Bailouts Beyond "Clunkers"

Financial Adviser Ray Martin On Variety of Federal Programs Designed to Help Americans During the Recession

(CBS)  Since its approval by Congress late last month, the "Cash for Clunkers" program has become a big success, so much so that 2 billion additional dollars have been injected into the program's engine.

But "Cash for Clunkers" is just one of many government-run programs designed to re-energize the economy and help Americans save money with certain incentives.

"Early Show" financial adviser Ray Martin discussed "Cash for Clunkers'" success on the broadcast Friday, as well as details of some lesser-known programs designed to give people a hand during the recession.

Martin said "Cash for Clunkers" is going as the government was hoping it would, with thousands of car owners filing into dealerships to take advantage of the program.

He said most car buyers are bringing in their gas guzzling SUVs and trucks and purchasing the most fuel-efficient cars on the market, according to the National Highway Traffic Safety Administration (NHTSA). In fact, the top-selling new car was the Ford Focus, and the top three -- including the Honda Civic and Toyota Corolla -- were compacts.

Among the vehicles traded in, Martin pointed out, citing the National Transportation Safety Administration, 83 percent have been trucks and SUVs, and 60 percent of vehicles purchased were passenger cars. The average fuel economy of vehicles being bought under "Cash for Clunkers" is 25.4 MPG. The average fuel economy increase from the old vehicle to the new is about 61 percent. And the program's first $1 billion is expected to fund sales of 250,000 vehicles.

Other government-backed programs also offer incentives to help consumers and the economy, programs such as the Federal tax credits for energy efficiency.

How do they work?

Martin explained, in keeping with the government's desire to make this country more energy efficient and greener, they're offering incentives for homeowners to make homes more energy efficient. He said this is a chance for homeowners to receive up to $1,500 dollars back from the government.

But what's considered energy efficient?

Martin said there are a number of things you can do to receive a tax credit: insulate your home, install windows and doors that meet Energy Star criteria, install energy-efficient cooling and heating systems.
Also, he said, if you're in need of a new roof on your home, consider using Energy Star approved materials like metal and reflective asphalt shingles to receive the tax credit. For any of these repairs you make, you'll receive 30 percent of the cost up to $1,500 dollars.

If you're thinking of installing a more complex system, such as solar energy or a geo-thermal heat pump, Martin said you could qualify to receive 30 percent of the cost in tax credits. So think about it: If you spend $20,000 on a solar energy system, you will receive $6,000 back from the government.

In order to do any of this, Martin said, it will require an investment on your part. But remember, he said, with the government tax credit, coupled with the money you'll save on your utility bills, it will be worth it in the long run.

Another incentive is a tax credit for first-time homebuyers. If you're a first-time homebuyer, Martin explained, you could qualify to receive a tax credit for a home purchased in 2008 or 2009. The credit, according to the Internal Revenue Service, applies to purchases that close after April 8, 2008, and before Dec. 1, 2009. It can either reduces a taxpayer's tax bill or increase his or her refund, dollar for dollar.

For 2008 home purchases, first time homebuyers can receive up to $7,500 back in tax credits. For 2009 purchases, that credit was increased to $8,000 dollars. The amount of money you receive from the government will depend on your annual income, so not everyone will receive $7,500 or $8,000 back. But right now, if you're a first time homebuyer thinking about buying a home, Martin said, the stars are aligned thanks to a few factors: interest rates are low, prices on homes are still now, and you can receive up to $8,000 back from the government. There's no better time than now, he said, to seriously consider buying a home.

Struggling small business owners may also get a break.

Martin discussed a new tax break available for small businesses. It's called the Net Operating Loss Carryback, and it allows small businesses to offset losses by getting refunds on taxes paid up to five years ago instead of the usual two, which can really pump much-needed money into struggling businesses. Also, with the program, qualifying businesses can deduct up to $250,000 (up from $133,000) of property and equipment purchased in 2009 which is again, designed to put more money back into the pocket of the business owner.

Martin pointed out though "Cash for Clunkers" is making headlines, plenty of other ways exist to help people financially through this recession.

Martin suggested you do your homework, and take advantage of these programs.

"It was just six months ago when President Obama signed his $787 billion stimulus bill, and it will take some trial and error to figure out what works and what doesn't," he said, "but this shows there are options out there to put money back in your pockets."

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