Author Archives: Kate Renda

  1. 3 Ways to Protect Your Credit That Aren’t Freezing

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    Image courtesy of Flickr user Paul Stocker

    Identity theft is a problem that isn’t going away anytime soon. Last year we saw a record 781 data breaches, putting people’s credit card and social security numbers in the hands of hackers and thieves. Identity theft can have serious consequences for your savings and your credit. Some believe that freezing your credit is an effective way to prevent identity theft before losses occur, but this method is far from perfect.

    First of all, credit freezes usually come with a fee. In Pennsylvania, for example, you are charged $10 for every freeze or thaw. This includes partial thaws to allow specific parties access to your information. Setting up access for those specific parties can take time, and the inability to access your credit information could result in higher interest rates when applying for loans or mortgages. What’s more, a freeze does not protect you from from all forms of identity theft. Family members or other people close to you could access your personal information in your home, on your phone, or on your computer and use it to access your credit – even if it’s frozen.

    Thankfully, there are alternatives to the credit freeze that can help you protect your identity without these hassles.

    Take Security Into Your Own Hands
    While the big data breaches that you hear about on the news are a legitimate concern, family members and other acquaintances can be a bigger threat to your personal data. You may think nothing of them having access to your personal computer or smartphone, or leaving bills and bank statements out in plain view around them. These seemingly innocuous moments can become quite costly.

    Instead of questioning whether you can trust your loved ones, actively protect your information whenever you can. Keep your personal documents in a secure place, and shred those you no longer need. Protect your digital devices with a variety of strong passwords, which you frequently change. This will help keep you safe from a variety of threats.

    Stay Alert
    Instead of completely freezing your credit, you can contact one of the credit bureaus to set up a 90-day fraud alert. With this alert active, lenders are required to receive additional verification to ensure credit or loan applicants claiming to be you are who they claim to be. This way, identity thieves must go to greater lengths to benefit from your information.

    This method presents its own difficulties, as the alert needs to be renewed every 90 days. It’s also not perfect; if an identity thief has stolen an unusually large amount of your information, they could get around the extra verification steps. However, if you’ve taken precautions to guard that information, you are able to access your credit without the difficulties presented by a freeze.

    Know Your Rights
    If you do fall victim to identity theft, you have protections under the Fair Credit Reporting Act. The Act requires data furnishers and the credit reporting agencies to have systems in place to remove accounts from consumers credit reports related to identity theft. Additionally, the IRS and FTC have resources and/or hotlines to help victims.

    If your credit has been impacted by identity theft and put you into debt, these resources can help you recover when combined with sound legal counsel. Call us to discuss your options and move back toward healthy credit.

  2. What Today’s Retirement Problems Mean for Millennials

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    Image courtesy of Flickr user 401(k) 2012

    Retirees today are finding it more and more difficult to live on their savings. Opinions differ on the cause and severity of this problem. PNC’s CEO William Demchak believes a major factor is the Federal Reserve’s refusal to raise interest rates. He believes this is placing a heavy financial burden on retirees, forcing them to work much longer than they planned to. Demchak says, “We’ve trained people their whole lives that once they retire, they are supposed to change their 401(k) [savings] and put it into kind of a less risky fixed-rate investment portfolio.” That just doesn’t cut it anymore.

    Some believe this is indicative of a retirement crisis, while others believe it’s more a symptom of a series of hardships that will pass. Whether or not it’s truly a crisis, there are some undeniable problems with the way many Americans are expected to retire. This situation can be heartbreaking for retirees or those approaching retirement, and it is something that millennials must learn from if they are to change things for themselves. By following these tips, millennials may be able to secure a decent retirement.

    Proper Budgeting and Saving
    The National Institute on Retirement Security found in 2013 that the median working household had a retirement account balance of about $3,000. This study also found that households nearing retirement age only amassed a median savings of $12,000. This would barely sustain anyone for more than a few months, let alone through retirement.

    This problem is compounded by a number of problems. According to economist Teresa Ghilarducci, only 32% of working adults are enrolled in a retirement savings plan — and access to plans has been decreasing. To combat these difficulties, millennials need to get into the habit of budgeting.

