The National Retail Federation estimates that consumers will spend $17.6 billion during this one holiday, or $126 per person, up 8.5 percent from 2011.  “This spending will certainly be a nice boost to the economy,” said Melinda Opperman, senior vice president for Springboard Nonprofit Consumer Credit Management. “Consumers who are already in financial distress, or on the cusp, should not feel compelled to spend, putting their own economic well-being at further risk,” added Opperman.

Springboard suggests that consumers consider the following list of what love is not as they shop for their Valentine:

• Love is not spending more than you can afford on a gift.  Regardless of the motive, being overly generous when money is tight is really no gift at all, to the recipient or the giver.
• Love is not being a pretender.  Honesty, including financial honesty, is key to any relationship.  Don’t pretend that you have money you don’t by playing the big-spender role.
• Love is not making financial decisions with the heart.  Even though emotional spending can give a temporary high, it can also lead to guilt and buyer’s remorse.
• Love is not avoiding the financial realities.  Burying your head in the financial sand and living as if there were no money problems only digs the financial hole deeper.
• Love is not giving a gift that will soon be forgotten.  Most people cannot remember what they received last Valentine’s Day.  Making a purchase simply to have a gift in hand will be equally forgettable and a waste of money.

“Spending irresponsibly is no way to say ‘I love you.’  However, showing that you are financially reliable is a tangible expression of that sentiment. It’s a gift that’s meaningful, always in style, won’t wilt or add pounds,” continued Opperman.

If you need help finding extra money in your budget, consider reaching out to Springboard and asking to speak with a certified financial counselor.  Across the nation, Springboard offers personal financial education and assistance with credit counseling, housing counseling, debt and money management through educational programs and confidential counseling.  Springboard offers financial workbooks, calculators and other helpful resources, which may be accessed and downloaded for free at http://credit.org/blog/.

Photo: pixieclipx

For readers under 30 who didn’t grow up with layaway, it typically means you pick out goods 8-12 weeks before you need them and make regular payments toward their purchase price. The retailer holds the goods for you until they are fully paid for, and then you can take them home. You’ll have to pay a small fee to cover the retailer’s costs, and if you stop making payments or cancel your purchases, there may be an additional cancellation fee.

Is this a good idea? Here are some pros and cons:

Pro: your “loan” is associated with specific goods.

Layaway is like a secured loan; you “borrow” the product you want, and the retailer keeps it while you make payments. If you fail to pay, the retailer has only missed out on the opportunity to sell the product to another buyer. The fees you’ll pay for not following through with layaway will typically be $5-$25.

The products in question are usually holiday gifts, so you know what you’re paying toward and usually have a strong incentive to pay. With credit cards, many purchases, interest charges, and fees are blended together to calculate your total balance. It’s more painful to pay toward a credit card balance than to pay toward the goal of having a happy holiday season.

Con: Minimum purchase sizes mean you might spend more than you needed to.

Retailers have to do a lot of extra work to help you buy things on layaway, so they can’t be expected to offer layaway on for inexpensive purchases. To make the practice worthwhile, there is usually a minimum amount required to make a layaway purchase. That means if you want to purchase a $40 item and the minimum purchase required is $50, you have to find more merchandise to make your total purchase qualify for layaway. (Minimum purchase sizes vary from store to store.)

Pro: It encourages planning ahead.

The very nature of layaway means that the purchaser is planning ahead. This is far preferable to credit card shopping with no thought to how to pay off the balance. You’ll know exactly how much you need to pay toward your total purchase and how long you’ll be paying. All of your financial decisions should be so well thought-out.

Con: Missing payments or cancelling a layaway order can carry fees.

If you back out on a layaway purchase halfway through, you should get most of the money you paid back. You will be responsible for an initial fee, which is usually $5 to $10. Some stores will charge a re-stocking fee as well. Typically the total cancellation costs are $15-$25. Many states cap the total amount a retailer can charge.

Pro: Only certain items can be purchased with layaway.

Layaway is often available only for specific purchases, like holiday-specific goods or big-ticket items. There’s no danger that layaway will become as widespread as credit card debt, and it is less likely to lead you to make unnecessary purchases the way credit cards do.

Con: May be less convenient than traditional shopping.

