Wealth Watchers

Anyone who’s ever tried to lose a few pounds knows that not every diet works for every person. Similarly, it may take a few tries to find a system for managing your personal finances that you can stick to.

For many people, a simple program called “Wealth Watchers” could be the solution. As its name might imply, Wealth Watchers features the journaling technique popularized by Weight Watchers, where you track every morsel eaten – or in this case, every dollar spent – each day.

The idea is that by carefully monitoring your spending habits, you become more aware of, and more likely to change, behavioral patterns that caused you to overdo it in the first place. The program also places heavy emphasis on the importance of financial education.

Wealth Watchers was born from adversity. Its founder, Alice Wood, was a successful estate-planning attorney whose occupation made her very knowledgeable about personal finance issues. But after sustaining a brain injury during a freak airplane accident, Wood suddenly found she was becoming forgetful, unable to concentrate and prone to making poor financial decisions that later plunged her into debt.

Another byproduct of her accident was unexpected weight gain. Wood notes, “I went to Weight Watchers to help drop the extra pounds, and in one of those ‘lightbulb’ moments, I realized that the solution to both my weight and spending problems lay in the simple, daily discipline of keeping track.”

After developing and practicing the core principles that would come to define Wealth Watchers – such as “spend less than you make” – Wood began sharing her ideas with family members and friends, and eventually with larger groups. Then, in January she published a book entitled “Wealth Watchers: A Simple Program to Help You Spend Less and Save More” (Free Press, $19.95).

The book contains formulas for calculating what it costs to live each month, as well as worksheets to track your daily disposable income (DDI), which is the amount you can safely spend each day without going into debt. “The difference between your DDI goal and your actual average daily total of expenses will show you if you are staying on track,” she explains.

Another feature I like is the “Call to Action for Consumers,” a 16-step roadmap for achieving financial health. A few of those steps people sometimes overlook include:

-Make sure your partner is on board with your goals.

-Define and understand the difference between fixed, semi-fixed and discretionary expenses.

-Know your credit score: If it falls below 700, make it higher. Find tips at www.whatsmyscore.org.

-Set up and strictly follow a bill payment system to avoid late payment charges. Many people find automatic payments from credit card or checking accounts helpful.

-Know your “small leaks” – spending weaknesses that can undermine your goal (e.g., buying unnecessary gadgets).
Share your goal with others. That’s why so many folks find Weight Watchers meetings helpful.

The bottom line is: Find a system that works for you. For Wood, adapting techniques she learned from Weight Watchers to track and control expenses was the key to her financial recovery.

By Jason Alderman

Rental Properties Can Make Good Investments, but They Come with Risk

Maybe your financial house is in order. Your debt is manageable or paid off. You have an emergency fund and now you’re looking for ways to grow your wealth. Or, perhaps you’re planning ahead by learning about different investments options. Have you considered becoming a landlord?

Rent prices tend to rise over time, providing an inflation-protected income into your retirement years. You also might be able to cash in big later if the unit’s value increases. It doesn’t always work out that way, though. Some landlords wind up with a trashed property after evicting a tenant or lose their savings in a natural disaster.

In between the extremes of easy, hands-off income and total ruin are the everyday concerns, benefits and risks that most landlords face.

A few risks you could face as a landlord. Investment property mortgages tend to be a little more difficult and costly to secure than primary residence mortgages. It can also be harder to take cash out of investment properties – either with a cash-out refinance or a home equity line of credit. In other words, you might not have access to the money during an emergency.

Owning a rental property outright can be risky as well. Especially if you’re placing a significant amount of your savings in a single investment, the lack of diversification could put you in a precarious situation.

Those aren’t the only risks you could face when owning a rental.

Finding and keeping good tenants. Landlords learn from experience that it’s worth leaving their rental empty for a month or two rather than pay for an eviction or expensive repairs later. You can pay for professional tenant screening reports or credit reports and call applicants’ references before offering a lease.

-Covering your expenses. Between taxes, insurance, repairs, maintenance and mortgage payments the monthly and one-off costs can quickly stack up. Some landlords lose money because their rental income doesn’t cover their expenses, but they won’t be able to attract tenants if they raise it. If the housing and rental markets drop, you could be stuck losing money each month or selling the property at a loss.

