Wednesday, October 11, 2017
In an earlier blog post, I cited research by Morningstar behavioral economist Sarah Newcomb that links a focus on the future with increased savings. Sounds simple enough, but the “f-word” (future) can be vague and scary to many people. It is easy to postpone action today for something that might be two or three decades down the road. For this reason, some people prefer to use the words “now” and “later” instead of “future goal.”
What to do? Use tools and techniques that develop your future-mindedness. Below are five ideas:
Experience Small Successes- Achieve success for motivation to move on to bigger goals. For example, if you complete the 30-Day $100 Savings Challenge a few times, you might ramp up the savings target to $200.
Do Backwards Thinking- Write down on a post-it note, on a board or wall, where you want to be and where you are now. Then, working backwards, insert post-its to identify all needed steps in between the two points.
Post-it Planning- Do the same thing as Backwards Thinking, but in reverse. Work forward from where you are now to where you want to be and use post-it notes to identify all needed steps in between the two points.
Listen to Powerful Stories- Google “Powerful Personal Finance Stories” and you will find inspiring stories about people like you who took small steps to turn their financial lives around.
Get a Glimpse of Your “Future Financial Self”- Research has shown that people who see themselves as an older person save more money. Web sites like Age Me and Change My Face can show you what you look like as an older person and give you a better appreciation of your “future self.
Thursday, October 5, 2017
In last week’s post, I noted that your personal identification information (PII) is now basically “out there” in perpetuity. In addition, proactive measures such as fraud alerts on credit cards and credit freezes will not deter non-credit related frauds such as tax refund identity theft and health insurance fraud. For that, we are simply told to “be vigilant,” probably for the rest of our lives. Hacked data can remain dormant for years before it is actually misused so you can’t let down your guard. Below are five vigilant practices to follow for insurance and taxes:
- File Your Income Taxes Early- Beat fraudsters to your tax refund. They now have the name, address, and Social Security number of 143 million Americans, which is everything needed to file a fraudulent tax return.
- Avoid Over-Withholding- Adjust your tax withholding, using a new W-4 form, to get a smaller refund or no refund; you’ll have little or no money stolen if someone uses your PII to claim a fraudulent tax refund.
- Look for Suspicious Activity- Beware of “red flags” for tax ID theft such as a tax notice from an unknown employer. If you receive such a notice, contact the employer to explain that someone stole your identity.
- Beware of Phony IRS Pretexting- Remember that the IRS rarely contacts taxpayers by phone and never by e-mail. Remember, the Equifax frausters have lots of information to sound convincing. Delete or hang up.
- Review Medical Bills and Explanation of Benefits (EOB) Statements- Scrutinize bills and EOBs to look for medical services that were not received by you. Medical identity theft is very serious and can potentially lead to death if a fraudster’s medical history (e.g., blood type and allergies) is co-mingled with a victim’s.
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