Tips to Avoid Identity Theft

What is rampant, spreading like wildfire and can kill life as you know it? No, not a deadly virus (but close). Answer: Identity theft. My stepson, Aaron, was a victim of identity theft recently. Someone stole his bank cards, deposited fake checks into his account, then withdrew cash. The deposited fraudulent checks and overdraft charges hurt his credit, and he’s slowly recovering and rebuilding his score.

Tips to avoid identity theft:
1. Buy a shredder. Aggressively protect your social security, credit card or bank numbers.
2. Use a lock-in mailbox. This isn’t 100% safe, but it’s much safer than one without a lock.
3. Protect your out-going mail. Get it into the box or the hands of a postal clerk. Heavily trafficked offices often have out-going mail in the entryway. While this may save time, it’s not safe.
4. Keep receipts and compare to your statements when they come once a month. Banks make mistakes all the time.
5. Keep financial documents under lock and key (at the bank or in a home safe).
6. Don’t give out your social security card—ever. 7. Know what’s in your wallet. Do you know how many credit cards are in your wallet?
8. Don’t discuss detailed financial information on a cordless or cell phone. That information can be intercepted.
9. Monitor your credit reports. You can sign up for a monitoring service or do it yourself periodically. Your credit is one of your assets, so protect it.


If someone steals your credit card information, get help from these reputable resources—Federal Trade Commission www.consumer.gov/idtheft or 877-382-4357
Identity Theft Resource Center at http://www.idtheftcenter.org/ 858-693-7935
Privacy Rights Clearinghouse http://www.privacyrights.org/ or 619-298-3396

Find more tax tips!

Repairing Your Credit

Fixing your credit report and repairing your credit are two distinct processes and problems. If your credit is bad, you can implement some of the strategies below to fix a low score.

Negotiate down the amount of debt (it’s easiest with private individuals). To do this, you must demonstrate the reason for falling behind. One of the tools you can use as leverage is offering something (not the full amount) rather than nothing. For example, explain why the lender should take $5,000 instead of $10,000. You can say “I’m calling five other creditors today. I’m offering you $0.50 on the dollar and if you aren’t interested, I’ll file for bankruptcy,” in which case they wouldn’t get a nickel).

Negotiate a forbearance with credit card companies and clients with mortgages. If there was an illness, death of a breadwinner, divorce or some other legitimate reason incurring severe financial difficulty, you may have a case. Show them you had a good reason for falling behind, agree to stay current on the current payment and offer to pay X amount per month toward what you owe. You also can stick the amount owed on the back of the loan. These are legitimate ways to negotiate and repair your credit.

Beware of illegitimate ways to repair credit
Watch out for companies that will put together new tax returns for you. They’re essentially offering to dummy up tax returns. Another scam is when they take advantage of the credit reporting service’s limited window to answer disputes. If, for example, the window is 14 days, they’ll write a letter saying you don’t owe (when you actually do). It’s just a matter of time before the bank fails to meet the 14-day window; when they miss deadline, you are not required to pay the disputed amount. Not only is this wrong ethically, but it doesn’t fix your credit problem. Additionally, companies that charge you an upfront fee to get you new credit (often ranging from $100 to $1,000), especially out of other countries, is a scam.

Recommended Read
I recommend “Your Credit Score” by Liz Weston, a helpful book on different strategies of legitimate ways to improve your credit score on your own. If you feel like you need/want help, there are legitimate services available to you as well.

Find out more about tax deductions!

Fixing Your Credit Report

Fixing your credit report and repairing your credit are two distinct processes and problems. Below are practical ways to fix your credit report if it’s wrong.

Look through a magnifying glass
Check the identifying information. Sometimes they make a simple mistake (wrong name or social security number).
Review the credit accounts. The report might be for an account that is simply not yours. It may include delinquencies in old accounts that were closed. You should report the debt of your spouse before you’re married since it isn’t your responsibility and you don’t want it to affect your score.
Look through the list of inquiries. Any inquiries older than two years shouldn’t come up on a credit report. Also, inquiries you didn’t authorize, shouldn’t be factored into your credit.
Collections and public records. Look for judgments and bankruptcies older than seven years; neither should impact or be on your score. You can improve your credit score after filing for bankruptcy and qualify for a loan as long as you can prove you made payments on time consistently for the last two years. It’s easier to get your score restored when you can explain the circumstances that contributed to the bankruptcy.

Proactive steps
Dispute the errors. Write a letter: include the account number and billing address and photocopied report with issues in dispute highlighted. Federal law requires them to respond within a set amount of time.
Pay current bills on time.
Don’t close your credit card or revolving account.
Apply for new credit sparingly.

