By Alexander Carl on May 26, 2010

Now the Solvency Shark tries to help you manage your money yourself. When you take control of your financial situation, you make decisions that fit your needs, not the needs of someone else— banks, retailers, insurance agents, etc.

But life can be complicated. The more you acquire and the more you invest, the harder your financial decisions will become. This is why there are financial planners.

Do I need one? Weigh the costs versus the benefits. Questions you should ask yourself: How good have I been at managing my money? Excellent? Average? Poor?

Financial planners can charge by the hour, charge a flat fee for a basic plan, or charge 1% of your annual income. Do these sound excessive? Is it worth it to have access to someone who (almost certainly) knows more about finance than you do?

There's no right or wrong answer. It's your money.

What will a planner do? Remember the guidance counselors in high school? Financial planners are a little like that. They'll sit down with you, listen to your goals, examine your assets, and give you straight talk on what can be done to meet them.

Some planners specialize in fields such as investing, retirement, or college savings.

But unlike guidance counselors, not all planners take on all clients. The more solvent (and wealthier) you are, the easier it is to find a match. Don't say you weren't warned.

How do I choose the right one? There are several signs to look (and look out) for:

Word of mouth. If people you trust use a trustworthy planner, pursue him or her first.

The CFP credential. While a Certified Financial Planner is held to certain standards of education and ethics, it's not a guarantee of good practice.

Research. Make sure their credentials are real and current. See if they've been convicted of ethics violations.

Learn the planner's approach. You need to know where a planner specializes, and how they operate. Drop anyone who compares themselves to Warren Buffett.

Ask about the fees. Get a straight answer about how much, and which pricing system.

Get everything in writing. If a planner hesitates to do this, watch out. 

By Alexander Carl on April 24, 2010

Let's envision the nightmare scenario: your ID has been stolen, and the thieves are opening credit card accounts as fast as the banks will let them. What happens? Should you just file a police report and accept the fallout?

Of course not. If all else fails and your credit is out of your control, you can ask the three credit reporting agencies to freeze your credit history.

What does it do? The freeze keeps your file from being seen by creditors. When they request a copy of your report from a reporting agency, they receive a message indicating that your history has been frozen.

This means that no new accounts can be opened, and thieves are stuck with a dead identity.

How do I do it? You need to contact all three agencies (Equifax, Experian, and Transunion) to fully freeze your credit. You can either do this online, or by mail. The state of New Jersey provides their addresses here.

Be sure to have all the required information ready. Your credit will be frozen no later than five days after you make your request.

You definitely should freeze your credit if your ID is stolen. In that case, the freezes are free. You can also freeze your credit if you suspect that your personal data is at risk, but this requires a small fee— $10 per bureau at most.

Does it affect my credit score? Not at all.

But what if I need to get a loan? You can temporarily lift the freeze by writing the credit reporting agencies again. The agency will send you a special PIN that provides access to your account. This process costs no more than $5 per bureau.

Sounds cool, but there's got to be a downside. If your ID has been stolen, a credit freeze will essentially deactivate your ID, and thus discourage thieves. No downside there.

However, if others need near continuous access to your credit reports (if you're applying for jobs, colleges, mortgages, etc.) the costs of constantly thawing and freezing will outweigh the benefits. If you suspect shenanigans, place a fraud alert on your accounts instead. 

By Alexander Carl on May 17, 2010

Password protection is not an unbeatable system when it comes to Internet security, but it's extremely common. Oftentimes it's the only barrier between your sensitive data and the outside world.

Think of your online passwords like locks. The more elaborate the lock, the harder it will be to crack it.

Here's how password cracking works, so you know what you're up against: A hacker runs a program that tries thousands of passwords for logging into a website. Sometimes sites have security measures to prevent this, but others don't.

The cracking program uses words from the dictionary, proper nouns, and potentially any common phrase. It will try combinations of numbers, and lower and upper cases.

So a strong password is one that is not easily accessible, i.e. would not be a likely Google search.

A very strong password: 5h#oo97Bs%152mU0s&3H"k

Notice how long this password is: over 14 characters. That is considered a good length for a tough password.

Notice too how it is a combo of lower and upper case letters, numbers, and symbols. There is no recognizable phrase or pattern.

