The average victim loses about $1,800 in goods and services and will spend around 30 hours and $370 to repair the damage done to their credit record.

Here’s what you need to do to make sure you are not the next victim:

Invest in a shredder

Shred anything and everything that has your name and address on it.

ID theft often starts with stolen mail, lost or stolen wallets, or leaving your name and address on documents that you toss out at work.

Identity thieves love the recycling bin, and they aren’t afraid to dumpster dive.

With that in mind, shred invoices, receipts, pre-approved credit card offers, credit card checks and the envelopes they came in.

Protect yourself online

Information that you store on your computer or in an online account can be a little bit trickier.

Be sure to encrypt any e-mails or files on your computer that may contain personal information, and always use a firewall and anti-spyware on a home computer.

It is also important to be wary of what you post on social networking sites.

“If we say that we’re going on vacation and we’ll be gone for a week, you might as well put a neon sign in front of your house saying come on in, take everything, help yourself to what’s mine,” says Gail Cunningham of the National Foundation for Credit Counseling.

“You have to be careful with your entire family. Educate them. Even the children may unwittingly put information online that compromises the entire family. And the crooks love this because it’s perfectly legal for them to search social media websites and find information about you.”

Check your credit report

Review your credit reports often for any suspicious activity.

Head to annualcreditreport.com to get a free credit report twice a year from each of the three reporting agencies.

“Be a savvy consumer and watch for identity theft,” suggests Gail Cunningham. “Review your report, check for any new accounts that have been opened or certainly charges made to your existing account.”

If suspicious charges have been made on one of your accounts, be sure to stay on top of the matter until it has been resolved.

If you are a victim

If you think you have been a victim of identity theft, call your creditors immediately and shut down the accounts in question.

“Consider putting a fraud or freeze alert on your account,” suggests Cunningham. “Contact the credit bureaus and file a police report. You may need that police report to legitimatize the theft and get any information removed permanently from your credit report.”

To file an identity theft complaint to the Federal Trade Commission, head to ftccomplaintassistant.gov or call the identity theft hotline at (877) 438-4338.

Originally reported by CNN Money.

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Uncle Sam doesn’t offer many gifts. This is one.

Contributing part of your salary to a 401(k) gives you three compelling benefits:

• You get an immediate tax break, because contributions come out of your paycheck before taxes are withheld.
• The possibility of a matching contribution from your employer — most commonly 50 cents on the dollar for the first 6% you save.
• You get tax-deferred growth — meaning you don’t pay taxes each year on capital gains, dividends, and other distributions.

The federal limit on annual contributions has been increasing gradually, and is $16,500 for the 2010 tax year. If you’re 50 or older, you may contribute an additional $5,500

Keep in mind, however, that while federal law sets the guidelines for what’s permissible in 401(k) plans, your employer may set tighter restrictions. Plus, it will take time for the administrators of your plan to implement the changes.

What’s more, there are other federal non-discrimination tests a 401(k) plan must meet, one of which applies to “highly compensated” employees. So if you make more than $110,000 a year (the limit for 2010), you may not be permitted to contribute as high a percentage of your salary as some of your lower paid colleagues.

For all its tax advantages, the 401(k) is not a penalty-free ride. Pull out money from your account before age 59-1/2, and with few exceptions, you’ll owe income taxes on the amount withdrawn plus an additional 10% penalty.

Also, be aware of your plan’s vesting schedule — the time you’re required to be at the company before you’re allowed to walk away with 100% of your employer matches. Of course, any money you contribute to a 401(k) is yours.

The above post is from the CNN Money series called “Money 101.”

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To an insurer, you’re not a person, you’re a set of risks. An insurer bases its premium (or its decision to insure you at all) on your “risk factors,” including some things that may seem unrelated to driving a car, including your occupation, who you are and how you live.

2. Insurers differ.

As with anything else you buy, what seems to be the same product can have different prices, depending on the company. You can save money by comparison shopping.

3. Don’t just look at price.

A low price is no bargain if an insurer takes forever to service your claim. Research the insurer’s record for claims service, as well as its financial stability.

4. Go beyond the basics.

Most states require only a minimum of auto-insurance liability coverage, but you should look for more coverage than that.

5. Demand discounts.

Insurers provide discounts to reward behavior that reduces risk. However, Americans waste money every a year because they forget to ask for them!

