Credit freeze for free

  It just got cheaper to freeze your credit files, thanks to the Economic Growth, Regulatory Relief and Consumer Protection Act. But should you do it? The law, signed by President Trump back in May, only took effect this month. It requires the three major credit reporting bureaus—Equifax, Trans Union and Experian—to drop the fees to freeze your credit. Those fees ranged from $3.00 to $10.00 per person, times three credit bureaus, plus more charges to “thaw” your credit. Consumers can now also un-freeze their files, either temporarily or permanently, free of charge. Thanks to a recent spate of credit breaches, Congress felt it needed to do something about the problem. Readers may recall last year’s credit breach at Equifax and its aftermath. Hackers stole personal data, including Social Security numbers, birth dates, addresses and even some driver’s licenses from an estimated 143 million people in the U.S. Another 210,000 credit card accounts were also at risk. To make matters worse, the company knew about it, but kept quiet for some time before revealing it to the public. There had been a flurry of hearings, investigations and demands from both sides of the aisle to do something about it. Then there was the Yahoo breach in 2016, where over one billion users were impacted. Several banks, including Citibank as well as countless department stores, have reported hacking of information for millions more users. Thus, the new legislation. So, what exactly is a credit freeze? It is a way to protect personal information from credit fraud and identity theft. Once you freeze your account, no one can get access to...

How prepared are you to sell your company?

If you are a small business owner and are toying with the idea of someday selling your company, you should pay attention. Only one in five small businesses put up for sale result in a closing. How do you become one of those success stories? Where I live and work, nestled in the Berkshire Mountains of Massachusetts, there are relatively few large companies. We are over-populated with “Mom and Pop businesses.” As such, I meet and talk to plenty of these enterprise owners daily. An overwhelming number of these entrepreneurs have saved little or nothing towards their retirement. Instead, they believe that at some point, someone would swoop in and buy their business, guaranteeing a financially secure retirement. Despite taking a hardline approach to the realities of running a business, most owners do not have a realistic sense of how to sell a business. The two are completely different animals. I recently got an education in the difference by reading a book written by Allen P. Harris entitled “Built It, Sell It, Profit.” It’s a slim book, well-written in layman’s terms, which I suggest you pick up. In it, Harris addresses the big questions that need to be answered if you have even a hope and a prayer of selling your business. The first question to ask is “What should I be doing today to build my business toward ‘maximum value?” Harris would tell you that you will need to begin planning that sale for at least three to five years ahead of time. The things that you overlook in your day-to-day running of the business won’t be overlooked...

Should you bury yourself?

In today’s world, the idea that you should prepay, or at least set aside some money to cover your funeral expenses is gaining traction. Given the escalating costs of paying for a loved one’s funeral, it is no surprise. Most of us don’t want to face it, let alone discuss it. In some quarters, it is “bad mojo” to consider planning for your death, so pardon me for bringing up such a squeamish (some might say ghoulish) subject. But as your fiduciary in all things financial, I feel obligated to discuss prepaid funeral expenses. This year, I was introduced to this concept when my Mom died. She was 93 years old, bless her soul, and had a good life. Independent to the end, she secretly arranged for her own funeral expenses in 2000 along with specific instructions on what should happen at her passing. She wanted no fuss, no bother. Her remains were cremated, and everything was signed, sealed and delivered before I could make the five-hour trip to her home in Pennsylvania. My mother turned out to be an astute investor when it came to her death. Funeral expenses during that time (2000-2018) increased by 75.74%, according to the U.S. Bureau of Labor Statistics. Her arrangement to prepay her expenses protected her from rising costs and provided a convenient and stress-free experience for me and the rest of the family. However, there are pros and cons of pre-paying for your funeral. A prepaid funeral plan is an arrangement between you and a funeral home in which you make an upfront payment to the funeral home today. The agreement...

Should you pay down your mortgage?

The Tax Cut and Jobs Act of 2017, together with rising interest rates have changed the calculus in determining whether to pay down your mortgage or let it ride. Let’s examine the pros and cons. Over the last ten years, as interest rates fell to almost zero, it made total sense to pay off your high-interest mortgage. At the very least, one could re-finance and save on monthly payments. This was especially true if your mortgage was in the last stages of a 30 or 15-year life. At that point, the interest portion of the payment, (which is tax deductible) was minimal, while the principal payments represented the lion’s share of the monthly bill. For those with new mortgages, or who refinanced at record-low interest rates, the interest banks charged composed most of the payment (and thus a larger tax deduction), so these buyers had fewer reasons to prepay. All this changed with the new tax act. There is now a cap on how much of a mortgage interest deduction one can claim. Worse still, if you are unlucky enough to live in a state with an income tax, the cap on the mortgage deduction is combined with a cap on state income tax and property taxes deductions. In short, the higher the interest payment on your mortgage, the less tax incentive you have to carry a mortgage. However, there are some positives to this mortgage equation. Interest rates have already begun to rise, although not by much. If rates continue to rise, at some point, some homeowners will have lower mortgage rates than the interest rates they could...

Are Americans saving enough for retirement?

If you simply read the headlines, you would assume that over half of Americans aged 55 and over, have no savings as they approach retirement. That’s a dramatic statement, but is it true? Most statisticians derive that data by adding up those who have an IRA or similar tax-deferred savings account such as a 401(k). The latest data compiled by the Federal Reserve Bank’s Survey of Consumer Finance indicated that 53% of households, age 55 to 64, had some savings in those tax-deferred accounts. So, yes, by that standard, almost half of all Americans fail the savings test. But what about all the people who work for the government? There are 22 million workers toiling away within the ranks of federal, state and local government, and all of them have traditional defined benefit pensions. That’s 14% of the labor force! Those pensions have amassed anywhere from hundred thousand 9maybe less) to $1 million or more. While corporate pension funds have been seen a multi-decade decline among workers, there are around 13% of private sector workers who are participating in defined benefit pension plans. In fact, roughly 40% of all workers between 55 and 64 years of age are expected to receive a traditional pension benefit in retirement. When you add all those segments together, the outcome is entirely different. Almost 75% of workers in the U.S. either have a tax deferred savings account or a pension account. That still leaves a goodly portion of Americans coming up short. However, all is not as bleak as it looks for those people. Let’s talk about the low wage earners making around...

Financial scams targeted at the elderly are epidemic

As Baby Boomers age, the volume of reported financial scams directed against them continues to escalate. By some estimates, more than $37 billion a year is now being stolen from America’s elderly. And those are only the reported cases. It is estimated that 5 million Americans are bilked by con artists every year. Some financial firms believe the total can exceed $37.5 billion annually. The Office of Children and Family Services in New York begs to disagree. They say that in their state alone $1.5 billion/year is stolen. And for every case that is reported, 44 are not. Aside from the impact of losing their entire savings, elder fraud victims are dying at triple the death rate of other elderly adults. That is understandable when you realize the physical and emotional devastation that results from this type of fraud. Rarely, if ever, do the victims get their money back. The stress and time required to pursue the criminals increases the impact on senior victims’ health and well-being. “I’m a trusting person,” says Dorothy, my 89-year-old, widowed, mother-in-law, who was a victim of a computer scam. Fortunately, she did get her money back, thanks to her adult childrens’ quick response to the incident. Asked why she would give her credit card information to a total stranger, she shrugged and said, “I never expected that people would do things like that.” Last month, the Justice Department announced the largest nationwide investigation of elder fraud cases. This incident victimized over one million people with estimated losses of over $500 million. In this case the perpetrators used mass mailings and telemarketing to ensnare...