The earlier you plan for retirement, the better

This was originally published on Monday, October 15, 2018, in the Pacific Daily News.  Click here to subscribe to the PDN. 

For some of us, retirement is many years away. For others, retirement could be coming up quickly or it may have already happened.

No matter what stage you are in your life, it is never too late to make saving for your retirement a priority. It doesn’t take large amounts of money to save up for your retirement. The key is to start, and the sooner you start the better off you are.

Ideally, you want to start saving for retirement when you start working in your early 20s. Depending on your salary and expenses, you should create an emergency fund. This emergency fund should have roughly three to six months of your living expenses saved up.

Set small milestone goals to help you reach your ultimate emergency fund goal. An emergency fund gives you piece of mind when an unexpected event happens

Retirement account

The next step is to start a retirement savings account while you are saving up for your emergency fund. Sometimes your employer will offer a retirement plan, other times you will have to look around and shop for a plan.

The most common types are individual retirement accounts, 401(k)s and, for those in federal government, the thrift savings plan. Each allow your money to grow by using compound interest and are tax-deferred. The magic of compound interest is that no matter how little you contribute, it adds a percentage to the total amount of your savings.

If your employer offers a match to your contributions, take full advantage of it, as it too will be added to the total amount. Where else can you get a 100 percent return on your investment?

Those who start in their 20s are at an advantage to save more toward retirement because they aren’t tied down to a mortgage, children and other responsibilities. They also have time to assemble a portfolio of mixed assets — stocks, bonds and money certificates.

Set financial goals

Sit down and decide your financial short- and mid-term goals. Do you want to buy a house, a car or pay off certain debt? Also, identify the expenses you will have during your retirement years — housing, utilities, and medical bills.

Think of your contributions as paying yourself first. If you get a raise, receive a bonus or a boost to your income, you should increase your contributions. Every year, increase your contribution by at least 1 percent.

These decisions are important. Seek the help of a financial professional to help you clarify the confusion and to point you in the right direction.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 24 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

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Protect yourself with a credit freeze and fraud alerts

This was originally published on Monday, October 08, 2018, in the Pacific Daily News.  Click here to subscribe to the PDN. 

A credit freeze is considered one of the most effective ways to protect your credit and your personal identity.  A few weeks ago, a new federal law went into effect that made placing a freeze or lifting a freeze on your credit report free of charge. The new law also extends short-term fraud alerts to one year.  Before the new law was passed, short-term fraud alerts were only for 90 days.

There are differences between a fraud alert and a credit freeze.  The credit freeze basically locks your credit.  A fraud alert allows creditors to obtain your report, but they must take steps to verify your identity.  Another difference is with a credit freeze you must contact all three credit reporting bureaus.  With a fraud alert, you can contact one of the credit bureaus and then they are obligated by law to share your notice with the other two.  The new law also makes applying for an alert free.

There are three types of fraud alerts:

Fraud Alert.  If you are concerned about identity theft but you are not a victim, you can place a fraud alert.  The alert will protect your credit for one year.  After one year you may receive another full year also for free.  If you lose your wallet or if your personal information has been compromised, you want to place a fraud alert on your credit.  It will make it much more difficult for identity thieves to open accounts under your name.

Extended Fraud Alert.  This alert is only available to those who have been a victim of identity theft.  The alert lasts for seven years.  If you need an extension you can request one. To receive the alert, you must have created an Identity Theft Report.  With the extended fraud alert, you are eligible for two free credit reports a year from each of the credit bureaus.  Your name will be taken off the marketing list that companies use to offer you pre-screened credit offers, for five years.  You may request to have your name placed back on the list.

Active Duty Alert.  Service members can use this alert to protect their credit while on deployment. The alert lasts for one year and can be renewed to match the length of their deployment.  The service members name will be removed from the pre-screened credit offering marketing list for two years if they choose to do so.

You can remove the credit alert at any given time.  Just like the credit freeze, placing a credit alert will not hurt your credit score.  You can still apply for credit, unlike a credit freeze, but extra precaution will be taken to verify that you are the one opening the account. Good news is that you can have both a fraud alert and a credit freeze on your credit report.  If you had a 90-day fraud alert on your credit report before the new federal law went into effect, your alert is good for the 90-days.  Once the 90-days is over, you can then request for a year-long fraud alert.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 24 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

Law allows free freeze on credit report

This was originally published on Monday, October 01, 2018, in the Pacific Daily News.  Click here to subscribe to the PDN. 

