Better Late Than Never – Weekly Round Up

Life’s been a bit crazy the last ten or so days so a result this weekly round up, which I would normally want to post on Sunday, is only just being posted on Tuesday. It is also a bit short because haven’t done much as much reading of financial sites/blogs as I normally do.

Which Family Cell Phone Plan Comes Out on Top? on DoughRoller.com is a very good and detailed comparison of family cell phone plans on the four major carriers.

An Ethical Dilemma – Choosing Foreclosure to be a SAHM on cashmoneylife.com poses a question that probably has a different answer to every family facing this question. One of the more thought provoking articles I’ve seen in a while.

When to ignore basic money advice appeared on MSN this past week. While I agree with some of the points in the article it also hit one of my pet peeves where it quotes someone from a bank who says, “not all debt is bad” then doesn’t spell out precisely what debt is “good” other than “low interest.” Low compared to what? grrrrr.

Combat Rising Food Prices on beingfrugal.net gives highlights a couple of things to do to combat the rising food prices. I don’t think I could buy unprocessed grains in bulk though. I’m either too lazy or too busy for that…

This just in: Charlie Sheen feels he’s underpaid yeah, right…

Debt Phobia – Really?

I subscribe to a particular mailing list some writers use to obtain comments (expert or otherwise) for their work.

While the terms of service prevent me from posting an inquiry that came to my inbox this week, nothing prevents me from commenting on it; Freedom of Speech and all.

The inquiry was related to “debt phobia.” Now, I personally feel that the “disorders” people get labeled with are bogus, but for argument’s sake I’m going to play along this time. According to several dictionaries (I checked four of them), “phobia” is defined as an “irrational fear” along with a few other adjectives that varied depending on the dictionary. The inquiry went on to describe people who save up for large purchases rather than borrowing for them. How is that irrational? How is that a fear? Taking that implication to its extreme you could probably say that every personal finance author, blogger, and financial expert is, to one degree or another, “suffering from debt phobia.”

The whole concept of something like “debt phobia” is ridiculous to me. Avoiding debt is sound judgment in my opinion. Anyone who has ever had debts they could not pay or knew someone who’s been in that position will probably say the same. It’s a painful thing to go through.

Anyone who does the math on the cost of debt to the borrower would rationally want to avoid borrowing money. That $2000 TV you put on your credit card will cost you two or three times the purchase price and take nine years or more to pay off, depending on your credit card’s interest rate. Is that smart or even “rational”? I won’t go so far as to say it’s irrational, but I will definitely say it’s not smart.

I don’t think everyone should pay cash for everything all the time. Only a handful of people in California would ever be able to buy homes if they had to pay for them in cash. The same is true in other parts of the country so mortgages are pretty much a necessity. Similarly, most people would have a bit of a problem paying cash for their vehicles. Since a vehicle is practically a necessity here in CA, most people finance their cars (whether they buy new or used). I recognize that those are the realities of life that most people face. However, I would not go so far as to state that people who would rather save their money and pay for these things in cash are acting out of some supposed irrational fear. On the contrary. I salute them. They’re obviously doing something right if they can save enough to pay cash for such large purchases.

The only party I can think of that would benefit from popularizing the notion that avoiding debt is somehow irrational would be lenders.

Do you agree that “debt phobia” is a bunch of bull?

How to Avoid Common Budget Mistakes

A budget is a great tool to help you reach your financial goals. Nearly everyone in the personal finance world repeatedly beats the budgeting drum, for good reason. Here are some common budget mistakes and how you can avoid them.

Not having a budget at all – This of course is obvious. It’s the biggest mistake many people make. They just spend money willy-nilly and rack up a bunch of debt. If you don’t have a budget you need to create and implement one if you want to improve your finances at all.

Focusing only on monthly expenses – There are annual expenses, such as car registration, and other expenses that have cycles other than monthly. Medical expenses don’t necessarily follow a schedule. You still need to budget for them. Same with Vet bills, car repairs, home repairs and a few other expenses. The best way to deal with these is to look over how much you spent on those things over the last year. Then estimate whether you think they’ll increase, decrease or stay about the same in the coming year. Then add those expenses to your budget.

Being unrealistic – If your budget amounts to mostly wild guesses about what you spend it’s not going to be realistic. When you do your first budget you should base it on your past spending patterns. Then you should track your spending for a few months and revise your budget numbers accordingly.

Making it too complicated – The polar opposite of a too general, poorly estimated budget is the overly complicated budget. No one can make a general statement about what the right amount of detail is for most people. However, if using your budget feels like too much of a chore, you’ll eventually drop it. You should simplify it bit by bit until it’s something you can use effectively without it taking too much work.