    Keeping a proper budget gives people a better sense of their monthly expenses and how much money they can comfortably save. If you have debts that impact your ability to save, budgeting will make paying them down more manageable. By developing a budget and sticking to it consistently, you can strengthen your overall financial situation and set savings goals to help build your retirement account.

    Choosing the Right Retirement Plan
    Did you know that retirement plans carry a cost? Not many people are aware of this. According to Ghilarducci, some 401(k)s carry a charge as high as 1%. While this might not sound like a lot, it can have a significant impact over time. This cost can create difficulties in the long run, especially if you ever need to borrow from your retirement plan.

    If you have a 401(k) or any other type of retirement account, make sure you’re aware of the fees associated with it. See if there are plans available with fees less than 1%. Similarly, be aware of the exact amount of money you and your employer are able to contribute to your plan. Keep your own contributions consistent and familiarize yourself with your employer’s contribution matching policies. This way, you’ll be able to better monitor your balance and account for the impact of fees.

    Don’t Plan on Retiring Early
    This might sound like a bitter pill to swallow, but it could actually make a significant difference in your retirement savings. By working longer, you’ll be able to contribute more money to your retirement savings and to social security. When you do eventually retire, you’ll have more to live on and be less dependent on social security.

    But What About Bankruptcy?
    Life is unpredictable. No matter how well-planned your retirement strategy may be, an unexpected emergency, bad investment, or issue with your credit could put you in a position to declare bankruptcy. Thankfully, if you find yourself in this situation, your retirement accounts should be unaffected. With few exceptions involving traditional and Roth IRAs, retirement savings are considered exempt from bankruptcy.

    In fact, bankruptcy could help put you back on a strong financial path and improve your ability to build retirement savings. If you’re considering bankruptcy, check out the Bankruptcy Roadmap on our website or give us a call.

  3. Savings: The Key to Financial Freedom and Building Wealth



    Saving money should be a financial priority for everyone. It’s the simplest way to build wealth. Money in the bank accrues interest, generating more wealth over time. This will help you navigate any financial issue, emergency, and retirement.

    However, the undeniable fact is that just setting some money aside is not enough to assure a comfortable financial future. According to Teresa Ghilarducci, an economics professor at the New School for Social Research, about 75% of Americans preparing to retire in 2010 had less than $30,000 saved. More people need to realize that you only have a limited time to save for retirement. If you don’t start saving from a young age, there are consequences.

    It might seem like common sense, but saving can be difficult. The following tips will help you save and build your wealth more effectively:

    Eliminate Debt
    This might seem obvious, but debt can hurt your ability to save. The interest accruing on your debt can easily outweigh the interest you gain from your savings. This is particularly troublesome when it comes to unsecured debt of $10,000 or more. Pay down your debt before attempting to build up your savings in earnest. Once you’ve addressed your standing debt, avoid incurring large credit card or further unsecured debt payments. If your debt is holding you back from saving, it may be time to look into bankruptcy.

    Keep a Budget
    Keep a budget so you can better manage the ebb and flow of the economy. Include expenses for any dependents, transportation, insurance, housing, personal wellness, recreation, taxes, and any other regular costs you incur. If you can fit savings or investments into your budget, be sure to weigh your options. For example, this USA Today piece shows that a seemingly safe investment option could cost you.

    Set Your Goals
    Set realistic savings goals that you can confidently fit into your budget. Whether you’re setting aside $50 or $100 per month, or setting up a direct deduction from your paycheck to your retirement, these goals will help you save responsibly. You’ll be able to cover your bills and necessities, and your savings and retirement accounts will become more robust.

    Treat Yourself…
    On the other hand, there are ways you can spend money that are beneficial in the long run. The idea is not to spend for the sake of spending — it’s to treat your spending like an investment. Ask yourself: would this investment add value to my life? Will it help me earn more money in the future?

    Consider spending money on a new suit for meetings or interviews. Look into conferences or seminars where you can learn new skills and trends pertinent to your work. Your employer might be willing to reimburse you for costs associated with such professional development. Attendance at these events also broadens your professional network and reflects well on you when it comes time for a raise.

    …But Be Responsible
    As tempting as it may be to spend money on an enticing investment or a once-in-a-lifetime experience, try to take a step back and survey your financial situation before jumping in. If an investment would put you in a precarious situation, try setting a goal similar to your savings. When you reach the goal, make the investment without fear. For example, for every $10,000 you save, you could invest $1,000 in stocks, mutual funds, or a CD.

