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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Are You Financially Fragile?

What would happen to you and your family if:

  • your fridge broke down?
  • your car transmission went out?
  • the primary breadwinner in your family dies?
  • the primary breadwinner in your family becomes disabled?
  • the Social Security fund goes bankrupt and you will no longer receive a Social Security check?

As many as 76% of Americans live paycheck-to-paycheck – they have little to no savings and they spend more than they earn each month. These people are the Financially Fragile.

Financially FragileWhen one of the above events happens it can be challenging for anyone, but it is devastating for the Financially Fragile.

If you are living this way, you can take a few steps to become Financially Resilient. Being Financially Resilient means that you are able to withstand or recover quickly from difficult financial conditions, such as your car transmission going out. Again, that can be difficult for anyone, but the Financially Resilient will recover quickly while it can destroy the Financially Fragile.

Here are some things I recommend to start down the path to becoming Financially Resilient:

  • Have an emergency fund – start out with $1,000
  • Use a budget[i]
  • Spend less than you earn
  • Have adequate insurance
  • Pay off debt
  • Use a Revolving Savings account[ii]
  • Have some “fun money” or “mad money”
  • Pay attention to your credit score[iii]

For more information on these topics, see the links below. I encourage you to take steps to become more Financially Resilient.


[i] http://blog.ryanhlaw.com/wp-content/uploads/2017/02/MFH-Guide-to-Budgeting.pdf

[ii] http://blog.ryanhlaw.com/revolving-savings/

[iii] http://blog.ryanhlaw.com/know-your-score/

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Budgeting Software

Budgeting software

Budgeting is the foundation of financial wellness and success. Budgeting puts you in control of your money and helps you achieve your goals.

A few years back two professors did the largest research study on millionaires in the United States. They studied how they made their money, what their family structure was, what kind of car they drove, what kind of watch they had and on and on. After they compiled the research they wrote a great book titled “The Millionaire Next Door.” One of the key findings of the book was about budgeting:

“Millionaires became millionaires by budgeting and controlling expenses, and they maintain their affluent status the same way.”

That’s right – they set a goal to become a millionaire then the budget was the tool they used to get them there.

Maybe you have a goal to become a millionaire, maybe you don’t. You have financial goals, though, even if you haven’t attached a dollar amount to it yet. Do you want to retire someday? That’s a financial goal. Do you want to travel? Go on vacation next year? Buy a better car? Buy a house? Those are all financial goals, and you will achieve those through your budget. Once you attach a dollar amount and a deadline to the goal your budget can start to really work for you.

In this day and age there is no reason not to use budgeting software. It is cheap (or free) and does all the hard work for you.

In today’s post I want to do a review of the top three budgeting programs – Mint, You Need a Budget and EveryDollar. All three are online, have great mobile apps and are very secure.

The basic premise of all three programs is that you budget based on what you actually have – it’s not a projection in the future or a record of the past. If you just got paid and you have $2,000 in the bank then you budget $2,000. In all three programs the $2,000 will go at the top of the page and you give every dollar of the $2,000 a job or a name.

If $1,000 of that is allocated to the mortgage category you put $1,000 in the mortgage category and you have $1,000 remaining. Let’s say you take the remaining $1,000 and put $500 in groceries, $250 in utilities, $200 to a car payment and $50 to entertainment.

At this point your mindset needs to shift. You no longer have $2,000 in the bank – you have $1,000 allocated to your mortgage, $500 in the grocery category, $250 in the utility category, $200 for your car payment and $50 for entertainment. Your bank balance is irrelevant – all that matters is having categories that are funded.

Let’s move on now to what some of the differences are, the costs involved and pros and cons.

everydollarEveryDollar

EveryDollar was developed by Dave Ramsey and his team at Ramsey Solutions.

EveryDollar has two versions – a free version and a paid version. The paid version is $99 a year. The paid version gives you the software and app and the paid version connects to your bank account and imports transactions, which is vital in my opinion. The free version also has a lot of ads pushing you to use the paid version.

EveryDollar recommends you:

  1. Budget before the month begins in a team meeting with your spouse if you are married.
  2. Budget to $0 – or give every dollar a name.
  3. Track your transactions – you enter them manually or with the paid version you import them and assign them to a category.

In addition to the ads pushing you toward the paid version, there are ads for Dave’s ELPs, or Endorsed Local Providers. For example, on the sample budget I set up ads came up for auto insurance, home insurance and life insurance.

EveryDollar comes with a good 15-page Guide to Budgeting that teaches you how to use the software.

I found the interface to be clean and very easy to use. Entering transactions was simple. You can set or change the categories any way you want – adding, deleting, or renaming.

The big problems I see with the software are:

  • Neither version tracks your bank account. The paid one pulls transactions in, but it doesn’t track your account. You would have to log in to each one to be sure your balances are the same. Other software acts as a bank register in addition to the budget. Using EveryDollar gives you an extra step.
  • The ads for the paid version and ELPs got annoying.
  • The paid version is expensive for what you are getting.
  • In most of the categories money doesn’t roll over from month-to-month. If you have $10 left in “gas” at the end of the month it is gone on the first of the next month. I think that is a major flaw. When I looked up why they did that it says that there shouldn’t be any extra money at the end of the month. If there is $10 leftover you should apply it towards your goals. I get that, but I still think it should roll over. What if I am putting extra in the gas category to save for the gas for our vacation?

