It’s close enough to Black Friday, Small Business Saturday, and Cyber Monday to talk a bit about online shopping. Some very scary statistics from 2017 showed a marked increase in online shopping fraud, using stolen credit and debit card numbers. This is not necessarily surprising because consumers are starting to trust online ordering, and the total number of “eCommerce” transactions were up by 19% over 2016 numbers. Sadly, the number of fraudulent transactions during the 2017 holiday season also increased, to 22% over 2016. And a staggering 1 in 85 transactions online was an attempted fraud. GAH!

Online retailers are taking steps to prevent fraud such as collecting IP addresses and requiring the “CVV” or verification code on the back of the card used for a purchase. But, while they do their part to protect their businesses from fraud (yes, they sustain incredible losses from fraud, it isn’t only the consumer), there are easy steps you can take to minimize the risk of being a victim of credit or debit card fraud:

1. Use Unique Usernames and Passwords for Each Merchant

Never reuse usernames and passwords for multiple merchants. If the retailer is compromised, and your login is stolen, thieves can log in to other sites using your information and make unauthorized purchases. This time of year, shipping and billing addresses often differ, so that delivery address discrepancy may not trigger a “potential fraud” flag on the merchant side. Yes, it can be a pain, but so can losing all of your holiday money temporarily until the bank refunds your fraudulent losses.

2. Check the HTTP (S)

The “s” at the end of the hypertext transfer protocol (you bet I had to look that one up) means, “secure.” The security includes data encryption. When you are on a site with only, “http” the data sent to the site can be intercepted by a third party.

3. Use the Code on the Back of the Card

The three or four digit verification number on your credit or debit card is requested to prove that you have the physical card in your possession when making a purchase. In addition to a billing address and card number match, the code can help reduce fraud by requiring a third data point for a purchase.

4. Limit the Potential Financial Loss

This is particularly important for debit card users who shop online this holiday season. Have a second (free) checking account with a debit card for online purchases, and only put enough in the account to cover your shopping budget. This limits the potential loss if the card used online is compromised. And always use the same card, tied to the dedicated account, when shopping online, or traveling.

5. Keep Copies of Everything and Watch Your Accounts and Statements

Print out copies of invoices and receipts. This way you have confirmation of what you ordered, and the total amount paid. If your card is compromised, you will be able to flag unauthorized purchases, while confirming the ones you actually made. And watch your statements and account carefully. Some financial institutions have a feature where you can receive an alert (we get a text) if there is a purchase made over a specific threshold. One word of caution, however, my husband was alerted to his holiday gift by this feature. The bank let him know when I purchased his gift.

There is a real emotional toll on consumers who have lost money and had to file fraud reports over the holidays. Nobody needs that stress and frustration while trying to buy gifts or make travel arrangements. There is one other layer of protection available you should consider: make sure you take advantage of the FREE credit freeze to limit access to your personal information, reducing the risk of a fraudster opening a new account using your identity.

In many states, the driver’s license and car registration expire on your birthday. The not so gentle reminder that you are a year older, and they want money. When you stop and really think about it, there are probably a few things that are renewed annually. My Microsoft 365 for example, some insurance types, etc. These are not necessarily discretionary items- many of us need computer programs and certain insurances to work and protect our property. So, because I am a nerd, I started to think about the annual fees we pay, and when they are due.

Lawyering bar fees and practice related fees aside (which are also annual) our family pays roughly $468.00 a year for various things. Our computer programs, including virus and malware stuff, state registration renewal on two vehicles, and yes, I have Amazon Prime (I can explain, but I don’t want to). The due dates are sprinkled throughout the year, with some due in November, March, July… you get the idea. Since we know these fees are coming every year, we should plan for them. Lots of people plan for Christmas, birthdays, holidays and may save a bit aside, but not for our expected, routine, boring annual commitments.

If we round up our annual commitments to $500.00 a year, and divide that by twelve, I have to save roughly $42.00 a month to cover these fees. If I receive 26 paychecks a year (paid bi-weekly) I have to save about $19.25 each payday to meet our commitments. This is the basic idea of a “sinking fund,” aptly named because businesses deposit money into these accounts to “sink the debt” (fun fact)**.

Placing the estimated amount of money into a “holding” type account or reserving them separately in your checking account will allow you to have the funds available when the payments are due. Here are a few things to consider when you decide to start a sinking fund, and save a little each payday for your expected annual expenses:

1. Make sure IF you open a separate CHECKING account at the bank, you have a FREE account. Service fees will eat up what you put aside and cause you to go a bit backwards. I recommend a small(ish) regional bank or credit union for these accounts.

