How to protect yourself after the Equifax data breach

equifax data breachFollowing the news of the hurricanes, news of the Equifax security breach has been all over the news. Financial data of 143 million Americans has been stolen, and in many cases it means that the victims are at-risk of becoming victims of identity theft for the remainder of their lives. That’s right, you, and if you have them, your children, could be at risk for the rest of your life. The hackers got names, Social Security numbers, birth dates, addresses, credit card numbers, and some driver’s license numbers.

The breach ticks me off – this never should have happened. Clearly Equifax has some major vulnerability in their system which they should have known about and protected. A credit bureau should be utilizing the highest level of security at every level. Your information with them should be as secure as a vault. On top of that, to add insult to injury, three of Equifax’s executives (including the CFO) sold nearly $2 million worth of stock after the breach, but before they told the public about it. That’s right – here’s a timeline for you:

  • Between mid-May and July, 2017 – breach happens
  • July 29, 2017 – the hack was discovered
  • Aug 1-2, 2017 – executives sell almost $2 million worth of stock
  • Sept 7, 2017 – the public is informed of the breach (thank you, Equifax, for waiting more than a month before letting us know)
  • Sept 8, 2017 – Equifax stock drops by double-digits

Equifax cliams that these executives had no knowledge of the hack when they sold their shares, but I don’t buy it. You’re telling me the CFO didn’t know about this? If he didn’t know, then who did? I’m sure that the timing of the sale will be part of any investigation.

The breach has happened, though, and you need to take specific steps to be sure you protect yourself. Let me warn you now, the few hours you spend on this are not going to be the most fun, but it is critical you take care of it now. It will be much, much worse if you wait and are a victim of identity theft.

I’ll try to make it as easy as possible for you with links and instructions.

  • First, don’t sign up for the protection that Equifax is offering. It’s garbage and only lasts a year, and, unless you opt-out of it, means you can’t be part of suing Equifax later on. I also don’t trust the company that just had the biggest data breach in history to be able to protect my data. Pass. Due to the severity of the breach, they should offer identity theft protection for life.
  • Sign up for Credit Karma (https://www.creditkarma.com/). You will get free credit scores and free monitoring of your credit reports. If anything unusual happens, they will contact you. It’s a free service and you should sign up for all adult members of your family.
  • Credit Karma logo

  • Place a credit freeze on all three of your credit bureau files. A credit freeze is THE SINGLE MOST IMPORTANT THING YOU CAN DO TO PROTECT YOURSELF. It literally locks your credit bureau files so NO ONE, including you, will be approved for new credit. A thief could have your information and they will apply rapidly for credit, all of which will be denied. They will eventually move on. Depending on the state you live in, there will be a $0-$15 fee to set this up, and you need to do this for each adult member of your family.Here are the links:
    https://www.freeze.equifax.com/Freeze/jsp/SFF_PersonalIDInfo.jsp
    https://www.transunion.com/credit-freeze/place-credit-freeze
    https://www.experian.com/freeze/center.html

    Because millions of people are setting these up the systems are not all working. I was able to set up Equifax and Experian, but not TransUnion. I will keep trying throughout the next day or so, and if it doesn’t work I will take care of it via mail.If you need to apply for credit later, you can un-freeze your reports for a limited period of time, after which is will re-freeze.

  • Place a fraud alert on your accounts. This is simply an extra step that puts an alert on your credit report that you might be a victim of identity theft, and that they need to call you before any transactions can be approved. It only lasts 90 days, but you can put the alert on there repeatedly. I already have a note on my calendar 90 days from today to renew the alert. You only need to place the alert with one company then they will place the alert with the other two. I recommend you use TransUnions fraud alert system – I found it to be the easiest one: https://www.transunion.com/fraud-victim-resource/place-fraud-alert
  • fraud alert

  • Sign up for Zander Insurance identity theft insurance. For $145 a year it protects your entire family, including your children. They have a 100% recovery success rate and protect you against all types of ID theft, including tax fraud, medical ID theft, and, of course, financial fraud. If your identity is stolen as a result of the Equifax, or any other breach or identity theft, they will take over and fix everything. It is well worth every penny. You can sign up for that here: https://www.zanderins.com/idtheft2
  • logo_zander

  • Speaking of children, does it make sense to freeze their reports? The credit bureaus don’t want you to be able to do that, but some states have made it mandatory. All three bureaus are falling in line, but none will allow you to do it online. TransUnion will do a search, for free, to see if your children have credit reports. You can find that here: https://www.transunion.com/credit-disputes/child-identity-theft-inquiry-form.
  • Utah is taking things one step further – they have set up a Child Identity Protection Program through the Attorney General’s office that registers your children’s Social Security numbers as a number belonging to a minor, which will help protect their data. You can find that program here: https://cip.utah.gov/cip/SessionInit.action. If you live in a different state encourage your attorney general to create a similar program. Because I live in Utah and have this option, along with the Zander protection, I don’t feel that I need to freeze their credit, but if I lived outside of Utah I would absolutely take that step.
  • utah cip

  • Because credit card numbers were stolen, I recommend calling the toll-free number on the back of each credit card you have and requesting a new number. It’s a pro-active step you can take to prevent unauthorized charges in the future.

