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Good Saver/Bad Saver
With the economy on the skids, the personal savings rate has been edging up, and that has economists concerned. While the government-measured savings rate has been in decline for decades—hovering around zero percent in recent years—in January the rate grew to five percent of disposable income. That’s a 14-year high. As quoted in a CNN.com article, economists say a recession is “the worst time for that.”

Matt’s View: One of the oddest dynamics of our consumer culture is what I call the “good saver/bad saver” dynamic. We sense that we should save more than we typically do, only to be told that saving too much is bad for our economy. What to do? God’s Word teaches us to save, but don’t hoard. Six months’ worth of living expenses in an emergency fund is prudent, and it’s wise to estimate how much we may need for our later years (go to www.fidelity.com and search for the “myPlan Snapshot”) and to save accordingly. However, continuing to save beyond our estimated needs may be a sign of hoarding.

Unemployed Workers Catch a Break
Losing your job is hard enough, but trying to afford continued healthcare coverage only adds insult upon injury. Under a law known as COBRA, if you worked for a firm with at least 20 employees that offered group health insurance, you are eligible for continued coverage if you can afford the hefty unsubsidized premium. However, under the newly signed American Recovery and Reinvestment Act of 2009, the government will now provide a temporary 65 percent subsidy of that cost. The subsidy is good for up to nine months and applies to workers laid off between September 1, 2008 and December 31, 2009.

Matt’s View: This is a crucial benefit. Please make sure unemployed people in your church know about this benefit. The U.S. Department of Labor provides more details here (http://www.dol.gov/ebsa/COBRA.html).

First-Time Home Buyers Catch a Break
If there’s such a thing as a positive perfect storm, first-time homebuyers seem to be in the midst of one. Home prices are still heading down, mortgage rates are relatively low, and now the government is offering a significant incentive—a tax credit worth as much as $8,000. According to an article on Bankrate.com, to qualify, a person must not have owned a home for the previous three tax years and must purchase a home in this calendar year. The credit is worth 10 percent of the home’s purchase price up to a maximum of $8,000. The value of the credit phases out for single purchasers who earn $75,000 or more or married couples earning $150,000 or more. Making the credit even more enticing, it may be claimed on 2008 taxes by purchasing a home before April 15th, filing an extension, or filing an amended return.

Matt’s View: All the other caveats about making a wise home purchase still apply, such as making sure you have enough savings to be able to make a 20 percent down payment, and making sure that the combination of your mortgage, tax, and insurance payments total no more than 25 percent of your monthly gross income. But for anyone meeting those standards, this would seem to be a good time to buy. The National Association of Home Builders offers details of the tax credit here (http://www.federalhousingtaxcredit.com).

California recently sweetened the pot, offering up to an additional $10,000 tax credit for anyone, regardless of income, who buys a newly constructed home in the state between March of this year and March of 2010.

Mortgage Woes Expand
The first wave of foreclosures came from sub-prime borrowers, whose poor credit history probably should have kept them out of the housing market in the first place. But now even people with better credit records are falling behind on their mortgage payments. According to a story on Time.com, the fastest-growing segments of people losing homes to foreclosure right now include those with “jumbo” mortgages (usually over $417,000) and people holding “option adjustable rate mortgages (ARM). Option ARMs are a now-rare type of mortgage made to people with good credit that allowed them to choose how much to pay on their mortgage each month, much like a credit card bill. The overall message from the article? The fact that prime borrowers are now falling behind on their mortgage payments likely means more foreclosures ahead.

Matt’s View: Plans for helping troubled homeowners are changing rapidly. If you know of people in your church who are having a tough time making their mortgage payments, encourage them to get in touch with a HUD-approved housing counselor (http://www.hud.gov/foreclosure/).

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