Color of Money Live (September 21)

Sep 21, 2017

Join Washington Post nationally syndicated personal finance columnist Michelle Singletary for an online discussion.

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Thanks for joining me today. 

Would love to hear any testimonies. 

Anyway, let's get started.

Hi Michelle, thanks for your chats! I've been reading a lot recently about the Equifax security breach, and just found out about Innovis credit reporting agency. I had never heard of them before! How long have they been around and why are they not included on annualcreditreport.com with the others (Experian/Transunion/Equifax)?

I don't know how long they've been around. It's a minor bureau. And frankly, not sure what they aren't part of the annualcreditreport.com. 

But really most lenders, credit grantors use all or one of the major three. 

However, given the recent breach by Equifax and the possibility that a creditor might use Innovis, can't hurt to get a freeze with this bureau as well. 

How would you prioritize spending money (even going into debt) to save money in the long term? Specifically I'm thinking about making efficiency improvements to my house. Supposedly they'll pay for themselves in 10+ years. Is it worth getting a loan for that?

I've been going through a similar thing myself. I've been looking at putting solar panels on my home. After a lot of research the time period in which I would get a substantial break is like 15 years if we choose to buy the panels, which is what Consumer Reports recommends. So for now we aren't going to do it. 

In my case and yours, I wouldn't borrow to do the improvements. The break even is too long and that's assuming that you took into account any interest on the money you would borrow. 

 

I understand what a credit freeze is and how it works, but I've seen conflicting reports about whether a freeze is permanent unless/until you "unfreeze" it, or does it expire after a time and need to be renewed? I don't plan to apply for new credit anytime soon. Can I just freeze it and forget it, or does it thaw on its own?

 

Read Michelle's column: Equifax has offered free credit monitoring after its epic data breach. Here’s what happened when some people tried to sign up.

Check your state law. In most states a freeze is permanent until you freeze or unfreeze it. In some states the freeze may expire after 7 years from the date of placement. 

But is the arithmetic that straightforward? Suppose the improvements increase the value of the property? Is that a factor? Suppose they just make the house more comfortable while you're living in it? Is the break-even point the only thing that matters?

There is a lot to consider when borrowing to pay for improvements. Sure some improvements "may" increase the value of your home but not always and it always depends on the market. You could for example add another bedroom or update your kitchen. But if the homes in your area of selling for a certain price, your improvements might not make a difference. 

If it's a matter of making the home more comfortable than definitely save not borrow for the improvements. 

People are always asking me permission to go into debt and then try to justify it by any means necessary. 

If you're roof is about to cave in and the only way to fix it and stop more major damage is to borrow or tap home equity, I can give a pass.

Otherwise, save for what you want to do. 

With Equifax being an epic failure in it's response, why aren't financial institutions and credit card companies coming forward and saying they will not use Equifax any longer? Assuming they are behind the scenes, I have not seen any reporting on how difficult it has been to get a freeze at the other two credit bureaus. Is it? or is it just as difficult as at Equifax?

What companies coming out in favor of what's best for consumers? 

Hush your mouth!

Not. Going. To. Happen.

The lenders have invested WAY too much money in their systems to overall just to help us out. 

There should be pressure but I haven't heard of any. 

As for getting a freeze, I'm hearing from folks everyday about how hard it is because everybody and their mama is trying in the wake of the Equifax breach. So all the bureaus are saying they are having trouble accommodating all the requests.

Thank you for your coverage of the Equifax fiasco. You definitely prompted me to place a credit freeze across all three agencies since Equifax indicated that my information may have been compromised. The freeze raised a question, though. I won't be needing to have any credit checks done in the near future, but it's only a matter of time before I need it. When I unfreeze credit, do I have to do it across all three entities, or can I just unfreeze one? It seems like a hassle to have to contact all three agencies if I want to apply for a credit card or maybe refinance a mortgage in a couple of years. Thanks again for all you do.

Good question. One being asked by a lot of folks.

If you are getting credit and the lender knows it is only going to use one bureau than you only need to lift the freeze with that bureau. But often they don't know or won't tell you at the point of the credit application. In this case you'll have to lift the freeze at all three bureaus. 

Folks this is why Congress needs to step in. We need

-- Free locking and locking of our credit files.

-- Lenders should have to tell us which bureau they are using

-- Unlimited access to our credit files, not just once every 12 months. This way you wouldn't have to get credit monitoring because you could do it yourself as often as you like. 

