What’s the threat, you might wonder. When your identity (social security, name, driver’s license, etc.) is used to secure credit and to make purchases, it is very difficult to prove that you were not involved. Lenders and creditors like to believe that they screen carefully when awarding credit, and that their practices are fool proof. What this means to you is that they think you are lying. You then have to prove that you do not have the property or items purchased or that you could not have been the one to make the purchase. It’s tricky.

Over 9 million people a year are victims, at an average cost of $4,849 to each individual. That number doesn’t include the many hours and extra dollars involved. Some consumers victimized by identity theft may lose out on job opportunities, or be denied loans for education, housing or cars because of negative information on their credit reports. In rare cases, they may even be arrested for crimes they did not commit.

Luckily, there are some easy ways to safeguard yourself from falling victim to identity theft. Once you know how your information can be stolen, you can protect it. According to the FTC, the number one way that thieves get information is by “dumpster diving”. They retrieve discarded documents that you throw away. Think about the way you go through your mail. Do you just put credit card offers, bank statements, tax returns and other data in the trash?

Shredding your documents is the safest way to prevent them from falling into the wrong hands. Personal shred machines are available at most office supply stores and are a good investment for your home. This Friday, however, you can bring up to three boxes of your personal documents for free shredding in celebration of National Protect Your Identity Week.

Kansas City Saves, a part of America Saves, involves over 50 local businesses that provide financial education resources to the community. Shred Time, Bank of the West, Essential Knowledge and many others have partnered to create this FREE event. Here is the information to attend:

Friday, October 23^rd.

Time: 5:00 – 9:00 AM

Place: Bank of the West, 6263 Nall Avenue Mission, KS 66202, located on Shawnee Mission Parkway.

Jon Hanson is a new guest blogger for It’s Your Money.

Uncle Sam wants you! To have an IRA! Proposed in President Obama’s 2010 budget is a provision for automatic enrollment of employees in IRA’s for employers that do not offer traditional 401K plans.

The good:

• It encourages savings, and even though you can opt out,few will. Jennifer Monnin of Nationwide Insurance, at an October 2008 National Savings Forum I attended in D. C. for America Saves, says 95 percent of Nationwide employees do not opt out of their auto 401K.
• Cutting edge employers could add educational opportunities to the program and increase employee loyalty and stability. Employees with a financial plan and goals are less stressed and more productive.
• Employers with less than 10 employees would be exempt and employees that earn under $5,000 a year would not be counted, according to Stephen Miller of SHRM.

The bad:

• The matching contribution by the government is simply forced redistribution of taxpayers’ money. I would like to see the match be voluntary and by the employer.
• If you do not initiate the savings, will you learn anything?
• It could be a burden on employers: more burden, less jobs.

The New York Times offered this explanation of the government matching funds, “For households that earn under $65,000, the federal government will match savings up to $1,000 a year with a 50 percent tax credit. So if you saved $500, you would get $250 dropped directly into your I.R.A. This tax credit is refundable, which means you would get it regardless of how much you pay in federal taxes each year. The credit would phase out between $65,000 and $85,000 of household income or half of that if you are single.”

It takes legislation to bring it to reality: Read more: Automatic IRA Act of 2007 not final versions (S. �1141 �& H.R �2167). Other: CFED, Brookings, Heritage

Jon Hanson is the author Good Debt, Bad Debt and Gooddebt.com

A Best Bet Self-Improvement Book “… bracing, snappily written.”
– People Magazine

1. Start Saving Now. How many paydays do you have until the week before Christmas? How much will you be able to save out of each one? Add that up to determine your cash budget. If you already have planned ahead with a Christmas account, good for you! Add that to your cash budget. This total represents what you can afford to spend without going into debt.

Resolve Not To Use Credit. How many times have you started a new year with debt from the holidays? Now is the time to steel yourself against impulse purchases, guilt gifts, and gifts for yourself. Make 2010 the year you don’t carry debt forward.

Make a gift plan (budget). How much will you allocate to each family member or friend? Divide up your funds so that you know exactly how much you can afford for each person. You may really want to buy your brother that new Blu Ray player, but can you afford it? Or should you be looking for something less expensive? Thinking through these purchases will really force you to stick to your budget.

Shop Smart. The key is to either shop early or shop last minute to get the best deals. If you can start early, you have the luxury of time, and can shop online. Google for coupons, and look for free shipping. Make sure to cross items off of your list as you find them.

Make Personal Gifts.  Typically less pricey than buying something, but it is appreciated just as much.

Make A New Gift Giving Tradition. This might be the year that you propose the adults in your family draw one name to buy for. Don’t be shy to suggest new ways to celebrate the holidays with your family. Now is the time to make these plans, though, before everyone else starts their shopping.

