Identity theft is one of the most common crimes in the world today. According to Javelin Strategy and Research, and their resent identity theft study, there were 10 million victims of identity theft in 2008 in the United States and over one in ten people received a data breach letter letting them know that they were potentially the victim of identity theft within each of the past three years. Purchasing items online can prove to be an inconvenient hazard for a lot of people because of the personal information that they have to give out as part of the process. In other cases, accounts are being opened by hackers who use other people’s information for illegal uses. But like all crimes, there is prevention methods that can be used to avoid such a situation in the first place.

Five simple steps to protect yourself…

Empty Your Mailbox.  First of all you must take your mail out of the mailbox immediately so that no one else can reach them. If your mail has stopped coming to you for some reason, you must contact the post office as soon as possible to find out why. Identity thieves can forge your signature and have your mail forwarded somewhere else and then gain personal information that they would further use to apply for credit in your name.

Review Your Credit Reports Regularly.  To keep up with your credit card activity, you must apply for your credit reports regularly and keep an eye out for fraudulent accounts and other information that might indicate your identity being stolen. Any points that may seem suspicious should be reported to the credit card bureau immediately to trace down the criminal’s activity. You are entitled to receive one free credit report from each of the three credit bureaus every year.  You can also sign up for credit monitoring services and credit score watching services through companies such as MyFICO.com.  MyFICO.com is the only place that you can get your real FICO credit score. 

Mind Your PIN Number.  Keep your bank card / debit card’s personal identification number (PIN) in a safe place.  You should also make sure that your credit card numbers are shredded and discard any letters or mail that you receive with this information so that the thieves don’t find it in your trash. A big mistake that many people make is to save the PIN number in their cell phones or on a piece of paper in their purse or wallet. I have known people who have their PIN numbers written in magic marker on the backs of their debit cards.  This is a huge mistake!  Care must also be taken to make sure no one is watching you when entering the PIN code at ATMs.

Digital Information.  Destroying any digital information that you have on your computer or laptop is important. Just by simply deleting or reformatting data is not enough as they can be undeleted. You should use programs that completely destroy the information on the hard disk. As for CDs for other removable media, you should shatter it into pieces before discarding it.

Information On Your Checks.  Believe it or not, people still write checks for many of their bills and other purchases.  You must take steps to limit the amount information that you or the cashier writes on the top of your checks. Don’t add your driver’s license number unless the company just has to have it for their security.  Never put your social security number on your checks no matter what.  You can request that the company not write those items on the top of the checks.  There are no rules or laws requiring it.  If you make a fuss about it, almost all managers will excuse the information’s omission from the face of the check.

You can also sign up with an identity protection company such as LifeLock.  LifeLock provides a proactive identity theft service, specializing in the prevention of identity theft rather than the reporting of it.  They even go as far as offer a $1 million dollar guarantee in which they promise to help you with lawyers and the like if you do become a victim of identity theft while using their services. 

The average fraud victim will spend about 30 hours and $500 in out-of-pocket costs to restore their good names and credit.  Always remember to keep your crucial information safe and sound.  There are tons of identity thefts out there just looking for you to have a lapse in memory or judgment with your information.  Something as simple as leaving credit card statements in the trash without shredding them could be used for fraud if it fell into wrong hands.  You can prevent identity theft from ruining your life by using these five simple tips and being proactive.

Thanks to SpendOnLife for the help with some of the statistics.  Check out their blog’s great Identity Theft section.

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Because it takes so long for our troops to receive mail overseas and in the combat zones of Iraq and Afghanistan, you should keep in mind the U.S. Postal Service’s recommended mailing deadlines.  Shipping your packages and letters by the dates below will help to ensure that the military member will get their mail in time for Christmas.

Holiday Mail Deadlines

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Paying taxes is always a very unpleasant task for any taxpayer. Taking care of how the tax calculations are done may help you lower your bill and reduce the bite in the next tax year. The end of the year is quickly approaching, and now is the time to start positioning yourself to save money on your tax liability.  Keep more money in your pocket and away from Uncle Sam. 

Here are some tips on taking care of the basics to reduce the tax liability.

Income, Expenses, and Deductions.  Keeping an eye on your adjusted gross income and try to find out areas where you can deduct. Funding retirement accounts and reviewing assessment can help reduce the tax liability too. Going over employers benefits plans is also a good idea. Pay for mortgage bills before the end of the year to avail the mortgage interest deductions and also pay property taxes as this reduces the federal tax bill. Defer any stock options that may push your income to a higher income bracket.

Stock Portfolio.  If the capital gains are high, then think about taking a loss to offset the income. Where there are losses, stock options can be exercised. It is important to keep your portfolio balanced.

