9.9 million Americans were the victim of identity theft last year. According to Javelin Strategy and Research, that’s a 22% increase from the year before.

The good news is the average amount lost due to identity theft decreased even while the number of incidents increased. This is due to better detection and resolution both by businesses and consumers.

As consumers become aware of the need to check their credit reports regularly, and to enroll in programs that send alerts every time there’s activity that affects those credit reports, fraudulent activity is being halted faster.

Those who don’t become aware of identity theft for 6 months or more after the fraudulent activity begins end up paying far more than those who nip theft in the bud.

While many fear using internet shopping sites because of the threat of theft, it turns out that only about 11% of victims had been victimized by on-line thieves. Lost or stolen wallets, credit and debit cards, and checkbooks were the source of 43% of the incidents.

No figures were given to indicate the number of people affected due to lost data on the part of major institutions. The Veterans Administration and at least two major banking institutions have had security breaches in the past few years, with thieves gaining access to data on millions of individuals.

A growing threat to consumers is the practice of phishing. This does happen on line – with emails directing you to visit a site and verify account information. But it also happens via the telephone.

A current scam has consumers receiving phone calls informing them that they have missed jury duty – and giving them a way to get off the hook. The caller asks for personal information such as birthdate and social security number. If they already have your credit card or bank account information, this extra data ensures that they’ll have clear sailing in using your identity.

To protect yourself from identity theft, first keep your wallet, purse, and checkbook secure. Don’t leave these items in the car or let them out of your sight when in stores, restaurants, health clubs, etc. When you pay by credit card, don’t hand it to a server to process and bring back – wait to pay until you can keep your eye on the card.

Second, don’t give out any personal information over the telephone unless you called them. If your caller is legitimate, you’ll be able to look up the business telephone and return the call. Don’t call a number given to you over the phone, because it could also be phony.

If you get an “urgent” email telling you to visit a site and update information, don’t click the link. Go to what you know to be the true website and check to see if you do have missing or outdated information.

Check your credit card agreement to ensure that you have zero liability in the event your card number is used by an unauthorized person. If not, consider getting a different credit card.

And be sure to check your credit report regularly. Then sign up for alerts that will give you instant notification of suspicious activity on your credit report.

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Is the $7,500 first time homebuyer credit a good deal?

You decide. When you buy you first home between April 9, 2008 and July 1, 2009, you’ll be entitled to a $7,500 tax credit on your 1040 Federal income tax form. That could help you save tax dollars this year – or next year if you’re buying in the first half of ’09.

Whether it’s a good deal will depend upon your income now and your income as it will stand over the next few years. Because, you see, the credit has to be repaid. You’ll have 15 years to do it, adding $500 to your tax bill each year.

As it stands, the credit is nothing more than an interest-free loan of 10% of your home’s purchase price, up to a maximum of $7,500. Single taxpayers with incomes up to $75,000 and couples with incomes up to $150,000 are eligible. When your income rises above $95,000 ($190,000 jointly) you’re no longer eligible. Those who fall between the two limits will get a reduced credit.

The advisability of taking this credit will depend upon what you’re going to do with that $7,500. Using it to improve the house, spending it on an education that will result in a higher-paying job, or investing in tools, equipment, and supplies for your small business might make taking the loan a smart move.

If, however, you’ll do what the government hopes you’ll do to “stimulate the economy,” it’s not very smart. Paying for a new flat screen TV and stereo system over the next 15 years really isn’t a sound investment. Neither is making a down payment on a new car, unless your old car is really on its last legs.

If you were to use it to create another job, that could stimulate the economy and be a smart move, if the job benefited your business. But, you can’t hire someone for long with $7,500 – especially not after you deduct payroll taxes.

Don’t make any decisions based on this quite yet, because this program is still open to change. Congress is debating twists and turns that could alter it dramatically.

For instance, they’re considering doubling this credit to $15,000. Also, the new stimulus package includes a one-time credit for new buyers that won’t have to be paid back as long as they keep their homes for at least 3 years.

In response to current home owners who have cried “no fair!” Congress is also considering making the credit available to all homebuyers – not just first-time buyers.

Other proposals include promotion of a 30-year 4% fixed-rate loan for both new buyers and current owners who wish to refinance – with the government picking up the tab for the difference between 4% and the loan rate offered by the lender.

While all these programs are designed to stimulate buying, they’re causing some confused would-be buyers to wait.

Should they pay the rates offered now, or will they be able to get in at 4% next month? Should they go for the $7,500 tax credit now, or will there soon be a tax credit that doesn’t have to be repaid – and if they buy before that’s passed, will they miss out?

Early last year we learned that the IRS had decided not to impose income tax on homeowners who sold their houses via a short sale.

This is a sale in which the buyer pays less than the current balance due on the house and the mortgage company “forgives” the remaining balance. In order to qualify for a short sale, homeowners must show proof that their home did not or would not sell for an amount equal to or greater than the balance due on the mortgage. Additionally, they must submit proof that they do not have enough assets to make up the shortfall.

