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Get Debt Free Fast with the 2% Rule

Purpose of this article: to give you a strategy based on a recent book I read to get out of debt fast and sustainably. Please note that we are not paid to recommend books like this, and our decision to do so is solely based on our positive experience with the material.

Bullet Point Summary

  • The strategies detailed within are based on the book “The 2% Rule to Get Debt Free Fast.”
  • The main focus of this approach: make incremental 2% changes to the way you behave with money over time.
  • Put even simpler, for every $100 you spend monthly, see if you can reduce that amount by $2. Then rinse and repeat for the next month.
  • Much like gradual fitness or diet improvement plans, The 2% Rule is designed to make you gradually better each month with money, 2% at a time.
  • Small cuts can go a long way and the strategies detailed within The 2% Rule leverage this.

Overview

I recently completed a book by the founders of The ThrifyCouple.com called The 2% Rule to Get Debt Free Fast. And while the content was far from earthshattering, the strategies detailed within are simple, effective, and sustainable for anyone trying to get out of debt. In essence, the thesis of this book is to simply make incremental 2% changes to the way you behave in regards to your money. The following article is a deeper dive into the concepts discussed within this book. My hope is that after reading this post, you will be enticed to read the book, and pick up some strategies to help you along your get-out-of-debt journey.

Start with Six Small Steps

The 2% Rule to Get Debt Free Fast starts with the following six small steps:

  1. Track your expenses and earnings for a month
  2. Create your baseline budget based on the results from Step 1
  3. Decrease spending the following month by 2%
  4. Increase income the following month by 2%
  5. Apply the “found money” from Step 3 and Step 4 towards your financial goal of getting out of debt
  6. Each month repeat Steps 3 through 5

By tracking your expenses and earnings for one month, you will get a feel for what you normally spend and make each month. From there you can then start to implement the incremental 2% improvements that the strategies in this book call for.

Six Small Steps in Action

Using the six small steps and a sample Client A, this is what the 2% Rule looks like in action:


  • Step 1 & 2: For the month of November 2018, total income and total expenses for sample Client A were exactly $3,000. As a result, the “found money” was $0.
  • Step 3: The planned expenses for December 2018 are $2,940 which is 2% lower than November 2018 baseline
  • Step 4: The planned income for December 2018 is $3,060 which is 2% more than November 2018 baseline
  • Step 5a: Actual income and expenses for the month of December 2018 created a “found money” positive gap of $120. It’s important to note that Client A still obtained a $120 “found money” positive gap even though their income didn’t increase. This is because Client A reduced their expenses by more than the 2% plan.
  • Step 5b: Use “found money” positive gap to pay down debt. Remember that your monthly expense already includes a debt paydown in there. So this positive “found money” gap is incremental payments on top.
  • Step 6: Apply the same 2% increase in income and 2% decrease in expenses to the actuals for December 2018. Rinse and repeat every month from here until you crush your outstanding debt balance.


Why This Approach Works?

This strategy works simply by leveraging the laws of incremental positive change. The focus each month is to simply be 2% better than you were the last month. This plan is designed in such a way to help you use gradual progress to meet your financial goal of getting out of debt. Other get-out-of-debt strategies require you to make drastic cuts that can really only be maintained for brief intervals. It’s like all of those fad/crash diets when you are trying to lose weight.

Instead, the 2% Rule gives you a gradual approach towards cutting your budget and expenses that can actually result in a more realistic plan that works. In closing, if you are motivated to begin your debt payoff journey and are looking for a strategy that may benefit you, please check out the 2% Rule to Get Debt Free Fast. It gives you a very good roadmap to follow towards debt freedom and also has a tone of other long-term financial goals and objectives. I highly recommend this book because of its simplicity and high degree of likelihood to be followed.

Usefull Materials – See Below

Step 2: Use the Overview of Debt Payoff Plan to Group Your Debt
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Start Repairing Your Credit Today

Purpose of this article: to give you some tips to start repairing your credit score day by day thus improving your ability to borrow money on better terms and your overall financial well-being.

