Identity Theft Prevention: Should You Freeze Your Credit Reports?

young woman talking on a mobile phone and holding a credit cardUnless you live in a bubble, it is hard to totally prevent Identity theft.  After all, many entities other than you have your personal information –financial institutions, doctors, schools, etc.  The goal is to put measures in place that make it more difficult to steal your identity – so thieves go looking for an easier target. 

Important prevention methods include: buying a good shredder and shredding anything with personal information before it gets tossed; keeping personal information out of your mailbox when possible; protecting account information and personal information in your possession –by locking it up at home; and carrying very little personal information with you if possible.  For other ideas, check out this website from the FTC:    http://www.consumer.ftc.gov/topics/protecting-your-identity

Credit monitoring or other protection services don’t prevent ID Theft because they let you know AFTER the FACT that it has happened to you.  With a little planning and time – you can monitor your own credit reports and accounts for fraud FREE – right?   You can check your financial statements every month either online or by opening your mail.  And, you can order your free credit reports every 12 months, or alternate several times a year at http://annualcreditreport.com

It turns out you probably DO have a very important ID Theft prevention tool in your toolbox – if you choose to use it.  It is called a Credit Freeze and/or Security Freeze.  In most states, including Missouri, you have the right to put a freeze on your credit report that prevents anyone from pulling your credit report to issue NEW credit.  The most difficult type of ID Theft to clean up is when someone opens new credit in your name and then misuses those accounts. 

What a security freeze does  is put a lock on your credit report so that in order to open new credit, you have to temporarily unlock your report.  Sounds inconvenient right? – at least that is what the credit bureaus make it sound like on their websites (they warn it could take weeks to unfreeze your reports).  Turns out this is not usually the case at all. For example, under Missouri law, after the initial freeze on your credit report, if you call or email the credit bureau within normal business hours, to temporarily unfreeze your credit report, they have 15 minutes from receipt to comply with your request.  Other states appear to have similar requirements. For specific information about State Laws on the security freeze/credit freeze, visit the Consumers Union website:  http://defendyourdollars.org/document/guide-to-security-freeze-protection.

A security freeze DOES NOT prevent you from being able to pull your own credit reports at any time, nor does it prevent business entities you already have a relationship with (your mortgage, your credit cards, etc.) from being able to review your credit. 

The average person opens one to two new credit accounts a year – so, if that is the case with you, it may be a much safer and cheaper option to pay to freeze and unfreeze your credit report a few times a year than pay for other types of protective services.

Posted in Credit, Financial Decision Making, Identity Theft, Uncategorized

Keep Fun Goals on Track With an Emergency Fund

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So, how do emergency funds keep fun goals on track?  If you don’t have that emergency fund set aside when the emergency happens, the money you end up using is what would have been used for things like… vacation, planned home improvements, a new/new used car, holidays and birthdays, education, or other goals that help move you and your family forward financially.

You may often hear an emergency fund should be 6-9 months of expenses, but realistically, many people are doing well to have $500 or $1000 in an account earmarked for emergencies.  So, getting past a month, two months or even three months of expenses may be unrealistic for some – at least for the immediate future.  Whatever the amount, it is better to have emergency money earmarked in a separate account, not mixed together with your regular checking or savings account.   

Making savings automatic is a great approach to saving for emergencies.  Consider keeping emergency money in an account that does not have a  penalty for early withdrawal and is low risk – a savings account or money market.  Check to see if your employer offers the option of direct deposit into a second/ separate account, or if not, setup a system to have your bank or credit union move the money to that earmarked account on the same date every month.  Making it automatic means you don’t have to think about it every month – it just happens.   Then that money is available for the unexpected. 

Start small so the idea of saving for an emergency is less intimidating.  Focus on working up to one month of expenses (if not there yet), and when and if you get there before an emergency happens, then start to work towards saving two months of expenses, then three months, etc. Celebrate each level of success, even if you are still far from having your six-months of expenses saved.

When that emergency happens, and it will (I have yet to have a year where it doesn’t), you take what you need and start to rebuild by keeping your automatic savings plan going.  Another idea to help you build or rebuild emergency savings is to use part of your tax refund or any other windfall you might get during the year to give it a bump up.  Remember – financial success is all about setting and reaching your goals; some are just more fun than others.  Keep your fun goals on track by having an emergency fund come to the rescue.

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Grocery Store Coupon Adventure

Woman Clipping from MagazineI already do things regularly to save money or keep expenses down. However, this year, I am going to try new, or haven’t tried for a while, cost saving ideas and methods suggested by you, class participants, money websites, consumer reports, etc. I will report in this blog how they work out. Here goes the first.

I am pretty frugal by nature. Related to grocery shopping, this manifests itself by sticking to my list, buying items only when on sale, shopping around when it makes sense, and avoiding buying things we don’t need.

Truth be told, I have never been great with grocery coupons. I have good intentions: I make an effort to collect coupons along the way, but then I forget them, or, they expire before I am ready to purchase the item, or, I can’t find them…. My husband bought me a coupon organizer in hopes of helping me….nope. My mother cuts out coupons and mails them to me from afar. She then follows up and asks me if I used them…nope.

