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Financial Protection When You’re Between Jobs

Brendan — Thu, 16 May 2013 11:00:03 +0000

When you’re between jobs—whether due to a layoff or a decision to leave—you may have special financial challenges to consider. Your income is likely less than it was while you were working, but that doesn’t have to mean derailing your retirement goals or foregoing insurance. There are some strategies that can help you keep your retirement savings and insurance coverage working for you, even when you’re not. Retirement Savings When you leave a job (voluntarily or otherwise), you typically have a few options for the 401(k) at your old employer. If the employer allows it, you can leave the funds where they are. Another option is to roll over your 401(k) into an Individual Retirement Account (IRA) so that the money continues working for you in a tax-deferred manner. Liquidating your 401(k) is an option but there may be tax implications and early distribution penalties. It is best to consult your tax professional before making any distribution decisions. To continue contributing to an IRA or 401(k), you need earned income, such as a salary or profits from a small business. Unemployment benefits are not considered earned income by the IRS, so if that’s your only source of income, you would have to temporarily pause contributions to your IRA or 401(k). However, if your spouse has earned income, he or she could potentially bump up retirement contributions to compensate. If you re-enter the job market, you could resume contributions to your own retirement account. If you’re 50 or older, you can also make catch-up contributions to a 401(k). Insurance Depending on the size of the company, employees who are laid off or leave a job voluntarily often have the right to continue their health care coverage for a specified period of time through COBRA. However, health insurance doesn’t cover everything, especially in the case of an accident or serious illness, so a supplemental health insurance policy could help fill coverage gaps such as co-pays, deductibles and non-medical care (transportation to treatment, for instance). Knowing your medical costs would be covered can help provide peace of mind during an uncertain time. Premiums for supplemental health insurance can start as low as $20 per month. Life insurance is another area to consider. If you had a policy through your previous employer, you may want to consider buying an individual policy to ensure that your family would be able to cover their daily expenses if the unthinkable happened. A permanent life insurance policy can accumulate cash value over time so that you might be able to take a loan or withdrawal if needed. Want to know more about your retirement and insurance options? Contact an Allstate personal financial representative to discuss your needs.

How to Start Improving Your Credit Health Right Now

Bethy Hardeman, CreditKarma — Wed, 24 Apr 2013 11:00:41 +0000

You might not think about your credit that often, but when it comes time to apply for a loan it’s a top priority. The thing is, if you wait until that moment to concern yourself with your credit health, it’ll may be too late to do anything about it.

So instead of waiting until you need it, anticipate that someday you’ll probably apply for a mortgage or auto loan—or even a credit card—and take a few steps to start improving your credit health today.

Get rid of credit errors.

Get in the habit of checking your credit report on an annual basis to make sure that it is accurate.

Check your three, free credit reports from AnnualCreditReport.com. You’re entitled to these once per year. After you’ve pulled your reports, go through them thoroughly to check for errors. You should look out for things like accounts you don’t recognize, late payments on accounts you’ve always paid on time, erroneous derogatory marks and even incorrect personal information. Small errors, like a wrongly reported mailing address, shouldn’t affect your credit score. But an incorrectly reported account could.

If you spot an error, use the FTC’s guidelines for disputing it with the credit bureau. If that doesn’t work, you can also go directly to the information provider to see if they’ll stop reporting the incorrect information.

Spot future errors early on by getting a credit monitoring service, like Credit Karma’s free one. You’ll be alerted to important changes on your credit report and can act quickly if you don’t recognize them.

Get a higher limit.

One of the most important factors of your credit score is your average credit card utilization rate. This percentage shows creditors how much of your available credit you’re using. Ideally, you should keep this number to less than 30 percent for good credit health.

One way to ensure your credit utilization stays low is to get higher credit limits on your credit cards. This should not lead you to spend more on your cards; it should just give you a nice buffer to stay well below a 30 percent utilization rate.

Most credit card issuers review and raise credit limits every six months or so. If it’s been a while since your last credit limit increase, try the direct approach. Call up your credit card company to request one, calling out your responsible credit behavior. Keep in mind that a request like this can sometimes result in a hard credit inquiry, which will ding your score a few points.

Use your old credit cards.

