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Author Archives: Kristina Tahnyak

Avatar photo About Kristina Tahnyak

Tahnya is a Certified Financial Planner and former Investment Advisor turned marketing and communications professional She holds a degree from Concordia University, is debt free and currently works in the field of digital marketing.

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Friday Roundup: The Financial Blogger Conference

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writing and highlighting
Happy Friday DINKS! This time last week many Personal Finance Bloggers gathered in Chicago for the 1st Annual Financial Blogger Conference.  The Financial Conference was created and organized by Phil @ PT Money.  It is a full day of expert panels, round tables, seminars, and discussions between Financial Bloggers, Financial Authors, Money Enthusiasts, and Financial Professionals.  I am sure that the 1st Annual Financial Blogger Conference was a weekend full of helpful information, lots of fun, and good times that will forever become memories. Unfortunately I was unable to attend this year, but I will definitely try to be there next year.

Some Financial Bloggers attended the 1st Annual Financial Blogger Conference to meet and connect with other online Bloggers who have become their online friends, some Bloggers  attended the Conference to learn about managing a successful Blog, and some other Bloggers went to Chicago to meet their money mentors such as JD Roth from Get Rich Slowly and Ramit Sethi, who is a best selling author.

I wish I could have attended the 1st Annual Financial Blogger Conference because I have always wanted to visit Chicago, but also because I would have really loved to connect with other Financial Bloggers.  I would have loved to (finally) meet J. Money from Budgets Are Sexy in person.  He has been my colleague, my friend, and my boss for almost two years…and he seems to be a lot of fun.  I would really like to meet Amber from Blonde and Balanced because we are both young professional women who work in Finance, she is a CPA and I am a CFP.  I have connected with Carrie Smith @AppleCSmith on Twitter and she seems like a great person, I would have loved to meet her.  As you know I am Canadian and I would have loved to meet up with my fellow Canadian PF Bloggers Krystal from Give Me Back My Five Bucks and Young at Young and Thrifty.   I hope that everyone had a great time in Chicago and I hope to see you all next year!

Check out what some Financial Bloggers had to say about FINCON11

  • Amber @ Blonde and Balanced left her newly wed husband for the weekend and took a short flight to attend the Financial Blogger Conference.  She discusses her goals for the conference in the post Heading to the Financial Blogger Conference.  You can Follow her on Twitter @AmberBalanced
  • Carrie @ Careful Cents talks about how attending a conference can help your career in the post 5 Ways Going to a Conference Can Really Pay Off.  Follow Carrie on Twitter @Apple Smith
  • MD @ The Financial Blogger discusses his business reasons for attending the Financial Blogger Conference in the post I’ll be Part of the Expert Tables at the Financial Blogger Conference and Nominations. He was nominated for 3 Plutus Awards, which are the Annual Financial Blogging Awards.  The winners were announced at the Conference in Chicago.

In case you couldn’t attend the 1st Annual Financial Blogger Conference in Chicago check out the official website: http://FinancialbloggerConference.com

 (Photo by ElvertBarnes)

Get Your Finances In Order!

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On the trail

Good Morning DINKS.  Today we are discussing a touchy subject.  I apologize if this seems grim, but our topic today is something that needs to be discussed.  During our lives we work hard and save our money, but what happens to our money in the After Life?  It is great to accumulate wealth, but what happens if we don’t live long enough to enjoy it? Today we are talking about Estate Planning and how to get our finances in order in case of an unforseen tragic event.  When we are young and healthy we think that nothing will ever happen to us, we have a “superhero” mentality, and we may think that we are invincible.  However, the truth is that tragedy can strike any one of us at any time.  Some of us may have a home, some of us may have retirement accounts, and some of us may have emergency savings; but how many of us have an up to date Last Will and Testament?

If you were to die tomorrow, would your finances be in order?

