Freezing Your Credit

Credit: dan at FreeDigitalPhotos.net

So my wife just joined a whole bunch of people who received a letter from a school in the Southeast explaining that some of her personal information may have been inadvertently exposed on the university’s website. That’s frustrating. What’s even more frustrating is that she didn’t even go to school there! Thankfully, she was a UGA Bulldog, but I digress…

It’s things like this that make you want to sand off your fingerprints and burn your Social Security Card. Every day in the news, there’s another data breach here or another identity theft ring there. It seems like an experience with identity theft is becoming just a matter of time, not a matter of if. With that in mind, today I thought I’d mention a defensive maneuver you can take called freezing your credit.

Historically, “freezes” were more available to previous victims of identity theft, but now all of the major credit bureaus are allowing people to freeze their credit for a small fee. Freezing your credit does not affect your credit score, it does not prevent you from getting your free annual credit reports, and it does not prevent your existing creditors or government agencies from accessing your credit report. It does allow you to temporarily seal your credit reports so identity thieves cannot establish new lines of credit in your name even if they are able to obtain a lot of your personal information. This is because most new creditors need to see your credit report before they will approve opening your new account. In short, if they can’t see your credit report, they probably won’t approve a new account for the identity thieves to go to town with!

If you’re going to be taking out a mortgage or a car loan in the near future, if you are going to be moving and opening up a lot of new utility accounts, or if you are planning on adding another credit card, I might not recommend this as there is a little administrative time involved and some slight costs to freeze and unfreeze (or “thaw”) your credit.

If things are running pretty normal, you want to have a little more identity protection, or you receive a letter like my wife did, you may want to consider this. Nothing is guaranteed, but it couldn’t hurt, and it might very well be the difference between “you” going on an unauthorized shopping spree and some disappointed identity thieves.

If you’re interested, contact Equifax, Experian, and TransUnion. And yes, either do all or do none or else your freeze will be incomplete.

Brrrr…

-Tom

The Top Ten Things I Learned from Selling a House

Credit: Stuart Miles at FreeDigitalPhotos.net

Selling a house as you are buying a house often go in tandem, and I’m happy to report I’m once again the happy owner of only one home! A few weeks ago I shared with you the Top Ten Things I learned from Buying a House, and a number of you were quite interested. With that in mind and not wanting to shortchange any soon-to-be sellers out there, I now offer some tips based on my recent experience of selling a house.

