Slide Show | October 2011
13 Financial Frights
Don't fear. Here are solutions to help you cope, no matter what haunts you. 13 Financial Frights
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13 Financial Frights
Your Wallet Is Lost Or Stolen
Solution: After you report your missing wallet to the police, your bank and your credit-card companies, ask one of the three credit bureaus -- Equifax, Experian or TransUnion -- to place a fraud alert on your account (the bureau you contact will notify the other two).
The alert lasts 90 days and gets you a free credit report from each agency so you can monitor any criminal use of your credit cards. With a police report, you can extend the alert up to seven years and get two free reports from each bureau annually. At the same time, be sure your bank and credit-card companies issue you new cards and new account numbers. Your Wallet Is Lost Or Stolen
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13 Financial Frights
Poor Credit Prevents You From Getting A Loan
Solution: For most people, the fastest way to improve your credit score is to either pay down your credit-card balances or increase your available credit. One-third of your FICO score (the score most lenders use) is based on your credit-utilization ratio, which is the total of your credit-card balances divided by the total of your credit-card limits. A good target is to use 20% or less of your available credit; a lower percentage is even better.
Correcting any mistakes in your credit report can also improve your score quickly. The best way to maintain a good credit score? Pay your bills on time. Poor Credit Prevents You From Getting A Loan
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13 Financial Frights
You're Audited By the IRS
Solution: You have no better defense than complete, accurate and organized records. Review your return, matching all the numbers to the receipts or statements. Be honest, but keep your explanations brief and on point. You could enlist backup from a tax pro, who may even go to the audit in your place. If something is amiss, you’ll have to pay the extra taxes plus interest. If you deserve a refund, you’ll also get interest. If you disagree with the auditor’s findings, you can appeal and request to meet with a supervisor. You're Audited By the IRS
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13 Financial Frights
Your Long-Term Care Premiums Spike
Solution: Investigate whether you can make changes to lower the cost -- such as reducing the benefit period (the average long-term-care claim is for less than three years), adjusting the daily or monthly benefit amount, or extending the waiting period before benefits kick in. Another option would be to switch to a reduced inflation option.
It’s generally less expensive to keep your current policy than it is to switch to another company -- especially if you’ve developed a medical condition that could make it tough to qualify for new coverage. So if you can afford the increased premiums, swallowing hard and keeping what you have may be the best option. Your Long-Term Care Premiums Spike
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13 Financial Frights
Your Tree Falls On Your Neighbor’s House
Solution: Even if your neighbor’s property is damaged by your tree, it's your neighbor who should file a claim. His homeowners policy will generally pay to fix the damage to the structure. If your tree damages your neighbor’s car, then the comprehensive-coverage portion of your neighbor’s auto insurance usually pays to repair it.
If the tree falls but doesn’t hit anything, insurance generally won't cover the cleanup. It’s probably up to you to pay for that if you want to keep your relationship with your neighbor cordial. Your Tree Falls On Your Neighbor’s House
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13 Financial Frights
A Financial Adviser Pressures You With Murky Advice
Solution: In this case, the elderly woman went to another financial planner, Eric Pelan, who successfully stopped the transfer. But before she signed the papers, she should have gotten a second opinion. And she should have checked the agent’s record with the Financial Industry Regulatory Authority’s BrokerCheck tool at www.brokercheck.finra.org. Turns out the agent did not have a license to sell securities. A Financial Adviser Pressures You With Murky Advice
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13 Financial Frights
Your Mortgage Is Underwater
Solution: The federal government is easing eligibility requirements for its Home Affordable Refinance Program. Introduced in 2009, HARP previously excluded homeowners whose mortgages exceeded 125% of their home’s market value. That barrier has been lifted, opening the program to homeowners with Fannie Mae or Freddie Mac loans who are current on their mortgages. You can’t have any late payments in the past six months, and Fannie or Freddie must have started backing your loan prior to June 1, 2009.
If your mortgage isn’t federally backed, don’t panic. Contact your lender to see if you qualify for a loan modification. If that doesn’t work, try Hope Now (1-888-995-HOPE) or another HUD-approved housing counseling agency for free assistance and advice to prevent foreclosure. Your Mortgage Is Underwater
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13 Financial Frights
You Owe the IRS Money
Solution: Never ignore an IRS notice. It’s generally cheaper to borrow money to pay your tax bill in full than to rack up penalties and interest on your unpaid balance. You could charge it on your credit card, tap your home-equity line of credit or borrow money from your 401(k). Otherwise, you’ll be penalized 0.5% per month, up to 25% of the balance, and interest will compound daily.