Unless you have a really good reason for closing out an old credit card account—like a high annual fee, for instance—keep these cards open and active. Creditors like to see long credit histories, especially if they’re clean. But it’s not enough to just keep old cards open; you also have to use them. The reason for this is that some credit card companies will close out inactive cards or at least stop reporting them to the credit bureaus. This can unexpectedly reduce your utilization rate, too.

Make a small purchase or two on your oldest card, or set up a recurring charge like a gym membership. Just make sure to pay off the balance each month.

Bottom Line: This should give you a good start in improving your credit health. Of course, make all of your bill payments on time; that’s the best way to maintain good credit health once you have it.

Bethy Hardeman writes on credit, personal finance and the economy for CreditKarma.com, a free credit management website that helps more than 8 million people access their credit score for free.

Bethy Hardeman is not an Allstate employee and does not represent Allstate. She did not receive monetary compensation for this post.

4 Ways to Use Your Tax Refund Wisely [INFOGRAPHIC]

Brendan — Fri, 12 Apr 2013 17:00:32 +0000

Tax time may not actually be 'fun,' but once the process of filling out all those forms is completed, dotting the Is and crossing the Ts, many of us have a refund coming our way. With the average tax refund near $3,000, it's important to put that money to use in the best way possible. For some that means paying down credit cards, for others it means putting it toward retirement. In any case, many options should be considered and evaluated. Here's a brief look at 4 wise ways to use that money. [infographic]

Stump the Identity Thief: 7 Tips to Create a Strong Password

Melissa — Thu, 21 Mar 2013 11:00:12 +0000

According to the Internal Revenue Service, identity theft and credit card fraud are growing global concerns. From phishing scams to sophisticated hacking rings, cyber thieves continue to develop creative ways to compromise your personal information. Internet security can be tenuous and, at times, easily breached, and both the IRS and Federal Trade Commission recommend you safeguard your personal information with a strong password. Here are seven password tips that will help you stump an identity thief and keep your information and financial accounts protected. 1. Don't use your dog's name. The IRS suggests that you refrain from using any personal information in your password. That includes Social Security numbers, maiden names, birthdays, anniversaries, the names of children, pets, or anything else that can be guessed, researched or discovered by a hacker. 2. Make them hunt through the "haystack." Steve Gibson, security expert and president of Gibson Research, suggests using a password that is long and contains upper-case and lower-case letters and special characters. Using various types of characters in a long password increases the number of combinations a hacker has to try in order to crack your password. Gibson likens these attempts to figure out your password to finding a needle in a haystack; so, to hide that needle, you should use more characters, and characters of different types, to make the "haystack" larger. 3. Old passwords = vulnerable. According to the United States Computer Emergency Readiness Team (USCERT), it’s a good idea to change your password on a regular basis, especially after accessing accounts via a public computer. If you keep the same password to a certain website for many years, identity thieves have that much more opportunity to decode it. A rule of thumb is to change your password every 45 days. It's especially important to change your password after using it on a public computer, because browsers on public computers can, in some cases, store your passwords, making them vulnerable to theft. 4. Try a pass phrase. If you feel your memory is sharp, then consider creating a pass phrase. A pass phrase is a long string of unrelated letters, numbers and punctuation marks. While a pass phrase can be difficult for a user to remember, this type of password is also very difficult to crack. 5. Use a sentence. If you don't think you're going to be able to remember a cryptic string of characters, one idea is to think of your password as a sentence and then use the first letter of every word, mixing in caps and lower-case letters and a few numbers that you can remember, as the actual password. 6. Memorize all passwords. Do not store the information in a wallet, in a purse or on a cellphone. If you need to write the password down, be sure it’s stored in a secure location. 7. Do not use the same password for work and personal accounts. In fact, the USCERT recommends that you use a different password for each website account you access. That way, if one of these passwords becomes compromised, the thief will not have access to a second account. While identity theft and credit card fraud are a risk, you don't need to feel vulnerable or unprotected. Use these seven tips to create a strong password, and you'll not only stand a better chance of stumping an identity thief, but you could also give yourself greater peace of mind when it comes to Internet security.

