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Smartphone users less smart about protection

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McLEAN, Va. (5/1/12)--One of four teenagers carries a smartphone. Many of these young users wind up broadcasting their whereabouts and other personal information to complete strangers, boosting the chances of becoming victims of identity theft (USAToday.com April 20).

A smartphone is a minicomputer holding quantities of personal information that requires protection, just like computers and laptops. Yet users--including teens--aren't taking simple, necessary steps to protect their smartphones from thieves and hackers.

Identity fraud spiked in 2011, in part because of unsafe social media and mobile behaviors. Smartphone users are about one-third more likely than the general public to be victims of identity fraud. About 7% of smartphone owners were identity-fraud victims last year, according to "Identity Fraud Report: Social Media and Mobile Forming the New Fraud Frontier" by Javelin Strategy & Research (MarketWatch.com March 26).

In April the Federal Communications Commission and the wireless industry announced creation of a stolen smartphone database, rendering stolen devices worthless and preventing thieves from reactivating the devices on other carriers (abcnews.com April 10). The wireless carriers' databases may be completed within six months, but it could take 18 months to complete the integrated database across all carriers.

The Identity Theft Resource Center, San Diego, Calif., recommends these best practices for mobile device users:

  • Password-protect your phone. Use a strong password (numbers, upper- and lower-case letters, and symbols).
  • Enroll in a backup/wiping program. This service backs up information on your smartphone to your home computer and "wipes" your phone if it's lost or stolen.
  • Install security software. Companies offer antivirus, malware, and security software designed for smartphones. Make sure you download software updates.
  • Download apps from trusted sources. Some "bad apps" contain malware (short for malicious software).
  • Don't access financial accounts from free, public networks. Public Wi-Fi hotspots are a prime target for hackers who then have direct access to your mobile device.
For more information, read "ID Theft Tops Consumer Complaint List--Again" in the Home & Family Finance Resource Center.

HandFF Radio Financial literacy and the economy

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WASHINGTON (4/27/12)--Sunday's Home & Family Finance Radio program covers financial literacy, college financing, and elder financial abuse. This week's show was recorded at the Montana Credit Union Network's 75th annual convention and expo in Billings, Mont.

The show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:

  • "Financial Literacy." Sen. Jon Tester (D., Mont.) discusses the importance of financial literacy in today's economy.
  • "Paying for College." Tracie Kenyon, president/CEO, Montana Credit Union Network, St. Paul, Minn., shares strategies to save and pay for your child's college education.
  • "Elder Financial Abuse." Denise Armstrong, executive director, Big Sky Senior Services, Billings, Mont., explains how to recognize and prevent elder financial abuse.
Home & Family Finance is a resource center for personal finance information at the Credit Union National Association (CUNA). The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide.

Home & Family Finance airs Sundays at 3 p.m. ET on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network.

CUNA and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA's websites.

For more information, read "Paying for Your Child's Higher Education," "Private Student Loans Can Help Fill the Gap," and "Elders Are Easy Targets for Scams" in the Home & Family Finance Resource Center.

401k hardship withdrawals Know the stakes

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DETROIT (4/24/12)--If you're like many Americans facing higher personal debt and a lower return on investments than you planned, you may have lost confidence that you'll ever have enough money to retire (Detroit News April 16). 

And yet, a sudden job downgrade, not being able to keep up with mortgage payments, or an expensive medical bill could leave you desperately looking for an immediate source of income.

Your 401(k) should be the last place you look for quick money. But if you've exhausted all other options, and your employer plan allows hardship withdrawals, you might have no choice but to tap in to your 401(k) retirement plan to help ease your financial burdens.

Before you do:

First, comb the fine print in your 401(k) plan to find out what qualifies as a hardship. Usually a hardship withdrawal must be due to an immediate and heavy financial need pertaining to certain medical expenses, specific home expenses including avoiding eviction or foreclosure, educational costs, funeral expenses, and the like.

Second, find out if you are eligible to take a hardship withdrawal. The Internal Revenue Service (IRS) says you must have exhausted all other options, such as stopping your elective deferrals, obtaining available loans, receiving compensation through insurance proceeds, or selling assets.

