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Unexpected expenses: How to plan your financial future
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Creating the family budget can be a pain, but if you account for worst-case scenarios, life will be much easier. Use this guide to help you plan for the unexpected. - photo by Brooke Chaplan
Even people with great budgeting skills can encounter unexpected expenses that throw their financial plans off track from time to time. Here are a few ways to plan for the unexpected and give yourself a better financial cushion for the future.

Think of worst-case scenarios

You don't have to become a pessimist, but don't assume things will always go your way. This is especially true with your expenses. Take some time to think about your current possessions, expenses, assets and liabilities. Think about big things like your car and little things like your favorite tennis shoes. Now imagine if all these things had to be replaced right now. How would you pay for this? Imagine some worse-case scenarios, and start building some extra padding into your savings.

Be insured

Insurance is supposed to be there when things get bad. Make sure you've got the right insurance to protect your most valued possessions, yourself and your family if things go wrong. Yes, insurance is an ongoing expense, but it will pay off if things ever go south.

Collect coupons

Its a well-known truth that there are coupons for almost everything. Coupons are a really easy way to reduce expenses. Think about things you get only occasionally but that you can't afford to go without. Now, look for coupons from the stores that carry these items. For example, you might keep coupons for a tire shop around in case you have unexpected car trouble. You can also find some of the best deals on car parts at Discountrue and other online coupon outlets. Also save big with groceries by using coupon clippings for items you buy every week.

Separate emergency funds from savings

You probably have a savings account already, which is key to having a sound financial future. However, most people treat their savings as a backup to their checking account. That means you dip into it semi-regularly for big purchases or in between paydays. This isnt a bad method, but it can hurt you if something really goes wrong and you need to use a lot more savings. You need a source of funds that isn't accessible for monthly expenses. Think about starting a separate account you won't carry an ATM card for or that has really restrictive withdrawal terms. Having this money blocked off from your normal spending patterns will mean it's there when you really need it.

By definition, you can't predict the unexpected. But you know life will sometimes bring you hard times. To avoid big setbacks, it's worth it to factor bad situations into your financial planning, have solid insurance, store some good coupons and save a little more.
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New Medicare cards are in the mail and scammers are on the prowl
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The Centers for Medicare and Medicaid Services has begun mailing new Medicare Health Insurance ID cards. The program no longer uses Social Security numbers to identify people. - photo by Lois M Collins
The federal government is beginning to send out new ID cards to the 58 million Americans who benefit from Medicare. But since many of the people who will receive them don't know they're coming or why, scammers are already gearing up to take advantage.

An AARP survey shows as many as three-fourths of Americans 65 and older have no idea the cards are coming, so some individuals may be duped with claims that they're supposed to pay a fee or provide personal information that will be used, instead, to defraud them.

The new cards are the first reissue in years, and the most striking part of the redesign is that the cards no longer carry the beneficiary's Social Security number. Congress mandated the removal of that number as an identifier for Medicare beneficiaries by next April. Instead, the card has a Medicare Beneficiary Identifier number, an 11-digit combination of numbers and letters.

The new Medicare cards are now being mailed out in batches, starting with the Eastern seaboard and moving west. Most Medicare beneficiaries will receive their cards over the next six months, as long as the Centers for Medicare and Medicaid Services (CMS) has their correct mailing address. Once the cards are in hand, people can share the new identification number with their health care providers. During a transition period, either card is valid.

The old cards, which used Social Security numbers as the personal identification number, should be destroyed.

AARP recently launched an education campaign to warn consumers about scams related to the new Medicare cards.

The membership organization's "Fraud Watch" consultant, Frank Abagnale reformed con man, scammer and the subject of the movie and book "Catch Me If You Can" tells senior citizens the only time they need to carry the actual Medicare card is to health care appointments. Otherwise, it should be left in a safe place. If they want to carry one in their wallet or purse, he says, make a copy and black out the first seven numbers.

Since the cards were announced, scammers have already:

  • Called seniors and asked for their bank account information so that money on their old card could be returned. There is no money on the old card and CMS never asks for personal information over the phone.
  • Offered to send the new card after Medicare beneficiaries pay a $25 fee to cover expenses related to the card. The card is free.
  • Said the card will be mailed out as soon as the older person verifies his or her Social Security number, mailing address and other personal information. CMS already knows the beneficiary's Social Security number and it's no longer being used in conjunction with health care.
AARP and the Federal Trade Commission will hold a free online seminar about the cards and the fraud attempts they have spawned on Thursday, April 19, at 7 p.m. EDT. Register at: www.aarp.org/FraudWebinar. CMS also offers a "frequently asked questions" guide to the new cards.

The AARP Fraud Watch Network says consumers can sign up for its Watchdog Alert emails that deliver breaking scam information, or call a free helpline at 877-908-3360 to speak with volunteers trained in fraud counseling. Abagnale also hosts a weekly podcast for AARP, called The Perfect Scam.
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