-The time or cost of managing a rental property. Becoming a landlord is often far from a hands-off job. When the phone rings in the middle of the night because the roof is leaking, you’ll need to figure out how to solve the problem. You may be able to hire a property management company to take on this work for you, but they often charge about 8 to 12 percent of your rental income or a flat monthly fee.

Even with the risk involved, there are countless examples of successful landlords. Many find the experience so rewarding that they purchase additional investment properties.

Set yourself up for financial success. What separates the successful and sorrow-filled landlords? Luck certainly comes into play, but you can also take steps to get started on the right foot.

Try to determine a property’s capitalization rate, the estimated annual return, before making an offer. To calculate the capitalization rate, divide the annual net income by the property’s purchase price.

Your net income will be your rental income, which you can approximate based on rental prices for similar properties, minus your costs, such as maintenance, upgrades, vacancies and emergencies. You may need to consult an accountant to understand how your new tax situation can affect your costs.

Cap rates tend to change depending on the area and type of property. But regardless of what’s considered “good” in your area, you can use this formula to compare different investment opportunities.

Bottom line: Many people focus on the positives of owning investment property. An extra income and potential to build equity with their tenants’ money seems too good to be true, and it just might be. If you’re going to be successful, you should acknowledge the risks that come with the territory and plan accordingly.

By Nathaniel Sillin

Google Finds Companies Receive Considerably More Malware in Inboxes Than Individuals

If you read Google’s security blog or were at the recent RSA security conference, you may know that corporate email receives 4.3 times more malware than personal accounts. The biggest targets appear to be chosen based on a few factors including size of the organization, the type of organization, in which sector they do business, and the country of origin.

Non-profits were the biggest targets, receiving 2.3 times more malware than other types of organizations. Education is at 2.1 times as much malware, and government and business followed behind at 1.3 times and 1.0 times respectively. These numbers are as of Q1 2017.

Gooligan was certainly one reason Google may be particularly interested in these numbers and in protecting customer data. This malware infiltrated 1 million Google accounts last year and was able to escalate privileges on Android devices. It also allowed hackers to steal Google account information, install other malicious apps, and do more damage, if they saw fit to do so.

Google recommends using its multifactor authentication (MFA) to add protection to email accounts. This could be a one-time code that is entered in addition to your password that is sent via text, voice messages, or within the Google app for mobile devices. Google has also started supporting security keys. These are additional hardware products that are inserted into the computer’s USB port or use the Bluetooth functionality on mobile devices.

For businesses, consider using their hosted S/MIME feature as well as the TLS encryption indicators. These ensure that only the intended recipient(s) are actually reading the email.

And for everyone, make sure to take time to read those dialogue boxes and warnings that a site might be phishing or trying to execute malware.

Malware wasn’t the only problem Google found geared at companies, although it did find that real estate companies are targeted far more often with malware (10 times more) than others. Phishing attacks and spam were also sent to corporate inboxes 6.2 times and 0.4 times as much respectively. Science related companies in Germany receive 9.6 times for phishing attempts than their counterparts in the U.S. Inboxes in India and Japan receive the most spam.

© Copyright 2017 Stickley on Security

Financial Planning for Later-Life Marriages

Couples who marry as young adults usually don’t bring a lot of financial baggage to the table. But what if you’re getting married in your 40s, 50s or later – after divorce, children and years of building assets have complicated your economic situation? Do you and your spouse-to-be have a game plan for how to comingle your finances?

There are many reasons to seek legal and financial advice before tying the knot. But before you bring in the professionals, there are a few steps you can take to better know where you stand:

First, catalog each person’s preexisting assets and debts. Include assets like income from paychecks, Social Security, investment accounts, bank account balances, retirement benefits and equity in homes, cars and other major purchases. Debts might include ongoing expenses such as child support, insurance premiums, rent or mortgage payments, credit card balances, outstanding car loans and medical bills.

Use this information to launch discussions about:

-What are your plans for sharing expenses and living arrangements?

-Whose medical insurance will you opt for – your own employer’s plan vs. spousal coverage?

-How long until each of you qualifies for Medicare, and how will you pay for coverage until then?

-How do you want your estates to be distributed? For example, how much of your pre-marriage assets should go to children from previous marriages?

You’ll probably want to amend your wills, financial and medical powers of attorney, life insurance policies, retirement accounts, investment funds and any other accounts where beneficiaries or people who control your health or finances are named.