Spending more than you earn – This one should be obvious, but statistics show that many people make this mistake on a regular basis. In talking to people about this, there is an interesting justification used for buying on credit. “The monthly payments are still within my budget.” Translation: “I’m not spending more than I’m making as long as I can afford the payments.” Spending includes all kinds of spending whether it’s credit, cash, check or whatever. If you’re increasing your debt load, you’re spending more than you’re earning.

Never adjusting your budget – Income and expenses change. They go up or down due to life changes or inflation or whatever. Whatever the reason, if you don’t adjust your budget to deal with those changes, your workable budget can become practically useless in a very short time. When gas prices go from $3.50/gallon to $4.25/gallon, the extra money needed to fill your gas tank is going to have to come from somewhere. You need to adjust your budget accordingly.

Neglecting to plan emergencies or predicted loss of income – Every financial adviser worth the title will tell you that you need to have an emergency fund. They don’t always agree on how many months worth of expenses you should put in there but they agree you should have one. It helps you deal with all kinds of completely unpredictable expenses without going into debt. You can also plan for other events ahead of time to lessen the strain on your budget without having to dip into your emergency fund. Things like planned unpaid leaves from work or seasonal lulls in your business can be planned for and money put aside ahead of time. Failure to have an emergency fund or failure to plan for predictable lean periods can wreck your budget completely.

Relying on ATMs or your bank’s website for your balances – ATMs and bank websites can tell you how much money is in your account at that moment. They can’t tell you how much of that money you can spend. If you spend $375 of the $386.79 your ATM says you have and you don’t take into account the $135 check you gave to the plumber that fixed your sink the other day, you’ll overdraw your account. That incurs fees that you didn’t budget for. Keep a check register and keep it up to date so you always know exactly how much money you have available.

Saving too little – If you don’t put money into savings you’re not building a future for yourself. One way to ensure you’re saving enough is to set specific goals and work out how much you need to save per month to achieve those goals.

Is there anything you would add to the list? Maybe a mistake you made in the past and learned from?

Household Budget Formulas

There are a few things in the PF world that I look askance at or at the very least tilt my head to one side much like my dog does when she has no clue what I’m doing. One of them is trying to strictly adhere to percentages or some sort of formula to come up with how much you should be spending on this or that. I’ve never found that approach workable.

A commonly talked about formula is the needs/wants/savings formula. It goes something like 50% needs, 30% wants and 20% long term savings. Some interpretations of this formula include debt repayment, particularly snowball amounts, in the 20% to long term savings. That part makes sense because debt will almost always cost you far more than you can earn on long term savings. For me the problem with this idea is that you’ll have trouble sticking to it if (a) your income varies from month to month or (b) you experience a loss of income – either short-term or long-term or (c) your income just isn’t high enough for your needs to fit into 50% of your income. When those things happen you’re going to end up monkeying with the percentages anyway, so why bother with them in the first place?

Another approach comes from a personal finance booklet I picked up a few years ago. Here are the percentages the article quoted for various budget categories:

Housing 35%: This includes monthly payments such as mortgage or rent, taxes, repairs, improvements, insurance, and utilities.

Transportation 20%: This includes monthly payments such as gas, oil, repairs, insurance, parking and public transportation.

Debt 15%: This includes monthly payments such as credit cards, personal loans, student loans and other debt payments.

Other expenses 20%: This includes monthly payments such as food, insurance, prescriptions, doctor bills, dentist bills, clothing, and personal items.

Investments & Savings 10%: This includes stocks, bonds, cash reserves, collectibles, etc.

The stated that these were “creditor budgeting guidelines.” It said that creditors use these household budgeting guidelines when reviewing and approving credit. I don’t think so. They will calculate your debt to income ratio (DTI) but I have never been asked for my household budget when applying for credit. Nor have I ever needed to get one when processing a home loan. The biggest problem with the above guidelines is the housing + debt equation. Both are calculated into your DTI when you’re applying for credit. Anyone following these guidelines with the purpose of making themselves more credit worthy is going to have a problem getting approved for new credit, particularly a mortgage, with a DTI of 50%.

I tried to find out where the above guidelines came from. Googling the “creditor budgeting guidelines” brings up several sites offering debt relief services all quoting the exact same information given above. I can only conclude that these guidelines are used as part of the process of putting together debt management plans and someone decided that they’re used for all credit decisions. That, however, is just a guess. What I didn’t find is any site connected to creditors that says anything about these “guidelines”.