You have to plan ahead for layaway, so you don’t have the convenience of grabbing gifts at the last minute. And depending on the store, you may not have the convenience of picking up your purchases right away. If the retailer stores goods off-site, you’ll have to give them a few days’ notice before you pick up your purchases.

Pro: Your goods are fully paid for before you get them.

Anything you buy with layaway is fully owned by you before you get it. This stands in stark contrast to credit cards, where you get the goods up front and then make payments. The incentive to pay is much less, which is one reason why credit card balances last so long and run up so much in interest charges.

Con: Buying early means missing out on holiday sales prices.

If you put something on layaway at the beginning of the holiday season, it may go on sale as the holidays draw near. Many retailers will price match your layaway purchases and give you the new, lower price, but you need to read the fine print and know the retailer’s policy in these circumstance.

Photo: nateone

Identity Theft Prevention Guide

Uncovering Identity Theft

Our focus in this series is preventing ID theft, not recovering after the fact (that’s a topic for our next series). However, sometimes ID theft prevention means preventing more damage after a thief has struck.

Of course, you’ll have to know that you’ve been victimized in order to take action, and today we’re going to talk about how to determine whether your ID has been compromised.

The most important thing you can do in this regard is to order your free annual credit reports regularly. You’re entitled to a copy of all three annually, but you don’t have to get them all at once. That means you can spread out your requests and get a different free credit report every four months.

NOTE: don’t fall for any free credit report scams. Monthly monitoring services are an unnecessary expense for most people. Simply visit https://www.annualcreditreport.com and use their online form to get access to your free credit report. Do NOT buy your credit score at this site, as you won’t be sold your true FICO Score, but a worthless alternative.

Look over your credit report for any accounts that are unfamiliar. You may also see if your Social Security Number is being used illegally for employment purposes.

Another important step to take is to take advantage of online banking. Chances are your financial institution has a web site that will let you log in and see all of your transactions. If you haven’t done so yet, set up a login with a secure password with your bank and all of your credit card accounts. Get in the habit of checking in regularly to make sure no strange activity is going on. If you make this process part of your routine, you’ll be able to log in quickly and see what’s happening with all your accounts. It doesn’t have to be any more time consuming or complicated than checking your email.

You can also get a copy of your ChexSystems report (www.chexhelp.com) to make sure no one has opened a fraudulent bank account in your name.

If you are in the habit of checking your account statements, credit reports, and online account activity regularly, you should be able to spot suspicious activity very quickly. This will help you take action before too much damage is done to your good name.

For more information, download our free eBook, “ID Theft: Protecting and Restoring Your Good Name,” or check out our online course on Identity Theft Prevention, available here in our FIT Academy. For more information about National Protect Your Identity Week (NPYIW) or to find a local PYIW event near you, visit ProtectYourIDNow.org.

Identity Theft Prevention Guide

Protecting your personal data

Identity Theft is a broad category, including all kinds of crime that involve a thief using your personal data in a deceptive way. This can include using your credit card, your checking account, or even providing your identity for non-monetary reasons.

So when we talk about preventing Identity Theft, we start with protecting your identity. It’s not just a question of your credit cards or blank checks; you must safeguard all the data a thief could use to compromise your identity.

In this series on Identity Theft Prevention, we’ll talk about different ways thieves operate, and how to thwart them. There’s no way to be 100% safe, since an identity thief could strike at a business or financial institution and gain access to your information there. The best you can do is to be secure in your own person, residence, and workplace. We’ll help you make sure your identity is as protected as you can make it.

To start, understand the different ways criminals gain access to your data. Many people still think online hacking is where most identities are stolen, but in reality, thieves are more likely to steal your identity from your mailbox or your trash. They can also get access to your info by simply standing in the right place at the right time and watching you enter a PIN or password into a computer or your cell phone.

The main information you need to protect is your Social Security Number and any account numbers you may have with credit cards or financial institutions. That may sound like an easy task, but there is a lot of additional data that can lead a thief to more sensitive info. If they can get your cell phone or laptop computer, they may be able to get to those important account numbers. So protecting your identity means protecting any avenue a thief might use to get to your ID numbers or financial accounts.

Even things like your resume might contain enough information for a thief to use to compromise your identity. Don’t share anything you don’t have to, whether it’s online or in a store or restaurant. We’ll talk about some specific steps to take to protect yourself, but it’s important that your general mindset be one of caution when dealing with your personal information.

