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The Cost of Kids

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I am a member of USAA. If you have not heard of USAA, they are an organization for those who have served or serve in the armed forces. In order to be able to take advantage of the benefits you must be a veteran or active duty armed service member to qualify for membership. Or if you are the spouse or child of a member you can become a member. This is how I became a member and I have already signed up my kids so they can benefit as well. I get their magazine in the mail and most of the articles are written for military families. However, there is more general financial advice and USAA offers everything from credit cards to savings accounts. In the Spring 2012 edition they did a multiple page write-up on relationships and money, from dating to being married with kids. I could relate to much of what was written because I have been married, divorced and have two beautiful kids I am raising. So it goes without saying that I am very familiar with the costs of children. In the article there is a chart and it lists the cost of raising a kid at $226,920. This number is based a single child born in 2010 for 18 years but not including any college expenses. A second number that is fairly eye popping but not so much of a surprise for me. According to the article the cost of feeding a family of four is $1014. This explains why families are probably feeling the current food inflation more than those who do not have children. Shopping at a wholesale club like BJs has definitely helped cut down my food expenses. Also, being more selective in choosing foods that are on sale or a better value, such as brand foods versus generic foods. That is a significant amount of money, and if you are like me with two or more kids, well you may need to sit down for a minute. I have to tell you though you cannot put a cost on the rewards of having children. However, seeing this number in black and white does remind me that it is important to be smart with money. Make sure you are putting money away for a rainy day and try to stay away from debt. Create a budget and have money put into savings automatically to cover the doctor bills, field trips, and anything else that may spring up along the journey. ~Good luck! Matt

Visa Network Temporary Outage and Global Payment Security Breach Update

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Global Payments has released an update saying that only one and a half million people were affected. The frustrating thing is as a consumer they try to make this sound like it is good news. We are supposed to feel better when they have not said how or where the breach occurred. So again a company that has access to our personal information, social security numbers and credit card numbers, fails to protect that data.

In the article Global Payment states that only credit card numbers were taken not names or social security numbers. This means the hackers are able to create bogus credit cards with the stolen numbers to make fraudulent purchases. As a consumer this does not make me feel better because now I need to monitor my credit cards, also what happens if there is an emergency and you go to make a payment but someone fraudulently maxed out your credit line.

This further reinforces that you should check your credit card statements monthly. You should also setup alerts for moderate to large purchases. Most credit cards have this option available online. You can also register your accounts with a service like mint.com, which allows you to setup alerts for your accounts. I hope that you were not affected, myself included. Oh, and maybe someday this country will enforce stricter protections on our personal information.

~Matt

Visa Network Temporary Outage and Global Payment Security Breach

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I was hanging out with the kids and decided I would stop and get them a treat. Thought it would be a nice treat and they had been behaving so well that day. I went to pay with my debit visa and the girl seemed to be taking awhile to run the card. Now I am a bit paranoid when it comes to identity theft and the possibility of someone stealing my data or money. Not to where I am doing anything extreme but I have a healthy respect for how easy it is for someone to commit fraud. Especially being in the technology field and knowing how smart some of these people are that are hacking various systems where the information is stored.

Eventually she came back and told me the card was not working. I found this to be alarming because I have the mint.com app installed on my iPhone so I can ensure that my checking account is adequately funded. So I gave her the cash, rare as I usually do not carry any. And immediately opened the app to check my balance to find everything was kosher. Being the nerd that I am, i came home to check to see if there was an outage and found this article. Thankfully I was able to put my mind at ease since this clarified that the issue was indeed a technical one. However, the article mentioned something that I had not heard about. Apparently in early March of this year there was a security breach at a company called Global Payments, a credit card processing company.

When originally reported the article stated that there could be ten million plus card holders affected. A couple concerns I wanted to share came from this and am interested in what others may think as well. If this companys' function is to process transactions then why do they need my social security number and other specifics of my identity. The second issue is that when there is a breach why are they not obligated to alert card holders immediately. If an employee at Global Payments is stealing or damaging the company would they wait a month to address the issue. Of course not so why do these companies not have a fiduciary duty to notify people when there is a breach. I could give a blank about your share price, why is it in this country everyone owns our information but us. 

