Stop Identity Theft With a Credit Freeze

(Originally posted in November 2007. Updated as of December 2010.)

Identity theft continues to be one of the fastest growing crimes in the country.  There are many types of identity theft, but one of the worst is when someone uses your personal information to borrow money or establish credit. 

Sadly, the 3 major credit bureaus, Equifax, Experian and TransUnion, have done little to help us prevent identity theft before it happens.  In fact, they make money by selling services that inform you if someone has accessed your credit file...after the fact.

SECURITY FREEZES

But over the last eight years, 47 states have passed laws that REQUIRE credit bureaus to offer "security freezes" to consumers that prevent access to your credit records.  A crook cannot take out a loan in your name if your file cannot be accessed.  Security freezes go a step further than "fraud alerts" offered by the bureaus that tell the lender to double check your identity.  The main problem with fraud alerts is that no law says the creditor must contact you.

California's security freeze law has been in place since January 2003.  Security freezes are free to ID theft victims, $10 per credit bureau for those under 65 and $5 per credit bureau for those 65 and older.  It costs another $10 ($5 to 65 and older) to "unlock" your account, either temporarily, for a particular creditor, or permanently. 

It takes a little work to set up your security freeze as the bureaus require a written request sent by certified mail.  The State of California provides guidance and sample letters for this purpose (click here for a link to the California Office of Privacy Protection website).  After registering, each credit bureau will send you a confirmation letter with instructions on how to remove the freeze.  Security freeze information is also available on the Experian, TransUnion and Equifax websites by clicking the links

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Visit the SSA Website to Estimate Your Social Security Benefits in Just Minutes

Interested in finding out what your estimated Social Security benefits will be? You can do this online in just a few minutes at www.ssa.gov. You will just need to provide your Social Security Number, Date of Birth and Mother's Maiden Name (and thus I'd suggest doing this at home...not on an unprotected WiFi Internet line).

All you do is visit www.ssa.gov website and click the "Estimate Your Retirement Benefits" link. After providing your personal information, the calculator tells you your estimated monthly benefit at age 62 (early retirement...and reduced benefits), 67 (full retirement) or age 70. This estimate is based on your actual earnings history.

Generally, if you wait until full retirement at age 67, your monthly payment will be roughly 40-50% greater than if you take early retirement. If you wait another 3 years, your payment will be another ~25% higher than normal retirement. All told, the 8 year difference (62 to 70) results in about a 75-80%

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An Update on High Dividend Paying Stocks

Thirteen months ago I highlighted some stocks that pay decent dividends, as an alternative to low yielding bank CDs and bonds. Since then, the market has made a nice comeback, up over 40% overall.  A monkey could have made money in this market by throwing banana slices at ticker symbols on CNBC.

The good news is that the 19 stocks highlighted grew by nearly 40%, even before taking into account the 5% to 6% dividends paid out during the period!

While I can't predict where the stock market is headed (seems like it should be taking a breather at some point, but who knows...), let's take a fresh look at these stocks!

  • Altria (Symbol: MO) A year ago at $17 it yielded 7.9%. Today at $21 it yields 6.6%. Still worth a look profiting off smokers of the world!
  • BP plc (BP) Yielded 8.8% at $38 a year ago but today it stands at $60 and at that price yields 5.7%. I suppose this is worth buying for the yield. Heck, fixed rate mortgages are still less than that.
  • Aflac (AFL) At $15 it yielded 7.5%. But holy smokes! Stock is now $57 and yields just 2% at that price! I'd hold my shares purchased at lower prices but would hesitate buying more at this point.
  • Eli Lilly (LLY) Lilly is now at $37 and yields 5.3%, slightly less compelling than the 6.5% yield at $31 a year ago but seems safe.
  • GlaxoSmithKline (GSK) Yielded 6.8% at $29 last year but today yields 5.8% at $39. I'd consider
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Education Tax Credits are Hard to Figure Out, But Worth Taking a Look At!

What prompted me to write this article is that I helped an employee save $1,900 on her 2009 taxes. Why? Because she wasn't aware of the American Opportunity Credit for the money she spent on college education last year.

