With Kim Lankford, Contributing Editor at Kiplinger
Podcast: Play in new window | Download
Steve’s guest, Kim Lankford, is a contributing editor at Kiplinger and also writes the Ask Kim column for Kiplinger’s Personal Finance.
12 Smart Financial Moves For The New Year
Steve starts the conversation with an introduction to Kim’s recent Kiplinger article on “12 Smart Financial Moves for the New Year” to save money on insurance, taxes, and other things.
1. Cut Insurance Premiums
First on Kim’s list is shopping for insurance, especially car insurance, because she believes almost everyone can lower their premiums by shopping around. For starters, contact your existing car insurer and ask for a list of discounts you may be eligible for and make sure they’re all applied, including new ones you may not have qualified for when you first applied.
For example, a significant discount may be available if your teenager’s grades have improved, if you’ve moved and have a shorter commute, if you carpool, or if you’re in a new job that might qualify for special discounts.
As Steve points out, the insurance company isn’t going to call you to ask if anything’s changed, so it’s up to you to call them.
Follow the same procedure with your homeowner’s insurance, especially if you’re about to make home improvements that may get you a credit, such as for security systems.
Once you’ve got a new baseline, shop around and see if other companies can beat your current rate.
2. Review Your Beneficiaries
Kim Lankford notes that January is always a good time to review your beneficiaries—on life insurance, retirement plans, brokerage accounts, etc.—and make changes. This information is typically included in year-end statements that you receive so you can file your taxes.
A lot of people update their wills when they get married or have kids or grandkids, but then forget to update their beneficiary designations and often end up giving money to people they did not intend to.
3. Protect Your Identity
In this era of lamentable data breaches, Kim Lankford believes you should think about whether or not you want to put a freeze on your credit to prevent people from taking out credit in your name. In her article, “12 Smart Financial Moves for the New Year”, Kim offers instructions on how to implement a data freeze, security features such as a PIN, and costs associated with freezing and unfreezing your account.
She also recommends getting free credit reports from the three main credit bureaus by visiting annualcreditreport.com. Once you get your reports, look for suspicious items, ask questions, and see what can you do to improve your credit record, such as paying down late charges, high balances, etc.
Steve notes that credit reports do not offer FICO credit scores, which you might now see on your bank statements.
4. Sign Up For An Online Social Security Account
Next, Kim recommends signing up for an online Social Security account even if you are years away from collecting social security benefits. An online account will show you what you’ll likely get on retirement based on your income history and prospects, as well as allow you to check for errors on your income history to make sure you get the full amount you qualify for.
Steve takes a break and continues with Kim Lankford’s “12 Smart Financial Moves for the New Year” in the next segment.
Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital. Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.
Steve Pomeranz: Today I’m speaking with Kim Lankford. She’s a contributing editor at Kiplinger. She also writes the “Ask Kim” column for Kiplinger’s Personal Finance. And we love Kiplinger and we love Kim. So let’s see what she’s got for us today. Hey, Kim, welcome to the show.
Kim Lankford: Thanks for having me.
Steve Pomeranz: You recently wrote an “Ask Kim” column on the 12 smart financial moves for the New Year. We’re talking about 2018, of course, where lots of things have changed. A year to take steps to save money on insurance, reduce taxes, and other things. Let’s get started. I noticed the first thing on your list.
These are “12 smart financial moves.” The first thing was cut insurance premiums by re-shopping your insurance, especially car insurance. And I’ve got to tell you, I totally agree with it. Tell me about that.
Kim Lankford: Well, first of all, this is something that can save pretty much everyone money. No matter how old you are, and especially if you have teenage drivers, one of your largest expenses is probably your auto insurance. And there’s a few easy things you can do, even before you start to re-shop. First contact your car insurance company and get a list of discounts. And see if there’s any discounts that you may not have been eligible for when you first applied for your policy but may qualify for now.
And make sure you’re getting credit for them. For example, if your teenager did not have a B average when you first applied for the coverage but now has improved their grades, you could get a pretty significant discount for them having good grades. Or if you’ve moved and have a shorter commute, if you carpool, if you’ve changed jobs.
There’s certain types of jobs some insurance give special discounts to. Just find out what that is and all you need to do is make sure you get credit for it.
Steve Pomeranz: Yeah, but more than that, the insurance company is not going to call you and ask you if anything’s changed.
Kim Lankford: That’s exactly right, so it’s up to you. And most of them, a lot of them, even have some of these lists on their websites. Some of the discounts vary from state to state, so you want to get a real specific one. But just find out. Also, it doesn’t hurt to do this with your homeowner’s insurance as well.
Steve Pomeranz: Yeah.
