What If Your Car Gets Totaled?


Each year, auto insurance companies declare millions of vehicles to be “totaled,” meaning it’s not worth the cost to repair them. It doesn’t matter whether the car was damaged in a collision, during a flood or after a thief’s joyride went bad.

It’s hard to argue with such an assessment if your car was wrapped around a telephone pole or the gas tank exploded. But what if the damage was more cosmetic, such as major dents on the roof and hood from a hailstorm?

A vehicle is considered a total loss if the insurance company determines that the total cost to repair your car to pre-accident condition, plus fees for storage, salvage and a replacement rental car (if included in your policy), is more than a certain percentage of car’s retail value. Insurers set their own allowable percentage, within state-mandated guidelines (typically around 60 to 75 percent), and use their own formulas to determine a car’s value and estimated repair costs.

Thus, if your $4,500-valued 2002 Honda Civic sustains $1,800 worth of damage – moderate bodywork and repainting these days – it might be deemed totaled, even though the engine still runs fine. On the other hand, a late-model Mercedes could sustain far greater damage and still be considered salvageable.

What’s worse, if the accident was your fault, or you must otherwise tap your own insurance (e.g., it was caused by an uninsured driver), you would only receive that $4,500 minus your deductible. Good luck finding a comparable car for that amount.

Other big losers when a car is totaled are people still paying off their auto loan. Since the lender technically owns the car, they’ll get first crack at any insurance payment; and you’ll still be responsible for paying off the loan balance.

As a preventative measure, you may want to purchase gap insurance if you owe more than the car’s retail value – or if you rolled past debt into the new car loan. It will pay the outstanding loan balance if your car is totaled or stolen. Most insurers will let you add gap insurance at any time.

Here are a few additional points you should know about when and why a car is declared totaled, and precautions you can take ahead of time to lessen the impact:

  • Make sure the insurance appraisal includes the value of all extra features and aftermarket accessories, like heated seats, custom wheels or an upgraded audio system.
  • Be prepared to show documentation of any major repairs or upgrades you made that might boost the car’s value – say you recently replaced the engine or bought new tires.
  • Do your own research. Use independent pricing sites like Kelly Blue Book or Edmunds to determine your car’s worth, factoring in its mileage, added features and overall condition before the accident.
  • If your estimate is far off from the proposed settlement, ask whether your policy includes the right to hire your own appraiser for a second opinion. Most states have a procedure for settling such disputes. Understand, however, that no matter the arbitration outcome, you’ll still have to pay your appraiser, and likely, a portion of arbitration costs.
  • Make sure the insurer’s totaled car value includes estimated sales tax to replace the car, as well as registration and title costs, since you wouldn’t have incurred these costs if you didn’t need to replace the car.

Let’s hope your car is never totaled, but it pays to know in advance what to do if it is.


By Jason Alderman


Train Like Rocky Balboa: The 90-day Financial Fitness Program

rockyRemember the training sequence in “Rocky?” He starts with a short run and small weights, then heavier weights, then there’s the climactic moment when he runs up the steps, with kids cheering in the background.

Each of us can be our own financial Rocky, beginning with relatively easy things like defining goals and making a budget, working up to heavy lifting like balancing a checkbook and investing. (It’s unlikely, however, that crowds of children will be screaming, “Go!” when you open your 401(k).) Here’s your own fiscal training program – 90 days to financial fitness.

Step One, Week One: Set specific goals
Rocky Balboa wanted to win a professional boxing match. What do you want to accomplish? Would you like to take your family to Disney World for a vacation? Or maybe you dream of buying a house. Decide what you would like to achieve, and find out how much it will cost.

Step Two, Week Two: Make a budget
Now it’s time to make a budget. Once you know how much you have coming in and how much you must spend every month, you can see how much is left for saving. You already know how much you need to meet your goal. This step will help you figure out how much you can save every month.

Write down your expenses and your income, using this budget worksheet. Now, see which expenses you might be able to reduce or eliminate. For example, you could lose the daily $4 mocha grande cappuccino and just drink the free office coffee. Or bring your lunch to work.

Step Three, Weeks Three and Four: Living Within Your Budget
Now, here’s how to see if your budget is practical. Write down everything you buy in one week. You can use this handy form. You may be surprised at how much you spend on things that don’t really matter that much to you.

Step Four, Week Five: Putting Money in Savings
Now you have a better idea how much money you can save. Armed with this knowledge, decide how much to save every month.

Most employers can set up an automatic withdrawal from your paycheck into a savings account. That way, the transfer happens automatically and you never even have to worry about it. Here’s a rundown on different types of savings accounts.