If you can’t pay in full, consider an installment agreement(Federal Form 9465). It gives you up to three years to pay and cuts the penalty in half during that time. There’s a $105 fee to sign up for a payment plan at www.irs.gov ($52 if you agree to direct debit). If you are sure you can wipe out your bill within four months, skip the installment-plan fee and request a short-term extension. You Owe the IRS Money
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13 Financial Frights
You Get Laid Off Unexpectedly
Solution: The news might come as a shock, but there are a few steps you can take to minimize the pain of losing your job. Start by meeting with your employer to talk about severance. You may be able to negotiate a better package. It never hurts to ask. You should also file for unemployment as soon as you lose your job. Qualified applicants usually receive the first check within three weeks. File online to speed up the process.
When it comes to health care, weigh the benefits of keeping your former employer’s health insurance vs. switching to an individual policy. While COBRA rules may allow you to keep your employer’s group benefits for 18 months, the program is expensive. Healthy people may find better deals elsewhere. If you have a flexible spending account or a health savings account, look into the guidelines for using that money after you leave. In some cases, particularly with FSAs, you lose any contributions you haven’t used pre-termination. You Get Laid Off Unexpectedly
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13 Financial Frights
Your Leased Car Has Damage
Solution: Excess-wear-and-tear charges average $500 to $800. Even a scratch that is more than one inch long may be considered “excess.” But you may be able to save money by spiffing up the car yourself. Before turning it in, get your car professionally detailed, recommends Tarry Shebesta, president of LeaseCompare.com. Detailing runs about $100, but many scratches can be buffed out.
Detailing makes it look as if the car has been well cared for, says Shebesta, so an inspector may be less picky. For minor dents, paintless dent-removal services, such as 1-800-Dent-Doc, start at $75 per dent. Your Leased Car Has Damage
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13 Financial Frights
You're Wrongfully Billed for Health Care Services
Solution: Call your insurer ASAP. Take notes on any conversations you have and get the names of the people you speak to. Your doctor’s office may not recognize the error at first, particularly if the practice outsources its billing. But be persistent.
Keep all your medical bills, "explanation of benefits" notices and any correspondence between you and your insurer or doctor. If you need to file a written appeal with the insurer, having all the paperwork will help. If all else fails, you can file a complaint with your state insurance department. The National Association of Insurance Commissioners has a list on its site. You're Wrongfully Billed for Health Care Services
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13 Financial Frights
Your Daughter Can’t Make Her Student-Loan Payments
Solution: Solution: If she borrowed via the federal student loans known as Staffords or GradPLUS loans, she’s in luck. A new “pay as you earn” program is set to take effect in January 2012 that will cap federal student loan payments at 10% of discretionary income. The government estimates that it will cut borrowers’ payments by as much as a couple of hundred dollars a month.
Uncle Sam offers several other programs that ease the burden on student borrowers including loan-consolidation plans and loan forgiveness for public service. If the loans are not federally backed, your daughter has fewer options. She should call Sallie Mae and try to work out an arrangement to make the payments more manageable until her income goes up. Your Daughter Can’t Make Her Student-Loan Payments
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13 Financial Frights
You Have No Job, You Have No Health Insurance
Solution: Despite your health problems, you may qualify for an individual policy if your condition is treatable. To get price quotes from several insurers in your area, contact eHealthInsurance.com (call 800-977-8860 to discuss your health situation rather than requesting an online quote), or find a health-insurance agent in your area at www.nahu.org.
Because you’re coming off COBRA, you have access to some special health-insurance options. People who exhaust their COBRA eligibility can buy certain policies regardless of their health condition as long as they don’t have a gap in coverage longer than 63 days. You also may be eligible for assistance in paying health-insurance premiums. Many states have Health Insurance Premium Payment (HIPP) programs, which help low-income people with medical conditions pay private health-insurance premiums. Go to www.coverageforall.org for more information about your state’s rules. Or contact your state insurance department (you can find links to the state departments at www.naic.org). You Have No Job, You Have No Health Insurance