I promise that if you act now, you will spend less money and lose less sleep over the holidays.

Up until October 2008, the U.S. was at a negative savings rate, which basically meant that, as a country, we spent more than we saved. With the availability of credit, and a strong economy, it was easy to adopt a “buy now, pay later” way of thinking. “There’s so much marketing pressure to spend and buy and have instant gratification. And if you can’t buy it now, put it on your credit card,” says Nancy Register, of the Consumer Federation of America.

In a recent blog post, Thomas J.Fox discussed the “Demise of Affluenza”. He cited a recent Consumer Reports survey that dubbed the new savings behavior intelligent thrift. With the unemployment rate rising, people have had to base their spending on needs rather than wants. Frugal is cool, only because there isn’t another choice. So, is the new savings rate truly indicative of changed behavior? Or, is this a fear mentality?

Once the economy improves, will this thrifty behavior continue? Or will many people simply return to their old ways of spending? History tells us that after 9/11 and the Great Depression, Americans went on a spending spree. Will this be the case for us? Or will the hard earned lessons of the past year pave the way for continued thriftiness?

For the sake of you, me, all Americans (and our nation) … I hope this time financial sensibility sticks around for good.

This comes at a time when many mortgage companies are advertising heavily before major changes take effect October 1, 2009. The S.A.F.E. Act will require that all condominium units go through a HUD approval process for reverse mortgages. Loan originators are using that date to push deals through, which may not benefit the consumer. In essence, buyer beware.

What is a reverse mortgage? It is a type of mortgage that allows you to convert the equity in your home into cash. You must be sixty-two-years of age to qualify. Most seniors use the money for repairs, living expenses, etc.  Unfortunately, many seniors have been victims of several types of scams. Normally, they fall into one of three categories:

1. Charging for Free Information. Detailed information regarding consumer rights is available for free at HUD.org. Being an informed consumer is the best way to make sure you are not getting ripped off.
2. Disregard of Pre-Counseling Loan Services If a company tries to perform pre-counseling over the phone, be concerned. Legitimate organizations will either have a face to face meeting, or offer one through a third party.
3. Forgery. Never sign any paperwork with blanks that are incomplete. Never assign any checks to another party.

Ideally, reverse mortgages should be unnecessary when a solid financial plan is in place. The goal should be to have your mortgage paid off, and your retirement fully funded prior to reaching that stage in your life. These days, that is less and less the case.

If you or someone you know is considering a reverse mortgage, remember to do your homework. Don’t consider a reverse mortgage that is tied to another financial product, like an annuity. And don’t agree to something you don’t fully understand. Your home is your greatest financial investment. Be careful.

This week marked the first day of fall. It’s hard to believe that we’re already at that time of year, and that cold weather is right around the corner for most of us. In Kansas, we still have 70 degree days and thoughts of sleet and snow seem a million miles away. However, this is the perfect time to use that final warm weather to do some easy things around the house to save money.

Do you have a programmable thermostat? This is one of the best ways to save on your heating and cooling costs. Why pay for air conditioning on a cool day? Check with your local utility company, but KCPL offers a free programmable thermostat, valued at $300 if you sign up for their Energy Optimizer program. It’s all free, and the program claims to save homeowners 20% of their utility costs. Click here to learn about the KCPL program.

While you are at it, lower your thermostat 5 to 7 degrees at night. Your energy savings will increase as much as 3% – 5% for every degree the thermostat is below 68. This is easy to do with mild days and cool nights.

Clean or replace your furnace filters once a month or as needed.  Dirty filters can block warm air from the furnace and make it operate less efficiently, costing you money. Check online for cheap filters delivered direct to you. Check out websites like Furnace Filters Outlet which offer free shipping.

Weatherize your home by caulking and weather-stripping all exterior doors and windows. There are some inexpensive caulking tools at your local hardware store that are perfect for novices.

Another easy fix is to lock your windows to make the seal tighter and to eliminate drafts.

If you are really feeling the DIY spirit, wrap your water heater with an insulation jacket.  This will help the appliance retain heat by limiting the amount of heat lost to the air.

EBay
Clear out your basement and attic while making some money selling things you never use. There are millions of buyers around the world who search eBay for everything from CDs and VHS tapes (remember those?) to children’s clothes. With very little time invested, you can make some money on your old things.

Garage/Yard Sale
Not sure if Internet sites like eBay are right for you? Use a time-tested method for selling your things … garage/yard sales. For some great tips, visit Yard Sale Queen. Whatever you don’t sell, give to a charity or church. It feels good, and you will get a receipt for a tax write off.

Become a Guest Speaker
Do you have a business skill that people need? Do you find yourself giving out advice about a particular area? Business clubs like ABWA, ACA, BNI and others often pay for guest speakers. Write an outline of your presentation, and start calling networking clubs. Also, check your local community colleges for teaching opportunities.