Step Five, Week Six: Balancing Your Checkbook
By now, you’re cruising along like Rocky, making gain after gain. If you haven’t already, celebrate with friends and family. And now that your confidence is high, grab your checkbook, your monthly statement and a calculator for the next step, balancing your checkbook.

In this process, you’re comparing the monthly reconciliation worksheet your financial institution sends you against your check register. That worksheet often has instructions on how to balance your checkbook; or for a more detailed, step-by-step guide, click here. One of the easiest, quickest ways to manage your checking account is online – you can do all your checkbook balancing without the bother of paper and pencil.

Weeks Seven, Eight, Nine: Stay Balanced
Keep balancing your checkbook, and don’t hesitate to ask for help if you run into problems. You can get assistance from your financial institution, or contact BALANCE at (888) 456-2227.

Week Ten: Take Stock
It’s entirely understandable if you hit a few snags along the way. In fact, it would be surprising if you didn’t.

Take a good look at things that you have not been able to achieve on a regular basis, and figure out if it is realistic to think you can achieve them in the future. If not, then do what the GPS unit always says when you miss an exit: “Recalculate.” For more tips, click here.

Week Eleven: Investing in a 401(k)
Now it’s time to take advantage of your employer’s tax-deferred investment plan. These accounts, known as 401(k) or 403(b), are a good deal. No taxes are due on your contributions or earnings until you retire and begin withdrawing the funds. Tax-deferred savings means that your investments can grow much faster than they would otherwise.

The same is true of IRAs, although the maximum amount you can invest annually in an IRA is substantially less than what you can put in a 401(k) or 403(b). So if your employer doesn’t offer a tax-deferred plan, open an IRA or a Roth IRA and reap the tax benefit come April 15.

Week Twelve: Congratulations!
Pat yourself on the back, Rocky – and take a run up those steps if you like. You did it. Take a moment to look back on all you’ve learned, and keep up the good work!

Copyright © 2011 BALANCE

Mobile Banking Trojans Increase 400% in 2015 Q3


trojan-virus-crosswordWe love our mobile devices and it’s hard to imagine not having them nearby sometimes.  The cybercriminals know this too. That is why they develop mobile malware to steal money. According to Kaspersky Labs’ Threat Evolution Report for the third quarter of the year, mobile malware is on the rise, particularly in countries where mobile banking is gaining popularity.

The report stated that in Q3, over 1.6 million malicious mobile installation packages were found to be in circulation and 2,500 of those were mobile banker Trojans. This is four times what was found in Q2 of this year and is the fastest growing category of mobile threats found in the wild (this means that it is active out in the general public in day-to-day situations, as opposed to in a controlled laboratory environment). In addition, there were over 5.5 million registered notifications regarding attempted malware infections. These were specifically geared toward stealing money from customers who use online banking.

This is why it is important that all consumers are aware of the dangers and learn to practice safe mobile security at all times. Knowledge is truly power and it will dramatically lower your chances of being a victim of cybercrime.

Here are a few basic things to remember when using your device:

  • Don’t click on links or open attachments in email unless you are certain they are safe. This is how malware is mainly delivered, so it is largely in your control to stay malware free.
  • Make sure anti-malware is installed on your mobile devices, regardless of the OS being used. Keep it updated.
  • Update or patch all software when notified. In most cases, updates sent by major software companies are fixes to vulnerabilities that will keep you safe from malware targeting the very same software issues.
  • Avoid using unsecured public Wi-Fi. Often hackers will sit in wait and hijack connections to steal login credentials.
  • Be aware even when using password-protected public Wi-Fi, such as in cafes and coffee shops. These can also be risky. Therefore avoid performing financial transactions on these connections.
  • If necessary to log in to a secured connection when in public, your work network for example, use a VPN from your mobile device. Alternatively use your device’s data network connection. There are still risks, but they are lower.
  • Make sure the password to your internet connection access point, and all network devices such as routers and switches, are changed from the default that comes on them when they are first installed. Make them strong passwords and change them regularly.
  • Keep anti-malware software updated on all devices in your home network that can have it. Remember that when you are at home, all of your internet connected devices (TV, thermostat, refrigerator, music system, etc.) are likely connected to each other also (unless you specifically separate them). Anything that penetrates your desktop can also get to your mobile devices no matter where you are in the house.

Malware is not going away any time soon. New varieties increased nearly 11% in the last quarter and the number of unique malicious URLs found in that three month period was nearly 75.5 million, according to the same report. Mobile devices are great tools, but the numbers show they will continue to be targeted. It’s up to us to learn what we need to do to keep our information safe when using them. Isn’t that better than not using them at all?

