The U.S. unemployment rate hit recent high of 10.1% in October, then dropped to 10.0% in November and held steady at that rate in December, even though more people lost their jobs. So what gives?

The unemployed are getting discouraged.

That’s the term economists us to describe people who get so fed up with looking for a job they just drop out of the race. That means they’re no longer counted as “unemployed” when the government calculates the official unemployment rate.

Looking at the bigger picture, the number of people actually working has gone down by almost 800,000 people from October to December. Also, the “underemployment rate” – which includes part-time workers who want a full-time job as well as people who have given up looking is 17.3% — way different from the 10.0% rate being reported in the news.

The latest Businessweek has a good story explaining all this.

Check out our Simple Rules categories on the left side of this page for tips to help you weather the recession!

Popularity: 1% [?]

Penny pinching is in. Even as the economy is showing some signs of life, people are still watching their spending closely. And they’re talking about it to their friends — money is a more popular topic than even boys for some women. So says the LA Times anyway!

While it is great to keep to a tight budget and generally only buy what you need, don’t be afraid to splurge every once in a while, as long as you can afford it. If you deprive yourself of all luxuries, it will be hard to stick to a good budget over the long term.

Popularity: 1% [?]

Many credit cards give you airline miles for every dollar you spend. Not only does that encourage you to spend money that you shouldn’t but all you get for it is a bunch of miles you can never really use.

A new batch of cards have been launched to actually get customers to pay down their debt. U.S. News describes a bunch of them here. Is one of them right for you? Well, it depends…

If you’re the type of person that needs some motivation every month to pay down your debt, some of the cards may work pretty well for you. However, if you can get up the motivation on your own, you’d likely be better off having a very low interest rate card so that your monthly charges are as low as possible. Also, if you’re an avid reader of this blog and you already may your credit card balance off in full every month, you’d be better off with a different type of rewards card – possibly one that gives you cash back.

Popularity: 1% [?]

NEVER get a cash advance from your credit card. Interest rates are typically 20-25% or more on cash advances. That’s very hard to pay back. You might as well just go to a loan shark!

Popularity: 1% [?]

By Bethany Hollrah

When you start a new job or experience a change in your tax situation, you need to determine how much of your paycheck will be held back to pay taxes. To do this, you need the W-4 Withholding Allowance Certificate (contact your HR department to get one). The form considers whether you are married or single, have children, have child tax credits, and more to help you calculate how much in taxes are withheld each paycheck.

And as the top of the form indicates, it’s a good idea to update the form every time your situation changes, such as from a wedding or the birth of a child or getting a second job.

There is a worksheet on the form itself that is designed to help you determine what your withholding allowance claim to enter at the bottom of the form. You can also use the calculator on the IRS website (just have your most recent pay stub handy). Generally, the higher the number of allowances you claim, the less they will hold back from your paycheck to cover your taxes.

The goal should be to have the amount you withhold match the amount you owe to federal, state and local taxes exactly. There is no exact formula, but you’ll know if you have a sufficient amount of withholding if you neither receive a big tax refund nor owe a large amount for your income taxes.

Popularity: 1% [?]

This is a (nice) dilemma recent grads often face: After temping in data entry or selling plasma TVs at your local big box retailer, you finally land a job that pays a decent salary. Even after you pay rent, student loan minimums, and other expenses, you have some money left over.

Do you save it? Spend it? Pay more towards your student loans?

While you should always pay your student loans on time, student loan debt could be considered “low priority” in terms of paying it off completely. Here’s why:

• Student loans typically have relatively low interest rates (look into consolidating your loans if you have multiple loans at more than 7 or 8% interest).

• The interest on student loans can be tax deductible (up to $2,500 if you earn less than $70,000 in 2008).

• If you accelerate the payoff of your loans, you’ll be taking money away from other things you might need to put money toward (like an emergency fund, high-interest credit cards payoff, down payment on a house or car, retirement savings, etc.).

So what’s a grad to do?

If you still have extra cash after building an emergency fund and paying off credit card debt, consider putting the money towards retirement. Learn how to get started here. Socking away money for retirement when you’re young will pay off big time when you’re older due to the power of compounding. Determine the cost of waiting with this calculator.

If you’ve maxed out your 401(k) and IRA contributions, then you could think about putting extra money towards your student loans each month.

Popularity: 1% [?]

These people don’t work for free…

Whether you are self-employed, just starting a new job, or you recently got laid off, you may wonder if you can get away without health insurance in order to save some money. Spending your money wisely is always a good idea, but going without health insurance is a huge risk. Even if you think you are healthy now, you still need to think about potential accidents, nasty virus outbreaks, and random diseases that could happen at any time, no matter how young or healthy you are now.

It’s worth paying a little bit of money each month towards health insurance to give you peace of mind and to protect you from a huge financial hardship if you do need medical care down the road.