    However you choose to invest that money, try to do so conservatively. Protecting your investment should be your first priority. Safe investments will help you do just that. Aim to have at least half your portfolio in blue chip stocks to ensure you aren’t putting too much money at risk. These big-name, sure-thing investments will offer some protection while you explore other investment opportunities.

    What if the financial landscape you are surveying is overgrown with debt? In most cases, time and consistency will help you build a healthy financial situation in which you can budget, save, and invest more freely. If this does not help, then bankruptcy could be a useful tool that can eliminate costly monthly payments and restructure your budget so you can save and have a healthy financial situation. If you endlessly struggle with debt with no end in sight, you are wasting time and money that could be used to save for a house, college or retirement. If you are having trouble saving, call us. We can create a plan that will help you eliminate debt and start saving.

  4. Things Millennials Should Know About Credit Cards

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    Image courtesy of 3 Style Life

    Getting a credit card is a great way to start building credit, which is crucial for several important life decisions, including securing loans and getting the best insurance rates. Despite this fact, many Millennials are still foregoing credit cards all together—approximately 31% have never applied for a credit card. Additionally, according to a recent study done by NerdWallet, Millennials have the lowest average credit score—28.1% have scores below 579—and the shortest credit history of all age groups. What you have to realize is that not using credit is as bad as having bad credit. Banks want you to use credit, because that’s how they make money.

    Here are a few of the things that Millennials should know about credit cards so they can make smart decisions and build healthy credit:

    Your Credit Score is Important, but it’s Not Everything
    Keep in mind that your credit score rewards you for behaviors that the banks want you to engage in. If you are using credit only to build your credit, it is best to use it only for small purchases and pay it off every month. It’s important to use your first credit card wisely because it will likely have a high interest rate. Once you establish some credit keep in mind that your high credit score doesn’t necessarily mean you have a healthy financial situation—a good credit score can never make you rich, it can only help you get into debt. The best indication of a healthy financial situation is having the ability to save and having money in the bank, which isn’t a factor considered on your credit score, because it’s a behavior that mostly benefits you.

    Don’t Apply for the Wrong Credit Cards
    One of the most important discoveries made by the NerdWallet study was that Millennials are often applying for the wrong types of credit cards. Many Millennials with low credit scores are actively seeking new credit cards, but are often rejected by issuers because their credit score is not within the appropriate range for approval. Rejections can damage a person’s low credit score further, as each denied application elicits a hard inquiry on their credit report. The more inquiries a consumer has, the riskier they appear to lenders.

    To avoid rejections and inquiries, Millennials need to make sure that they are applying for credit cards within their credit score range. Look for secured or student cards, as these types of cards are designed for people with low credit scores.

    Avoid Late Payments
    Failing to pay your bills on time is a big credit card misstep that many people often make. It may not seem like a big deal, but when you pay your credit card bills late, credit card companies may penalize you with two surcharges on one delinquency. These can come in the form of a late fee and a penalty rate, which is an interest increase that can quickly raise your APR to incredibly high rates.

    For Millennials with bad credit, it’s important to be aware that a large portion of your credit score (35 percent) comes from your history of making on-time payments. A good tip for making sure you make payments on-time is to set an alert—whether it’s a text, email or calendar reminder—so that you’ll never miss another deadline again. Over time, the negative marks on your credit report from late payments will be eroded by the positive information you create by making payments on-time.

    Fixed Rates Aren’t Really Fixed
    Many Millennials are quick to believe credit card advertisements that boast low, fixed rates. But the reality is that credit card issuers can raise your APR whenever they want. Although this information isn’t a secret, it’s often hidden so deeply in the fine print of your agreement that card companies think that you’ll miss it. Knowing this, it’s important that Millennials understand the terms of their agreement before committing to a card in order to avoid surprises down the line. And once you do sign on to a card, be on the look out for notices about a raise in APR, so that you’re able to prepare.

    Millennials can avoid many of the pitfalls of applying and using a credit card by doing enough research in advance. Picking the right credit card and managing it responsibly will help you build a healthy credit score in the long run. Additionally, always remember to only use credit to supplement your finances not as the basis of your finances, because the only way to build wealth is by having money in the bank.

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