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Stimulus Plan Attracts Con Artists

Ever heard of phishing? Phishing is a form of high-tech identity fraud, and the economic stimulus plan has created another opportunity for identity thieves to attempt to steal your personal information.

Phishing works like this: a hacker wanting to steal sensitive information (user names, passwords, account numbers, etc.) sends a victim an email disguised as a legitimate source. The email requests sensitive information or directs the recipient to a link that requires a user name, password, or account number. Unbeknownst to the victim, the hacker has manipulated the link within the email to appear to belong to a legitimate organization when, in fact, these manipulated links direct the victims to sites that collect user names, password, and account information for personal gain. Fact17_6030247_IDTheft

And now, thieves masquerading as IRS employees are sending emails to thousands of people telling them they are entitled to stimulus money. The emails instruct the victims to provide a bank account number so that the money can be transferred. Of course, the hackers take this information to make fraudulent withdrawals.

To shield against phishing, keep this in mind: A legitimate source will never request personal information via email. Never respond to emails that request personal information, and never provide sensitive information after clicking on a hyperlink, even if the website address appears legitimate.

If you have been a victim of ID Theft, comment and share your story.  The more we know about what is out there the better.  Please comment below!

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Economic Stimulus Might Cause Tax Problems

In its haste to pass an economic stimulus package, Congress might have caused a problem for more than 15 million taxpayers. Included in the stimulus package was a $400 tax credit for individuals and an $800 tax credit for married couples. To implement the tax credit, the legislation instructed the IRS to adjust withholdings so that fewer taxes were withheld from employees’ paychecks.

To make a complicated story short, the instructions to the IRS were faulty, meaning millions of taxpayers might have received a larger credit than they were entitled.

In other words, 15.4 million taxpayers might owe money on their 2009 returns, according to a report by the inspector general for tax administration. Still others will receive smaller refunds than they imagined.

If you suspect you might fall into either of these camps, you can either wait and see or change your withholdings for the rest of they year.   Either way, I recommend you talk to your Human Resource Manager if you need more information.

Assuming you do find that you are one of the 15 million people, comment below and share your story.

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Want to be Featured On TV?

I’m filming tomorrow and need additional “credit and finance questions” for the show.  Ask me anything you have ever wanted to know!  The more background you can provide, the better.

To submit your question(s), feel free to leave a comment below.

Thanks!

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“Deed for Lease” – Another Real Estate Disaster Coming?

A new initiative by Fannie Mae might keep troubled borrowers in their homes as tenants instead of owners. The “Deed for Lease” program lets homeowners who cannot keep current on their mortgage payment transfer their title to Fannie Mae and start paying rent at market rates, which most often are lower than mortgage payments.

As much as I love this for the borrowers who are struggling, this could be a disaster for the real estate market.  What is going to keep someone paying their mortgage if they are “underwater” by $100,000 when they could stay in the same home AND pay less rent?

This is going to hurt the banks more than they will help them… once again, a “good” idea that is going to backfire.

That being said, if you are struggling to meet your mortgage obligations, call your lender.  Most likely, you will need to be late on your payments for you to qualify (like the loan modification programs). 

To qualify for the “Deed for Lease” program, borrowers must show that:

  1. They did not qualify for a loan modification.
  2. They cannot afford their current mortgage.
  3. They can afford rent.

Be sure to ask when the lender will put the home on the market so you can plan accordingly.

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Credit Card Act Might Mean Higher Fees

The Credit Card Act of 2009—which takes full effect in February 2010—eliminates some of the unfair penalties credit card companies charge their customers. Say good-bye to the Universal Default Clause, a vicious device that permits a credit card company to raise a person’s interest rate for making a late payment to another creditor. And tighter restrictions will be placed on credit card companies’ methods for assessing finance charges.

While these changes might seem like a good thing, beware. The credit card companies are making up for lost profits by charging higher interest rates and fees, lowering limits, and increasing minimum payments.

 All these increased fees might make you want to cancel some of your credit cards. I caution against this for two reasons:

  1.  Canceling credit cards can lower your credit score by reducing the average age of your accounts. And if you cancel a card with a balance, you will have a high balance-to-limit ratio, which is bad news for your credit score.
  2. The tighter restrictions on creditors means credit cards will be harder to come by. What if you cancel your cards, only to find that you cannot get approved elsewhere?

Instead, pursue other options:

  1.  Call the credit card company and ask for a customer-retention specialist. Ask why you have been assigned higher fees/lower limits. Do not admit to anything that might make you appear to be a credit risk. Do let the representative know that you have been a loyal customer and that you object to the change in policy.
  2. If the representative does not reinstate your previous terms, consider “opting out.” The Credit Card Act of 2009 allows you to keep the old terms as long as you stop using the card and continue paying the balance. If the representative does not reinstate your previous terms, you could “opt out,” but consider this option seriously. The Credit Card Act of 2009 allows you to keep the old terms as long as you stop using the card and continue paying the balance. NOTE: This will result in either a closed or an inactive credit card account, both of which could hurt your credit score. Before choosing this option, read 7 Steps to a 720 Credit Score for a full explanation. 