There are 3 Federal education credits in 2009, the new American Opportunity Credit, the Hope Credit and the Lifetime Learning Credit.  Of course, you can also claim a tax deduction for education costs (in lieu of credit), but most people will benefit more from a tax credit (particularly a refundable tax credit) than a tax deduction.

American Opportunity Credit ("AOC")

  • AOC is a new tax credit applicable to years 2009 and 2010 that modifies the Hope Credit (we'll touch on later).  However, at this point it is temporary....will be gone in 2011.
  • The AOC is a tax credit of up to $2,500 per eligible student. Up to 40% of the credit can be REFUNDABLE and the remainder is limited to taxes due (nonrefundable).
  • The credit is based on 100% of the first $2,000 and 25% of the next $2,500 spent on qualified education expenses.
  • "Qualified" expenses include tuition, enrollment fees and course-related books, supplies and
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New Rules for Roth IRAs in 2010

New Rules for Roth IRAs

Presented by Bradley Bronk, CFP®

Roth IRAs, despite their attractive features, have yet to match the popularity of traditional Individual Retirement Accounts (IRA).  One reason Roth IRAs constitute such a small percentage of total retirement assets, just 5%, is that many wealthier individuals, who potentially stand to benefit the most from them, have been ineligible either to contribute to one or to convert their existing traditional IRAs to a Roth IRA.  As of year-end 2008, over $3.5 trillion was invested in traditional IRAs compared with a mere $165 billion in Roth IRAs.1

The Tax Increase Prevention and Reconciliation Act of 2005 changed tax laws regarding the conversion of a traditional IRA to a Roth IRA.  The act specifically allows anyone to convert their traditional IRA to a Roth IRA regardless of their adjusted gross income (AGI), beginning January 1, 2010.  This is a unique opportunity that was not available to everyone in the past.

What is a Roth IRA?

A Roth IRA is a retirement investment vehicle in which all earnings are tax free when distributions are taken. Other benefits include eliminating the need to take minimum distributions after age 70½ and avoiding the early distribution penalty on certain withdrawals.

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Credit Cards that Help You Pile Up Frequent Flier Mileage and Points!

This is a guest post from Mr Credit Card of www.askmrcreditcard.com. Mr Credit Card is going to take a leaf from his best credit card recommendations section and list some cards that will be useful for folks who want to earn frequent flyer miles or points.

Based on the east coast, Mr. Credit Card will be highlighting credit cards for certain airlines that fly east coast to west coast (and vice versa), including United, Continental, Frontier, American Airlines and US Airways.

Frequent Flier Miles/Points credit cards can be sorted into two groups. The first group is cards that allow you to earn points that can be transferred to multiple airline frequent flyer programs. The second group consists of cards that have their own reward program and allow you to use them for travel expenses. So below are my recommendations.

Cards for those with multiple frequent flyer memberships

Starwood Preferred Guest Credit Card - The Starwood Credit Card is probably the highest rated card for frequent flyers. Why? Aside from having a great frequent guest program, the SPG Starwood Preferred Guest allows you to transfer points on a one on one ratio (mostly) to over 30 airlines. Furthermore, they will give you 5,000 bonus miles when you actually transfer 20,000 points into air miles. This is one card frequent flyers have in their pockets.

American Express Gold Card - Another card to consider earning air miles is the American Express Gold Card. The Membership Rewards program has over 17 airline partners that fly from the East Coast to Los

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Yikes! Just Two Weeks of Year-End Tax Planning Remain!!

2009 is nearly over! Time to start planning now for year-end tax savings!  Here are some last minute ideas.

Load up the 401k

If you are employee with a 401k plan and can increase your contributions, last minute, consider doing so if you can spare the $$.  This is a very simple way to decrease your 2009 taxable income while saving for retirement.  Maximum is $16,500 or $22,000 if you are 50 or older.

Time Your Expenses

If your income is higher than normal this year (or even if it ain't that high), consider the following to decrease your 2009 taxable income:

Property Taxes - Many of you paid the first half of your 2009-2010 property taxeslast week.  The remainder is due in mid-April 2010.  If you want to lower your taxes this year, consider making that additional payment by December 31st.

Mortgage Payments - Pay your January mortgage payment in December!  More interest expense to include in your itemized deductions.  This is a no brainer!

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