A new federal law took effect starting September 21, 2018, that makes freezing your credit report free.

Congress passed the law in response to last year’s Equifax cyberattack.  The hack exposed the names, birthdates, and Social Security numbers of nearly 145 million Americans.  A credit freeze or a security freeze is a tool that lets you restrict access to your credit report.  If you are opening a new account, creditors will check your credit report.  The freeze blocks lenders from checking your report.  This means that anyone deceptively opening an account in your name would be unable to do so.

Before the law took place, depending on where you lived, consumers paid anywhere from $3 to $10 per freeze with the three credit bureaus.  If you wanted to unfreeze your credit report another fee would be charged.  Additionally, the law allows a free credit freeze and unfreeze for children under the age of 16.  Previously only certain states allowed the freezing of a minor’s credit report.  Additionally, if you are a guardian or have a valid power of attorney you can get that same free service for that person.

A credit freeze does not affect your credit score.  You can still get your free annual credit report and open new accounts.  If you are opening an account, buying insurance, renting a house or apartment, or applying for a job, you can temporarily unfreeze your report.  You can also name a specific party to have access to your report, such as your landlord, a new employer, or a utility company.  Do keep in mind that although a credit freeze provides you a layer of security it does not cover fraud to your existing accounts, so be sure to monitor those regularly.  Likewise, it will not protect you from other forms of identity theft such as insurance or tax.

Certain entities will still have access to your credit report even if you have placed a credit freeze.  Your existing creditors or debt collectors working on their behalf will have access to it.  Government agencies will also have access to your credit report if responding to a court or administrative order or intending to serve you a subpoena or search warrant.

To freeze your credit report, you must contact each of the three credit bureaus by phone or online.  If the request is made by phone or online, the freeze goes into effect within one business day.

TransUnion: Visit TransUnion.com/credit-freeze. The company also has a free-freeze mobile app called myTransUnion, available at the Google Play Store and the Apple App Store.

Equifax: Visit https://www.Equifax.com/personal/credit-report-services/. Or call its automated line at 800-685-1111.

 Experian: Visit www.Experian.com/freeze. Or call 1-888-EXPERIAN (1-888-397-3742).

After receiving the freeze request, each credit bureau will provide you with a PIN or password to use when you want to lift the freeze.  With the PIN you can remove the freeze completely or within a certain time frame.  The credit bureau has one hour to lift the freeze if the request is made online or by phone.  If you want to open an account, it is best to find out which bureau the agency uses.  That way you do not have to unlock all three but just the one they will use to look at your credit report,

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 24 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

Take precautions while you’re away on vacation

This was originally published on Monday, September 24, 2018, in the Pacific Daily News.  Click here to subscribe to the PDN. 

You’ve packed your bags and ready to leave your cares behind. You’re ready to start your vacation. But did you know that you could be vulnerable to identity theft and fraud while you travel?

Many travelers have had credit/debit cards, smartphones and other sensitive personal information stolen or lost while traveling. Not only does this cause undue stress, it can become a financial nightmare.

Before you leave

  • Ensure your passport is valid! Some destinations require your passport expire after six months of entry into that country.
  • Remove non-essential items from your wallet; take only the items you will need — ID, credit/debit cards that you plan to use and your passport. Leave your Social Security card at home.
  • Ensure your laptop, smartphone and tablets are secured with a passcode.
  • Contact your financial institution to tell them you are traveling, especially if you are traveling outside the country.
  • Make copies of your ID, credit/debit cards, passport, visas, and other travel documents and give them to a relative or a friend you trust. In case these documents are lost or stolen, you will be able to show proof you had them in your possession.
  • Download a locator app in case your smartphone is lost or stolen. Many of these apps have a function to lock your phone or even erase information.
  • If you’re planning on being away for a long period of time, stop home deliveries. This is an indication you’re not home and makes you a target for a break-in. Go to your post office and have them hold your mail till you return. Bills and bank statements can fall into the wrong hands.
  • If you’re traveling abroad, register your travel plans with the State Department. It’s free, and you can complete the form online. The nearest embassy or consulate can contact you if there is a family emergency or a state or national crisis while you are traveling.

