Three Unusual Ways to Become a Victim of Identity Theft

Alright, so you’ve heard the talk around the water cooler about identity theft and the ways that criminals are committing it. But how much do you really know? Are all the stories you hear true? Let’s take a look at some examples of some not so common techniques criminals use.

Mailbox Diving

While not particularly common, theft of your postal mail can be very damaging. If you’re old school and pay your bills by check and receive paper statements, you’re the most at risk. Essentially putting all that information in a box in front of your house without a lock is asking for it to be stolen. But what if you live in an apartment or condo and you do have a locked mailbox? Believe it or not, you’re still at risk. Those large banks of mailboxes have a big door on the back that opens like a trunk hatch, exposing every mailbox inside. It only takes a crowbar and a few moments for a thief to get to every mailbox in your apartment complex. One stop shopping.

Using Computers

Some of us are from the generation that remembers never having computers, much less the internet. Once upon a time computers were safe and the internet was a novelty to be played innocently with. No longer. Your computer is now the gateway for hackers who make a very nice living stealing your money. These days going on the internet (or indeed, even plugging into the modem at all) without anti-virus software or firewalls is like shaking the hand of an Ebola patient. You don’t even have to use your credit cards online to become a victim. Virus writers now are targeting your passwords and your online banking websites. Even worse than using your own home computer is using a public one. The terminals at a library are no place to be checking your balance. Want to buy something online? Doing it at the library is like giving that Ebola patient a nice big kiss.

ATMs

It’s Sunday at 5 o’clock, you’re about to go out to dinner with some friends and you don’t want to pay with your debit card (want a good way to tick off your waiter? Tell him to split the bill among five cards all with different amounts). You go to one of those stand-alone ATM booths (more secure than the ones at the gas station, right?), and swipe your card through the reader on the door to get in. The light doesn’t turn green, and the door doesn’t open. Frustrated and late, you decide to frustrate the waiter instead and leave. What’s the problem you ask? You just became an identity theft victim.

A technique criminals sometimes use is the fake card reader. Sometimes these are placed directly on some ATMs, but most often they’re installed on bank doors or those stand-alone booths. The thief will remove the card reader that opens the door, and attach an identical one that they have modified. Instead of reading the card number and sending a signal to open the door, this new reader sends a signal to a wireless device or a memory card, storing your card number. You just think that the door isn’t working, when in reality you just gave your card number to a thief (in fact, you probably gave it several times as most people will try three or four times to open the door before giving up).

These are the more unusual ways to become a victim, but the lesson here is the same in general. Vigilance and knowledge are your best defenses. The only thing you can count on from identity thieves is ingenuity, they are constantly thinking up new and devious ways to get your cash. But if you stay up to date on the latest scams and arm yourself with the know-how to avoid them, you’ll be safe and sound.

Your Budget Can’t Be A Straitjacket

Budgeting your money is one of the best methods to control your spending, simply because you know where each of your dollars ends up. But you can’t allow your budget to turn into a straight jacket: you should control your budget, rather than the other way around.

Unfortunately, many people — especially when they’re first developing a personal budget — let the budget take the leading role, often in two different ways.

1. They don’t plan for changing circumstances, like a mid-month emergency.
2. They don’t change their budget in response to upcoming events, like moving.

You don’t need to carve your budget in stone: you do not need a budget that will work month in and month out. Instead, your budget should be a living document — the kind you can easily amend or change. Furthermore, you should plan to change it on a fairly regular basis. It isn’t unreasonable to expect that you’ll need to at least review your budget and make small changes every month or so. However, it is practically mandatory to revise your budget when you have something out of the ordinary coming up: a vacation, moving expenses or even the holidays.

Consider the expenses of moving to a new home: you may be able to tweak your budget from residence to residence fairly easily if the rent or mortgage payments are similar. But the actual act of moving should also figure into your budget: extra gasoline for your truck, renting a U-Haul or hiring movers each can require an allotment of money in your budget that you wouldn’t normally worry about.

So how can you make your budget flexible?

Start out by keeping track of your budget in such a way that you feel comfortable making changes. I use an spreadsheet, although I know many people who still feel more comfortable with a paper budget. The one warning I would like to make about a paper budget, though, is that most people aren’t comfortable marking up a piece of paper over and over again. You may wind up rewriting your budget, or otherwise spend too much time trying to make a simple piece of paper look a little clearer.

You should also make the effort to check your budget once a month, preferably with your calendar in hand. I like sitting down at the beginning of the month, and reviewing both upcoming events and what I expect to need to spend, all in one go. I typically set aside one afternoon a month for all sorts of paperwork, including my budget. Most people don’t need to spend hours tweaking their budget — some months you may only need 10 minutes. But don’t forget to look a couple months out. If you’re trying to save a little extra for a trip home for the holidays, you should take that into account when reviewing your budget several months earlier.