During a call to my health insurance company the other day to ask about an unrelated claim, I found out that on September 5th they processed a bill submitted by a company I'd never heard of for "durable medical equipment" supposedly related to surgery I had on 22 June. I have already suffered weeks of anxiety and sleepless nights worrying about when the next bill is going to come and how much it will be. Now, more than two months after the date of surgery, I'm told I can expect a big bill from a company I've never heard of for equipment I never saw and certainly did not get to bring home. Leaving aside the issue of whether the bill is legitimate (and refraining from rants about other aspects of our medical system), shouldn't all providers have to submit a first bill/claim within some reasonable period -- 30 or 45 or 60 days? For how long do I have to worry that new bills/claims will be submitted?

I honestly don't know the answer to your question. 

 

Does anyone?

But I will say this. Fight every bill you think is in error!

 

So I freoze my credit many years ago and had no issues unfreezing (you need to keep the code they give you and you can just call a temp lift) and while I was charged $10 to do the intial freeze, the lifting the freeze has never cost me anything (I think this is a Virginia law). One question I have is about Innovis? I never heard of it, but the link you had in your article noted it as one of the four credit bureaus including that, but I always that there were just three: Transunion, Experian & Equifax. Do I need to freeze my credit at Innovis too?

There are more than the big three. Innovis is a smaller player. And if you want to be super duper safe, sure freeze it there too. 

And you are right, you pay to place the freeze in Va. ($10) but you aren't charged to lift it. 

Rules vary according to state law. 

TransUnion has a great chart to help you see what's what. Link here. 

Hi, Michelle. Thanks for providing great advice on all financial matters! In last week's chat you mentioned not using your debit card very much. I've also been reading and trying to follow the advice of another prominent personal finance writer who recommends that people get rid of all credit cards and only use debit for everything. I definitely understand the risks of using your debit card should the card or number be stolen. But on the other hand, I also completely understand only spending your actual money you have and not using credit (even if you pay it off monthly). Should I really stop using my debit card? FWIW, I didn't cut up my credit cards. I still use one for things like plane tickets and hotel reservations, plus the times when I really don't feel comfortable using my debit card somewhere. Thanks.

Well Dave Ramsey recommends not using any credit cards and only using your debit card for purchases.

I totally get it and agree with him up to a point. 

I use credit cards. I find them as a layer of protection between my purchases and direct access to my bank account.

When I has a dispute with a retailer I can get the credit card company to reverse the charge while we work out the dispute.

With my debit, once I authorize a payment, I have to fight to get my money back. And I've been helping a relative who approved a small fee ($5.95) but the unscrupulous company took like $95 saying she had signed up for a monthly subscription. (She had not or at least not willingly). Because she authorized the vendor to take the smaller fee and couldn't prove she hadn't signed up for the subscription the bank wouldn't budge.)

I just want to limit the access electronically or otherwise to the money in my checking account.

Now what you could do if you want to go the debit card only route is set up a second accord to pay for retail stuff and keep that money separate from your bigger household account where you pay your mortgage/rent, etc. 

The birth of my first grandchild has piqued my interested in the subject. The little I have read so far tells me I need to do a LOT more research before helping my daughter set up the account. At this point, I don't even know what I don't know! Can you or one of the chatters direct me someplace where I can get smart on the subject?

It's not really that hard or deep.

Go to savingforcollege.com. It's a great site with all things 529.

But here's my advice, put the account in your name with the beneficiary as your grandchild. If you live in a state that offered a state tax deduction AND the financial company running that state's 529 has a good track record and low fees, go with the 529 plan in your state. 

Otherwise, with no tax deduction and a sucky plan, you can put money in any state 529 investment plan. And no, it does not limit where you grandchild can go to school. 

Michelle: Would you recommend locking up your credit via LifeLock instead of directly with Equifax or the the other two credit reporting companies? Just to ensure that your credit is truly all locked up. TY. Peter in SoCal.

Okay, so I try not to comment directly on a specific investment choice or company.

But me, I don't see the point of paying a monthly fee FOREVER when you don't get credit every month.

Get the freeze and unfreeze when you need credit or for some company to have access to your files. Generally the fee to freeze is about $10 and depending on the state another 10 to unlock and maybe $10 to lock it again. So yes, that's $30 (at one bureau) but a heck of a lot cheaper than $20 a month for a year. 

But again this is why EVERYONE  of you on this chat needs to contact your congressional representative and ask for free freezing. It's only fair. They keep getting our data stolen, it's the least these companies should do to help us protect ourselves. 

Or petition your state legislatures to do with say Virginia did. You pay the one-time fee to lock and then you can lock an unlock as needed. 

