Color of Money Live: Securing your accounts after the Equifax breach

Oct 12, 2017

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It's just you and me today.

I'm ready for your money questions.

And where are my testimonies? Have you gotten out of debt lately? Solved a financial crisis? If so, I want to hear from you. 

Did one of my answers help you? Tell me about it. 

Anyway, let's get started. 

So what do you think of the Equifax data breach? Are you worried? What have you been doing to protect yourself?

Little technical difficulty. Hope to start soon. So sorry.

I carefully track my spending in mint.com, have $590,000 in retirement savings (plus I'll get a federal FERS pension), automatically pay my 2% cash back credit card in full each month, keep cars for at 12 years (and always cash for a new or "new to me" next one), pack my lunch, always take advantage of happy hours when out with friends, always save for my yearly travel and skiing (which are my only indulgences)... Due to all this, I've never done your financial fast. However, I recently experimented by using just cash to buy things for one month. It was definitely harder to spend and I did spend less - I would strongly recommend cash only spending if one is trying to cut down spending. However, I found it really hard to do things like get a second glass of $5 Happy Hour wine when I was having a good time with my friends. I was buying cheap cheese instead of the French cheese I love for cheese and crackers I enjoy at home a few times a week. In short, for me, using cash changed me from "good frugalness" to stingy. I now know never to try to do mostly cash spending on vacations, which my best friend and traveling partner prefers due to fraud concerns. Since she and I are leaving for South Africa in two weeks, I'm glad I know that. Different strokes for different folks!

I can see where you are coming from. But you actually proved my point about why a financial fast works. 

It made you think about what you were spending. And that's the major point. Lots of folks just spend without thinking.

In your case, you realized that it was worth it for you to have that extra glass of wine or good cheese. I'm okay with that. 

In fact, I joke that if after the fast you realize you really love coffee from the shop, get it, especially if it will keep you from slapping your co-worker. 

The point is spend on what you really value. Cut out everything else. 

Michelle, My husband and I would like to sell our house and buy a new one. We have decent equity in our current house, and we planned to use the sale proceeds for the down payment on the new house. We are thinking about taking out a home equity loan for (in theory) a few months so that we would have cash to make a non-contingent offer on a new house before selling our current house. Do you have an opinion on this?

So you are asking me if I agree you should take out more debt on your home before you sell?

I wouldn't. If you don't have the cash for the offer, perhaps you aren't ready to sell yet. 

Save what you need before you start looking. 

what radio station is this chat on? I can't find it on the AM dial. Thanks.

So the chat is a text chat. And if you sent in this question yo are in the right place. You write a question to me. I write an answer back. 

I'm dealing with a house fire caused by a plumber and my homeowners insurance sent me a non-renewal notice last week because I had two claims in three years (I live in Virginia). I immediately called up my insurance agent and had them contact the underwriter department of the insurance company to ask them to reconsider owning to the fact that the fire claim will be reimbursed by the plumber's insurance, that I've been a good customer with them for 13 years and I have excellent credit. I sweated it out over the weekend but got the word this week that they reconsidered due to what I had politely pointed out to them. Sure they are dinging me an extra thousand on the premium but the alternative of my mortgage company force placing insurance would have been more expensive. So folks it pays to push back when big business tries this stuff!

Love this testimony. Thanks for sharing.

My philosophy: It never hurts to ask. 

I had given up on the credit freezes because either the sites were too slow or one of them wanted to charge $5, and I had a feeling that that wouldn't last....sure enough, I used your newsletter links today and froze my credit at ALL the agencies, for free, in about 10 minutes! I'm going to post the links on social media, too!

You are so welcome. And glad you subscribe to the newsletter.

For folks who ran into trouble getting a freeze might be better now. All the bureaus said they had a backlog, but hopefully it's clearing now. 

 

But keep in mind you might have to pay for a freeze at least at TransUnion and Experian. It's free for Equifax until next Jan. 

First, it's pretty ridiculous that WE HAVE TO PAY to have our credit frozen in the first place. This needs to change immediately. Second, it is not completely simple to just freeze your accounts. I spent the better part of a morning contacting each credit agency to freeze my accounts and then all over again to freeze my wife's accounts. One agency asked questions to confirm identity (to freeze an account?) that were so vague that I failed to prove that I was me. I had to email proof of my identity before they would freeze the account. In the meantime, a scammer could have been out there using my exposed information to rack up charges. We need reform and we need it now. I've written to my congressman, but EVERYONE needs to write their congressperson. Collectively, we, the people who are the potential victims of identity fraud, need to make our voices heard to the politicians so they know we are serious about this and we will hold them responsible to make sure it doesn't happen again.

I totally agree with you. And I've written as much. We need to advocate for ourselves. 

