Personal Finance Advice

You already know that you need to protect your personal financial information.  It’s difficult to read through a personal finance website or magazine without running across an alarmist article about identity theft, but it’s with good reason.  Nobody is immune to identity theft, but there are certainly some things you can do lessen your chances of experiencing this huge hassle.

Here are some tips for keeping your personal financial information out of the hands of a potential identity thief:

Shred your documents.  If you receive bank statements, credit card bills, or anything else that has your personal financial information on it, don’t just toss the paperwork into the trash or recycle bin when you’re finished with it.  Shred it first.  You might be amazed at the lengths some thieves will go to get their hands on information, and digging through your trash is one of them.

Close your browsers.  After you have completed a financial transaction online you should log off the website and close the browser, especially if you are using a communal computer that other people have access to.  Also keep in mind that you never really know what types of programs are on community computers, so waltzing up to a computer in an Internet Cafe and checking all your account balances may not be the best idea.

Don’t advertise your information.  Suppose you’re sitting in the subway, trying to utilize the time by getting some financial tasks taken care of.  When you call your bank for some information they ask you for a slew of information to verify your identity, such as your account number, your address, and your name.  It’s a bad idea to loudly and clearly give all this information to your bank over the phone in a crowded area because you just never know who is listening.

Know that thieves are everywhere.  This may seem a little paranoid, but the fact is that identity thieves often know their victims…sometimes they are even related to them! Don’t leave your credit cards sitting around in plain sight, don’t conduct PIN transactions with your pal looking over your shoulder, and don’t even think about letting a friend borrow your ATM card.

Be careful who you give information to.  Just because someone calls you on the phone and sounds official it doesn’t necessarily mean that the person is indeed an employee of your financial institution.  Never give out personal information during phone calls you don’t initiate, and use the same caution when you conduct financial dealings online.  Remember that a pop-up chat request probably isn’t from your bank.  Ignore the IM request and contact your financial institution.

The truth is that you can fall victim to identity theft even if you are really careful about who has access to your information.  Be sure to periodically check your credit report and always review your bank and credit card statements before you shred them.

I recently had a conversation with a friend who was having problems getting his tuition assistance paperwork to the correct office of the university he’s attending.  The mix-up wasn’t his fault, but he kept getting letters from the school asking him for payment and warning of possible late fees.  He knew that once the correct documentation was forwarded to the school then everything would be resolved, but until then he was steadfastly ignoring the notices.

“I just didn’t want to call the school until I knew what was going on with the paperwork,” he said. 

Bad idea.  Whenever you owe someone money, one of the worst things you can do is to avoid keeping them abreast of the repayment situation.  If you don’t make an effort to contact your creditors (or if you make a concerted effort to avoid talking to your creditors), then they may just make the assumption that you don’t ever intend on paying the debt.  What do creditors do when they don’t think they’re going to get money out of you through polite methods? They get aggressive.

It’s a much better idea to contact your creditors, even if you don’t really have a resolution to the issue.  Let’s say your check actually got lost in the mail, and you’re having problems with getting your bank to cancel the check so you can write another one to the creditor.  The whole situation turns into a big debacle and you’re having a hard time getting the bank to resolve everything.  Instead of keeping your creditor out of the loop, you should call up and let them know what is going on.  Even if you have nothing to say other than, “I got your notice in the mail today, but I’m still working with my bank to work this all out,” it’s far preferable to ignoring everything and just waiting for a resolution before you call your creditor.

Why? For a few reasons, really:

1.  Creditors can raise your interest rate in the blink of an eye if they want to (and if it’s permissible through the original terms and conditions).

2.  Creditors can send your account to collections.

3.  Your credit score can drop if the creditor reports the delinquent payment.

Are creditors actually so benevolent that they will delay taking negative action if you keep them in the loop of what is going on? Yes, some actually are.  Instead of hiding from your creditors, stay in constant contact and let them know the status of the payment.  You might save yourself some late fees (and grief) by doing so.

If you’re heading down the wedding aisle soon, or if you are combining households with someone who you are in a relationship with - there comes a time when the two of you either decide to have an open and honest discussion about your finances or instead you decide (consciously or unconsciously) to just leave it alone and assume that everything is a-okay in the other person’s financial world.

Do you want to guess which option is better?

Whether or not you combine all your finances with your spouse or significant other is a decision that should be made by the both of you.  There are valid reasons for each choice depending on your particular situation, but in most cases the finances can be simplified quite a bit by combining them together.  There is no rule that says significant others absolutely must have joint accounts for debt and savings, but it can make everything a little easier.

Regardless of the choice you make to combine finances or keep them separate, both you and your significant other should take the time to sit down and disclose the full details of your personal finances to each other.  If the thought of this makes you cringe, then consider this: Would you rather reveal all your financial details and find out your significant other’s financial details early on, or would you rather discover that your spouse’s credit is horrible after you submit a joint application for a mortgage to buy a house together?

The truth is that your spouse’s personal finances affect you, even if the two of you don’t ever combine finances.  Buying a house or taking out an auto loan can turn into a real nightmare if that’s the moment you find out that your significant other is three months behind in credit card payments and hasn’t made a student loan payment in over a year. 

You might also get a different view of your partner when you get a realistic glimpse at how he or she handles finances.  A person who keeps up on payments and fastidiously contributes to savings demonstrates a readiness for responsibility while a person who regularly misses payments and exceeds credit limits might indicate reluctance to achieve maturity.  If you find out that your loved one needs help with budgeting and handling finances then you can help early on before it starts to affect your chances of buying items together as a couple.

What if you are the one with the horrible credit and tendencies toward credit mismanagement? Chances are you’re embarrassed to reveal your money problems to your significant other, but if you don’t reveal your financial situation then you’re hiding a lot from the person you’re supposed to share everything with.  Or, in other words, you’re lying through omission.

Get the finances out in the open before you marry or move in with someone.  It’s better to know early into the relationship instead of much later when the other person’s finances will make or break your ability to obtain credit jointly.

What do you do if your significant other won’t share financial information with you whatsoever? Most relationship experts would agree: Consider it a huge red flag.