What is Identity Theft?

Credit Card Theft
Image by Don Hankins via Flickr

Usually “identity theft” means that someone is using your name, Social Security number, or credit card information without your permission. It could also mean that they are using your driver license or medical records. There was a recent case where a man struggled for 35 years because someone he knew had taken his personal information. This person moved to another city, got a job, got sick and created medical records and doctor bills, and did not bother to pay his taxes – all in this man’s name!  The victim tried to get help , but it took THIRTY FIVE years before anyone listened to him, can you imagine?

According to the Federal Trade Commission the number of Americans who fall victim to identity theft each year is 9 million and growing! I have been a victim three times, twice someone began using my credit card while I was out of the country, and once I didn’t even know about until I received a notice from the government that the person had been caught. Fortunately, I was able to take care of my issues quickly and easily. The first time I was on a cruise for 7 days and the bank noticed the strange activity and called my home; the second time I was in Europe, when I got home and started working on my expense reports, I  noticed purchases that were definitely not mine. In both cases the cards were canceled immediately and new cards were issued. What was scary is how easy it was for someone to be me, and purchase items, gamble in online casinos etc.

Chances are that you, a close friend, or a relative have been victimized in the past. Due to the state of the economy, the instances of identity theft are actually on the rise. Crimes utilizing your identity range from using your name to acquire housing or purchase an iPhone and create a new AT&T account , to getting a new drivers license and clean driving record.   Identity Theft is not always about your credit card (not at first anyway), this is a fairly common misconception.  Identity theft more commonly occurs because:

  1. The thief has lost their own drivers license (suspension, DUI, too many traffic violations) and uses yours to start over in  another state
  2. The thief is unable to get an apartment because they have a bad rental history
  3. The thief cannot get a new cell phone plan with their bad credit, so they use your name and information instead

Once the identity thief is comfortable using your information, it’s no stretch for them to really dig in and get a job, open credit accounts, get medical care, and basically create a shadow life to the one you are living. Scary isn’t it?   And what’s even more scary is that this could very well be someone that is known to you or to your friends or to your relatives. Someone who got close enough to get just  enough of your information to be dangerous.

Identity theft is not a joke and it’s not some crime that companies make up to get you to buy their ID protection  product. What’s even scarier is the impact identity theft can have on your life:

  • You could lose out on a new job
  • Your child may not be able to get a loan for college
  • Your cars could be repossessed or you may be unable to purchase a car
  • You could be arrested and jailed because of someone else’s mishandling of your identity

Have any identity theft horror stories? Feel free to share.

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When Paying Off Debt – Don’t Try To Eat The Whole Elephant

ccToday we are blessed with the ability to have just about anything we want quite quickly. If we get lost on a road trip, a GPS system will give us the correct directions instantly (failing that you can text your location and destination to Google and they will text directions back to you); we don’t just have restaurants we have “fast food” restaurants, and even conventional restaurants now allow fast ordering and pickup via the internet; can’t remember the name of that actor in National Lampoon’s vacation? Google it. Need to visit your money, pay a bill, trade some stock, or buy clothes for the kids? You don’t even have to get off the couch, just log on to your bank, favorite online store etc.

But what has the ability to get things done right now done to all of us? It’s given us the false belief that we can do everything FAST!  You can lose 10lbs this week, speak Italian by Monday, have a gourmet meal on the table in 30 minutes or less, and take a couple of hours off work to  change the contours of your body or thickness of your lips.  So then why shouldn’t you  be able to get out of debt quick, fast, and in a hurry?  I read somewhere recently that if you borrow against tomorrow, you will always be broke. Well think of your debt situation as you having borrowed against tomorrow – and now the day after tomorrow is here and you’ve still got the debt, but that windfall you borrowed against  just never happened.

The truth is that how quickly you get out of debt will depend on a couple of things:

  1. How far down the rabbit hole did you let yourself go? $2000 in credit card debt or $250,000 including a car and a mortgage (yes you should probably pay your mortgage off  if you plan to stay in your house).
  2. How much are you willing to give up ( from that Aruba vacation to eating out to t-bone steaks from the grocery store)?
  3. How much  income can you throw at your debt?
  4. How strong is your desire to be debt free – I mean do you want to be debt free or do you just want to get back to being able to using your credit cards and not hiding your car?

Getting out of debt can be hard work if you do not have the right tools – if you have 3 or more large sums to pay off then chances are you have creditors calling and offering their “special payment plan” , please understand that often these plans will leave you exactly where you are for another 10 to 15 years! In my last post  “How To Survive & Maybe Even Thrive In Our Down Economy” I discussed my aversion to credit counseling services – the main one being that they don’t get you out of debt very quickly (ok, yes I am addicted to fast) and the monthly payment you get stuck with just isn’t worth it in many cases, I also promised my Mamapedia readers some debt reduction tools.

