Tamila McDonald, Author at The Free Financial Advisor

Here’s What You Should Do If Your Accountant Has Plead Guilty to Tax Fraud

January 18, 2021 by Tamila McDonald Leave a Comment

If your accountant pleads guilty to tax fraud, they’ve done more than make an honest mistake. Tax fraud involves the willful attempt to reduce the filer’s tax obligation through false statements, documents, or claims. These include underreporting income, inflating deductions, and similar acts. Tax fraud is a crime and is treated seriously. However, the impact your tax preparer’s actions have on you can vary. If your accountant pleads guilty to tax fraud. Here’s what you need to do.

Understand Your Responsibility

First and foremost, it’s critical to understand your level of responsibility when it comes to your taxes. Regardless of who prepares your documents. You are ultimately responsible for your tax return. If you benefited from your accountant’s actions, and those actions were deemed fraudulent. There will be ramifications. This is true even if you weren’t aware of your tax preparer’s illegal acts.

Know What Can Occur

The exact ramifications you’ll face for fraudulent tax returns prepared by your accountant will vary depending on your situation. If you can prove that you had no knowledge of the fraud and played no role in it being committed. The impact is usually purely financial. The IRS will require you to pay any taxes that should have been paid had the returns been correct. Additionally, you may owe interest on the back amount, as well.

If you did play an active role in the fraud. The outcome could be different. Along with having to pay the amount owed. You could face criminal charges. The exact nature of the charges would depend on your fraudulent actions. If found guilty, you could owe additional fines and penalties or even end up with jail time.

Gather and Review Your Tax Returns

Once you know that your accountant has pled guilty. You should gather up every past tax return they handled. While the IRS can only audit your returns for three years. A guilty plea on the part of your accountant can extend the review window. Thus, giving the IRS the ability to look at more past filings.

The IRS will review these returns to look for fraudulent activity and other discrepancies. So it’s wise to start that process yourself. As a result, it’s best to review every one you possibly can. Which allows you to identify fraudulent activity and estimate the impact.

Usually, you want to conduct reviews yourself. However, you may also want to enlist help from a tax professional. This is especially true if you aren’t fully aware of tax law or don’t understand some of the information contained in your return. Who you turn to for assistance is up to you. Although you may want to consult with a tax attorney or a reputable tax accountant as a starting point.

Consider Amending Past Returns

If during your review you find fraudulent information on your returns. You may want to amend them. Using Form 1040-X, you can submit updated tax calculations, allowing you to correct the issues proactively.

However, you should only file the amendments proactively if you have not received a notification that an issue has already been identified by the IRS. If you’ve received a notice that a given tax year’s return has already been reviewed and a decision regarding whether additional money is owed is being (or has already been) made. Filing an amended return may either not be necessary or could complicate the situation further.

If you’re uncertain about whether to amend a past return after your accountant pleads guilty to tax fraud. Consult with an expert. A tax attorney could provide you with guidance. Thus, helping you determine which approach is best based on your current situation.

Don’t Avoid the IRS

While you may want to take time to review any tax returns that may be impacted by fraud, don’t actively avoid the IRS. Generally speaking, it’s better to engage sooner rather than later.

Precisely how you may want to engage could vary depending on any communications you’ve received from the IRS. If you’ve been notified about specific dollar amounts of back taxes being owed or other penalties related to your returns, the process may be fairly simple. If you don’t disagree with their assessment and they aren’t pursuing criminal charges against you, you may choose to simply pay the amount (or make payment arrangements if the amount is too large to cover) to end the matter.

However, if you disagree with the assessment or are concerned about criminal liability, you might want to contact a tax attorney first. While this can cost a tidy sum of money, it ensures you have access to a professional who understands the nuances of what you’re going through and can speak to the IRS on your behalf.

Additionally, if you’re simply uncomfortable speaking with the IRS, you can enlist support from a tax lawyer. They can help you navigate the situation and find a reasonable resolution.