I found far too many percentage formulas for budgeting than I can list. None are really workable in my opinion. A budget is a fluid thing. It is something you have to routinely adjust as income changes or the costs of certain things change (such as gas or food prices going up). It is not about percentages or formulas or what some guru says you should be doing. It’s about spending your money as wisely as you can. That means spending less than you make, having an emergency fund, and putting as much money as you can into long term savings/investments.

If you’re carrying debt, your long term savings/investment plan should resemble something like this:

  1. Put about $500 to $1000 into an emergency fund.
  2. Pay off your debts
  3. Build up your emergency fund to a comfortable level. A lot of folks recommend three months’ worth of expenses, others recommend six. My view is that your risk tolerance determines how much you want to put into your
  4. Build up your long term savings/investments.



Encrypt Your Important Documents and Store them Online Free

In his comment on my Organizing and Protecting Your Financial Documents post, MoneyCone made the point that you can encrypt your files yourself and store them with Google. Quite true. Google gives you 1GB of space for files you upload but don’t convert to Google Docs. This is usually more than enough space for your encrypted documents. You can purchase more storage space if you need it.

That said, I got to thinking about what encryption software to use and also about any free other file storage options out there, in case 1GB isn’t enough. I did some digging and here’s what I came up with.

Free Online File Storage

Free online storage options come it two forms – small applications you install on your computer (and in at least one case your smart phone) or completely website based like Google.

Dropbox – Of all the free online storage options Dropbox is definitely the most convenient. It combines a computer or smartphone app with it’s website to offer the ultimate in convenient file storage and synchronization. You download their software, sign up for an account and drop the files you want to store online into the Dropbox folder on your computer. The files are uploaded and then accessible from your other computers through the Dropbox software or through their website. The free version of the service gives you 2GB of storage. That’s double what you get for free from Google. If you need more space you can get a paid subscription. One of the nicest things about Dropbox is the number of platforms it supports – Windows, Mac, Linux, iPhone, Android and Blackberry!

iDrive – iDrive is an online backup solution. Their Basic service is free and gives you 5GB of storage. It uses a desktop application that you install on your computer. It takes a little more effort to configure because you need to tell it what folders and/or files you want it to back up. Once it’s set up your backups run on a schedule. iDrive supports Windows and Mac. Your files are accessible through their website as well as through the desktop application. As with DropBox and Google, you can purchase more space if you need it.

ADrive – Like Google, ADrive is entirely web based. You have to upload your files to their server via your browser. Unlike Google, their free Basic plan gives you 50GB of storage. This is enough for a lot of us to not only store our important files but also family photos and a few videos. What ADrive lacks in convenience it makes up for in capacity.

Mediafire – This site is mostly geared toward online file sharing for things like photos and videos. However, everything you upload to their server is private until you decide to share it. You can share files with the general public or restrict access to only certain people. There are no limits on disk space or number of files. The main restriction is on file size. You can’t upload anything larger than 200MB with a free account. If you want to upload larger files, you’ll need to pay for a MediaPro account.

Depending on which features are most important to you, each of these are good alternatives to storing your files with Google. Best of all they’re all FREE.

I would not recommend storing sensitive information on any of these services without encrypting the files first. If your password to your online storage is ever compromised so is your personal information.

Free File Encryption Software

TrueCrypt – For the last few years TrueCrypt has been the program I’ve seen mentioned most in articles about encrypting files. It does provide the best security of the options I’ve checked out. The downside of this program is that it’s a bit complicated to use. If you’re comfortable with technology and don’t mind wading through the documentation to learn how to maximize security, this is the software for you. If you want something that’s simple, effective and easy to learn how to use then you’re going to need to look elsewhere.

MEO Free Data Encryption Software – This program is simple and easy to use. You launch it from your start menu like any other program and you get a small window with three big buttons – Encrypt Files, Encrypt an email, and Decrypt a file. Click the button corresponding to the task you want to perform and follow the prompts in the wizard that launches. With this program, what you gain in simplicity compared to Truecrypt, you lose in efficiency. That’s not to say that it won’t do the job. It will. Just maybe not as well as other options. To state my reason for that statement in English rather than a bunch of technical acronyms, MEO Free Data Encryption Software uses an older, less efficient method to encrypt your files compared to the other encryption software I tested.

Another huge drawback with this program is that when you download it and install it you get a whole bunch of other software you didn’t particularly need or want. The installer also attempts to install a browser toolbar. If you’re not paying attention during the install you could end up with a new tool bar you didn’t want.

AxCrypt File Encryption – In my opinion this program combines ease of use with efficient encryption technology better than the other two. You simply right click the file or folder you want to encrypt or decrypt and select the appropriate function from the pop up menu. No muss no fuss. The selected file is encrypted or decrypted.