Bullet Summary

  • Repairing your credit score takes some time. The following are the seven easy steps to start fixing your score today.
  • Always start by checking your credit score
  • Next obtain your free credit report and verify that the information is accurate. This will help you know your starting point.
  • Call your creditors and contact the credit bureaus when mistakes are found on your credit report.
  • Commit to paying your bills on time, every time as this is probably the single most important strategy
  • Ask for more credit limit from time to time to reduce your credit utilization rate down to 30%
  • Take out a personal loan to consolidate your credit card debt into one if you can.

Overview

Rome wasn’t built in a day. In fact, based on a Google search, Rome was built in 1,009,491 days. And repairing your credit won’t happen overnight. It’s a bit like losing weight: It will take time and there is no quick way to fix it, but you HAVE TO START NOW!

Your credit score is based on your credit history which is the sum of all your financial activities over the past 7 to 10 years. As you repair your credit history, your credit score will naturally improve over time. But for most of us, we only think about our credit score right before we need to take out a new loan. The following article will hopefully help you take some pre-emptive steps toward repairing your credit score now.

The First Step is Knowing Where You Currently Stand

The time to start repairing your credit score is well before you really need it. But before you can actually take steps to improve your score, you need to know where you stand. There is only one true way to know where you stand and that is to pull your credit report from one of the three credit agencies: TransUnion, Experian, and Equifax.

You can obtain your free annual credit report from the following link here.

Once you obtain your credit report and review it thoroughly, you will have your starting point from which you will hopefully improve. For more information on the importance of your credit score please see our article entitled “Your Credit Score … Three Digits Can Mean A Whole Lot.”

Next Step is to Fix the Mistakes on Your Report

The unfortunate reality of financial life is mistakes happen. And while you and I both are perfectly infallible human beings (kidding of course) the credit agencies are not.

The most common mistake that shows up on your credit report and drags your credit score down is incorrectly entered late payments.

This occurs when a credit card provider or a mortgage lender fails to enter a payment correctly and/or timely.

Payment history is a significant factor in your credit score. Remember that over 65% of your credit score is based on your payment history and how much credit you have used up (credit utilization). Given this it is vital that you ensure all your payment history entries on your credit report are accurate.

When you find a payment entry that is incorrect (i.e. applied late), dispute this with either the creditor or the credit bureau directly. You can also move all of your credit payments to auto draft from your bank account to ensure that the payment is issued to the creditor/lender on time. At minimum, you should have all your minimum payments on auto draft so that you can ensure that your payments are processed on time, EVERY TIME!

Ask to Remove Negative Comments

You have probably heard the saying: “You get more with sugar than with salt.” And in dealing with the credit agencies and creditors this couldn’t ring truer. When you have a negative comment on your credit report for say a late payment, you can simply call up your creditor and ask them nicely to remove the negative comment. I kid you not, but plenty of our clients have been able to remove negative marks from their credit history by simply playing nice.

This is simply because creditors have the power to instruct the three credit agencies to remove entries from credit reports for any reason at any time. Put another way, your creditor can decide whether or not to grant you mercy simply by how you ask for “forgiveness.” So, if you do anything at all, please start by calling up all of your creditors and playing nice with them to see if they will remove negative comments/remarks for late payments and other derogatory actions from your credit report.

And While You’re Asking for Things … Ask for More Credit Limit

As we mentioned above, over 65% of your credit score is based on your payment history and how much credit you have used up (credit utilization). Asking for more credit limit will decrease your credit utilization and increase your credit score. Credit Karma has a great step by step on how to ask for more credit limit.

The bottom line is if you have bad credit already, asking for more credit limit will be tough but it is still worth doing because every extra dollar of new credit limit will improve the ratio of credit utilization which will positively impact your credit score. You just have to ensure that you don’t use up the additional available credit should you be approved.

Use a Personal Loan to Consolidate Multiple Credit Card Debt into One

At first glance, the idea of taking on more debt to pay off credit card debt might seem counter intuitive. But the reality is a personal loan can help you consolidate all of your current credit card debt into one single payment, usually at a lower interest rate.

