Tuesday, February 03, 2009

Where is the Stimulus Suggestion Box?

Here are my two suggestions for immediate relief for normal Americans:

1) Loss on sale of home tax benefit
Let home-owners who must sell their home in a down market realize some sort of tax benefit for their loss. Businesses can already do this, but pity the poor individual who currently gets the shaft. Home-owner decides “what the heck, I lost my job and can’t make my mortgage payments, and darned if I’m going to live in a $300,000 home that I bought for $350,000. I’m going to foreclose.” Let the tax benefit have some kind of carry-forward provision. “Homeowners can amortize the difference between house sale price and house purchase price over a 10 year period on their 1040”

2) Lock in student loan interest rates TWICE
Poor uneducated college graduates who think they’re doing the right thing by locking in their multiple variable interest rate student loans into one simple loan. It made sense to us all at the time. Instead of writing checks to Sallie Mae, Wells Fargo, Department of Education, and Perkins – all at different and high interest rates – I can just write one check to Department of Education and lock in a rate at 5.5%. Wow, 5.5% is an all time low, this is great! But fastforward 7 years. You still owe tens of thousands of dollars. In fact it feels like you’re not making a dent in your loans. By now that all time low 5.5% is now down to 2%. That could have saved you $50,000 or $100,000 on the life of your loan. “If only I could have seen the future,” you cry. “I would have waited seven years, writing 5 checks every month, and then locked in my student loans…” Again, if I were a business, I could swap rates and lock in rates an infinite number of times. But Uncle Sam has poor uneducated college graduates in a vice grip. Squeezing interest out of us 5.5% annually and mocking our myopic decisions to lock in our rates soon after we graduated.

I’m not sure if I actually made the suggestion in there, but I think you get the point. Do you have any other great ideas that Obama should bring forward that aren’t being talked about in the press? Ideas must make an immediate impact on normal people.

5 comments:

Andrew and Joanne said...

What happened to not blogging about politics?

Robert and Rachel said...

It's about economics! Furthermore, these suggestions could easily be part of an economic platform for either political party. But don't get off topic: what is your suggestion to help normal Americans today?

Brian said...

It's good to see God's laws of sowing and reaping are still alive and well.

:-)

Robert and Rachel said...

Ah, but you’re missing the point of the post, to solicit ideas for helping normal Americans today. You are incorrect in your vague supposition that a vote for Obama has kept home-owners from taking a write-off on the loss on the sale of their home, or that a vote for Obama is now the reason students can’t swap their interest rates. These frustrations have been part of America’s regulatory system for decades. Likely these two rules were enacted by business-friendly members of the legislature.

Nicole said...

It sounds like the solution might be to become a small business owner. That's the American dream after all, isn't it? To take hold of your own destiny and use our free enterprise system the way it was meant to be used? My dream is to someday pay more in taxes than I currently make (or Brian makes, rather) annually. Then it simply won't be an issue.