What are your options?

If you work at a company that offers health insurance, definitely check out their options – buy joining a group plan and having your employer pay part of the cost, a basic health insurance plan at work can be pretty cheap.

If you are self-employed or you missed the open enrollment period at your employer, get private health insurance. eHealthInsurance
has tons of good options and easy-to-use comparison tools to help you out.

Finally, if you were recently laid off, I would recommend looking into COBRA, which extends your workplace health benefits. Normally COBRA can be very expensive, but there’s a new program (part of the economic stimulus plan) that enables you to pay only 35% of your COBRA premium – the government will pick up the rest of the tab. Stipulations apply, of course, but it’s worth checking out. Learn more here.

Stay healthy but be prepared… just in case.

Popularity: 1% [?]

by Sharon Bordas

For years, whenever anyone asked my husband and me if we were going to have kids, our stock answer was that we couldn’t afford it. Two freelance writers with a spotty employment history, credit card debt, student loans and a love for fine dining… how could we ever afford to procreate? We just didn’t see it. The standard response we received (especially from the over forty set) was that there was never a good time to have a baby. To which we’d shrug and order a martini to go with our oysters on the half shell. C’est la vie.

And then something changed and we decided to have a kid.

Quite honestly, in the final assessment, our financial stability played little to no role in our decision to take the procreative plunge. It was an emotional choice. Only after we’d gotten ourselves knocked up did we face the financial reality of bringing this little girl out into an oxygen based world and the only thing we knew for sure was that this time we weren’t going to put our medical costs on a credit card… we wanted to leave the hospital knowing we owned this baby, free and clear.

As the pregnancy progressed, my husband and I realized that we were perhaps setting the bar a little low and we began to ask around about other ways to reduce our costs. Here are the five big financial take aways from our foray into parenthood.

1. Exploit Your Health Insurance Options: Not only do you need to look at your health plan, check out your deductible and figure out if your doctors and hospitals are in network or out, you also might want to get creative with your coverage. My husband and I both had individual insurance plans, but at the suggestion of a friend we doubled up, adding me a dependent on his coverage as well. Paying the nominal fee to add me to his plan provided us with secondary insurance and reduced our out of pocket costs.

2. Have Baby Showers: People are really, really nice to you when you have a baby. We’re still overwhelmed by the packages that are arriving on our doorstep. And although we rejected the idea of baby showers and registries at first, we were finally convinced to embrace them, and thank god we did. Believe it or not, not only do you kind of need some of this stuff, but you also have the right to the romance of your baby’s childhood. Five hundred bucks is a lot for a stroller, but can you really put a price on happiness? Decide what’s important to you and let people know about it.
And I don’t care what the Mormons say about family values and Proposition 8, my gay friends were the most generous of the lot. Car seats, strollers, high chairs, baby Bjorn’s, Tiffany rattles… most of the big purchases came from our daughter’s gay uncles. So register for what you really want, have co-ed showers and enjoy.

3. Ask Questions Before Someone Takes Your Blood: Not every test is needed or necessary. Make sure you engage with your doctor so that they don’t just make assumptions and test you for every possible illness or genetic condition known to human kind. Unless you want to be tested for every possible illness or genetic condition known to human kind, which is just fine too. However, in that case you can ask your doctor about the most cost efficient way to do these tests because some of them can run between $200 to $400 bucks a test.

4. Look Around for Deals: Not on babies, silly, on products. Savvy shopping is a must with a kid on the way. Sometimes baby registries come with free diapers or gear. We got six months of free, biodegradable diapers for registering on Amazon. Coupons are available on line for all kinds of important stuff… diapers, formula, Dramamine, etc. Why pay full price for such mundane but super necessary things when you spend your hard earned cash on sleek modern baby furniture and designer socks?

5. Live Off the Government: Those of you with conventional jobs might not need to concern yourself with this, but for freelancers like us, California State Disability was a godsend. As spotty as it may be, my past employment history qualified me for $900 a week for four weeks before delivery and eight weeks after. And then I can apply for Family Leave time on top of it, as can my husband. Now, having been raised a republican, I felt a little weird about this at first. I may not be financially stable, but I’m not poor either. However, I’ve come to believe that I pay into this system, I might as well take advantage of it. And besides, if the banking system can get a bailout, why shouldn’t I? So I suggest you check with your employer, your doctor and the disability office and make sure you file if you qualify.

Our kid is only a handful of weeks old right now, and with the disastrous state of the economy, you could argue it’s the absolute worst time to have a baby. That’s what I’d be telling people if I hadn’t already done it. But having just received a thirty thousand dollar bill for my time at the hospital, all of which was picked up by my two insurance plans, I’d have to say that my viewpoint has changed.

Now I think that the only good time to have a baby is before your health insurance runs out…

Popularity: 1% [?]