TLC MAGAZINE ONLINE

AUGUST 2013 INDEX

HOW TO CREATE A CHECKING ACCOUNT PIN YOU CAN ACTUALLY REMEMBER BUT NO ONE WILL GUESS

By Nicholas Pell

Want a shock? One in ten people uses the most popular PIN number out there: 1234. Sadly, we aren't kidding. This is just about the first thing that a thief is going to try if he gets his hand on your debit card.

Protecting the security of your checking account is closely tied to having a secure PIN. But you need one that you can remember, as well as one that will keep the thieves at bay or you'll end up locking yourself out of your accounts, too! We spoke to Steven Weisman of Scamicide and Bentley College about how to choose PIN numbers and passwords that will keep you secure.

What Is a PIN Number?

A "personal identification number," also called (the slightly redundant) PIN number, is a 4 digit numeral password that you use to access your financial information at ATMs and to purchase things at the point of sale typically with a debit card. "With a PIN you don't have the upper and lower case," says Weisman, referencing one of the common ways that people are able to make email and social networking passwords more secure against identity theft.

What Can You Do to Secure a PIN?

According to Weisman, the best thing that you can do to have a secure PIN number is to make it as long as possible and don't use anything obvious like birth dates or 1234. "Consecutive numbers of any kind can be dangerous," he says.

Some other smart ways to protect yourself:

Keep your PIN number or passwords private, and don't share them with others.
Don't keep your PIN or password written anywhere, especially in the same place you keep your debit card like a wallet.
Avoid using significant numbers or dates that can be easily found out, such as birth dates like "0127" for a birthday of January 27th or wedding anniversaries.
Choose different PIN numbers or passwords for different bank accounts.

Weisman recommends mixing numbers and "letters", as in the ones on the keypad, to get something that's hard for people to guess but easier for you to remember. For example, the phrase "Four score and seven years ago" can be condensed into the code "4S7YA," which using a numerical pad creates the PIN "47792."

Protecting Yourself From Identity Theft

Of course, there's more to your personal security than just your PIN. In the 21st Century, lots of people do their banking online and that means you're going to need a more traditional password to access your financial information. It also means that you're at greater risk of identity theft and need to be wise about what you use as a password.

"Don't use anything that people can find out about you," advises Weisman. This is increasingly harder to do, as social media makes just about all of our interests somewhat public. The good thing about passwords, Weisman points out, is that you can use upper case and lower case letters, digits and even symbols in some cases. He advises that you mix up all of the above adding that he's a big fan of the exclamation point.

Weisman also says that people should avoid using any word that's in the dictionary. This is because hackers now have programs that can cycle through 1,000 passwords in 17 minutes. "Words in the dictionary includes foreign words and slang terms," he adds. One way to protect yourself from this kind of identity theft is to make your password a phrase (again, going back to something like "4score&7yearsago!") or a pneumonic device ("4s&7ya").

At the end of the day, however, Weisman is frank about the fact that there's only so much that one person can do to protect themselves. "So much of your security is reliant upon other people and other institutions." He urges people to just do the best that they can. "You can't completely protect yourself, but you can do things that will dramatically reduce your chances of bad things happening."

Q&A: HOW MUCH IS MY CAR WORTH WITH A SALVAGE TITLE?

By Jennifer Calonia

Q: I got into a big accident last weekend, and my car received a salvaged title. The car still runs fine, but I'm thinking about selling it for a new one. How much is a salvage title car worth?

Salvage title cars can be challenging to approach. A car with a salvaged title can indicate a number things depending on the state in which you reside. Some states such as Arizona, Florida and Georgia just to name a few, affix salvaged titles to stolen cars while other salvaged cars, like yours, earn this classification due to physical damage resulting from an accident.

What to Know About Salvage Title Cars

Often, a salvaged car has sustained significant damage. According to Carmax, the damage range that warrants a salvaged title varies from state to state but, generally, "a Salvage Title is issued on a vehicle damaged to the extent that the cost of repairing the vehicle exceeds approximately 75% of its predamage value."

While your vehicle's body may appear drivable, damage resulting from an accident or theft could have compromised the integrity of the vehicle's chassis thereby posing a potential safety risk. It's for this reason, subsequent auto repair costs and the questionable history of the car, salvaged title cars depreciate in value considerably.

How Much is a Salvage Title Car Worth?

Kelley Blue Book (KBB) states common auto industry practice is to reduce the Blue Book value of a car with a salvage title by as much as 20 to 40 percent. However, when sold in the private market, selling points may vary depending on the age of the vehicle, the pre-title condition of the car, the amount of damage incurred to the car and other factors.