Exploring Additional Legal Avenues

If your tax accountant’s actions left you with a significant financial liability, you might want to consider suing the preparer for damages. While this can be costly in its own right, as you usually need assistance from an attorney, it is an option on the table.

Whether it’s the right move for you will depend on the nuances of your case. Additionally, you may want to take the accountant’s financial situation into consideration. If the accountant has no way to pay any amount awarded – either through cash, assets, or other sources – even if you win, you may not see any financial reward for the favorable judgment. This could leave you in a tougher situation, as you could still be responsible for your attorney’s fees, at a minimum.

Have you ever worked with an accountant who was later convicted of tax fraud? Has your accountant ever put you in a sticky financial situation? Share your thoughts in the comments below.

Should You Report Income from the Sale of Your Home on Your Income Taxes?

7 Tips to Get The Most Out Of Your 401k v/s Pension

January 11, 2021 by Tamila McDonald Leave a Comment

When it comes to company-sponsored retirement plans, 401(k)s are likely the most common offering. While pensions were once fairly widely used, that isn’t the case any longer. For some professionals, this is incredibly frustrating. Pensions – also called defined benefit plans – come with a level of stability and predictability that you don’t always find with a 401(k). Investment returns can be volatile, and some earnings may be eaten away by fees and other costs. However, that doesn’t mean the results in a pension vs 401k calculator can’t come out in favor of the latter. If you want to know how to pull that off, here are seven tips that can help.

1. Contribute Early and Consistently

With 401(k)s, compound interest is your friend. By contributing at a younger age and continuing to do so for as long as you are eligible, you’re allowing the magic of compound interest to work for you.

Additionally, by making regular contributions, you can offset some of the impacts of volatility. While some of your money will be invested when the market is strong, you also get to invest when prices in the market are low. In the end, this often balances your investing out over time, which does work in your favor.

2. Contribute the Maximum Amount Every Year

Each year, the IRS sets a maximum contribution limit for 401(k)s. Ideally, you want to contribute up to that amount, ensuring you can stash away as much money as possible.

For 2021, the employee 401(k) contribution limit is $19,500. For individuals who are 50 years old or older, they can also add in catch-up contributions up to an additional $6,500.

It’s important to note that employer contributions aren’t counted toward that limit. Only what you save is used to determine if you’ve hit the limit, so employer contributions can send you above and beyond those amounts.

Ultimately, contributing the maximum amount gives you the best chance of coming out ahead in the pension vs. 401(k) debate.

3. Capture Your Full Employer Match

In many ways, employer matches are like free money. They add to your savings without impacting your income, but only if you’re actively contributing enough to qualify for the match.

If you’re contributing the maximum amount each year, you save more than enough to get the full match. However, if you can’t set aside the maximum amount, work to dedicate enough of your funds to receive your full employer match. That way, you get as much free money as possible, increasing your odds of having enough in savings to have your 401(k) perform at least as strongly as a pension.

4. Aim for 15 to 20 Percent

Another option for winning the pension vs. 401(k) game is to make sure you are stashing away at least 15 to 20 percent of your income. Now, this can include your employer match. So, if your employer will match up 3 percent, that means you need to dedicate 12 to 18 percent to hit that mark.

Precisely how much you need to set aside may vary on either your current income level or your target retirement annual income amount. Some professionals may be able to get by with saving less if they tend toward frugality, plan to retire in a low-cost area, or have outside investments or retirement income sources that will bolster their financial security during their golden years.

However, it typically doesn’t hurt to over-save a bit. Worst case, your retirement will be more comfortable than you initially hoped, and that isn’t necessarily a bad thing.

5. Diversify Your Portfolio

While diversifying your portfolio won’t automatically lead to gains, it can help protect the value of your 401(k). Typically, when markets shift, some sectors are affected more than others.

