After writing my book, Simple
Wealth Building Strategies, I had the eye opening experience of
having my identity stolen. Thank God I had taken my own advice and implemented
the strategy I wrote about in Chapter 4. Sometimes the wisest thing you can do
is take the advice you’d give to others. That is what saved me from wasting a
lot of time and energy cleaning up a financial mess. In Chapter 4, I discussed
the best way to protect your wealth by taking a defensive posture. I started
the chapter on wealth preservation by writing these words. Contrary to the
popular phrase “the best defense is a strong offense,” you have to employ a
different strategy that says the best offense is a great defense. To build
wealth, you need an income (offense), but to preserve it you need strategies
(defense).”
There is a lot of information in
that chapter focused on helping the reader preserve the wealth he or she is
building, but there is nothing more important than the information about
identity theft. As a matter of fact, I called the strategy to combat identity
theft “The Greatest Wealth Preservation Tool” because protecting yourself from
identity theft is the single most important thing you can do in today’s world. I
believe this strategy is so important that I have decided to give you an
excerpt from the book so you can protect yourself from identity thieves. If you
find this information helpful, consider picking up a copy of Simple Wealth Building Strategies
to learn more about building wealth. I hope this excerpt helps you protect your
financial assets when you become yourself in another body.
Up to this point, I have been
discussing those things over which you have direct control. You have an
emergency fund to cover unexpected expenses and a sinking fund to cover
expected expenses in the future. That is why I highly recommend that you
identify these two items (the emergency and sinking funds) as Obligations so
you make them the highest of priorities. Over these items you have control.
However, there are items within the Wealth Preservation strategy over which you
have limited control. Therefore, it is important to seek out the best process
for increasing your level of influence over these areas where you lack control.
One of the most important Wealth Preservation actions you can take is
protecting your identity from theft. In this section, I will walk you through a
simple, but effective strategy that anyone with a credit history can do. There
are three credit reporting agencies that capture and report data associated
with your use of credit. Most every purveyor of credit contacts these three
agencies before extending credit to a potential borrower. There are several
options you have that will offer you different levels of confidence and comfort
concerning identity theft. Most companies such as LifeLock, LegalShield, and
IdenityGuard offer credit monitoring and restoration services. It is important
to note that these services do not guarantee that your identity will not be
stolen. They only guarantee that they will notify you when it happens and they
will assist you in restoring your identity.
When your identity is stolen, a
thief can open credit accounts in your name. The use of your credit card number
is not identity theft. That is merely fraud. The concern with identity theft is
that someone, pretending to be you, establishes new credit accounts in your
name and then proceeds to max out each account before you have a chance to
prove that you did not establish these accounts. According to the Federal Trade
Commission (FTC) the average time required to recover from one instance of
identity theft is six months and 200 hours of work. The FTC qualifies this
estimate by noting that most of the actual work of identity theft recovery
(i.e. phone calls, written correspondence, keeping track of creditors,
responding to letters, working with credit bureaus and law enforcement
agencies, etc.) involves the victims making sure that they won't be liable for
the debts that thieves created.
So, though you may feel a certain
level of comfort knowing that one of the credit monitoring services is watching
your accounts, you should not have an over-inflated sense of confidence that
your identity will not be stolen. It is important to note that credit
monitoring does not actually stop the opening of new accounts. It can enable
you to learn about the fraudulent accounts sooner, but it does not stop
identity theft. Each service requires an ongoing financial commitment (usually
a monthly fee) to maintain services. I first began this journey of identity
theft protection by paying over $100 for myself and another $100 for my wife.
We switched identity theft protection companies when we learned that we could
have both identities protected for one low price of $154 annually, about $12.83
a month. However, having identity theft protection only kicks in once your
identity is stolen. Think about it. The reason why these companies offer
restoration services is because there is a need for restoration, which means
your identity has been stolen.
Accessing the services of these
companies provides some protection, but outside of making the monthly payment,
you have little to no control over your credit. However, there is a way that
you can protect your credit/identity and maintain almost total control over
your credit for a very minimal cost. The best way to preserve wealth is to
establish a Security Freeze at all credit reporting services. The process is
easy and will not cost you hundreds of dollars a year. If you are concerned
about becoming a victim of fraud or identity theft, a Security Freeze with the
three credit reporting agencies might be right for you. Wealth Preservation is
about more than how you handle money. It is also about managing your affairs in
such a way that you protect your reputation, identity, and wealth. Placing a
freeze on your credit report with TransUnion, Equifax, and Experian will
prevent lenders and others from accessing your credit report entirely. This
prevents them from extending credit to those who seek to use your identity for
their fraudulent activities.
With a Security Freeze in place,
even you will need to take special steps when you wish to apply for any type of
credit. Due to more stringent security features, you will need to place a
Security Freeze separately with each of the three major credit reporting
companies in order to place a total freeze on all of your credit files. This
Security Freeze remains on your credit file until you remove it or choose to
lift it temporarily when applying for credit or credit-dependent services. You
and your spouse will need to place a security freeze on your individual credit
reports because your credit history is based on your social security number.
Placing a protective freeze for a child can prevent fraudulent accounts from being
opened with your child’s identity. If you are the parent/legal guardian of a
minor or medically incapacitated consumer and reside in an eligible state, you
may have the right to request a protected consumer freeze. The process to
complete this action is simple, but profoundly important. To check the fees for
your states, type the links below into your browser and follow the
instructions.
Equifax:
TransUnion:
Experian:
To complete this action in the
Wealth Preservation strategy, go to each credit reporting agency and request a
credit freeze. For TransUnion, type this link
(https://www.transunion.com/freeze) into your browser address bar and follow
the instructions. For Equifax, type this link (https://www.freeze.equifax.com/Freeze/jsp/SFF_PersonalIDInfo.jsp)
into the address bar of your browser and complete the process. For Experian
type this link (https://www.experian.com/freeze/center.html)
into your browser’s address bar and complete the form. Make sure you retain the
PIN numbers that you are assigned by each credit reporting agency because, in
order to lift a ban or cancel it, you will need to provide each service with
that number.
I believe this one action will give
you the most comfort and confidence that your identity is safe. The most
important safeguard in a Security Freeze is that if you want to spontaneously
open a credit account to save ten percent instantly, you can’t. In a roundabout
way, establishing a Security Freeze limits your exposure to easy credit, which
in turn reduces your temptation to artificially inflate your income through the
use of credit. That, in and of itself, is a Wealth Preservation benefit. If you
have ever fallen victim to the pressure of signing up for a credit account in
order to save an instant 10 percent on your purchase, you know how easy credit
can destroy your wealth building plan. Establishing a Security Freeze protects
you from identity theft and from yourself.
I hope this will help you protect
your wealth when “you become yourself in another body.” If you would like to
learn more about simple strategies that can help you build wealth, consider
purchasing my book. I took the defensive action to put freezes on my credit and
when my identity was stolen, the thief attempted to open six accounts in my
name, but he or she couldn’t because the thief could not get approval from the
credit reporting companies. Having a monitoring service can help repair the
damage a credit thief can do, but why not stop him or her before the damage is
done. Take it from someone who knows, being proactive will be the best thing
you have ever done.
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