I always hear about how much money these “extreme couponers” save on groceries, so I thought I should revisit using coupons to see how much I could really save if I made a greater effort. I keep my grocery list on my phone, so, I knew what coupons I needed, and proceeded to look for coupons for things I needed now or in the near future. I visited a bunch of the coupon sites recommended by various publications (coupons.com; couponmom.com; smartsource.com; valpack.com and redplum (save.com), etc.).

During my initial visit to these coupon sites, one that even boasts over 700 coupons, I proceeded to find possibly 5 coupons that I might ever use, and none that applied to my current list of needs. So, I decided to take another approach. I got out my list of grocery items and decided to search for coupons by product.

Several hours of effort later, I had not found one usable, downloadable coupon for a product I use, or would consider using, that did not require me to register for various websites (giving personal information) or require me to “like” their Facebook page. I already have information overload from my real “Friends” on Facebook, but at least their information is often entertaining. I did find a promise of $17 in coupons if I registered on one website, only to find out after registration, I had to wait 4-6 weeks for delivery.

I ended up on this coupon hunt for weeks, returning to the coupon sites regularly, looking on paper, looking on manufacturer and store websites, and putting off purchases in hopes of finding that money saving ticket. After hours and hours of hunting over several weeks, my end result was this: I saved a total of $5.00 in grocery coupons for all of my effort. (Had I gotten to the store on a double or triple coupon day I would have done better). Looking at it another way – I spent hundreds of dollars of my time to save $5.00.

So, it turns out, grocery coupon savings is not going to be high on my list for reducing expenses. Don’t get me wrong, I do find and use great coupons for other purchases– sporting equipment, art supplies, electronics, clothing, and car repairs, etc. (and will share coupon phone apps in an upcoming entry). But, since I am not willing or able to make grocery couponing a full-time job, this method will have to be replaced by other ways to reduce expenses. As I tell my class participants – you have to use money saving methods that fit your lifestyle and money personality.

Posted in Expenses, Saving, Shopping, Spending, Uncategorized | Leave a comment

Reaching Financial Goals….means setting them first

MP900341322Early in the year is perfect timing to reflect on what you want to see in your life in the next six-months, next year, and even the next few years. You can start on your goal today or this week and through consistent, small steps, work your way up to even that long-term goal. The big question is: what small step will you take today to move you forward toward reaching your goals? The most important thing about goals is to actually write them down – that could be your small step for today. Make your goals specific, positive and uplifting.

An important step to reaching goals is to make an action plan: What is your target date? How much is your total expected out of pocket cost? How much do you need to save each month? What are your positive reasons for wanting to achieve this goal? What will you do today, this week and/or this month, and every week or month to make sure you stay on track to meet your goal? These are small steps you could work on over the next few weeks.

If you can go so far as to figure out how much you want to save per paycheck, and can have it direct deposited into savings automatically every paycheck (not into your regular checking and savings account), you will be ahead of the game with another small step. Think about what you want to be, what you want to do, and what you want to have in your life – then write these down and get started using a series of small steps over time. Don’t put it off or you may not get around to it.

You can find an online sample goal setting form at Rutger’s Extension website: http://njaes.rutgers.edu/money/pdfs/goalsettingworksheet.pdf Missing piece: when it says monthly amount to save, add a column for amount to save per paycheck if you don’t get paid monthly. Remember, your goals need to fit within your monthly spending plan.

Posted in Financial Goals, Saving, Uncategorized | Leave a comment

Holiday Spending Part 2 – Staying Out of the Red

Planned holiday spending is a great way to prevent financial stress in the new year!  

Set limits on overall holiday spending:  Decide how much you are really comfortable spending on gifts.  A quick rule of thumb might be to keep your spending under 1.5 percent of your yearly gross income.  For example, if your income is $30,000, try to keep your spending under $450.  Set limits on how much you spend on food, decorations, travel, entertainment, holiday cards, etc.  See the Holiday Spending Planner at http://extension.missouri.edu/wfes/documents/holidayspendingtips.pdf

How do I set these limits you ask?  Make a list and stick to it!  Your list should include all the people you need a gift(s) for, and their priority level.  Then, by priority, assign each person a dollar amount.  Hint – don’t exceed your limit just because you have more people than dollars. This is when you have to be creative and either 1. Eliminate people from your list, 2. Make them something instead of buying, 3. Give coupons for your time or talents 4.  See part one. 5. Look at the holiday spending planner or Internet sites for gifts that stretch your dollars.

Once you have your list of people and amounts to spend, make a list of the possible gift(s) for each person and estimate the cost.  Because actual purchase prices may vary, allow a 10-15% margin.  Look online, in newspaper ads, catalogues, etc. to get an idea of the cost, and plan out your spending and shopping before you leave the house.