By diversifying, you create a level of stability by ensuring you don’t keep all of your eggs in one basket. Usually, when some of your investments are trending downwards, others aren’t. You end up better equipped to ride out normal market fluctuations, ensuring your portfolio as a whole is heading in the right direction no matter what a portion of your individual investments are doing.

6. Reconsider Your Risk Level

The risk-level represented in your 401(k) plays a role in how much your savings may grow over time. Higher risk investments typically have the potential to yield greater growth. However, there’s also a chance for more significant losses.

If your portfolio is diverse, you can often afford to take on additional risk. This is especially true for younger professionals who have enough time to ride out a degree of volatility.

While you don’t want to take on so much risk as to keep yourself up at night worrying about your 401(k), consider being as aggressive as you can while still feeling comfortable about your choice. That way, you’re giving your portfolio a chance to grow.

7. Reevaluate Your Portfolio Annually

Investment decisions you make when you first start with a 401(k) may not be ideal down the road. Economic conditions change, sectors shifts, and the value of various investments will move around.

If you want to make the most of your 401(k), review your portfolio annually. See if your allocations still make sense or if making an adjustment is a smart move. Not only can this allow you to alter your strategy based on economic shifts, but it also gives you a chance to reassess your risk level and portfolio composition. You can make changes to make sure you are diversified and that your risk level feels appropriate based on your life stage.

Do you have any other tips that can help someone get the most out of their 401(k) vs. pension? Share your thoughts in the comments below.

What Could Cause a Credit Score Drop of 100 Points?

December 28, 2020 by Tamila McDonald Leave a Comment

If you’re wondering why did my credit score drop, the answer may or may not be simple. There are a lot of actions and activities that could cause your credit score to tumble, at times dramatically. However, if you’re credit score fell by 100 points in a single moment, the list of potential reasons tends to be shorter. If you’re wondering why did my credit score drop 100 points, here are some possibilities.

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Should I Tap My Retirement Funds for Medical Expenses?

December 21, 2020 by Tamila McDonald Leave a Comment

Your retirement account is a critical nest egg. It’s money specifically set aside to ensure you can handle your bills and live comfortably after you leave the workforce. Making it a crucial resource. However, when large expenses, like extensive medical bills, are hanging over your head. It may be tempting to tap your retirement account to handle the obligations. If you are wondering whether you should tap retirement funds for medical expenses. Here’s what you need to know.

Can You Use Retirement Funds for Medical Expenses?

Yes, you can potentially use retirement funds to handle medical expenses. In fact, it’s one of the few instances where you can possibly withdraw money without being slapped with an early withdrawal penalty from the IRS.

Usually, these are referred to as hardship withdrawals from 401(k)s and IRAs. Typically, you need to have an immediate and significant financial need that falls into a qualifying category to make this kind of withdrawal. Medical bills are potentially a qualifying expense.

Additionally, to avoid the early withdrawal penalty. You would have to make the withdrawal during the same year you incurred the medical debt. Also, the total of the unreimbursed medical expenses would have to be more than 7.5 percent of your adjusted gross income (AGI). If either of those conditions isn’t met. You’ll have to pay the 10 percent early withdrawal penalty.

It’s also important to note that certain retirement plans may prevent or limit hardship withdrawals. If you’re using an employer-sponsored retirement program, you’ll need to contact the program administrator to see what options may be available. For IRAs, you’ll need to reach out to the financial institution overseeing the plan.

Could a Creditor Seize Your Retirement Account If You Have Unpaid Medical Bills?

Some people consider using retirement accounts to pay medical bills merely because they believe the institution they owe could seize those funds anyway. As a result, they withdraw the cash to make the payments, assuming that using that money for that purpose is practically inevitable. However, that isn’t universally the case, as some accounts are shielded from this kind of seizure.

Whether your retirement account is protected from creditors depends on the type of account involved. Generally speaking, creditors can’t seize your employer-sponsored retirement accounts even if you have unpaid medical bills and owe them substantial amounts of money.

