4 Reasons You Should Protect Yourself From Identity Theft

It seems like every few weeks there’s a new report of a massive data breach or some other form of widespread identity theft. Each time, the news anchors end their reports by providing tips to avoid identity theft. Do you follow their advice, or do you forget about it and move on with your life until it happens again?

While it can be easy to dismiss identity theft as something remote that only happens to careless people, there’s a new case of identity theft every two seconds. Here’s why you need to make sure you won’t be next.

1. Identity Theft Is Expensive

Victims of identity theft spend an average of $1,000 clearing up their credit report. Those costs could include legal fees, sending certified letters, obtaining copies of your credit report, and enrolling in credit monitoring services.

Often, you can get much of this cost reimbursed. This is especially true if your information was lost to a bank or company’s negligence. However, you may need to pay expenses out of pocket, and you may find that getting back every dollar is too time-consuming or requires additional costs.

You may also face the actual theft of money out of your bank account or off your credit card. Most banks offer $0 liability but only if you report the identity theft in a timely manner. If you don’t discover the theft quickly enough, you may be partially or even fully responsible for the unauthorized charges.

While banks will typically reverse overdraft fees caused by fraudulent charges, you could be on the hook for fees for late payments or bounced checks if the balance left in your account couldn’t cover your bills.

2. Resolving Identity Theft Takes Time

Even if you’re able to get 100 percent of your losses and out-of-pocket expenses reversed, it won’t happen in an instant. It takes an average of 30 to 60 hours to clear up identity theft — that’s a full work week.

You’ll be spending hours waiting on hold to talk to your bank, filling out identity theft forms, obtaining police reports, and filing disputes with the credit bureaus.

In many cases, a merchant who accepted your stolen credit card may try to claim it was really you to avoid losing money. Your bank may also say you didn’t follow their policies to try to avoid having to cover your claim. This will only add to the amount of time it takes to resolve the situation.

Depending on the type of identity theft and how much was stolen from you, you may also receive a subpoena to testify in court. That’s at least one more day you’ll have to take off from work.

3. Identity Theft Will Tank Your Credit Score

When you’re the victim of identity theft, anything that can harm your credit score will probably happen. The thieves may overdraft your bank account, max out your credit cards, or open new accounts.

Of course, they won’t be making payments on the accounts, so you may only find out about an account when derogatory marks for late payments and collections start hitting your credit report. Worse still, if your current lenders see these negative reports, they may close your credit accounts thinking you’re in financial trouble.

The good news is that federal law requires the credit bureaus to remove any negative items caused by identity theft from your credit report. When you’ve resolved the problem, your credit report will look like the identity theft never happened.

The bad news is that it could take weeks or months to fix your credit report, and you’ll probably need to hire a credit repair agency to dispute items  and fix your credit report. If you were looking to buy a house or a car, most lenders will only use your current credit score or tell you to wait until your credit report is fixed.

4. Your Information Will Still Be Out There

You can change your account numbers and close fraudulently opened accounts, but once your information is stolen, it is always out there. Identity thieves routinely sell lists of names, addresses, Social Security Numbers, driver’s license numbers, and other personal information.

Even if one thief goes to jail, another can still use the information to open accounts in your name. You’ll need to constantly monitor your credit and banking reports for suspicious activity. You may also want to freeze your credit reports to make it harder for accounts to be opened in your name without additional verification.

This will make routine transactions, like changing cell phone providers or signing up for a credit card bonus offer, much harder. And even with the added inconvenience, there will never be a guarantee that your identity won’t be stolen again.

Get Professional Help

If you’ve been the victim of identity theft or want to stop it from happening, a company like Ovation Credit Services can help. They offer credit repair and monitoring services to help undo the effects of identity theft. While you can fight identity theft on your own, wouldn’t you rather save your vacation days and spend 30-60 hours with your family instead of talking to your banks?

 

Budgeting Living Expenses

Budgeting Living Expenses

When it comes to your financial situation, it can be always improved by budgeting living expenses. This involves creating a spending plan that will enable you to make the best use of your income.

Having a personal budget will prevent you from overspending and not being able to pay for the necessities. It will also keep you from overdrawing on your checking account, which would be a costly mistake with the fees that most banks charge. To budget your living expenses, you need to sit down and look at your income versus everything you have to pay.

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To create your personal budget, first write down all forms of income you currently have. The most obvious will be your paycheck. The figure you need to use is the amount you bring home from each pay period. Other income, such as child support, rental properties, and any additional money that comes in on a regular basis, should be included. Money earned from sporadic sources such as selling an item or working as needed can be placed in a miscellaneous income category.

The next step to take when budgeting living expenses is to write down everything you have to pay each month. This should include all of your bills as well as other expenses such as groceries, gas, childcare, savings, and a little extra money for fun.

List each bill that you have to pay, and calculate the total. You will want to budget at least this total amount for your bills as well as any additional amount if you are trying to pay off a bill in advance. This amount of typically 50% of a person’s monthly income, but may be more if you have a large amount of debt.

Money for groceries, gas, and the other necessities should be allocated based on what you normally spend if you were only purchasing items you needed. For example, if it takes $100 in groceries for feed your family meals – and not including junk food – then you should allot $400 for groceries.

Buying snacks should come from the extra money you have left over in your budget. The gas category only needs the amount of money you need to spend to get you to your job, school, or other place you need to go frequently. Trips to the mall or other places for entertainment should come from the fun category.

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The saving section of your spending plan should be at least 10% of your monthly income. This allows you to put back money in case of emergencies in the future. It can also help you from getting into debt when you need more money in a certain area of your personal budget. The last category, fun/extra, can be for any money left over after paying for the necessities when budgeting expenses. This amount will gradually increase as a reward for paying off debts and needing less money for your essentials.

When budgeting living expenses, be sure that you keep yourself on track. Failure to do so can have you further in debt, meaning it will have the opposite effect that intended. To stay within your budget, keep an eye on the energy consumption of your home to lower your electric bill. Also, only use credit cards when necessary to avoid additional finance charges. Notice the increase in the money you have while sticking to the budget, as this can motivate you to continue on your set spending plan.