Fixing your credit report and repairing your credit are two distinct processes and problems. Below are practical ways to fix your credit report if it’s wrong.

Look through a magnifying glass
Check the identifying information. Sometimes they make a simple mistake (wrong name or social security number).
Review the credit accounts. The report might be for an account that is simply not yours. It may include delinquencies in old accounts that were closed. You should report the debt of your spouse before you’re married since it isn’t your responsibility and you don’t want it to affect your score.
Look through the list of inquiries. Any inquiries older than two years shouldn’t come up on a credit report. Also, inquiries you didn’t authorize, shouldn’t be factored into your credit.
Collections and public records. Look for judgments and bankruptcies older than seven years; neither should impact or be on your score. You can improve your credit score after filing for bankruptcy and qualify for a loan as long as you can prove you made payments on time consistently for the last two years. It’s easier to get your score restored when you can explain the circumstances that contributed to the bankruptcy.

Proactive steps
Dispute the errors. Write a letter: include the account number and billing address and photocopied report with issues in dispute highlighted. Federal law requires them to respond within a set amount of time.
Pay current bills on time.
Don’t close your credit card or revolving account.
Apply for new credit sparingly.

Find out more about retirement plans!

A Love/Hate Relationship: How your credit score can open and slam doors for you

There are many ways to get ahead financially: attend seminars where you cut up your credit cards with hundreds of other people, participate in debt consolidation services that help you take out a home equity loan or refinance your home, or you can transfer debt on one credit card to another credit card with an introductory rate of 0% (which goes up to 12% six months down the road). The reason these methods don’t work is because we don’t concurrently cut our expenses while implementing these strategies. Even if we’re making more money, unless we cut expenses, we will continue to spend more money than we have and incur debt. Manage yourself and your money. Money is like food; we don’t eat only when we’re hungry, and we certainly don’t spend only when we need something.

Beware: Debt forgiveness can hurt you. The company that forgives your debt can issue a 1099C, which means the forgiven amount gets added to your taxed income.

When there’s a will, there’s another way

Your credit score (also called your FICO or Beacon score) will affect the interest rate you’re able to secure. Credit scores range from 500 to 850. Where are you on the scale?

What’s in a number?

500 and below—your in serious trouble
650 to 680 you probably will have a difficult time getting credit, and if you do it will be at higher rates
700+--excellent score

How you got your credit score
a) Payment history (35% of score). Make payments on time or early.
b) Amounts you owe (30% of score)
c) Credit history (15% of score). The longer you have credit, the higher your score can be.
d) New credit (10% of score). New credit cards.
e) Type of credit you have in use. Mortgages, Bloomingdale’s, etc.

There are three reporting services that can give you your score: Equifax.com, Experian.com and Transunion.com. At least once, do an experiment and order a report from all three. They probably will provide a complimentary report each year, per person.
You will most likely find inconsistencies in the reports such as missing and incorrect information. Each time a credit report is run on you, your score is lowered by two or three points. You still want to shop around for a mortgage, but consider using a mortgage broker who runs one report to shop around the loan. If you go to five different banks, that can drop your score 15 points.

Get a guard dog:
If you email monitorit@successdna.com to have them monitor your credit report, they will let you know who is checking your credit, how often and when. No one should be looking into your credit unless you authorize it.

Find more tax tips!

Action Plan: How to power down your debt NOW

It will take you on average between 25 to 30 years to pay off your credit card at the minimal amount. This will not do.

Make a list of all of your credit cards (including all consumer debt such as doctor bills, furniture stores and your home).

List the following in columns: the type of credit card, principle amount, regular payment amount, power down payment, interest rate, total number of payments left on the card, estimated payoff date. Put your list in order of how many payments are left from least to most. If you make a minimum payment of $55/month on one of your cards until it is paid off in full, you then have $55/month freed up to add to the minimum monthly payment for the next credit card. After you pay off the second card, the amount you were paying on that one can be applied toward the third card. By doing this, you will decrease the number of years required to pay off your credit cards from approximately 30 years to nine years.

Using this strategy, think about the other ways you can free up money. If you spend about $100 at Starbucks each month, think about spending that money toward your credit card payments.

Remember, money is emotional. We spend and make money based on emotional compulsion. Go back and see what you spent money on in the last week and how much you spent. It’s not how much money you make that matters, but how well you manage it that counts.

Find out more about tax deductions!

It’s no Secret—We’re getting older and broker

Not so fun facts:
· By 2015, 77 million Americans will be over 50 years old and only approximately one-third of them will be able to retire.
· During the economic boom in 1997, the average net worth of the richest 1 percent of families was $9.7 million, while the bottom 40 percent’s average net worth was $3,000.