    There is an exception to this – the “goals” categories do roll over. Put $100 in a category labeled “Emergency Fund” and it will roll over. Supposedly you can also turn any category into a “Fund” and it will roll over. When I tried doing that, though, nothing rolled over. It is possible I got frustrated too early and didn’t learn how to fully use it, though.

While it is clean and simple to use, I think the cons outweigh the positive features. I don’t think it fully does what you want a budget to do.

mintlogo_link_presspgMint

Mint was one of the original players in the online budgeting software game. They were acquired by Intuit a few years back who really hasn’t done much with it. My guess is that they bought Mint to market its other products to the users, of which Mint has over 300 million.

Mint is 100% free. It is supported by ads that can get quite intrusive.

When you first sign up the first step is to link it with your bank account. You can’t move past the first screen until you link it. I don’t like that at all. I think they should let people take it for a spin before they commit, but I think we should also read bills before we pass them. I do wonder how many of their 300 million users signed up, then never actually linked an account.

Because I didn’t want to link an account today, my review is based on how the software used to function. However, just last week I tried to help someone with their Mint account, and it looked the same and had the same limitations it used to have, so my review should be fairly accurate.

Mint will allow you to connect all of your accounts, so it can act like a Financial Dashboard for you. As I mentioned, it is also free.

For me that is where the pros stop. I found Mint to be incredibly inflexible and not user-friendly at all, starting from page one where you can’t see what you are getting unless you link your account. Want to rename a category? Nope. Mint fixes the categories and you can’t change them, which means you have to fit your budget around their predetermined account names. Here is their fixed list: https://www.mint.com/mint-categories.

“Honey, which category in Mint is the money we’re saving for a snowblower?” “It’s the laundry category.” It’s about like that.

Returning things and getting credits to your account throws the budget off as well. If you return $50 worth of clothing it sees that as income. I found full blog posts about how to manipulate the software so it isn’t treated as income. It shouldn’t be that hard.

Remember, though, Mint IS free. If you can’t afford a paid version and you want it to link to your accounts (and you do want to), then Mint is a good option.

ynab-logoYou Need a Budget

You Need a Budget, or YNAB for short, was developed by Jesse Mecham while he was a student at BYU. He had taken an Excel class and created a spreadsheet that he used to track their family budget. He decided to try to sell it and to his surprise it sold – a lot. Jesse has a full team working on YNAB now and it has moved far beyond the Excel spreadsheet. It is now a web-based app with an Android and Apple app. YNAB focuses on one thing – budgeting – and they do it extremely well.

YNAB has four rules for making your budget work:

  1. Give every dollar a job. You budget just the money that you have on hand by asking yourself, “What should this money do before I’m paid again?” You follow this rule by connecting your bank and credit card accounts to YNAB, setting up spending categories, putting money in the categories and tracking your expenses.
  2. Embrace your true expenses. Think about your less-frequent expenses such as Christmas and insurance. You set a goal with a deadline and a dollar amount to meet those goals. The software tells you if you are on-track or not. See my blog post at http://blog.ryanhlaw.com/revolving-savings/ for more details.
  3. Roll with the punches. When you need to change your budget, just change it.
  4. Age your money. Work towards spending money that you earned at least 30 days ago – that way you aren’t living paycheck to paycheck anymore. The software displays an “Age of Money” number at the top of your budget.

YNAB is free for 34 days, then you can pay either $5 a month or $50 a year. Students can get a copy for free for a year by emailing student@ynab.com.

YNAB is simple to use, and in my opinion it is the most powerful budgeting software out there. The only downsides I can think of are:

  • The Android and Apple apps need some more developing. I happen to know that this is a feature they are working on right now.
  • It has a bit of a learning curve. While they have user guides, they could benefit from a simple booklet like EveryDollar puts out with their software. However, they have free online classes (over 100 per week) – including some early in the morning and others in the evening. You should be able to find a class time that works for you. There are currently 13 different classes – from Getting Started to Learn From Reports (https://www.youneedabudget.com/classes/).

Conclusion

If you need a free solution I recommend Mint. If you are willing to pay for a far superior product, though, I recommend YNAB. I have been using YNAB for years now and I recommend it all the time. It is the most powerful and versatile option. You will get far more from YNAB than you will from either other software package.

With any budgeting software, though, it only works if you put in the time. EveryDollar recommends a weekly meeting and check-in. This will work for most people. Being the budgeting nerd that I am, though, I actually log in each morning, pull transactions in from the previous day, and make sure everything is up-to-date. It takes just a few minutes, then I can be sure that all of our budget categories reflect correct numbers.

You can learn more about any of these solutions at:

http://www.everydollar.com

http://www.mint.com

http://www.youneedabudget.com

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