5 Quick & Easy Strategies to Save More for Retirement

Admin — Wed, 13 Mar 2013 11:00:39 +0000

According to the Employee Benefit Research Institute, almost one-third of all Americans have less than $1,000 set aside for retirement and more than half have less than $10,000. This is surprising in light of the fact that many experts warn that your future Social Security income--a traditional form of retirement income--may not be enough. Saving for retirement, or saving more, is really not something to put off. Consider these five strategies to boost your retirement portfolio today: 1. Put Yourself on a Budget If you don't know where you are financially, you'll have a hard time getting to where you want to be. The solution is to budget, and it's easier than you might think. Use an online tool, such as Mint, or simply list all of your income and expenses in a spreadsheet or on paper. True, collecting your monthly statements, such as credit card and bank statements, and bills, may take a few minutes, but it's worth the effort. Then, review your expenses to see where you can cut back, and set monthly limits for each spending category. Deposit what you save into a Roth or traditional IRA, or increase your contribution to your 401(k) at work. 2. Clip Coupons to Save on Groceries According to the Department of Agriculture, the average American household spends as much as $1,200 per month on food. This means that if you reduce your food bill by 20 percent, you could save almost $3,000 per year. One good way to save is to clip coupons. Even if you don't take it to the extreme, regular couponing can translate into serious savings. Check the Sunday paper for coupons, sign up for your grocery store's loyalty program, and match coupons to in-store sales and incentives to get the biggest bang for your buck. 3. Generate Extra Income Consider reallocating the time you spend watching TV or posting on Facebook. You might consider selling unneeded items on the Internet, or even filling out paid surveys online. Or consider starting your own consulting business specializing in an area of your expertise. 4. Review Your Monthly Bills Review all of your monthly bills and look for ways to cut back, including negotiating extra fees and charges. Also, use the Internet to research less expensive options for your cable TV, cell phone and other monthly services. If you're not currently bundling, investigate this option, too. 5. Eliminate Credit Card Debt According to the Federal Reserve, the average American carries roughly $7,000 in credit card debt, which can result in significant interest payments. Consider your credit card's APR and the amount you end up paying every year in interest, and think how much you could save by paying off your credit card debt. Final Thoughts There are two chief components to saving more for retirement: One is to save more money, and the other is to actually deposit what you save into a designated retirement account. If you haven't already, open an IRA, a Roth IRA (if you qualify), or deposit more of your income into your 401(k) at work. A great way not to be tempted to spend what you save is to set up automatic deposits into your retirement account on a monthly basis. Remember, if you make early withdrawals (before you turn 59 1/2) from a 401(k) or traditional IRA you may be penalized. However, you can withdraw contributions made into a Roth IRA at any time without penalty. What other ways to save more for retirement can you share? David Bakke is a contributor for MoneyCrashers.com. He was once buried in more than $30,000 of credit card debt, and now shares his story and tips for smart money management. Recommended by the editors:

Tax Day: Are My Medical Expenses Deductible?

Brendan — Tue, 05 Mar 2013 12:00:31 +0000

Tax day is approaching quickly, so you may be searching for the correct ways to trim your IRS bill or increase your tax refund. Be sure not to overlook medical and dental expenses. According to the IRS, expenses associated with the “diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body” may be eligible for deduction. But how do you know which expenses are fair game – and which cannot be deducted? What about the Health Coverage Tax Credit? Here are some answers to four of the most common questions:

What medical expenses can I deduct that I may not have known about?

The following are examples of expenses that you can deduct:

Weight loss programs if the program is recommended by a physician following a diagnosis of obesity, heart disease, hypertension or another medical condition.
The cost of transportation to another city if the purpose of the trip is to receive medical services. An additional $50 per night is allowable for an additional person, such as a spouse or a parent traveling with a sick child.
Smoking cessation programs, including medication requiring a prescription. However, drugs that do not require a prescription, such as nicotine gum, are not eligible for deduction.
The cost of birth control prescribed by a doctor.
A wheelchair that is used primarily for sickness or disability.
A wig purchased following the loss of hair from treatment, such as chemotherapy.

What expenses can I not deduct that I may have thought were eligible?