When you begin the work of getting out of debt, don’t try to eat the whole elephant, you can’t really pay off anything if you are paying off everything all at once. Try the snowball method where you start with the little things – your $400 department store card, followed by the $1000 Amex, and then the $5000 Home Depot  bill.  Back to those tools I mentioned ( the links below are all to documents on Keith Chuvala’s FPU page), if you can afford it I suggest David Ramsey’s ” Financial Peace ” or his Total Money Makeover or any book on creating a budget  and managing your debt. The first thing any financial planner worth their salt will tell you is that you have to pay yourself first, which doesn’t mean that you take $200 from your paycheck and go shoe shopping. What it means is that  you should save and/or invest a portion of your income every pay day. David Ramsey suggests saving $1000 before you even consider starting your debt reduction plan because if you don’t have any savings then small emergencies will derail your efforts topay down your debt.

The next thing that you should do is determine what you take home and what you  spend each month, the three spread sheets on this page will help you to document this information and then create a quick and dirty budget.  There are many worksheets on Keith’s website that wil help you with everything from how to save to paying off debt, by far my favorite is the Debt Snowball Calculator, using this calculator I realized that I could actually pay of my 30-year refinanced-too-many-times-to count  mortgage befoe my youngest gets out of college – to me that is awesome!

OK this post ran a little longer than I planned, I hope that I’ve given everyone who’s having issues with debt a few tips and tools for getting out of debt once and for all. Also, if you leave a comment and are among the first 10 people to  link to the post on Twitter( put @deniseporter so I know that you did) I will gift you with a copy of  “The Total Money Makeover”.

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Your Reality Bites – How to Deal With Bill Collectors & Other Blood Suckers

dino debt collector
Image by niznoz via Flickr

Did you read my previous post  “Your Boss is Not Your Daddy” ? Read it again, I’ll wait. Well can I call it or what? You’ve been laid off and have no fall back position. To top things off, now that you are a payment or two behind on the car or the mortgage or a credit card – your phone rings constantly and it’s not recruiters with lucrative job offers. What can you do besides cower in a closet or turn the ringer off (i mean if you turn the ringer off you may just miss that lone recruiter with the lucrative job offer).

So what’s this all about? Well, I’ve been there more than once, I have walked through the fire for you and I am here to tell you that you have to face your fears or the calls will never stop. Now I’m not going to give you financial advice, there are smarter people than me for that; but I am going to give you some tips that I hope will help you to get out of that funky space that hiding from debt-collection calls puts you in.

  1. Answer the phone! If you don’t answer the phone they will continue to call and believe me you don’t want to prolong this experience. Florence Scovel Shinn says when we are prepared to face the lion in our path, he magically disappears.
  2. Be nice! Like your Mom probably told you countless times – you catch more flies with honey than vinegar.You attract what you are and if you answer the phone with a growl, the lion will roar. Remember that the person on the other end
    • is just like you
    • might even be deeper in debt than you
    • is probably reading from a script and will be critiqued at the end of the call by someone listening to that recording that is being done for quality assurance purposes
  3. Explain your situation calmly and let them know that you want to pay your bill as much as they want you to pay your bill. Often this will lead to them offering you a deal of some sort like eliminating the interest and late charges and letting you pay 50% or less of what you owe. Deals like that are nice if you have the wherewithal to pay, but even if you don’t there may be a hardship program that you qualify for.
  4. If they are nasty and ask personal questions or try to make you angry – hang up. Why make yourself sick and cloud your Karma by arguing with them? Just say nicely “Thanks for the call, I’m going to hang up now, have a great day OK?”
  5. Learn your rights under the Fair Debt Collection Practices Act; one of your rights  is that you can send a letter to the collection agency and the original debtor that says “for petes sake please stop calling me!” Here’s and example (remember to send it certified mail and get a receipt):
Tired of all these bills bills bills
Image by banoootah_qtr via Flickr

Dear Mr Bill Collector Sir,

I am exercising a right granted to me by the Fair Debt Collection Act. I am currently unemployed and cannot  pay the $240.00 per month required to keep this account current . I can pay $20 per month, but given my present circumstances that’s all I can afford .  I have no other property to use to pay this debt, and I cannot borrow anymore than i already have from family and friends.
Please cease all communication with me.
Sincerely,

Broke in Boise

Use this letter as an example only and make sure that you look into what your other rights under the THE FAIR DEBT COLLECTION PRACTICES ACT are.  Do you have some tips for dealing with bill collectors? Please share!

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