Defer Income.  Where you feel that your income bracket will not rise in the next year, defer your income until after the first of the year.

Self-employed.  Many Soldiers, Sailors, Airmen, and Marines moonlight.  Some even have their own small businesses on the side.  The end of the year is the optimum time to purchase and stock up all the business necessaries and equipment. Do make sure you keep the receipts and mark them.

Donate to Charity.  Since charitable donations are a deduction on your tax return, it is always wise to give at this time of the year. You could definitely donate extra junk or items lying around as well as any extra cash you have on you. Always remember to save the receipts as evidence.

Pay Taxes In Advance.  Where you are not affected by alternative minimum tax and don’t expect a higher income the next year, paying local/state taxes in advance can help you take a deduction on your tax report.

Update Withholdings.  Updating your withholding is important in event of marriage or divorce. You should update also when you have had a child or no longer claim the child to be a dependant.

Using these tips would definitely help you reduce your tax burden especially at this time of the year.

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Members of the United States military have a great benefit in the Servicemembers’ Group Life Insurance which everyone simply calls SGLI.  SGLI is relatively cheap, term group life insurance that is offered to members of the military on active duty, in the ready reservists, members of the National Guard, members of the Commissioned Corps of the National Oceanic and Atmospheric Administration and the Public Health Service, cadets and midshipmen of the four service academies, and members of the Reserve Officer Training Corps.  The insurance is also offered to spouses as well.

Servicemembers’ Group Life Insurance coverage is available in $50,000 increments up to the maximum of $400,000 for members of the military.  SGLI premiums are currently $0.065 per $1,000 of insurance, regardless of the member’s age which would make full coverage cost only $26 per month.  This is a great price for insurance premium with respect to the amount of coverage that you receive.  While everyone’s situation is different, let me give you one quick comparison.  I have purchased a $500,000 thirty year term for almost $75.  So, $400,000 for only $26 is an excellent value and benefit to members of the military.

There is also an insurance plan for family members as well.  Family Servicemembers’ Group Life Insurance (FSGLI) is an insurance program for the spouses and dependent children of members of the military that are insured under SGLI. Family SGLI provides up to a maximum of $100,000 of insurance coverage for spouses and $10,000 for dependent children.

Do You Need More?  Do you need more insurance coverage?  Is $400,000 insurance is a great value, but is it enough insurance coverage should the unfortunate happen?  Well, it depends.  For a single private with no dependents earning $21,000 per year, then $400,000 worth of insurance is probably more than enough to take care of any expenses and beneficiaries that his estate will have after his passing.   

But, $400,000 may not be enough for a senior captain, major, colonel, sergeant major, etc. who has a lot of people counting on him or her income.  Insurance is a hedge against the loss of your income for people (like your spouse or kids) who depend on that income.  So, for example, if you have a mortgage payment or college tuition to pay down the line, you might need more insurance coverage.  One rule of thumb that a lot of people use is that you should be insured for ten times your annual income.  So, someone earning $40,000 per year before taxes are taken out may be alright with only $400,000 worth of insurance coverage.

Leave To Heirs?  Do you want to leave a huge nest egg to your heirs?  Then, you may not want to consider term life insurance such as SGLI that will eventually go away after you leave government service.  While a whole life policy is much more expensive than a term policy, you will carry the policy for your entire life.  Term is only good for the length of time you sign up for such as twenty or thirty years.  So, with term insurance, you would not have an insurance benefit to leave your heirs after the thirty year mark in this example. 

These are all things to consider when evaluating your own insurance needs.  They are tricky subjects, and you may need a more in-depth analysis than the internet and this blog can give you.  You should consider seeking professional investment advice from a fee based financial planner if you have additional questions.

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Handling investments is a tricky business, but like all other types of trades, it has it’s tricks that will enable an investor to gain the most out of it. There are various strategies that can be employed in order to get the best value out of your investments. Every investment has telling signs that help the investor understand when to let go of them. The first and foremost strategy that you should use is to plan the time of sale at the time of purchase. This will help safeguard against making any impulsive selling decisions.

A good time to sell investments is when they mature. Where money has been invested for a set period of time, the maturity date is the indicator for when it should be sold. This is especially true for fixed rate investments such as certificates of deposits and bonds.  When the investments mature, you will have enough cash to reinvest in a new investment or roll it over. Also when you have changed your goals and plans related to the investment, it is better to sell of that investment and move on to the next plan.

