Doing everything right, and still being wronged

Some of us make a simple mistake online, and leave ourselves vulnerable to identity thieves. But some people do everything right, and still wind up as innocent victims.

Recently, my teenage nephew got his very first job, which led to his first bank account and debit card. The very day he got the card, he proudly logged in to his iTunes account and used it to sign up for a subscription service. He agreed to pay $9.99 for his first month of access.

The next day — yes, the very next day — his bank called him to let him know there had actually been two transactions charged to his account: the one he approved for around $10, and a second one for almost $60! He had been hacked, through no fault of his own.

While having your account compromised is always a frustrating, scary, and infuriating experience, I think that for him to have this episode at his age was especially maddening.  Not only had he just gotten his account and card, which he viewed as kind of a stepping stone to adulthood, but the thieves had attempted to steal a big portion of his very first paycheck.

Having their first job is a great way for teenagers to learn the value of a dollar, and how hard Mom and Dad have worked all these years to provide for them all their lives. Almost having that hard-earned money stolen was also a great lesson for him in how quickly you can lose everything you’ve worked for due to hackers and thieves.

Luckily for my nephew, his bank blocked the transaction, closed that original debit card and got him a brand new card so he wasn’t out any cash. His banker gave him some great advice, too, that everyone can use.

When you’re making a subscription purchase through an online account like iTunes, consider purchasing a prepaid debit card instead of using one that is connected to your bank account. Another option is to purchase a gift card for the service you want to purchase and pay for your subscription, or item, with the gift card instead of connecting your debit card. This way, thieves can only access a limited amount of your cash.

While I wouldn’t wish dealing with this experience on anyone, least of all my nephew, I am glad that he learned this lesson now with a relatively small risk so he can be more careful in the future and save himself some trouble and some money.

Don’t write that PIN down

Did you know that for many financial institutions, simply writing down your debit card’s PIN number or sharing your password with a trusted person is a loophole that could relieve them of responsibility of covering your losses if your account is compromised?

I recently received a new debit card that came with a PIN number a few digits different from my old PIN number. That meant there was no hope I was going to remember the correct sequence. If it weren’t for the trouble a friend had a few years ago, I would have been tempted to just write the new PIN number down somewhere safe, perhaps inside my checkbook register.

That’s exactly what a friend of mine did. A few months later, she realized her entire savings account had been drained. She told the bank quite innocently that she had her security number written down, not realizing that her admission alleviated the bank from replacing her stolen funds. She was out several hundred dollars.

Even doing simple things that I know I do all the time, like sending my teenager to the store with my debit card and PIN number to grab a missing ingredient I need for dinner, is technically against the rules. I’m also guilty of sticking my card in my coat pocket when I get gas instead of immediately putting it securely back in my wallet. Then later, I panic because I can’t find it. That card isn’t just a convenience to us, but also can be an easy way for criminals to gain access our accounts.

We all know about safety tips when we’re checking out in a store, or visiting an ATM machine for quick cash, but it’s also easy to give in to our own busy schedules and take shortcuts. Keeping your account protected is worth the extra hassles, though. I suggest you request a new PIN from your bank if you’re worried that yours has been compromised, or even if you are having trouble remembering it. That’s what I did; it was as painless as a trip to the local branch. Now my PIN is something I can easily remember and I don’t need to write it down! And don’t hesitate to ask your bank if you’re allowed to write down your PIN before it’s too late.

Plan for the Unexpected

It’s Easier Said Than Done

 

Probably the number one piece of financial advice we have all heard countless times is to save for a rainy day. It’s that thing we all know we should do, and some of us actually are doing (or are trying to). But when that rainy day comes, sometimes it really pours. And sometimes the roof springs a leak, too.

There are plenty of tips and tricks you can use to make saving easier. My husband and I found that automating that savings by having a portion of your check automatically rerouted to savings is a great way to accumulate a rainy day fund without even having to think about it.

