NEWS 
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Social Security Closes Free Loan Loophole

Social Security CardBefore the Social Security Administration published new guidance to change it, you could effectively take an interest free loan against your Social Security benefit if you were eligible to receive benefits. Once you were eligible to receive benefits, you could start taking your benefits early (and thus a reduced benefit) and then withdraw your benefit application once you hit full retirement (and thus maximum SSA benefits). Once you withdrew your application, you’d have to pay back the benefits you received. Once you did that, you were all square with the SSA and you could continue to wait until full retirement age, when you’d receive the maximum benefit. The end result was an interest free loan.

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 Credit 
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Do You Have Multiple Social Security Numbers?

Did you know that 6.1% of Americans have at least two Social Security numbers associated with their name? A hundred thousand Americans have five or more associated with their name. Those are just two the amazing statistics out of an surprising report by ID Analytics. When you consider that there are 1,000,000,000 possible Social Security numbers, of which over 420 million numbers have been issued since November 1936 (according to the SSA’s FAQ), it’s amazing there aren’t more errors.

I experienced this first hand a few years ago when I discovered a keying error resulted in me having two Social Security numbers. It took a little while to fix the error with the credit bureaus, which I discovered resurfaced just a few weeks ago, but someone typed a 0 instead of a 6 and I was awarded a second number (the bureaus obviously don’t double check this stuff… they probably don’t care).

This underscores the importance of keeping tabs on your credit report, which you can review annually, because that’s really the first place where duplicate numbers can really hurt you. Sometimes the duplicates are the result of honest errors and sometimes it’s fraud, keeping tabs on your credit report will help you fix it as soon as possible.


 Personal Finance 
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How to Recover From a Lost Wallet

Costanza WalletIn this inaugural post to the Financial Contingency Plan series, I want to discuss one of the most common financial disasters – losing your wallet. Whether you carry a money clip, an actual wallet, or an entire purse, losing it is one of the most demoralizing financial events that can happen to a person. Your wallet is a compartmentalization of your financial identity and contains your driver’s license, your cash, any credit and debit cards, your photos, insurance information, and other financial tidbits.

This is what you need to do to prepare for and recover from a lost wallet.

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 NEWS 
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Governments Benefits Direct Deposited in 2011

Social SecurityToday, the Obama administration will announce that all benefits payments from the government will be paid electronically, rather than with paper checks. This includes, but is not limited to, Social Security, unemployment, veterans benefits, railroad retirement, and other government benefits. If you do not have a bank account, you will instead receive a debit card through the Treasury Department’s Direct Express Debit MasterCard program.

This is a good thing and a long time coming. With electronic deposits, you get your money faster and taxpayers save money. Currently, 85% of benefit recipients are already getting their benefits direct deposited into their bank accounts. It’s estimated that this will save $303 million over the first five years and then $120 million each year thereafter. It’s estimated that it costs $1 to mail a check and only 10 cents to direct dpeosit it.

If you enroll for benefits on or after March 1st, 2011, you are required to receive them by direct deposit or debit card. Existing beneficiaries have until March 2013 to supply direct deposit information or request a debit card. The debit card has no monthly fees, no required credit check, and signup is free.

(Photo: swanksalot)


 Career 
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Decode and Understand Your Paycheck

Pay StubI remember when I received my first real pay stub, it was a mixture of happiness and absolute horror. It was my first summer internship after my freshman year of college. I was earning something like $12 and I was pumped that in my first week I’d earn $480. Then I saw my paycheck.

At first glance, your paycheck is a lot of numbers in tables. If you spend a few minutes, you can generally decode and understand what’s going on. However, sometimes it takes a little extra work because your company will use acronyms you aren’t 100% familiar with. When I looked at my first paycheck, I was able to decode it pretty easily… the Feds got their piece, NY state got their piece, and then this weirdo named FICA took a little slice. What? Who the heck is FICA?

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 Government 
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How to Read Your Social Security Statement

If you have a job, you’re paying into the Social Security program. Social Security, or more officially and appropriately, the Old age, survivors, and disability insurance program (OASDI); is more than just a check when you retire or a payroll deduction on your pay stub. In addition to the “old age” portion, it is also a disability insurance program that provides for individuals who are unable to work because of a disability.

Each month, you pay 6.2% of your paycheck into the OASDI program, up to a limit of $6,621.60 a year (the tax is only on the first $106,800 of earnings). Three months before your birthday, you will receive a Social Security Statement. This post will explain how to read and review that Social Security statement.

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 Personal Finance 
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$250 Social Security Stimulus Check

I’ve been getting a lot of emails lately about the $250 Social Security stimulus check so I thought a post would be the best way to answer all of your questions. If you’re wondering where your $250 Social Security stimulus check is, wait until June 4th before trying to contact the Social Security Administration. The American Recovery and Reinvestment Act of 2009 gave all social security recipients (SSI included) a one-time $250 payment, so if you are one of the 50 million individuals who get those benefits, the check is in the mail!

Who is eligible? You must be eligible for Social Security, SSI, Veterans, or Railroad Retirement benefits during November 2008, December 2008, or January 2009. If you were not eligible at that time, you will not receive the check. If you are eligible for multiple benefits, you will only receive one payment.

When and how will I receive the payment? You will get it the same way you are getting your current Social Security and Supplemental Security Income benefit. If you get it by check, you’ll receive the payment as a separate check. If you get it by direct deposit, you will get it as a separate direct deposit. The government has staggered the mailing of those payments throughout May so if you haven’t received it, it’s likely in the mail or in processing. You don’t have to do anything to receive the check and the Social Security Administration will not contact you for any information.

What if it’s after June 4th and still no sign of a check or deposit? Visit the Social Security Administration’s website for the one-time economy recovery payment information page to find out who you need to contact for more information. If you just want more information, this electronic booklet about the one-time economy recovery payment is also very informative.


 Investing 
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Basics of Retirement Investing

Seated Stock TradersFive years, on the first day of my first “real” job, the HR administrator of my company handed me a folder labeled XYZ Company Pension & Retirement Plan. Inside the folder was a description of the company’s pension and 401(k) package, two “things” that meant almost nothing to me. I knew what a pension was but had no clue was a 401(k) was, but the folder seemed to have enough information in it to help me start my own 401(k) company if I wanted to. I made some good decisions about my 401(k), mostly by luck (I put 40% of my money into emerging markets, which was a good choice but I did it for a bad reason – I had no reason!), but you shouldn’t have to.

Retirement investing is not rocket science, it’s just confusing with all the acronyms and the taxability and everything else. The basics, which we’ll cover in this Foundation series article, once you unravel the confusion, are fairly straightforward.

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