Employer-sponsored retirement accounts – including pensions and 401(k)s – are typically shielded from this kind of seizure due to federal laws governing the matter. The only exception there tends to be if you owe money to the government, such as back taxes.

For traditional or Roth IRA, the situation is blurrier. You can exempt a certain amount of traditional or Roth IRA savings during bankruptcy proceedings, per federal law, but that’s really the only concrete protection available at the federal level.

However, your IRA may be protected by state laws. Since those rules can vary, you’d have to check locally to see what protections are available and if they apply to your situation.

Should You Tap Your Retirement Account to Pay Medical Bills?

Whether you should tap your retirement account to handle medical expenses is ultimately a personal decision. But, in many cases, it may be wise to explore alternatives first.

For example, many hospitals and medical facilities will set up repayment plans, often without interest charges. They may also have programs for low-income households that could eliminate some or all of the debt right off of the top, which could be worth exploring.

You may also have access to financing. For example, a 401(k) loan may be a better option in the long-run. With that, you borrow against your account instead of actually making a withdrawal.

If you’re in dire financial straights due to medical debt, you may even want to consider bankruptcy. While the ramifications are certainly substantial, you could potentially eliminate any medical debt while protecting some or all of your retirement savings.

Ultimately, the choice of how to proceed is yours. Just understand that you may have options available that you’ve yet to explore, so don’t default to making the withdrawal. Instead, see which paths are potentially available first. Then, select the one that’s genuinely right for you.

Do you think people should tap retirement funds for medical expenses? If so, do you feel it was a wise decision? Share your thoughts in the comments below.

Remote Workers Get Paid to Live In These Locations

December 14, 2020 by Tamila McDonald Leave a Comment

When you work remotely, you’re not stuck living in a specific city or state. This gives you a lot of freedom, as you can essentially take your job with you no matter where you head. Plus, it creates a unique opportunity. As a means of attracting more professionals, some locations actually pay remote workers to relocate there. If you want to see if these programs could work for you, remote workers are paid to live in these locations.

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Should You Care About Warren Buffet’s Stock Trades

December 7, 2020 by Tamila McDonald Leave a Comment

Warren Buffett is a bastion in the world of investment. The billionaire has a reputation for making smart choices. As a result, many investors wonder if they should mimic his moves or if keeping an eye on his trades would help them achieve better results. If you are trying to figure out if you should care about Warren Buffett’s stock trades, here’s what you need to know.

Why Investors Follow Warren Buffett’s Stock Trades

Generally speaking, when an investor spends time tracking Warren Buffett’s stock trades, their main goal is usually to snag similar results. Following the investment moves of a legend usually seems like a great idea. Many think that, by using an approach that mimics the Oracle of Omaha’s strategy, they can reach the same level of success.

However, some many also watch Warren Buffett’s stock trades for other reasons. For example, instead of attempting to follow his moves directly, they may use his trades to identify sectors that could be poised for gains or losses. At times, investors simply enjoy seeing how their strategy aligns with or differs from what others are doing, including individuals with some fame.

Changing Your Investment Approach to Match Warren Buffett

As mentioned above, some people watch Warren Buffett stock trades in hopes of following his strategy to increase their gains. In reality, that isn’t always a great idea.

One of the biggest reasons why you may not want to follow in Warren Buffett’s footsteps is that his investment goals may differ from your own. For example, he isn’t stashing cash for retirement, while that may be your main objective. As a result, his choices may not align with your preferred risk level.

Additionally, there are certain moves that he can make that are out of the reach of the vast majority of investors. For instance, he can establish massive stakes in companies that are household names, something that most investors can’t pull off.

Finally, Warren Buffett can make deals that an individual investor just can’t. For example, his $5 billion investment in Goldman Sachs in 2008 – which many considered to be a bailout – resulted in a $3+ billion gain when he unloaded it. But he didn’t purchase Goldman Sachs’s stock the way a normal investor would when that happened, putting him in a different position.