Sometimes investors tend to follow their gut reaction and sell their investments when it suddenly drops in value or when they hear any bad news on a company they have invested in. This knee jerk, overreaction to short term changes in value can cause a needless loss for an investor.  Always remember, a loss is not a loss until you sell.  If you can wait for the values to rise again, especially where you have invested for the long term, then it is only a loss on paper and not in your wallet where it really matters.

A proper selling strategy should be devised in order to save your portfolio from suffering any major damages whenever you require a large amount of cash. Having an emergency fund will also keep you from needlessly selling your investments at inopportune times. All of your investments must be looked at in the overall portfolio and should be sold over the account, selling different positions in varying degrees. This will ensure a good equity percentage and a healthy portfolio. It’s always better to be safe than sorry.

When selling the stock in one of your mutual funds, you should always keep in mind certain points. Always keep a look out for any real long term change in the company’s competition. Where the company shows a loss in ability to produce and sell new products, the stocks should be sold off to protect from future loss. Management of the company should also be considered and watched, especially where a new person in the upper echelons of management has been hired. Any loss in the faith of the management can sharply reduce the value of the company and subsequently your investment in them.

By keeping these selling strategy tips in mind, you can figure out the right times to sell you investment without losing money.

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A former boss of mine recently e-mailed me to ask if there were any down sides to the new 8,000 Homebuyers Tax Credit.  As part of the Housing and Economic Recovery Act of 2008, the first-time homebuyer credit was enacted providing $8,000 as a tax credit to qualified homebuyers in 2009.  The Home Buyers Tax Credit is a tax refund for 10% of a primary home’s purchase price (up to $8,000) if the home was purchase and closed on after January 1st, 2009 and before November 30th, 2009.  The amount not used on your 2009 tax return will be refunded directly to you.  To be eligible for the program, the government considers a first time home buyer as those people who have not owned a principal residence in the last three years.  The tax credit is a great benefit to American homebuyers and Service members as well.  There are several important things that you need to know in order to take advantage of the tax credit.

Must Close By November 30^th.  The main drawback of the tax credit is that it ends on the 1^st of December.  So, all home sales must be closed on by November 30^th.  Time is running out!  You’ve got to start closing on your new house if you haven’t already in order to get the tax credit, and your real estate agent should be telling you all of this too if you are currently looking at homes.  This is the big caveat that has a lot of people worried right now because it looks like Congress will not extend the program. 

Must Live There Three Years.  You must keep your new house for three years, or you will owe that $8,000 tax credit back to the IRS.  Of course, this plays havoc with members of the military because they move around to new duty assignments very often.  Typically, the average military family moves to a new job or base every three years. So, tread carefully when taking the tax credit. 

If you claim the first-time homebuyer credit in 2009 and stop using the property as your main residence before the 36 month period expires after you purchase, you are required to repay the credit.  Repayment of the FULL amount of the credit is due on your next income tax return for the year the home stopped being your principal residence. The full amount of the credit is reflected as additional tax on that year’s tax return. 

Extension For Deployment?  If you cannot buy a home before the November deadline and are deployed to a combat zone, you may get more time to buy a house and take the tax credit when you get home.  The House of Representatives recently voted 416 to 0 to pass the “Service Members Home Ownership Tax Act of 2009” which extends the current $8,000 first time homebuyer tax credit for another 12 months for members of the military, Foreign Service, and Intelligence Corp who served at least three months of qualified overseas duty in 2009. 

No Taxable Income – That’s Ok.  The credit is fully refundable and, if you qualify as a first-time homebuyer, having tax-exempt income will not preclude eligibility. Although there are maximum income limits for qualifying first-time homebuyers, there are no minimum income criteria. Thus, someone with no taxable income who qualifies as a first-time homebuyer may file for the sole purpose of claiming the credit for a refund.  So, if you receive the money while you are down range while you do not have any taxable income, you can still file for the tax credit as well.

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Many members of the military get out of the service and find a new job earning about what they made in the military.  But, then they realize that there are more things to consider than just your base pay and housing allowance when comparing salaries between the two jobs.

Thirty percent of your paycheck, on average, is set aside for you in the form of benefits without you ever really thinking about it.  So, for a brand new Second Lieutenant who earns $43,860 in 2009 including $1,000 in monthly housing allowance and base salary, up to an approximate $13,000 is also set aside for benefits by the government.  So, in essence, he or she is actually earning $56,800 in total compensation, and that is the number that needs to be considered when comparing military and civilian jobs.

For members of the military, the distinction is even more dramatic since the government covers all healthcare, a robust college education stipend, 30 days paid leave per year, and a generous pension plan after just twenty years of vesting.

