Volume 6  Number 1 January 02, 2009

Tonight people across Florida will be joining friends and family to celebrate the coming of the New Year. Many will take the start of 2009 as an opportunity for a new beginning, making resolutions and setting goals for personal achievements.

The Florida Legislature will kick off the New Year by convening in a special session on January 5 to address the state’s economic crisis. While lawmakers propose solutions to ease Florida’s $2.3 billion deficit, CFO Sink will continue to advocate for a reducing the state’s expenditures in a responsible manner, stressing the importance of keeping mission-critical services like law enforcement and education sufficiently funded.

Although 2008 was a sobering year for many of us, we have many blessings to reflect upon. As you celebrate with loved ones this evening please keep your fellow Floridian in mind and obey all laws. We wish you all a happy and prosperous New Year.

CFO Sink offers money-saving New Year's resolutions for Florida families

The New Year is just around the corner, and while 2008 will be a year to remember for financial crises large and small, Florida Chief Financial Officer Alex Sink and Florida’s Department of Financial Services are encouraging Floridians to take stock of their personal financial situations and make resolutions that will make 2009 a happy and prosperous new year.

1. Keep Track of Your Expenses -- Sounds too simple to be true, but financial planners and confirmed budgeters agree that just by keeping track of expenses on a weekly basis, most people will end up reducing their cash outlay by as much as 20 percent. When you become more aware of where your money is being spent, you tend to become more frugal in how you spend.
2. Make a Plan -- It’s nearly impossible to improve your financial situation if you don’t know where you stand. Start by getting copies of your credit reports and making a list of what you owe in revolving or monthly debt (credit cards, mortgage or car payments) and the associated costs of that debt or the interest charged on the loan. Then list all recurring obligations whether monthly, quarterly or bi-annually. Monthly or more frequent items would include utilities, child care, and groceries. Quarterly or bi-annual items might include car repair or auto insurance, and contributions to retirement or college fund accounts. Once you’ve made your list, you’ll have the foundation to build a budget and create your 2009 financial plan.
3. Save Money – Pay Yourself First -- The old adage that paying yourself first is the key to creating wealth is one of those sayings that is actually true! Make a commitment to set aside five, 10 or even 15 percent of your income for savings and stick to it. Once this becomes a habit, increase the amount you save as much as you can. If your company offers a 401(k) plan and you’re not already participating, sign up today. Many employers match employee contributions and that’s free money! Consider your options for individual retirement accounts, 529 college savings plans or health savings accounts. If you don’t already have one, start building an emergency fund that can cover your obligations for six to 12 months in the event of a financial crisis such as losing a job or a serious illness.
4. Reduce Debt, Especially Credit Card Debt -- Pay off credit cards and other revolving consumer debt as quickly as possible. Credit cards often have very high interest rates and paying only the minimum monthly payment can be a very dangerous practice. Use credit cards only if you’re sure you can pay the bill in full when it comes in. If you have an emergency, pay off as much as you can monthly until the bill is paid in full. Shop around for the best rates on the credit cards you carry and limit the number of credit card accounts you have open. Most experts recommend no more than two to three credit cards per household.
5. Making Your Mortgage Work for You -- Instead of making one single mortgage payment monthly, pay half of the monthly amount every two weeks allowing you to make 13 monthly payments, shortening your loan and saving you thousands of dollars in interest. If this isn’t possible, set a goal of paying an additional five to 10 percent more on your mortgage regularly or applying portions of your annual bonus to paying down the mortgage.
6. Review Your Insurance Needs Annually -- Insurance is the perfect way to protect your assets. An annual review of your insurance needs will let you know if you have too little or too much. Be sure to review life, home, auto, renters and specialty insurance like that for a boat or other recreational vehicle. Riders are available with many polices to meet specific needs such as expensive jewelry, collectibles, art or other valuables. When shopping for life insurance, consult your financial planner on whether life or whole-term is a better financial strategy. As with any major expenditure, don’t be afraid to shop around and be knowledgeable when negotiating the best rates and coverage for you and your family.
7. Manage Your Taxes --  If you’re getting big tax refunds each year, you’re counting on the federal government to manage your money for you better than you can. There are many resources available to help you identify the proper withholding without over-withholding. There are several options available in the marketplace that can also help you make the most of tax savings. If your employer provides a pretax option for a flexible spending account for medical and day-care expense, take advantage of these opportunities to reduce your total taxable income. You could also consider opening a health care savings account, selling stock before the year’s end if it is generating losses, increasing charitable contributions or establishing a trust and maximizing your own pension and IRA contributions.
8. Prevent Identity Theft -- Identity theft protection is everyone’s responsibility. Millions of Americans fall victim to identity theft annually. Request a credit report annually to ensure that your accounts are in order and that you recognize all creditors listed. Be careful about using credit cards online and over the phone and guard your social security number and other personal information carefully. Use online banking to avoid the millions of checks stolen from mailboxes every year. Be wary of scams by phone, mail or email, no matter how legitimate they appear when asking you to provide “your bank” with your personal information. It would be highly unusual for a bank to ask a customer to provide that information in those formats. Always call your local bank or customer service number to confirm any requests by a financial institution for such information.
9. Plan for Retirement  -- Most companies offer employees a 401 (k) plan where the employer matches a portion or all of an employee’s contributions up to a certain percentage. Not taking advantage of this “free money” is a mistake many people make. As Americans live longer, their retirement savings must go farther, making retirement planning a must. Outliving their finances is a major concern of many people today. A good financial planner can help you determine what you’ll need to retire comfortably.
10. Protect Your Credit Score -- Check your credit score regularly to ensure that information reported to the three major bureaus is correct. If you have deficiencies, use the information to correct them and improve your standing. In addition to being top of the list in consideration for the best pricing when you need to borrow money, landlords and many employers require the ability to check your credit score before a hiring decision can be made. A credit score above 700 is considered average and those in the high 700s excellent.