Generally, Warren Buffett’s unique position means that he can make moves that nearly everyone else can’t. Mimicking his approach is, therefore, practically impossible.

Overall, all of the points above suggest that changing your investment approach to match Warren Buffett isn’t a great idea. His strategy doesn’t rely on traditional kinds of investing, so it may not be compatible with you.

Warren Buffett’s Stock Trades: Should You Care?

Even if you shouldn’t copy Warren Buffett stock trades directly, that doesn’t mean keeping an eye on what he does is a bad idea. You may be able to use his choices to figure out options that you were previously overlooking, like an emerging sector.

The trick is to make sure that, even if you want Warren Buffett’s trade activity, you only make moves that align with your strategy, goals, and risk tolerance. That way, you’re doing what’s right for you and not just copying a billionaire whose unique position gives them different kinds of options.

Do you think investors should care about Warren Buffett’s stock trades? Why or why not? Share your thoughts in the comments below.

5 Steps For Getting The Most Money for Your Used Car

November 30, 2020 by Tamila McDonald Leave a Comment

When you want to sell your used car, getting as much as you can out of the deal is typically the goal. While some factors – like the make, model, and mileage – of your vehicle aren’t changeable, there are things you can do to make sure you get the most money for your car. If you don’t know where to begin, follow these five steps.

1. Spruce Up Your Vehicle

If your car looks nicer, it may sell for more. Before you list it as available for purchase, spend time sprucing it up. Get it detailed. Repair any minor cosmetic defects. Make sure it smells nice.

You should also handle routine maintenance that’s come due. For example, if it’s almost time for an oil change or its fluids are low, take care of those issues, if possible.

2. Know the Value to Get The Most Money For Your Used Car

Understanding what your car is worth is a critical part of the equation. It allows you to set a reasonable price based on the vehicle’s condition, mileage, features, and general desirability.

If you don’t know where to begin your research, sites like Kelley Blue Book, Edmunds, and Consumer Reports can be great starting points. You can also lookup how much used cars like yours are selling for in your area by checking out used car sites, Craigslist, or other similar resources.

3. Understand the Pros and Cons of Each Approach

Typically, if you’re selling a used car, you can go one of two routes. First, you can try to sell it to a dealership. With this option, you may be able to offload your vehicle quickly, which could be ideal if you need fast cash.

However, you’ll have to deal with negotiating with a professional salesperson, which can be challenging. Additionally, you’ll usually get less this way as they need to have enough of a margin to turn a profit when they sell the car. If you shop around, you can find the best deal, potentially netting you a little more.

Otherwise, you can try to sell your vehicle privately. With this approach, you’ll typically make more. But it usually takes more time and effort. You’ll probably need to place ads, follow up with interested parties, handle showings, negotiate prices, and more.

4. Gather Your Records

Maintenance records can make it easier to get top dollar. You can show that you’ve actively followed manufacturer service recommendations and otherwise stayed on top of things.

If you have receipts, that could be enough. Put them in order by date, potentially in a binder, so you can easily show what you’ve handled.

If you don’t have records, reach out to your service station. Some can print out copies of everything that’s been handled by them, giving you a quick list of the maintenance that’s been performed over the years.

5. Be Ready to Negotiate

Negotiation is simply part of the game. In nearly every case, a buyer’s initial offer is going to be on the low side. Make sure you’re ready to reject lowball offers outright and are prepared to counter.

Usually, the best approach is to know your car’s value, as well as the minimum amount you’re willing to accept. If you need to sell fast, you’ll usually need to be open to less than the market value. However, that doesn’t mean you have to start there or can’t counter against an offer that’s ridiculously low.

Negotiating can be stressful. But with some care, you can secure a fair price for your used car.

Do you have any tips that can help someone get the most money for their used car? Share your thoughts in the comments below.