A very important part of the Financial Planning process is Estate Planning.  I know that it is difficult to talk about death, and it is especially difficult to talk about our own deaths; but unfortunately it is something that needs to be done.  Think about your last bad dream, did it involve your death? What if that bad dream became a reality for your spouse and family?  In the past 3 years I have lost my grandmother, my great grandmother, my best friend, and my step brother.  I know from personal experience how devastating the death of a family member or close friend can be on our mental, emotional, and physical well being.  Imagine the difficulty of having to deal with the finances of your spouse while you are still grieving their loss.  Being financially prepared in the  case of an unforseen tragic event can greatly help our loved ones through the grieving process.

As a Financial Planner I have seen Estates tear families apart; money really is the root of all evil.  I think that it is comforting to know that our last wishes will be respected, and that our death will not cause havoc on our families.  When I was 19 my Paternal Grandfather passed away without a Last Will and Testament.  Since he lived with us, my Father declared himself the Liquidator of the Estate.  At the time of his death my Grandfather was only on speaking terms with 2 of his 5 children and he had been seperated from my Grandmother for 10 years.  However, once my Grandfather passed away everyone wanted a piece of the pie.

My Grandmother reminded everyone that she was still legally married to my Grandfather, and 3 of my estranged Aunts and Uncles were suddenly on our doorstep waiting for our handout.  My Father knew that my Grandfather would not have wanted to share his wealth with anyone who was not active in his life.  However, there was no way my Father could prove it because my Grandfather passed away without a Last Will and Testament.  My younger sister and I saw how strenuous handling an Estate can be on the Liquidator and on the entire family, specially on my Father.  My younger sister and I made a promise to never fight about money.  We agreed to respect our parents last wishes, whether they are equally distributed or not.  I am glad to say that this promise has been upheld for over 10 years.  My younger sister and I may fight about other things, but we never fight about money.

How To Get Your Finances In Order

  • Keep at least one Paper Statement.  Even if you are going green and you prefer the convenience of Online Banking, keep a paper statement in a safe place where your spouse can have easy access if ever you should pass away.  This is important because settling an estate is a lot easier with account numbers and contact information.
  • Draft a Will.  Having a Last Will and Testamony doesn’t have to be complicated.  It can be as simple as declaring that you want to leave a universal legacy (everyting in it’s entirety) to your spouse.  Or, we can declare individual beneficiaries to each of our specific  accounts.  Regardless of how we choose to distribute our money upon death, having it written down on our Last Will and Testatment will save our loved ones time, money, and a lot of stress.
  • Talk About It. Make sure that your spouse is aware of your final wishes. Talk about your intentions, your accounts, your business, and your final arrangements.  There is nothing worse than losing someone and having to decide what type of funeral we think that they would want.
  • Make sure to have one Seperate Account.  Usually all individual assets and all  joint assets where the deceased is an account owner are frozen.  In order for your spouse to prepare final arrangements and continue living during the grieving and Estate process it is important that they have access to money.

(Photo by Mr eNil)

A Guaranteed Stock Market Investment

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stock market investment, investment tips, investment advice

new york stock exchange
A Stock Index GIC or a Market Linked GIC is a Guaranteed Investment Certificate (Term Deposit) that guarantees our capital investment but offers the possibility of a higher rate of return.  Our capital investment in a Market Linked GIC is always guaranteed, but our interest is to be determined based on the performance of a particular Stock Index.  Depending on the Stock Market performance we may have a very high rate of return, or we may have no rate of return at all.  If the Stock Market has a negative return over the entire term of our investment we will have a 0.0% rate of return, but at least we can never loose any of our initial capital investment.  The interest rate on a Market Linked GIC is not determined until the end of the investment term.  The investment term on Market Linked GICs is usually 3 or 5 years, this is because investing in the Stock Market is usually for the long term.

A Market Linked GIC is the perfect solution for new investors or for investors who want to guarantee their initial investment but not thier interest rate.  This type of investment is perfect for people who may not yet be comfortable with the possible fluctuations in the value of their investment due to market volatility, but who still want market exposure.  A Market Linked GIC is a great way for investors to learn about the fluctuations in the market and how it can affect their personal rate of return.  However, they will never take the risk of losing their capital investment.