Again, I realize this isn’t fun – it’s a lot of work to set these things up, but I wouldn’t delay. Take a couple of hours today and get all of this done. Taking these steps is like building a brick wall between you and identity thieves.

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What’s up with the economy?

Are you tired of watching your savings earn .02% per year and seeing your investments lose money each year? You’re not alone.

You probably feel a lot like this guy – you just want someone to “FIX IT!”

Let’s establish a few things up front:

  • The economy moves in cycles:

economy

We go through times of high unemployment, low savings rates, negative stock market growth, etc. and we go through times of low unemployment, great stock market growth, etc.

It’s all part of a cycle.

There are times, of course, when the recessions and troughs last longer than others, but overall that is how the economy works. No one knows how long or short any part of the cycle is going to be.

  • The “stock market” is made up of a lot of different components.
    There are individual company stocks, company and government bonds and money market savings. It also includes things like commodities (gold and silver), oil and real estate. You can invest in all of these.

  • Most people invest in the stock market through their employer (401(k)) or through another retirement account such as an IRA. Typically this is in the form of mutual funds, which is a collection of corporate and government stocks and bonds. Throughout the article when I refer to investing in stocks I am talking about stock mutual funds. Most people shouldn’t be purchasing individual stocks.

  • Past performance in the stock market doesn’t predict what it will do in the future, but it can give you an idea of trends.

So how do you make or lose money in the stock market? When the market is down in a recession or trough stocks generally lose money. This can be caused by many things. Most recently the drop in the market has been caused by economic issues in China and the low price of oil, along with a continuing sluggish economy in the U.S.

In the first two weeks of 2016 the stock market has lost about 8% of its value. 8% in two weeks! Everyone’s invested assets are taking quite a hit right now.

Let’s take a look at some historical data.

Dow Yearly Return Histogram

The graph above shows the Dow yearly return frequency. You can see that there are years that the return on your investments would have returned more than 70%, and years it would have lost more than 20%. About 25% of the time the market has lost money.

This next graph shows the range of returns for a portfolio of 100% stocks, 100% bonds and 50% stocks and 50% bonds between 1950-2013.

In a single year the stock portfolio returned between -37% and +51%.

If you invested for 5-years that range narrows to -2% and +28%

If you go out to 20 years, the range narrows even more to +6% and +18%.

range of returns

The average annualized returns for stocks during those 20-year periods is 11.1%.

You have to decide if you are willing to ride out the negative years in hopes of gaining in the good years, and how long your time horizon is.

Here are some things to keep in mind:

  • The further out your time horizon is the better chance you have of getting a positive return, with the stock market returning the most. If you don’t have at least 5 years, or even better 10 years, you shouldn’t be invested in stocks.

  • The shorter your time horizon is the more you should be invested in conservative assets such as bonds. That means that you can be invested in stocks the younger you are, and move your money to bonds the closer you get to retirement.

  • A good rule of thumb is that you should take 100 minus your age and that’s how much you should invest in stocks. If you are 40 years old you should invest about 60% in stocks (100 – 40 = 60%). If you are 55 years old you should invest about 45% of your money in stocks. Your risk tolerance level might be higher or lower than that, though. Here is a good free online tool that will help you determine your risk tolerance level: http://njaes.rutgers.edu:8080/money/riskquiz/. Because I have a higher risk tolerance I have more of my assets invested in stock mutual funds.

  • Remember that there are additional ways to invest your money. While most of our retirement money is in the stock market, we are saving up money to invest in some real estate as well. A diversified portfolio is best.

  • What you don’t want to do is invest in stocks, panic when it goes down and pull all your money out, then when the market goes back up move your money back in to stocks. That’s a losing game, and you will never get ahead that way. You are buying high and selling low, which is the opposite of what you should do. A lot of people do this, however, which is why there is a big difference between investment returns and investor returns. Investment returns assume you leave the money in the market, while investors move their money around when things get bad.This chart helps me to remember that I need to stay invested:

    missed opportunity

    This chart assumes you invested $10,000 between Dec 31, 1993 and Dec 31, 2013. During that time the stock market had some great years and rough years.If you kept it fully invested you would have ended up with just over $58,000. If you missed the 10 best days (which often come right after the worst days) your return drops to $29,000. If you missed the 40 best days your return is actually negative – your $10,000 drops to $8,147.

