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Identity Theft Top Complaint of 2014

Identity theft was the top complaint reported to the FTC in the last year, beating out even debt collectors. From CNN:

There’s no doubt it’s a scary situation when it happens. If a criminal gets his hands on some personal information, it can wreak havoc on your life. You might find mysterious charges on your credit card. Or a thief could file a tax return in your name, getting a bogus refund before you even know it.

None of this is a surprise. Massive data breaches that could lead to identity theft keep coming and, most recently, hackers hit insurance giant Anthem, stealing information on tens of millions of customers.

Hackers are almost always one step ahead of cybersecurity. And besides, there’s enough low-hanging fruit in the form of businesses that have your personal information on file, but don’t even bother to invest in top-of-the-line security to safeguard it. If you haven’t had your identity stolen yet, you probably will. Identity theft is increasingly becoming just another part of modern life that people will have to deal with.

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Americans Saving Up Record Amount for College

From CNN Money:

They amount of money in the savings plans grew to a record $248 billion in 2014, about 9% more than the previous year.

People are starting to save for their children earlier than ever. About 31% of the savings plans are opened by parents when their child is barely a year old, or before, according to the College Savings Plans Network.

Given the poor quality of most people’s saving habits, this is worth celebrating. Although, I do question how good of an investment a college degree is for many people.

There has been talk recently about doing away with tax-beneficial 529 Plans. The government wants all the money it can get. I’d say this is more likely to happen than doing away with IRAs or 401(k)s, but still pretty unlikely, especially in light of how many people are taking advantage of them.

If you have kids, a 529 savings plan (NOT pre-paid tuition) is a good option for saving up for college. Money is about possibilities, so even though college isn’t right for everyone, you want to have the possibility to buy it for your kids should they so choose. And without saddling them with student loan debt they’ll never be free from.

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How Much Will Auto Loan Rates Increase if Fed Raises Rates?

With interest rates at a historical low right now, it’s only a matter of time before they go up again. Maybe next month, maybe next year, but it will eventually happen. These things are cyclical.

If you’re in the market for a new car, now is a pretty good time to take out a loan. If the Fed raises rates, however, what will happen? This is the first I’ve seen someone put a concrete figure on it:

…should interest rates rise later this year, some households and corporations may find themselves overleveraged as interest rates and borrowing costs rise. When looking at interest rate sensitivity by loan product, we see that auto loans rates are the most sensitive to changes in the fed funds target rate. In addition, we can see that for each one-percentage point rise in the fed funds rate, the interest rate on a 48-month new car loan rises 0.61 percentage points.

So that’s the magic number. Expect a larger increase for longer loans and used car loans.

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Credit Tightens, But Not by Much

Credit numbers are out for the last quarter of 2014. Here are the highlights from ZeroHedge:

Housing Debt

  • Originations, which we measure as appearances of new mortgage balances on consumer credit reports and which includes refinanced mortgages, increased slightly, to $355 billion, but remain low by historical standards.
  • About 122,000 individuals had a new foreclosure notation added to their credit reports between October 1 and December 31.
  • Mortgage delinquencies improved, with the share of mortgage balances 90 or more days delinquent decreasing slightly; 3.1% of mortgage balances were 90+ days delinquent during 2014Q4, compared to 3.2% in the previous quarter.

Student Loans, Credit Cards, and Auto Loans

  • Outstanding student loan balances reported on credit reports increased to $1.16 trillion (+$31 billion) as of December 31, 2014, representing about $77 billion increase from one year ago.

And the kicker:

  • Student loan delinquency rates worsened in the 4th quarter. About 11.3% of aggregate student loan debt is 90+ days delinquent or in default in 2014Q4, up from 11.1% in the third quarter.
  • Auto loan delinquency rates worsened. The 90+ days delinquency rate is now at 3.5%, up from 3.1% in the previous quarter.

That’s a lot of deliquency. Nearly 1/8 of all student loan debt is 90+ days late. And that debt doesn’t go away.

 

The man who became of his understanding of the laws of wealth, acquireth a growing surplus, should give thought to those future days. He should plan certain investments or provisions that may endure safely for many years, yet will be available when the time arrives which he has so wisely anticipated.

The Richest Man in Babylon
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Tragic Story of Latest Powerball Winner

From Marketwatch:

“I don’t have to worry about the word ‘struggle’ no more, and neither do they,” she said. “I just want them to understand that money doesn’t change you, but it can help you, so they don’t have to worry about debt, none of that. They can go to college; they don’t have to worry about nothing. And I’m glad that I can do that for them.”

Such a strange juxtaposition. On one hand, she says money doesn’t change you. True. But then she said that her children won’t have to worry about debt any more. That’s false. If money doesn’t change you, and you’re in debt now, then you’ll find a way to get back in debt even after a $100 million+ payday.

Without the right mindset and habits around money, you will always be living paycheck to paycheck–no matter how big that paycheck is.