A credit (security) freeze should be free to all. They can't protect our data. Fine. Then allow us to freeze our information for free any time we want!!! 

I'm aware of income limits for Roth IRAs. I (hopefully) anticipate that in a few years, my income will exceed this limit. At that point, do I have to transfer the IRA, or can it sit without additional contributions?

Once you hit the income limit, you can't contribute to the ROTH. 

Now there is a backdoor way to contribute. You put money in a regular IRA and then convert it to a ROTH but you have to pay the taxes upfront. 

I'm not a fan of the backdoor way to contribute to a ROTH. But do a search for IRA conversation to ROTH to see if it's right for you. It's best if you don't have to use any of the IRA money to pay for the taxes. If you do, it's not a wise move generally. 

to keep someone else from doing it. I get the mailed notifications from Social Security once a year (telling me what my monthly benefit will be at various retirement ages. Does that mean my account is set up? I honestly don't remember how long I have been getting these, but it is years. Also, if someone tried to claim disability benefits on my SS number, wouldn't the administration reject it for now since I am employed and they receive the SS taxes from my paycheck regularly? That would be a clear indicator that I am not disabled enough to qualify for benefits even if something had recently happened to me.

 

Read Michelle's column: If you expect to get Social Security, this is the one thing to do in the aftermath of the Equifax breach

You used to get the statements mailed. Unless you are 60 and not receiving benefits you will not get a mailed statement. 

You have to set up an online account to get the statement.

And you are right, an identity thief might not be able to set up an account now. But hackers are patient and they could do it just before you are eligible. 

I'm not taking any chances. 

Hi Michelle - I tried to set up a "my social security" account online but the system wouldn't allow me to do so. It asked me questions about a car loan in a time period when I didn't have one... could that be why? Also, my son (age 19 with limited work history) tried to set one up and the site wouldn't allow him either. Any suggestions? Thanks!

SSA uses information in your credit file to verify who you say you are. So a few things could have happened

-- You are right and the information in the file is wrong (Ironically they use Equifax)

-- You have a security freeze on your Equifax file, which means SSA can't access to verify the information. Although since they pulled the question about the car, you probably don't have a freeze

-- Your memory could be wrong. I have trouble remembering when I actually took out a loan. For example, I always remembered my home loan as a different date. But that's because I built my home. Took out the loan before I moved in so I get the two confused

As for your son, if he doesn't have much of a credit history there isn't enough in his file for SSA to pull to verify his identity.

But you both can go to a local SSA office and create an account. Online is easier but you can go to the local office and do it. Click the link in the previous question to find a local office. 

Hello. I need some help determining how to respond to my husband’s need to buy a new car. Overall, we are very careful with our money (no student loan or credit card debt, son’s 429 fully funded, lots of savings, etc.). However, my husband has an occasional need to splurge – where I generally make more frugal choices. Our current car is only two years old, but he wants to replace it. He now prefers to have a car payment ‘in perpetuity’, in exchange for always having a relatively new car. To support his position, he does most of the driving (I take metro to work), he just wants another sedan, and we can afford the payment. I just don’t like spending the money. How do we resolve this issue?

Let me talk to him!

His logic is so crazy. Why oh why would he want to be in debt forever for a car, an asset that loses a great deal of value the moment you drive it off the lot. 

So, my husband and I have a "House Rules" around these type of decisions. One is "It takes two yeses and one no." 

Meaning it would take both of us agreeing to buy the car. If one objects, it can't be done. Period.

I suggest you adopt this rule. 

Another: Neither of us can spend more than $200 without consulting each other. And referring back to the 2 yeses and 1 no rule. 

You can also tell him he can get the new car AFTER you've saved for it. So pay off the current car. Keep making a car payment to yourself. In four or five years, he'll have the cash to buy another car. 

OR how about telling him how much more money you'll have for your child's 529 plan or retirement or paying off your home early if you didn't sink so much money into an non appreciating asset! 

If you still doesn't buy it and you live in the DMV area, come to the monthly financial classes I teach. I'll straighten him out pronto!

After the Equifax hack I got a credit report, issued a 90 day fraud alert, and froze my credit reports from all 4 agencies. Then I helped my husband and my three (adult) sons do the same. I have got stuck with the youngest son (20yrs old) who has no credit cards or student loans. He does not appear to have a record with any of the credit reporting agencies. Equifax say it is unlikely he was hacked. However, now I have submitted all his information to the credit reporting agencies whilst trying to issue the freeze, and his summer job employer had all the employee information stolen last year, so I am anxious to prevent anyone getting credit in his name. How do I do this?

If your son has a file, you may have to have him mail in his information to freeze his credit files. 

Short of that, I'm not sure what you an do if he doesn't have a file at all. I wouldn't feel pressure to open credit just to get a freeze. 