Lastly, you need to remember who’s in charge. It’s your budget, and you should never be scared to rip it up and start over, if you need to.

Creating Your (dreaded) Budget

If there was ever a time to get serious about paying down your debt, that time would be now. With the economy in a tailspin, more and more people are finding it difficult (if not almost impossible) to pay their loan and credit card payments on time. This is making the banks and credit companies nervous and it is resulting in the tightening of their proverbial fists. They aren’t calling it a “credit crunch” for nothing.

This is not the time to pay only the minimal amount on your bills and it is definitely not the time to skip a payment. It is time to get serious and get rid of your debt before doing so becomes even harder. The credit card companies and banks look for reasons to raise your rates and charge you extra fees under normal circumstances. With so many people defaulting, they are itching to recoup their investment. Don’t give them any reason to target you.

The key to reducing your debt is to figure out exactly how much money you owe. Get all of your bills together. Don’t worry about insurance or utility bills yet, we’ll include them in a little bit. If you don’t have a recent bill handy, call the company and ask them for a remaining balance. Write it all down. Make sure that the amounts left on your mortgage and car loans are represented. Add it all together and this is your debt. Tack on an extra ten to fifteen to percent to account for the interest that will be added as you pay down the debt.

Yes. The final number will probably be depressing.

Now, go through your bills. Write down two numbers. The first number is the minimum payment. The second number is the amount of money you are charged for interest and finance charges. Combine the two numbers and add ten dollars. This is your new “minimum payment.”

Total your new minimum payments. Yes, this number will still be depressing.

To your minimum payment total add the following: if you live in an apartment, add your rent payment. Add your insurance payments (car, home, rental, etc). Add in how much money you spend on groceries each month and your utility payments. Figure in how much money you will need for things like getting your hair cut, clothing for work, and even some for leisure time activities –seeing the occasional movie, splurging on the occasional dinner out, things like this. Be realistic. If you know that you are not likely to skip your monthly hair appointment, write it down. Total all of these numbers together and this is the amount of money you must make every month.

Does your monthly income match your monthly “out go?”

Don’t feel bad and do not panic if you don’t earn enough to make your monthly minimum budget. There is plenty of advice here on Wealth Junkies to help you figure out how to add to your income and how to reduce your spending.

Eliminate Credit Card Debt

Credit card debt can be very overwhelming. It adds up quickly, and the high interest rate makes it difficult to pay off. Here’s what to do.

There are three steps to eliminating your debt:

1. identifying and consolidating your debts
2. managing your debts
3. and reducing your debt

In order to most effectively eliminate your debt, you must take all three steps.

Identifying and Consolidating Your Debts

Make a list with the following for each of your credit cards and other debts: the debtor, amount you owe, and the interest rate. The purpose of this list is to identify which credit cards need to be eliminated first.

You will want to start eliminating the higher interest rate credit card debt first because it is costing you the most every month. Some credit cards can have rates as high as 21% or more - if you are carrying debts of such a high rate you should eliminate that first.

If you owe a large amount of money at a high interest rate you will want to consider transferring that debt to a lower interest rate credit card. As another option, you can consider getting a debt consolidation loan from a bank.

If you are able to transfer some of your debts to a 0% interest credit card you should transfer your highest interest rate debts to a 0% card. This will let you manage that credit card debt while paying a minimum amount and then reduce your other credit card debts while carrying the first at zero interest.

You should try to consolidate your debts at the lowest possible interest rate. If your average credit card interest rate is 15% or higher you should try to consolidate to a single digit rate if you can.

Debt Management

Debt management is an art of maximizing the effectiveness of each of your dollars to pay off the most principal and the least interest. If you are able to keep a portion of your debt on a 0% card you could save thousands of dollars while managing your debt and focusing your energies on paying off a higher-interest card.

One important thing to remember is that if you are trying to manage your current debt you must do your best to not add any more to your debts. You’ll need to analyze your cash flow and not spend more than you are earning - you need to save every extra cent to get rid of this high interest debt!

Take advantage of 0% balance transfer opportunities. If you make the same payment each month to a card with 0% interest, you’ll pay off much more of the principal.

Debt Reduction

Make credit card payments each month. Even if you just pay the minimum, you have to make monthly payments on time. It will affect your credit score for the rest of your life.

If you are tight on cash, I recommend paying the absolute minimum to all cards but then pay the maximum you can afford on the card with the highest interest rate. Put your maximum effort toward paying off your highest interest rate credit card, and make it your goal to pay it off and close the account.

Take advantage of low interest rate cards whenever you can. If you can transfer some of your balance to a 0% card, you can pay a lower monthly payment on that balance. This will allow you to pay even more cash toward your highest interest rate credit card, which will make it easier for you to reduce your debt.

Cut back on any expense you can in order to save every penny to cut back your debt. Cut back on morning coffee, cut back on McDonalds breakfast, and save everything you can. Getting out of debt is a continuous process and you have to change the way you think about money.