During turbulent times, people are often anxious, preoccupied, or distracted. COVID-19 is no exception. Not surprisingly, there is a positive correlation between turmoil and the incidence of cybercrime. During 2020, identity theft and financial frauds have been on the rise: hackers and scammer prey on people’s fear and vulnerability. Advances in technology and mobile communication have changed the way we manage our finances. These innovations save time and allow us to be more informed consumers. But the innovations have also introduced new risks and exposures. With time, your financial accounts will grow, and so will the potential losses from identity theft and fraud. Review your credit report regularly. You can download your free report and search for errors or indications of fraud at www.annualcreditreport.com. If you will not be in the market for a new loan soon, it is possible to freeze or lock your credit profile to reduce the…
Gather Vital Documents
We accumulate vital documents over time. As a result, they are often scattered around our homes. Having your most important information organized and close at hand gives you peace of mind, especially during turbulent times. An In Case of Emergency, or ICE, file contains key documents that are easily accessible to you or someone acting on your behalf. If you need to leave your house or apartment quickly, it is beneficial to have your most important documents all in one place so that you can easily access them as you leave your home. At the least, include the following items in your ICE file: Legal documents, such as wills, powers of attorney, health care directives, and the titles for your home and car Vital records, such as birth certificates, adoption documents, marriage certificates, Social Security cards, and military records Copies of passports, credit cards, and driver’s licenses After you have…
What to Keep? What to Shred? What to Recycle?
An essential part of clearing out your home office is figuring out what you should keep and what you should not. Here are some general guidelines that I follow to get organized: What to Keep Keep tax returns and all supporting documents for seven years from the date that you file your taxes, not seven years from December 31st for a particular tax year. Keep all bank statements and credit card annual statements and summaries for the same seven-year window. Keep receipts for any major purchases and all insured things as long as you have the item. Keep student loan, car loan, and mortgage documents (including payoff notices) and documentation for any other loans indefinitely. If you own your home or condo, keep records related to the purchase or sale and any improvements that affect the home’s value indefinitely. Keep a record of the purchase or the confirmation for every…
Tackle Your Home Office: How to Organize Finances
As most of us stay close to home, we address projects on the “to do” list. Now is the perfect time to clear out home offices and review the integral aspects of our financial lives. If you have not done so yet, it is time to get started. Financial Spring Cleaning Just like when you go through your closet or food pantry to determine what to keep, what to donate, and what to toss, you need to do the same with your financial life. Perhaps even more important than what you keep is what you can shred, recycle, or delete. Keeping unnecessary documents and statements makes it harder to locate vital personal finance information in a hurry. Most of us waste a lot of time trying to find things on our computer and amidst our papers. Getting rid of unnecessary documents frees up precious space in your file cabinet and on in your filing system on your hard drive.…
Managing Your Passwords
Whether appearing in your mailbox or your browser, financial information inundates us daily, adding to the papers and information (virtual or real) you already have. Some of it is important; some of it is not. Not only should you strive to reduce the amount of paper and computer files that you retain, but you need a system for organizing everything that you decide to keep. Not only are we inundated with information, our lives require more passwords than ever. Time to confess: I have far too many passwords (financial accounts, online shopping, subscriptions, kids’ schools, activities . . . the list goes on). I have wasted a lot of time trying to find or remember them all, and I worry about online security. Your passwords need to be secure, whether you write them on a piece of paper (keep the list hidden far from your computer) or you use a…
Prepare an ICE Plan
With an In Case of Emergency or ICE plan, you assemble key contact and financial account information in one place. An ICE plan guides someone who must act on your behalf—it is like a roadmap of your financial life. If you use a web-based personal financial management service, you have a great head start. To create an ICE plan, prepare a list of: Bank accounts, credit card accounts, retirement accounts, brokerage accounts, and any other investments The name and phone number for anyone who helps you manage your financial life—banker, insurance agent, accountant, investment adviser Details about your lease or your mortgage—the name of your property management company or mortgage company Bills that are on automatic pay, with passwords to access the accounts or the master password if you use a password management service For someone just starting out, your retirement account is likely your most valuable asset. As you…
Making Tax Prep Less Stressful
Due to COVID-19, the federal tax filing deadline has been extended. Even with additional time, preparing your taxes is not a fun task. It can be significantly less unpleasant if you are organized. Your taxes involve a lot of documents, and you must keep good records. In addition to your W-2 (or 1099-Misc forms, if you are a contractor), you will need supporting documentation related to your savings and investment accounts. A 1099 is a statement that details the dividends, interest, and capital gains earned during the year. Some investments are structured as partnerships and provide a year-end, or annual, K-1 instead of a 1099. A K-1 shows an investor’s share of partnership income for a given year. Transactions that you need to document at tax time occur throughout the year. Therefore, I strongly recommend that you keep a Current Year Taxes folder. As you receive tax-related documents in the…
Passwords and Security
Just as we are inundated with financial documents and marketing materials, the number of passwords we have—and need to keep track of—has exploded. Your passwords need to be secure. If you write them on a piece of paper, keep it out of sight and away from your computer. Think about using a passphrase that will be easy for you to remember. The longer a password or passphrase, the harder it is to crack. Consider using a password management service, which stores your passwords securely online. You enter all your passwords into the service’s website. When you are logging in to a site, you enter a master password rather than entering your log-in and password for each website you visit. The sites will flag any of your passwords that are not secure and suggest you revise them. If you have a partner, a password management service can help you work together…
Helpful Tips on Holiday Tipping
Tis the season for tipping. It is a nice way to say “thank you” to those who help us out during the year. Many have questions about whom to tip during the holidays and how much to give. Here are a few thoughts: For those who help you out regularly – dog walker, trainer, hair stylist, babysitter, piano teacher – tip the equivalent of one service or session. For nannies or housekeepers who work with you more than once a week, consider one week’s pay as a holiday bonus. For teachers or coaches, consider pooling voluntary contributions from parents and putting the funds toward a gift card to be given at the end of the season or at the end of the school year. For other service providers, you could double the tip that you would give other times of the year. Every year make a list of holiday tips…
Asset Allocation Grid
My Asset Allocation Grid helps you take a comprehensive view of your investable assets. It is like a dashboard for your financial life. Attached is an example of the Grid. Click on the image below to download. Asset Allocation Grid Example