The interest rate on a Market Linked GIC can be calculated in one of two ways.  The first option for Market Linked GIC interest calculation is an average market return over the entire investment term.  The advantage of this interest calculation is that if the average market return is low in the first year or the first two years the client has the chance to make up their losses over the remainder of the investment term. I always tell clients that their Market Linked GIC  investment is for 3 or 5 years; and the odds of the overall market average rate of return being negative for 5 consecutive years is very low.

The second option for the interest rate calculation on a Market Linked GIC is an average of each individual year over the investment term. If the Market Linked GIC is for 3 years, each year an interest rate is determined for the GIC based on the average market return.  As an example the first year could have a 2.0% rate of return, the second year could have a 3.0% rate of return, and the third and final year could have a 4.0% rate of return.  This means that the average rate of return for the 3 year period would be 3.0%.  In most cases the Financial Institution offers us the option to lock in our interest rate after two years.  In our example after two years our average interest rate of return would be 2.5%,  If we think that the interest rate for the third year is going to be lower than 2.5% we can lock in our interest rate to guarantee that it does not go down in the third year based on the overall market performance.

Some Financial Institutions also offer Guaranteed Investment Certificates that are linked to the performance of individual Mutual Funds, as opposed to the Stock Market as a whole. Common Mutual Fund Linked GICs are Dividend Mutual Fund GICs as well as Growth Mutual Fund GICs.

Photo by Dannels

Are You Counting on Social Security?

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social security, retirement planning, retirement tips

beautiful sunset
Good Morning DINKS.  My 31st birthday is quickly approaching (October 9th) and that means that I am soon to be one year older, and soon to be one year closer to retirement.  If you have been working since you were 16 years old like I have been, then you have also been contributing into our Social Security fund, just as I have been doing for the last 15 years.  I am all about a sustainable economy and I think the idea of a federal pension plan is great if it can be self sustainable, but there is no guarantee that Social Security will be around for me when I am ready to retire…whenever that will be.  As a 30 year old (soon to be 31 year old) professional I have to plans to retire anytime soon because there are still so many more things that I want to do in my career; however the idea that I will be contributing into a fund for (maybe) 45 years and there is a possibility that I will get nothing out of it in return really bothers me.

Should Social Security be Optional?

I don’t mind contributing into a Pension Plan or a Retirement Savings Plan during my working career as long as I am able to enjoy the fruits of my labour during retirement.  If our Social Security fund may be bone dry by the time we retire, should we still be obligated to contribute?  I feel that the answer is No.  Social Security should be an optional savings plan for people who don’t have the option of contributing to a Pension Plan through their employer. The idea that younger generations of workers are contributing into Social Security in order to fund the retirement of a previous generation is very unsettling.  There is no guarantee that the number of contributing younger workers will be enough to sustain Social Security for the older generations.

Maybe the Federal Government should act as a hybrid between a Financial Institution and an Employer when it comes to Social Security.  Our personal contributions to Social Security should be held in an individual account for us which will be able to be withdrawn at retirement for personal use.  During our working careers the Federal Government should match our Social Security contributions which would be prorated based on our annual salary each year.  This would give workers an incentive to save for our own retirement, and it would guarantee our own personal savings upon retirement.  This way we wouldn’t have to depend on a younger generation to fund our retirement.

We Have Other Retirement Saving Options!

As a Financial Planner when I prepare Financial Plans for my clients we always consider Social Security as part of their retirement income.  Actually, we plan for Social Security to be the clients primary source of retirement income and we supplement their retirement needs with their own individual savings.  But the truth is that this may not be a reality for many young workers today.  Personally I am planning for my own retirement by saving through my employer Pension Plan as well as an individual Retirement Savings Plan.  If Social Security is available for me at retirement it will be the gravy on top of my french fries, it won’t be the potato.