At the very least have him sign up for the free credit monitoring Equifax is offering to everyone, even if you weren't impacted by the data breach. 

I'm planning to buy a unit in a co-op building and will reside in it as my principal residence for many years (hopefully). I'm not viewing it as an investment but wonder if it is likely to appreciate in value as much as a condominium. What do you think of co-ops vs. condos?

My first home was a condo. Loved it at the time. Hated it by the time I had to sell. Had a lot of problems because a lot of owners were behind in their condo fees, which impacted the ability of a new buyer to get a loan. You have to make sure the condo-co-opt doesn't have too many renters, which could also impact a buyer getting a loan.

Look at the rate of increase for the condo/co-op fees and special assessments. 

I can't tell you if the property will appreciate. Talk to a realtor. Talk to the folks living there. Like a lot of real estate, it depends.

I’m a single woman making a good salary and renting in DC area. It took a while to get where I am so I can forgive myself for not having more in the bank but I can’t forgive myself for not knowing how to say no. This could be for anything - dinner out, girls weekends, family stuff, anything. Every few years I buckle down and eat more at home, take less trips, but I always end up in the same bad spot financially. I read you all the time so I know about the importance of the emergency and life happens funds. I have small ones of both and I am striving to grown them more. In the meantime I am wondering is if there are any books that focus on the psychological habits of trying to change one’s financial ways. I am worried I will be in this cycle forever and one day something really bad will happen and I'll be bankrupt.

I hear you. I get this question all the time. 

A book would help but I think you need to get connected to a financial program at your church or in your community. Get around others who are struggling and can help you. Get an accountability partner, someone who can help you say no. Mine is my husband. I'm his. Before him it was my girlfriend, grandmother. 

Also what works for me is to have specific financial goals. Write them down on an index card and carry it with you.

So when you are tempted to overspend, pull the card out and ask if this spending will help or hurt in meeting you goals. 

You want to retire before you need a walker, right?

You might want to buy a home one day?

You might need money to get long-term care?

You need an emergency/life happens fund well funded because you only have yourself to rely on should you lose your job, right? 

Whatever is it, make it the reason you say no. 

Thanks for keeping us informed on this. I have done credit freeze with all three, then realized it was only for me as individual, not my wife. We have been retired for almost nine years, and she had left the work force years before, focusing more on volunteering. Do we need to freeze her credit as well? - we both have excellent ratings, hers even higher. It seems especially annoying to have to pay another fee.

Unfortunately, to be safe you do need to put a freeze on her files too. But in many states if you are older than 60 the freeze is free. It's free right now for Equifax. 

Some of the questions that you might get from SS when setting up your online account are false ones ("did you have a car loan in 1995?") that you're supposed to say "no" to. An identity theft might say yes, but you know that you didn't have the loan so "no" is the correct answer. That might be happening.

Forgot about that. You are right. I did have a number of false questions.

Thanks for the backup!

Or just pull your credit report before setting up your SS online account. My husband and I had to do that since the online enrollment for SS asked some truly obscure questions that neither of us would have remembered off hand. (Did you open a credit card account in November 1989? Who in their right mind remembers stuff like that?) We just did a search of the credit report PDF for the key words for each question. No problem signing up after that.

Good strategy!

I have a file with such information too. Like all my past home addresses.

They still send out SS Statements, just ever 5 years, after birthdays ending in age 0 or 5 (so age 45, 50, etc.)

That was the planned.

But SSA announced at the beginning of this year that they wouldn't be sending out statements at all unless you are 60+ and not receiving benefits and don't have a my Social Security account.

Reason: Budget cuts. 

Because I'm pretty sure I got one last year or sometime early this year. Sigh, yet another reason to go and tackle the "review and file this" box.

Announcement came out in Jan. of this year. No more mailed statements folks.

I had a birthday recently. No statement. 

That's why you need to set up your account. 

Hi Michelle! I froze my credit before I set up my Social Security account, so I had to go in person to my local office to take care of it. My wait ended up being about two hours. (Fortunately, I brought a book, and by the end of the two hours, was pretty friendly with my fellow line sitters.) For people who have to go in person to get things straightened out, I recommend calling in advance and making an appointment. Fortunately, I am able to take time off pretty easily during business hours, but a lot of folks don't have that flexibility. And the wait is easily twice as long as a lunch break. Testimony: the book I bought (Bossypants) I had bought secondhand at a church book sale and I plan on lending it to at least two friends because I enjoyed it so much. : )

Thanks for the tip!

We are fortunate to have excess cash. What to do with it? We already max out retirement options, save in a 529, have good savings, give to our annual charities. Should we continue to boost savings, put more toward our mortgage, or another idea?

Mortgage. Yes mortgage. That's what we do with the extra.