2. Do NOT open a SAVINGS type account if you will make frequent withdrawals to pay these bills as they come due. “Regulation D” is a federal rule that limits the amount to free transfers or withdrawals to six, afterward, you can be charged a fee for each additional .

3. Have that baby emergency fund,$500-$1000.00 saved, BEFORE you start a sinking fund. Those pesky little emergencies, such as the need to buy a tire or repair a leaking faucet, can quickly eat up the money you allocated for other expenses.

4. In the beginning, you may have a bit of overlap with what’s due and what is saved, so you may have to pay a bit more and continue saving. I know if you are living paycheck to paycheck this doesn’t always allow much room, but if you don’t start soon enough before the next expense, you may have to stretch. Example: You have $85.00 due in three months. You typically put away $21.00/ month. In three months, you have $63.00 saved, but are $21.00 short. Pay the $85.00, but still try to put away the $21.00 so you are on track for the next expense due.

It’s so easy to get frustrated we forget when the annual bills come due, and of course they still come due. Consider the sinking fund as a way to put a little away each check to cover what you will need. The stress is really reduced when the amount you need for an expected expense isn’t squeezed 100% from the same paycheck.

**And for all of you bond asset types, yes, there is a sinking fund term meaning to pay a trustee an amount to retire bond debts before they come due… though most of us have no idea what that even means. I just don’t want angry email.

It is no secret that companies want me to buy stuff. They want to separate me from my hard-earned money at every turn. Exhibit A: we moved about a year ago from another state and wouldn’t you know it, I got a catalog yesterday in the mail, with “easy terms” and “guaranteed credit line.” Now, I haven’t ordered from this company in years, opted out of “junk mail” over a year ago, and never forwarded my address to any catalogs.So, what gives? Opting out of “junk mail” is not as straightforward as it seems. There are literally four different processes to get rid of the marketing mailers, pre-approved offers, and sales calls. The Direct Marketers Association charges $2.00 to opt out for five years. Catalogs must be opted out through another process. GAAAH.

I hear some of you reading this, going, “What’s the big deal? It’s just a catalog. Recycle it and quit whining.” I hear you loud and clear. But, I was very surprised by this stupid catalog, that they tracked me down to my new address out of state. I also don’t want the temptation to order on credit around because they make it easy to spend without thinking. There is always a birthday, anniversary, holiday or occasion to spend while you are budgeting and working on your debt-free walk. “I’ll pay it off next month” is way too easy to say. Problem is, if we don’t spend actual cash or shop on impulse, Murphy has a way of wreaking havoc right before the bill is due to be “paid off.” It happens almost every time.

The easier a company makes it for us to spend, well, the more likely we will buy from them. There are many articles and sales books on the topic of reducing “sales friction” to help customers buy products. Amazon is continually finding creative ways to make it easier for you to buy. The latest friction reducer is the delivery to the trunk of your car. Amazon recognized customers grew wary of having packages delivered at home hours before anyone arrived to retrieve them, which created an environment ripe for thieves. Apple is another master at making buying easy and convenient for customers. In their own stores you can just “scan and go” to purchase items. For other retailers, “Apple Pay” puts purchasing at the swipe of a phone. It’s crazy.

Guarding Against Temptation

To guard against impulse shopping or spending more than you planned on a purchase, I have two suggestions to help you take control of your money. First, a written budget is a must. You are the boss of your money. You get to tell it what job each dollar is assigned each month. If you don’t have a job for every single dollar that comes in the door, it’ll just run away and spend itself on things you may regret later. The bill always shows up, whether the dollar ran off and became catalog spending on credit or putting purchases on your phone bill.

Second, use cash. Just do it. Try it for the next month. Create your own “friction” between you and the seller. You will think twice when you hand over bills rather than entering a card online or waving a phone. Imagine having to get up off the couch, put shoes on, drive to the store, open your wallet, give bills to the cashier, drive back home… you get the idea. You will probably think twice about buying that “thing” if it doesn’t show up in two days with “free shipping.”

Third, (although I said only two) opt out of the junk mail, sales calls, and catalogs. Block out an hour or so, make a cup of something to drink, sit down and go through the steps above. Get rid of the pre-approved credit cards and the spending opportunities that show up in your mailbox. You know, lead me not to temptation.