People say use cash which may help because maybe there are less places your data is stored but as long as our social security number is allowed to be used by everyone other than the government for tax and identity purposes, then identity fraud will continue to flourish. It is cheaper for companies to set reserves aside to deal with security breaches when they occur then to take more proactive measures to prevent them initially. Or the government could pass legislation that prevents companies from selling your information and allowing them to only use it for its intended purpose such as applying for a loan. They will not do this though because the lobbyist will continue to pay off the government for their own gain.

The only conclusion remains that you are responsible for protecting yourself. Do what you can to protect your identity? Nothing is guaranteed but there are things you can do to minimize opportunity and in the event soemthing happens, the damages.

1. Shred any documents with a confetti shredder that contain personal information.
2. Get your statements delivered electronically. This has an added bonus of "being green".
3. If you have a smartphone, use an app like Mint to track your account balances and set up alerts for purchases.
4. Check your credit report using annualcreditreport.com . You are allowed one report from each agency per year so check one agency every four months. This way you can monitor your credit report through the year for any suspicious credit lines.

~Matt

Firstrade Low Fee Discount Brokerage Firm

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When it comes to building wealth minimizing the amount of fees, interest, etcetera that you pay is important. The more you keep, the more there is to grow, the faster it will build. I have been using Firstrade for several years now and have been very happy with their site and service. Best of all when it comes to normal stock trades they only charge $6.95. This is cheaper than Scottrade ( $7.95 ), Schwab ( $8.95 ), etrade ( $9.99 ), as well as other major firms. Some of these offer better values if you trade frequently but this article is more for the buy and hold readers.

In addition to their low trade fees, they also offer a basket of ETFs that you can buy without paying the transaction fee. And to complete the trifecta of free, they offer a basket of No Load NTF mutual funds, which means there is no cost to buy or sell the funds. However, an expense fee will still apply as is customary with mutual funds so always read the prospectus before making your finally decision.

Here is an image of the Research and Tools section. I think it what you get for free without having to make a minimum amount of trades or monthly fee is comprehensive.

Firstrade Screenshot

The last two things that I like about Firstrade is that they have an iPhone app which is very clean and easy to use. And I when I need to get in touch with customer support I have always had a very positive experience whether through the online chat or calling the support number. As always please do your own research and speak to a professional when necessary before making financial decisions as this is strictly for information purposes only.

Thank you,
Matt

The IRS - The Government is Doing Their Share to Get Your Identity Stolen

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So if you have been following my blog you will know that most of the articles I write are from my own experience, readings, research, etc. Well this one is from my own experience. I am hoping to raise awareness and maybe our government will make changes but in light of precedence, I am not holding my breath. In the United States, we have the infamous Social Security number. This number is used to identify us to the government but also links us to our credit history and practically all things finance related in our lives.

Losses from stolen identities continue to grow and that is just the quantifiable damage. Forget the hours lost fighting and repairing your credit and identity. The FTC has a document called the Sentinel Annual Report, which is a comprehensive report of fraud and identity theft statistics. This can be downloaded here: FTC SENTINEL REPORT From 2010 to 2011 the FTC reports an increase of 28,051 complaints or ten percent. Remember this is only the reported incidents many go unreported.

As you can see identity theft is a growing problem. However, you would not think our own government would be creating opportunity. How are they doing this? Well I have mentioned two ways already above, allowing the social security number to be used for everything instead of just for tax purposes and government benefits as it was intended, and by not having stricter consumer laws to protect gathering, sharing and selling of OUR information. The third way was made apparent to me this year.

I received a correspondence from the IRS. On the envelope it was clearly labeled, Internal Revenue Services. Inside were documents, most of which had my complete SS# and current name and address. Had someone decided to take this or open it he would have had the most important pieces of my identity. The only thing they would be missing is my drivers license number and my picture. The latter, which they could get from my Linked In profile. In addition, from what I have read not having my drivers license would probably not be much of a hurdle.

So if anyone from the Government happens to stumble upon this article please have the IRS send documents in a plain white envelope and not have my complete SS# plastered on all the contents. I know what my SS# is and you do because you sent me the documents. It is like giving your keys to a car thief. While you are reading this, maybe change the laws to protect my privacy better as well.

~Matt

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