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Tim Maurer

The Big Takeaway From The Equifax Hack?

Re-posted from Forbes.com

The Big Takeaway From The Equifax Hack? Only You Can Protect Your Identity

Personal finance is more personal than it is finance. Opinions expressed by Forbes Contributors are their own.

What happens when one of the three primary entities designed to safeguard our financial identity to the outside world gets hacked?

We don’t know yet, but it’s quite possible that the answers will be illuminated in retrospect because Equifax waited more than a month to announce the breach.

Equifax hacked

What can you do at this time to ensure that you are shielded from the worst possible outcomes of this–or the inevitable next–mass identity theft?

First, specifically regarding the Equifax situation, you may consider taking two steps they have recommended (all while keeping in mind that this is coming from the entity that let the identity of as many as 143 million Americans slip through their fingers):
1) You can go directly to the dedicated Equifax website to determine if you were likely hacked, like I did. Hit the “Potential Impact” tab and then the “Check Potential Impact” button:

Were you hacked?

You’ll be asked to put in your last name and the last six digits of your Social Security number.  Then, you’ll get the verdict on whether or not they think your information may have been hacked. When I completed this process for the four members of my household, three of them were (apparently) spared while I got the undesirable response that my “personal information may have been impacted by this incident.” Awesome.

Yep, you were hacked.

Many, however, have found this online device lacks reliability. In at least once instance, the name of a colleague’s dog and a fabricated Social Security number returned positive results.

2) Regardless of whether your information was hacked, Equifax then gives you the opportunity to sign up for their TrustedID Premier credit monitoring system–free for a year to all Americans. There initially was some controversy over whether agreeing to receive the freebie would result in waiving your right to be part of a prospective class action lawsuit against Equifax in the future. They’ve since clarified that it will not.

But signing up for their credit monitoring service also seems convoluted, or perhaps my enrollment message appears clearer to you:

TrustedID Premier

If your journey to secure your identity continues beyond what the leaky Equifax has to offer–and it probably should–please consider these additional steps:

3) Monitor your credit. You can pay someone to do this, but I’ve yet to be convinced that it’s worth it, especially because you can get most of the promised benefits for free.

You can obtain a free copy of your credit report from all three credit reporting agencies at annualcreditreport.com. Order all three at once for the most comprehensive review or spread them out throughout the course of the year. But to be fair, reading a credit report can be like drinking from a firehose.

Click here to see my recent appearance on PBS’ Nightly Business Report, discussing the Equifax hack.

Therefore, you may consider a growing number of free online resources, like CreditKarma.com or Mint.com, that aggregate credit information in a more understandable and practical form.  Personally, I’ve used CreditKarma for years and found it to be very helpful as part of the following simple process:

Regularly glance at the homepage, which displays my current credit score from two of the three credit bureaus. Only if there’s been any significant movement in this score will I then…
Review any of the warnings that might explain the volatility in my score. If so, I might…
Review reports in full and take any necessary action.
This process has more than once served to alert me to activity that required follow-up.

4) You may consider taking the additional step of “freezing” your credit. It’s a process that looks different in each state, and I’d only recommended it if you don’t intend to use your credit in the near future. Otherwise, you’ll have to “thaw” your freeze to give prospective creditors the necessary access to your info.
One step, however, that I can’t see any downside to taking is freezing any existing credit reporting for your minor children. (Um, why do they even have credit reports, major credit bureaus?) If you decide to go this route, Clark Howard’s credit freezing guide is helpful.

5) Only use credit cards–not debit cards–for purchases. Despite Dave Ramsey’s objections, this way, it won’t be YOUR money that is stolen if you’re hacked. It’ll be the credit card company’s job to reclaim their funds.
This is advice that I’ve received first-hand from Frank Abagnale, the fraudster turned FBI consultant made famous by Leonardo DiCaprio in the movie Catch Me If You Can.
We can trust him now. I’m pretty sure.

6) Lastly, change your passwords to online financial accounts. If you were one of the 143 million people affected by the Equifax hack, you may wonder if hackers could gain immediate access to your bank and securities accounts. But you still hold some very important cards that they can’t see–namely, your password and any PIN numbers attached to online financial accounts.

It’s probably a good time to update and strengthen those.
But here’s the scariest news that has been highlighted by this new mass hack:
Unfortunately, we now live in a world where it’s not a question of if, but when, we will deal with having all or part of our identity stolen.

Do you really want to go “off the grid”?