While you’re away

  • Use ATMs at a financial institution instead of high-traffic tourist areas, which usually are a prime area for thieves. Be on the look-out for skimming devices. Be sure to cover your keypad when entering your PIN.
  • Lock up your valuables, travel documents and personal sensitive documents. Pay a little extra to use the room or hotel safe.
  • Use a travel wallet, which is secured close to your body. There are radio frequency identification, RFID, wallets that keep your passports, credit cards and other items that have radio signals safe from being skimmed while in your wallet.

When you return

  • Review your credit/debit card statements. Review your bank statement carefully to ensure there are no erroneous charges. Call your institution as soon as possible if you find something suspicious.
  • About three to five months after you travel, check your credit report.
  • If you believe you’re a victim of fraud, file a police report and then file a report with the Federal Trade Commission. You should request to place a 90-day fraud alert on your credit reports.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 24 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

 

Four ways to purchase travel insurance

This was originally published on Monday, September 17, 2018, in the Pacific Daily News.  Click here to subscribe to the PDN. 

A well-planned trip will almost always bring about happy memories. You can learn about new cultures, see new places and meet new people.

What happens if something goes terribly wrong and you are miles from home, in a foreign country where you may not speak the native language, or you are far away from the next point of civilization? A misplaced passport, flight delays or cancellation, lost luggage, sudden illness or injury can certainly turn a planned trip into an expensive, chaotic and stressful journey.

Travel insurance is designed to help ease the stress and finances of those unplanned events. There are four ways you can purchase travel insurance:

  • Single-trip travel insurance. Most travelers purchase this policy. It’s purchased before you leave home and expires when you return. Most single-trip policies can cover up to 10 travelers and used domestically or internationally. This policy is for travelers who don’t travel often and provides protection for a single trip.
  • Multi-coverage travel insurance. This insurance will cover multiple trips within a year. It can cover more than one person. Most of the time, the trips aren’t very long and usually don’t exceed 30 days.
  • Annual travel insurance. This policy covers frequent travelers who take trips that usually last 30 to 365 days. The policy usually starts the day of the first departure date and expires a calendar year from that date.
  • Group travel insurance. If you have a large family or plan on traveling with extended relatives or friends, then this policy may fit your needs. It usually covers up to 10 or more travelers. Just like the single-trip insurance, this policy typically covers lost luggage, trip cancellations, delays, and medical emergencies.

Although travel insurance is designed to reimburse you for the non-refundable expenses, it does have limitations. While needs are unique and every trip can run into different unforeseen events, there are certain reasons insurance claims can be denied.

Before you decided to purchase your travel insurance, here are a few reasons to consider:

  • Pre-existing illness. Your wife suddenly came down with a bad cold or the stomach flu the day before you depart. A decision is made to stay home and reschedule or cancel your trip.

Some travel insurance policies may require a physician examine the traveler before canceling, while others may require the traveler to see a physician 72 hours after cancellation. Either way, a physician usually must write a statement stating the traveler wasn’t medically able to make the trip for the claim to be approved.

  • Cancellation of trip. If you are canceling your trip because you found out that the tour company that was going to take you on a safari went out of business, you may need to provide more than just your credit card statement. You must thoroughly document all your trips cost and any refunds.

Some documents may include hotel and rental car confirmations, documents that officially explain the cause of your trip cancellation, original tickets and much more. Contact your travel insurance company as soon as possible to get the appropriate documents.

  • Foreseen events. Insurance policies cover sudden and unforeseen events. If there’s a typhoon heading toward your dream vacation destination, you may not be able to purchase traveler’s insurance. If you are already there when the disaster hits, be sure to keep all your receipts and documentation, especially for extra costs due to the disaster.

 

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 24 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

Consider the type of travel insurance you need

This was originally published on Monday, September 10, 2018, in the Pacific Daily News.  Click here to subscribe to the PDN. 

When planning a trip, we think of all the fun we intend on having. But we sometimes don’t plan on those things that worry us most. We don’t plan on food poisoning, a car accident, losing our passports or our possessions being stolen.

Travel insurance works primarily as a reimbursement. It’s there as a financial safeguard when your travel is interrupted. There are several different types of insurance. Before you purchase travel insurance, decide what type of policy you need.

Trip cancellation insurance. This insurance is exactly what implies — it covers you in the event you, or those you are traveling with, need to cancel or interrupt your trip. Most trip cancellation insurances will cover weather-related issues, illness or injury, delay in getting visas or passports and sometimes a change of plans or change of mind. Some cover kidnapping, an act of terrorism, or issues with the vendor, such as it going out of business.