Some people say that if you want something done right we have have to do it ourselves; the exact same rule is true when it comes to our retirement.  It is important to always have individual savings for our retirement because it is very risky to count on someone else to save for our retirement.  Take a moment and think of the worst case scenario,  imagine that you have absolutely no savings when you retire and that Social Security is not available for you in retirement.  What would you do?

Retirement Savings don’t always have to be in a Roth IRA or a 401k, retirement savings can be in the form of any type of investment account.  As long as we are saving for our own retirement we will be ok.

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Photo by angela7dreams

My Mortgage Broker Nightmare

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mortgage broker. mortgage broker nightmare, housing nightmares

for sale by owner sign (fsbo)
Good Morning DINKS.  Today we are discussing the balance between receiving good customer service from our Financial Advisor and finding the best pricing for our financial products.  Let me ask you a question, if you could only have one which would you prefer to have? Establishing a relationship with a Personal Banker is important for us to receive good customer service, but at the end of the day all that matters is the bottom line and how much that service will cost.  I personally prefer to have better products at a lower price.  However, what cost comes with a good price?

As a Personal Financial Planner my main focus is Investments, Retirement and Estate Planning; however I also try to help my clients with their Mortgages.  Since 2008 the credit rules at Financial Institutions have become tighter and it is becoming harder for clients to be approved for their Mortgage loan.  I have a client who wants to refinance her Mortgage but unfortunately she was not approved with our Financial Institution.  She proceeded to look outside the Bank to find another solution to refinance her Mortgage.

My client found a Mortgage Broker who was able to approve her Mortgage refinance and offer her a really good fixed interest rate.  My client did not receive any cash back from the Financial Institution but the Mortgage Broker did offer to pay for her notary fees, this was generous since the cost comes out of his own personal commission.  Mortgage Brokers are independent workers who are “sponsored” by Financial Institutions.  Mortgage Brokers work for themselves, but they have working relationship with several Financial Institutions, Banks, and Finance Companies.  A Mortgage Broker is paid a commission by the Financial Institution whenever their clients mortgage is approved. The commission is approximately 0.0125% of the total Mortgage value.  Therefore, on a $300,000 mortgage loan a Mortgage Broker will earn $3750 in commission.

The benefit of using a Mortgage Broker is that they will shop around and find the best Mortgage rate for us, this eliminates a lot of extra work and wasted time for us.  When we shop around for Mortgage Rates and  Mortgage Pre Approvals each Financial Institution will check our credit and put a hit on our credit bureau.  Having a lot of hits on our credit bureau can significantly lower our credit score.  Mortgage Brokers only check our credit once and then submit it to different financial institutions to see which one will approve our application.

The downside of using a Mortgage Broker is that they are only negotiating interest rates on our behalf.  Usually Financial Institutions  who work with Mortgage Brokers do not offer a cash back option or cover any additional costs such as notary fees or inspection fees.  These financial institutions may offer cash back when clients apply for a mortgage directly with the Institution but the interest rate will be higher.  My client was lucky that her Mortgage Broker offered to pay her notary fees, and on top of it she was getting a really great interest rate on her Mortgage Refinance.

The Mortgage Broker had to submit my clients application to several different Financial Institutions before he could find one that would approve it for her.  My clients personal situation is a little bit special because she runs a daycare out of her home and also receives government supplements that she has to declare on her income.  Apparently the Mortgage Broker felt that the time he spent on reworking and resubmitting my clients Mortgage application was  more valuable than the amount of commission he received on her $410,000 mortgage aka $5125.  My client refused to pay any additional fees to the Mortgage Broker because there was nothing in their contract that said the Broker could request any additional fees, and that those fees were at his discretion.  The Mortgage Broker was asking for an additional $1500 from my client.

After two weeks of exchanging phone calls and one week of my client avoiding his phone calls the Mortgage Broker decided to show up at my clients home and demand the money.  Remember that my client runs a daycare out of her home, and at any given time she could have 7-10 young children in her home.  The Mortgage Broker finally left her property, but he decided to sit in his car on the street in front of her home.  She was afraid for herself, her family, and the children she she called the police.  The Mortgage Broker was escorted away and warned never to return.