Sure, you could try to go “off the grid,” like Psycho Sam, the bush-man. But for most of us, the benefits to be derived by the online economy simply outweigh the risks. That means personal credit monitoring is a habit we must build into our lives.
I’m a speaker, author of “Simple Money” and director of personal finance for Buckingham and the BAM Alliance. Connect with me on Twitter, Google+, and click HERE to receive my weekly email.

I’m a speaker, author of “Simple Money” and director of personal finance for Buckingham and the BAM Alliance. Connect with me on Twitter, Google+, and click HERE to receive my weekly email.

Tim Maurer

Why Busyness Isn’t Good Business

Re-posted from www.forbes.com

It’s old news that we’re busy and that we wear our busyness as a badge of honor. But a new study found that Americans, in particular, are actually buying it. Specifically, the study concluded that Americans who always say they’re “busy” are actually seen as more important. Unfortunately, it’s all a charade.

Numerous studies have shown that busyness isn’t actually good business, and here’s the big reason why: It makes us less productive. We’re all susceptible to it, but If I’m saying to myself (and I have), “Woo, I’m busy; really busy,” I’m likely being distracted from the most important, most productive work that I could be doing. I may feel like I’m doing more, but the net result is actually less. And it often feels like it.

Every Millennial Should Fund A Roth IRA

Reposted from Forbes.com

Personal finance is more personal than it is finance.

Much—too much—has been said and written about the relative superiority of Roth IRAs versus Traditional IRAs. The debate over which is better too often involves the technical numerical merits. In truth, the Roth wins in almost every situation because of its massive behavioral advantage: a dollar in a Roth IRA is (almost) always worth more than a dollar in a Traditional IRA. This is true regardless of one’s age, but the Roth IRA is even more advantageous for Millennials.

I must first disclaim that you can disregard any discussion of Roth or Traditional IRA if you’re not taking full advantage of a corporate match in your employer’s 401(k)—free money is still better than tax-free money. But after you’ve “maxed out” the match in your corporate retirement account, here are the top three reasons Millennials should consider putting their next dollar of savings in a Roth IRA:

1) Life is liquid, but most retirement savings isn’t.

Yes, of course, in a perfect, linear world, every dollar we put in a retirement account would forevermore remain earmarked for our financial futures. But hyperbolic discounting—and the penalties and tax punishments associated with early withdrawal from most retirement savings vehicles—can scare us away from saving today for the distant future. The further the future, the more we fear.

The Roth IRA, however, allows you to remove whatever contributions you’ve made—your principal—without any taxes or penalties at any time for any reason. Therefore, even though I’d prefer you to generally employ a set-it-and-forget-it rule with your Roth and not touch it, if the privilege of liquidity in a Roth helps you save for retirement, I’m all for it.

2) There are too many competing priorities.

Millennials are dropped into the middle of a financial should-fest. You should pay down school loans, save up for a home down-payment, drive a cheap ride, purchase the proper level of insurance, enhance your credit and save three months’ worth of cash in emergency reserves. All while having a life? No chance.

Most personal finance instruction tells you what your priorities should be, and if you’re looking for that kind of direction, I’m happy to help in that regard as well. But it’s also not a mortal money sin to employ some Solomonic wisdom and compromise between, say, two worthy savings initiatives—like short-term emergency reserves and long-term retirement savings. Therefore, while I can’t go so far as to suggest that you bag the idea of building up cash savings in lieu of a Roth, I’m comfortable with you splitting your forces and dipping into your Roth IRA in the case of a true emergency. The challenge we all face is to define “true emergency” without self-deception.  (And no, splurging on concert tickets or a last minute vacation with friends don’t qualify.)

3) Roth contributions cost you less today than they will in the future.

Despite my sincerest attempt, I couldn’t avoid the more technical topic of taxes—and nor should I, in this case. That’s because it only stands to reason that you’re making less money—and therefore paying less in taxes—at the front end of your career than you will be in the future.

Therefore, in addition to beginning tax-free compounding sooner, Roth IRA contributions—which are not tax-deductible—will likely “cost you” less as a career newbie than they will as a seasoned executive. At SpaceX. On the first Mars colony. Furthermore, you can also make too much to contribute to a Roth IRA, progressively phasing out of eligibility at income of $118,000 for an individual and $186,000 for a household.

Like Coachella tickets, the opportunity to invest in a Roth IRA may not be around forever. Tax laws and retirement regulations are constantly evolving, and who knows what the future may hold. This increases their value for everyone, but especially for those who could benefit from them the most—Millennials.

I’m a speaker, author of “Simple Money” and director of personal finance for Buckingham and the BAM Alliance. Connect with me on Twitter, Google+, and click HERE to receive my weekly email.

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