Third, learn how much is available to you. It's usually restricted to the amount you have contributed to the plan, without earnings, but some plans make employer contributions available as well.

Be aware that:

  • You will not be allowed to make elective deferrals for at least six months after you receive the withdrawal. This means you may make no new pretax contributions from your paycheck and you'll miss out on all or some employer matches during that time.
  • You will have to pay taxes on the amount you receive, based on your tax bracket.
  • If you're younger than 59½ years old, you will have to pay a 10% early withdrawal penalty.
  • In addition to the penalty, your plan might charge a fee to take a hardship withdrawal.
Don't go into this without understanding the consequences. First and most important is that you'll forego the compound earnings you'd otherwise enjoy in retirement.

To drive this home, say you are 30 years old, in the 25% tax bracket, and want $10,000 to pay for your tuition this year. To net $10,000 and pay the employer withdrawal fee and the IRS early withdrawal penalty plus taxes, you'll need to pull $15,485 from your retirement account. For the next six months you can't make any elective deferral contributions, and you'll miss your $2,700 employer's match. That's $18,185 that won't earn compounding interest--for the next 35 years.

Assuming you miss a 7% annual rate of return, you will come short roughly $194,000 when you retire.

In some situations it is worth taking the hardship withdrawal, but it should be your last resort. Consult with your human resources department, and with your tax and financial advisers before you make a hardship request. And use the calculator "The Cost of Borrowing From Your 401(k)" in the Home & Family Finance Resource Center to determine the ultimate consequence of this decision.

Financial Literacy Week on IHandFF RadioI

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WASHINGTON (4/20/12)--Sunday's Home & Family Finance Radio program addresses Financial Literacy Week, bill-paying trends, buying a home, and obtaining a mortgage.

The show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:

  • "Financial Literacy Week." Debra Matz, chairman, National Credit Union Administration, Alexandria, Va., shares online resources to help consumers observe Financial Literacy Week.
  • "77 Million Americans Don't Pay on Time." Gail Cunningham, vice president of membership and public relations, National Foundation for Credit Counseling, Washington, D.C., explains how late bill payments can negatively affect your credit history.
  • "Know When to Buy a House." Susan Tiffany, certified credit union financial counselor and director of consumer periodicals, Credit Union National Association (CUNA), Madison, Wis., provides advice for deciding when to pursue homeownership.
  • "Mortgage Money, Good or Bad." Raymond Friday, senior vice president, Southern Trust Mortgage, Virginia Beach, Va., discusses the housing market and options for financing.
Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide.

Home & Family Finance airs Sundays at 3 p.m. ET on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network.

CUNA and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA's websites.

For more information, use the "What Will It Take to Pay Off My Balance?" calculator, read "Know When to Buy a House," and watch "Mortgages: Prequalification vs. Preapproval" in the Home & Family Finance Resource Center.

Make the most of unexpected moola

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McLEAN, Va. (4/17/12)--"The Three Amigos," Maryland public school employee winners of a recent Mega Millions lottery who will split $105 million after taxes, all say they will continue to work, for now. One winner is going to help his kids pay for college and buy a house for his sister, another will backpack through Europe with her brother, and another plans an overseas trip. All vow to be careful about how they spend their winnings (USAToday.com April 10).

Whether you've won the lottery or come into unexpected cash by way of a bequest, receiving sudden wealth can be overwhelming whether you're inheriting $10,000 or $10 million.