If you're determined to shoulder a new auto loan and sell your salvaged vehicle for the best offer you can get, consider KBB's reduction range as more of a loose guideline. Car buyers who are open to purchasing a car with a "clouded" history could be willing to offer more for your automobile if it's still in good physical condition or has a strong cult following.

Photo: Tony Alter

Q&A: WHAT'S THE DIFFERENCE BETWEEN A MONEY MARKET SAVINGS ACCOUNT AND MONEY MARKET FUND?

By Casey Bond

Q: I'm interested in opening a money market account to earn a little extra interest on my savings, but I'm confused: Is there a difference between a money market savings account and a money market fund?

Understanding the difference between a money market savings account and money market fund (MMF) is key, because while they sound like the same thing, these two investment tools are very different from each other. Below is a look at how a money market account and MMF differ.

What is a money market savings account?

Sometimes referred to as a money market deposit account (MMDA), this particular type of account is a lot like a traditional savings account. In fact, there are only a few subtle differences between a money market account and savings account, most of which come down to interest rates and restrictions put in place by the individual bank or credit union.

The most important thing to remember is that an MMDA is, in fact, a deposit account, which means it's held at a bank or credit union and the principal is protected by the FDIC or NCUA up to federal limits as long as the institution is federally insured.

What is a money market fund?

A money market fund, on the other hand, is not a bank account but rather a type of low risk mutual fund that offers very modest returns. According to the FDIC, money market funds "typically invest in government securities, certificates of deposit, commercial paper of companies, or other highly liquid and low risk securities."

MMFs are held in investment portfolios and serve as a place to park cash that isn't currently invested in another fund or security. That means they are also subject to loss on principal, though rare, and are not protected by the FDIC.

If your goal is to earn higher interest on your savings, a money market savings account is the right choice for you. Money market funds are better served as one piece of a larger overall investment portfolio.

Photo: epSOS.de

YOU CAN STILL BUY A HOUSE WHEN YOUR SPOUSE HAS TERRIBLE CREDIT

By Elle Martinez

We bought our first place a few years ago together. We had been saving for some time and decided we wanted to buy while mortgage rates were low in an area that we liked in the city. They're now even lower! As we were looking around at options we checked our credit scores to get an idea of what we could qualify for.

Joint vs. Single-Applicant Mortgage

While we have pretty much similar finances, my credit scores were lower than my husband due to a few mistakes I made in college and a medical mix up that still hadn't cleared up. We were faced with a choice of whether to let my husband go for a mortgage by himself to get a lower rate, or jointly applying to see what we could get. We decided to apply together, but not before we took care of a few things financially. I'll discuss it in a bit.

You'll be happy to know that it is possible to buy a house when your spouse or you have bad credit. Both of you need to decide what's best for your circumstances, but there are a few things you may want to consider about mortgages and credit.

How to Improve Your Credit and Get a Better Mortgage in the Process

Many lenders today look at your credit score as one factor in determining what interest rate you'll be offered. Borrowers with lower credit scores typically pay higher rates since they're assumed to be riskier investments.

The first thing you and your spouse should do is review your credit scores and reports. Make sure your reports are error free. If they aren't, contact all three credit bureaus with the proper documentation to get them corrected.

If your credit score is low due to financial mistakes you've made in the past, your goal should be to increase your FICO score before asking for a mortgage loan. The good news is that with some work, any married couple can get their credit scores raised and improve the chances of obtaining a better mortgage interest rate which can save you tens of thousands of dollars over the life of the loan.

When your goal becomes raising your credit score, here are some things to clean up and improve:

Debt Repayment History: If you've missed or were delinquent on your debt payments your credit score decreases. Get them back on track and save money by avoiding late fees. Set up automatic payments through your bank or credit union's bill payment center.

Available Credit: Did you know that approximately 30 percent of your credit score is based on available credit? Keep current lines of credit open by paying down as much of your debt as possible.

Within a few months of working consistently you should start to see an increase in your credit score.

Buying a House with Bad Credit

Even if you have bad credit, you can still make yourself an attractive borrower to potential lenders by setting up the numbers in your favor. Three big ones demand your focus:

Down Payment: Money talks, and if you build up a sizable down payment it says, "I'm serious about this purchase." Besides lowering your monthly payments you also save on private mortgage insurance if you put 20% or more down.

Debt-to-Income Ratio: Lenders are leery of handing over money to borrowers already in over their heads. Make sure that all of your debt payments are less than 30% of your take home income. Better yet, eliminate as much debt as you can before even applying. When deciding to house hunt we made it a goal to pay off our car loan faster. It helped us get a competitive rate on our mortgage.

Loan to Value (LTV) Ratio: The loan-to-value ratio is basically the mortgage loan amount you're hoping for divided by the appraised value of the property you're considering to buy.