How do you protect your credit rating during the pandemic?


worried couple checking credit reports on computer

Worried about if the pandemic is affecting your credit? Here’s good news to help you monitor your credit status: Equifax, Experian, and TransUnion, the three major credit rating bureaus, are now offering free weekly online reports through April 2021. Normally, you are entitled to one report per year for free, so this is a great tool and it’s important that you take advantage of it.

The three nationwide credit reporting companies have joined forces to make it easy for you to request your reports through a central website annualcreditreport.com.  Beware of pretenders that will try to charge you – this is  the only authorized way to get free credit reports.

Why it’s important to monitor your credit reports

Your credit report is a historical record of your credit activity and loan paying history. Lenders use this information when you look to open a credit card, borrow money to buy a house or a car, or take a loan for other purposes. Credit reports may affect your mortgage rates, credit card approvals, apartment requests, or even your job application. In some states, they can be a factor in your insurance premium. Reviewing your credit report helps you ensure that its accurate and may help you spot signs of identity theft early.

It’s particularly important that you review your reports now if the pandemic has caused any disruption in your finances or if you took advantage of any financial aid through the CARES Act, which allowed postponement of some federally backed mortgages and federal student loans through September 30. Your credit should not be affected by this, but Consumer Reports says that some people are experiencing problems. See: How to Protect Your Credit Score During the Coronavirus Pandemic

The Consumer Financial Protection Bureau, an official US government website, also offers helpful information on protecting your credit during the coronavirus pandemic. They also maintain an excellent library of resources, and tools to help you protect your finances during the coronavirus pandemic.

Each of the major credit bureaus also offer advice, tools and resources on protecting your credit through the pandemic:

 

How financially prepared are you if a weather disaster strikes?


emergency prep - three steps infographic

Last year was the fifth year in a row that 10 or more weather and climate disasters in the US logged at least $1 billion of associated losses. If you think 2020 threw everything it had at us and will now ease off, think again. While we all have our hands full with navigating the new realities of life under Covid19, nature is relentless and doesn’t slow down. Most Americans agree. According to a recent survey by American Institute of CPAs (AICPA), 61% or respondents said they were likely to be personally affected by a natural disaster in the next three to five years. Almost one in five said that prospect was highly likely. (see ThinkAdvisor: Few Americans financially prepared for a natural disaster: survey.)

Despite that, “… only 15% of respondents said they had created a disaster plan to protect their finances. Worse, 27% had not taken any steps at all to prepare for a natural disaster.” That’s rather daunting. Think about the problems and logistics in a hurricane, massive wildfire, or flood evacuation in the middle of a pandemic: public emergency resources are already strained. Plus, social distancing measures important to disease prevention will make things like finding emergency shelter and supplies even more challenging than normal at a time when many are suffering financial strain and economic strain from job loss.

AICPA has suggestions for financial emergency prep steps in their report on the survey:

Banking Without the Bank — If your bank branch is closed due to the pandemic, you may need some new options for accessing cash, depositing funds, and checking your account activity. Now is a good time to investigate alternative locations where you can use your ATM card to obtain cash without additional fees, and perhaps mobile banking which can allow most banking activities including check deposits and transfers between accounts.

Insurance Coverage — If you haven’t recently reviewed your coverage with your insurance agent, you’ll want to be sure your homeowner’s or renters insurance is up to date for changes in value, valuable items you’ve added like jewelry or watches, and special risks you may face like flooding. As a first step, be sure you know how to contact your agent, who may be working remotely or with a reduced staff under current conditions.

Safe Deposit Box — If you have documents in a safe deposit box that you may need after a disaster, you may find that your local bank branch is closed or operating under restrictions. You can check with the bank’s main office to learn how to access the box if local restrictions apply and may continue.

Wills, Powers of Attorney, and Health Care Proxies — If disaster results in incapacity, loss of a loved one, or serious injury, you’ll want to be sure that your legal paperwork is up to date. Your attorney may be working remotely under pandemic- related conditions. If your papers need an update, it pays to get a head start in contacting the professionals you will look to for help and advice.

