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Credit monitoring services may be overkill
© St. Petersburg Times More companies are trying to cash in on concerns about identity theft by selling consumers credit monitoring services. But I won't be buying if I can avoid it. The enticement is usually a free credit report and a free trial period of monitoring. I fell for the bait last November, proving to myself once again that I should never sign up for free trial offers. Remembering to cancel on time is a lot tougher than it seems if you actually give it a real trial. In my case, the trial with TrueLink's monitoring produced periodic e-mails informing me that no one had applied for credit in my name, no one opened an account in my name, no late payments were recorded on my credit report and no one applied for a job or filed for bankruptcy under my name (thank goodness!). Of course, that's exactly what I expected. While it is a good idea to check your credit report every year or two, constant monitoring seems like overkill, particularly considering some companies charge $80 a year for the service. The odds of becoming a victim of identity theft are still small, and monitoring doesn't catch thieves in action or stop them in their tracks. You still have all the hassle of trying to stop them yourself and clean up the mess they have created. "It's a burglar alarm," said John Danaher, chief operating officer for TrueLink, which is in San Luis Obispo, Calif. "It doesn't stop somebody from jimmying open your window. It alerts you to the fact that somebody is trying to do something." He said 50,000 people have signed up. I called to cancel on what I thought was the 30th day, but it turned out to be the 31st. I was informed my credit card already had been billed $79.95. After I complained, the charge was reduced to $19.95. Q. My wife has at least $75,000 in credit card debt. I am 63 and ready to retire. My house is mortgage free. I am thinking bankruptcy is my only way out. What are your thoughts? My first thought is that you and your wife should consult a bankruptcy attorney as soon as possible. This is a significant amount of debt, and you need to have a good grip on your options. One of the things you need to be certain about is whether this is truly just your wife's debt or whether you also are obligated. Whatever you do, do not take out a mortgage on your home to pay these debts. A debt repayment program is generally considered a reasonable option if you have sufficient income to pay off the debts in five years. Settlement also may be an option, if you can get all the creditors to settle. You also might benefit from a lawyer's help with this. My final thought is that you and your wife need to stop incurring new debt. If you do not have sufficient income to cover your living expenses, you are not ready to retire. Q. I get a pension from my former company that is fixed at its current level for life. That and a small Social Security check are my only sources of income. I worked for 40 years to earn the pension, so I surely consider it "earned income," but I found out I cannot continue to contribute to an IRA. This does not sound right. Why can't I continue to contribute into my IRA for the future and to keep up with inflation? President Bush should include this in his proposed overhaul of the system. You certainly can and should continue to save for the future. You just can't use an IRA to do it because that's the way the tax law is written. You can, of course, make suggestions to President Bush and representatives in Washington. In the meantime, look for other tax-efficient investments. If Congress goes along with President Bush's proposal to make stock dividends tax-free, holding stocks outside a tax-sheltered account will be very attractive. And remember that when you sell appreciated shares in a taxable account, you pay capital gains tax. Money withdrawn from an IRA is taxed at the higher rate for ordinary income. If your tax bracket is high enough to make it appropriate, consider other tax-advantaged investments such as municipal bonds. -- Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, send it to On Money. We'll try to answer those we think are of greatest reader interest. All questions must be submitted in writing, but readers' names will not be published. Send questions to Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731.
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