I also want to share a very important tip concerning using encryption software. The encryption is stronger when you use a longer passphrase or key when prompted to do so. Just make sure it’s something you will remember. It really stinks when you try to decrypt something you encrypted several months earlier and you can’t remember the passphrase. Been there. Done that. There’s no way to decrypt a file without the correct passphrase.

So, my new choice for secure online storage of important documents to encrypt with AxCrypt and store them in Dropbox. Just don’t expect to be able to open encrypted files using your Dropbox app for your smartphone or on your Linux system or a Mac. AxCrypt is Windows only. If you’re a Mac user, TrueCrypt and MEO Free Data Encryption Software are both available for the Mac. There are other Mac based encryption programming available but I didn’t test them because I don’t own a Mac.

What to do if Your Identity is Stolen

What do you do if your identity has been stolen despite your best efforts to protect yourself from identity theft?

Unfortunately, if you’ve been a victim of identity theft it could take quite a long time to clean up the damage the thief does to you. One of the things that makes this crime such a pain is that its victims often don’t know the full extent of the damage for years. Thieves can use your identity to start up cable or satellite TV services, even bottled water delivery, which typically don’t show up on your credit report until the company sends the account to collections. Depending on how long such a company retains delinquent accounts in their offices those types of accounts may not come to your attention until several months or even a couple of years after your identity is stolen. If you take the following steps, you will be better able to cope with the fallout.

Fill out an identity theft affidavit

This should always be the first step. The Federal Trade Commission has an official identity theft affidavit that is accepted by the credit bureaus, most banks, credit card companies and so on. You can download the affidavit from the FTC website at http://www.ftc.gov/bcp/edu/resources/forms/affidavit.pdf. Download the form, print it and fill out all of the information you can. Gather up any evidence you have concerning the identity theft and take everything to the police station. It’s very important that your signature is witnessed by a law enforcement officer.

The instructions on the top of the form present a bit of a Catch-22 for an ID theft victim. It says to close all accounts you feel might have been tampered with or opened fraudulently before filling out the affidavit. However, you may need to send the affidavit as part of the process of closing the accounts. My suggestion is fill out this form and get the police report first, then contact the credit bureaus, your creditors and your bank(s) that same day. This way you can supply the needed paperwork at the time you contact them.

Contact the police

Go to the nearest police station and tell them your identity has been stolen, you need to file a report and have your affidavit witnessed by a law enforcement officer. Take valid identification and proof of residence (such as a utility bill with your name and address on it) with you. When you’ve completed your report and your affidavit is witnessed make sure you get a copy of the police report for your records. This is vital.

Next step is to make several copies of the police report and affidavit for your files. The reason this is important is that there my be fraudulently opened accounts in your name that you don’t know about yet. If or when you discover such accounts you need to have copies of these documents on hand to send to the creditor and/or any debt collectors.

What if the thief is someone you know?

This situation is more common than anyone would like. It requires some special consideration. It may even modify whether you even want to take the above steps. My personal opinion is that decision rests in large measure upon whether the perpetrator accepts responsibility for the crime and is willing to make restitution.

Dealing with this special circumstance is quite involved. You have your rights, your credit and your finances to protect. If the thief is a family member, you have the family to consider. If you know the identity thief I recommend reading “When You Personally Know the Identity Thief” on www.idtheftcenter.org. This site is an excellent resource for information about identity theft.

Cancel your credit cards and ATM cards

Contact every bank you do business with for checking, savings or credit cards. Let them know you’ve been a victim of identity theft and ask them to cancel your existing cards and issue you new ones. This includes debit cards connected to your checking and/or savings accounts. Find out where to send copies of the police report and affidavit and get them sent off right away.

Alert the credit bureaus

It’s vital that you alert the credit bureaus to the fraud as soon as you’ve taken care of your bank accounts. They all have online alert systems on their websites or you can call their fraud departments directly. The phone numbers and website addresses are listed below.

Security freeze your account

As of November 2007, individuals nationwide are able to “freeze” their credit reports with Equifax, Experian, and TransUnion. The TransUnion website has a nice explanation of what a security freeze is and how it works. Here are a couple of paragraphs from their explanation.

When a Security Freeze is added to your TransUnion credit report, all third parties, such as credit lenders or other companies, whose use is not exempt under law will not be able to access your credit report without your consent.