Credit bureaus make their money gathering and selling our information to lenders. Could you imagine an alternative business model, where maybe WE would pay a fee to the credit bureau to provide our credit report to lenders when WE ask them to? That would make US the customer, and the credit bureaus would be responsible to US for managing and protecting our data properly.

From your mouth to the ears of Congress!

 

But with the money involved I don't think this is going to happen. 

So for now, we need to fight for better disclosure and rights.

Read this column and act:  After massive Equifax breach, let’s make it free to freeze your credit


I got on today to enroll in their free monitoring and on the enrollment page it lists all these great things it will do for you BUT in the fine print in the terms of use that you have to agree to it really only says it's obligated to check one of the credit agencies and since TrustedID is owned by Equifax we all know which one it will check. The terms-of-use say nothing about searching suspicious websites for your SSN and it specifically says it will not check agencies to see if someone else is using your SSN or notify you if they happen to notice. So tell me again why I should sign up for their free monitoring, which requires me to give them my mobile phone#, something I don't hand out freely on applications or websites. Note I had freezes in place at all 3 before this happened and did Innovis today after reading here.

With freezes on all three, I think you are good. 

And like you I try NOT to give out my cell too. 

But with two factor authentication being a thing you have to do and me not being near my home phone as much as I have my cell, I'm finding I have to give up my cell more and more. 

Man, I'm getting heated writing this!!!

We have lost control of our data often through no fault of our own. And now we have to have dings, alerts and sleepless nights wondering if someone is going to steal out good name. 

 

Probably answered many times before but I just found out about your chat. I signed up for the TrustedID Premier from Equifax which said I will receive an email with a link to finalize and activate it in a few days. Does this count as a credit freeze with Equifax or do I have to do that in addition?

If you haven't gotten the email to finalize your enrollment you don't have a freeze.

You can do a freeze separate from the enrollment but I'm hearing from folks they are having trouble getting even that. 

Some people have been successful. Others not. 

Me, I'm still waiting for the email -- 8 days in. 

And you have to put a freeze on all three bureaus. Putting a freeze on one does not put it on the other two or three is you add in Innovis. 

(1) water heater develops a leak. (2) replace water heater. (3) pay bill in full from life happens fund. Oh - maybe there is a step 4 - no worries about payments drawn out over time.

All praises to the life happens fund!!!

For those not in the know. The life happens fund is different from your emergency fund, which you should reserve for say losing your job.

Life happens is an in and out account -- money going in and out as needed -- when life happens like a water heating developing a link.

OR your kid drops her Mac laptop and calls crying because she has a grad paper due that day. 

OK, Michelle, I'm with you on forsaking "investment" in favor of paying off debt, but, man, I'm awfully tempted right now. Just bought a new car (mine died for good, but a few months early, at 15 years) and took out a loan as I am waiting for a small inheritance that will materialize before the end of the year and I always intended to pay for the car. But the loan I got for the car is .9%, and I could use at least part of the inheritance to allow me to divert more of my pay into my 401(k) at 4, 5, or 6% (last few years). Awfully tempting! But I hate debt!

Channel the "I hate debt" part of you and just be done with it. Then take what you would have pay for loan, even at a low, low rate and invest. 

It's a philosophy and way of life I know. 

But one I embrace fully. 

Like I say, "If debt were a person, I would slap it." 

Hi Michelle, wife and I have carried debt for a long time, committed to a budget for over a half year, and significantly increased our incomes (~$1000 extra) per month. So, based on various figures we can be out of CC from anywhere from two to 3 years... but trying to balance the payoff, with savings (have life happens $1,500), with maintaining the home (bathroom had leaks - fixed, but need to drywall, replace tiles, etc.). How should we balance these priorities? Any thoughts on reasonable payoff schedules for high level of debt (70K, we know), i.e. ASAP, 2 years, etc.? Thanks

Once you reach the life happens goal, put all extra money on the debt payoff. And this might mean not replacing the tiles for awhile. List the debts from the smallest to the largest and attack, attack, attack. With that level of debt, I would want it gone at all costs, even if it means looking at an ugly wall. 

Whenever we have checked into solar panels, we can't justify them as our electric bill isn't all that much higher than a few years ago. We keep the temps in summer at 77/74. We did buy insulated metal exterior doors which has made a difference in the bills and we do have double pane storm windows along with attic insulation which could be increased but we haven't done so. We're retired and did get a contract for electric that gives us the same rates summer and winter which we like since we're home all day.

The numbers, like you, didn't work for me. At least not now.

If you freeze your credit report, and then need to unfreeze it, how does that work? Can you make it available to just one lender? Or does it lift for a specified period of time and freeze automatically? Or does it remain open until you freeze it again?

