, cars, clothing, shoes, electronics, products that require a monthly fee, etc. and go high end on items that do not have a high price of entry.  For our family, as I've said, that luxury item is food/wine.  Specifically, here are some things that we buy each week that provide us with a luxurious lifestyle:

1. Organic fruits and vegetables (whatever is in season)
2. Freshly baked bread
3. Free range eggs (they taste better, really!)
4. Fresh, wild, fish
5. Free range, whole, chicken (which we have our butcher cut into parts for us)
6. Whole bean coffee (which we grind, per use, at home)
7. Organic grains
8. Pasta imported from Italy (so much better than stuff made in the US)
9. Italian tuna in olive oil (you'll never buy Starkist again!)
10. Freshly cured olives
11. Various cheeses from around the world
12. Italian Olive Oil
13. Wine (including the homemade variety)
14. Fresh herbs
15. Dark chocolate

In sum, don't be afraid to spend money on things that make you feel special (if you can truly afford the item) because life can quickly become bland and pointless without true, day to day, happiness.   I do have a couple of caveats, however, before you treat yourself to some practical luxuries: 1., you should have no debt outside your mortgage, 2., you should have a 6-9 month emergency cash fund, 3., you should be fully invested in your company retirement plan (401K, 403b, etc.) and 4., you should have a few outside investments in your retirement portfolio (index funds, mutual funds, bonds, exchange traded notes, etc.)

Now more than ever the idea of an emergency cash fund is critical.  Many personal finance gurus recommend that individuals and/or families put aside at least 3 months of living expenses in a conservative vehicle (such as a CD, money market fund, or traditional savings account).   Living expenses include: mortgage, taxes, utilities, food, gas, and car payments.  

An emergency cash fund is a must in any economic environment (including good times) as you never know when you may lose your job, need to make an emergency home repair, etc.  I also believe that establishing an emergency cash fund should be done early (that is, within the first six months of your first job) and ahead of any other money matter (even before funding your 401K).  Having cash at the ready provides a sense of security and freedom and also builds discipline in terms of saving for the cash fund.

I like to have well over 3 months of emergency cash on hand and I would recommend an amount closer to 6-9 months of living expenses.  Look for an online money market fund via ING or Vanguard and connect it with your checking account (this way transferring money to your emergency fund is easy and convenient).

According to an Indiana Business Review article, individuals in the US between the ages of 25-54 spend an average of $2833.00 each year on eating out (this is according to 2004 data).  While the number is not surprising, it did get me thinking about personal finance and daily eating habits. 

Given the current economy, many personal finance blogs and magazines are offering advice on money saving products, deals, coupons, investment strategies, etc., but I've yet to see a piece on the importance of NOT eating out often.  Don't get me wrong, I'd love to eat at a fine restaurant each and every night (provided I could find some healthy dishes on occasion!), but I don't do it because:

1. Eating out is a colossal waste of money (most food and beverage items have a huge markup).

2. Eating out is not healthy (you don't have direct control over ingredients and the amount of fat, salt, etc. used in the cooking process).

3. Eating out, often, leads to a reduction in the quality of ingredients used/consumed (unless you're eating at a four star Michelin restaurant each night).

4. Eating out is a waste of time (think about the process: figuring out where to go, figuring out how to get there, waiting for your food, leaving a tip/paying, getting back to your home/apartment, etc.).

5. Eating out is lazy (going to a restaurant other than for a special event breeds the type of behavior that is all about immediate satisfaction).

6. Eating out can rob you of personal time with family and/or spouse (think about the teamwork needed to prepare a nice meal - it's the kind of behavior that makes families and couples bond).

7. Eating out does not allow me to build leftovers into my weekly food planning process (read: do not buy lunch at work!).

