Scam Prevention

As we progress through the 21st century it’s becoming more apparent that we must also protect our retirement from online hackers. A recent government study says there are more than 60 million cyber attacks on U.S. bank accounts on a daily basis. In order to ensure you are not a victim of this type of scam there are some simple steps you can take that will virtually eliminate the possibility that you become a victim.

First, understand how this happens. Hackers use computer programs to sift through different possible combinations of usernames and passwords with the ultimate goal of logging onto your online bank and brokerage accounts. Once they are in, they can transfer money to an account they control in some other country.

If they know simple information about you, there is a good chance they can start with a basic guess of a username and use the software to attempt different passwords which are the most commonly used. If your name is John Smith, they may start with the username Jsmith. This is a common username that people use for their accounts (First initial with the full last name). From there, the computer software will attempt millions of different possible passwords. This is all done automatically by the computer program.

To combat this potential, and most frequently used hack, develop a unique username that no one can ‘guess’. If your current username is Jsmith, change it to something like velvetshoe or blackbanana. Something no one would correlate to you personally.

Then, change your password to something that uses a combination of lowercase and uppercase letters and numbers. This strategy exponentially increases the possible combinations of passwords which the hacking software must try. If you use this strategy with at least 8 characters, it will take most hacking software hundreds of thousands of years to hack into your account.

To make the password easy to remember, come up with a basic word that has at least 8 letters like: Elementary. Change the “E’s” to the number 3. Change the “L” to the number 1. Then capitalize the last three letters. It would look like this: 313m3ntARY. It would take a computer program millions of years to guess your new username with that password. Your online accounts are now protected from the 60 million cyber attacks that banks receive daily.

One final note. It only takes about a week for your fingers to get used to typing this type of password. You will be able to do it just as fast as your current password and be millions of times more secure. One trick is to capitalize the letters that you would usually type with one hand. For example, I can use my right hand to hold the shift key on my keyboard while typing the letters “ARY” with my left hand. This makes it that much faster!

Follow these tips to protect your online accounts from unauthorized transfers, withdrawals and fraud!

Posted in Uncategorized | Tagged | Leave a comment

Historical Evidence of Rising Debts and Deficits on GDP and Real Wages: Why we can’t borrow/print/spend our way out of this hole.

 Historical Evidence of Rising Debts and Deficits on GDP and Real Wages
         Why we can’t borrow/print/spend our way out of this hole.

Part 1 

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Ballooning government deficit spending and debt has a negative effect on private GDP, money supply, money velocity and wages.

I have often explained why the Keynesian belief that the government can print/ borrow and spend enough money to trigger self-sustaining prosperity is a nonsensical, magical-thinking Cargo Cult.

The following charts show why printing/borrowing and spending our way to self-sustaining prosperity has failed, and why it will continue to fail, with eventually catastrophic results: the returns on this unprecedented borrow-spend policy are diminishing to near-zero or negative.

Humanity has an innate attraction to conspiracy and complexity. Humans have been selected to seek patterns in Nature and in the behavior of the humans around them. No wonder humans are drawn to detective stories, puzzles and conspiracies.

While conspiracies are indeed a part of the human experience, focusing on human intent and collusion can distract us from the impersonal systems that dominate economic history.

In a similar fashion, an obsession with complexity distracts us from what is blindingly obvious. Just as the alcoholic refuses to admit his addiction lest he be forced to tackle his self-destruction, so too do we avoid the financially obvious lest we be forced to surrender our ardent hope that the increasingly fragile Status Quo we depend on is enduring and secure.

As long as the interest rate on debt is low, the path of least resistance is to keep borrowing to support politically untouchable fiefdoms, cartels and constituencies. Eventually, the cost of servicing the debt overwhelms the diminishing returns on the debt-based spending.

Let’s start by admitting the unprecedented rise of government debt in the past decade.Here is the Federal debt, not including the bogus inter-governmental debts (mostly money owed to the illusory Social Security Trust Fund).

Everyone knows Federal debt has skyrocketed, but so has the debt of state and local governments: state and local government debt has risen by 250% just since 2002.

GDP includes government spending; this vast expansion of debt-based spending has had a very modest positive impact on GDP:

Courtesy of longtime correspondent B.C., here are five insightful charts. The first displays the ratio of GDP minus government spending to total Federal debt. This reveals the effect of massive Federal borrowing on the private sector–the non-government part of the economy.

When the line is rising, private GDP is expanding even as Federal debt increases. Thus the private economy expanded smartly from 1959 to 1973 while the Federal government ran relatively modest deficits. If we look at the first chart above, total Federal debt, we see that it was basically flatlined in this period–the deficits of this period barely moved the needle on total Federal debt.

As Federal deficits and debt increased in the 1980s, private GDP was negatively impacted. Only the twin speculative bubbles of the late 1990s to mid-2000s (dot-com and housing) reversed the trend. Once the housing bubble popped, the effect of rapidly rising Federal debt has had a very negative correlation to private GDP.

It’s even worse when state and local government debt is added:

What is the correlation of rapidly rising Federal debt and money supply? It appears ballooning Federal spending/debt no longer boosts money supply much:

As B.C. observes: The purchasing power of wages is in freefall vs. the growth of debt-money. Increasing Federal debt and spending is not boosting wages.

The effect of rising government debt on wages has been declining for 40 years, a trend interrupted only by brief speculative bubbles.

Meanwhile, massive Federal borrowing and deficit spending has opened a structural deficit of monumental proportions: anyone claiming this is sustainable or healthy is either in a drunken daze or mesmerized by Cargo Cult magical thinking.

