This article: Equifax Hack — How To Protect Your Credit And Identity If Your Data Was Compromised was posted last month on the Forbes.com website.
I write about building wealth and achieving financial freedom. Opinions expressed by Forbes Contributors are their own.
As widely reported, the credit reporting bureau Equifax was recently hacked. If you have a credit report, you’re likely one of the 143 million Americans whose data may have been exposed, according to the Federal Trade Commission.
According to Equifax, the breach lasted more than a month, from mid-May until July of this year. The hackers gained access to people’s names, Social Security numbers, birth dates, addresses, and even some driver’s license numbers. They also got credit card numbers for 209,000 people and dispute documents with personal information for 182,000 consumers.
Unfortunately, at least some of your information was likely involved in this breach if you had a credit file with Equifax. I can tell you that my data was compromised. Let’s walk through what you need to do to first determine whether your information was compromised. Then we’ll look at what you can do about it.
Enroll in free credit monitoring even if the site doesn’t say you were affected. You’ll be able to find out when you can enroll at the site linked above. You’ll have from that date until November 21, 2017 to enroll for a free year of credit monitoring.
For this reason, consumers should also enroll in several free credit score services. I use several of them and receive email alerts when changes appear on my credit report. You can find a list of free credit score services here.
Next, check your credit reports now so that you have a baseline. You can get your free annual credit reports from www.annualcrediterport.com. You can also get your reports along with your credit scores directly from FICO.
While everyone’s needs are different, here are some optional uses of your refund that may work for you.
Contribute your refund to your employer’s 401(k) plan. If your employer offers a matching contribution, that’s an immediate return on your money in addition to deferring taxes on your contribution. And, funds in the plan grow free of tax until withdrawal.
Use your refund to pay down credit card balances – you could earn a double-digit return.
Consider investing your refund in your child’s education. Both Section 529 college savings plans and education savings accounts offer tax-advantaged ways to save for college costs.
Take full advantage of your IRA options for retirement savings. Both Traditional and Roth IRAs are great ways to save for retirement.
If you’ve maximized your retirement and education savings, and your credit cards are under control, put your refund in diversified investments that make sense for your age and financial situation.
Ask yourself if getting a big refund every year is a smart idea. Would you rather invest your money during the year instead of making an interest-free loan to the government? If so, consider filing an updated Form W-4 with your employer.
You still have time !
The problem with time is that you always think you have enough. And yet fall is already here, and the time for establishing a retirement plan for your business is ticking down to the deadline. Here are two plans with upcoming due dates.
The maximum contribution for SIMPLE plans in 2016 is $12,500, plus an extra $3,000 when you’re over age 50.
For 2016, the maximum contribution is $53,000.
Not sure which plan will suit your business? Contact us for a detailed comparison.
How can you become financially fit? Here are suggestions for improving your fiscal muscles.
Get your budget in shape. Use your spending history to create a meaningful budget, then stick to it. Resolve not to spend more than you make, and remember that what you “make” is your take-home pay, not your gross salary. Budget for savings too. Pay yourself first. Set up a minimum monthly amount that you put into savings at the same time you pay your other bills.
Slim down your debts. Where possible, consolidate or refinance existing debt with more favorable terms. Concentrate on eliminating personal debt first because interest you pay on personal loans generally has no tax benefit.
Build up your benefits. Review your employer’s benefit package. Are you participating in every program that you can? Employer plans generally have favorable tax benefits that will make your dollar go further.
Tone your investment portfolio. Do your investments fit your current financial situation, age, and risk tolerance?
Strengthen your insurance coverage. Do you have adequate coverage for property, disability, life, and health? Avoid overlapping or excessive coverage.
Coordinate your estate plan. Does your will allow your assets to pass according to your wishes? Have you provided for guardianship of your minor children if something happens to you? Do you have a power of attorney that will give a person of your choice the ability to act for you in the event you are unable to act on your own behalf? Have you completed a health care proxy or living will?
Maintain your recordkeeping. Set up a recordkeeping system that tracks the income and deductions reported on your tax return so you can capture all deductions you are entitled to take.
Maintaining financial wellness, like physical wellness, is a continuous process. The sooner you start, the more likely you are to succeed. Schedule a meeting with us for assistance in reviewing your tax, financial, and estate plans.