6. Ask for the real thing.

Insurers cut costs by paying only for car parts made by companies other than the car’s manufacturer. These parts can be inferior. Demand parts by the original equipment manufacturers (OEMs).

7. At claims time, your insurer isn’t necessarily your friend.

Your idea of fair compensation may not match your insurer’s. Your insurer’s job is to restore you financially. Your job is to prove your losses so you get what you need.

8. Prepare before you have to file a claim.

Keep your policy updated, and re-read it before you file a claim so there are no surprises.

The above post is from the CNN Money series called “Money 101.”

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Such a plan ensures that your family and financial goals are met after you die.

2. An estate plan has several elements.

They include: a will; assignment of power of attorney; and a living will or health-care proxy (medical power of attorney). For some people, a trust may also make sense. When putting together a plan, you must be mindful of both federal and state laws governing estates.

3. Taking inventory of your assets is a good place to start.

Your assets include your investments, retirement savings, insurance policies, and real estate or business interests. Ask yourself three questions: Whom do you want to inherit your assets? Whom do you want handling your financial affairs if you’re ever incapacitated? Whom do you want making medical decisions for you if you become unable to make them for yourself?

4. Everybody needs a will.

A will tells the world exactly where you want your assets distributed when you die. It’s also the best place to name guardians for your children. Dying without a will — also known as dying “intestate” — can be costly to your heirs and leaves you no say over who gets your assets. Even if you have a trust, you still need a will to take care of any holdings outside of that trust when you die.

5. Trusts aren’t just for the wealthy.

Trusts are legal mechanisms that let you put conditions on how and when your assets will be distributed upon your death. They also allow you to reduce your estate and gift taxes and to distribute assets to your heirs without the cost, delay and publicity of probate court, which administers wills. Some also offer greater protection of your assets from creditors and lawsuits.

6. Discussing your estate plans with your heirs may prevent disputes or confusion.

Inheritance can be a loaded issue. By being clear about your intentions, you help dispel potential conflicts after you’re gone.

7. The federal estate tax exemption — the amount you may leave to heirs free of federal tax — changes regularly.

The estate tax hit $3.5 million in 2009, but was phased out completely in 2010, but only for a year. Unless Congress passes new laws between now and then, the tax will be reinstated in 2011 at $1 million.

8. You may leave an unlimited amount of money to your spouse tax-free, but this isn’t always the best tactic.

By leaving all your assets to your spouse, you don’t use your estate tax exemption and instead increase your surviving spouse’s taxable estate. That means your children are likely to pay more in estate taxes if your spouse leaves them the money when he or she dies. Plus, it defers the tough decisions about the distribution of your assets until your spouse’s death.

9. There are two easy ways to give gifts tax-free and reduce your estate.

You may give up to $13,000 a year to an individual (or $26,000 if you’re married and giving the gift with your spouse). You may also pay an unlimited amount of medical and education bills for someone if you pay the expenses directly to the institutions where they were incurred.

10. There are ways to give charitable gifts that keep on giving.

If you donate to a charitable gift fund or community foundation, your investment grows tax-free and you can select the charities to which contributions are given both before and after you die.

The above post is from the CNN Money series called “Money 101.”

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There are term policies, or pure insurance coverage. And there are the many variants of whole life, which combine an investment product with pure term insurance and build cash value.

2. Insurance is sold, not bought.

Agents sell the vast majority of life policies written in the U.S. because the life insurance industry has a vested interest in pushing high-commission (and high-profit) whole-life policies.

3. Whole life is expensive.

Policies with an investment component cost many times more than term policies. As a result, many people who buy whole life often can’t afford an adequate face value, leaving themselves underinsured.

4. Whole-life policies are built on assumptions.

The returns quoted by the agent are simply guesses – not reality. And some companies keep these guesses of future returns on the high side to attract more buyers.

5. Keep your investing and insurance strictly separate.

There are better places to invest – and without the high commissions of whole-life policies.

6. Buy enough term coverage to fill your needs.

Life insurance is no place to skimp, especially with rates at historic lows.

7. Match the term of the policy to your needs.

You want the policy to last as long as it takes for your dependents to leave the nest – or for your retirement income to kick in.