A personal loan works as follows:

  • You borrow funds from a creditor at an interest rate that is usually lower than the interest rates charged by your credit card provider.
  • You then use the funds to pay off your credit card balances.
  • Over time, you pay back the personal loan and thus reach a state of debt freedom

Personal loans are typically unsecured which means they don’t require the borrower to put down any collateral to obtain the loan, and the interest rate you pay depends on your credit score. Consider this … as of January 2018 the average credit card interest rate was higher than 16 percent[1].

So even if a personal loan has a higher interest rate than a secured loan, it will oftentimes be lower than the interest rate on your credit cards. Additionally, after consolidating your credit card debt into one, you will only have to make payments to one entity rather than all of the different credit card providers you had before.

Last but Most Important … Pay Every Bill on Time

The single most important strategy to repair your credit today is to commit to paying every single bill you have on time, every time. Just one late payment of 30 days has the potential to drop your credit score by 90-110 points. So, to say this is the most important step is a bit of an understatement.

Closing

Your credit history good or bad can impact your ability to buy a home, purchase a car, get a better credit card, get cellphone coverage, and even impact the type of employment opportunities you may have.

Repairing your credit score will take some time. On average, negative comments and remarks on your credit report remain on your report for about 7 – 10 years. Remember that your credit history is really just a story that tells future lenders how you manage your financial affairs. And everyone likes a good comeback story.

If you are just starting your credit repair journey, you can use the strategies discussed above to navigate this process. My hope in writing this article is that after reading this, you will take some steps towards successfully repairing your credit score.

[1] https://www.creditkarma.com/credit-cards/i/loan-pay-off-credit-card-debt/

Follow our seven steps to help repair your credit. Always start by (1) checking your credit score and (2) obtaining your free credit report. This will help you know your starting point. (3) Call your creditors and (4) contact the credit bureaus when mistakes are found on your credit report. (5) Paying your bills on time, every time is probably the single most important strategy on the road to repairing your credit. Remember that a missed payment can drop your credit score over 90 points. (6) Ask for more credit limit from time to time to reduce your credit utilization rate down to 30% and (7) take out a personal loan to consolidate your credit card debt into one if you can. These seven strategies will help you improve your credit score over time and get you on the path to better credit management and financial well-being.
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How to Build Credit from Scratch

Purpose of this article: to give you some tips to start building your credit history and explain why building up credit history is important to your financial well-being.

Overview

Credit is one of those tricky things … you need to have a solid credit history to get a decent credit card or a loan, but it’s hard to start building history when no one will give you credit in the first place. So what options do you have to establish credit history without credit in the first place? The following article will walk you through some solid options for building your credit history from scratch.

Option 1: Apply for credit card even with limited/no history

The best credit cards with the best interest rates are usually reserved for people with extended years of good credit history. If you are just starting out though, there are still a couple of credit card options for you even with limited or no credit history:

• Apply for a store credit card

Oftentimes stores extend credit cards to their customers with little to no credit history. These cards typically have very low credit limits and high interest rates, but they do give you a chance to prove that you can handle your finances in a responsible fashion. Once of my favorite store credit cards is the Target REDcard because it gives you 5% off every purchase every time and gives you free online shipping.

• Apply for an unsecured credit card (traditional credit card)

Traditional unsecured credit cards are not off the table when you have limited credit history. It just usually means that your credit card will have lower limits, more fees, and a higher interest rate associated with it. Credit card companies like to be compensated for taking on risk, and cardholders with limited to no histories bear the brunt of this. Credit Karma has a good list of unsecured credit cards for 2018.

• Apply for a secured credit card

If you are unsuccessful in opening a store credit card or a traditional unsecured credit card, your last credit card option is a secured credit card. With a secured credit card, you make a cash deposit upfront, say $300. This cash deposit serves as collateral against the credit card. You then charge the card accordingly and pay the card off each month. If you don’t make payments in full, you incur interest. The cash deposit is returned to you when you close the credit card. The key with secured credit cards is their duration of use should be short and only long enough to give you enough credit history to qualify for a better unsecured credit card. NerdWallet has a list of the best secured credit cards for 2018.