Here are some considerations that may help you manage your windfall, according to the Credit Union National Association's Center for Personal Finance:

  • Find help. Just be sure the help you get is on your side. Make sure that the person managing your money is registered with the Securities and Exchange Commission,  you'll get quarterly performance reports,  you never pay more than a 1.7% annual money management fee, and you ask to see other client reports.
  • Take first steps. Contact your tax professional for advice about what is and isn't taxable. Also, be aware that each state has its own estate tax rules. Check the Internal Revenue Service website (use the link)  for current rules.
  • Plan ahead. What do you want to accomplish in life and how will this money help you get there? For example, maybe now you can reach a life goal sooner than expected, perhaps by pursuing a different profession or going back to school.
  • Pay off debt. Using your windfall to pay off debt is a great idea, but experts recommend going one step further and figuring out how to avoid building new debt. Set aside enough money to cover future emergencies in case of job loss or a medical crisis.
  • Manage obligations. Have you saved enough for retirement? Are you saving for your kid's education? If not, this is a great opportunity to beef up those accounts. If you still have money left, work with an adviser who knows you, your goals, and your timetable.
  • Splurge cautiously. Figure out what will make your life better long term and what might be fun just for now. Be careful how you spend and how much you spend. Studies show that more than 18% of those who receive $100,000 or more spend it, lose it, or give it away, according to a Consumer Affairs newsletter.
Regardless of your situation, receiving a large amount of money will be life-changing;  the bigger the windfall, the more dramatic the impact is likely to be. Money management is one thing, but managing how your life has changed is another.

For more information about handling an unexpected amount of money, read the "Landing a Windfall" Turning Point in the Home & Family Finance Resource Center.

Last-minute tax tips on iHandFF Radioi

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WASHINGTON (4/13/12)--Sunday's Home & Family Finance Radio program covers the 2012 tax deadline, paying your tax bill with a credit card, retailer debit cards, and sustainable living.

The show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:

  • "IRS Last Call." Eric Smith, spokesperson, Internal Revenue Service (IRS), Washington, D.C., shares final tax reminders from the IRS for this year's filing deadline, April 17.
  • "Tax Bills and Credit Cards." Michael Eisenberg, certified public accountant, Los Angeles, discusses the pros and cons of paying your tax bill with a credit card.
  • "New Rewards and Risks of Store Cards." Amanda Walker, senior editor, ShopSmart magazine, Yonkers, N.Y., highlights potential pitfalls of new retailer debit cards.
  • "State of the World 2012." Erik Assadourian, senior fellow, Worldwatch Institute, Washington, D.C., explains how living sustainably can be no more difficult than living as a typical consumer.
Home & Family Finance is a resource center for personal finance information at the Credit Union National Association (CUNA). The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide.

Home & Family Finance airs Sundays at 3 p.m. ET on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network.

CUNA and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo and other popular podcast library sites, as well as on Radio America and CUNA's websites.

For more information, watch "Getting Tax Records Organized" and use the "What's Your Credit Quotient?" calculator in the  Home & Family Finance Resource Center.

Avoid tax fraud Select reputable preparer

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NEW YORK (4/10/12)--There's no good time to find out you've been ripped off, but tax season can be particularly distressing. You're already stressed about meeting deadlines and making payments, so it's especially alarming to discover that your tax preparer has scammed you.

That's exactly what some taxpayers had to deal with when TaxMasters, a tax consultation firm in Houston, was charged with defrauding customers across the country (CNNMoney March 30).

A civil trial in Texas alleges that TaxMasters  committed more than 110,000 violations of the state's Deceptive Trade Practices Act. The state claims that TaxMasters lied to customers about contract terms, did not inform customers of its no-refund policy, and caused customers to miss tax deadlines after promising to immediately start work on cases.

TaxMasters and its founder have been ordered to pay $195 million in damages, with $113 million going back to defrauded customers.

While these tax-scam victims will be compensated for the money they lost, it's probably safe to say that they'll be careful when choosing future tax preparers. There are ways to ensure that you're hiring a trustworthy preparer.

The Internal Revenue Service (IRS) reminds taxpayers to follow these guidelines when selecting a preparer:

  • Don't be lured by the promise of a larger refund. A return preparer who claims to be able to get you a bigger refund than other preparers should be treated with skepticism.
  • Never pay based on your refund. Steer clear of a preparer who charges a fee based on a percentage of your refund amount.
  • Make sure there's a PTIN. A reliable tax preparer should sign and enter a preparer tax identification number (PTIN) on your return and supply you with a copy for your records.
  • Find out if the preparer will stick around. Will the preparer or firm be available to answer questions about your return for months or years after the return has been filed? If not, use caution.
  • Pay attention to what you sign. Don't sign a blank tax form under any circumstances.
  • Get feedback before you hire. Find out if anyone you know has used the preparer you're considering, and ask about the experience. If you're still not sure, check with the IRS.
Remember that in the end you are responsible for the accuracy of all entries on your tax return whether you complete your taxes yourself or work with a return preparer.