8. Buy when you’re healthy.

Older people and those not in the best of health pay steeply higher rates for life insurance – so buy as early as you can, but don’t buy until you have dependents.

9. Tell the truth.

There’s no sense in shading the facts on your application to get a lower rate. Be assured that if a large claim is made, the insurance company will investigate before paying.

10. Use the Web to shop.

Buying life insurance has never been easier, thanks to the Internet. You can get tons of quotes – and avoid the pushy salespeople.

The above post is from the CNN Money series called “Money 101.”

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To an insurer, you’re not a person; you’re a set of risks. An insurer bases its premium (or its decision to insure you at all) on your “risk factors,” including your occupation, who you are, what you own, and how you live.

2. Know your home’s value.

Before you choose a policy, it is essential to establish your home’s replacement cost. A local builder can provide the best estimate.

3. Insurers differ.

As with anything else you buy, what seems to be the same product can be priced differently by different companies. You can save money by comparison shopping.

4. Don’t just look at price.

A low price is no bargain if an insurer takes forever to service your claim. Research the insurer’s record for claims service, as well as its financial stability.

5. Go beyond the basics.

A basic homeowners policy may not promise to entirely replace your home.

6. Demand discounts. Insurers provide discounts to reward behavior that reduces risk.

However, Americans waste money every year because they forget to ask for them!

7. At claims time, your insurer isn’t necessarily your friend.

Your idea of fair compensation may not match that of your insurer. Your insurer’s job is to restore you financially. Your job is to prove your losses so you get what you need.

8. Prepare before you have to file a claim.

Keep your policy updated, and reread it before you file a claim so there are no surprises

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In effect, you’re giving the government an interest-free loan.

2. If you have too little withheld, you may be charged an underpayment penalty.

You must pay 90% of what you owe for the tax year by the end of that year or an amount equal to 100% of your tax liability for the previous tax year, whichever is smaller.

3. Not every dollar of your taxable income is taxed at the same rate.

That’s because portions of your earned income fall into different brackets, which are assigned different tax rates. Generally speaking, the first dollar you make will be taxed at a lower rate than your last dollar. Your marginal tax rate is the tax bracket at which the highest (or last) portion of your income is taxed.

4. Your combined tax bracket determines how much tax you’ll owe on income from investments such as CDs and money market funds.

Your combined bracket is the sum of your top (or marginal) federal tax rate and your top state income tax rate. It may be less if you itemize deductions since you will be able to deduct your state income tax on your federal return.

5. If you file your return by April 15, but don’t pay the tax you owe, you may receive a late payment penalty.

The same goes if you file for an extension. An extension only allows you to file your return after the due date. But full payment is still required by April 15. If you make a partial payment by then, you may be charged interest on the amount outstanding.

6. You can reduce your chances of being audited.

One of the best ways is to fill out your return completely, correctly, and on time every year.

7. You should pay estimated taxes if you’re self-employed; expect hefty investment income or profits from a property sale; or if you don’t have enough taxes withheld to cover the taxes you’ll owe on non-wage-related income.

Retirees should also consider paying them if they haven’t opted for voluntary withholding on their pension or IRA payments. Estimated taxes are due four times a year (April 15, June 15, Sept. 15, and Jan. 15).

8. Your adjusted gross income (AGI) is your total income minus certain “above the line” deductions such as deductible IRA contributions, alimony payments, or health savings account contributions.

Your AGI primarily determines whether or not you’re eligible for tax breaks. Almost every break, be it a deduction, exemption, or a credit, has its own AGI limit.

9. Your taxable income is your AGI minus exemptions and deductions.

The less your taxable income, the less in taxes you’ll owe. That’s why it’s in your best interest to take advantage of tax breaks where you can.

10. A credit is better than a deduction.

A credit is a dollar-for-dollar reduction of the taxes you owe. A $100 credit means you pay $100 less in taxes. A deduction reduces the taxes you owe by a percent of every dollar you’re allowed to deduct.

You calculate the worth of your deduction by multiplying your marginal (or top) tax rate by the amount of the deduction. If you’re in the 25% tax bracket, a $100 deduction means you’ll pay $25 less in taxes (0.25 times $100).

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Hey, wait. Don’t go down to the car dealer and start shopping immediately. Are you sure that the car, pickup, sport utility or van you have in mind is what you really need?