Until recently, homeowners were required to pay income tax on the forgiven balance because the IRS treated it as income. That policy was reversed under the Mortgage Debt Relief Forgiveness Act of 2007, and applies to the sale of qualified principal residences after 2006 and before 2010.

The decision was, assumedly, in response to falling home values across the country. While short sales used to be a once-in-a-while occurrence in any given market, they are now very common. In fact some Realtors are specializing in handling nothing but short sales.

Removal of the tax imposition lifted a huge burden for homeowners who were already in financial trouble.

Now we’re warned that consumers who were unable to pay their other debts in 2008 may face income tax on the amounts that were forgiven or cancelled. The tax liability may also extend to the forgiven interest and penalties as well as the forgiven principal.

As was formerly the case with forgiven mortgage debt, the IRS treats these amounts as income.

If the amount exceeds $600, the creditor is required to report the amount to the IRS and the taxpayer on a form 1099-C. This does not apply to debts wiped out in bankruptcy.

The loophole in this tax law is insolvency. If you receive a 1099-C, contact a tax professional or the IRS for instructions on how to demonstrate that insolvency. This may remove your obligation to pay tax on the forgiven balances.

If you are currently negotiating to settle a debt, or if you may do so in 2009, get tax advice before you settle. Then you can be prepared with the proper paperwork to show insolvency and avoid this tax.

While credit card companies are taking steps to reduce lending and are cutting credit limits on some of their best customers, it appears that they are still wooing students and encouraging them to create new credit card accounts.

Some states have become so alarmed over the growing debt incurred by students that they are pushing legislation to crack down on card issuers targeting students.

Texas, California, New York and Oklahoma have already passed laws restricting or regulating the marketing of credit cards on college campuses.

In Illinois, pending legislation would ban free gifts with credit card offers on college campuses and prohibit the selling of student information from colleges to credit card lenders. It would also require financial literacy education for freshmen students at schools that allow credit card marketing.

Lawmakers are concerned that aggressive and often predatory practices by credit card companies are targeting students with little financial sophistication – and plunge them into debt that will be difficult to repay.

In 2008 the U.S. Public Interest research Group completed a study at 40 college campuses. They learned that 25% of students had paid a credit card late fee, 15% had paid an over-limit fee, and 6% had already had one or more credit cards cancelled for nonpayment. This event, of course, puts a 7-year black mark on the student’s credit report, making it difficult for them to obtain needed credit after graduation.

Along with offering free gifts for making application, some credit card issuers are promoting rewards cards geared specifically to youth. The rewards include travel, cash back on bookstore purchases, and merchandise rewards such as CD’s, videos, and movie tickets.

While this attempt at a crackdown is taking place, lawmakers are also taking notice of the need for financial literacy among younger students. Legislation is pending in various states to require financial education in high schools. In Virginia, it has been law since 2006.

The President’s Advisory council on Financial Literacy was created by President Bush in January 2008. As a result of testing conducted last year, it recommends requiring schools to teach financial education in grades K-12, and requiring college students to take a financial literacy course in order to receive federal student loans.

The Council also recommended tax incentives for employers who teach workers about money management, creation of a federal financial literacy website, and making a debit-card-accessible bank account available to every adult American.

The goal of these recommendations is a future generation and a current population armed with sound money management skills to make good decisions for themselves and their families.

It’s about time that our government got involved with the excessive spending of Executives, after the US treasury bailed them out. In my opinion it is very distasteful that these executives are still living the lives they are after all the turmoil in our financial market. I still blame government for the deregulation, which is primarily the Republicans parties fault. They are the ones that pushed for deregulation, and guess what that did to our banking system? Well, by now you can figure that out just by watching TV or reading the local news paper.

Greed is mainly the problem, I don’t care where you graduated from and what your GPA was, no one is worth what these CEO’s and executives are getting paid. I am sure you have heard these big investment bankers saying they are concerned about scouting talent with the “new cap” on income for companies that the government bailed out. The cap will be $500,000 a year. Hmmmmmm I guess I could live on that, if I did not have a yaught, 3 mansions and a Ferrari.

I think our country needs a real wake up call; we are extremely spoiled and blessed at the same time. Being in lending I have learned that money brings out the worst in people. Where there is lots of money, there is lots of GREED.

Even though I did not vote for Obama, I am impressed with what he is doing. I believe he is in the right direction on some matters, especially when it comes to politics in Washington.

Credit has never been more important these days, and hopefully the American people will just be happy with what they have. You never know, “when what you currently have” “might end up being what you had.”

So with all of this being said, make sure you are saving your money, staying on top of your credit. This might even be a great opportunity to learn a new trade through your local college. As markets that are hot change over time, there will always be new hot ones. I would have to say the next hot market will be the web.

Just make sure once you make it to the top that you are not like the rest of greedy America, be very thankful for what you have.

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