 If you haven’t already shared your credit card “horror” stories, comment below, the more detailed the better.

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Giving Gift Cards? Think Again.

Critics complain that gift cards aren’t personal. Giving A $25 gift card to Barnes & Noble doesn’t quite say: “I know you.”

Proponents argue that gift cards allow the recipient to pick out the perfect gift. The hassle of returning gifts just isn’t worth it. Gift cards, they say, are the way to go.

Here are my two cents on the great debate over gift cards:

In today’s economy, buying gift cards is risky. Even major chains are in danger of going bankrupt, downsizing, or closing their doors entirely. Just ask K-B Toys and Circuit City, as soon as they went into bankruptcy all of their gift cards holders were left in the cold.

If you buy your sister-in-law a gift card to her favorite store, you will be throwing money down the drain if the store closes and is unable to honor the gift card.

Don’t take the chance with that gift card in this economy… I wouldn’t.

If you have had a horror story, share it with your fellow readers and comment below.  Thanks!

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Rental Slump – Tenants, Time to Haggle

Bad news for landlords: The vacancy rate has reached 7.8 percent, a 23-year high, and is expected to climb even further in the coming months, according to Reis Inc. And RREEF Research says the apartment market faces “one of the most challenging and complex environments in modern history.”

Bad news for landlords, good news for renters, who can negotiate lower rents and better terms. According to a recent article in the Wall Street Journal, landlords are doing just about everything they can think of to retain tenants—slashing rent, providing upgrades, and even offer flat-screen TVs to renewing tenants.

If your lease is about to expire, scout your neighborhood to see the rent on vacant units. You might be surprised to find that you are paying 10 percent higher than comparable vacancies on the same block. Then call your landlord and ask to renegotiate the lease. If you cannot get a lower rate, how about new paint? Will the landlord install a new ceiling fan? Maybe the landlord will provide you with an extra storage or parking space if you play hardball.

And if you know you are going to remain in the neighborhood for several years, think about asking for a two-year lease. Though the rental market is suffering now, experts predict it will be one of the first to rebound.

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Tax Credit for Buyers Until May 30, 2010

In an effort to stimulate the floundering economy, President Obama on November 6 extended and expanded the first-time homebuyer’s tax credit.

The good news is that it is no longer just for first-time home buyers.

The tax credit was set to expire on November 30. The new law extends the first-time homebuyer tax credit until next spring. You can claim the credit so long as you sign a sales contract before May 1, 2010, and close before July 1, 2010.

You can qualify if:

  • You and your spouse are both first-time homebuyers (defined as those who have not owned a home in the three years before the new purchase), you can qualify for a tax credit of 10 percent of the home’s purchase price—capped at $8,000 (an $800,000 purchase price).
  • You have owned a home for the past five of the past eight years, and want to buy a new home.  This tax credit is capped at $6,500.
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Beware of Interest-Induced Holiday Hangovers

Almost half of banks responding to a survey by the Federal Reserve said they were increasing interest rates.

Suffering not only from the recession, but also from the new restrictions mandated by Congress, banks are passing the buck—or rather, they are grabbing the bucks wherever they can find them by increasing interest rates to make ends meet.

With the holiday season fast approaching, this is bad news for consumers who turn to credit cards to finance their holiday shopping. To stave off compounding interest charges—and the holiday hangover that corresponds with mounting credit card bills, we suggest leaving the credit cards at home when headed to a mall. Instead, follow this plan:

  1. Make a budget for each person on your shopping list.
  2. Label envelopes with the names of each person for whom you are buying a present.
  3. Place the amount of cash appropriated for each person inside the respective envelope—no more and no less.

When purchasing a present, withdraw cash from the appropriate wallet. This method creates a psychological barrier to impulse shopping. If you are tempted to splurge on a gift—let’s say you are robbing from Peter’s envelope to buy a gift for Paul—you will be dissuaded when you realize you will need to withdraw money from another person’s wallet to cover the extra cost of the gift.

If you want a copy of my book, “Preventing the Credit Holiday Hangover,” submit a comment below with your best money saving technique.  I’ll email the book out to you immediately!

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Credit Card Companies – Can They Do That?

Have you had your credit card interest rates go up?

Have you been treated unfairly by your credit card companies or banks?

Are you willing to tell your story?  If so… you can help!

I’m heading back to Washington to lobby our elected leaders and I need as many stories as possible so we can make a difference.

Let’s face it…. The LAWS are not fair, and they need to be changed!

 Tell me your worst story about your bank or your credit card company.

1)   What happened?

2)   What did they tell you?

3)   Why wasn’t it fair?

The more detail the better!

Post your comments below!  Do it now!

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