By working with a Mortgage Broker, my client got her (otherwise unapprovable) Mortgage approved, she received a really low interest rate, but she also got harassed.  This story proves that everything has strings attached and nothing good ever comes without a price tag.

Photo by Casey Serin

Friday Roundup: You Know It’s Fall When…

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farmhouse window
Happy Friday DINKS!  Or should I say Happy 2nd Friday of Fall Everyone.  I personally love Fall.  It is definitely my favourite season.  I love Fall because my birthday is in October, I love Fall because the air is fresh but not too cold, and I love Fall because I love wearing sweaters and boots.  I also love the smell of Fall, nothing says Fall more than Fresh Baked Goods, Apple and Cinnamon.  I am not sure if I love the smell of Apple and Cinnamon because it smells good or I love it because it is comforting and reminds me of my childhood home before my parents divorce.  What is your favourite season?

Check Out these other posts from around the web about all things that these Personal Finance Bloggers love about Fall:

Kelly@ The Centsible Life discusses her new wardrobe in the post 10 Essential Fall Wardrobe Builders For Less.  As the seasons change so do our wardrobe needs and sometimes a girl needs a little upgrade.

Elle @ Couple Money shares her TV Guide in the post Weekly Round Up: Fall TV Season is Starting. This is another reason why I love fall; all of the great new TV shows premier, and the new seasons of my old favourite shows begin.  This Fall I will be watching the CBS oldie but goodie The Good Wife and the new CBS comedy series Two Broke Girls.  I may also get into Prime Suspect on NBC.  What will you be watching on TV this Fall?

Shannyn @ Frugal Beautiful talks about her hobbies in the post Geek Craft Fall Projects.  I couldn’t agree more with Shannyn.  Fall makes me want to get outside, go apple picking, and bake something.  I also can’t wait to carve my pumpkin for Halloween!

Carrie  @ Careful Cents notes that Fall marks the last season before the end of the year and it is the homestretch to reach our personal goals for 2011.  She gives encouragement to people whose personal goal was to pay off their debts in 2011 in the post  Staying Encouraged and Positive While Paying Off Debt.

 Happy Fall Friday Everyone. Have a Great Weekend.

 Photo by angela7dreams

Job Cuts or the Loss of Jobs? RIM vs. Apple

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stock market, Apple stocks, stock market advice

cool laptop picture
Good Morning DINKS. It’s time for the next post in our Stock Market Showdown series.  Today we are discussing  a topic that may be an ongoing battle between friends, co-workers, relatives and people of all kinds.  Today we are discussing the choice to own either a Blackberry or an iPhone, and the choice to buy the stock of either Research in Motion (RIM) or Apple.  Research in Motion is the company that produces Blackberry cell phones.  The technology war between Microsoft and Apple has been ongoing for many years, but recently Apple has engaged in a cell phone war with RIM.

Not too long ago it was rumored that Apple will soon release the iPhone 5, and this rumor was recently confirmed.  The iPhone 5 will be released on October 4, 2011 and this is sure to make Apple stocks rise.  The stock value of RIM has declined since they cut over 2000 jobs in the summer; however people still continue to buy Blackberry cell phones.  Apple Corporation recently lost their main front man Steve Jobs; but people continue to buy iPhones.

The question is…do more people choose to buy a Blackberry cell phone rather than an iPhone?  Let me ask you, which do you have (if any)? I personally don’t have either; I have an Android phone, but my boyfriend Nick is a huge Apple fan.  Actually let me clarify that statement, my boyfriend Nick is a huge fan of Apple for their techno gadgets such as his iPhod and iPhone; but he has always been an HP consumer for his personal computer.  However, HP recently announced that they will stop producing personal computers.  Needless to say this was devastating news for Nick, as I am sure it was for many HP PC users worldwide.

