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What To Do If Your Info Was Hacked at Equifax

Equifax hacked

Equifax Hacked

On September 7th, Equifax announced that they had been hacked and about half the population of the U.S. had their private info stolen. The hackers stole names, social security numbers, addresses, birth dates, credit card numbers, and in some cases driver’s license numbers.

In case you don’t know who Equifax is, they are one of the 3 credit reporting bureaus that provide your credit score when you apply for loans. So they basically have info on every person who has credit.

equifax hackedGet Free Credit Monitoring if You’re a Victim

You can go to Equifax’s site and find out if you were one of the victims and if so, they will send you over to a credit monitoring service that will watch your credit for free. This service is usually pretty pricey, but they will cover the cost for you. This is a good idea because they will alert you if someone tries to commit fraud with your info.

However, according to the fine print of the free credit monitoring, if you sign up for the free service you will be giving up your right to be part of any class action lawsuit that may arise.  There is a pretty low likelihood that you could get much money in any class action lawsuit because half of the population in the United States will be eligible to be part of the class.

If you decide to hold out for the suit, then you really should get a paid credit monitoring service somewhere else. The sad truth is that credit card fraud happens all the time and so you really have to review your statements regularly to make sure your cards aren’t compromised.

My 13-year-old daughter had her debit card stolen just the other day, only a month after opening her first bank account. They wiped out everything she had in there. She was completely distraught and in tears.

Luckily, we were able to get the money back after disputing the transactions.  But many people don’t even check their statements to see if anything like this has happened. Don’t be the person who doesn’t notice.

Again, the website for checking to see if you were a victim of the hack is: https://www.equifaxsecurity2017.com/.

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Is Your House TOO EXPENSIVE For You?

Is your house too expensive

Is Your House Too Expensive For You?

Here’s a crazy fact: I once worked for Washington Mutual Bank as a mortgage underwriter. Washington Mutual Washington Mutualwas the country’s largest savings and loan bank, until 2008 when it completely went out of business in just one day. (Just like in the Great Depression.)

But one thing I learned about mortgages while I worked there was that most borrowers were buying too much house for their budget. They were buying impressive houses, but they really couldn’t afford them.

Back then, lenders had lax requirements on income qualification and debt-to-income ratios. In fact, most of the mortgage files I saw had buyers that shouldn’t be buying a house. As a result, when the financial crisis hit, many people lost their homes.

huge houseNow, banks are more strict, but people are still buying houses out of their price range.  Financial experts agree that your total housing cost should only be about 25%-35% of your income. This includes your mortgage, property taxes, home insurance, mortgage insurance, and any association dues.

Why It Matters

If you are paying too much for housing, then the rest of your budget will suffer. You won’t have enough for the remaining categories.

Your budgeted income should be spread like this:

  • Charity 10%large house
  • Savings 10%
  • Housing 25%
  • Utilities 5%
  • Food 10 %
  • Transportation 5%
  • Clothing 5%
  • Medical Costs 10%
  • Insurance 10%
  • Recreation 5%
  • Personal 5%
  • Total 100% (of Take-Home Pay)

Notice that there is no room for consumer debt payments in this formula. That is because no one should have consumer debt. If you are dying to get out of debt, see this post to learn how to get out of debt quickly. Click here to set up a budget for free.

What to Do About Your Expensive Mortgage

There are a few options you can try to reduce your housing costs. If you rent, you could shop around for a new place once your lease is up. If you own your house, try one of these options:

