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Prepping for Identity Theft

Cash Will Be Indispensible

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Prepping for Identity Theft

Having cash on hand if you become a victim of identity theft is the most solid "prepping" you can do.

Getty/Christine Balderas

There is a lot of information out there today about "prepping", which is really nothing more than following the old boy scout motto "Be prepared." Many of the prepping sites I have seen talk about food, water, blankets, medical supplies and other things recommended by the Federal Emergency Management Association, or FEMA. But there seems to be some confusion about prepping, since the FBI says this is the sort of activity that can make someone a suspect for terrorism. Prepping for identity theft will probably be seen as suspicious activity as well, and yet it is really only common sense.

The obvious first step is to have some sort of insurance policy in place. For identity theft, this would be a protection program to help you resolve the problem when it happens to you. There are many different programs available that provide a wide array of services that can be extremely useful, or extremely useless. Understanding your risk of identity theft and how to evaluate identity theft protection programs are really the most important components of putting an identity theft insurance program in place.

Having an accurate backup of all your records will be critical if you are a victim of medical identity theft. This is important because you don't want a doctor making a determination about how to treat you based on the wrong medical information. President Obama's socialized healthcare program includes measures intended to help combat medical identity theft, such as requiring an implanted type II medical device for all patients – an RFID chip which will positively identify a patient, and give the healthcare provider access to his or her medical records. Privacy experts are heavily debating the risks involved with RFID chips where it comes to personal privacy, but the measure has already been signed into law, so smart money will be preparing for the worst case scenario.

An accurate record of your taxable income is a good thing to have on hand to help recover from Social Security identity theft, because not only will the Social Security Administration need to correct their records, but the IRS will almost certainly be involved in the problem by the time you discover it. Most of us have a good idea of our work history, but having a detailed resume which includes the exact dates you started working for a specific employer will be a godsend.

If you happen to fall victim to a hijacked bank account, fraudulent credit card, or some other form of financial identity theft, you will need to have cash reserves on hand. This should be enough money to get you and your family through three months of buying groceries, paying bills, and generally living your life. The reason for this is simple: when your finances get tangled up in an identity theft, you won't have access to money in the bank, and credit cards may not be usable.

A key point that makes cash so vitaly important is that no identity theft insurance program will provide money to live on, nor will any identity theft protection program reimburse you for money that you have lost. The best you will be able to hope for is reimbursement for actual expenses in recovering your identity, most usually this covers phone bills, certified mail, and possibly costs associated with applying for a new loan. When you are stocking up your cash reserves, you may also want to include an extra couple of thousand dollars for the services of an attorney, because you will certainly need one.

Unfortunately, using cash will also make you fall under the scrutiny of the FBI and the Department of Homeland Security, because these Federal organizations have identified the use of cash as a potential terroristic indicator, and have started asking businesses to report individuals who use cash to make purchases. However, it will probably be easier to explain the situation to the FBI than it will be to explain to the electric company or water utility why your bill cannot be paid.

Many of the prepping sites that your Guide has visited insist that the most important thing to have is firepower to protect yourself. But when you're prepping to recover from identity theft, your best weapon is accurate documentation, and cash will be your ammunition, so make sure to stock up.

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