For more information, read "IRS Releases Dirty Dozen Tax Scams" and watch "Getting Tax Records Organized" in the Home & Family Finance Resource Center.

Shop online save for retirement with IHandFF RadioI

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WASHINGTON (4/6/12)--Sunday's Home & Family Finance Radio program provides guidance for shopping online, discussing money with your significant other, saving for retirement in tough times, and preparing for natural disasters.

This is a rebroadcast of an earlier Home & Family Finance Radio program.

The show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:

  • "Save Money Buying Online With Special Discount Codes." Barry Boone, CEO, CurrentCodes.com, Tulsa, Okla., shares moneysaving tools for shopping on the Web.
  • "Begin With the E.N.D. in Mind." Scott and Bethany Palmer, The Money Couple, family and couples' financial advisers and authors, Colorado Springs, Colo., discuss the importance of planning regular conversations about finances with your spouse.
  • "How to Invest and Save for Retirement During a Recession." Bill Losey, certified financial planner and author, Bill Losey Retirement Solutions, Wilton, N.Y., offers advice for getting retirement-ready in a challenging economy.
  • "If Disaster Strikes, Can Your Finances Weather the Storm?" Steven Smith, chairman, president, and CEO, Finicity Corp., Salt Lake City, explains how to put your financial life in order in case of a natural disaster.
Home & Family Finance is a resource center for personal finance information at the Credit Union National Association (CUNA). The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide.

Home & Family Finance airs Sundays at 3 p.m. ET on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network.

CUNA and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA's websites.

For more information, read "Couples and Money: Reconciling a Spender-Saver Marriage" and "Preserve Your Family's Paper Trail: Replace and Safeguard Personal Records," and use the "How to Calculate Your Retirement Needs" calculator in the Home & Family Finance Resource Center.

How to manage half a billion dollars

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NEW YORK (4/3/12)--If you are one of the three winners of that record $656 million Mega Millions jackpot, you're probably exhilarated today. You're also likely at sea about your next step.

The Associated Press and The New York Times (March 28) offered these ideas:

  • Sign the ticket. Not unlike a blank check, an unsigned ticket could be claimed by anyone who presents it to lottery officials. Protect your ownership rights by signing the ticket on the back, then photocopy both sides and lock the ticket in a safe or safe deposit box.
  • Slow down. Curb your impulse to call all your kith and kin or to post the news to Facebook or Twitter. The news will spread quickly enough; you need to get ahead of it with some feet-on-the ground planning.
  • Identify professional advisers. You'll need a lawyer, tax expert, accountant and financial planner. If you don't already have these kinds of pros on speed dial, ask trusted family or friends for referrals, or call the manager of your credit union and ask for recommendations.
The record Mega Millions prize grew to $656 million as dreamers scrambled to buy tickets before the Friday drawing. But taxes will take a significant cut--federal taxes alone will claim some 25%, and state and local taxes will bring the total tax bite to about a third. Still, you'll do all right.

Your advisers can help you decide if you should take the prize in a lump sum or in annuity payments over 26 years. If you have the discipline to stick to a plan, take the lump sum; if you're not sure you can handle that much money and those kinds of decisions, choose the annuity plan.

Splurge a bit, be a little generous to friends and family, but keep a rein on payouts until you get used to being one of the 1%. If you don't settle on your priorities for all that money, you could join the many lottery winners who find themselves broke in as few as five years.

And if you could use some help managing windfalls of the more common variety, read "Make the Most of Unexpected Good Fortune" and "Loans Among Friends and Family: Win-Win or Sure Loss?" in the Home & Family Finance Resource Center.