The Security Freeze may delay, interfere with or prohibit the timely approval of any subsequent request or application you make that involves access to your credit report. This may include, but is not limited to, new loans, credit, mortgages, insurance, rental housing, employment, investments, licenses, cellular phone service, utility service, digital signature service, Internet credit card transactions and extension of credit at point of sale.

I recommend that you request a security freeze on your credit report at the time you submit your fraud alert. This prevents the identity thieves from opening new credit accounts in your name after the freeze is established.

Report stolen checks

If you’ve had checks stolen, whether or not you have any other evidence of identity theft it’s vital that you alert your bank immediately. Tell them checks have been stolen and ask them to close your existing account and open a new one right away. If you have outstanding checks that haven’t cleared your bank, notify the payees of the situation and send replacement checks from your new account.

Contact the DMV

If the identity thief has obtained your driver’s license or the license number, report to the Department of Motor Vehicles that someone is using your driver’s license number fraudulently. You can obtain a new driver’s license number. You should be prepared to show proof of theft and damage.

Social Security

It is possible that someone could obtain your Social Security number and use it to get a job. One way to verify whether or not this is happening is to request a copy of your Social Security earnings statement from the Social Security Administration. It lists your earnings for the last several years. If any of the figures are incorrect, contact the Social Security Administration and report the problem. Let them know that you’ve been a victim of identity theft.

If you take all of the steps I’m advising you to take and your social security number continues to be misused and the misuse is causing you damage, it is possible to obtain a new Social Security Number. If you request a new number you must be able to provide documentation of all of the above steps as well as the continued misuse and damage. I recommend that you move before you change your number. Records connected to your original Social Security Number at the credit bureaus and other government agencies (such as the IRS) will be connected to your address as well. If you begin using your new Social Security Number with the address connected to your old number your problems could persist because both numbers will be linked to that address. If you move and then request the new number from the SSA, your old records are less likely to be connected to your new Social Security Number.

Take control

The most important thing about dealing with identity theft is that you need to take control of the situation and follow through. Don’t wait for anyone else to help you deal with these issues. If your bank is supposed to do something and get back to you and you don’t hear from them exactly on time, call back. Write down the names and extensions of every single person you speak to about your case so you can re-contact that person or refer others in their company to them if need be at a later date. If you’re not getting sufficient assistance from a customer service representative, ask to speak to a manager. Be assertive and persistent and make sure your case gets handled properly.

Dealing with debt collectors

One of the most annoying and frustrating aspects of identity theft for most people is calls from debt collectors trying to collect on debts they did not incur. If this happens to you, take the following steps:

  1. Do not pay any debts you do not recognize as your own, ever.
  2. Send a written notification to the creditor/collector that you didn’t create the debt and demand written validation of the debt including the signed credit application.
  3. Some agencies will return a canned response to your demand for validation of the debt that doesn’t include any documentation you may request. Just be prepared for that and take the next step.
  4. Send the creditor/collector written notice back that you are not liable for the debt(s) and include copies of your ID Theft Affidavit and your police report.
  5. Follow up and get the creditor/collector to confirm in writing that the account is closed and that you are not liable for the debts and any reports they have made to the credit bureaus about the account will be deleted from your file.

Monitor your credit report

Monitor your credit report regularly. You are entitled to a free copy of your credit report from each bureau once per year. Sometimes fraudulently opened accounts will be reported to the credit bureaus even if you don’t receive any contact from the creditor or a collector. If you see such an account on your credit report, follow the steps above for dealing with debt collectors.

Since you can get one report per year per bureau you can stagger your requests so you get one credit report every four months. For example you can get your free Equifax report in January, your free Experian report in May, and your free TransUnion report in September. Monitoring your credit this way helps to catch the fraudulent accounts and get them taken care of faster than if you requested the reports from all three bureaus at the same time.

Weekly Roundup

I feel like there are so many things to write about that I could write several posts a day if I had the time to do so. I don’t have that kind of time, so I’m just trying consistently do a post a day. I succeeded this week. If you missed any of them, check out the recent posts in the sidebar.

It’s kind of amazing how many interesting articles and blog posts I can find in a given week. Here are some of my favorites:

This Interactive Graphic of the US Budget was published by the NY Times. You can flip back and forth between the 2010 and 2011 budgets. Here’s what bugs me. The deficit is huge. The President talks about reducing it in his State of the Union address. The budget is $3.69 trillion over $3.60 trillion last year. That’s a ninety billion dollar increase in spending! Huh?

How to Save Money on Utilities on My Two Dollars gives some good tips on cutting those utility expenses.

Dear Babie R Us, Please Buy A Dictionary on Money Beagle is pretty funny, and kind of annoying too. So is all® brand detergent on sale, or is “all detergent” sale, or are just some of the less popular brands on sale?