You also might want to draft a prenuptial agreement (prenup) – a written contract that basically outlines who gets what if you divorce or one of you dies. Having a prenup might prevent your spouse from challenging terms of your will or preexisting trusts after you die (it happens).

Other financial considerations:

By federal law, you can bequeath an IRA to anyone you like, but spouses are entitled to inherit other non-IRA retirement benefits such as 401(k) and pension plans unless they sign away their rights.

Amounts accumulated in 401(k) plans during a marriage typically are considered marital property, so if you were previously divorced, the court should have divided your accounts through a qualified domestic relations order as part of the divorce settlement.

Division of pension benefits can be even more complicated, so make sure your attorney reviews prior divorce settlements very carefully when drafting your prenup.

If you were widowed, or married at least 10 years before divorcing, you can draw Social Security benefits based on your dead or former spouse’s earnings if that’s more favorable than your own accumulated benefit. However, if you remarry before age 60 (50, if disabled), that option goes away.

Prenups don’t supersede Medicaid rules. The government considers your combined income when determining eligibility to receive Medicaid benefits, including long-term nursing home care.

Alimony payments from ex-spouses will almost certainly end when you remarry, so factor that into your new budget.

Widowed spouses of public employees often lose some or all of their survivor benefits upon remarriage, so research survivor annuity or health insurance policies carefully.

Congratulations on finding love later in life. Don’t be put off by all the important financial decisions you’ll need to make together, but do get sound legal and financial advice.


By Jason Alderman

Do You Know How to Save on Online Brokerage Fees?

If you’ve made it to a point in life where you’re ready to start investing, or at least start thinking about investing, you may consider opening a brokerage account. But you’re not alone if the thought of choosing a brokerage firm is foreign to you.

While brokers have helped individual investors buy and sell investments for decades, the relationship and services have changed over time. For instance, rather than calling their brokers, today many investors use a sleek online platform or mobile app to place orders.

Fees associated with maintaining a brokerage account and investing have also changed. Whether you’ve been investing for years, or are just diving in, it’s wise to occasionally compare brokerage firms’ offerings and costs, including those listed below, and find the option that’s right for you.

Trading-platform fees might not be necessary. A trading platform is downloadable software or an online app that you can use to make trades, view real-time quotes and news, perform analysis and set up your trading strategies. While platform fees can cost hundreds of dollars a month, many high-quality options are completely free. Others are free as long as you meet minimum account balance requirements.

Trading fees are common, but prices vary. Brokerage trading fees can vary widely depending on the financial product and broker. Many online brokers charge a flat fee, typically somewhere between $5 to $10 per online trade for stocks or exchange-traded funds (ETFs). Some brokers alternatively charge a fee per share, which could be a better option for day traders.

Making a trade over the phone or with the help of a broker rather than on your own online could incur an additional fee (sometimes between $20 to $50).

Mutual fund transaction fees may be higher than the cost of trading stocks, although some brokers have a list of no-transaction-fee funds. More advanced trading tactics, such as options, also may have additional fees.

Higher trading fees don’t necessarily indicate better service, but the fees could help the brokerage firm invest in its trading platform, customer service and research tools. Therefore, you’ll want to compare each firm as a whole, not just the trading fees.

Avoid annual fees. Some brokers charge an annual fee, often around $50 to $75. You might be able to avoid the fee by maintaining a minimum balance in your account, or there are a number of brokerages that don’t charge this fee regardless of your account balance.

Don’t overthink account closure or transfer fees. It’s common for a brokerage to charge $50 to $75 to close your account or transfer your holdings to a different brokerage. However, many brokerages will reimburse you when you open a new account with them.

Optional services are just that – optional. There are a few services, such as paper statements or premium research tools, that often cost money but are easy to opt in or out of based on your preferences.

How much could you save by choosing a low-fee brokerage? Unless you’re an advanced investor, there are likely a variety of brokerages that can fulfill your needs. Review the fees you’re paying at your current brokerage, or at a brokerage you’re considering, and the competition’s offering.

Paying $5 versus $10 per trade might not be significant for every investor. However, that’s the difference between receiving $95 or $90 worth of stock when you invest $100. Everything being equal, spending the extra $5 means you take an immediate 5-percent loss, plus you miss out on potential gains.