  1. Refinance. If the mortgage rates are currently lower than your mortgage interest rate, you might benefit from refinancing. Lowering your interest rate can reduce your payment and make it easier to afford your house. 
  2. Downsize. If you are open to the idea of downsizing, now might be a good time. The price of houses are risinghouse and you might be able to make a nice profit on the sale of your home. You could use this money to put a down payment on another home that is more affordable. 
  3. Rent Out a Portion. If you have a spare room, rent to a relative or friend. This would reduce the burden of your housing cost.
  4. Use Airbnb. If you are planning to take a trip, rent out your home while you are gone. You can earn quite a bit per night through online home rental sites like Airbnb and Home Away. This can help bring in more income to pay for your mortgage.
  5. Get a Modification. This option is very difficult. You have to contact your mortgage company and ask for an application to get a modification. They will require lots of paperwork to be submitted to apply. Then they still might decline your application. Some homeowners have been able to get approved, but it is an uphill battle. It’s worth it if it helps you reduce your costs. It doesn’t negatively affect your credit.
  6. Earn More Income. Getting a second job or doing things from home to help earn money will really help get your financial situation under control. Starting a side business is often very rewarding. 
  7. Get Rid of Your PMI. Some mortgages have what is called Mortgage Insurance. This is required by the lender. Only some borrowers have to get this insurance. But usually, you can get rid of it after a certain amount of time. If you have this, contact your mortgage company to see if you can get rid of it soon. It will save you a nice chunk of cash.

is your house too expensive

Other Options

If you can’t do any of the above strategies to reduce your housing cost, another option is to just reduce your other living expenses. For 87 ideas on how to reduce your expenses, click here.

If you are looking for help to set up a budget, click here. Come back soon for more money management advice from a professional accountant, entrepreneur, and college instructor. I can teach you to prepare your own taxes, start a business, budget, be frugal, make more money, save money, and so much more!

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Hi, Friends!  Welcome to Momma Money Sense where you can get FREE advice from a professional Julieaccountant. I’m Julie Tronsen, founder of this blog, and my goal in life is to help as many people as possible to achieve their financial dreams!

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The reason we are doing these giveaways is to get more people to subscribe to Momma Money Sense. The purpose of this blog is to help people achieve financial freedom! I want to help as many people as possible to get their finances under control, get out of debt, and build wealth. As a professional accountant, entrepreneur, and college instructor, I have the answers to your money questions! And it’s all FREE. You can Ask the Accountant or get help with a variety of money management topics by reading the blog posts.

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Answers to Tax Questions: Car Donation

Do You Have a Tax or Budgeting Question?

I worked as an accountant for years. Feel free to ask any question you like. Just reply to this email with your question and I will answer it in an email like this one. Plus, this coming tax season, I am planning to give tips to help you save a bundle of money by preparing your own tax return.

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Question by Barrie: “My 19-year-old is in college and we claim her as a dependent. She worked this summer and made about $1,200. Do we claim that or does she do her own tax forms?”

She needs to file her own tax return. She should receive a W-2. You can still claim her as a dependent though. Just make sure that she marks on her return that someone else is claiming her. Since she is in college, be sure to take any possible education tax credits on your tax return.

Question by Ann Marie: “How do I make sure that I don’t have to pay state taxes while getting a federal refund?”

Most states in the country require you to pay personal income tax and file a yearly return. The states that don’t have an income tax are: Alabama, Arizona, Florida, Illinois, Indiana, Pennsylvania, South Dakota, Tennessee, Texas, and Washington. If you live in those states, you don’t need to pay state income taxes and there is no return to file. In all the other states, there is an official income tax and you would need to file a return to see if you owe anything.

Question by Annett: “Can’t seem to save money. I’m not working and my husband is on disability. What to do?”

There are only two ways to fix a shortage of money, earn more or spend less. If you have already cut back as much as you can on your budget, then you need to earn more money. In your situation, I would really recommend that you do everything you can to get a job. The economy has been improving lately so there are more job opportunities now than even a year ago. First, set up a professional looking resume and then, apply for jobs that you can do.

If you have children at home that would need childcare if you went to work, check with the social services in your state to see if you can get help paying for childcare. Or perhaps your husband could take care of the children while you go to work.

Question by Tami: “If you are making money from a blog, do you have to register as a business?”

You should register as a business. Most states have rules requiring you to have a business license when you are earning money on the side. But that doesn’t mean you need to set up a corporation or anything like that. You can just operate as a sole proprietor. It’s always better to be on the up and up with your state so that you don’t run into problems later. Be sure to check with your state licensing agency to see what the rules are.