Depending on the state, you can lift it for just one lender. And you may also be able to specify how long the lift is or just freeze back when you're done apply for whatever you are applying for. 

The thing is it will take a little work. But for your peace of mind it may be worth it.

And frankly, if you've been the victim of identity theft do it. And in every state I could see freezing would be free. 

Hi Michelle, I realize you don't get questions like this usually, but I hope you can help! We are fortunate enough to have $1M in savings from a prior inheritance. 15 years from now, we will receive an additional $2M (today's dollars). We are in our mid-30s with four young kids. We are outgrowing our house and am wondering if it would be a good decision to use half of our savings to buy a bigger house, knowing there will be an inheritance in the future. Our cash flow is steady so no concerns there. Thanks for your help.

I would just the money to buy the house outright. 

As you note, credit cards have far stronger consumer protections than debit cards. And unlike a credit card, a debit card transaction takes the money directly from your account immediately and you have to fight to get it back if there's a problem. Your account could even be emptied by fraudsters. But what do you think of debit cards that are not linked to a bank account? There are prepaid debit cards (some with big fees, but others that are reasonable) that only draw on the money you provide. Could they be a cash management tool? You could deposit every month the money you need for that month's basic expenses, and pay with that card. Money for all other purchases would have to come from somewhere else, which would at least make you think before you buy on impulse.

Yes, I do think that's a good strategy to have a separate prepaid or debit card devoted to shopping or that would give a company limited access to your main funds. 

It's interesting that you don't give your cell number out easily. I try not to give my LANDLINE to anybody. The landline is linked to my address and other identifying information, and it's where my friends and family call me. Changing it would be fairly disruptive. But a cell number is more anonymous and easier to change. I give it out first. Am I wrong?

If that works for you, that's fine. The point is you're thinking about how to limit access. 

Is the credit report lock offered by TrustID for the Equifax breach the same as a credit freeze? I have a freeze already but the fine print in TrustID terms says when your subscription ends it will lift the lock. Is that going to lift my credit freeze? I don't care about the credit report lock if I have the freeze in place.

Equifax says you can't have a lock and a freeze. 

Stick with the freeze. 

I just want to put a plug in here for protecting your credit. I work for a financial institution in fraud and money laundering. Watch your stuff and contact us quickly. It's to our benefit to help you. (and bank with a community bank ;) we're nicer.) Second, i have been extremely ill over the last two months--sleeping 12-18 hours a day, passing out, and other various problems. Gratefully my employer has allowed me to work from home, flex my hours, and take care of myself during this time. My husband lost his job (and our insurance) just before I got ill. I have never been more grateful for my emergency savings and frugal lifestyle. We made minor adjustments to live on my salary alone (mostly ceasing our savings for a home down-payment) are frustrated but able to pay my 5,000 and increasing medical bills. It has been a very hard time, but I feel extraordinarily lucky that the financial concerns are painful, but not devastating. That my employer is flexible--and I don't have to take disability-- and that I have the support of friends, family, church, and husband to make it through this time--not to mention unemployment compensation--which while small, has been extremely helpful. Husband just got a field-relevant part time job that has the potential to turn into full time. He's still available to help my ill self and has helped make the financial future a little less painful. We had enough funds to finally buy the couch and table we've been saving for for over two years (newlyweds) in cash, manage our medical bills, and only go negative in funds for medical and furnishings. THanks for all of your advice about save save save save save. It's so important.

Thank you for your testimony! I'm so sorry you are ill but grateful that you have a cushion. 

 

So much talk about freezing credit .. which is a great way to stop identity thieves, but in terms of a large scale data breach, doesn't everyone realize that the next breach will INCLUDE the info necessary to unfreeze your credit?? I'm not saying don't do it ... it's the best defense right now, but it's hardly the solution to these large scale breaches!!

You are so right on the money!!!

Just an FYI that none of my 3 federal representatives in Washington for the state of Maryland have anything on their websites about efforts to introduce legislation to further regulate the credit agencies. Where are their priorities?!

Good question. Ask them. All of them. 

If I don't plan to take out any more loans? (I'm 62)

Given the breach I would consider a freeze on all your files. 

Thank you all for participating in the today's chat.

If you have any other questions, especially about Equifax or you have an experience with the breach that could help others please email me at colorofmoney@washpost.com.

I plan on writing a lot more about this. Can't handle all the questions in one column so taking the issues little by little. 

I'm way next week but back the first week in October. 

 

In This Chat
Michelle Singletary
Michelle Singletary writes the nationally syndicated personal finance column, "The Color of Money," which appears in The Post on Wednesday and Sunday and is carried in more than 120 newspapers.

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