There is something interesting we have come across over the past few months, people changing owners on the deeds to their home. There is an array of reasons why you might want to do this, but most commonly this is found in families who want to easily transfer ownership from siblings or parents to children. The process is simple using a Quitclaim deed to add or remove someone to your property’s title or transfer the title entirely.
It’s happened once again. On Thursday, September 7, 2017 Equifax reported that they had fallen victim to a cyber-attack. Headlines were plastered with the news of customer information being compromised. An estimated 143 million people may have been affected as result. You can read more about the details of this specific attack here. To find out if you have been impacted you can check here. Understand that if you take any offers from Equifax you may waive your rights in the future to pursue them for damages that may arise from this situation.
How does this affect the average person?
For starters, personal information may now be available to criminals or publicly exposed for the world to see. That personal information may be sold on underground markets and can include names, addresses, phone numbers, and even social security numbers. Just a few pieces of the right information would be enough for anyone to open credit cards, utility accounts, bank accounts, or even allow someone to steal your physical identity. In short, if you receive a notice that you’ve been affected, take the news seriously.
What can be done?
It’s hard to imagine that your personal information might be exposed. Not only that, but it’s scary to think of what might happen after the fact. There are a few things you can do immediately to help prevent any ill-fated effects of compromised information. Here are some tips about what you can do to combat any issues:
Consider setting up credit monitoring with all three of the credit bureaus. The three bureaus are TransUnion, Experian, and Equifax (coincidentally enough). These three bureaus keep a close eye on your credit and are likely to have any credit-related activity reported to them including opening and closing of accounts as well as delinquent, late, or defaulted payments for liabilities. Once credit monitoring is setup you can breathe a little easier knowing you’ll be notified of any activity. Note that these services may or may not be free of charge, and personally I’m not sure I’d recommend anything Equifax has to offer (since they are the reason I’m even writing about this topic). There are also third party identity theft monitoring services such as LifeLock that can monitor your credit and other identity related activities.
In lieu of (or in addition to) setting up credit monitoring you may also want to pull a credit report from each agency. It is a best practice to monitor your credit report on a continuous basis regardless but in times of heightened risk it might be a good idea to grab a copy and make sure there is nothing questionable on your report. If you do find something you disagree with then you can start the process to resolve issues immediately. By continuously monitoring your credit it should reduce the impact from issues in the future. Keep in mind that any unfavorable credit report effects due to a recent compromise of information may take months (or even years) to show up since your information may not be used immediately after the attack.
Alert any banks, credit card companies, investment firms, accountants, and any other third party financial service providers that your information has been compromised. This is helpful in enforcing safeguards to validate your identity when attempting to make transactions or do business with these parties so that they can ensure only you are the party being dealt with.
Consider changing passwords (and login IDs) to sensitive websites. This seems to go without saying, but whenever there is a breach of information it’s always a good idea to change your password to prevent unauthorized use of your information.
Monitor your bank accounts and credit card activity more closely. You can do this by downloading the smartphone apps offered by your bank and credit card company and/or setting up spending notifications by text/e-mail. By setting automated alerts you’ll at least see activity for large transactions and can react very quickly to recover any lost money. Check out my blog about using credit vs. debit at checkout to further reduce the risk of financial compromise.
Last but not least, make sure you file your taxes on time. With the information that may have been stolen anyone could file a tax return for you. It is easy for criminals to craft fictitious tax returns in the hopes that they will receive a refund check, leaving you holding the bag at tax time for any money paid out. There are safeguards set in place at the IRS and state levels to ensure proper handling of all tax returns, but there is always the risk that something slips through the cracks. In the perfect storm of identity theft a criminal may have everything they need to file a legitimate tax return for you and direct any refunds to their accounts. If you do fall victim to fraudulent tax reporting then you should consult with your tax advisor (or find one if you are a self-preparer) to help you address the issue. Even if you don’t meet the minimum requirements to file you should still file a tax return annually.
Criminals are becoming more sophisticated with how they steal from others. The above steps are a starting point; however, they may not be all encompassing since everybody’s situation is different). I would urge anyone who feels they have fallen victim to a data breach to do what they can to protect themselves. Feel free to post any other tips in the comments section below!
Self-check, Fast Lane, or Register 4? Insert or Swipe? Credit or Debit? All of these questions play a role in our shopping experiences each day. We don’t think about them much but as times change and technology continues to advance we will continuously be faced with new payment options and methods as consumers. This week I’d like to reflect on how these split second decisions can affect our shopping experience and what you should know about the consequences of each decision.
Breaking Down the Options
There are three questions I mentioned above that aren’t just rhetorical. The first deals with time. Do you want to put in the effort yourself, bag your own groceries, and possibly save time in the long run? Or do you want someone to do that work for you while you stand in line behind people with full carts? What is your time worth and what are you trying to get out of the shopping experience?
The second deals with security. Many large retailers have updated their systems with the chip technology (reference the Target and Home Depot credit card hacks a few years ago). Chip technology? You know, that annoying new process, where you insert your card at checkout instead of swiping it? Unfortunately there are also quite a few retailers where chip technology isn't setup yet. Luckily this doesn’t have much impact on consumers, minus those awkward moments where you swiped instead of inserted your card, or vice versa.
The third and final question from above affects your security, your future spending, and your time. Credit or Debit? Which are you supposed to choose? You probably have both types of cards in your wallet, possibly with the intention to use each for certain purposes. Or maybe you only have a debit card, but you know the machines and the cashiers still ask you how you wish to use your card. What's really the difference? Let me explain.