For Federal taxes, you should be reporting the income. Plus you could benefit from deducting your expenses against that income. There are some significant tax benefits to setting your business up as an entity other than a sole proprietor. The entity choices are Corporation, S-Corporation, Partnership, or LLC. The LLC or Limited Liability Company is a unique structure that protects you legally, but also allows you to choose what kind of tax treatment you want to do. That means you can still treat it like a sole proprietorship even though you get the legal protection.

I usually recommend setting up as an LLC with the tax treatment of the S-Corporation. The S-Corporation treatment has some great benefits, but it will require a separate tax return to be filed. The Sole Proprietor treatment doesn’t require a separate tax return, but it does require you to pay a self-employment tax.

Question submitted by Kelly L.: “I am disabled and on social security. My husband is disabled but fighting for social security benefits. He won a trip, do we have to file taxes (I normally don’t)?”

If you are filling as married filing jointly and are both over the age of 65, you have to file a return when taxable income is $23,200 or if you earn at least $400 of self-employment income. If you have had withholdings and could get a refund, you must file a return to get the refund.

If the prize amount is $600 or more, the company will send you Form 1099 Misc or W-2G. This must be reported on your tax return. Include this amount in calculating your taxable income to see if you need to file. If your prize was valued less than $600, you still have to include the amount on your return, but you won't receive a form.

If you are supposed to file a return and you don't, the IRS can file for you based on what limited info they have. This usually turns out bad for you. So make sure you know whether you should be filing.

Question submitted by Casey G.: “How many years can you wait to file your tax return? Can I file last year and this year together?”

Yes, you can file last year's and this year's returns in the same year.

If you are going to get a refund, you won't have to pay a penalty. But if you owe money, you will get a penalty plus interest on the balance due. It's a terrible idea to file late if you owe money. The penalties can be enormous.

If you wait 3 years to file, you will lose any chance to get a refund. You must file by 3 years from the original due date to get your refund.

I once filed a return for a woman who hadn't filed one of her returns for 10 years. The IRS had filed for her and had billed her for $25,000 in tax. When I prepared her return, she ended up with a refund of $10,000 instead of owing the $25,000. But unfortunately, she couldn't get her refund because it had been more than 3 years since the return was due. She basically threw away $10,000. Don't end up like that, whatever you do.

Question submitted by Emma: “Is it better to do your own taxes via tax software, or hire a person to do them for you?”

It depends on how complicated your tax situation is. If you just need to do a personal tax return on Form 1040, then you could easily prepare your own return on a tax program like Turbo Tax.

Even if you itemize your deductions, you can still do it yourself. This is a good way to save money since accountants often charge enormous fees for something that only takes them a half hour to do. One tax firm that I worked for charged a client $450 for a tax return that only took 30 minutes to prepare. It's a complete rip off to hire an accountant if you can just pay $50 or so to Turbo Tax and do it yourself.

I plan to provide some tips during this next tax season to help you prepare your own return using software such as Turbo Tax. That way you will be able to save money on tax preparation fees.

The more things you can do for yourself, the better your financial situation will be.

Many people are afraid to do their own tax return because they might make a mistake that gets them in trouble or doesn't give them as much money back. That's why I like Turbo Tax. It asks you questions as you go to make sure you have thought of everything that is deductible. It also offers free help from professionals if you have questions along the way.

If your tax situation involves investment income, self-employment income, or more complicated situations then it might be in your best interest to consult your tax accountant. However, Turbo Tax and other tax prep software can still help when there are businesses or investments involved. You would just need to buy the upgraded version of the software. Many people prepare their own personal and business returns. It's not as complicated as it sounds. Believe me. I know people that are not accountants that prepare their own returns each year.

I can prepare just about any kind of return out there, but I still use Turbo Tax for my personal return because it is so easy to use. I even use it for my business returns. This blog is one of my businesses and I set it up as an entity called an LLC (limited liability company). I elected to use the S-Corporation treatment for my LLC and I use Turbo Tax to do the return each year.