Need online resources for online coupons? Blogging Away Debt gives Beks’ top three sites.

Yes I am Cheap shared 10 Ways to Save Money on Gasoline. All of them are simple and relatively painless to implement, unless you have a lead foot. If you do, some of them won’t be quite painless for you.

Jackie over at Money Crush tells you how Budgeting Will Get You Everywhere. I don’t have anything to add to what she has to say. She’s dead on.

Then there are the 8 Budget Expenses You’ll Probably Forget to Plan For. This is a great list. There’s one more I thought of that should be added at number nine. Car maintenance isn’t just oil changes every 3000 miles or whatever your owners manual recommends. It includes tires, belts, hoses, brakes, and so on. These things have known replacement cycles. If you’re approaching 50,000 miles on your tires, for example, it’s a safe assumption that you’re going to need to replace them soon. If you plan for the expense then you won’t have to pull it out of your emergency fund.

Would You Bank at Redneck Bank? Well, after reading the information supplied in this post at DoughRoller, I am seriously considering it.

Pay Cash, Save Money, by Jennifer Derrick on Personal Finance Advice illuminates an often overlooked cost of using credit to make purchases at small businesses.

As a final bit of news MyMoneyMess had it’s busiest day ever in terms of visitors to the site this past week. Thanks for stopping by and taking an interest in my blog!

How to Protect Yourself from Identity Theft

This is a serious post about a very serious problem – identity theft.

You can be great at managing your budget, saving money, staying out of debt and so on and still have your finances ruined by identity theft. It is estimated that annual financial losses from identity theft exceed $50 billion. Identity theft occurs when a criminal obtains someone’s identifying information uses it to commit fraud or theft or sells it to another criminal. With the right information, a criminal can assume your identity and commit various crimes. They can apply for loans or credit cards, open store charge accounts, withdraw money from your bank accounts, write checks, obtain cell phones or run up other large debts. Victims of identity theft can spend months or years cleaning up the mess and repairing their credit record. Financial damage from identity theft is estimated to be about $3500 per occurrence.

Identity thieves usually go after the following information:

  • Name, address & phone numbers
  • Bank statements and account numbers
  • Credit card numbers
  • Social Security number
  • Income (paychecks)

How Criminals Obtain Your Identifying Information

Identity thieves may use a variety of methods to obtain your identifying information and take over your identity. These methods include:

Stealing your wallet or purse and with it obtaining your identification, credit and bank cards.

Stealing your mail from your home mailbox, therefore, obtaining credit cards statements, bank statements, pre-approved credit offers, new checks, new credit cards, tax information and more. By obtaining your mail, they can change your address and divert your mail to another location.

Sifting through your trash cans (this is known as “dumpster diving”) at your home or business looking for personal data, such as copies of checks, credit card or bank statements, or other records.

Spam emails and some websites can install malicious software on your computer that gives thieves access to your personal information including passwords you might type into financial websites.

Protect Your Identifying Information

There are several things you can do to protect yourself from being an identity theft victim. If you take these steps you can greatly reduce your risk of identity theft.

Use good passwords on your computer, credit card, bank and phone accounts. Do not use your mother’s maiden name, your birth date, the last four digits of your Social Security number or your street address as passwords. Whenever possible use passwords that contain lower case letters, upper case letters, numbers and punctuation. You have to be able to remember it easily as well. Alternate spellings of words can be useful in creating passwords. For example, let’s say you wanted to use some variation of “go home” as a password. You could change it around to g0*HoM3. It would also be prudent to change your passwords every few months.

Avoid carrying excess credit cards in your wallet, in case it’s stolen. Keep any credit cards you don’t carry with you in a safe deposit box or a safe in your home.

Safeguard your mail. Never place outgoing mail containing any financial information (such as bill payments) in your mailbox at home. Instead, use the post office collection boxes located in your community or the local post office. Try to have your mail removed promptly on a daily basis. If you go on vacation, call the post office and ask for a “vacation hold” on your mail.

Do not throw any personal information in the trash or recycling. Invest in a cross-cut shredder. This is the type of shredder that turns your documents into little pieces of confetti. If you use a shredder that cuts paper into long strips, it can be pieced back together. Always shred papers that contain identifying or financial information such as charge receipts, copies of credit applications or offers, insurance forms, medical statements, checks, bank statements, utility bills and anything that has your identifying information printed on it.