Make and Sell Items
Do you have a craft or skill? A member of the Essential Knowledge team makes amazing items for pets. She sews these in her spare time, and sells them at area craft shows and makes $500 a day. If you paint, woodwork, or have another talent, look into places where you can sell your products.

Use your Secret Talents
Can you design a website, write a marketing plan, or offer a service? Freelance work is all around us, and easy to list on social networking sites. You may be surprised at the demand for your talents.

Pick up a Paper Route
This may not be as glamorous as the others, but it does pay well.

Become a Website Affiliate marketer
Set up affiliate agreements with online vendors, and do the marketing for them for a percentage of the sale. ShoeMoney has a free tutorial to get started.

Get a Part-Time Job
We all know that this is an option, but sometimes it is hard to schedule around your day job. However, if you have more time than you have money, it makes sense to get another steady income. Dave Ramsey will tell you to deliver pizzas, but don’t rule out bartending, waiting tables, or retail stores. Each type of business will offer different shifts or schedules.

Switch Banks
Financial institutions are very competitive right now, and many are offering cash incentives for new accounts. Do some research, and you can pick up an extra $100 for opening a new account. Just make sure to meet the minimum requirements, and plan on staying for awhile.

Do you have a great idea how to make extra money? Please share!

The Credit Card Act

Debit cards have been marketed as similar to an ATM. When the money is gone, you can’t make a transaction. However, since most are now endorsed by Visa, banks are covering transactions, and charging large fees when the transaction occurs on a negative account.

What does this mean to you? Even if you don’t have the funds to cover a transaction, it may still be approved. In which case, be prepared for your bank to charge you $20 or more for that transaction. Those fees can easily add up to more than is possible to cover. If you, or someone you know, is in this situation, contact your financial institution. You may have to opt out of the provided overdraft protection. But it’s worth it.

Debit cards are becoming more and more like a checkbook. Which is why it is more important now than ever, to reconcile those accounts on a regular basis. In this age of electronics, many people are relying heavily on bank balances as an indicator of funds available. Make sure to keep your own check register, or log of what you have spent, so that you don’t fall victim to one of these fees.

For more about the debate in Washington, Click Here to read the New York Times article published this week.

Every time she saved an amount, said Shonda, she ended up having to spend that money on bills. She was certain that she would never be able to save anything for the future. She believed it, too. She had a whole list of reasons to support her belief. Even though she was sitting in a presentation titled “saving strategies,” she was there to prove it wasn’t possible. Our team hears this perspective often.

Spenders usually have great excuses. I even find myself believing them at first.  These arguments can be very convincing.

** I will save more when I get my debt paid off.

** I will start saving when I have money left over at the end of the month.

** I don’t make enough money.

Will there ever be extra money left over? Are you really motivated to pay off your debt to start saving?  For almost everyone there is always something that needs to be purchased or fixed. Putting saving at the end of the list means you might as well leave it off the list completely. It just becomes one of those wishes and dreams that you hope to get around to doing one day.

So what makes a successful saver?  Someone who has stopped putting energy into why saving can’t work and is focused on how to make it happen.

Successful savers know that saving must be a priority. Consider Lyndsey, who comes from a family of spenders. Her husband, on the other hand, comes from a family of strong savers. They went through our financial education program and discussed their shared saving goals. Now, when she feels like indulging in retail therapy, she reminds herself of their plans.

Save the excuses. That’s the best way to become a great saver. Stop justifying bad behavior, and make a change. Excuses interfere with our ability to accomplish any goal in life, including saving. Even before you go through the act of putting money into a savings account, you must decide that your desire to build your savings is stronger than your desire to spend.

Billing – Prior to today, credit card companies were required to bill within 14 days of a payment due date. Now, cardholders are billed 21 days before the due date. This is good news for cardholders, especially if you travel or use online bill pay. You now have more time to get that payment in.

Rate Changes – Instead of 15 days to notify you of a rate change (which was sometimes retroactive), companies now must give you 45 days notice. I can’t tell you how important this is, based on scenarios I have seen in some families. For those that struggle to make the minimum payment, it is a real tragedy when the rate goes up drastically, because it increases that minimum payment.  Many have been forced into default. Now, the extra time gives consumers the ability to try to negotiate that rate, switch a balance to another card, or to pay off the balance.

Even better, if you disagree with the rate change, you now have the option to freeze your current rate. Your account will be closed to new charges, but you will have five years to pay off the balance.

What this means to you:

As a cardholder you are being given more time to deal with your creditor. However, don’t take this as a free pass to procrastinate. It is just as important to get those payments in on time, and to take action on rate increases. Use your time to your advantage and make decisions with your wallet.