© Copyright 2015 Stickley on Security

The Steps of Spearphishing and the Value of Stolen Data

Spear Fisherman With Speargun near coral bottom

In a survey conducted by the Identity Theft Resource Center (ITRC) of identity theft victims in 2014, only 16.4% of respondents completely trust their health insurance provider to use personal information they provide in a responsible manner. Most people only moderately trust them (29.7%).  Possibly, they have good reason.

There have been several data breaches involving health insurance companies over the past year including Excellus, Anthem, and Premera. These three breaches have affected approximately 100 million people so far. Another 18 million who were not customers may also have been affected by these. Tack on another 14 million if you add the UCLA Health System breach of this past summer.

Information has started to rise up as to how the breaches of at least two of these (Anthem and Premera) happened. Both lead to phishing and more precisely spearphishing. The latter is a type of phishing where employees or those “in the know” about a particular company or industry are specifically targeted by cybercriminals. Spearphishing may be more time consuming due to needed research, but it usually will result in a more lucrative payload.

If you know the steps of a spearphishing scam, you are much more likely to not make your information readily available to the hackers and hopefully implement some internal policies to better identify legitimate internal emails containing links or attachments.

Step 1 – Criminals research a company’s organizational structure. With all the information available on social media, a quick search on LinkedIn or Google will produce most of the data very quickly.

Step 2 – Once a criminal has the company structure, they now need to know what the executive’s email looks like. Criminals set up a Gmail or Yahoo account and send a nice email over to the executive. All the criminal is trying to accomplish is to get a reply email to be able to replicate the look and feel.

Step 3 – Now that the criminal has the company structure and can mimic the executive’s email, they send out emails to people in their direct food chain with a malicious link or attachment. Because the victims believe this is an urgent matter from their “boss”, they are normally anxious to fulfill the request very quickly.

Step 4 – When the link is clicked or attachment opened, the malware is delivered to the company network. Once on the network, it will connect with the criminal’s server and wait for instructions.

The hacker will target your company’s sensitive data to steal and sell it on the Dark Web. This is a multi-billion dollar industry and all trends point to this as one of the fastest growing and most lucrative crimes in the world.

Each data record stolen has a price tag and that price is driven by how it can be used and the current supply and demand. Credit card numbers used to be the main target, but there is a glut of them and it is pretty simple to get a new card and end the usefulness of the stolen number. Social Security numbers and health care records are much bigger scores. A SSN stays with a person for life. Even if a person can prove to the US Government that their life has been ruined due to identify theft, the new number the victim is given ties directly to the old compromised number. Therefore the new number is of no help at all.

Data Price List (this is estimated):

  • Financial Institution Account Record: $80 (usually contains SSN)
  • Heath Care Record: $80 (usually contains SSN)
  • Social Security Number: $40
  • Credit Card Number: $7
  • User Name & Password to any Website: $2

In the case of health insurance companies, it is the identity theft motherlode. Health insurance companies store social security numbers, payment details, health histories, information on family members, and other data that is extremely valuable to cyber thieves.

More importantly, think about your company and what data is worth stealing. And then ask yourself if your company could survive if that data was stolen. Making a few changes in the process and taking an extra few seconds to ensure the link or attachment is legitimate may be all you need to prevent an attack.

© Copyright 2015 Stickley on Security

Over 70 ½? Don’t Forget Mandatory IRA Withdrawals



With final holiday preparations looming, the last thing anyone wants to think about is next April’s tax bill. But if you’re over 70 ½ and have any tax-deferred retirement accounts (like an IRA), put down the wrapping paper and listen up: IRS rules say that, with few exceptions, you must take required minimum distributions (RMDs) from your accounts by December 31 of each year – and pay taxes on them – or face severe financial penalties.

Here’s what you need to know about RMDs:

Congress devised IRAs, 401(k) plans and other tax-deferred retirement accounts to encourage people to save for their own retirement. Aside from Roth plans, people generally contribute “pretax” dollars to these accounts, which means the contributions and their investment earnings aren’t taxed until withdrawn after retirement.

In exchange for allowing your account to grow tax-free for decades, Congress also decreed that minimum amounts must be withdrawn – and taxed – each year after you reach 70 ½. To ensure these rules are followed, unless you meet certain narrowly defined conditions, you’ll have to pay an excess accumulation tax equal to 50 percent of the RMD you should have taken; plus you’ll still have to take the distribution and pay regular income tax on it.