Option 2: Get a Co-signer or become an Authorized User

You have heard the adage that sharing is caring and with the co-signer or authorized user strategy, this adage really rings true. This is because when someone agrees to be your co-signer or allows you to be an authorized user on their credit card, they are ultimately committing to repaying your debts should you be unable to.

When someone agrees to be a co-signer to your loan they ultimately agree to pay off the loan if you cannot make the payments. When someone allows you to be an authorized user on their credit card they allow you to use their credit card and build history. But ultimately, they are legally obligated to pay for any charges unpaid.

Both situations require a huge degree of trust and should not be entertained lightly.

Option 3: Use your monthly rent to build credit history

Assuming you do not have a monthly mortgage payment (since you are just starting to build your credit history), you can use your on-time monthly rent payment to your landlord to build credit history.

Some landlords report positive payment history to the credit reporting agencies, and even if your landlord doesn’t, you can use a variety of rent-reporting services to get your positive payment history reported.

The only downfall of the rent-reporting services is that they aren’t free. I guess there is no such thing as a free lunch.

Option 4: Use your monthly student-loan payment to build credit history

The average student loan debt hover around $37,172 per person. If you happen to be one of the many citizens burdened with student loans, you can at least use your monthly on-time payments to build some positive credit history. This is because student loans are considered installment loans that are paid back over a set period of time.

So, paying back your student loans on time will positively impact your credit history, and just staying on top of your loans each month is enough to boost your credit score into the 700+ range over time.

Closing

Your credit history good or bad can impact your ability to buy a home, purchase a car, get a better credit card, get cellphone coverage, and even impact the type of employment opportunities you may have.

Building and maintaining positive credit history takes some time. Remember that your credit history is really just a story that tells future lenders how you manage your financial affairs. If you are just starting out on your credit journey, you can use the strategies discussed above to navigate this process.

My hope in writing this article is that after reading this, you will take some steps towards successfully building your credit history.

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Your Credit Score… Three Digits Can Mean A Whole Lot

 

Purpose of this article: to explain what goes into your credit score and give you tips to improve your overall credit score.

Overview

Your credit score is a number that approximates how likely you are to repay your debt. This number is used by lenders to decide whether or not to approve you for new loans. And while your overall credit history is captured and maintained by the three main credit bureaus (Equifax, Experian, and TransUnion), the actual score is calculated by the VantageScore and FICO models.

Credit scores range from 300-850 and your score within this range is based on many factors such as how often you make payments on time, and how many accounts you have in “good-standing.”

It is possible at any given time to have different scores given the various scoring models that are in place, but the bottom line is that your score is based on the information within your credit report. It’s a good habit to review this information annually to ensure that it is correct. You can access your free annual credit reports from here.

The Main Factors that Affect Your Score

The factors that are generally considered when calculating your credit score are as follows:

• Payment history – do you pay your bills on time every time?

• Length of credit – how long have you had your accounts open?

• Type of credit – are your loans auto, student, mortgage, credit cards, etc.

• Use of credit limits – how much of your available credit limits is currently used up?

• Number of hard inquiries on your credit report

Why Does Your Credit Score Matter?

Since credit is simply borrowed money provided in the form of a loan, credit issuers like banks or other financial institutions want to make sure of your likelihood to repay. Consequently, they use your credit score as this indicator. Low scores indicate lower degree of repayment while higher scores indicate a higher degree of paying on time.

The amount of money you can borrow as well as the interest that you will be charged is primarily determined by your credit score rating and where you fall in the range. This is why your credit score really matters!

The following score range comes from Credit Sesame:

You don’t necessarily need perfect credit to get the best interest rates and borrowing options, but the closer you are to the 700+ range the better off you will be.

The Formula to Getting a Better Score

Given everything we have talked about the formula to getting a better credit score is pretty simple:

1. Payment History (35%) 

Pay all of your bills on time… no exceptions!