The following are examples of expenses that you cannot deduct:

Health insurance costs that are eligible for the Health Coverage Tax Credit (HCTC).
Medicine or drugs purchased or shipped from other countries.
Health club or gym membership dues.
Controlled substances, including medical marijuana, where legalized by state law.
Medical expenses that are reimbursed by a Flexible Spending Account (FSA) or Health Savings Account (HSA).
Expenses associated with housekeeping help, even if this help is recommended by a doctor. Some expenses, such as nursing services and long-term care may be deductible.
Weight loss programs if the purpose of the program is for general health, physical appearance improvement or self-esteem improvement.
Special diet food and beverages, even if you have been diagnosed with a specific medical condition requiring weight loss.

Can I deduct health insurance costs if I am self-employed?

If you are self-employed, you may be able to deduct health insurance costs as an adjustment to your income. These costs include insurance payments for yourself, a spouse and children under the age of 27. However, you cannot deduct insurance costs for any month in which you were eligible to participate in an insurance plan subsidized by your spouse’s employer. To determine your deduction amount, use the Health Insurance Deduction Worksheet in the Form 1040 instructions.

Do I qualify for the Health Coverage Tax Credit (HCTC)?

According to the IRS, HCTC covers 72.5 percent of qualified health insurance premiums for eligible individuals and their families. This credit is available on a monthly basis to cover premiums, or it may be taken on a yearly basis when filing an income tax return. HCTC covers displaced workers, individuals receiving benefits from the Pension Benefit Guaranty Corporation (PBGC) that are 55 years old or older, and individuals who have lost health insurance coverage at work. COBRA continuation coverage, coverage under a non-group (individual) health plan, and certain state health insurance plans may qualify. Proper life insurance can also help protect you and your family, including your finances, when an unpredictable health issue/expense arises. For more information on deducting medical expenses, consult IRS publication 502 available at IRS.gov, or talk to your tax preparer.

5 Tips to Protect Your Identity at Tax Time

Melissa — Thu, 28 Feb 2013 12:00:23 +0000

Whether you owe money or are expecting a refund, preparing your tax return on your own or hiring a professional, tax time can be, well, taxing. The last thing you probably want to worry about is identity thieves tapping into your financial accounts, opening new lines of credit or committing other types of theft or fraud. But according to Identity Theft 911, tax season is a prime opportunity for identity thieves. W-2s and other Internal Revenue Service tax forms contain a wealth of information--everything from Social Security numbers to financial account information--that can be a target for resourceful criminals. Protecting your identity, however, doesn't have to be difficult. Follow these simple steps to help safeguard your personal information from hackers and identity thieves during tax season. 1. Be vigilant with your information online. According to the IRS, impersonation schemes thrive during tax season. This is when thieves claiming to represent the IRS send emails, make phone calls or send traditional mail in an attempt to steal people's Social Security numbers or other sensitive personal information. However, it's important to remember that the IRS says it does not contact people by email or social media, so, if you're the recipient of any electronic messages, you should know that they are fraudulent. If you suspect that a piece of mail you’ve received is part of a scam, you can visit IRS.gov for information on how to determine whether it is authentic. 2. Keep an eye on your mailbox. While cyber-crime has become many thieves’ preferred method of obtaining personal information, it's still important to closely monitor your mailbox. All official tax forms are delivered by mail, and some thieves find it easier to simply open someone's mailbox and steal their forms than figure out Internet passwords in order to reap personal information. 3. Leave your Social Security card at home. According to the IRS, you should not, at any time, carry your Social Security card in your wallet or purse. The card should be kept in a safe place, preferably in a safe-deposit box or another secure location. If your Social Security card is in your wallet and your wallet is stolen, then it’s possible your personal information can fall into the hands of identity thieves. With your Social Security number, a thief can compromise your bank account and open new lines of credit. 4. Be crafty with your password. Refunds from electronically filed tax returns are typically direct-deposited into financial accounts, which can help protect a refund check from being stolen from your mailbox. However, if you e-file, you need to know how to do so safely. One way to protect yourself is by creating a strong user password on the website through which you file your tax return. To ensure Internet security, incorporate a series of numbers, letters and punctuation marks into your password. 5. Know your tax preparer. Fraud rings have been known to front as tax preparation centers. Scam artists prey on the unsuspecting customers of these centers, stealing personal information and sometimes redirecting their tax refunds. According to Forbes, there have also been instances when a corrupt tax preparer has sold a client's information to a criminal, who then used the information to file for a fraudulent tax return. The bottom line? It's a good idea to research your tax preparer or accountant and make sure he or she is legitimate and ethical. In addition to taking steps to thwart tax-time identity thieves, you may also want to consider purchasing identity theft restoration coverage, which can alert you to potential fraud and help you repair any damage to your identity in case you do become a victim.