1. First impressions count. I can tell you as a recent buyer that first impressions count. One of the agents that took my wife and me through several homes told us that within 30 seconds to a minute we would either have that “aha” moment or we would not. I think she is right and, as a seller, you need to know this. The house you are trying to sell obviously needs to look nice on the inside, but the buyer’s “aha clock” starts from the curb or the driveway! Make sure paths and stairs are swept, mats are clean, the yard is well manicured, and maybe even hang one of those pretty seasonal wreaths on the door to help things get off to a good start.
2. Set a reasonable price. Go ahead and reach for the stars, but don’t be foolish. Do a little research on comparable houses and give yourself a little wiggle room to go down and still get what you want. Keep in mind that an appraiser is going to have to feel comfortable with the property being worth what the buyer is borrowing before the bank is willing to play ball; so if you are looking for a sucker, you’re going to need two: the buyer and their appraiser (unless, of course, the buyer is paying cash)!
3. Remove evidence of your pets. I’m fonder of certain animals than others, and some of your potential buyers aren’t going to be fond of any pets at all, so keep this in mind. Fido may be cute to you, but if he scares away a perfectly good and willing buyer because there are chew toys all over the house, Fido and Fido’s possessions may need to be strategically relocated when someone is looking at your home.
4. Declutter. Speaking of strategically relocating things… hide your stuff! In all seriousness, no one wants to see all your stuff. Pretend you are hosting Thanksgiving. Pretend you will be eating dinner off the floor. Pretend a volcanic eruption is coming and every bit of your stuff that is out will be melted by the molten magma. Imagine whatever it takes to make you declutter! Have your possessions displayed neatly, and less of them displayed than you normally would.
5. Hire a real estate photographer to take photos. Photos matter. Our photographer made our house look like Southern Living, and I think that really helped us sell our home pretty quickly. Put simply, there is a good chance a photographer’s camera is better than yours, their experience manipulating light is better than yours, and their ability to Photoshop themselves out of mirrors is better than yours. Hire a photographer and pay them. It won’t take many days of you not selling your house for it to be worth their fee!
6. Do minor repairs before the inspection. If you know you have a scratch on the wall, try a Magic Eraser. If you haven’t changed your air filters in ages, change them. Please, please make sure you don’t have any lightbulbs that are out. I can’t tell you how many houses we looked at that were in need of copious amounts of lightbulbs. Minor things may not be “deal breakers,” but they can make your prospective buyers wonder how well you have really taken care of your house.
7. Differentiate your home from others. I’m talking fresh flowers on the table, a little soft music on in the background, maybe even a bowl of candy or some bottles of water available to your visitors. You want visitors to see how serious you are about selling your home and how precise and thoughtful you have been.
8. Sweeten the deal. It has amazed me how many people I know were drawn to houses that “left them things.” In our own case, our willingness to leave our refrigerator as opposed to taking it with us was what actually sealed the deal. Whether it is leaving behind appliances and deck furniture, or going ahead and paying HOA fees for the rest of the year, consider little things you are willing to do for a buyer to make it easier for them to move in. Buying a house and moving is an expensive time, and all I’m trying to say is that not having to go pick out and pay for a washer or a dryer may be worth a lot more to your buyer than you might think.
9. Be responsive. When buyers or their agents inquire, be responsive. Can they visit? Yes. Will you send the Seller’s Disclosure? Done. Will you send the Neighborhood Covenant? Yes (as soon as you find it). Buyers are anxious and you need to strike when the iron is hot. I know a lot of people that do things at the last minute, and it works for them; but in a situation where you’re trying to woo someone into giving you a whole lot of money, please don’t be a “buzzer beater.” They will appreciate it. So much so, they might even buy your house!
10. Write a letter. This is my seller’s secret sauce: write a letter. I know it sounds crazy, it sounds cheesy, and lots of people will tell you that you need to depersonalize your house in every way possible, but I disagree. Okay, take some of those obnoxious family pictures off the refrigerator, but my wife and I were undoubtedly drawn to houses that felt like homes. We wrote a letter that we left on the counter to our prospective buyers, and I can tell you they went quickly, so I think other people like them, too. Introduce yourself, say why you’re moving, why you love your house, and thank them for coming. It’s human, it’s real, it’s a keepsake. If someone is visiting 17 houses on a Saturday, it might just cause them to remember yours. Maybe it could rub someone the wrong way, but, personally, I think it can do a lot more good than bad.

If you’re getting ready to sell your home, I wish you the best. It’s easy to think, “Why fix that?” and “Why put money into something I’m not going to enjoy?” but I urge you to think more along the lines of making your house look and feel like the kind of home you’d want to live in.

 

-Tom

When the Stork is Looming

Credit: digitalart at FreeDigitalPhotos.net

I don’t know about you, but I know a lot of pregnant people right now. Maybe it’s my age and stage in life, maybe there is something in the air, or maybe there is something in the water! I don’t know what it is, but there are going to be some overworked storks in 2015!