Bottom line: Choosing a brokerage with low fees helps ensure that your money goes towards your investments rather than overhead expenses. Low-fee brokerages aren’t necessarily worse either. Some still offer high-end services, advanced trading platforms and mobile apps that can satisfy the needs of most beginner or intermediate investors.

By Nathaniel Sillin

Taxpayers Need an ID Theft Wake-Up Call

Americans remain apathetic about identity theft protection, according to the second annual Tax Season Risk Report, from Scottsdale, Ariz.-based CyberScout, which suggested taxpayers must still take ownership to protect their filings.

While the Internal Revenue Service took steps to reduced tax ID theft a pattern of poor practices leaves much of the public vulnerable.

Most Americans (58%) are not worried about tax fraud in spite of federal reports of 787,000 confirmed identity theft returns in 2016, totaling more than $4 billion in potential fraud.

“We’ve reached an extreme level of cybercrime where identity theft has become the third certainty in life. In tax season, it is crucial that everyone remain vigilant and on high alert to avoid tax related identity theft or phishing schemes,” Adam Levin, founder and chairman of CyberScout, formerly IDT911, and author of Swiped, said.

Having a password protected Wi-Fi connection, a protected mailbox for a physical tax return to be sent, two-factor authentication for tax preparation services and an encrypted USB drive for sensitive tax documents are four of the most basic ways to protect oneself.

“In order to reduce the risk of becoming a tax identity theft victim, consumers need to follow the 3Ms: minimize their risk of exposure, monitor your accounts and your personal identity, and know how to manage the damage,” Levin noted.

“If the worst happens, victims of identity theft should turn to organizations they trust, including their insurance provider, financial services institution, or the HR department of their employer, who offer low-cost or free cyber protection services to protect and restore stolen identities.”

CyberScout also suggested consumers and tax preparers can protect themselves by visiting the federal web site on tax scam alerts to find out about the current scams and cyber-attacks.

Taxpayers, confronted with a variety of scams, should protect themselves by always using long and strong passwords; never authenticate themselves to anyone who contacts them online or by phone, since the IRS will never contact them by those methods; using direct deposit or locked mailboxes for refunds.; and monitoring and protecting personal identity on social media.

These are some of the top tax-season risk behaviors according to CyberScout:

  1. Taxpayers should be more worried than they are. The majority of Americans (58%) are not worried about becoming victims of identity theft during this tax season, a 5% drop from the number of those not worried in 2015 (63%).
  2. Only 35% of taxpayers demand their tax preparer use two-factor authentication to protect personal tax information. The majority (56.5%) did not know if their preparer followed, offered or required this best practice. Two-factor authentication is much more secure than a single password and tax preparers should take this security approach.
  3. Most consumers (80%) have protected their home Wi-Fi networks with a password, but they are relying on it too heavily and need to use more secure storage methods. Only 18% utilize an encrypted USB drive, a secure way to save important documents like tax worksheets, W-2, 1099 or 1040 forms. Another 38% either store tax documents on their computer’s hard drive or in the cloud, approaches that are susceptible to a variety of hacks. Nearly a third report not being sure where they save their tax data or documents and another 14% don’t save their tax documents at all.
  4. One of the safest ways for consumers to file their 2016 tax return is to file online directly with the IRS. Unfortunately, only 48% rely on and trust online tax services. Nearly a quarter of respondents do not trust online tax services because they think they are unsafe, a misperception that sometimes leads to exposure.
  5. A majority of taxpayers have not gotten the message to file early. Nearly half (43%) file by February, but another 57% either planned to file later or didn’t know when they would file. Delaying filing gives tax scammers an opportunity to file ahead of the real taxpayer and scoop up their refund.
  6. Tax return checks headed to home mailboxes are at risk. According to the IRS, more than 70 million taxpayers receive refunds. Of those who expect refunds in the mail, only 29% have a locked mailbox. And while another 20 % planned to be home, 51% risk exposure from unlocked mailboxes and lack of other precautions.
  7. Tax preparation services continue to be a potential avenue for serious harm. Most people (62%) use a tax preparer. Of that group, 50% choose their tax preparer based on reputation or rely on an IRS declared preparer, while the rest were not sure how to judge their credibility, planned to choose someone online, or didn’t vet them at all. This is an area where consumers need to research carefully since pop-up storefronts offering tax preparation services are a common way to scam consumers.

By Roy Urrico