You can delay or avoid paying an RMD in certain cases, including:

  • If you’re still employed at 70 ½, you may delay starting RMDs from your work-based accounts until you actually retire, without penalty; however, regular IRAs are subject to the rule, regardless of work status.
  • Roth IRAs are exempt from the RMD rule; however, Roth 401(k) plans are not.
  • You can also transfer up to $100,000 directly from your IRA to an IRS-approved charity. Although the RMD itself isn’t tax-deductible, it won’t be included in your taxable income and lowers your overall IRA balance, thus reducing the size of future RMDs.

Another way to avoid future RMDs is to convert your tax-deferred accounts into a Roth IRA. You’ll still have to pay taxes on all pretax contributions and earnings that have accrued; and, if you’re over age 70 ½, you must first take your minimum distribution (and pay taxes on it) before the conversion can take place.

Ordinarily, RMDs must be taken by December 31 to avoid the excess accumulation tax. However, if it’s your first distribution you may wait until April 1 the year after turning 70 ½ – although you’re still must take a second distribution by December 31 that same year.

Generally, you must calculate an RMD for each IRA or other tax-deferred retirement account you own by dividing its balance at the end of the previous year by a life expectancy factor found in one of the three tables in Appendix C of IRS Publication 590:

  • Uniform Lifetime Table if your spouse isn’t more than 10 years younger than you, your spouse isn’t the sole beneficiary or you’re unmarried.
  • Joint and Last Survivor Table when your spouse is the sole beneficiary and he/she is more than 10 years younger than you.
  • Single Life Expectancy Table is for beneficiaries of accounts whose owner has died.

Although you must calculate the RMD separately for each IRA you own, you may withdraw the combined amount of all RMDs from one or more of them. The same goes for owners of 403(b) accounts. However, RMDs required from other types of retirement plans must be taken separately from each account.

To learn more about RMDs, read IRS Publication 590 at www.irs.gov.


By Jason Alderman


Think Twice About Spending That Bonus


When is a bonus not a bonus? When you fail to think about what that extra income will mean to your overall finances.

I don’t mean to spoil the fun. Bonuses, particularly if they recognize your great performance during the year, are rewarding in a number of ways beyond money. It means your work is being noticed and you might rise higher in the organization – always a good thing.

However, in many organizations, bonus compensation has developed and transformed to a new entity, very different from how it was a generation ago. So before you book your dream trip to an exotic beachfront resort, take a closer look.

According to human resources and management consulting firm Aon Hewitt, (http://www.aon.com/human-capital-consulting/), some 90 percent of employers have either implemented or are considering something called “variable pay systems” that mean a greater reliance on “incentives, bonuses and cash awards,” to reward high-performing employees.

Employers are signing on because it helps them slow the growth of overall payroll, which is the biggest fixed cost in any business. It also offers a way to boost performance among workers at all levels.

What do one-time bonuses or a conversion to a variable-pay system mean for you? Potentially, this could result in changes to your tax situation, the overall value of your employer- and government-based benefits and therefore, your long-term financial picture. Here are some questions to ask:

What kind of bonus is it? Make sure you understand whether a bonus is a one-time award or a shift to an ongoing bonus system. This is a money and a career question. If you are going to be evaluated under new benchmarks and measurements for work you’ve done every day, you should fully understand these new guidelines and how you can maximize them in your best interest.

Get qualified advice. A one-time bonus or a long-term change in the way you’re being compensated is an important financial event. Consider speaking with a qualified financial planner or tax expert about any bonus news you receive and see how they think you should handle the money. Keep in mind that the Internal Revenue Service generally considers bonuses as supplemental wages that can be taxed at a higher rate. Check IRS Publication 15 for more detail. Keep in mind that your salary level – not extra money you get from bonuses or other incentives – provides the basis for calculating your employee benefits and what a lender might offer for mortgages or other credit. In some cases, it might be better to save or invest that bonus than to spend it outright.

Ask questions. Read any paperwork that accompanies your bonus information, write down questions and take them to your employer’s designated human resource representative or manager directly.

Be practical, but don’t forget the fun. Consider treating your bonus like your paycheck – evaluate what essential needs should be addressed first and figure out what you can spend for fun.

Make a change if you need to. As more employers adopt variable pay and performance grading systems, consider issues beyond the money. For example, if you are doing work you love, will meeting new performance targets change how you feel about your job? Are you ready to take on the challenges of a workplace where you’re graded and evaluated in a different way than you are used to? In some environments, new employee compensation methods can be liberating and financially rewarding; in others, it can make it tougher to stay. See where you stand, and if changing jobs might be worthwhile, consider looking for a better opportunity (http://www.practicalmoneyskills.com/personalfinance/lifeevents/work/landingjob.php).

Bottom line: The way workers are being paid is changing. It’s important to understand how one-time or annual bonuses might affect your long-term finances.


By Nathaniel Sillin