Refinancing at Lower Rates: Pros and Cons

November 23, 2020 by Tamila McDonald Leave a Comment

Deciding whether to refinance your mortgage or vehicle at a lower rate isn’t always easy. While there are coms clear benefits, you’ll also face a few drawbacks. In some cases, those negatives aren’t immediately noticeable if you don’t do your research first. However, you may feel that the positives outweigh them. If you’re thinking about refinancing at lower rates, here are the pros and cons you need to consider.

Pro: You Might Save Money

One of the biggest benefits of securing a lower rate on your mortgage or auto loan is the potential savings. First, you usually end up with a smaller payment, and that can be a boon for your monthly budget.

Second, you could pay less in interest, leading to a long-term savings, too. However, this isn’t technically guaranteed. Your interest rate is only one factor in this equation; the other big one is the length of your new loan.

If your existing mortgage only had, for example, 15 years left, and you refinance into a 30-year loan, you could actually end up paying more in interest over the life of the loan, even with the lower rate. However, if you had 27 years left on your initial loan and refinance it with a lower rate 30-year mortgage, you may not spend more in interest, depending on the exact terms.

Con: You Might Reset the Clock

When you refinance your loan, you generally select from a few term lengths. For mortgages, 15, 20, and 30 years are most common. For vehicles, 36, 48, and 60 months are the norm. That means there may not be an exact match to the number of months or years you have left on your existing loan.

While this isn’t always a problem, if you only plan on making minimum payments, you could be defaulting to a longer term than your existing loan has left. As a result, you’ll have to deal with the monthly payment longer, and that does impact your budget and, potentially, other aspects of your finances, like savings goals.

Pro: Pay Your Debt Off in Less Time

As mentioned above, when you refinance, you typically have to choose from a handful of set term lengths. However, there is no rule that says you have to choose a longer one than what’s left on your current loan.

With a lower rate, you may be able to select a shorter term and keep your monthly payments affordable. For example, if you have 20 years left on your 30-year mortgage but choose to refinance with a lower rate 15-year loan, you could come out ahead financially in the long-run. Not only will you be able to tackle the debt faster, but you’ll also pay less in interest.

Con: Refinancing Fees and Expenses

When you refinance a loan, particularly a mortgage, you’ll have to contend with some fees. For example, you may need to pay mortgage refinance closing costs, origination or underwriting fees, escrow fees, appraisal fees, or similar costs associated with securing the mortgage.

Exactly what you owe will depend on the lender you refinance with, as each lender has their own fee structures. Some lenders do offer no-closing-cost refinance options, for example. Or, if you aren’t doing a cash-out refinance, you may not need an appraisal.

However, if you do have to contend with fees, they could offset any savings you receive from securing the lower rate. It’s critical to do the math to estimate their impact. That way, you can figure out if refinancing at lower rates is actually a smart financial move.

Pro: You Might Reduce Your Debt-to-Income Ratio

Your debt-to-income ratio is a comparison between your monthly debt obligations and your monthly income. Usually, lenders use it to determine your ability to repay a loan, credit card, or another form of debt.

When your debt-to-income ratio is lower, you may be viewed as a safer risk. If your debt-to-income ratio is too high, a lender may not view you as a good bet, causing them to deny you financing.

If you refinance your mortgage with a lower rate, you may be able to shrink your debt-to-income ratio. This could make it easier for you to secure credit while you are still paying down your mortgage, should the need arise.

Con: You’ll Impact Your Credit Score

When you refinance your loan, you’re going to end up with a hard pull on your credit score. Additionally, if you move forward with the refinance, the new loan will reduce the average age of your accounts.

While these aren’t universally guaranteed to hurt your credit score, they certainly can. The impact will depend on the number of credit inquiries you have listed on your report within the past two to three years, as well as the age of your other credit accounts and other factors.

However, it’s almost guaranteed to make some kind of impact, and it’s critical to keep that in mind. This is especially true if you may need a different type of financing in the near future, as a decline in your credit score, if one happens, could make that harder to obtain.