2. Credit Utilization (30%)

Do not use more than 30% of your available credit at any given time. If you are above 30% today, call up your credit card companies and ask them to increase your available credit. Doing so can instantly drop your utilization rate!

3. Age of Credit (15%)

Hold off on closing down old accounts because longer credit history is beneficial to your credit score

4. Type of Credit Outstanding (10%)

Mix the type of loans you have. Credit card debt (i.e. revolving credit lines) are penalized more than mortgage, auto, personal, and or student loans. Put another way, debt that is usually not tied to an asset is penalized more from a credit score standpoint.

5. Number of Hard Inquiries (10%)

Don’t open more than 2 credit cards a year. Usually new credit cards require a hard inquiry into your credit history and that negatively impacts your credit score

 

*Please note that this breakdown is based on the FICO scoring system. The VantageScore 3.0 credit scoring system weight each variable slightly different but Payment History is still the most important under both scoring systems.

Closing

Your credit score is one of the most important three-digit numbers you will manage in your financial life. It really can mean the difference between thousands of dollars paid over the life of a loan. When it comes to maximizing your credit score, the steps detailed within this article are the easiest and most effective ways to do so. If you only do two things, please make sure you pay your bills on time and call your credit card company today to ask for more available credit. My hope in writing this article is that after reading this, you will take some steps towards improving your credit score.

On an aside: If you currently do not use a credit monitoring service, please sign up for Credit Karma as soon as possible. It’s free to use, very effective, and can help protect you from fraudulent activity on your credit reports. Given the Equifax hack that occurred earlier this year, it’s imperative that we all monitor our credit more closely these days.

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Best Options to Use to Pay for Graduate School

Purpose of this article: to explain some options you have to come up with the funds to go to your dream graduate school.

Overview:

You have just been accepted to graduate school, and while you already know the return on investment is high, you have some questions on how to pay for this. The article below will give you some of the best tactical strategies to come up with the money for graduate school.

Strategy 1: Contact the financial aid officers at your school and ask about Fellowships or Scholarships

Many business schools offer lucrative merit-based and/or need-based fellowship awards, and similar to scholarships, these awards do not need to be repaid. On top of fellowships, most schools offer a number of merit-based and/or need-based scholarships. Eligibility for these awards is based on a variety of factors like previous educational achievement, GMAT or GRE scores, and other career related factors.

The stats show that one of the best schools for fellowships is the Harvard Business School. According to the school’s website, “HBS Fellowships are gifts that do not need to be paid back, and nearly 50% of the class receives a fellowship award. The average HBS Fellowship is approximately $37,000 per year, or $74,000 total. All students are encouraged to apply for an HBS Fellowship after being admitted to the program.”

So regardless of your background and career interests, your best bet toward obtaining one of these lucrative offers is to talk with the financial aid department of your respective school as soon as you apply/know that you are getting in. These awards a typically limited and are given out pretty quickly.

Strategy 2: Borrow smartly from the Federal Government

In order to be eligible for federal loans, you will need to be a U.S. citizen and file a form called the Free Application for Student Aid (FAFSA). Once filled out, this form will give you access to federal student loans. Your options from a federal loan standpoint are:

• Stafford Loans (Federal Direct Unsubsidized Loans)
• Graduate PLUS Loans

The following details the characteristics of each of these federal loans:

Stafford Loans (Federal Direct Unsubsidized Loans)
• You can borrow $20,500 annually and $138,500 max lifetime for non-health fields like business

• You can borrow $41,167 annually and $224,000 max lifetime for health fields

• The interest rate is fixed at 6.0% as of June 1, 2017. New rates will be determined on June 1, 2018

• There is a 1.066% origination fee that is deducted proportionally from the loan disbursements. This means that you will receive less money that the amount you actually borrowed

• This loan is Unsubsidized which means interest accrues during the entire time you are enrolled in school

• You do not need to demonstrate financial need to qualify and you don’t need good credit to obtain

• Repayment of this loan is delayed for 6-month after your gradation date and is ultimately unavoidable unless you are eligible for loan discharge or forgiveness

Graduate PLUS Loans
• You must borrow the full amount ($20,500) of the Stafford Loan first, before borrowing any of the Graduate PLUS Loan.