Employment-Based Programs — Visiting your human resources department to check on items that may help you manage through financial survival in a disaster, like your disability coverage or ability to borrow from a 401(k) or similar retirement plan, is likely not an option if your workplace is closed due to the pandemic. You can take steps now to learn how to get the information you need, and request any needed updates, by phone or online.

AICPA offers more help at the 360 Degrees of Financial Literacy portal – see Disaster Action Plan: 5 Key Steps to Protect Your Family and Finances.

Other emergency prep planning tools:

 

 

 

Newlyweds & insurance


wessing cake topper couple standing on coins

Like 2.3 million other couples this year, you may be putting the finishing touches on your plans for a wedding. On average, there are 6,200 weddings per day in the US, but some months are more popular than others. The Spring is an active time, with 10% of all weddings in May and 11% in June. Statistics say that the average wedding budget is $20,000 and the average number of guests is 178.

From the event to the honeymoon, it’s a big deal with a lot of details, so it can be easy to overlook insurance. But we’re not just talking about wedding event insurance which, if you plan a costly event, you should definitely consider to cover cancellation or losses such as stolen gifts, damaged photos, rings or gowns and other unforeseen problems. In this case, we’re talking about insurance matters that you and your spouse should consider as you embark on a financial life together.

The National Association of Insurance Commissioners (NAIC) offers a handy tip sheet about insurance matters that engaged couples should discuss: Combining Your Insurance: Just got engaged? Don’t forget to talk about insurance. It discusses decision points and money saving tips for homeowners and renters insurance, auto insurance, health insurance, and life insurance.

Of course the easiest way to cover insurance is to make an appointment with your local independent insurance agent, who can walk you through all the considerations both for the event itself and for the various coverage options you’ll need going forward. As you embark on a new life together, you no doubt have many hopes, plans and dreams. The right coverage can keep you on track by protecting you from unexpected losses. Your agent will know the best coverage options and the ins and outs for saving money.

Below is an infographic Insurance Survival Guide for Newlyweds, also from NAIC. (For a larger version, click the link or the image).

Insurance survival guide for newlyweds infographic

Tips to get you through tax season


illustration of woman burried in paperwork

Here in the US, it’s tax season! Unless you’re a CPA (and if you are, thank you for your hard work and sorry for not sorting that shoebox filled with receipts), this fact is unlikely to fill your heart with joy, especially if you’re one of the millions of Americans who does her own taxes.

It’s an annual headache. It’s awful. Did you know that in some other countries, citizens are simply mailed a form that has all their tax data pre-filled? Then they simply check it for errors, make any necessary corrections or additions, and mail it back in. Done and done. Of course, here in the US, we don’t do things that way, because that would be simple and easy, and simple and easy is in direct contradiction to our rough-and-tumble pioneer spirit. Or something like that. But hey, good news: April 15 falls on a Sunday this year, so you have a whole extra day to prepare.

So. We have a tax code the size of a refrigerator. A walk-in refrigerator. It’s written in impenetrable bureaucrat-ese, and it has so many loopholes that even the exceptions to the exceptions have exceptions. So buckle in as we take a look at some important things to know about getting your taxes done right.

Get (More) Organized

Every year you tell yourself you’re going to be better organized next year. It happens. But it’s hard to maintain the discipline in June that will pay off next April. Still, the better a job you’ve done of keeping your tax-related documents organized, the easier a time you’ll have when push comes to shove.

Do Your Homework

Modern tax software is pretty good at grilling you with questions you’ll need to answer to properly complete your tax forms. But the more answers you have at hand when you fire that software up the happier you’ll be. Has your employment situation changed since your last filing? How about income you earned from your side hustle? Did you have any employees, contract or otherwise? If you’re self-employed, did you make any purchases that were a business expense, like a printer or computer? Start big and drill down.