Financial Tips for the Newly Single and Over 50

Brendan — Tue, 26 Feb 2013 12:00:26 +0000

Divorce can throw a wrench into even the most careful financial planning. If you’re newly divorced, you’ve probably had to deal with dividing assets, such as investments and retirement accounts, and setting up separate households, not to mention the emotional fallout of ending a marriage. Here’s a look at several steps you can take to get your finances back on track after a divorce. Consider Life Insurance Life insurance is especially important if you have dependent children who may be relying on you to cover their daily expenses or educational costs. Life insurance could also prevent you from becoming a financial burden on other family members, because your beneficiaries could use the proceeds to cover your final expenses, such as burial or funeral costs. That money could also be used to settle any debts you might leave behind. Investigate Health Insurance If you were covered under your ex-spouse’s employer health insurance policy, you may need to secure new coverage once the divorce is finalized. If your ex-spouse’s company has 20 or more employees, you may be eligible to continue coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA), provided you notify the health plan administrator within 60 days of becoming divorced. However, under COBRA, you will be responsible for the entire amount of the premium, which is the monthly payment, so it may be more economical to secure coverage on the individual market or through your own employer. You may also want to beef up your health insurance coverage by adding supplemental health insurance. In the event of a serious injury, supplemental health insurance would help fill coverage gaps like co-payments, deductibles, and nonmedical care, such as transportation to treatment. Explore IRA and Social Security Options If you were married for at least 10 years and have not remarried, you can claim Social Security benefits on your ex-spouse’s record starting at age 62, regardless of whether your ex-spouse has remarried or not. But Social Security checks may not cover all your expenses during retirement, so it’s often a good idea to use other retirement savings vehicles, such as Individual Retirement Accounts (or IRAs). IRAs are a tax-advantaged way to save for retirement that allow you to choose the investments in your account and supplement employer-sponsored retirement accounts, including a 401(k) or 403(b). The maximum IRA contribution for 2013 is $5,500, but if you’re over age 50, you can also make catch-up contributions to a traditional or Roth IRA up to $1,000. By taking these steps now, you’ll help ensure greater financial independence and security during and after this difficult transition. Want to know more about insurance and IRAs? Contact an Allstate personal financial representative to discuss your needs.

3 Tips for Making the Most Out of a College Visit

MovingInsider — Wed, 20 Feb 2013 12:30:32 +0000

College is a big deal. All the years of academic study, from grade school through high school, will culminate with your acceptance into college. It’s a place where you’ll live and become educated at the highest level for four years, totaling nearly $90,000 (for the average in-state public college), according to a College Board report out last October. The goal, of course, is for you to leave fully equipped with everything you need to pursue a successful career in your area of study. If you really take a moment to contemplate the magnitude of this commitment—four years, $90k in college savings, preparation for the rest of your life— then it’s clear why selecting the right college likely will be the most significant decision of your young life. At this point, you’ve probably carefully reviewed the program and campus information online, and read all the informational pieces sent to your home. Now, you are ready to enter the final stage—the campus visit. Here are three tips that can help you make the most out of your college visit.

Schedule Your Visit Like a Pro.

Advance planning is important. Why? Well, in addition to reserving a campus tour, you also should arrange for several other engagements. For instance, it is recommended that you meet with an admissions officer and professor in your area of interest, attend a lecture, participate in a student club activity and perhaps even spend the night in campus housing. The best time to schedule your visit is when classes are in session, and the campus is bustling with activity. This will give you the most authentic taste of the daily university profile.

Don’t Be Shy. Go Explore.