If you have an iPhone do you also own stocks of Apple?  If you would buy a Blackberry cell phone would you also buy stocks of Research in Motion? As you may know from previous posts in our Stock Market Showdown series I am a firm believer in purchasing stocks of companies whose products we use in our daily lives.  If products are in demand by the masses the company’s stock should continue to be profitable.  Of course corporate accounting also has a role to play in the sustainability of a company.  But, with the right management and a general consumer demand a company should be profitable.

How much of a company’s professional image influences your decision to buy their stock?  I feel that the young image of Apple appeals to many people from teenagers to young professionals.  The Apple commercials with actor Justin Long clearly compare the young, hip, easygoing stamina of Apple’s Mac computers versus the complicated, boring, old, and tired image of a PC.  Now with PC getting out of the picture I am excited to see how Apple will compare them self with RIM, more specifically how Apple will compare the iPhone to Blackberry.

Is pricing a factor in your buying decisions? Whether we are referring to the stock unit price of Apple Corporation versus Research in Motion or the price of buying an iPhone versus a Blackberry, is the price a factor in your decision?  Past performance may influence our decision to buy one stock over the other, but future predictions should also be a factor.  Neither past performance or future forecasts can predict what is going to happen in the Economy and they can’t predict how a Stock will perform, this is why personal preference should be the main consideration when choosing to buy one stock over another.

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Photo by Mr eNil

How to Diversify Your Retirement Portfolio

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retirement portfolio, retirement tips, retirement advice

There is no better time than the present to review our Personal Retirement Portfolios.  The end of the third quarter is quickly approaching and we will soon be receiving our September 30th account statements in the mail.

We have always said that Investing is a personal decision.  You don’t have to be a Personal Finance Professional to know what you want when it comes to your Retirement Portfolios; no one knows what we want better than us.  I recently had a conversation with my Mother regarding her Retirement Portfolio. My Mother is concerned because she has seen a significant loss in her Retirement Portfolio and she feels that she will never be able to afford retirement.

In the past when my Mother has asked me for Investment Advice I have politely avoided the subject for two reasons; first, I don’t like to mix my professional life with my personal life and second, I live in a state (well actually a province) different from My Mother and I am not licensed to give investment advice outside of my geographical region.  I also really hate it when people come to see me as a Financial Planner with tips from friends and neighbours.  It really bothers me because they are seeking my advice as a Professional Financial Planner, but they don’t trust me as much as they trust their family member or neighbour, who is not a Professional.  I don’t know what came over me during this particular conversation with my Mother, but I decided to give her investment advice.  Well actually I just asked the right questions so that she could take her own advice.

What is Your Risk Tolerance?

My Mother is currently invested in Stocks.  She has a Stock Broker who buys and sells Stocks on her behalf while charging her an annual as well as a per transaction fee. When she told me about the losses in her Retirement Portfolio I asked her Why she is invested in Stocks? What does my Mother know about investing in the Stock Market?  Without hesitation my Mother replied “Absolutely Nothing.”  This is the first rule of investing; never invest in something that we don’t understand.  My Mother is uncomfortable with the risks associated with investing in Stocks;  upon realizing this she decided that she wants to start investing more conservatively.

When reviewing our Retirement Portfolios we should never look at our losses in dollar amounts; we should always view our losses as a percentage rate of the entire portfolio.  The reason is because $5000 may be a big loss to me, but it may not be a big loss to someone who has over $1 million in their Retirement Portfolio.  If you are not comfortable losing up to 15% of the value in your Retirement Portfolio, then don’t invest in something that risky.  Portfolio Diversification is the percentage of each asset mix (liquidity’s, fixed income, domestic equity, foreign equity)  that we have in our Retirement Portfolios.  If we aren’t comfortable with the risks associated with owning individual Stocks then we shouldn’t have a Stock Broker.

What is Your Investment Objective?

If picking, choosing and researching different Stocks, Bonds, and ETFs is not your thing, then don’t do it.  Investors can simplify their Retirement Portfolios by investing in Mutual Funds.  Mutual Funds are an already well diversified investment because one Mutual Fund can hold several different investments (Stocks and Bonds).  My Mother told me that she was investing in Stocks because she wanted her investment portfolio to grow, however she didn’t think about the potential losses.   My Mother made the decision that she no longer wants to have stocks because she is no longer looking for growth; my Mother now wants stability in her Retirement Portfolio.