But this password is tough to remember. One this tough is perfect for say, your bank. But for your email or Facebook account, you might want one that flows easier.

A medium-strong password: t3xh()Ma898989^

Perhaps you like the name of the town “Texhoma”, so you mutate that into the first component. Then you repeat some digits before adding an extra symbol.

Note that you shouldn't use a word that has a personal connection (as if you were from Texhoma). Even if it's mutated, it still shouldn't be a short or common word (like “Fr33” or “1nT3rN3t”)

What to avoid. Avoid any phrases related to your personal life—your name, your address, your pet (which is very common), or your interests.

Avoid obvious combinations of anything: “abc123”, “qwertyuiop” “money$$$”.

And never use the password “password”. It is believed to be the most common password on the Internet, and thus the easiest cracked.

Need help? Microsoft offers a password checker for determining strength. However, the checker looks at form rather than content, so it can't tell if you're using words from your life. 

By Alexander Carl on May 12, 2010

No doubt you've heard about the recent flooding in Nashville, and you've likely heard stories of homeowners without flood insurance. And before Nashville, there were major floods in New Jersey, New England, New Orleans...

But who should buy insurance? Is it just for those next to creeks and rivers?

The first thing to know is:

Normal homeowners' insurance does not cover floods. That is a fact, and it means that you must buy flood insurance separately.

But insurance companies are counting that you don't. In many disasters, such as hurricanes, severe thunderstorms and even tornadoes, insurers have claimed that wind damage (which is covered) was actually caused by water damage (which is not). Flood insurance eliminates this coverage cop-out.

Okay, but I don't live in a flood zone. Unfortunately, many federal flood maps are outdated, and roughly one-quarter of all flood damage claims originate from low to moderate risk zones.

So should I get insured? If you live in a high risk zone, your mortgage lender might force you to. Otherwise, it's your choice.

We are all trying to save money, but flood insurance could be valuable enough to make it worth the extra cost.

Oh great. How do I know? Go to floodsmart.gov. You can type in your address and see your property's risk according to your community's flood map.

Of course, finding out you're in a low to moderate risk zone doesn't get you off the hook. The rule of thumb is that if you can afford flood insurance, get it.

What does it cover? There are multiple levels of coverage: your home's contents, the structure itself, or both. Each level is increasingly more expensive.

I'm making an appointment with an agent. How much coverage do I need? Your agent will recommend getting coverage for the replacement cost— the value of rebuilding the home and its contents.

Even if you're a renter, you can still insure your home's contents. This is an excellent idea.

A major flood can cause catastrophic damage, and even a minor one will set you back thousands of dollars. Don't claim that “it can't happen here,” because it could. 

By Alexander Carl on May 11, 2010

We make thousands of purchases throughout our lives, but the trick is being good at it— buying the products that suit our needs, at the best price, with the least amount of hassle. 

The Solvency Shark offers these strategies for making great purchases, whether a new home or a pack of gum.

Let's consider buying a toaster, which is somewhere between the two extremes. Once you recognize that you need a new toaster (such as receiving charred bread in the morning), you begin the process:

What do you really need? Your old Toast-A-Rama made satisfying toast, so you decide to look for a toaster that has similar features.

Yet it's easy to be lured by what is offered but unnecessary. The Lasertoast 220i offers six slots for bread, rotating heating elements, and will text your phone when your toast is ready. These features sound cool, but do you need them?

Research and reconnaissance. With your toaster specifications in mind, what do you do? Figure out who offers them, and learn which brands are considered best.

If you rush straight to your purchase, you'll overlook many great opportunities. So instead you hit the stores, both in-person and online. You see what's offered, and for how much. You read Consumer Report and learn the latest toaster ratings.

Know your range. From your research, you learn that the Toastamatic series offers high quality models for a good value. But you've budgeted your price range, and only one model makes it. Should you flex and spend more?

If there is a significant difference between models, perhaps. If not, stick with your budget. A toaster isn't worth going broke.

You can wait... or not. The dilemma— to go with the current lowest price, or wait for a sale?

It depends on how much the potential savings could be, and how badly you need a toaster this minute. Only your research and personal experience can answer this.

Check your emotions at the door. You really need your morning toast, so you will buy now. You pledge not to be carried away by any cool advertising or packaging. You've done your research, and you will buy the best toaster for you.