Many people make statements like, "I don't know how to cook" or that "cooking is hard"  in response to eating out often, but cooking quality meals is NOT hard (see my getting started to cooking at home guide here) and after you've been doing it for a while you can get really efficient at putting together healthy and great tasting meals (including food for lunch at work the next day).  Also related, see my essential kitchen tools guide here as well as a guide on buying fruit, vegetables, and fish here

Over the last couple of months I've been posting simple and tasty recipes and I thought now would be a good time to summarize the entries given the financial crunch.  So, try and avoid making reservations and opt to make a few of the dishes below (they're really not hard to prepare and you'll be happy you didn't go out after your belly is full!):

1. Perfect Omelet
2. Oven Baked BBQ Ribs with Dry Rub
3. Black Bean and White Corn Salad
4. Pasta with garlic, olive oil, and parsley
5. Perfect Grilled Chicken Sandwich
6. Tomato Salad
7. Roasted Pork Tenderloin
8. Fava Bean Gazpacho 
9. Eggplant Parmigiana
10. Scallops with Pan Simmered Tomatoes
11. Roasted Peppers
12. Chicken Thighs and Mint
13. Classic Salad Dressing
14. Baked Flounder with Fennel Salad
15. Couscous with Feta and Tomatoes
16. Lamb and Beef Kufta Kebab
17. Braised Short Ribs in Red Wine
18. Lentil Soup
19, Onion and Potato Fritatta
20. Oven Roasted Vegetables

Finally, if you're looking for food items you can consume often, I have a quick series on "foods I live on" http://www.scordo.com/blog/2008/10/foods-i-live-on-part-3-de-cecc.html  Looking for a nice bottle of wine, here's my guide on buying wine!

Recently, our extended family has been going through a difficult period caring for my 89 year old grandfather (Nonno Vincenzo).  Nonno Vincenzo has been housebound for the last year suffering from dementia, et. al.  I was named after Nonno Vincenzo and we share many of the same traits (including being calm most of the time with the occasional loss of temper).

Nonno's physical decline got me thinking about how personal identity is shaped by family and whether it's a good thing?  For example, in most large cities in the Western world, people cherish the ability to create their own identity and the personal freedom that comes along with such a choice.  In Ancient Greece, however, a newborn male became a citizen only after being acknowledge as a member of a particular family.  The newborn was also, in most cases, named after the paternal grandfather.   So, in many ways, identity in Ancient Greek culture was shaped by the family the individual was born into.

Family, as I've said in other posts, is critical if you're interested in money matters and living a frugal life.  The way I see it, an extended family can help with:

1. Raising and caring for children (this has been the model for thousands of years and it's only in Western countries where we've moved away from this idea).

2. Managing a home (including home repairs and maintenance).  This is especially true if you live in an older home and have family members who are handy.

3. Maintaining a social life.  OK, hanging out with your 90 year old grandfather on a Friday night may not be that much fun, but the occasional dinner and party with family is really nice.  I try to have dinner my parents once a week and I like having family over for a coffee and light snacks every month or so.

4. General advice.  Think of Uncle Frank and Aunt Maria as pro bono attorneys and psychotherapists who can offer advice on tough life decisions.  Making a decision in a vacuum is not good and I like to shop ideas and possible solutions around with family before acting on an item, so I think this tip is particularly important.

Let me know what you think in terms of family, identity, and how you've managed to stay close to your extended family.

One of the most important life skills you can teach your child is how to save or, more specifically, why it's important to save.   My parents would often bring me to the bank as a small child and I observed my mother writing and cashing checks, depositing money, etc.  By the time I was 7 or 8 my parents told me about a little blue passbook they had opened for me when I was born.  The passbook (or savings account) contained some regular deposits and a healthy amount of money.  I had no sense of the value of the account or what the cash really represented, but I do remember my parents telling me:

- This is where you will (not can) save any money you should come across (birthday, holiday, etc.).

- Once you put money into the little blue book you really do not want to take it out (unless you need something).

- The bank will give you some money in return for keeping a little blue book full of money.

Shhh, insider secret: Consumer product companies want you to be slaves to trends.  Companies that produce automobiles, clothes, furniture, electronics, etc. are all dependent on repeat business (in marketing terms: retention rates) and the only way they can get customers to buy a product again is to argue that their older product is outdated and now has a newer version available. 