We recently discovered that we were very lucky to have that rainy day fund because the thing we thought would never happen, happened: my husband lost his job of 17 years. A really good job. A job that, among other things, offered our family solid health insurance coverage at no cost to us. Because he’d had that job for so long, we had been shielded from the reality of what health insurance coverage actually costs most people.

We were lucky. Not only did he get a decent severance package, but he landed a new job right away. Nevertheless, there was still a gap in health insurance until his new job’s plan kicked in for us.

So you’re probably thinking, what about the Affordable Care Act? Yes, that’s what we thought, too. And then we priced it. Once we picked our jaws up off the floor at the cost, we quickly decided that we needed a Plan B. Either we could wrap both of our kids and ourselves in bubble wrap and hope for the best, or we could check into a plan from my employer. When we considered things like prescription coverage and the possibility of someone getting sick or injured and how much that could cost, we knew the bubble wrap wasn’t going to be a viable option.

We were incredibly lucky that my employer offers a great plan and we could get coverage for the three months until his coverage started. However, that coverage did not come without a hit to the household budget.

That rainy day fund we’d saved didn’t go nearly as far as we had hoped it would. That was due, in most part, to us not taking into consideration that the cost of healthcare for our family would be way more than we were prepared for. Plus, since we had to switch policies, that meant we started over with things like deductibles and out-of-pocket expenses for the new plan. So while paying for the new plan, we were also paying additional expenses on top of the premiums.

Now that we’re counting down the days until things go back to normal, we’ve learned a valuable lesson. As usual, we’ve learned it the hard way, though. Now we know that not only should that rainy day fund cover the usual expenses like bills, but also the equally important things like health insurance.

 

Money Lessons for the High School Graduate

 

There’s a lot of financial advice around these days for the recent college graduate, but as the parent of a recent high school graduate, I think those conversations need to start even earlier. Now is the time when high school graduates are choosing a college to attend, and applying for financial aid, and probably deciding on a future career path. There’s nothing like taking on an enormous amount of debt while you’re living on the money you make working at the local pizza place to help turn a teenager into an adult overnight.

At our house, we’ve had numerous conversations around the college decision, and I’ve always made a point to remind our daughter that different schools cost different amounts. The cost of a school should weigh in her decision of where to attend college along with how pretty the campus is and how many graduates are employed in their chosen fields.

I’ve encouraged my daughter to consider what the average salary is for her chosen field when applying for student loans because the last thing we want her to do is to graduate with more debt than her salary will allow her to repay. Our daughter’s chosen field happens to be teaching, and if you’ve not been living under a rock then you know that teachers are not exactly the top earners in our country. When we were comparing colleges over the last year and one college cost tens of thousands of dollars more, that definitely weighed into her decision. Borrowing more means less money in her bank account in a few years, and for several years after that.

We’ve talked about how her friends who don’t know what they want to study are smart to take classes at the local community college while they figure it out, instead of going away to a more expensive school. The community college is far less expensive and will allow them to live at home, and work part-time while they figure things out instead of taking on debt.

We’ve worked hard to teach our children about money because in our generation there weren’t discussions around the dinner table about finances. My husband and I learned by trial and error what worked and what didn’t, and as parents, it’s our job to encourage our children to do better and to learn from our mistakes. Our kids have had bank accounts for years, and we’ve always encouraged them to save more than they spend. Now that our oldest is driving, and has her own car, she’s getting her first experiences with paying bills regularly and how that makes saving even more difficult. I’ve heard her say things about really wanting to hit her favorite shops, but not wanting to spend her hard earned money.

Even with all of our discussions about finances we were surprised when our daughter turned 18 and the credit card offers started filling our mailbox right alongside the college brochures. This opened the door for a lengthy discussion about debt, credit scores, and all that ties with those things. While a credit card for emergencies might be a good idea next year when she is away at school, we all agreed that now is not the time to add that responsibility to her wallet.

The bottom line is now is the time that our teenagers start to realize that mom and dad will not always be paying their bills and they need to start thinking about their own financial futures.