Trick…or Treat? Money Trends to Be Aware Of

By JJ Montanaro, CERTIFIED FINANCIAL PLANNER™

| Photographs By Zing Images

The cool winds of fall remind me that it’s time to dig into my personal finance bag of tricks and treats to help you steer clear of scary money problems.

Tricks

Account takeovers. Costume parties aren’t the only places where alternate identities lurk. Crooks disguised as you can steal your identity and sneak into your online assets before you can say, “Boo!” These account takeovers surged 31% last year, affecting a record 15.4 million Americans, according to Javelin Strategy & Research’s 2017 Identity Fraud Study.

How can you protect yourself?

  • Check your credit report at least quarterly.
  • Safeguard your personal data, usernames and passwords by shredding or safely storing the information.
  • Avoid use of public Wi-Fi to access online accounts or sites.
  • Vigilantly monitor your accounts.

While you probably don’t check your long-term investments daily, you may need to adopt a vigilant approach with your bank and credit accounts. If you see any discrepancies, notify your financial institution.

Credit card debt. Americans are ringing up credit card debt at an unprecedented pace.This summer the Federal Reserve reported an 8.75% increase of this type of debt over the same time last year. And for the first time since the end of 2007, revolving debt such as credit card debt eclipsed $1 trillion. Don’t fall into this dangerous trap. Develop a plan to knock out your debt and get help if you need it.

Car loans. After encountering a dozen or so ghosts and ghouls on Halloween, you can become numb to the spectacle. That’s how I feel about the length of car loans. They seem to keep getting longer. Experian’s State of the Automotive Finance Market (Q1, 2017) put the average new-car loan length at 69 months —almost six years. If you can’t afford the car you want with a loan of 60 months or less, look for a more affordable option.

Treats

Wages are growing. This is like reaching into your goody bag and finding all your favorite treats. The Atlanta Federal Reserve’s Wage Growth Tracker put wage growth for people ages 16-24 at a year-over-year clip of 7.5%; for ages 25-54, it’s 3.8%. While a bigger salary can mean a better lifestyle, it also can help you pay down debt, build savings and invest for the future.

Savings rates eclipse 5%. Americans saved 5.5% of disposable income in May, according to a report from the Bureau of Economic Analysis. Although that’s far below the 10% USAA recommends folks sock away early in their careers, I still think this belongs in the “treat” category. Under the military’s new Blended Retirement System in 2018, participants will need to put at least 5% into the Thrift Savings Plan to receive the maximum government contribution. So, while 5% shouldn’t be your goal, it should be the minimum if you’re part of the BRS.

Credit scores on the rise. FICO reported in April that the average credit score hit 700. This is a decidedly good trend. But don’t let it lull you into a false sense of security. Just because you can borrow doesn’t mean you should. After carefully reviewing your finances, make borrowing decisions in the context of what you know makes sense — not what some financial institution offers.

 


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Safety guidelines are not intended to be all inclusive, but are provided for your consideration. Please use your own judgment to determine what safety features/procedures should be used in each unique situation.

Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER TM in the United States, which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.