So if your net worth is $3,000, and you spend $3,000 each month in living expenses, you only have one month of living stored up for when you get ill, lose your job or encounter an emergency. Work to get 10 percent in a savings account for rough times. A practical action plan for successfully building a savings account is to set aside 1 percent in savings, 1 percent for tithing, then up it to 2 percent for savings, two percent for tithing, etc. Baby steps are better than standing still!

Find out more about retirement plans!

Pay Yourself First

Schools do not teach thrift: college, high school, junior high—our system doesn’t place a high priority on frugality. And what a shame. We should put money aside regularly using a simple system—pay yourself first.

For example, when you pay your utility bill, pay yourself first. I’ve talked to people who have mastered saving money who have become very wealthy. Many of them have had to make tough choices—pay the phone bill or savings account? All of them chose to pay themselves first. They got on the phone with the phone company to buy time and negotiate a payment plan. Figure out a way, but pay yourself always.

You must pay yourself first, or you’ll negotiate away your savings. You want to have at least six months of living expenses, liquid. Savings is money you set aside that you never spend. Ultimately, you’ll invest it, generate passive income and get out of the rat race.

Recommended savings
60% Long-term savings
20% Emergencies
optional % “Emotional” (vacation/car savings account) (optional)

Or another way to think about it…

10% Yourself
10% Tithe
10% Pay down any debt you have (and commit yourself to not run up more debt)
70% Do anything you want with it

Once you get the ball rolling, you can shift your savings into a CD, then shift it again into something with stronger returns. Your initial goal is to live on 90 percent of your earnings. The average American lives on 110 percent of his earnings. You can do it.
Another, separate, prong of this saving strategy is to tithe another 10 percent. It could be given to your church, the Red Cross, Habitat for Humanity, or any other organization you’d like to benefit. In my opinion, we owe it to our community and each other to be responsible and giving stewards of our money and do good in the world. I encourage us all to incorporate tithing into our savings plan of action. Your generosity will come back to you.

Find more tax tips!

Do you have good posture?

When I started saving, I wasn’t saving much. However, I developed an important habit. Whether you’ve wisely saved money or received a good tax return, don’t go out and blow it on more stuff. You can have anything you want, you just can’t have everything you want. A.F. Bannerman once shared wise advice worth mentioning here that I’ve come to agree with and respect:

“Your savings affect the way you stand, the way you walk, the tone of your voice. In short, your physical well being and self confidence. A person without savings is always running. You must take the first job offer. You sit nervously on life’s chairs because any of life’s emergencies throws you into the hands of others. Without savings, a person is often fearful of the present and the future. Being in a state of constant fear is a horrible place to live. A person with savings can walk tall. You can appraise opportunities in a relaxed way, have time for judicious estimates and decisions. You need not be rushed by life’s problems or economic necessity. The person with savings can resign from his work if his principles tell him this is not the place to be. "

The person who is always worried about rent, food, bills, etc. can’t concentrate on long-range career goals. The person with savings can focus on family and service to shape personality and develop character.

Find out more about Pathfinder Business Strategies!

Money is Emotional

Pathfinder operates on 10 principles originating from books “Money Mastery” by Alan Williams and Peter Jeppson and “The Richest man of Babylon” by George Clason as well as information I’ve learned over the years.

Principle No. 1: money is emotional. When we make and spend money, it’s an emotional event. When we get a raise, we celebrate. When we get laid off, our routine and activities are often derailed because of it. Most of our spending patterns are emotional. For example, we don’t plan ahead of time to buy a car. Daily, we’re barraged with ads and commercials that tug at our emotions. Even if you deserve the new item and you’ve been working hard, you still bought the item emotionally.

The point: If we can acknowledge money is emotional, we can then plan and master its power over us. We’ll never change the fact that money is emotional, but we can change our spending behavior.

Student testimonials say tracking their spending helps them realize how much they actually spend. Tips from those who have curbed their spending are helpful:
>Paying with cash helps some people spend less (compared to paying with credit cards or by check)
>Shop with a plan or list and stick to it
> Get an accountability partner, someone who you can share what you purchased during the week.
>Instead of ordering two full meals when they go out to dinner with someone (taking home leftovers), split a meal and order an appetizer or dessert instead.

Find more tax tips!

Emergencies—Are you prepared?

A young man got into a car accident resulting in many bedridden months in the hospital and $100,000 of debt in hospital bills. Pathfinder’s “Mastering Your Money” series originated from this true story. The young man decided to pay off his debt in small amounts each month instead of filing for bankruptcy. When he was released from the hospital, he got a job, generated a modest income and stuck to his plan of paying his doctors $5 each week. He calculated with each payment how long it would take him to get out of debt. The result: he learned how to manage every penny he made.

