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When To Quit Your Job – How Much Money Do You Need?

Everyone has probably thought of it. Whether it is easing into early retirement, starting your own business, or earning passive income, people want to live the good life. Quitting your job and seeking better opportunities is a perennial topic but it is more relevant today than ever before. So many people are either working part-time, unemployed, or fearing that they will be part of the next batch of lay-offs. As a result the real unemployment rate has only gone higher and higher.

The situation is a lot worse in the United States because people don’t want to lose their group health insurance. But even if you decide to get your own insurance, the main question is how much do you need to survive without your job? Would you also buy life insurance if were not provided? This is one of the main factors that keep people stuck to where they are.

What Kind of Escape do you want?

Determine what kind of escape you want – whether it is a change in career, semi-retirement, or retirement and then plan accordingly. Also, try to gauge your current standard of living. A civil servant might be happy to live on his pension and may not need anything else. But a highly-paid executive may not be happy with this set-up. Basically, the pile of cash you need depends on your circumstance and preference.

Are You Willing to Relocate?

If you are shifting from one job to another, some people would recommend having at least six months worth of savings. However, if you’re looking to start your own business, it is a different matter altogether. For people who had been there, they recommend at least two years worth of savings – in a very accessible, liquid form. The good news is relocating from one area to another can stretch your dollar significantly.

How Far with Your Dollars Stretch over the Long Term?

There are a lot of factors that can affect the value of your money today. Even a person investing conservatively should earn at least 3 percent annually to cover inflation. Anyone who is seriously considering an escape should take a look at their cash flow.

Will You Be Willing to Cut Back – Significantly?

It is a fact that middle-class households usually have budgets that can be dramatically cut. But people see their neighbor’s luxury as their necessity and this is where the problems occur. Use the zero-based accounting to determine how much you can cut back each month.

The Real Unemployment Rate in America

With the GDP growing by 3.5 percent in the third quarter, economists and market watchers are expressing a small sigh of relief. However, no one can deny that a lot of taxpayer money has been invested into the economy through tax hikes and this contributed significantly to the growth. The question is, how much can be attributed to the bailout and how much to the real economy? To find the answer to this question, it is essential to know what recovery really is.

Basically, there are three developments that are required to get the economy back on tract. The first development required is bank stabilization. Recklessness in the financial institution was a major cause of the recession. The turmoil in this industry started in August 2007 and reached its peak at the early autumn of 2008. The crisis has passed and the stabilization of the financial industry laid the foundation that allows the economy to heal. The second development is GDP growth. From the first paragraph, it is apparent that this has been met as well.

The third development that needs to happen is the job growth. Unlike the first two factors, it is slower to develop but it affects people’s lives more intimately than the first two. Even during the shallow recession in 2001, it took almost 2 years before job growth became positive once again. Another problem in determining what the real “job growth” really means is unreliable data. For example, the government released new figures that said the stimulus package “created or saved” more than a million jobs.

These data was collected from agencies that received funds under the American Recovery and Reinvestment Act of 2009. Unfortunately, the figure is not reliable because of reporting basis. Recipients feel encouraged to inflate the number of “jobs” they created in the race for federal money. It would be misleading to take the numbers at face value. The unemployment rate stands at 9.8 percent, few are comforted that a million jobs were said to be “retained”.

Turning Frugal: Save Money by Spending Wisely

You can feel it in the air. Everyone is turning frugal. After decades of engaging in shameless consumerist attitude, people are suddenly becoming wiser with their money. The catastrophe that forced them into the situation might not be welcome, but the shift in consumer attitude will do a lot of good to society as a whole for the long-term.

There are still bills to pay and debts to get rid of though. In the meantime, it is important to save as much money as you can. It is inevitable that you still need to spend on certain things. Here, we compiled some blog posts that can help you spend less on your needs and wants:

April @ Get Rich Slowly uploaded an article titled “The Art of Improvising: Alternatives to Buying New”. Despite what the headline implies, this posts digs deeper into saving. Other than telling you to stop buying new stuff, the author also provided practical tips on how and where you can save. For example, she tells you to repair whenever possible, delaying spending, trading, or renting. Borrowing is also a good idea in some instances.

DeputyHeadmistress @ Frugal Hacks wrote an interesting post “When It Pays to Buy New”. Now, she is not specifically encouraging you spend money on new things; the point of the article is that it sometimes pays to buy something new. This is especially true if the product you’re interested in meets two factors: it frequently needs to be replaced and the company you’re buying from offers money-back replacement guarantee. If it doesn’t meet the latter condition, you should think twice.

The third blog we will feature for this week focuses on buying cheap books. Fiscal Geek has a post titled “24 Ways to Help You Buy Cheap Used Books”. It provides various links to websites that sells books at bargain prices. Even non-booklovers will find the post useful because it gives them an idea about how much, or how little, they should pay when buying stuff.

Home Buyer Credit: Is It Going to Last?

First time home buyers is inevitably anxious right now, especially if they’re not sure they will be able to find their dream home next month. On November 30, the credit is to be finished although the Obama administration is looking into extending it past the due date in order to make it available to more home buyers.

The situation about the $8,000 first-time home buyer credit is very fluid right now. According to Housing Secretary Shaun Donovan and Treasury Secretary Tim Geithner, the government may extend it for a “limited period”. However, several proposals are being considered. There are very generous and least generous proposals that are being looked into.

Jaret Seiberg from the Concept Capital’s Research Group said that, “there is bipartisan compromise to extend the credit through spring and expand it to existing homeowners who are stepping up to a different home”. Because of this, policymakers are considering giving up to $6,500 in credit for homeowners who want to trade up their homes, as long as they live in their current residence for at least five years.

Not everyone can take advantage of the first-time home buyer credit though. This is because in order to get the full amount, the applicant should have less than $125,000 in adjusted gross income ($225,000 for married couples). Aside from this, the provision is only applicable for homes that are sold for $800,000 or less. The contract should be signed by April 30, 2010 and must be closed by June 30 of the same year to qualify for the home buyer credit.

The home buyer credit has attracted supporters and critics alike. Supporters say that it has helped boost home sales at a time when it is needed most. Extending it will further improve sales and help stabilize prices. However, critics say that while it has helped in some ways, it is ill-targeted and therefore not cost-effective. They say that only 10 to 20 percent of 2 million qualified home buyers bought homes with the credit in mind.  In other words, 80 to 90 percent would have bought anyway even without the credit.