Credit Freeze

Beginning July 1 twenty nine states and the District of Columbia will give consumers a new tool to combat identity theft; residents will be allowed to put a "freeze" or block on access to their credit reports. Without access to credit reports and credit scores businesses will not make credit available, thus locking out potential identity thieves. If you put a freeze on your account and need to apply for credit you can input a PIN number to allow access for legitimate inquiries.

You can find a list of the states that are working to protect your identity here. For the rest of us we need to be asking our legislators when we can have access to this useful tool too.

photo courtesy of Belin at mourgefile.com

Some Help From the Web

The internet is a great place to get work done... if you know where to look. Here are some helpful sites I have come across this month.

Send password protected PDF files from your Mac. Files can be opened but not altered or printed without a password.

How to use Google spreadsheets and docs. Use live lookup to track your investments, work with a remote team on a document with revisions.

Protect your email address from spam bots with this text to ASCII converter. Input you email address then copy and paste the ASCII output to reduce the chances of your email address being found and used by spammers.

Create name tags for meetings and seminars with Big.First.Name.

Selling online or through the classifieds and want to protect your privacy? Use Numbr to generate a temporary phone number.

Choose a credit card wisely. The Federal Reserve Bank can help you understand and compare the features of different credit card offers.

Looking for an alternative to Microsoft Word? A review/directory of alternative word processing programs.

Find other web based applications for home and office use at Simple Spark.

Use expensr to Find Where Your Money Goes

Ever wonder "where did my money go?" at the end of the month? Expensr is a new free online tool to keep track of your spending. Tracks and graphs your income and spending for the last fourteen months. A couple of minutes a day can help you get a handle on your finances. Sign up for a free account at https://www.expensr.com/.

Delayed Gratification

According to the Social Security Administration about 50% of retirees claim social security benefits as soon as they become eligible. Yet benefits are reduced from 5.5% to 6.5% for each year you take benefits before your normal retirement age, which is currently between age 65 and 67 depending on your date of birth.

For anyone who is still working it makes little sense to begin collecting benefits early. Working claimants will loose $1 of benefit for every $2 earned above $12,960. In many cases this could wipe out the benefits altogether. So if you continue to work you should think twice about taking benefits at age 62.

Because social security benefits are based on age but ignore gender, and women tend to have longer life expectancies than men, it normally would make sense for females to claim benefits as soon as possible, but again if you plan to work beyond 62 you should carefully examine if delaying benefits will result in higher net income.

At age 70 social security benefits reach their maximum so there is no point in delaying beyond that point. So the real question for those who continue to work is whether to claim benefits between normal retirement and age 70. A good way to judge when to claim benefits is to compare the cost of buying an immediate annuity to provide this same income over a single life expectancy. Insurance companies are great actuaries, so this method can show you the present value of future benefits at various ages. Many web sites can provide immediate quotes for this type of annuity, allowing you to make a comparison of benefits quickly and privately.

Russian Roulette

Nick Murray is a well known figure inside the investment advisor community. He could be called an advisor's advisor. A prolific writer with a dry style and laser sharp insight his monthly columns in Financial Advisor magazine are greatly anticipated.

This past month Nick chose to discuss concentrated stock positions. He weaves an interesting story about one of the bluest of blue chips, Merk. Noting that over the years Merk has been an excellent investment creating great wealth for shareholders. But then on September 30, 2004 Merk announced that it was withdrawing the blockbuster drug Vioxx from the market. You can remember the story from there. Fear of class action lawsuits and memories of how asbestos decimated the building industry in the 1980s and how silicone implants crippled Dow Corning came flooding to the public consciousness.

Merk opened down 27% the next day and eventually bottomed about 70% off its highs. Nick then coins one of the phrases he is famous for: "You can get rich by under diversifying. But you cannot stay rich by under diversifying."

Wow! what a great way to sum up in a nutshell a lesson that could have saved millions of dollars for the employees of Enron, Cisco, Sears, Xerox, and a host of past Wall Street darlings that eventually fell on hard times. In fact, Nick likens overly concentrated stock holdings to playing Russian roulette with your financial future. You may be okay today, "but tomorrow may be the day when the sun comes up on your Vioxx."

Nick's advise? "Sell every share you have to until that stock is no more than 20% of your net worth...and do it by nightfall."