You see the above happening every year in late summer / early fall as car companies roll out "newly re-designed" and "all new" sedans and trucks.  The auto manufactures argue that you have to have the latest model because it boasts new safety features, a bigger engine, and technological advancement (think of Acura's slogan: "Advance").

The truth is, however, that in most consumer product categories you are better off not buying into the hype of chasing the latest redesign or product enhancement.   What you can do is buy products that have a classic design and good reliability/quality.  So, for example:

With temperatures beginning to drop and cold winds battering against our 83 year old house, we've been giving serious consideration to replacing our original, single pane, wood windows.  Our windows also include storm windows that, at one point, guarded against strong gusts of wind (but they are pretty much non-functional at this point).

We do like the aesthetics of our original single pane, wood, windows and most of the 35+ windows in our home are functional.  But there is a long list of cons, including:

• Windows are NOT efficient (they let tons of air through the bottom and upper sashes and also along the side of the unit) and are single pane (versus two and three pane for modern windows)
• Windows do not have gas filled panes which help with efficiency.
• Windows are difficult to clean.

There have been some great blog posts on the web this past week focused on happiness and savings, frugal living, how to talk about sensitive money/job issues, etc. and here are the best of the lot:

- Trent @TheSimpleDollar talks about Happiness and Saving for the Future

- JD @ Get Rich Slowly posted a nice article on great wine buys and even had a guest video blog by Gary Vaynerchuk from the WineLibrary.com .  JD also had a great entry on the ROI of gardening (part of a series)

- The MSN Smart Money blog has several blog entries on "8 Questions Not To Ask In This Economy"  , "Netflix: Frugal or Not"  and "50 Financial Skills Every Person Needs to Have"

- Frugal Dad has an article on "Budget Avoidance Syndrome"  and the "Black Friday Sales Emotional Trap"

One of the first things I do in the morning (even before I have a cup of coffee and say good morning to my wife!) is turn on NPR (National Public Radio).  Listening to the news wakes me up and gets my brain going in the morning and I'm grateful that NPR is available as a free (well, somewhat free; more on this later) resource.

I started listening to NPR as a freshman in college and have been hooked ever since.  I not only listen to my local NPR affiliate (WNYC), but I scour the web for the best NPR shows and programming.  I listen because, like a good puzzle or game, it really forces your brain to concentrate and follow arguments and logic via language (as opposed to TV which, of course, is partly visual and not as deep given the 30 and 60 second TV spot formula)

NPR provides tremendous value; it is technically free, but the organization and the affiliate stations rely on both fundraising and government funds (the latter being the smaller portion/source of operating cash, so you should contribute if you can).  Here is a bit more on how NPR works; I really encourage folks to donate to their local NPR affiliate station.

NPR programming provides:

Trent over at The Simply Dollar blog had an interesting post this morning on "A Long December"; that is, how, for many American's December will be a tough month given job cuts, gift buying pressue, investment/401K performance, and the poor economy in general.

Trent's post got me thinking about my childhood and how my parents (pic: that's my mother on the left with my great grandmother and grandmother in Calabria in the late 1960's) handled tough economic times.  And I easily concluded that parents didn't panic much or for that matter pay much attention to recessions, the stock market, or even my dad's job (my mother did not work a formal job).  I'm sure my folks worried like everyone else, but I don't remember hearing or feeling any sense of panic from mom/dad.

One of my father's golden financial rules is to not buy what you think you need.  As I've said in earlier posts, my father is an incredibly crafty individual, though I didn't realize the full extent of his ability to improvise and save money until we purchased our own home.

As new homeowners most couples are eager to make home improvement and purchase stuff to help mend and repair a "new" home.  The intention to improve a home is a good one and should stay with the homeowner as long as s/he occupies the home, however the associated behavior to run to Home Depot or Lowes' for supplies, material, and equipment is questionable and potentially dangerous.