The insurance company will refund you the difference of what you originally paid for the trip and how much it costs to cancel the trip. It’s best to purchase this insurance from a third party and not from the vendor with which you are traveling.

Travel medical and major medical insurance. Both provide medical protection if you or those on the policy become ill or injured while traveling. The travel medical insurance is short-term, usually a few days to a few months. The major medical insurance covers travel on longer trips of six months or more.

Not only will the insurance help you cover medical expenses, it can help you locate health care facilities or providers in the area that you are visiting. Some will even help you with foreign language translations related to your healthcare emergency.

It’s strongly recommended you consult your primary medical insurance prior to traveling to determine what or if you are covered, especially if traveling abroad. Use caution and read the fine print and know exactly what medical procedures your travel insurance covers and doesn’t cover.

Travel accident insurance. This covers you in case of accidental death or dismemberment for you and those traveling with you. This will cover sudden losses that can occur because of travel or flight accidents. Usually the insurance company will pay the traveler’s surviving beneficiaries, just like a life insurance will.

Medical evacuation insurance. If you need transportation to a medical facility while on your trip, this will help cover the cost. This is helpful if you plan on vacationing a remote rural area. In a large city, it may be easy to get an ambulance, but if you are far from civilization it may require a helicopter, a train or other modes of transportation to get you to the care you need.

This can become extremely expensive. This insurance also may cover evacuation and repatriation in case of a political unrest or natural disaster.

Specialized or package travel insurance. Coverage is based on the different needs of the traveler, such as the business traveler or those partaking in extreme activities. These policies can cover a wide range of events and are made specifically to cover you.

It can include medical, dental, trip cancellations, evacuation, passport issues, loss baggage, theft, rental car accidents, road side assistance and more.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 24 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

Consider buying travel insurance for your trip

This was originally published on Monday, September 3, 2018, in the Pacific Daily News.  Click here to subscribe to the PDN. 

Recently, one of my employees educated me on the benefits of travel insurance. Her granddaughter fractured her foot while traveling. Luckily, the group with which they were traveling purchased insurance prior to the trip and that policy covered all associated medical costs.

After speaking with my employee, I reached out to Narcissa Rosario, regional production manager at Moylan’s Insurance, where the group purchased the insurance, for more information. Narcissa was very helpful in providing insights, which I’d like to share with you.

If you’re planning a trip, you may want to consider purchasing insurance. Most major credit cards may provide limited coverage for accidental occurrences, but what they don’t cover may leave you vulnerable.

Travel insurance can help with unforeseen events — a medical emergency, car accident and even fees associated with canceling your trip. Travel insurance is intended to provide financial protection for unexpected events.

What to consider

When deciding if you need insurance, take a few of these questions into consideration:

  • Will you be traveling to a foreign country?
  • Will you be partaking in adventure sports (skiing, whitewater rafting, etc.)?
  • Can you afford the costs of canceling or delaying your trip?
  • Can you afford the cost of an early return flight back home?

When deciding if you need travel insurance, go through every scenario you can think of that could turn your dream vacation into a nightmare.

Travel insurance comes in different policies. The main ones are medical coverage or trip cancellation. But you can also get coverage for lost luggage and even rental car coverage.

Premiums are usually 5 percent to 10 percent of the cost of the trip. For example, if your trip to the Philippines is $3,000, you may pay between $150 to $300. Considering the cost of fees if you get sick or must cancel your trip, that’s relatively inexpensive.

Talk with insurance companies

Before deciding what type of insurance you may need, check with your insurance companies.

Talk to your health insurance to see if you are covered in that country, if have to go to a certain provider and what to do in a medical emergency. Talk with your auto insurance company to see if it covers you and your passengers when you rent a vehicle, or if they have a contract or agreement with car rental companies where you’re traveling and what type of occurrences will they cover. Some homeowner’s insurance will cover stolen items while you are traveling.

Some credit cards will cover some form of insurance. But they may have strict policies regarding what they will and won’t reimburse. Most credit cards won’t cover medical care abroad. They may also cover only the portion of your trip you purchased with the card. If you used reward points, they may not cover anything. Call to understand exactly what they will cover.

 

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 24 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.