For those of you who are interested in learning how to start a home business, stay tuned because I am working on creating a free class that will teach you the exact steps to start a home business. And yes, starting a home business can make you rich. (Some time I will tell you my secret strategy on which state to register an LLC in to get the best possible legal benefits available. And guess what? It's not in North Carolina where I live and not in Washington State, where I came from.)

Question submitted by Christina: “My husband and I are recently married and in the middle of a strict 2-year plan to A. have a baby, B. get out of debt, and C. save cash for a down payment for a house. My husband is totally on board with all of these goals, and understands the financial plan to achieve them. But, I find myself constantly saying “no, we can’t afford that right now” , or “remember our plan?” and he gets really frustrated. My question is, how do I keep reminding him that we are not getting any older, and we have a very realistic and possible goal, we just have to work hard and stick to the schedule?”

I love this question because it is a problem many people face. Here's the thing, Christina, you've probably heard of the phrase,"All work and no play make's Jack a dull boy." Well, when you are always on a strict budget and you can't ever splurge a little, it can be tough on the partner who enjoys spending at times.

It's true that working hard and sticking to the plan will get you to your goal, but for most people it's too hard to be that perfect all the time. So, I recommend a compromise.

Set aside some money in your budget for enjoyment. It doesn't have to be much. But make sure your husband gets part of that money just for him. Let him know that he can spend it on whatever he wants and make sure he gets that amount each month. This will make things easier for both of you. You can still stay on track with your plan if you cut back in other areas of spending. Find 87 ideas on ways to cut back your expenses here.

Here's another helpful tip: Don't take him shopping with you if he is an impulse spender. Whenever there is a partnership between a person who is frugal and a person who spends too much, one of you has to be the shopper. The other one has to stay home every time. Here are 13 tricks to stop impulse shopping right now.

Question submitted by Jana: “Can I claim my husband as a dependent if I support him?”

You can never claim your spouse as a dependent, but you can take a personal exemption for your spouse if your filing status is married filing jointly. If you file as married filing separately, you can only take a personal exemption for your spouse if he doesn't have any income.

A personal exemption is just as good as a dependent. They both provide the same benefit. The personal exemption for 2017 is $4,050. That means your taxable income is reduced by that much.

A dependent is a qualifying child or qualifying relative that you support. Some people have even tried to claim their pet as a dependent, but that doesn't work either.

Question submitted by Linda: “I have 3 ‘junk’ cars I want to donate for the $500 tax deduction. Would I be able to do all 3 in the same year, or should I space them out?”

Yes, you can donate them all in one year. But first, you need to make sure that the donation is going to a real charity. They should be able to provide you with a receipt and proof that they are a legitimate charity.

Second, you need to check your prior tax return to see if you itemized deductions or took the standard deduction. If you don’t itemize, you can’t deduct the car donation. Wait until you can itemize before you donate.

Next, before you decide when to make the donation, you might want to estimate your tax refund for the year based on what you already know. The best site for doing that is e-file.com. It’s completely free to use their tax refund estimator.

My philosophy is that you only want to donate this year if it will help you get a bigger refund or reduce what you owe. Otherwise, save it for the next tax year. This will maximize your financial gain.

If you need more deductions to increase your expected refund or to reduce your tax liability then you definitely want to donate the cars this tax year (or clothes, toys, household items, etc.). If you don’t need more deductions, then save it until you do. As long as you donate the car by the last calendar day of the year, you can still count it on your tax return. The IRS has a special publication just for car donations if you want to read up on it.

But hold on…you don’t get $500 more in a refund just because you value the car donation at $500! The amount of additional refund you get is LESS than the donation value. Why? It’s because you are deducting the $500 from your income and your income is being taxed at a certain percentage.

For example, if you are in the 15% tax bracket and you deduct the $500 donation, this will represent an additional tax refund of 15%* $500 = $75 more refund. That’s pretty insignificant, right? Maybe you would be better off selling the cars for what you could get for parts. Can you get more than $75 by selling the parts of the car on Craigslist? Can you sell the car as is to someone who can fix it up? This is my recommendation. Sell the car for more than what you can get back on your tax return.