Your overall financial well-being has less to do with your income than the strategies you put in place and honor. We are stewards of our money. In my opinion, we have an obligation to honor our money by treating it as best we can. It doesn’t matter how much you’re making, if you have a leak somewhere, the money will run out. Prepare for life’s emergencies. One of Robert Kiosaki’s quotes from last weekend that I took away and believe to be true: “The way you do anything is the way you do everything.” Do you cut corners? Do you plan ahead? Are you disciplined? Hard working?

Speaking of discipline and preparing for emergencies…one of Pathfinder’s principles is—When you track your money, you can control it. Do you avoid balancing your checkbook? Do you blame employees and others because you don’t make enough. Blame the kids, your boss, your investment partners? Don’t think you’ll ever have an emergency? Statistics say you will, and you’ll need an emergency fund. Keep at least six months of living expenses liquid, so you have half a year to gain control over your emergency situation.

Find out more about tax deductions!

Reality Check

How many years do you have left until you’re 65?
Whether retirement is just around the corner or have many more years to go, setting yourself up for retirement is key and must start now. Do the math. If you want $10,000 and you’re investing at 5 percent, you need $3,765. If you invest at 10 percent, you’ll need $1,400. It’s great if you have a savings account (you’re ahead of most folks), but if that’s the highest form of investing you’re doing—we have a lot of work to do.

It’s not Magic—Compounded Interest
In my 30s, I started saving $50 each month. As I earned more, I saved more. If you invest in a Roth/IRA, your money grows tax-free.

Example: If you invest $1 for 40 years at…
1 percent = $1.49
10 percent = $45.26
20 percent = $1,470

Make your money work for you.

Get a plan down for saving and stick to it. I was trained in trading commodities. To do so, you have to eliminate/minimize your emotion. You go in with a plan and stick with the plan, meaning you invest only under certain circumstances and if it goes down more than a certain amount, you take your loss and drop out. If your trading system loses 80 percent of the time, is this a good system? Perhaps. If you only lose $0.01 (when you lose), and you make $0.05 when you win—this is a good trading system because the winnings outweigh the losses. You can make 20 percent on some investments that are 100 percent secured (by the United States government, such as tax deeds).

Find out more about tax deductions!

Why is it so hard to get ahead?

Pitfalls of the latest and greatest: The market has brainwashed us to buy stuff we don’t need with money we don’t have.

My grandfather bought his house for $6,500. He had no retirement after 20+ years of working for the same employer. They gave him $100 each month in lieu of a retirement check. He saved more than $200,000 over the course of his life. My grandfather clearly had respect for money. Our culture today has lost sight of this respect.

Today’s generation fears not that they won’t have something, but that they won’t have everything. Twenty-five percent to 50 percent of purchases are unplanned. What’s the big deal? The average American will retire with only $57,000 to live on.

Debt
Personal debt has increased by 123 percent. Do you know how long it takes to pay off your credit card if you pay only the minimal amount? 20 to 30 years!

Taxes
Most Americans severely overpay their taxes.

Care for a challenge?
Here’s my personal challenge : Track your expenses for one month. Set your expenses up in categories. Write down every penny you spend. If you don’t want to track your business expenses, do at least your personal expenses (date, what you spent, what you spent it on). This will help you get a really good grasp on how much you’re spending.

I spoke with someone recently who has been selling stock to finance his lifestyle. That’s upside down. If you’re selling stuff to support your lifestyle, you’re upside down financially. Live on less than you make, save and invest with the difference. If you’re doing anything else, you’re upside down financially.

Find out more about tax deductions!

Views are Spectacular Off the Beaten Path

When I was practicing law, my colleagues would talk about how lucky they were to put their kids through college or. “I don’t know how we did it, but we put the kids through college , and now we’re hoping to start saving for retirement,” they’d say. In reality, they were saying much more—“Wow! We’re so lucky to barely be able to put the kids through college, now we’re just crossing our fingers that we’ll be able to start saving enough to retire.” I was on that path too, toward a life of just scraping by, where I’d spend just as much (if not more) than I earned, living financially strapped. It was only a matter of time before I made the same comments and had the same financial destiny.

I thought having my own law practice would make me financially free, but my path (owning my own firm) wasn’t going to lead me there, as I learned from my colleagues. So I decided to get off the beaten path and head down a road less trodden, as difficult as it might be at first. In the end, the views are worth the extra effort.

Why is it so difficult to get ahead?
1. We unnecessarily spend money on the “latest and greatest,” things we don’t need (but that
emotionally appeal to us) 2. Debt—once we’re in the red, and spend based on habit and emotion, it can be very difficult to break patterns, discipline ourselves and get out of debt 3. Taxes take up to 50 percent of our salary.

Find out more about tax deductions!