• Once you borrow the full amount of the Stafford Loan, you can then borrow up to the remaining cost of attendance.

• The interest rate is fixed at 7.0% as of June 1, 2017. New rates will be determined on June 1, 2018.

• There is a 4.264% origination fee that is deducted proportionally from the loan disbursement similar to the Stafford Loan

• You do need to demonstrate good credit to obtain and the government does reject applicants who have had significant financial trouble

• Repayment of this loan is delayed for 6-month after your gradation date and is ultimately unavoidable unless you are eligible for loan discharge or forgiveness

So, in summary the federal student loan options for graduate students are as follows:

Strategy 3: Carefully consider if a private loan is a viable option for you 

Borrowing funds for graduate school from private sources like banks or Sallie Mae can be an option for you. But my honest advice will be to opt for loans from the federal government because the interest rates and origination fees are typically better. And from a repayment option, the federal government loans give you more flexibility with plans like income driven repayment.

Nevertheless, if you are still interested in pursuing private lenders, here are some options from NerdWallet.

Strategy 4: Follow one of these three alternative options to finance your degree 

If you find yourself unable to secure funds from fellowships, scholarships or student loans, the following three options could serve as a last resort:

1. Graduate Assistantships – under this method, you would work as a graduate assistant for the university while enrolled in your MBA program. Click here to see an example of Michigan State University graduate assistantship program

2. Industry specific scholarships – just like it sounds, based on what you are pursuing, there can be a ton of industry specific type scholarships. Just note that they are usually in small denominations of $1,000 to $5,000 so you will have to collect a lot of different types to fund the full cost of attendance

3. Employer Sponsorship – companies often have tuition assistance programs as well as full on sponsorship programs for high performing individuals. The “catch” though is you usually have to return to that same company for a certain period of time.

Closing 

Financing your graduate degree is more than possible and will more than likely take a combined approach. The best-case scenario would be to get a fellowship or scholarship through your university. But the most likely scenario will be funding our education with a combination of student loans from the federal government. My hope in writing this article is that after reading this, you will feel more confident in finding the funds necessary to finance your graduate degree.

Aside:  If you are an international student, the type of loans your can apply for depends upon whether or not you have a U.S. cosigner. With a U.S. cosigner, you will be eligible to borrow from a number of different lenders. Without one, your options are very limited and usually gravitate towards the private student loan variety.

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Opt-Out of Prescreened Credit Card and Insurance Offers

Purpose of this Article: to explain how and why you should opt out of credit card and insurance offers through the mail

Overview:

Have you ever wondered why so many credit card and insurance companies can send you “pre-qualified” offers through the mail? While these unsolicited offers might seem like a good thing, in reality they are unnecessary especially if you are not in the market for a new insurance policy or credit card.

When you have good credit, you are a candidate for these types of unsolicited offers. Oftentimes, these companies access your credit information through on the of the three large credit bureaus (Equifax, TransUnion, and Experian) to send you these prescreened, prequalified offers.

Put simply, Equifax, TransUnion, and Experian sell your financial data to credit card and insurance companies without your express permission. Essentially since you have not opted-out, you have opted-in.

Should I Care About These Offers?

Unless you are actively in the market for a new credit card or insurance policy, these unsolicited offers are bad because:

1. You risk your personal information being stolen.

2. These offers clutter your mailbox with junk mail that ends up in the trash

3. They tempt you to open up new credit cards

By opting out, fewer companies have access to your credit file and that is a good thing as the Equifax hack has shown (see here)

How Can I Stop These Offers?

Opting out takes less than five minutes, is completely free, and can be done completely online (unless you opt for the permanent option). To opt-out follow these steps:

1.  Visit https://www.optoutprescreen.com/?rf=t

2. Gather your full name, address, social security number, and date of birth

3. Decide between a five year or permanent opt-out

4. The five year option will allow you to complete the entire application online

5. For the permanent option, you will print out the application and mail in to:

Opt-Out Department
P.O. Box 2033
Rock Island, IL 61204-2033

The following screen shot below shows you what the Opt-Out screen looks like (see below):

Once you completed the opt-out application you are done!