For more information, download our free eBook, “ID Theft: Protecting and Restoring Your Good Name,” or check out our online course on Identity Theft Prevention, available here in our FIT Academy. For more information about National Protect Your Identity Week (NPYIW) or to find a local PYIW event near you, visit ProtectYourIDNow.org.

Americans go to great lengths to protect against being robbed.  We lock our doors, install alarm systems in our homes and cars, and insure our valuables.  Many, however, do not pay an equal amount of attention to the crime that impacted more than eight million consumers last year, the crime of identity theft.

Recognizing that education is the key to prevention, the National Foundation for Credit Counseling (NFCC), National Sheriffs’ Association (NSA), and National Association of Triads (NATI) are proud to join forces bringing the fourth national Protect Your Identity Week (PYIW) to communities across the country October 16-22, 2011.

Springboard is an NFCC member agency and Melinda Opperman is the NFCC member agency Chairperson for Protect Your Identity Week.  To keep from becoming the next victim of identity theft, visit www.ProtectYourIDNow.org where you’ll find educational resources, steps for victims, and a map to locate the PYIW event closest to you.

Now, though, new technology offers a new approach that is more secure and even more convenient.

More and more people these days carry smart phones and cell phones with built-in cameras. Rather than having to find a copy machine and make physical copies, simply take cell phone photos of your credit cards, id cards, and other documents. You won’t want to leave the photos on your phone, in case it is lost or stolen as well. Move those photos to a secure folder on your PC and you’ll always have access to that information without having to make an additional set of physical copies.

And there’s an even better option. Sign up with a secure online storage service and upload the files there. That way, if your computer is stolen or your home is destroyed in a fire or natural disaster, you can get to your info through the internet.

Just make sure you don’t share these photos by accident; put them in a secure folder on a password-protected file hosting service like Dropbox or a similar service. Don’t upload them to a photo-sharing site like Flickr or to a Facebook album.

A stack of photocopied credit cards and ID cards can do more harm than good if a thief steals them from your home. Having these documents somewhere online will give you quick access without creating another way for ID theft to strike you.

You may not always be able to prevent a lost or stolen purse or wallet, but if you have backups of your personal information and you act quickly, you can prevent the addition stress and expense of ID theft.

Photo: camknows

Special Homeownership Resources

Many people start the home-buying process with this step. As we’ve shown you in this series, there are several things you need to do first. If you haven’t gotten your finances in order and created a budget that enables you to afford the costs of homeownership, you should stop looking at houses until you do so.

Likewise, you should have already checked your credit to make sure everything is in order and there is nothing there that will prevent you from getting a mortgage.

You should also get pre-qualified or pre-approved by your mortgage lender before you start looking at homes.

Only after all of these steps have been taken should you start shopping. Your pre-qualification will tell you roughly what you can afford. This is a good time to consider using a real estate agent if you haven’t contacted one yet.

Choose an agent carefully; interview several candidates and go with the one who seems to understand your needs, is readily available to you, and can help you understand the steps in the home buying process.

If you don’t use a real estate agent, you will probably have to hire an attorney to help you file the paperwork and complete your purchase agreement. In most cases, a qualified agent is the best choice, especially for the home buyer. A home seller might think they can save money by not using a real estate agent, but home buyers rarely do.

When shopping for a home, consider your long-term needs. Will your family be growing in the future? What schools serve your potential neighborhood? Also, thinking long-term means paying close attention to the mechanical aspects of the home. How old is the roof? The air conditioner and furnace? If major systems and appliances will need to be replaced, you should factor that into your decision.

Strive to remain objective during this process. Some buyers form an emotional attachment to a property, and this will cause them to make mistakes, by either paying too much or ignoring problems that may surface later in the process.

Making an offer on a home may involve negotiating and counter-offers. When both parties have agreed on a price, it’s time to talk to your lender again.

Photo: selectseattlehomes

Special Homeownership Resources

The most thorough credit check most people will undergo is the one that precedes a home purchase. Your mortgage lender will check all three of your major credit reports, all of your FICO™ scores, and look at 2 years worth of tax returns as well as all of your current debts and other financial obligations.