Since My Mother’s Retirement Portfolio is currently at a loss (the Cost Base is higher than the Market Value) it is not the right time to sell her investments.  Since she no longer needs the “assistance” of a Stock Broker but she still has to hold the Stocks I advised her to transfer all of her accounts (there are 4 in total) to a Self Directed Brokerage Firm.  This will allow her to hold the Stocks in her Retirement Portfolio until the value increases and she can sell them to reinvest in more conservative investments.  It will also save her money in the form of the quarterly and transactional fees that were being charged by her Personal Stock Broker.

What is Your Time Horizon?

My Mother is 55 years old and she plans to retire at 65.  Currently my Mother’s losses are only “on paper”.  As frustrating as it is to see the value of our Retirement Portfolio decline, it really doesn’t cost us anything because we haven’t physically taken the loss.  If my Mother acted on her emotions and sold all of her investments (which she wanted to do) she would have actually realized this ” paper loss” and that would have been bad.  A big mistake that Investors make is investing emotionally.  We have to remember that investing is business, it’s not personal.

Our Retirement Portfolio should be diversified based on our Time Horizon, we always have to keep our target date in mind.  Short term fluctuations are normal in the market, and that is ok if we are investing for the long term. If our target retirement date is two years from now then we should have investments with the same time horizon.  Someone who is retiring in ten years should never have the same investments as someone who is retiring in two years.

(Photo by Mr eNil)

The Devastation of a Downgrade

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devastation, downgrade, market downgrade

beautiful girlIn recent years we have all lived through some tough economic times; in more recent weeks we have seen the downgrade of the United States credit rating as well as the downgrade of two other major French Banks.

Being downgraded for a small business can be extremely devastating to their future sustainability, but is the downgrade of a big country as big of a deal? If a country is downgraded it will not stop running and the residents will not stop living their.  However, being downgraded can definitely hurt a country’s foreign trade. Being downgraded is like being demoted, it means that our personal worth is no longer valued or that it is less valued.  How would you feel if you (or your contributions) were no longer valued at home or at work?

I have personally never been demoted at work but I have seen it happen several times throughout my career.  When a company downgrades their employees it usually means that they want to let them gobecause their contribution is no longer valued in the workplace, but they don’t have enough of a reason to fire them.  Being demoted is personal because it is harmful to our ego and our personal self worth.  Some people do not accept the option of a demotion very well, and therefore they quit their job.  In this day and age I personally think that it is better to have a lower level job than have no job at all.

I like the idea that my contributions both at work and at home are valued.  However, I am not totally naive; I understand that I am replaceable at work.  In my personal life I like to think that my DINK household could not run efficiently without my individual contribution.  In a partnership there are always two people who contribute to the relationship, but if 1 person stops contributing their share, what happens to the couple?

A downgrade means that people see us as less of an asset, but it also diminishes our credit worthiness.  Our own personal credit score determines the level of risk that Financial Institutions are taking when they choose to lend us money.  If our personal credit score is low we are deemed to be a high risk and the Financial Institution could decline our credit application.  If our personal credit score is high we are deemed to be a low risk for the Financial Instituion and we could end up being approved for more credit than we need.  If our personal credit score is high we could also receive other financial benefits such as lower interest rates.

Our credit worthiness is determined by paying our bills on time and not accumulating more debt than we can afford to pay off.  If we are financially responsible we are assumed to be very credit worthy.  If you have ever been declined for a loan, a credit card, or a mortgage how did you feel? Our credit worthiness is a business decision for the Financial Institution, but it definitely has a personal impact on our self worth.

How we are viewed by others is very important to some people.  If your friend asked you for money and you knew they probably wouldn’t or couldn’t pay you back, would you still lend them money?  What if you asked your friend for money and they would not lend it to you, even though they could afford it, how would you feel?  I know that my feelings would be hurt because not only did my friend not help me out in my time of financial need, they also didn’t feel that I was worthy enough to lend money.  This is definitely a personal decision, it is not business.