If you rush into a deal without carefully considering how you will really use the vehicle, you could be making a $25,500 mistake, at the average new-car price.

Sure, you want a car that will make you smile. But consider the purpose of most of your driving. Is it commuting? Hauling kids? Weekends? Vacations?

If you drive more than half an hour to work every day, a combination of a comfortable ride and reasonable gas mileage is important. If you frequently drive clients or co-workers to lunch, a sleek coupe won’t be welcoming for whomever has to crawl into the back seat; you need a four-door sedan.

If you frequently haul your kids and their many friends or classmates, a minivan or sport utility with three rows of seats may be essential. If weekend errands involve hauling building materials or large bushes, that same utility or van will come in handy.

Be honest with yourself. What is the largest number of people you carry regularly? What is the biggest pile of gear, luggage or haul from Home Depot that you regularly carry?

Once you have made this practical matchup, however, you still have lots of choices. With careful planning, you can get a vehicle that you need and really want.

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There are sensible ways to save money on insurance, but skipping coverage isn’t one of them. Medical bills from even a minor car accident can deplete your savings – a major illness can push you into bankruptcy.

2. If your employer offers insurance, grab it.

Group coverage, particularly when it’s employer-subsidized, is almost always a better deal than anything you can get on your own, even if you’re young and healthy. If you’re NOT young and healthy, it’s definitely a better deal.

3. Comparing plans is tough but necessary.

Unfortunately, there is no such thing as standard coverage. Benefits and costs vary widely from plan to plan. If you have choices, you’ll have to examine each one closely to find the best deal.

4. The lowest premium isn’t always the cheapest plan.

What your insurance covers is just as important as, and sometimes more important than, what you pay up front. Ultimately, the cheapest plan is the one with the best price for the benefits you’re most likely to use.

5. Even good coverage can have big loopholes.

You can count on your health insurance to cover you for a hospital stay. Most policies cover doctor visits, but benefits for mental health, prescription drugs and dental care are strictly optional.

6. You’ll pay more for freedom.

Plans with the most comprehensive coverage at the lowest out-of-pocket cost require you to use a specified network of hospitals, doctors, labs, and other providers. The more flexibility you demand, the more you’ll pay, in either premiums or co-payments.

7. You can check out networks before signing up.

A growing number of public and private sources compile information on the track records of individual doctors, hospitals, and health plans.

8. You can keep your insurance if you lose your job.

State and federal regulations protect you from losing your health coverage in the event you lose your job. Unfortunately, they offer little protection from high premium costs. However, jobless workers may get help paying for these premiums as part of the economic stimulus bill.

9. Working couples have more to think about.

If you and your spouse both get health insurance at work, you must sort out whether it makes more sense to have two policies or for one of you to cover the other. If you have kids, you need to decide who’s going to cover them.

10. Tax breaks can help.

Ordinarily medical expenses, including insurance premiums, are not tax deductible until they exceed 7.5% of your income. However, if you’re self-employed or your employer offers a flexible spending account, you can get a tax break without meeting the threshold.

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Your children will have more sources of money for college than you will have for your golden years, so don’t sacrifice your retirement savings.

2. The sooner you start saving, the better.

Even modest savings can pack a punch if you give them enough time to grow. Investing just $100 a month for 18 years will yield $48,000, assuming an 8% average annual return.

3. Stocks are best for your college savings portfolio.

With tuition costs rising faster than inflation, a portfolio tilted toward stocks is the best way to build enough savings in the long term. As your child approaches college age, you can shelter your returns by switching more money into bonds and cash.

4. You don’t have to save the entire cost of four years of college.

Federal, state, and private grants and loans can bridge the gap between your savings and tuition bills, even if you think you make too much to qualify.

5. With mutual funds, investing for college is simple.

Investing in mutual funds puts a professional in charge of your savings so that you don’t have to watch the markets daily.

6. 529 savings plans are a good way to save for college and they offer great tax breaks.

Qualified withdrawals are now free of federal tax and most plans let you save in excess of $200,000 per beneficiary. Plus, there are no income limitations or age restrictions, which means you can start a 529 no matter how much you make or how old your beneficiary is.

7. Tax breaks are almost as good as grants.

You may be able to take two federal tax credits — the American Opportunity Tax Credit and Lifetime Learning Credit — in the years you pay tuition.

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