Pro: You May be Able to Tap Your Equity

If you are refinancing a mortgage and have some equity, you might be able to access it when you refinance. A cash-out refinance allows you to access some of your home’s value, giving you money you can use for any purpose. For example, you might take the cash and fund some home improvements or use it to pay off high-interest debt.

Generally, the interest rates on mortgages are lower than most other forms of consumer debt, particularly unsecured personal loans and credit cards. That can make a cash-out refinance an attractive option for handling expensive home repairs or getting out from under credit card debt.

Now, this isn’t a risk-free move. Your home secures the mortgage and, if you take out enough money to put a strain on your budget, you could lose your house if you can’t make the payments. However, that doesn’t mean cashing out can’t be beneficial. It will all depend on what you intend to do with the money and the current state of your finances.

Cons: Refinancing At Lower Rates Isn’t Fast

If you’re in financial trouble right now, refinancing may not solve your immediate woes. Whether you’re looking at refinancing your mortgage or vehicle, the process can take a little bit of time, especially with the former.

When you refinance a mortgage, you’re essentially going through the same process you did when you first financed a house. It can take weeks or months to finish, depending on the lender, the refinance type you choose, and your financial situation. Plus, you have to keep paying on your current mortgage (and other bills) until the process is complete, as a missed payment while the refinance is in-process could bring the whole thing to a halt.

Even vehicle refinancing isn’t always immediate. While it can certainly be quicker than refinancing a mortgage, there’s no guarantee it’ll be done in just a day or two. This is especially true when it comes to closing out the old loan.

Regardless of whether you successfully complete the refinance process and are formally approved, if you have a payment due on your existing loan within a few days, the pay-off through your new lender might not process before that due date arrives. If that’s the case, you’ll have to make the payment or take a hit on your credit.

Ultimately, refinancing at lower rates can be beneficial, but it isn’t a risk-free proposition. Make sure you understand the risks and drawbacks before you begin. Also, do the math to make sure that the lower rate genuinely results in a meaningful savings. That way, you can make the financial move that’s right for you.

Can you think of any other refinancing at lower rates pros and cons? Share your thoughts in the comments below.

Is It Too Late to Invest In FAANG Stocks?

November 16, 2020 by Tamila McDonald Leave a Comment

If you explore any information about the stock market, you’ll be hard-pressed not to trip across an article talking about a FAANG stock or two. These tech behemoths are always movers and shakers, at times for better, at times for worse. But when you see the price tags associated with these investment options, you may be wondering, “Is it too late to invest in FAANG stocks?” If you fall into that category, here’s what you need to know.

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Don’t Keep These 7 Things In Your Wallet

November 9, 2020 by Tamila McDonald Leave a Comment

When you choose items to go into your wallet, you typically have a few goals in mind. Usually, the first priority is to ensure certain necessary items are accessible, like your driver’s license or debit card. However, some people also carry around additional items, predominately because it seems convenient. The issue is, some things are incredibly risky to keep with you, leaving you open to identity theft, fraud, or other hardships if you misplace your wallet or the items fall out. If you want to make sure you’re as protected as possible, don’t keep these 7 things in your wallet.

1. Social Security or Passport Card

Identity theft is much easier for a fraudster to pull off if they have access to your Social Security number. Since your Social Security card isn’t something you regularly use, carrying it around means you’re taking an unnecessary risk.

Ideally, your Social Security card should be stored in a safe place, such as a fireproof safe in your home or a safe deposit box at a bank. That way, it is accessible on days you do need it – such as if you have to present it to complete an I-9 verification for a new job – but won’t easily fall into the hands of someone else.

Technically, you also shouldn’t carry any documents or notes with your Social Security number on them, especially in your wallet. Your ID card or driver’s license contains a lot of your personal information. If you lose your wallet and it also has your Social Security number on a piece of paper inside, you’re making it particularly easy for them to steal your identity.