Tips to stick to your limits:

  • Use cash and bring only the amount of money you need or can afford to spend when shopping.
  • Consider using the envelope method of planning.  Create an envelope for each person with their name and the amount of money you have allocated to spend on them. Also do this for the limits you have set on food, decoration, etc.   Don’t borrow from other envelopes unless the purchases have already been made for that person or category.
  • Use cash, use cash, use cash. Bring only the amount you can afford to spend (this may give you leverage to negotiate more on purchases).
  • Keep track of what you are spending.  Each time you make a purchase, write down the price you paid.  If you are using a credit card, make sure you are keeping a record of your spending for each person or category and subtract it from the amount you agreed to spend.  It is easier to stay on track if your holiday spending planner comes shopping with you.
  • Set aside money each month for these end of year holiday expenses if you are not doing it yet. Set a limit in January for what you plan to spend at the end of the year and set aside 1/12 each month.   If you have difficulty doing it yourself, consider using a special account at a bank or credit union that will help you save monthly and release the money towards the end of the year.
Posted in Credit, Debt, Expenses, Financial Decision Making, Financial Plans, Non Financial Resources, Spending | Leave a comment

Staying Out of Debt for the Holidays – Part 1

  • It is getting to be that time of year again; the winter holiday catalogues and holiday decorations are making an appearance.  So…..I am going to start the discussion on holiday spending. 

The holidays are really about spending time with family and friends right?  Important aspects are holiday cheer, goodwill and giving to others.  Here is my question – does giving to others really have to mean spending yourself into debt?  Or is there a better approach? 

Is it time to re-think holiday spending that may be keeping you from reaching your financial goals?   If it took way too long to pay off last year’s holiday spending, or you had financial goals that were delayed or unmet because of the cost of last year’s holiday, here are some things to consider this holiday season:

  • People will remember the time you spent with them and the fun things you did together more than they will remember what you gave them or how much you spent!  Fun times can be free and low cost community activities, games, arts and crafts, baking, teaching someone a skill, etc.
  • Make a big financial decision before heading out to do any holiday shopping – how much can you afford for the overall holiday – gifts, decorations, holiday food, eating out, etc?  When you set your spending limit, try to choose a figure that will not create any debt that needs to be paid off after January.  You up for the challenge?  You can use the holiday spending planner at:  http://extension.missouri.edu/wfes/savingandspending.aspx  to help you implement your plan.  This planner also has great ideas for inexpensive gift giving.
  • Limiting your spending on the holidays can lead to some tough but important conversations.  Your family may have been doing things the same way for years and you may be asking for a change in order to keep your finances on track.  What I often find, though, is that many people want to cut back on gift giving outside of their immediate family (spouse and kids) – but someone just needs to make the first move.  Even in your immediate family, consider changing the emphasis from buying lots of meaningless gifts that end up in the back of the closet or are rarely used, to buying just a few (or one) higher quality purchases.  Place more emphasis on spending time together.
  • Ideas people have implemented to reduce the emphasis on gift giving to  family and friends:  a.) Pick a name gift exchange with a dollar limit ($10-$15) – this way each person gets one gift to open; b.)  Giving gifts only to young children – no teens or adults; c.) Have a cookie exchange instead of gift giving; d.) Eliminate competition, and purchasing things people may not want or use anyway, by not exchanging gifts with anyone that is not your spouse, child or grandchild; or e.  Share your ideas….. I would love to hear what you have done to reduce gift giving expenses.
  • What many family members and friends really need is something you can do for them.  Consider giving coupons for your skills, talents, hobbies, or even just your time.  Can you take a great family photo for a sibling or friend?  Can you help your parent with things they need done around the house – gardening, home maintenance (lightbulbs, clocks, garage cleanup,etc.)?  Can you teach someone to bake, scrapbook, or help them organize their stuff?  There are many great ideas available on the Internet.
Posted in Credit, Debt, Expenses, Financial Decision Making, Financial Goals, Financial Plans, Non Financial Resources, Spending, Uncategorized | Leave a comment

Your Net Worth – a positive approach

Believe it or not, doing a net worth statement each year is crucial for your financial health.  Many people get intimidated by the idea of determining their net worth because they don’t want to see negative results – that they may owe more than they own, or are not as far along financially as they hoped.  Well,  I don’t want to get on the scale either, but it does not change how much I weigh just because I choose not to look at it.  The same applies to money, you are where you are whether you write it down or not.  If you want to move ahead financially, a big step is to know where you are now and then use that information to create strategies to get to where you want to be.

Determining your net worth is as easy as writing down the value of everything you own and subtracting from that amount everything you owe (Assets – Debts = Net Worth).  You can find a free form for this at http://extension.missouri.edu/wfes

Net worth reviews are a great tool to help you compare how you are doing from year to year. By creating it at the same time each year, you can make sure you are headed in the right direction – that you own a little more and owe a little less than the year before.  If you find that your debt is growing and your savings is shrinking, it gives you a chance to stop in your tracks before you get too far down that road, and figure out how to turn it around – such as spending less and saving more.

So how can you get yourself to do it?  Make a date with yourself each year around the same time and put it on your calendar.  Whether it is the beginning of each year or tax time, etc., whatever makes sense for you.  As your reward, you will find yourself reaching, or moving closer to reaching your financial goals!

Posted in Debt, Expenses, Financial Decision Making, Financial Goals, Financial Plans, Financial Records, Uncategorized | Leave a comment