Best of the week – April 19, 2014

by Bob Snyder on April 19, 2014

Here are some articles that caught my eye this week…

When ‘Liking’ a Brand Online Voids the Right to Sue

Interesting article. Essentially, General Mills and some other brands are instituting  a policy that if you print an online coupon for the product, like them on Facebook or other social media, you are forfeiting your right to sue them in the event there is an issue with their product. You would instead need to go through an arbitration process. I’m not sure what I think about this. I can certainly understand it in our litigation-happy culture. At the same time, it seems like a good way to upset your customers and open a potential land mine of bad PR. What do you think? Leave a comment below.

10 More Top Tips from Our Favorite Personal Finance Bloggers

Good advice on a variety of topics.

Four Simple Ways to Cut Household Expenses

A few minutes of your time could add some needed margin to your finances each month.

3 ways low prices are actually harming consumers

We all know the dangers of high inflation and the damage that can do to our wallet. Did you know though that low inflation rates or even deflation, which is falling prices, can be just as damaging? It may seem counter-intuitive that falling prices would be a bad thing, but a reasonable amount of inflation is actually a part of a healthy economy.

You’re Blocking Your Own Success — Here’s How to Stop

Sometimes it is baggage that we are holding onto that stands in the path of our success. We may just need to learn to let go.

Screaming from the Rooftops: When Insurance Won’t Cover Repairs

With some insurers, the quality of your roof may affect your ability to get home insurance.

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There have been a lot of stories in the news about the latest online security bug, which has been dubbed Heartbleed.

Without diving into too much techno-babble, most secure web sites use a standard security protocol called SSL to encrypt the data that is sent between your computer and the web site that you are logged into. Because the data is encrypted you are protected since even if a hacker were to intercept your information they would not be able to read it.

This Heartbleed bug though opened a door that would allow a hacker to read your encrypted information, potentially stealing your password to your online accounts among other things.strong password

Since financial web sites are among those that commonly use the SSL protocol, you should take steps to make sure you are protected.

What should you do?

First, check the web sites you use for financial accounts and see if they have a statement regarding the bug. They probably do. Not all sites are affected, but many are. If you don’t see anything, contact your institution and make sure they have addressed any issues related to the bug.

Second, now would be a great time to change your passwords for any online services you use. It is a good practice to do this periodically anyway, and especially after a security flaw like this one is revealed.

Third, it is always wise to review your monthly statements for any transactions that you don’t believe you made. It is also a good idea to check your credit report at least once a year. If it has been a while, now would be a great time to do it.

What constitutes a bad password?

Obviously the main point of a password is it should be difficult to guess.

  • Don’t choose easy combinations like “111111″ or “qwerty” or “abcdef”
  • “Password” is never a good choice, nor is it a good idea to make your password the same as your logon id.
  • Don’t use easily guessable words like the name of your spouse or your children, pets, birthdays or anniversaries, where you live, or any other easy to guess facts. As a side note:  be careful what you post in profiles on your social media web sites. Posting items like your birthdate, home town, etc. just makes it easier for a criminal to get information about you.
  • Never leave a password blank even if it is allowed.
  • Avoid common words you could find in a dictionary.
  • Passwords should be complex, but they shouldn’t be so difficult that you have to write them down to remember them.
  • Be careful about using your password on a public computer like at a library or when using a public wi-fi hot spot like at a Starbucks.

Choosing a strong password

So how do you choose a strong password?

  1. Strong passwords should contain a mixture of lowercase and upper case letters. Mix in some numbers. And if you can, use some special characters or symbols like !, @, %, &, etc.
  2. Longer passwords are better. Ideally, your password should be at least 8-12 characters.
  3. Combine two or three totally unrelated words.
  4. One of my favorite suggestions is to base your password after a song lyric or a common phase by taking the first character of each word. For example, “Mary had a little lamb, its fleece was white as snow.” would yield a password of “mhallifwwas”. The beauty of this kind of password is you are almost guaranteed to have a random string of letters that will never spell out a common dictionary word, but it is easy to remember since you know the song or phase on which it is based.
  5. Use a common pattern that only you know, such as always capitalizing the 3rd character or inserting a number or a special character at a certain place in the password.
  6. Sometimes people substitute numbers or symbols for characters that look similar like a “3″ for and “E” or a “0″ (zero) for an O or a “@” for an “a”.
  7. Most security experts recommend that you do not use the same password for everything. That way if one of your accounts was compromised, other accounts would remain secure. There are a couple ways of doing this:
    • One method is to incorporate the name of the website into the password. For example, I might take the first three letters of the web site and insert them somewhere in my password. So my password for Amazon.com would have “ama” somewhere in it, but by password for Ebay.com would have “eba” at that some location.
    • Another alternative is to use password manager software. When you use these products you need only remember a “master” password for the password manager product. The product then generates unique, complex passwords for each of your sites and enters them for you automatically when you go to the site. I have not personally used any of these products so I don’t have a specific recommendation, but PC Magazine recently published The Best Password Managers which reviews a number of the common options.