    People miss the best days all the time though because they switch from stocks to cash when the market goes down, miss the up-side, and invest when stocks are back at their most expensive.

I realize that all these charts and statistics don’t make you say, “Well, I’m sure glad my portfolio is losing money!” No one likes to see their portfolio drop for even a day, let alone for a few years in a row.

Every time it feels different, like we aren’t going to recover this time. I understand it. I get it. If you need help, find a financial planner who can help you set goals and stick to the strategy you outline together. Make sure it is someone you trust and has your best interests at heart. Someone who will teach you and encourage you and cheer you on.

As always, feel free to leave comments or ask questions below, on Facebook or in an e-mail.

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The Affordable Care Act in Plain English

by Ryan Law

At the end of the day, what everyone wants is a way to make sure we’re taken care
of when we’re sick, and that it doesn’t ruin us financially to get that care
.”
– Jonathan Gruber, architect of the Affordable Care Act

There is a lot of controversy, confusion, misunderstanding and unfortunately, even blatant lies in the media about what the Affordable Care Act (ACA or Obamacare) is and how it will affect you, your insurance coverage, and the amount you pay for insurance.

Whether you like it or not the ACA is the law and it is important you understand what it is and how it relates to you and your family. After all, your health is one of your most important assets! I won’t go into a lot of detail and I won’t cover all parts of the law – if you want a lot of detail I recommend you visit http://www.healthcare.gov/index.html.

My attempt with this article will be to describe, non-politically, what the ACA is in plain English. If you want to hear a partisan description of the law you can tune in to your favorite Liberal or Conservative commentator. Trust me; they have plenty to say about it!

Jonathan Gruber, Mr. Mandate

The ACA was put together by Jonathan Gruber, an MIT Economist who has studied and analyzed the effects of health-care reform extensively. When Mitt Romney was governor of Massachusetts he called Gruber in to help design a health-care law for Massachusetts, which has become known as Romneycare.

As a side note – Romneycare was seen as a “Republican ideal” because it required individuals to take responsibility for having insurance and didn’t give anyone a free-ride. Liberals actually hated the law because they wanted national health care such as the one in Canada. Romney said that this law was his “singular policy achievement” and that it could be applied nationally. Interesting how an election can change things. Romney became Obamacare’s harshest critic, vowing to repeal it if elected and even calling it an “unconscionable abuse of power” by Obama. After studying both laws I’m not sure how anyone can say there is much of a difference, though.[1].

In 2008 Obama called on Gruber to help him design the ACA. Gruber has written extensively about the law. He says it is the opposite of public health care and that insurance companies like the law because they get more customers, especially young, healthy ones that will pay insurance but not need as much healthcare. He says that the most important provision of the ACA is the individual mandate – without requiring people to get insurance it doesn’t work. There will be more on the mandate later.

In 2011 Gruber wrote a book titled Health Care Reform: What It Is, Why It’s Necessary, How It Works. This is actually a good book for understanding the ACA, and best of all, it is written in comic-book format. (I think more books should be written this way! After all, a picture is worth 1000 words. Maybe I need to find an illustrator for my blog..) It’s obviously slanted as he is the architect of the law, but it’s worth checking out from your local library.

Goals of the ACA

  • Decrease the number of uninsured Americans. There are currently 44 million uninsured Americans[2], most of which are either young and they don’t think they need insurance, or they are poor and cannot afford insurance. The ACA should reduce this by 30 million.
  • Reduce health care costs