Beware of people who call your home. Some identity thieves will call you and claim to be representatives from your bank, the IRS, or even a government official. They are hoping to gain your trust and persuade you to give them your identifying information. If someone really is calling from any of those institutions they already have your information. They don’t need you to give it to them on the phone. If you are asked for personal information by someone who calls you on the phone, tell the person you’ll call back with the information a little later. Don’t call the number the caller gives you. Instead call the published number for the bank’s customer service department.

Since identity thieves obtain personal information from companies as well as homes, it’s important that you know that your company has adequate security procedures. You should speak to your employer and find out who in the company has access to your identifying information. You also should know if your personal records are kept in a secure place like a locked filing cabinet. Do they shred personal records or do they just tear them up and throw them into the trash? These are questions that you should ask and be concerned about.

You can secure personal information at home using a locking file cabinet and or fireproof safe as I recommended in my last post. This is particularly important if you have roommates, or employ outside help in your home such as babysitters, housekeepers or service people.

Secure Your Computer

It’s vital that you keep your computer secure. Since so many people manage their personal and financial lives by computer these days, identity thieves are constantly trying to find ways to access that information. Follow the following steps to keep your computer secure:

Use anti-virus and anti-spyware programs on your computer and keep them up to date. Criminals are constantly evolving new threats to your computer security. No one security program can detect and prevent all of these threats.

Do not download files sent to you by someone you don’t know or click on links. Opening a file could expose your system to a virus or spyware that can give thieves access to your information.

You need to be aware of an identity theft method called phishing. Identity thieves send emails purporting to be from your bank. They often falsely claim that you need to go to their website and update your information. These emails look very official and if you click the link in the email it will take you to a website that looks very similar to your bank’s website, except it isn’t your banks website. Any information you enter there will go straight to identity thieves. Instead of clicking on links in emails supposedly from your bank, open your browser and type the address for the bank’s website instead. If there really is something that needs to be updated, you’ll see a message to that effect when you log in.

A firewall is an important part of your computer security. They guard against hackers accessing your computer over the Internet. There are several options where firewalls are concerned. Many home routers these days have firewalls built in. If yours doesn’t or if you don’t use a router, you should use a personal firewall program on your computer. There are several specialized firewall programs available for you to install. Windows also comes with a built in firewall. You just have to make sure it’s activated.

Keep Windows and your favorite browser updated so any security flaws are fixed as they are discovered.

Don’t store identifying information on a laptop if you can avoid it. If your laptop gets stolen so does your information.

If you dispose of a computer or replace your hard disk, make sure that you delete all your identifying information. You should get a program that wipes the disk completely. You could also make the data on your disk unrecoverable by drilling holes in the disk so it can’t be accessed at all.

Do you take any other steps to protect yourself from identity theft?

Organizing and Protecting Your Financial Documents

A great deal of personal finance is paperwork. You have pay stubs, bills, insurance papers, bank statements, tax records, loan documents, etc. There are several others that come into play in your financial life that aren’t, strictly speaking, financial documents such as birth certificates, death certificates, marriage certificates, and so on.

Fact is, loss of these documents can mean a great deal of hassle or outright disaster. It’s a major hassle if you’re applying for a mortgage, for example, and you can’t find your pay stubs or your tax returns. Lack of organization of these documents can delay closing on a home in this case. Theft of some of these documents could cost you hundreds or thousands of dollars, damage your credit and consume hours and hours of your time dealing with the fallout.

In addition to loss due to being disorganized or due to theft there are disasters to think about. Fires, earthquakes and flooding could destroy your home, and with it all of your personal records.

Some documents require a bit more security than others. To organize and secure your records, you’ll need a small locking file cabinet and either a fireproof safe or a safe deposit box at a bank. It also wouldn’t hurt to have a small amount of secure online document storage for a few key documents.

Locking File Cabinet

You need a locking file cabinet to store things like pay stubs, monthly bills, bank statements and canceled checks. You should create a file folder for each item. You should include a few minutes every week to file everything in its file. At the end of the year you move all of the folders into a banker box that you store somewhere convenient. Why the emphasis on locks? Well, it has to do with the old maxim “better safe than sorry.” Thieves, like most other criminals, look for easy targets. Locked cabinets and storage require more time and effort on their part and that itself is a deterrent.

Fireproof Safe or Safe Deposit Box

If your home is destroyed by fire, flood or earthquake your important financial records could be destroyed as well unless you protect them. There are a couple options here: fireproof safe or safe deposit box.

A bank safe deposit box is one. Because it’s not your home, its contents would not be affected by a fire or flood at your home. The two main disadvantages are cost and a bit of inconvenience. Banks charge annual fees for safe deposit boxes. To put anything into a safe deposit box or to retrieve something from it, you have to go to the bank during its regular business hours.

