College Savings In 2009

Saving for college is hard, even when times are good. The cost of a college education has risen at nearly twice the rate of inflation for several years running. The various ups and downs of the market mean that college savings may be vulnerable at a time when stability should rule.

All states now have a 529 college savings plan, and most states allow participants from other states to save in their plans. Parents can reap tax breaks from their local state government for college savings they set aside right now. As an added benefit, most 529 plan withdrawals are exempt from taxes, although the non-taxability of these plans isn’t guaranteed into the future.

Most firms that offer 529 savings plans take an age-based approach to college savings. As the beneficiary inches toward college age, the child’s portfolio is exposed to a decreasing amount of risk. While this approach does turn down the gains that might be made in a good market, it also protects college funding from market downturns when families are most likely to need cash.

Parents need to be very careful about college savings however. Not all 529 plans are age-based, meaning that if the goal is to maximize gains, a child’s college funding could be at significant risk.

The beginning of the financial year is a good time to take stock of college savings plans. Make sure you understand the goal of the plan, and whether or not your savings will be transferred to less risky investments as the child’s college enrollment date approaches. If not, talk to the fund manager about shifting assets from more risky to less risky investments as the child ages.

Optimistically, 2009 will be a turnaround year for investments, but most analysts don’t believe that things will start looking up until 2010 or even later. Under these circumstances, it makes more sense to hang on to what you have or settle for small gains than it does to swing for the fences and lose a semesters or years of tuition.

Watch Your Identity During The Holiday Season

The holiday shopping season is here, which means that identity theft is on the rise. Credit card usage rises in the weeks leading up to the holiday season, and alert thieves are looking for opportunities to swipe your credit card information.

Most credit card receipts no longer contain the full credit card number, which has cut down on the incidence of “convenient” theft, but receipts that are made from an actual impression of the credit card may still leave consumers vulnerable to theft. Old credit card statements that contain the full account number can also be stolen from household garbage. To eliminate this kind of vulnerability, shred old credit card statements, receipts and other documents that may have your credit card numbers or other identifying information in plain text.

Consumers have reported an increase in the number of credit cards being stolen from restaurants and retail outlets. Cardholders are being victimized by “skimmers” and “scanners” that enable thieves to copy all information from a credit card required to make additional transactions. Dishonest restaurant employees may make an extra credit card impression when they process a credit card. Enterprising thieves have also been known to hack into a restaurant’s credit card network connection to capture unencrypted credit card data.

Thieves hope to hide the added transactions among the holiday statements, so cardholders may not notice the unauthorized activities right away. Credit card companies have developed excellent detection capabilities, but not all credit card fraud is identified right away. Check your statements carefully each month and report any unrecognized transactions immediately. Contact the credit card company using the 800-number on the back of the card, or contact the issuing bank for assistance.