As government borrowing and spending skyrocketed since 2002, household income flatlined during the housing bubble and then fell off a cliff as the State-enforced financialization of the economy hollowed out household wealth and income. In a Central State/cartel capitalism system like America’s, the cost basis for both enterprises and households constantly rises, pressuring wages lower for the majority of wage earners. We see this clearly on this chart:

Posted in Uncategorized | Leave a comment

Missed Your 2012 RMD? Here’s How to Avoid the 50% IRS Penalty For Doing So.

Missed Your 2012 RMD? Here’s How to Avoid the 50% IRS Penalty For Doing So.

The rules for taking required minimum distributions from tax qualified retirement plans are a murky area to say the least. For non-inherited IRA’s, the general rule is you must take your first RMD by tax time of the year after you turn 70.5. For every RMD thereafter, they must be taken by 12/31 of the calendar year or the IRS imposes a 50% penalty on the amount you failed to take.

The American Taxpayer Relief Act of 2012 (ATRA) extended the qualified charitable distribution (QCD) provisions for 2012 and 2013. Several special transition rules were included in ATRA to enable taxpayers to have a donation made before February 1, 2013, treated as a 2012 QCD.

A QCD is an otherwise taxable distribution from an IRA (other than an ongoing SEP or SIMPLE IRA) owned by an individual who is age 70½ or over that is paid directly from the IRA to a qualified charity. An IRA owner can exclude from gross income up to $100,000 of a QCD made for a year, and a QCD can be used to satisfy any IRA required minimum distributions (RMDs) for the year. Also, the amount of a QCD excluded from gross income is not taken into account in determining any deduction for charitable contributions. (See Notice 2007-7, Section IX, for additional information on QCDs.)

2012 QCDs Made in January 2013

An IRA owner can treat a contribution made to a qualified charity in January 2013 as a 2012 QCD in either of the following circumstances:

  • The contribution is a cash contribution to the charity of all or a portion of an IRA distribution made to the IRA owner in December 2012, provided that the contribution would have been a 2012 QCD if it had been paid directly from the IRA to the charity in 2012.
  • The contribution is paid directly from the IRA to the charity, provided that the contribution would have been a 2012 QCD if it had been paid in 2012.

IRA owners should keep records to substantiate the timing of contributions and distributions regarding any 2012 QCD made in January 2013.

A QCD made in January 2013 that is treated as a 2012 QCD will satisfy the IRA owner’s unmade 2012 RMD if the amount of the QCD equals or exceeds the 2012 RMD. However, no part of such a QCD can be used to satisfy the 2013 RMD, even if the 2012 RMD had already been made. In determining the RMD for 2013, the 2012 QCD must be subtracted from the December 31, 2012, IRA account balance(s).

Voila! If you missed your 2012 RMD and are concerned about the 50% penalty associated with doing so, this quick article will save you thousands of dollars!

Reporting- This section is more technical, but if you missed your RMD, be sure to provide this information to your CPA.!

Form 1099-R – IRA trustees must report distributions as follows:

  • Distributions made in 2012 are reported on a 2012 Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.; and
  • Distributions made in 2013, including any 2012 QCDs made in January 2013, are reported on a 2013 Form 1099-R.

Form 1040 – IRA owners must report 2012 QCDs made in January 2013 on their 2012 Form 1040 by:

  • including the full amount of the 2012 QCD (even if in excess of $100,000) on line 15a; and
  • not including any amount on line 15b, but writing “QCD” next to line 15b.

Note.  A 2012 QCD made in January 2013 must also be reported on the IRA owner’s 2013 Form 1040. These reporting requirements will be reflected in the 2013 Instructions for Form 1040.

IRA owners must file a 2012 Form 8606, Nondeductible IRAs, with their 2012 Form 1040 if:

  • the 2012 QCD was from a traditional IRA, there was basis in the IRA owner’s traditional IRA(s), and the IRA owner received a distribution from a traditional IRA in 2012, other than the 2012 QCD; or
  • the 2012 QCD was from a Roth IRA.

If a 2012 Form 8606 must be filed, the instructions to the form will describe how to report any 2012 QCD made in January 2013.


Posted in Uncategorized | Leave a comment

Social Security isn’t as safe as it used to be

As of this post, Social Security is in immediate danger.

The U.S. government is preparing for a shutdown as both sides of the aisle disagree over the new budget. April 8 is the date on which an agreement must be reached, or non-essential government services will be suspended. If the shutdown continues for more than a few days, more essential payments and services may be on the chopping block.

Timothy Geithner, White House Treasury Secretary, paints a grim picture, according to Bloomberg. The U.S. debt ceiling–the maximum amount of debt the country can have on the books at any one time–now stands at $14.29 trillion. Geithner says that if Congress doesn’t raise that, we’ll hit the ceiling by May 16 at the latest. And if there’s a shutdown, no work will get done, including a debt ceiling increase.

What does it mean? It means that the government will run out of ready cash to send to military personnel and retirees, among other government programs. Your Social Security check will be among the first casualties.

In retirement, good planning is the key to ensuring your needs are met. Many people in retired years look at Social Security as a safety net. But in these uncertain times, Social Security is no longer the certainty it once was.

The retirement specialists at Oak Harvest Financial Group can show you a true safe haven for your retirement nest egg–with excellent growth potential, but without the market risk and ongoing market fees. Can your bank or brokerage house say the same?

To learn more, listen to the Retirement Rescue Show with Troy Sharpe and Steve Watts, every Saturday at 6 p.m. on the 9-5-0 AM Houston. Or call us today at 713-914-8111 to schedule a no-cost, no-obligation consultation.

Of course, you can always visit our Oak Harvest Financial Group website.

Posted in Uncategorized | Tagged , , , , , | Leave a comment