14 The Hampton Roads Messenger Financial Checkup


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borrowing money. Figure out how much you would need to pay for, say, three to six months of essential expenses (housing, transportation, medical costs and so on). If you don’t have that much money in a savings account, start setting aside what


you would need.


For anyone struggling to build a "rainy day fund" or reach any major savings target, setting up automatic transfers is a steady way to work toward that goal.


What about


retirement savings? Start by calculating how much money you will need for retirement, perhaps by using an online estimator. According to the Social Security Administration (SSA), most financial advisors say to aim for a combination of Social Security payments,


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limits. After six months, if no change is made, the account will be insured for a maximum of $250,000, and you will be considered the sole owner of the funds. Similarly, if you have one or more payable-on-death (POD) accounts that include a beneficiary who has died and you have not replaced that person with another beneficiary, the amount of insurance coverage will decrease immediately; there is no six-month rule for deceased beneficiaries.


"If there are changes in 1-877-275-3342 to make the


ownership or beneficiaries named to your accounts, you can call the FDIC at


sure


your deposit insurance coverage is adequate," said Martin Becker, Chief of the FDIC's Deposit Insurance Section.


Do I have the necessary legal


your home, read tips from FEMA — the Federal Emergency Management Agency — at www.ready.gov.


savings that equal at least 70 percent of your pre-retirement


pensions and personal earnings


in


order to maintain your pre-retirement standard of living. Even if you are just starting out in the working world, look into all your retirement savings options, as they may come with tax savings and employer matches. And, if you are self-employed, find useful information from the IRS at www.irs. gov/Retirement-Plans/Retirement- Plans-for-Self-Employed-People.


To


estimate your Social Security benefits when you retire, you can contact the SSA at 1-800-772-1213 or go to www. socialsecurity.gov/estimator.


Do my checking and savings


account choices meet my needs at a reasonable cost? Start by talking to a representative at your current bank and/or visiting your bank's Web site. That's because some banks only offer certain deals in their branches but not online, or vice versa.


"If you paid checking account overdraft fees recently, look into ways to avoid them, starting with keeping a closer eye on your balance," said Luke W. Reynolds, Chief of the FDIC's Outreach and Program Development Section. "And for money you don’t need in the near future, remember that nondeposit investment products may have the potential for a higher return but you can also lose some or all of the money you invest." He added that if you have multiple accounts, consider whether consolidating them may save you money and time in monitoring transactions.


Taking Precautions Am I adequately insured?


Having enough life, health, disability, property and other insurance is essential to protect your finances from a sudden shock. Learn more at www. insureuonline.org, a Web site from the National Association of Insurance Commissioners. You may find savings on your existing policies by getting updated quotes from your current insurer and comparing them to quotes from at least two other companies.


Am I prepared financially


in case of a fire, flood or other emergency? In addition to having your most important possessions insured, ask yourself how your most important documents would be saved from ruin. For more information, including how to assemble a preparedness kit if you had only a few moments to evacuate


Is the personal information on


my computer and/or smartphone properly protected? Use and automatically


update anti-virus


software and a firewall to secure your computer. Arrange for your computer or phones to regularly download and install any "patches" (system updates) the manufacturers produce to address security weaknesses. For unlocking your computer and mobile devices and for logging into Web sites and apps, create "strong" IDs and passwords with combinations of upper- and lower-case letters, numbers and symbols that are hard to guess, and then change the passwords regularly. "Try not to use the same password at more than one site," advised Michael Benardo, manager of the FDIC's Financial Crimes Section. "And if you feel a need to keep a written list of passwords, which is not recommended, try instead to use word and number combinations that vary slightly between sites, which may be easier for you to remember."


Am I taking precautions with


my personal information when I go to social networking sites? Scammers try to collect even minor details about an individual, such as a pet's name or a high school mascot, in hopes that they can use this information to reset the passwords on a bank or investment account and commit fraud. Social media sites are places where criminals can often find this information. For guidance on limiting your information at social media sites, see tips from the Internet Crime Complaint Center at www.ic3.gov/media/2009/091001. aspx. For additional information about safely using financial institutions' social media sites, see the Fall 2013 FDIC Consumer News (www.fdic. gov/consumers/consumer/news/ cnfall13/socialmedia.html).