Standard campus tours are great for learning about the basics. But if you really want to peel back the layers and tap into true student experiences, you must venture out on your own. Hang out in a campus gathering area and ask students questions you might have about programs, campus life, extracurricular activities, facilities, housing, summer storage, etc. Their responses will be genuine and non-scripted, providing you with great insider information. After speaking with students, continue to explore your surroundings: Eat in the dining hall, visit facilities/buildings you weren't shown during the general tour, read bulletin boards and the school newspaper, attend an on-campus event and also make sure to check out the area just outside the campus perimeter.

Create a Campus Portrait.

It’s also a good idea to create a record of your trip. The easiest way to do this, of course, is by taking pictures. Snap photos of anything and everything that interests you. This will help you recall the sights and activities of your trip with complete accuracy. Also, carry a small notepad (or use the note application in your phone) so you can write down your thoughts during your tour, the responses of students, or any lingering questions you would like answered before you leave. After visiting several campuses, you will have a nice collection of photos and recorded thoughts, allowing you to effectively compare your college visits. Attending college is a cherished opportunity, valued privilege and a worthy responsibility. Many people say their college years were some of the best of their lives, a time when they experienced fundamental self-discovery, made lifelong friends, and built the beginnings of what would become their future careers. You should now be prepared to make the most out of your college visits. Before you know it, you will be packing for college and setting out to have the time of your life. This post is brought to you by the editors of MovingInsider blog, the DIY Experts in moving, storage and organization. Recommended by the editors:

Has Your Child’s Identity Been Stolen? Know the Warning Signs

Melissa — Wed, 13 Feb 2013 12:00:04 +0000

Many of us have heard the warnings about identity theft. But, did you know that your children can fall victim to identity theft too? Recent statistics show that it happens. Carnegie Mellon University's CyLab found that 10.2 percent of 40,000 children involved in a 2011 study were victims of identity theft. Childhood identity theft can have devastating long-term financial implications. It can affect a child’s ability to take out a student loan, receive a scholarship or get a credit card. Identity theft may even impact future job opportunities.

Child Identity Theft Warning Signs

How do you know if your child’s identity has been stolen? Be vigilant about protecting your child's identity, and watch for the following red flags:

Unsolicited credit card offers. Have you received one or more unsolicited credit card offers in your child’s name? Credit card offers are never intentionally sent to minors.
Social Security account statement. These statements track annual contributions and anticipated benefits. Unless your child has a part-time job, an earnings statement in your child’s name is a clear indicator of fraud.
A bill or a collection agency call for your child. Don’t dismiss this as a case of mistaken identity. A call from bill or collection agency can be a clear sign of identity fraud.
The Internal Revenue Service contacts you about your child. If the IRS informs you that your toddler hasn't paid his income taxes, this is a warning sign that someone may be masquerading as your son.

Tips for Preventing Child Identity Theft

Identity protection for your child starts with some privacy precautions. Here are some tips that may help reduce your child’s risk for identity theft:

Be proactive. Start by checking with the fraud divisions of all three credit reporting agencies: Equifax, Experian and TransUnion. Credit reporting agencies typically do not keep a report on file for minors. If there is a report, then there’s a good chance that your child’s identity is compromised.} And consider purchasing identity restoration coverage, which can help protect you and your family against identity theft and help repair any damage to your identity. Talk to an Allstate agent for more information.
Be cautious when giving out your child’s Social Security number. If a school, youth sports team, or a medical office asks for your child’s Social Security number, know that it’s OK to question why they need it, what they will do with it and how they plan to keep it safe.
Shred anything with your child’s personal information. Shred forms, documents and mail before disposal.
Never carry your child’s Social Security card. To help reduce the risk for theft; leave you child’s card -- and the cards of all the members of your family -- in a safe place, like a safe at home or a safe deposit box.

What to Do If Your Child's Identity is Stolen

If you find out that someone has stolen your child's identity, there are some steps you can take to minimize the damage. If you discovered that a credit report (fraudulently) exists for your child, contact any one of the three major credit bureaus (that bureau is legally required to alert the other two) and ask them to put a "fraud alert" on the file. Report the identity theft to the FTC. Also, contact your local police department to file a report. By taking a few simple proactive steps, and staying alert to early warning signs, you can minimize your child's risk for identity theft or the impact it will have should it ever occur. What concerns you most about someone's stealing your child's identity? Share your thoughts below.