If we know one another personally, you probably know that my wife and I just had a child of our own. I'm still working on my swaddling technique and I haven't quite figured out how to shove the “pack and play” back in that tiny little bag, but I have learned a few things over these past several months. For my currently pregnant and maybe one-day pregnant readers out there (and their spouses), here are seven financial tips:

1. If possible, get health coverage where the insurance company will pay 100% of your costs after your deductible and copayments have been met. Call me Captain Obvious, but births are significant health care events, so they are going to have a price tag. If you’re on a plan that covers 100% after you reach your deductible, you have the comfort of being able to back-in to what your birth medical expenses will likely be without having to wonder how much it could cost if there are complications. If you are planning to have children, health insurance is a good thing to address before you are pregnant because you don’t always get an open enrollment period before the baby arrives. You can also go ahead and strategize about whose plan the baby is going to be on if both parents have health insurance.
2. Boost your life insurance or get life insurance if you haven’t already. If Mom is going to stay at home for a while or shift to part-time, Mom needs to have some significant life insurance on Dad should something happen to Dad and his paycheck. If Dad is going to keep working and Mom is going to look after the baby, Dad needs to have some significant life insurance on Mom should something happen to Mom and her child care services. Interchange “Mom” and “Dad” here as needed, but you get the picture. An article I recently read pointed out that going ahead and boosting a woman’s life insurance early in her pregnancy may be a good idea as complications such as gestational diabetes could arise during the pregnancy and obviously, situations could occur at birth. As you would probably expect, it’s cheaper and easier to get life insurance if you have fewer health issues and less treatment history.
3. If Mom is going on maternity leave, there is a good chance she will be drawing short-term disability that will very likely not be 100% of her pay. This means you have a pay cut coming, and you need to plan accordingly! I’d suggest ratcheting up the savings now if Mom is still working so that you can offset your upcoming pay cut when the time comes and not have to significantly change your lifestyle.
4. Many of our friends that are already parents have warned us about looking after “us.” A baby can be a wonderful addition, but he or she takes time and energy, and can subtract from what you can offer your spouse and your friends. In that spirit, I’d also start saving for date nights and friend nights. It’s not just dinner and a movie anymore! It’s going to be dinner, a movie, and a babysitter. Look after the baby, but look after your marriage and your friends, too!
5. Pay off your credit cards! You should do this whether you are having a baby or not, but I can already tell you that you’re going to want to have as much spending power available to you as you can. Baby stuff is expensive! I’m sure you’ll get some gifts (and my wife and I are very appreciative of what we have received), but you’re not going to get all that you need without buying some of the stuff yourself.
6. In the spirit of my comment about baby “stuff” not being terribly cheap, don’t overspend or overbuy baby stuff, either. It makes me sound like an old man, but I can tell you for a fact I wasn’t raised with all the gadgets and gizmos that some of these baby stores tell you that you “have to have.” My wife asked a good friend of hers who was a recent Mom to accompany us as we started considering what we would need for our new family member, and I think that was one of the best ideas we’ve had. My wife may have invited her friend for comfort, support, and wisdom, but every time she told us we didn’t need the premium plus version of that bottle, or the spa edition of the bath apparatus, or the nuclear-powered thermometer, I literally felt money going back into my wallet!
7. Try to figure out what the new normal budget is going to look like. Whether it’s pay cuts, health insurance expense increases, double income households becoming single income households, daycare expenses, or lots and lots and lots of diapers to be purchased, your budget probably won’t look the same after the little one arrives. No matter how cute those little hats and booties are, your financial principles need to stay the same: spend less than you make and live within your means.

I’ve got a feeling I’m going to be writing a lot of posts at strange hours over the next few months…

-Tom

Questions You Should Be Asking Your Financial Advisor

Credit: Danilo Rizzuti at FreeDigitalPhotos.net

A friend of mine posed an interesting question to me the other day. His parents are beginning to think about retiring in the next few years, and they didn’t leave their recent meeting with their financial advisor feeling overly confident that they were in good hands, so he asked me what questions they should be asking. I may get tarred and feathered by others in my line of work for sharing this, but today I offer you some of the questions I think you should be asking your current or prospective financial advisor.