Resolutions are meant to be kept. Keeping your financial resolutions will mean not just a happier new year, but a more prosperous one as well.

Florida Chief Financial Officer Alex Sink invites you to participate in Florida Housing Help, a community outreach program sponsored by the Department of Financial Services and the Financial Action Team (FACT). Florida Housing Help is designed to educate and assist families facing foreclosure.

The workshop will include opportunities to meet with lenders, HUD-certified housing counselors, local housing authorities, legal assistance, the Florida Career and Service Center and Florida Gulf Coast University Small Business Development Center.

• Event: Florida Housing Help Workshop
• Date: January 10, 2009
• Where: City Hall Complex, 1015 Cultural Park Blvd., Cape Coral, Florida
• Time: 9 a.m. to 2 p.m.
• Pre-registration is recommended. Please call 1-877-MY-FL-CFO (1-877-693-5236).

There is still time to pay into an Individual Retirement Account for 2008

Different types of retirement accounts provide you with different ways to deposit money, invest money, keep the money earned, and even to use the money you accumulate. So be sure to consider the differences among the types of accounts and choose what works best for you.

Individual Retirement Accounts, or IRAs, are special accounts with tax advantages to help you save for retirement. There are two types of IRAs:

• Traditional IRAs are funded with pre-tax money so taxes are paid later when funds are withdrawn. The money put into the IRA can lower your taxable income now.
• Roth IRAs are funded with after-tax income so money is withdrawn without paying federal taxes.

America's preferred retirement savings vehicle is the individual retirement account (IRA). According to a report from the Employee Benefit Research Institute (EBRI), assets in such accounts totaled $4.75 trillion in 2007, more than any other type of retirement account. Much of the growth in IRAs can be attributed to rollovers (when workers changing employment transfer 401(k)s to IRAs) rather than new contributions. One of the chief benefits of the IRA is the power of tax-deferred compounding over long periods of time.

Only ten percent of eligible taxpayers contributed to IRAs each year from 2000 to 2004, according to EBRI. This statistic clearly points out that many Americans may not understand the savings value of an IRA. Contributors have until April 15 at midnight to establish tax-deductible IRAs for the 2008 tax-year.

For 2008, the standard contribution for a traditional IRA has increased to $5,000. If you have reached age 50 in the calendar year, there is also a catch-up contribution of an additional $1000.

Under the age of 70-1/2, anyone with earned income or with a spouse with earned income can contribute to a traditional IRA. The traditional IRA comes in two kinds - deductible and nondeductible. Taxpayers without access to an employer-sponsored pension plan may qualify for the deductible traditional IRA within certain income limits. The Roth IRA has its own age and income requirements.

Taxpayers whose adjusted gross incomes are above certain thresholds and who have employer-sponsored retirement plans typically can't deduct their contributions to IRAs on their income taxes. But they can still contribute to an IRA with a nondeductible contribution. Income limits affect only whether the contribution is deductible or not.