Kim Lankford: Especially if you’re about to do some home improvement, you may get credit for using certain materials, or doing certain things to your home. Getting a generator, things like that.
Steve Pomeranz: Okay, also it’s a good idea to start shopping car insurance companies because I have recently done it myself.
I’ve saved a lot of money and that was through shopping. I was really surprised that some of the ones that advertise a lot and you think you’re going to get great discounts, you don’t necessarily get the greatest discount for. So don’t be too swayed by all of the insurance advertising and cute little creatures that talk with us, talk to us on [LAUGH] .
Kim Lankford: And it’s true that each insurance company has different sweet spots. So one may have a really good deal for your neighbor. It may not be the best deal for you. And also, some of the ones, you may have had some life changes. You may now have a teenage driver, or different type of cars, or live in a different area. And the insurance company that may have been good for you a few years ago may not be the best deal anymore.
Steve Pomeranz: And if you’re a teenager and you’re listening to this show, you know, get better grades. You’re going to help your parents out, okay?
Kim Lankford: It’s a decent sized discount. It really makes a big difference.
Steve Pomeranz: Okay, let’s do number two. Number two is an easy one, but it’s very important. Review your beneficiaries on all of your accounts.
Kim Lankford: And I think January is just a good time for this because you’re starting to get all of your information together for tax time.
You might even be snowed in and not be able to go do all the fun things you’d want to do. So just take a moment while you’re in your accounts, while you’re getting those year-end statements, things like that. Just see if the beneficiaries are the people you intend.
Steve Pomeranz: Yeah.
Kim Lankford: And this is because the beneficiaries on your life insurance and your retirement plan, the money is going to go to the beneficiaries you designated, no matter what you say in your will. So a lot of people update their will when they get married or have kids or grandkids, but forget to update their beneficiary designations and don’t realize the money would not be going to the people they thought it would be going to.
Steve Pomeranz: So call your broker, call your insurance agent. Make sure that all things are on track. It’s like they say that when you change your clocks, you’re supposed to change the battery in your fire alarms. Of course, I don’t know anybody who really does that, but it’s also a good idea. So every January, you should just check your beneficiaries.
Kim Lankford: I think that’s just a good way to always remember to do it. And like I said, with getting the tax forms this time of year, a lot of times doing your accounts anyway, so while you’re there, just take a quick look.
Steve Pomeranz: Okay, number three, protect your identity. This is an era of data breaches. What are you supposed to do?
Kim Lankford: Well, first of all, think about whether or not you want to have a credit freeze. And if you do, we have a lot of great instructions. You’re going to need to go to each of the three credit bureaus, and the key thing is that this is going to prevent people from taking out credit in your name. In fact, no one will be able to use your credit report unless you unfreeze your account. You usually get a PIN and be able to do that. The things to think are usually costs to freeze and unfreeze your account unless you have been a victim of identity theft.
So just keep in mind those rules. Also, while you’re at it, go take a look at annualcreditreport.com. You can get a free credit report from those three credit bureaus and look for anything suspicious. If you see anything on there that’s suspicious, ask questions. Also get a chance to see what can you do to improve your credit record.
You may see that there might be some late charges, you might have some high balances, and this just gives you a great idea. Another good thing to do in January is to set yourself up for the rest of the year, improving your credit and making sure there aren’t any strange things on your credit report from someone who might not be you.
Steve Pomeranz: Got you. Don’t forget, don’t expect, I should say, to get your FICO score at these credit report places. FICO scores are completely different. You can usually get that on your bank account. They’re now listing FICO scores. But I remember one time, years ago, I was like, I want to find out what my score is. That’s not what these annual credit report sites are all about, so just to remind you of that.
Number four, sign up for online social security even if you’re years away. What’s with that?
Kim Lankford: Well, first of all, I need you to go to ssa.gov/myaccount. And no matter how old you are, if you’re working, you’re building up your social security record. And so it’s a good idea to go there, sign up for your online account and first of all, you’ll be able to see what you’re on track to get when you retire, even if it’s years and years in the future. You can kind of get an idea of what you’ve accumulated so far, and if your earnings stay on that same path, what you could expect.
But also it’s a good opportunity to check for errors. You’ll also see a list of what your income has been reported to social security for all of the years that you’ve been working. And just take a look and make sure those are accurate. I hear from a lot of readers, every once in a while, they might find a mistake and they just need to go back to their old employer.
They need to get some of their old pay stubs and contact social security so they get credit for that right away. Because you want to make sure when you finally do qualify to take benefits that you’re getting as big benefits as you really should be getting.
Steve Pomeranz: We’re going to take a break for one quick second and we’re going to come back with Kim Langford from Kiplinger and go through more of the “12 smart financial moves” for the New Year.