Credit vs. Debit
The major difference between choosing credit vs. debit is how the money is taken out of your account. A debit card is linked directly to your bank account; therefore, as soon as you make a purchase it is only a matter of hours before the charge is deducted from your account. When you pay with a credit card you decide when you wish to make the actual payment on your card, usually when your bill comes due in a few weeks. MasterCard explains it in the following way: "When you use a debit card ... the transaction is completed in real time ... you authorize the purchase ... and the money is immediately transferred from your bank account. With a credit card, or using a debit card as credit, it's an offline transaction." The difference is that an offline transaction on a debit card means that the funds are not transferred for up to 2-3 days which gives customers time to confirm that the balance is present in one's account. In addition, once you enter your PIN number for a debit card transaction, all of your banking information is available for someone to steal and use.
Prevention of Overcharge Fees
If your card information is compromised, and you paid with a debit card at checkout, there is a high possibility that you could be looking at significant insufficient funds fees. According to an article posted by CNN "under federal law, your personal liability for fraudulent charges on a credit card can't exceed $50. But if a fraudster uses your debit card, you could be liable for $500 or more." In addition to the fees you may need to pay, it could take longer to receive credit for the money that you did not authorize to be spent if your debit card is the one compromised. CNN goes on to say "If a crook uses your debit card, not only can they drain your account, but it can take up to two weeks for the bank to investigate the fraudulent charges and reimburse your account." But, "if someone uses your credit card, the charge is often credited back to your account immediately after it's reported.” The use of a credit card gives you ample time to check your statement charges and determine if each transaction was made by you prior to owing the money on questionable charges. You have more time to report the fraud and need less time to make up for it.
What if I Don't Have a Credit Card?
As a general rule, when given the option, try to sign instead of providing your PIN number at registers and ATMs, and if a machine looks questionable, do not use it! Use ATMs only from reputable banks to avoid the risk of third party theft. Additionally, scan your account activity on a regular basis and report any unauthorized to your bank right away so that you have ample time to take action and protect yourself from any future problems! Finally, if you must use the debit option, try to keep as little cash as possible in your checking account. This may help mitigate how much cash may be stolen from your account in the event fraud does occur.
Have an experience or story to share about your debit or credit card being compromised? Or maybe you have additional tips & tricks you’d like to share. Feel free to post them below!
I have a client I met about 5 years ago, and at that time she was broke. Worse then that, she was in a bad relationship, and without her other half she would not have been able to pay her bills.
The first thing I noticed when we met to talk about her finances, aside from her lack of funds, was that she had no budget or system to create one. So we put one together.
The budget was simple. We started by setting up a spreadsheet (think Google Sheets) using her weekly paycheck amount and her average weekly grocery and gas bill. Then came her average monthly expenses: cellphone, TV & Internet, mortgage payment (which included escrowed expenses for property taxes and insurance), car insurance, and utility bills. She went through her bank statements to get actual amounts so we knew we had real information to work with. What good is a budget if the amounts aren’t accurate?
It turns out she was earning barely enough to cover her necessary expenses.
Then we covered the less critical expenses such as dining out, movies, clothes (for her and her two school-aged children), and pet expenses for her dog. Forget vacations, she hadn't traveled in years and knew it wasn't in the cards. But she did admit to buying herself new clothes about once a month (the kids more so when they needed them). She also had a relatively healthy dog that only needed an annual visit to the vet so his expense was minimal (aside from food which was also negligible).
Once we added her wants and needs into her budget, it was clear she could not afford everything on her own. However, with the extra support of her not-so-great boyfriend, she could more than afford her current lifestyle.
But she wanted out of the relationship.
After we put it all together, I was able to step in and do what I do best; analyze. The first thing to go was her monthly habit of clothes shopping. We agreed she would need new clothes from time to time, but not every month. By cutting this monthly habit she was able to save money and also became more aware of seasonal sales to get really good deals (Black Friday anyone?).
Dining out and going to the movies were also off the table. For the cost of taking her kids to the movies every month, she could sign up for Hulu and Netflix and have endless content choices for less. She also cut her TV package down to internet-only because she now had Hulu and Netflix for TV & movies. Some might argue the lack of content choices so we added a few bucks per month for a weekly visit to her nearby Redbox.
Big Ticket Items
Despite these cutbacks, we still hadn't made the progress she needed. So next, we reviewed her insurance policies. Guess what? She hadn't thought to combine her home & auto policy. As soon as she did (and changed insurers) she started seeing big savings.
Where it gets better is on the mortgage. She had been paying pre-recession interest rates (think 6.5%) but during our meeting (circa 2011), rates were at about 3%. We worked with a local bank to refinance her mortgage and dropped her payment hundreds per month. We even cut the mortgage from a 30-year term to 15-year term and the payment was still less with the added benefit that her house would be paid-off much faster.
Make It Happen
Not soon after her mortgage was refinanced she was able to give Mr. Not-so-Wonderful the boot. Even without him she was able to pay her bills and save a little for emergencies. The greatest part of this experience was that she was able to declare her personal and financial independence by changing some of her habits implementing a budget. Today she is doing very well; she has established college funds for both of her children and has built up a nice emergency fund. She has even been able to re-introduce some of her wants back into her lifestyle and is less stressed out about finances because she now uses a budget to plan.
What are some methods you use to budget and stay in the habit of budgeting? Add them in the comments section.