• Do you feel my investments are appropriate (particularly if it has been a while since you met or your investment accounts were rebalanced/reallocated)? If the response you get is only a “Yes,” you should follow up with “Why?” I really think that having a general understanding of why you are invested the way you are is important. It gives you confidence through the market's ups and downs, and it ensures that your advisor’s strategy is in line with your goals and your objectives.
• What fees have I paid you? An advisor may not be able to rattle this off on the spot, but if they can’t get you a clear answer pretty quickly, this may be a red flag. Contrary to how some practice in the industry, fees and expenses don’t have to be hidden. It also doesn’t hurt to ask an advisor how they get paid based on the investments they recommend. If you hear the word “commission,” you need to at least consider the possibility that your advisor could have a conflict of interest.
• What licenses and credentials do you hold? There is so much alphabet soup out there that I don’t even know what some of the acronyms stand for! That being said, some licenses and credentials are impressive and should be confidence-inspiring, but some, not so much. You’re looking for things like CFP®, CFA®, and CIMA® from an investment advisor in addition to advanced degrees from respected business schools.
• How can I access my funds and my information? In today’s world, you should have the ability to view your account any time and withdraw money within a few days. If you don’t, you may want to see if your advisor has booked a one-way trip to the Caribbean…
• Who is your typical client? What’s good for one type of client is often good for another, but not always. If your advisor is used to working with people with backgrounds, needs, and amounts of money drastically different than your profile, you may want to find an advisor better suited to work with you. You want to be your advisor’s "bread and butter" and a client that is right in their wheelhouse!

 

I’ve been asked lots of crazy questions from clients including why I couldn’t guarantee an 8% return every year, why a particular beverage wasn’t for sale in their local grocery store, and if I was dating anyone (because their granddaughter liked blondes), so my proposed questions should be softballs for your current advisor. If your advisor's answers leave a lot to be desired, I’d suggest you ask these very same questions when you are interviewing candidates to be your new advisor.

 

-Tom

How Saving Money Can Cost You

Credit: iosphere at FreeDigitalPhotos.net

I bet you thought I’d lost my marbles when you read this post’s title, but the title is as I intended. Saving money is wonderful, and I often preach the value of saving until I am blue in the face, but not always. Sometimes (hard swallow) saving money may not be so good for you. Saving money can be bad if…

• You buy something with a coupon that you would have otherwise not purchased. You didn’t save money; you got a good deal on an unnecessary expense.
• You buy something that is incrementally or insignificantly cheaper than a higher quality or longer lasting product. I’m talking canned soup, car batteries, air filters, toilet paper, Oreo’s, and other products like these.
• You already have an adequate rainy day fund yet you keep adding to your cash account that is earning you little interest while you have credit card debt, student loans, car loans, and home loans that are costing you lots of interest.
• You already have an adequate rainy day fund, and you are not contributing to your employer’s 401(k) or retirement plan (or you are not contributing enough to get your employer’s match if they offer one).
• You already have an adequate rainy day fund, and you are not investing anything in the stock market. Whether through annual IRA contributions or deposits to a taxable brokerage account, you need to be investing sooner rather than later so you will have a longer time frame to reap the rewards of long-term growth.
• You already have an adequate rainy day fund, but you do not have or adequately have life, disability, property and casualty, and/or excess liability insurance. Having no premiums or low premiums is nice until you need your insurance!

 

Finally, there are two currencies in life: money and time. Saving money is really important, but so is utilizing time. I once had a meeting with an elderly client whose health was beginning to fail, and he asked me what he was supposed to do now that he had all this money and no time to enjoy it. His degree of saving and holding onto his money was self-imposed, so I didn’t feel guilty, but I did feel sad for him. I’ll probably never recommend that you risk your financial security to make a memory, but it is important to be careful how many times you say, “No” or “Next time.”

 

Anything in enough excess can be bad for you. This includes fanaticism for a sports team, chocolate, and saving money. Keep saving, but not too much.

 

-Tom