Important Provisions of the ACA

  • Pre-existing conditions: Requires insurance companies to cover all applicants of the same age at the same rate, regardless of pre-existing conditions or gender. This provision is something that will be extremely beneficial to millions of people who were denied coverage due to a pre-existing condition.
  • Coverage up to age 26: If you are under the age of 26 you can stay on your parent’s plan, regardless of whether you live at home or on your own, or are single or married.
  • Individual mandate:  This is one part of the law that the government was sued over and that went all the way to the Supreme Court[3]. Because the Supreme Court upheld the Constitutionality of the individual mandate it will go into effect in 2014. Essentially it says that if you don’t buy insurance you will be charged a $95 penalty or 1% of income (whichever is greater) in 2014. That amount will increase until it reaches $695 per person or 2.5% of income in 2016. Regardless of your family size you will never pay more than three times the penalty amount if all your family members are without insurance. However, if health care coverage would cost you more than 8% of your income you don’t have to pay the tax.
  • Health Insurance Exchanges: By 2014 each state is required to set up a health insurance exchange (states that don’t set one up will use the national one) where consumers can compare health insurance policies and premiums.
  • Elimination of lifetime coverage caps: In the past health insurance plans typically had a maximum you would be covered for over your lifetime. It was often as low as $1,000,000. With the ACA coverage caps were eliminated.
  • Businesses must offer insurance: Businesses with 50 or more employees must offer health insurance or they will pay a $2000 fine per employee. They don’t have to provide it for employees working less than 30 hours a week. Businesses with less than 25 employees could qualify for a subsidy to offset the costs of insurance.
    NOTE: Some companies have said they may have to lay off employees or reduce employee’s hours due to this portion of the law, the most famous of which was Papa John’s CEO John Schnatter. Schnatter later said he was taken out of context and plans to comply with the law and that his company is still doing analysis on how it will affect the company.
  • Deductibles and out-of-pocket maximums: Employer plans have a maximum annual deductible of $2000 per person, or $4000 for a family. By 2014 the out-of-pocket maximum per person is $6000 per person per-year (out-of-pocket includes your deductible and co-pays).
  • Preventive Care: There will be no co-pay, co-insurance or deductibles for preventive care.
    NOTE: This portion is sometimes referred to as the Contraceptive Mandate because under this portion of the law contraceptives and the “morning-after” pill must be free to people with insurance. Some groups, including the Catholic Church, have sued the government over this as they are religiously opposed to contraceptives. Other groups (Hobby Lobby being the largest) have sued the government because they are opposed to providing the morning-after pill to employees. There are currently 28 separate lawsuits about this provision. Under current rulings churches are exempt from providing contraceptives or morning-after pills, but church-run hospitals and schools are not exempt, and they were given until August 1, 2013 to comply. Hobby Lobby and others opposed to offering the morning-after pills were given until January 1, 2013 to comply or they will pay $1.3 million per day in penalties. Hobby Lobby has chosen to stand by its principles and pay the fine rather than offer the pill.
  • Insurance subsidies/tax credits: The Central Budget Office has predicted that insurance premiums may go up 10-13% due to the ACA. To offset this, low-income Americans will not pay anything for health insurance, and many in the middle-class will get some form of tax credits. Individuals making between $14,400 and $43,320 and couples filing taxes jointly making between $29,330 and $88,200 will receive some tax credits.
  • Insurance company profits: Insurance companies must pay out 80-85% of insurance premiums received in medical costs and can use 15-20% for administrative needs and profits.

Costs of the ACA

  • Jonathan Gruber claims that by his analysis the ACA should reduce the federal deficit by $143 billion by 2019 and by $1 trillion within 20 years.[4]
    NOTE: Niall Ferguson in the August 19, 2012 Newsweek cover article[5] claimed that the CBO (Central Budget Office) and Joint Committee on Taxation have said net federal spending will be $1.2 trillion by 2022 even after all taxes and penalties have been collected. However, the CBO has actually said that it will decrease the deficit by more than they originally thought.[6][7] I believe the jury is still out on this one – in 2022 we will know for sure, but I struggle to see how it will actually reduce the deficit. I hope I am wrong, though!

Paying for the ACA

The following taxes, fees and penalties have been put into place to help pay for the ACA:

  • .9% tax on incomes over $200,000 (individual) or $250,000 (family).
  • 3.8% tax on unearned income over $200,000 (individual) or $250,000 (family).
  • Insurance providers will pay an annual fee.
  • Pharmaceutical companies and other companies that manufacture medical devices will pay taxes and fees.
  • The 7.5% AGI floor for itemized deductions is being raised to 10% (You can deduct your medical expenses if they exceed 7.5% of your Adjusted Gross Income and itemize deductions – that is being changed to more than 10% of your Adjusted Gross Income).

I hope this article has helped you understand the law better and how it will affect your family and your insurance. I believe there are both good and bad portions of the law and I’m sure we will see more lawsuits and attempts to change portions of the law through legislation. As major changes come about I will continue to post them on my blog.

—————————————————————————————————————–

[1] Among other similarities, Romneycare requires individuals to have insurance (individual mandate), gives free health insurance to the poorest citizens, penalizes employers not offering insurance and sets up a health care exchange. The only real difference is that Romneycare is administered on a state level and Obamacare on a national level.

[4] Gruber, J., Health Care Reform: What It Is, Why It’s Necessary, How It Works, 2011 ISBN: 0809053977

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