Don’t forget deductions

Are you eligible for deductions? Check this handy summary of 2017 Tax Rates, Standard Deductions, Exemption Amounts, and more. And as insurance agents, we’d be remiss not to point out one potential deduction that shouldn’t be overlooked – non-reimbursed losses from theft or casualty events (fires, floods, storms, etc.)

Watch out for the scammers

There are a lot of bad guys out there trying to separate you from your tax refund – and the scammers get craftier every year. The IRS keeps track of the latest tax fraud schemes – there’s a lot of them! There are a lot of tax agent impersonators, too – remember, the IRS will never contact you on social media or via email. Here’s a guide to know when it really is an IRS agent and when it’s not.

Seek Help

Even the best tax software can’t anticipate the minutiae of your individual work circumstances. Spend some time looking over the IRS help pages to check for details you might have missed. If you work from home, can you write off those comfy footy pajamas as a business expense? (Probably not, sadly.) The best solution is to hire a professional tax accountant – she may save you enough to pay for her services!

Don’t Freak Out

Remember: Form 4868 is your friend! This is the form you’ll use to file for an extension, so BEFORE THAT APRIL 16 DEADLINE, submit this little beauty and feel the stress ebb away. Be aware that this form requires you to make an estimated tax payment, so it isn’t a get-out-of-jail-free card, but it can come in handy if you’re overwhelmed.

If you’re doing taxes for your business (and why are you doing that?! Get an accountant, jeez!) the form you’ll need to file for an extension is either Form 7004 or Form 1138, depending on your circumstances.

Of course, there’s a whole list of caveats, ifs, and buts swirling around any tax question. Your best guide will be a reputable tax accountant. Start looking soon, they’re very, very busy here in the depths of tax season!

A fresh look for 2017: Re-assess your insurance needs


financial planning

Insurance isn’t a once-and-done thing – it requires a periodic assessment of the changing circumstances in your life and a thoughtful evaluation of whether you should add  protection against any new risks. As you budget for the new year and prep for tax season, it’s the perfect timing to think about these things.

With the start of a new year and the emphasis on resolutions, there have been a few good articles on insurance that caught our attention. The National Association of Insurance Commissioners issued a handy Insurance Checklist for the New Year. It offers some considerations about common forms of insurance – life, home/rental, health, auto.

When new life events occur, you should review of insurance coverage. You may need to add a new type of coverage, you may want to raise or lower deductibles on an existing policy, or there may be opportunities for savings or discounts. Your independent insurance agent will be able to inform you about various coverage options – but can only advise you based upon what he or she knows.

Here’s a list of life events that should trigger a call to your independent insurance agent:

  • Marriage
  • Divorce
  • Birth or adoption of a child
  • Death of an immediate family member
  • Military deployment
  • Purchasing a new home, condo, or a second home
  • Home renovation
  • Adding buildings to your property
  • Renting out your home
  • Moving to a new geographic area
  • Renting an apartment
  • A teen child getting an auto license
  • Getting a new car
  • Joining a carpool
  • Acquiring expensive electronics, antiques, jewelry, furs, or specialty collections
  • Acquiring a recreational vehicle – boat, motorcycle, snowmobile
  • Getting a recreational drone
  • Changing jobs and job benefits
  • Retiring
  • Starting a small business
  • Joining the sharing economy, such as renting property through Airbnb or driving for Uber

Lacie Glover at Nerd Wallet, USA Today offers good risk limiting advice for us all with her 10 smart insurance resolutions for 2017.  We particularly like #1 – making an inventory – and #9 – informing beneficiaries about your policy. We’d go one step further and suggest that you look at any insurance policies and financial accounts and make sure your contact information and beneficiaries are updated. People often forget to keep those things up to date – unfortunate consequences can ensue: you might not intend to leave your home, your 401K or your life insurance to an ex-spouse, but it could happen if you forget to update your beneficiaries when circumstances change. See our best practices for updating your beneficiaries for insurance policies and retirement plans.