If there's been a death in the


family, have I reviewed what that could mean for our FDIC deposit insurance coverage? It's especially important to make sure your accounts are properly structured if a co-owner or a beneficiary you named has recently died. As an example, if you have a joint account with a co-owner (such as a spouse) who passes away, the FDIC will continue to insure the account as if the co-owner is still alive for a maximum of six months. That six-month grace period is intended to give survivors or estate executors a chance to restructure accounts, if needed, to stay within the insurance


documents for managing my money if I become disabled or when I die? These may include a “power of attorney” permitting someone else to handle transactions and make decisions on your behalf if you are unable to. And if you haven’t already done so, consider consulting with an attorney about creating or updating a will and/ or a trust to guide the distribution of your money and property after you die.


Am I keeping the right financial


records? When it comes to paper versions of records like old bank statements,


credit card bills and


receipts, consider keeping only those you may need to protect yourself in the event of, say, a tax audit or a dispute with a merchant or manufacturer. Documents you don’t need can be discarded, but shred or otherwise securely destroy records that contain personal information. It’s also good to keep a list of your financial accounts and personal documents in one secure place, so that a loved one responsible for your affairs could easily find it.


Spending Do I have a good plan for how I


spend my money? Start by listing how much money you take in over a typical four-week period, what expenses you need to pay, and how much goes to savings. Include any large expenses you pay annually or semiannually, such as taxes or insurance premiums. Also pay attention to small expenses, from entertainment to snack food, which can take a toll on your finances. Then jot down ways you can control your spending. Online tools also can help you develop a more comprehensive budget.


Are all the expenses I'm paying


for automatically each month really worth it? Some expenses you've put on auto-pilot may look small but can add up over the course of a year. Start by reviewing your credit card and checking


account statements


for expenses that get charged on a recurring basis. Consider whether you still get value from each product or service. Also find out if you may already be receiving the same benefits elsewhere or if you can negotiate a better deal with the company.


"Examples a of or cellphone spending certain package," you


might be able to reduce could include memberships, extras on your cable TV subscription, on


options said


Reynolds. "And, if you are paying for identity theft or credit protection plans [products that would postpone or make your loan payments if you die or become ill or unemployed] ask yourself whether you get the value you pay for them. Keep in mind that federal law affords you considerable


January 2015


protections in the event of fraudulent activity involving your bank accounts or credit cards."


Borrowing Am I reviewing my credit


reports for accuracy? Correcting errors may help you improve your credit history and credit score, which can save you money when you need to borrow money. And reviewing your credit reports can help you detect identity theft or errors that could cause you other hassles, such as higher insurance premiums.


Federal law gives you the right


to one free copy of your credit report every 12 months. There are three major nationwide consumer reporting agencies (also called "credit bureaus") — Equifax, Experian and TransUnion — and each one issues its own report. Go to www.AnnualCreditReport.com, or


toll-free 1-877-322-8228, to order your free credit reports from each agency. There also are "specialty" credit


call bureaus that, for example,


track a person's history of handling a checking account or prepare risk profiles that insurers may use when determining your insurance premium. For more information about your rights, start with either the Consumer Financial


Protection Bureau (www.


consumerfinance.gov or toll-free 1-855-411-2372) or the Federal Trade Commission (www.ftc.gov or toll-free 1-877-382-4357).


Is there more that I can do to


cut the costs of a mortgage loan? For example, if you have an adjustable-rate mortgage with an interest rate about to go up, find out if there are lower rates for which you might qualify. Also inquire about your options for refinancing into a different, better loan. You also can research the pros and cons of making additional payments to principal (to pay off the loan sooner) or even paying off the mortgage outright.


Can I do more to reduce the


interest I'm paying on other debts? Any reduction of outstanding debts, particularly


those that charge you


the highest interest rate, will bring you savings in interest expenses. For example, look into paying all — or at least more — of your credit card balance.


Am I truly benefiting from my


credit card rewards programs? These features can be beneficial, but you have to know what to do to earn extra cash or keep "points" or miles. A rewards program also may have changed since you last looked at it. Also, don't let the allure of rewards be the only factor in choosing a card. "It's not just cash back or points that can make a card appealing. Features like a low interest rate and minimal or no fees can also be beneficial," said Elizabeth Khalil, a Senior Policy Analyst at the FDIC.


a credit


If you're considering closing card


account that you’ve


managed well for a long time, instead consider the alternative of keeping the card but not using it. That's because closing the account could adversely affect your credit score, which lenders often use to determine your interest rate. According to Jonathan Miller, Deputy Director for Policy and Research in the FDIC Division of Depositor and Consumer Protection, "If you do keep the account open and continue to use the card occasionally, be careful to keep it in a secure place and periodically monitor the account to make sure a fraudster isn't using it instead."


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