Because we want to be free of that monkey on our back mortgage before we retire.

I’m old enough to remember when you had no right to know your own credit score. The government had to force credit bureaus to open up to consumers.

I'm old enough too.

We didn't have access to our credit report or credit score.

Now it's time to get free freezes. People please, please contact your lawmakers in Congress. 

This must be done.

The Equifax breach was EPIC!!!!!!!!!!

Hi Michelle, I just wanted to add my thoughts for those who are concerned about saving enough money when starting a family. One thing I have learned is NOT to listen to people in the "industry" and believe me there is a baby industry (I'm looking at you BuyBuyBaby!). They will encourage you to put SO MUCH on a baby registry (we never had one) because they try to convince you to have other people buy you things. Most of what the tell you is a "must have" is not. You do not need five sets of sheets if you have access to a washing machine. You do not need a baby swing, a wipe warmer, a Bumbo seat, etc. And if you do want these things, I almost guarantee you that you can get them at a thrift store for a fraction of the original cost. What you really need and should budget for aside from daycare are diapers, a crib, a car seat (assuming you have a vehicle) and formula if not breastfeeding. Most insurance companies will provide you with a free breast pump and milk bags so take advantage of that too.

Thanks for sharing your baby buying wisdom. 

I have found your columns on Equifax hack helpful. Could you go into more detail defining key terms--credit report, credit freeze, fraud alert, and other terms you have used to help us through the hack. Specifically: I have a credit report from Transunion--what should I look for. (2) I still can't distinguish between a freeze and a lock. (3) If we put on a freeze/lock, should we also sign up for fraud alerts? More details on these questions and answers would be appreciated, as would perhaps your structuring a model action plan for us to get through this Equifax fiasco/scandal. Big picture: Is anyone working day and night to find out who did this and to catch and punish them? Neither the Post or NYT has much to say about "whodunit." Thanks and keep up the good work. 

I'll do my best to answer your questions in upcoming columns. 

While I agree that dishonesty in pursuit of a saving is morally wrong, I'm proud to do things like share an entrée (rather than wasting food, if I'm not in a position to take home the leftovers). And there's no need to give a card + cash to a co-worker for their wedding if I don't feel close enough to the person. I regard activities that take some of my time in order to save a significant amount of money are like paying myself for overtime, and well worth the effort (e.g., baking my own bread, canning homemade applesauce and homegrown tomatoes, etc.), plus I genuinely enjoy those activities.

You're proudly frugal. Not a miser. Miser bad. Frugal, even cheap by your testimony good.

I've been fantasizing about the lottery recently (mostly wanting to help my parents move into an assisted living place that they actually like and might be able to afford in a small unit, but not in the type of unit they would prefer). It is counter productive and I don't buy the tickets anyway, but the fantasies are there. So I was at Wal-Mart getting some groceries the other day, and paid in cash and realized that I was down to $40 in my wallet just from groceries that weekend. I sighed and said "where the heck does the money go?" Well, my check out clerk was lovely and sympathized and said it is hard and you just have to make it last until the next paycheck. Well, I had just gotten paid two days before, and I have plenty of money. I just try not to go to the well too often because that is how you save. And I realized that my form of limiting spending by using cash is a form of luxury, because someone who works at Wal-Mart might really be living paycheck to paycheck and I need to be grateful that I'm not even close to that situation. Going to write a note to the store to tell them how kind and efficient she was, too.

Lovely way to look at life when it comes to your money. 

Hi Michelle - You've spoken about the support you provide to your family. I grew up poor, but hauled myself into the middle class by prioritizing education, a profession and a stable marriage. By a combination of bad luck and bad choices, the rest of my family continues to struggle. I've been careful to not give more financial support than I can afford, but have a harder time setting boundaries when it comes to emotional support. Now that I'm pregnant with our first child, my husband has asked me to consider cutting back in order to focus more on enjoying this stage of our own lives. I would like to, but feel guilty. How do you balance enjoying your own happiness/success when people close to you are hurting? And do you explain these new boundaries or just engage less over time? I feel like it's easier to say "I don't have the money to do X" than "I care more about enjoying my weekend than supporting you through your partner's disappearance/child's suicide attempt/job loss and possible eviction."

My time is up but yours is a question in which I need more time to answer.  

For the longest time this was my issue too. So I got it and I'm going to answer in a column.

My credit reports list a couple of incorrect past addresses, and I know why: They were places where my mom lived, and I was on her bank account (in case of death). Is it worth the trouble to get this information removed?

Definitely worth the trouble. 

So sorry. Got to finish my Sunday column.

But I read all the questions and comments I don't get to during the chat. I've already indicated some I plan to answer in a column. And I'll look for others. 

You can also come back next week (so sorry) and ask again.

Thank you so much for joining me today. 

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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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