My hope in writing this article is that after reading this, you will take some steps to protect yourself and your family from unsolicited credit card and insurance policy offers. As the Equifax hack continues to show (see here) your personal data is far from safe. Every little step you can do to protect it is well worth it.

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5 Steps That Will Help Protect You in the Face of the Equifax Hack

UPDATE (9-15-17): There is technically a forth credit agency known as Innovis that also has a credit freeze option. Here is a link to their online application to freeze your credit report with this agency.

Purpose of this Article: to explain five actions that you can take to reduce your exposure and protect yourself after the Equifax data breach.

Overview:

Earlier this year Equifax, one of the nation’s three major credit reporting agencies, was hacked by thieves who stole the personal information of 143 million U.S. consumers. And while the company scrambles to figure what happened and how to respond, the reality of this breach doesn’t change: the burden to protect oneself will fall mostly on the individual consumers.

This article provides some steps that you can take to protect yourself in the face on one of the most brazen failures to protect consumer data.

What Can I Do Today?

Step 1: Freeze your credit and place a fraud alert on your file.
Known as a security freeze, this tool allows you to restrict access to your credit report, which in turn makes it more difficult for identify thieves to open new accounts in your name. Put simply, this will prevent someone trying to establish a new credit account in your name. For more detailed information on a credit freeze, please see here.

Please note that a credit freeze doesn’t negatively impact your credit score and fees for freezing your credit at all three agencies (Equifax, Experian, & TransUnion) will cost you $5 to $10 each. Here is a state by state list of the fees you will pay here.

Step 2: Don’t sign up for the Equifax free credit monitoring service. Instead, use a free monitoring service like Credit Karma.

First things first, the last thing you want to do is trust Equifax to monitor your credit. This is the same company that allowed 143 million U.S. consumer personal data to get into the hands of thieves. They also haven’t been very transparent and forthcoming with information regarding this breach.

Instead, sign up for Credit Karma. They offer free credit monitoring which allows you to stay on top of changes to your credit. They also have a smart phone app that makes this very seamless. For more information on this service see here.

Step 3: Review your free credit report annually from Equifax, Experian, and TransUnion.

You can access this by visiting http://www.annualcreditreport.com. Each year you are entitled to three free credit reports from each of these agencies. Request them and review them looking for accounts or activity that you do not recognize. If you find anything out of the ordinary, report this unusual activity to the FTC’s http://www.IdentityTheft.gov website.

Step 4: Regularly monitor your bank statements and credit card statements for fraudulent activity.

Most banks and credit card companies often offer fraud detection services free of charge but the onus is on you to consistently monitor your existing credit card and bank accounts. Personally, I check my accounts every other day, and at a minimum, you should check them weekly.

Step 5: File your income taxes with the IRS as early as possible.

By filling as early as possible, you prevent and reduce the likelihood that your information will be used to fraudulently file your tax returns. Most thieves do this to try to steal your tax return.

What NOT TO DO:

Lastly, whatever you do please DO NOT sign up for Equifax’s TrustedID Premier Service. Even though this is a complimentary identity theft protection and credit file monitoring service, the data breach is so severe that criminals will be able to use the information they stole for decades to come. One year of TrustedID Premier Service is simply not enough to stop the potential risk of identity theft.

Furthermore, there is some legal fine print that states once you sign up for this service; you waive the right to sue Equifax later on. If you want more information on this, see this article here.

Closing:

The unfortunate truth is that there is never complete certainty associated with these security measures. But the fact remains that doing nothing will expose you to as much or more risk. Never assume and trust any of these organizations to protect your own data and take it in your hands to protect yourself.

My hope in writing this article is that after reading this, you can now implement some strategies to protect yourself for identity theft in general, but also specific to the Equifax data breach.