For more information on retirement planning, visit AARP.org.

Idea: With the changed marketplace, review your homeowners insurance now

As home prices drop and equity dwindles, it makes sense to review your homeowner’s insurance to find ways to save such as:

Insure your home, not your land. Policies do not provide protection for your land, so make sure the value of the land is not included as part of your coverage amount and that the home value is equitable in the current market.

Be sure you are getting all the discounts you are entitled to receive. Discounts are typically given to people who have more than one policy with the same insurer; have security or safety systems such as smoke detectors, deadbolts and fire alarms; are 55 or older; are retired; or have improved the storm-safety of their homes.

Consider increasing your deductible. If your deductible is $250, raising it to $500 or $1,000 should decrease your premium. Just make sure you can pay the higher deductible and be aware that the hurricane portion of your policy may have a higher deductible.

Make home improvements. Upgrading your electrical, plumbing and heating systems could improve the safety of your home and, therefore, reduce your premiums.

Identity Theft and Your Tax Records

The IRS does not initiate communication with taxpayers through e-mail. Before identity theft happens, safeguard your information.

What do I do if the IRS contacts me because of a tax issue that may have been created by an identity theft?

If you receive a notice or letter in the mail from the IRS that leads you to believe someone may have used your Social Security number fraudulently, please respond immediately to the name, address, and/or number printed on the IRS notice.

Be alert to possible identity theft if the IRS issued notice or letter:

• states more than one tax return was filed for you, or
• indicates you received wages from an employer unknown to you.

An identity thief might also use your Social Security number to file a tax return in order to receive a refund. If the thief files the tax return before you do, the IRS will believe you already filed and received your refund if eligible.

If your Social Security number is stolen, it may be used by another individual to get a job. That person’s employer would report income earned to the IRS using your Social Security number, making it appear that you did not report all of your income on your tax return.

If you have previously been in contact with the IRS and have not achieved a resolution, please contact the IRS Identity Protection Specialized Unit, toll-free at 1-800-908-4490.

What do I do if I have not been contacted by the IRS for a tax issue but believe I am a victim of identity theft?

If your tax records are not currently affected by identity theft, but you believe you may be at risk due to a lost/stolen purse or wallet, questionable credit card activity, credit report, or other activity, you need to provide the IRS with proof of your identity.

You should submit a copy, not the original documents, of your valid Federal or State issued identification, such as a social security card, driver's license, or passport, etc, along with a copy of a police report or Federal Trade Commission Identity Theft Affidavit. If the FTC Affidavit is not notarized, a witness (non-relative) must sign it.

You may also contact the IRS Identity Protection Specialized Unit, toll-free 1-800-908-4490 for guidance. Hours of Operation: Monday – Friday, 8:00 a.m. – 8:00 p.m. your local time.

Additional IRS.gov resources:

How to report and identify phishing, e-mail scams and bogus IRS Web sites.

If you are experiencing economic harm or a systemic problem, or are seeking help in resolving tax problems that have not been resolved through normal channels, you may be eligible for Taxpayer Advocate Service assistance. If you do not prepare your own return, be careful in choosing your tax preparer.

Repository of IRS messages related to suspicious e-mails and identity theft

Remember: The IRS does not initiate communication with taxpayers through e-mail.

SEC Actions During Turmoil in Credit Markets

During the current turmoil in the credit markets, the Securities and Exchange Commission has worked closely with the Department of the Treasury, the Federal Reserve, and other regulators in the U.S. and around the world to protect investors and the markets.

The SEC administers the federal securities laws, requires disclosure by public companies, and brings enforcement actions against securities law violators.

While other federal and state agencies are legally responsible for regulating mortgage lending and the credit markets, the SEC has taken decisive actions to address the extraordinary challenges caused by the current credit crisis.  Read what actions the SEC has taken.

Federal Financial Regulators Issue Revised Identity Theft Brochure

The federal bank, credit union, and thrift regulatory agencies announced publication of a revised identity theft brochure – You Have the Power to Stop Identity Theft – to assist consumers in preventing and resolving identity theft.

The updated brochure focuses primarily on Internet "phishing" by describing how phishing works, offering ways to protect against identity theft, and detailing steps to follow for victims of identity theft.

The brochure includes contact information for three major credit bureaus, where to report suspicious e-mails, and where to access additional information.

The brochure is attached - ID Theft Brochure - and is available to download from the websites of the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, National Credit Union Administration, and Office of Thrift Supervision.