The same goes for passport cards. While they are convenient for border crossings, they also contain a ton of personal information. Unless you’re planning on crossing a border or need it for an I-9 verification, leave it securely stored elsewhere.

2. Credit Cards You Don’t Use Regularly

Carrying credit cards that you don’t use frequently creates an extra level of risk. Even if you notice your wallet is missing quickly, it takes time to contact every issuer to let them know your card is missing. That could give a criminal enough time to use your card before you get it canceled.

While you may want to keep your main credit card and debit card with you, reconsider any extras. For example, you may want to lock up your store cards in a fireproof safe, only removing them when you plan to shop at that store. Not only is that safer, but it could also reduce the urge to impulse shop, which could make it easier to keep your budget on track.

3. PINs and Passwords

Some people struggle to remember their debit card PIN and various account passwords. While keeping it on a piece of paper might seem convenient, it also means that someone else gets access to it if you lose your wallet. Thieves will have an easier time using your card, as they can enter the PIN directly, or could the passwords to break into your bank accounts.

Similarly, writing your PIN on the back of the card is a no-go. You never want a copy of your PIN and your card in the same place, as that makes it much easier for someone to use the card without your permission.

If you have trouble remembering, you may want to use a password keeper app. That way, you only need to remember one password, and the rest will be securely encrypted inside the app.

4. Checks

A check – whether blank or filled out – contains a lot of information that a fraudster could use to steal money from the connected account. Along with the accountholder’s name and address, the routing number and account number both appear on paper checks. That could be enough detail for a criminal to initiate a transaction, allowing them to take money out of your account.

If the check is blank, that’s even riskier. If you drop your wallet and it contains an ID card, driver’s license, debit card, or another item with your signature, the person who finds it could use that as a reference. Then, they could write themselves a check, fake your signature, and get the money that way, too.

5. Extra Cash

If you’re a fan of the envelope budgeting system, you may get in the habit of carrying large sums of cash. While that may be necessary if you’re about to handle a major shopping trip, it isn’t wise to walk about with big amounts of money when you’re not about to shop.

Instead of keeping all of the envelopes on you at all times, leave them secured in a fireproof safe. Then, remove only the ones you need when you’re about to shop.

Additionally, while it might be less comfortable, you may want to avoid carrying large bills, like $100 bills. If someone notices that you’re removing large bills from your wallet, that could make you a target. While having to carry a stack of $20s means a thicker wallet, it could be a wise move.

It’s important to remember that, unlike with credit or debit cards, there’s no fraud protection with cash. Often, if you lose your wallet and someone removes the money, recovering it is practically impossible.

6. Extra Gift Cards

Like cash, gift cards are hard to recover if they are stolen. As a result, it’s best not to carry any you aren’t planning on using that day in your wallet. That way, if you misplace your wallet, you don’t have to worry about their value being stolen.

Additionally, if you have the option of registering your gift card online, consider doing it. Usually, this process is required for online purchases, allowing the card to be associated with a physical address for traditional verifications. As an added bonus, it could make it harder for a thief to use your card, suggesting they didn’t manage to get their hands on your driver’s license or ID, too.

Without your zip code, they can’t make it through the verification process. However, if they do have your ID, they can input the right information while checking out. But that doesn’t mean that registering isn’t worth doing, as it could offer you a degree of protection.

7. Spare House, Car, or Valet Keys

While many people worry about what they’ll do if they lose their house or car key, keeping the spares – even the valet key – in your wallet isn’t ideal. If you do happen to misplace your wallet, the person who finds it can do more damage than just take your money. For example, they could use the address on your driver’s license or ID to locate your home, using the key to gain access. They could then keep an eye out for your arrival and take advantage of the spare car keep to steal your vehicle.

If you’re concerned about getting locked out of your home or car, your best bet may be to give the spare to a trusted friend or family member. Then, if you lose your keys, you can contact them for assistance.

Can you think of anything else people shouldn’t keep in their wallets? Share your thoughts in the comments below.