A fireproof safe can protect your valuable documents at your home. It’s more convenient than a safe deposit box because you can access it any time you want. The down side of this one is the cost of buying one. Depending on the size and type of safe you get they can be very expensive.

What should you put in your safe deposit box or fireproof safe? All of the following:

  • Financial Documents: Such as tax records, mortgage notes, lease notes, auto contracts, divorce agreements, child support agreements, military papers, etc.
  • Estate Documents: Such as wills, life insurance policies, stock certificates, bonds certificates, family trust papers, managed account portfolio statements, business agreements and other investments.
  • Family Documents: Such as Social Security cards, birth certificates, marriage certificates, nationalization records, citizenship papers, passports and copies of driver licenses.

You could take this all a step further and use both a fireproof safe and a safe deposit box. In that case put the originals in the safe and copies in the safe deposit box.

Make sure a loved one has the combination to the safe and/or knows where the safe deposit keys are located.

Secure Online Storage

First of all the key word there is secure. As in bank-type security. At least one major bank offers this kind of service for about $5 per month. You scan and upload whichever of the above documents you want to be able to access electronically. If anything should happen to your home (and therefore your original records) you would be able to access, download and print them from any computer with Internet access.

I recommend storing financial records for at least 5 years. How long you retain other documents depends somewhat on the document and the circumstances. For example, mortgage documents should be retained until you pay off the loan or sell the property.

DIY Microwave Popcorn Recipe

This post about microwave popcorn on Debt Free 4 Ever is 100% correct about both the cost and benefits of making your own popcorn.

Let’s face it we all know that microwave popcorn is stupidly overpriced and contains crap we don’t really want to eat (artificial flavors and preservatives anyone?). We buy it and eat it anyway because, well, it’s so damn convenient.

Well, you can have your cake and eat it too. You can make your own with this microwave popcorn recipe. It’s simple.

What you need:

what you need to make diy microwave popcorn

Oil, microwave safe bowl, microwave plate cover, 1/2 cup measure, popcorn salt, popping corn, tablespoon

I use canola oil, but any vegetable oil will do. The bowl I use is a 4-qt glass bowl. You could use a 2 or 3 qt bowl if you don’t have one this size or if a 4-qt bowl is too big for your microwave.

measure oil into bowl

Measure oil into bowl.

Put 3 tablespoons of oil into the bowl.

Measure popping corn

Measure popping corn

Measure 1/2 cup of popping corn into the bowl.

spread popping corn evenly

Spread popping corn evenly.

Spread the popping corn evenly on the bottom of the bowl. If possible try to make a one kernel deep layer. I’ve found that this results in the lowest amount of unpopped kernels. If the shape of your bowl won’t really allow a one kernel deep layer, do the best you can.

cover the bowl and microwave

Cover the bowl with the "plate cover" and into the microwave

Cover the bowl with one of those vented “plate covers.” If you don’t have one of those, you can cover the bowl with plastic wrap and poke some holes in it. The cover has to accomplish two things: keep the popcorn in the bowl and let steam escape from the bowl while the corn is popping.

Now the next bit is going to vary depending on your microwave. I put mine in on high for 6 minutes. Through trial and error I found that with my microwave anything more than that and the popcorn will scorch even if it isn’t done popping. Usually mine is done in less than 6 minutes. The trick with popping corn in the microwave is to listen to it. The type of popcorn you buy and its age will also affect cooking time so you can’t just set an arbitrary time and expect to get a good result every time. Listen to the kernels popping. It’s done when it goes over 2 seconds between pops. Using this method I usually end up with fewer unpopped kernels than I used to see at the bottom of the microwave bags. The batch I made when I took the pictures for this post took about 4:30 – YMMV.

Here’s what it looked like when it was done.

all done

Popcorn's ready!

Sprinkle with popcorn salt. Add butter or any other flavorings you like and enjoy!

Here are a few things I learned while playing with this:

  • You can make smaller batches but I had little success making larger ones. With larger batches I’d get scorching before all the kernels finished popping.
  • Adding salt at the beginning did not give me a satisfactory result. I ended up with unsalted popcorn and a salted bowl bottom.
  • If you use a glass bowl like I do, it will get very hot. If you have a microwave safe plastic bowl that’s big enough, use that. If not, glass certainly works, just be careful. I highly recommend pot holders.

Overall, this popcorn is only slightly less convenient than grabbing a bag from the box, peeling the outer plastic off the bag, unfolding the bag and starting the microwave. I’m willing to give up that convenience when I consider that it costs a small fraction of what microwave popcorn costs.