Take the time to protect yourself

Take the time to choose a strong password for your online accounts. There are no guarantees that your account will never be hacked, but by taking a few simple steps you can make it very difficult for anyone that may be trying to steal your identity.

Additionally, even if you are unlucky enough to be hacked and someone uses your accounts fraudulently, remember you are not responsible for charges made by a criminal who steals your identity.

Don’t allow stories like the ones related to this Heartbleed bug to scare you away from using online accounts. I love the convenience of being able to access my bank accounts and make simple transactions from almost anywhere. It is a wonderful benefit. Just make sure that you take these simple precautions to keep your information safe.

When is the last time you changed your online passwords?

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Hurricanes, market corrections and your investments

by Bob Snyder on April 15, 2014

The last five years have been a great time to own stocks and the market has bounced back and then some from the losses of the great recession. This year so far though has been a bit mediocre as overall stocks have stayed about even. Last Thursday and Friday the market suffered some of its biggest losses in the last two years.

All of this has led to a lot of speculation; the good days are over and we should expect stocks to fall this year as the market corrects itself. So are we headed for a market correction? Was Friday a minor blip and new highs are on the horizon? Time to buy or time to sell?

Storm clouds on the horizon

market correctionsInvesting in stocks is a little like owning a home in Florida. There are many benefits to living in Florida, but one thing you can pretty well guarantee is at some point in time you’ll probably experience a hurricane.

It is much the same when you invest in stocks. No one knows exactly when the next market correction will come, but just like the hurricane, you know it will come.

The question is how do you react?

Weathering the storm

No one wants to live through any hurricane, but not all hurricanes are created equal. A tropical storm or a category 1 hurricane is scary. A major category 5 like Katrina is terrifying.

Market corrections are the same. Sometimes after a sustained run of good returns, the market will go through a small correction and lose a few hundred points before bouncing back. Other times like we saw during the great recession in 2008 it can be much more catastrophic.

Regardless of the strength of the storm, the sun does shine again. Understanding that is the key to weathering the ups and downs of investing. Depending on the strength of the storm, the recovery may be more difficult. In a mild correction your investment may regain its value in a few months. In a category 5 like 2008 it took a few years. But in every case the recovery did happen.

Preparing for the storm

One key to surviving a major storm is preparation: Having a supply of emergency food. Perhaps having a generator in case the power goes out for a while. Some plywood to board up windows and a good battery operated weather radio. Having these things will help you make it through the storm.

By the same token, there are steps you can take to survive the market storms. Make sure you are diversified. If you are invested in one company and that company fails you will be in trouble. If you are invested across a wide variety of companies though chances are you’ll be in much better shape. In fact, some companies actually do better in lean economic times.

Another important key to handling these storms is having the right perspective. Investing should always be done with a long-term perspective. Today the storm clouds may be pretty black, but tomorrow the sun will be shining again. My 401K looked pretty scary in 2008, but in the years since I have recovered all that money and more. Having a long-term perspective means I don’t care what the market is doing today or next week or even this year. I care about what it will be doing over the next 20 or 30 years. With that as my focus the storm clouds of today aren’t quite as threatening.

Don’t panic when the storm hits

When the hurricane winds are blowing is not the time for you to try to make a run to safety. The day after the storm blows through is not the time to decide to sell your house because you can’t take it anymore.

Remember the only people who lost money in the disaster that was the great recession were those that got scared and sold when things were at their worst. Those who hung in there recovered all they lost.

