One of my personal finance heroes, and nationally syndicated talk show host, Dave Ramsey, has posted an alternative to the $700 Billion dollar bailout plan.

Click here to view Dave’s Three Steps To Change The Nation’s Future.

Dave has created a Common Sense Fix (PDF) for how to get out of the current crisis.  Here’s one suggestion that really caught my attention -

B. In order for a company to accept the government-backed insurance, they must do two things:

1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage.

a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes.

b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while
working with the borrower-again limiting foreclosures and ruined lives.

What do you think?  Is Dave on to something here?

Big thanks to Imelda for sending me the link to Dave’s plan.

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The House of Representative has voted against the $700 billion dollar bailout bill… for now.  207 members voted yea and 226 voted nae.  The bill, however isn’t dead, just yet.  The voting has remained opened, tabled for a time.

It’s amazing to see who is for and who is against the bill.  Personally, I never wanted the bill to pass, because I believe in small government, but I know others, who don’t mind government intervention, who oppose the bill for completely different reasons.

It’s going to be very interesting to see if a different version of the bill passes.

Later today, I’ll check the U.S. Congress Votes Database, over at the Washington Post, to see how my representatives voted.

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I’ll assume that many of you will be receiving an income tax refund and/or a stimulus check.  Here are some suggestions for what to do with those checks -

1.  Emergency Fund - I like to maintain an emergency fund equal to $500 per person in our family.  We have 4 people, right now, soon to be 5, so our emergency fund equals $2500.  If you don’t have an emergency fund, use your check(s) to fund one.

2.  Debt Reduction - If you have your emergency fund, but you still have non-mortgage debt, consider depositing your check and then sending a ‘big splash’ payment to one (or more) or your creditors.  Depending on your debt reduction technique, you’ll send your extra payment to the account with the lowest balance or the account with the highest interest.

3.  Roth IRA - Have you started saving for retirement?  For 2008, the per person contribution limit for Roth IRAs (in most cases) is $5000.

4.  Emergency Fund (2) - If you are out of debt, now would be a good time to really build up your emergency fund.  I like to have enough money in my emergency fund to cover six months’ worth of expenses.  Depositing that check could go a long ways towards funding your Emergency Fund.

5.  Automobile Repairs/Maintenance - If you are trying to avoid borrowing money to purchase newer automobiles, you might consider using your refund or stimulus check to repair or maintain your automobile.  I am going to use a portion of my stimulus check to buy new tires for my paid-for Honda.

6.  Fun - If it’s been a while since you went out to eat or bought an new outfit, live a little.  Personally, I wouldn’t spend every dollar of my check on ‘fun stuff’, but I’ll probably use a small portion of our stimulus check to buy some new golf balls and a new pair of running shoes.

7.  College Savings - We have two kids, and a third on the way, and we are saving for their future college expenses.  Take a look at ESAs and 529 plans and consider funding one or both.

Final notes - If you are getting back a sizable income tax refund, you might want to check your withholding.  Remember, the money you are ‘receiving’ is actually your money! There is no real sense in loaning Uncle Sam your money, interest free, for a year.  Also, please don’t use your refund / stimulus check as down payment for some item that you can’t afford.  Don’t turn a blessing into a curse.  Use the money wisely and you’ll be happy with your decision.

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From the IRS Website -

Approximately 320 IRS offices located in all 50 states and the District of Columbia will be open on Super Saturday to prepare the simple Form 1040A for people who are filing a return solely to receive their stimulus payment. Operating hours will be 9 a.m. to 3 p.m., although some may be open longer. IRS employees will help prepare the Form 1040A returns for low-income workers, retirees, disabled veterans and others. Hundreds of IRS partners will have sites open around the country as well to help prepare stimulus payment returns.

For more information, click here to visit the IRS Economic Stimulus Payments Information Center.

Here are my favorite articles from the past few weeks, written by my fellow members of the Money Blog Network -

AllFinancialMatters has an interesting piece on Target.

Consumerism Commentary notes that when prices are down, it’s time to buy!

Five Cent Nickel has developed an interesting technique for managing assets across several accounts.

Free Money Finance asks a very interesting question - could you do a better job than your boss?

Get Rich Slowly suggests that, when the times get tough, we need to get back to the basics.

Mighty Bargain Hunter went on a stroll of his own, down memory lane, to Sesame Street.

Wise Bread writes about irregular income and taxes.

Here are my favorite articles from the past few weeks, written by my fellow personal finance writers -

Gen X Finance has a reader poll, asking What Will You Do With Your Rebate Check?

Lazy Man suggest two reasons for why folks are poor.

Money Smart Life has answered several frequently asked questions about the economic rebate checks.

The Digerati Life has ideas for surviving a recession.

The Sun’s Financial Diary reviews Scottrade’s customer service.

PaidTwice has increased 401k contributions.

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My buddy, Nickel, from Five Cent Nickel has written a couple of articles about The Tax Stimulus Plan that you’ll want to read.  The first is about the tax rebate payment schedule and the second is about the official tax rebate calculator.  After reading the articles, it looks like our check, for $1800, should arrive in May.  This will work out great for our family, because my wife will miss a paycheck - due to the fact that she’ll be having baby #3.

Some of the rebate check money will go towards offsetting the cost of the delivery.  It looks like the total cost will be about $11,000, 90% of which will be covered by our health insurance plan.  We’ll have to pay our portion, up front, the day of the delivery.

For those of you who are new to No Credit Needed -

Let me welcome you to the site and invite you to checkout some of the other ‘NCN’ sites -

I have a weight loss blog, No. Calories Needed.  I’ve started following a new eating plan - Paul McKenna’s 4 Golden Rules - and I’ve lost 7 pounds.  I’m really excited about this plan.  I hope you’ll click over to read more.

I also have a podcast, the No Credit Needed Podcast.  I talk about debt, debt reduction, my life, saving money, and frugal living.

Finally, I manage the No Credit Needed Network.  The Network allows members to create and share a personal finance goal / chart.  You really have to see it to really appreciate it.  Two years ago, there were fewer than 10 members.  Now, there are more than 350.

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