Well before you approach a lender about purchasing a home, you should check your own credit. Give yourself a few months to address any issues that might be negatively affecting your credit score.

The number one thing a lender is looking for is evidence that you will repay your debts responsibly. Any history of later or missed debt payments on your credit report will be the biggest problems to address. Make sure your debts are paid up and current, and if you have a few late payments, you should strive to make full, on-time payments for three to six months before seeking a new home loan. There’s no shortcut to correcting late payments on your credit record; time and consistent payments are the best way to improve your credit.

Another aspect of the credit report is public record information. If you’ve declared bankruptcy, been sued, had a tax lien, been evicted, etc. then this section could damage your ability to get approved for a mortgage. Make sure everything that appears in this section is paid off or removed from your report if any of the information is erroneous or outdated.

Inquiries also affect your credit score, but they’re not a significant factor. Try not to apply for loans or credit while you’re building up to a home purchase and you should be fine.

If you don’t have much of a credit history, good or bad, your lender will need more information before deciding whether to lend to you. With some lenders you can use “alternate credit” information, like utility & phone bills, insurance, or other monthly obligations you have been successfully paying.

If you need additional advice on correcting your credit record or improving your credit score over time, check out our free “Consumer Guide to Good Credit.” It contains sample dispute letters and more comprehensive information about how to evaluate your credit record.

Also, check out our “Understanding Your Credit Report” course, freely available from our FIT Academy.

Special Homeownership Resources

Getting ready for homeownership means getting your finances in order. If you don’t currently have a budget you stick to every month, you must create one now. Come up with a spending plan you can live with that leaves you enough money for the various obligations that come with homeownership.

To get started on a budget, check out our Budget 101 course, available for free from our FIT Academy. If you’re having trouble making ends meet, our Budget 911 course might be useful to you. Finally, download our Power of Paycheck Planning materials to find budget forms and tracking sheets you can use to create your budget.

If you are currently renting, you probably pay rent, utilities, and renter’s insurance. Homeowners must pay more for their insurance, plus property taxes, repairs and maintenance costs, and perhaps HOA dues and fees. That means when you create a proposed budget, you should set aside more money for housing costs than just the mortgage payment. And because home repairs will be inevitable, establish a savings fund to pay for those expenses.

We’ve only scratched the surface of the added costs of homeownership. Consider lawn care. Do you own a lawn mower? How much more expensive will your heating and AC bills be?

The best way to prepare financially to buy a home is to build up a sizeable down payment. While it’s possible to purchase a home with very little up front, you put yourself ad greater risk when you do so. If you aren’t able to save up a down payment, are you really ready for the additional costs of homeownership.

Also, if your down payment is less than 20% of the purchase price, you will also have to pay for Private Mortgage Insurance (PMI), which will make your monthly mortgage payment even larger.

Preparing for homeownership is a process that should take some time. You need to be saving up well in advance, and when you create a new budget, you should live with it for at least a few months so you can gauge its effectiveness and make adjustments over time. Only after you’re certain that you can really afford to become a homeowner should you proceed to the next steps.

Before signing a credit card application, get familiar and read the terms of the agreement. Remember the offer could start with a low interest rate but then after a couple of months will increase. Then it becomes easy to purchase items that you think you need. (Learn to distinguish your need from your wants). If by the end of the month you don’t have enough cash to pay off your bill you will start accumulating finance charges. If this keeps happening, you may get into deep credit card debt. At the very least, you’ll end up paying a lot more for your purchases than their original price. You might put yourself in serious financial problems.

• Try to pay as much of your outstanding balance on your cards each month.
• If you are only making the minimum payment each month, which covers only interest charges — it means that it will take you a long time to get out of debt.
• Pay off the card that has the highest interest rate first.
• If you are not careful with your credit, you may not be able to get a loan to pay for graduate school.
• If you get behind on your bills, your creditors will be calling you and generally making your life miserable.
• If you overspend, you won’t have much money left over from your paycheck after you pay your bills.
• Don’t apply for a lot of credit cards.
• Know exactly how much money you owe
• If you’re having trouble keeping yourself from overcharging, cut up your credit cards, then call the credit card companies and tell them to close your accounts. Decide which credit card has the lowest interest and keep it for emergencies only. If you think you need help, Springboard is here for you!