That can be hard to do. I remember in 2008 and 2009, it seemed like every day there was another headline about how the market was collapsing. It was scary. There were times when I wondered should I just try to sell now before I lost any more money. I had confidence though that just as it always had in the past, the market would eventually recover, and that confidence has been rewarded. It takes a degree of courage though to hang in there when everyone around is yelling the sky is falling.

So is 2014 going to be a bumpy year for investors? Maybe. Certainly hasn’t been real great so far. But if there isn’t a correction in 2014, there probably will be one in 2015 or 2016. But regardless of how black the storm clouds get, there will always be sunshine coming on the other side.

Why do people live in places like Florida where hurricanes are a reality? It is because while hurricanes happen, they don’t define the weather. There are far more beautiful sunny days. They live in Florida because while those of us that live in the north are shivering through a polar vortex, they are thinking about putting on a sweater because it might get down to 50.

In the end I believe that one of the best ways to make money over time is by investing little by little in good well-diversified mutual funds. When you do that you can be sure there will be some storms you will have to weather, but over a period of years there will be many more sunny days.

Have you ever regretted an investment decision you made in fear?

Photo credit: Mrs. Gemstone (creative commons)

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Best of the week – April 12, 2014

by Bob Snyder on April 12, 2014

Here are some articles that caught my eye this week…

Get Your Tax Day Freebies and Deals 2014

Here are a bunch of ways you can treat yourself to soften the blow from dealing with the tax man.

My Checklist To Financial Freedom

How many of these items are you doing today? If you are struggling, pick at least one of them and start on it this week.

5 rules for using the Internet after ‘Heartbleed’

You may have heard about the most recent security breach dubbed Heartbleed. This one was a particularly nasty one. If you have online financial accounts, it would be a good idea to verify that they have installed the fixes for this security hole, and if they have, change your passwords just to protect yourself.

10 Money Conversations You Must Have With Your Family

One of the biggest benefits of budgeting is that if done properly it opens the door for many needed conversations with your spouse. This is just one of the areas where you need to learn to communicate if you want to have a great marriage.

Turn Your Closet Into Cash – Selling Used Clothes Online and In Stores

If you need money to start your debt snowball, save for a vacation, or prepare for some other upcoming need, the answer might be in your closet. Most of us have clothes in our closet we haven’t worn in years.

Seven big mistakes couples make in retirement

Probably the biggest mistake that many couples make is not planning for retirement at all.

 

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Should I cash out my retirement account to pay off my debt?

by Bob Snyder April 10, 2014

When people start to realize their debt is a problem, one option that often comes to mind is whether to cash out a retirement account in order to pay off the debt. This can seem like a tempting quick fix. Let’s face it. Paying off debt is hard. It takes discipline and sacrifice. If I have […]

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The moving target of contentment

by Bob Snyder April 8, 2014

“He who is not contented with what he has, would not be contented with what he would like to have.” – Socrates I believe one of the keys to financial success is contentment, but one of the problems with contentment is that it can be a bit of a moving target. No matter what your […]

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Best of the week – April 5, 2014

by Bob Snyder April 5, 2014

Some articles that caught my eye this week… Insurance Policies You Don’t Need  Having the right kinds of insurance (home, auto, health, life) are a critical part of a sound financial plan. But there are a so many kinds of insurance out there and many of them are just a waste of money. Make sure […]

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The discussion you MUST have with your fiance before getting married

by Bob Snyder April 3, 2014

A recent study by the National Foundation for Credit Counseling showed that more than two-thirds of engaged couples were reluctant to discuss financial matters with their fiance prior to marriage. The actual question asked was: If I were getting married, I think that discussing money with my fiance would… Be a necessary, but awkward, conversation […]

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How to ask for a raise

by Bob Snyder April 1, 2014

Many times part of the answer to our financial difficulties is we just need to earn more money. That might mean working some overtime or finding a part-time job. The answer might mean taking some classes or learning some new skills that will help you be able to find a higher paying career. But the […]

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Best of the week – March 29, 2014

by Bob Snyder March 29, 2014

Some articles that caught my eye this week… 107 Ways to Save Your Family Money – BIG TIME!  Super list of links on thebettermom.com site. It includes ways to save on utilities, groceries, vacations, entertainment, clothing, frugal meal planning ideas, and tons of other topics. How Does The Cleanliness of Money Affect Our Spending? There […]

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