According to the Bureau of Labor Statistics, 11% of your salary is typically set aside for health insurance benefits.  Eight percent is paid in addition to what you see in your paycheck for Social Security, Medicare, and other government insurance programs.  Retirement plans and pension contributions by the employer generally account for 6% of your salary.  The equivalent of 7% of your total compensation is paid to you in terms of vacation, sick leave, and other personal days.  Other interesting benefits can add up to between 1% to 10% in things like stock options, company cars, gym memberships, lunch, coffee, etc.

In the United States Army, the service offers $4,500 worth of tuition assistance per year for Soldiers to earn college credits in pursuit of a degree.  I always considered this free month and a pay cut if you do not take advantage of this compensation benefit.  Another big benefit for members of the military are the free gyms on the military bases.  If you normally spend $40 per month on a gym membership, this increases your annual salary by $480 per year since it is free to members of the military and their families.  These are just a few of the excellent benefits that the military provides its service members, and they must be considered when comparing jobs.

You should look at total compensation when considering a new job, and this is especially true for members of the military who are considering leaving the service in search of a comparable civilian job.  If you do not consider total compensation, you may end up with a higher salary but actually make less in the end because your benefits are lower.  Many people only focus on the salary portion of a job’s compensation and forget to look at the total figure and benefits.

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Below is a guest post from Robert who runs the website, VALoansGuidelines.com

America’s veterans have access to one of the most flexible and low-cost home loan programs in the country. Since World War II, the Veterans Administration has helped more than 15 million Americans become homeowners. VA home loans are designed to help veterans and their families more readily achieve the dream of homeownership. To aid those who served our country, the VA offers a host of significant benefits for qualified buyers.

VA Home Loan Benefits Include:

• No down payment
• Financed VA funding fees
• No penalty for prepayment
• Sellers can pay up to 6 percent of closing costs
• Less stringent loan qualification criteria
• And many more

VA loans can be used for a host of purposes, including buying, building or refinancing a home, improving a veteran-owned residence or simultaneously buying and refurbishing a home. But veterans cannot use these high-impact loans to purchase land or investment properties.

VA loan guidelines and eligibility criteria limits them to veterans and their spouses. But there are often less stringent standards to qualify, meaning veterans with less than perfect credit – or even a history of bankruptcy or foreclosure – can obtain a VA loan. In fact, about 8 in 10 VA home loan borrowers could not have qualified for a conventional home loan.

To be eligible for a VA loan, veterans must first meet one of the following guidelines:

• Military members who’ve served 181 days on active duty or three months during war time may be eligible.
• People who have spent at least a half-dozen years in the National Guard or Reserves
• Spouses of those killed in the line of duty

Eligible veterans must then obtain a Certificate of Eligibility verifying their military service and ability to qualify for a VA loan. These forms can be found online through the Department of Veterans Affairs.

At that point, VA officials will examine a veteran’s financial history and make a determination regarding the loan. Veterans who meet all the initial lending criteria will still have to qualify based on their income, credit and other key factors. But the VA is built on helping veterans realize their goal of homeownership.

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At its April 2009 monthly meeting, the Federal Retirement Thrift Investment Board which runs the federal Thrift Savings Plan (TSP) considered the addition of a Roth 401-k feature to the TSP. The Thrift Savings Plan is the federal government’s version of a civilian 401-k retirement plan.  The board members voted 3-1 in favor of recommending that the Congress authorize a Roth 401-k feature in the TSP.  Unlike civilian plans in which companies and their Human Resource departments can change their retirement and 401-k plans fairly easily, the federal Thrift Savings Plan is govern by laws passed by Congress.  Changes that are suggested must go through a rigorous vetting process, approval, and passage of a new law by the entire Congress.

The new law which was passed by Congress recently authorizes adding a TSP Roth 401-k feature.  Participants will be able to contribute after-tax dollars under the feature. Like regular contributions, the Roth contributions will grow tax free. However, unlike regular TSP contributions, both the contributions and earnings are tax free when withdrawn.  

Unfortunately, it will be quite a while before the changes will be implemented in reality down at the troop level.  The Roth TSP feature will require substantial modifications to federal and military human resources and payroll systems.  The changes will also require several changes to the TSP’s paperwork, correspondence with investors, record keeping, and accounting systems.  The board estimates that the addition of a Roth 401-k feature will take up to two years to finally work its way down to the “boots on the ground” level.

Thanks to Your Military Money for the heads up on the new Roth TSP action.

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Because it takes so long for our troops to receive mail overseas and in the combat zones of Iraq and Afghanistan, you should keep in mind the U.S. Postal Service’s recommended mailing deadlines.  Shipping your packages and letters by the dates below will help to ensure that the military member will get their mail in time for Christmas.

Holiday Mail Deadlines

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