Thursday, November 16, 2017

Tuesday, November 14, 2017

Security vs. Convenience - The Equifax Hack

You have undoubtedly heard about the massive data hack at Equifax, one of three U.S. credit-reporting companies, referred to as “credit agencies” (Experian and TransUnion are the others).  With 143 million credit files identified as exposed, I think it safe to assume that your information is “out there”. 

You can check to see if your data was exposed: Equifax has established a “Am I impacted?” web page:

I personally didn’t bother checking but went straight for the only action I could take that would provide any real measure of protection: I called each of the three credit agencies and initiated a Security Freeze on my credit files.  A Security Freeze locks your credit file; denying anyone attempting to use your information fraudulently to set up loans, credit cards, etc.  Will this action prevent all possible fraud with my information?  No – fraud takes many forms, but it will prevent my credit files being used.

Applying a Security Freeze locks your credit file to all applicants, including yourself.  When the freeze is applied, you are given a PIN (either immediately or by mail) which you will need to unlock your file in the future.  With the PIN, you can unlock your file temporarily if you need to apply for credit or unlock it permanently.

You might reasonably ask: “That seems inconvenient - should I sign up for credit monitoring – that’s just as good isn’t it?”  My reply is “Are you willing to take the chance that monitoring will catch every fraudulent attempt?”

Costs: two of the agencies charged $10 while the third charged $0.

Pro tips: 1) you must contact each agency separately – there is no “one and done”; 2) each person has their own credit files – if you are married both of you need to take separate action.

You can count on data breaches like this one happening again.  Protect yourself.

Here are the phone numbers for the three agencies:

Equifax      (800) 685-1111
Experian    (888) 397-3742
TransUnion (800) 680-7289

You can learn more at the Consumer Financial Protection Bureau:

© 2017 Kim Miller, Certified Financial Planner™

Tuesday, April 25, 2017

Use Your Imagination!

“Imagination is more important than knowledge.”
-        Albert Einstein

Consider a few of the great conundrums of life:

How long will I live?
How long will my spouse live?
What will it look like to retire?
How much money will it take to be comfortable?
What will I do all day?
How can I stop procrastinating and do something about it?

Let’s imagine…

Consider that the answers to most of these questions are not knowable with any degree of certainty.  No one knows how long you or your spouse will live, no one knows what your life will look like after you quit working, no one knows how much money you will need, you probably don’t know yet what you will “do all day”, and of course the very essence of procrastination is to put off doing anything about any of it.

Financial planners are well known for the perfection of their analyses – you’ve seen the charts, calculated to the nearest dollar.  Many people employed in our business feel that the more precision they bring to their analyses, the more likely the client is to accept the results.  Unfortunately, financial planning software doesn’t help much in dispelling such reliance on precision, and in fact actively encourages it – “Look, color pie charts!”.   A few years ago, a bank ran a series of ads which showed people walking down the street holding a large number sign, trying to make the point that “everyone’s number is different, but you better get cracking by engaging our services”.  Of course, those “numbers” came out of nowhere.  It’s probably not much comfort to know that a financial planner can show you how they arrived at your “number”.

The “number” is derived with inputs that are decidedly, subjectively assumptive – i.e., “guessing”.  How long will you live?  What rate of return will you earn on investments?  What will the inflation rate be?  A newer assumption gaining popularity – what will the rate of inflation in medical costs be?  What will the capital markets “do”?  This last assumption often takes the form of “what if” the capital markets do “this” or do “that”.

How can I bring certainty into the mix?

Newsflash: to a large degree, you can’t.
Apply Your Imagination

Consider making a list of “Things I can control” and “Things I can’t control”.

Here are some starters; notice that we’ve provided several blanks for homework.

Things I can control
Things I can’t control
How I live – work, health, relationships
How long I will live
How much I save/invest
Returns on savings/investments
My actions today AND tomorrow
Other people’s actions
My spending lifestyle

How I will live when I quit working

Where I live, where I will live

What will I…

How will I…

How much is enough?

Arguably the number one narrative used in retirement planning is some variation on “You don’t want to be eating cat food, do you?”  We are aware of anecdotal stories of people doing just that, so while this approach sounds like fear-mongering, there is some truth there.  Canned cat food is cheaper than canned tuna.  Eating fresh food is universally desired, but it does cost “more”.  Act accordingly.

Stop Procrastinating – Use Your Imagination

Consider your “future self” 10, 15 or 20 years from now.  What action or series of actions can you take today that will make a difference to that person you will become?

© 2017 Kim Miller, Certified Financial Planner