Photo by Valerie Everett

Can We Really Prevent Identity Theft?

Posted on by 1
identity theft, protection from identity theft, fraudulent advice

identity theft faceThis week at my bank branch we had a major case of Identity Theft. Thank goodness the loss was only minimal, but unfortunately the lost money can never be recovered.  This is the scariest thing about Identity Theft, the person who has stolen someones identity doesn’t actually exist because they have assumed the identity of someone else. The other really scarey thing about Identity Theft, or any type of theft, is that we only catch and recover a very small percentage of everyday thefts. And yes, I believe that everyday personal theft and identity theft occurs, we just may not know about it.

Identity Theft can be extremely damaging to our short term and long term personal financial situation, it could also  cost us thousands of dollars.  In my bank branch the fraud client came in to get a new debit card claiming that he misplaced his own debit card over the weekend.  Of course we had no idea at the time that he was a fraud client.  The teller asked to see two pieces of identification which where his Drivers License and his Social Security Number.  The client gave the teller both pieces of id; the Drivers License number matched the number that we had in the clients file on our bank system.  He also confirmed the Social Security Number and the address on file.  Since the photo id matched our records the teller gave the client a new debit card along with his up to date account balances.  The client withdrew $2500 in cash and ordered another $10,000 for pick up in 3 days.  We gave the client his money and he was on his way.

The next day we received a call from our real client who wanted to know why $2500 was withdrawn from his account.  He tried to check his account balances through online banking but he was unable to log in with his debit card.  This is normal because we had cancelled his debit card and replaced it with the new debit card that we gave to the fraud client the day before.  We reminded him that we replaced his debit card yesterday, and he advised us that he didn’t come to our bank branch yesterday.  This was  red flag for us and we immediately froze his accounts and cancelled the order of $10,000.

As a formality we asked the real client to come in for an interview with additional pieces of identification including his passport; we also asked him to bring in a utility bill which will confirm his name and address.  After meeting the client and getting all of his accounts in order we once again cancelled the previous debit card and issued a new debit card to our real client.  Now that our real client was satisfied and the immediate financial mess was cleaned up we could only hope that the fraud client would return in two days to pick up his $10,000 and we could catch him; needless to say the fraud client never came back to our bank branch.

Even though the short term situation was fixed, the long term effects that Identity Theft could have on our personal financial situation could be never ending.  We advised our real client to sign up for a Credit Alert service with the 3 Credit Bureaus so that he will be altered any time someone checks his credit.  This is helpful to clients because they can verify that they actually applied for credit with the companies who are verifying their Credit Bureau.  I signed up for this service  after my wallet was stolen.  When I was younger and I first moved away from home I was naive and financially irresponsible.  I carried all of my personal identification and bank information in my wallet.  When my wallet was stolen my whole life was stolen along with it from my credit card to my birth certificate.

There is no way to know how frauders obtain our personal information, maybe they have a friend who works at the bank or maybe they have a friend who works for the Internal Revenue Service. However, most often frauders steel our wallets or our mail to obtain all of our personal information.  A common way that frauders use our personal information is to apply for new credit cards in our name and then max out the card to the limit.  It is very difficult to prove that we didn’t apply for the credit card, but if the credit card was sent to an alternate address it could help our case.

Although we can never prevent the possibility of Identity Fraud, we can try to take precautions.  It is a good idea to keep our credit cards at home; this prevents the possibility that they will be stolen or cloned, it also eliminates the temptation of spending money that we don’t have.  We should only keep one piece of identification in our wallet such as our drivers license; this eliminates the loss of all our identification if our wallet is stolen and it protects our identity.  Having our monthly bills delivered electronically prevents the possibility of our mail being stolen or lost in transit.  We should also order a copy of our Credit Bureau at least once a year to make sure that all of our information is up to date and that our open credit products are actually products that we applied for.

Photo by pareeerica

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