Financial Independence and Wealth Generation Starts with Due Diligence

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 If you want to find a real prince you need to kiss a lot of frogs! The problem that most wanna-be entrepreneurs experience is that they have to go through a lot of failures and disappointments before they find what they are looking for, but finding something valuable always requires persistence, patience, and the willingness to learn from your mistakes and they don’t have the balls, brains or guts to achieve the success that they aspire to achieve. 

An entrepreneur needs to take risks and make mistakes along the way, and failure is a necessary part of the journey on the road to success for anyone hell bent on victory. My advice to would be dreamers is Never, Never ever surrender your reverie of finding a pot of gold at the end of the rainbow, no matter how difficult the path may seem, believe in yourself, work hard and smart and never be afraid to fall flat on your face, for it is only through the gate of failure that you discover, mature and achieve the greatest triumphs. 

I have spent decades involved in the higher for- profit vocational education sector and I want to share with you the foundation of finding, evaluating, buying, fixing and building for profit vocational schools and then exercising an exit strategy after 3-5 years with 30-40 times returns on your leveraged investment. Starting with a $1 million investment and with 8-times leverage your ROI will be $240 to $320 million in 3-5 years if you play your cards right. I do not know anywhere else that these returns are possible and the best part is that it is accomplished with infinite attention to compliance, student centricity, staff harmony and a professional team that serves students no matter what their level of academic performance was when they started at a vocational school of higher education. 

The best chance for success in the higher education sector necessitates that you have a minimum of 5-10 years boots on the ground experience and can assemble a AAA class team to work with you. The game starts with your “skin in the game” so be prepared to have 10% of the purchase price in the bank before you deal yourself in to being an entrepreneur in the higher education sector. 

Every investor that you approach will want to see your Benjamin’s and access the strength of your team! The project vocational institution that you want to acquire is important, but the most carefully thought-out plans can fail due to unforeseen circumstances or events beyond our control and an investor, your investor wants to minimize his risk and increase his ROI, so your team needs to be flexible and adaptable in the face of change. 

During your working career it is important for you to network with smart and contrarian people that you can learn from and I cannot think of a better organization for you to bond with than the Financial Policy Council (https://financialpolicycouncil.org/). Here you will meet entrepreneurial men and women who have made it or are making it now and they can help guide you when you have problems and introduce you to investors for your project. 

You have the skin in the game, the team, and advisors so it is time for you to select your target acquisition. Higher Education Vocational education is a small vertical market. In 2019-2020 there were approximately 900 for-profit vocational schools in the United States. If you have spent your networking years well you should know at least one hundred people in the industry that can advise you if a school they now work at of have friends working at may be for sale. Listen to them closely and research the schools that they have provided to you. It is also in your best interest to purchase an entity that is not currently on the market for sale. You will establish the market where one did not exist by your interactions and reputation. This will lead to a shorter time to complete an acquisition, cut out the brokers, advisers and banks and increase your student outcomes, their retention rates, student and employee satisfaction, impact on society as a whole and your exit ROI. I have also found that owners who have not put their vocational schools up for sale are usually more involved, better operators with less to hide in the due diligence process. 

In future blogs I will explain how to target a school, meet its owner, and establish a rapport, estimate a purchase price and an enterprise value and start the process of negotiation to purchase the entity. While my directives are targeted for vocational for-profit institutions of higher learning, the principles are basically the same for whatever silo your acquisition falls into. 

I am jumping ahead to the guts of this blog which is a synopsis of the due diligence process which every acquisition requires. Every prince or princess has pimples so don’t fall in love with your acquisition/seller and maintain a composed and rational demeanor, not putting too much trust or faith in what you are told by a seller. “Accept but Verify” to strike a balance between being too skeptical and too trusting. Being overly skeptical and suspicious can lead to missed opportunities, misunderstandings, and strained relationships. On the other hand, being too trusting and gullible will lead to being taken advantage of, making poor decisions and have a direct relationship to your exit strategy. 

Due diligence is an essential process for anyone considering investing in or partnering with a for-profit vocational higher education institution. It involves a comprehensive review of the institution’s financial, academic, and operational performance to identify any potential risks, red flags, or areas of concern. 

The due diligence process helps to identify potential risks associated with buying, investing in or partnering with a higher for-profit education institution. I use a list of 150+ touch points in my due diligence process which covers the essential information that I need to understand the institutions culture, potential for growth, the path to an exit strategy and the anticipated ROI. (I will cover these touch points in future blogs.) 

The extensive due diligence process that I employ identifies financial threats, regulatory perils, legal threats, and reputational hazards to name just a few of the touch points on my list. It is the sine qua non imperative to evaluate the financial performance of an institution, including its revenue, profitability, and cash flow. This provides insight into the institution’s financial health and its ability to generate returns on investment. 

The due diligence process also evaluates the quality of academic programs offered by the institution. This includes reviewing the institution’s accreditation status, faculty qualifications, student outcomes, and other relevant factors. Parenthetically, it is most important to evaluate the competitive landscape of the institution, including the strength of its brand, reputation, and market position. 

Last but not in any way least is the evaluation of an institution’s compliance with regulatory requirements, legal obligations, and ethical standards. 

Compliance is extremely important in the for-profit education sector, as it is in any industry that is heavily regulated. For-profit education institutions must adhere to a complex set of laws and regulations governing their operations, including regulations related to accreditation, financial aid, student outcomes, marketing, and more. 

Non-compliance with these regulations can result in significant legal and financial consequences, including fines, loss of accreditation, loss of eligibility for federal financial aid, and reputational damage. These consequences can be particularly severe in the for-profit education sector, where institutions are often heavily reliant on federal Title IV financial aid to fund their operations. 

In addition to the legal and financial risks associated with non-compliance, failing to adhere to regulations can also lead to poor student outcomes, such as low graduation rates and poor job placement rates. This can harm students and damage the reputation of the institution, making it more difficult to attract new students and remain competitive in the market. 

For these reasons, compliance is always my top priority in purchasing and running for-profit education institutions. It requires a dedicated and ongoing effort by an astute team to monitor and ensure that all aspects of the institution’s operations are in compliance with the relevant laws and regulations. This often involves significant investments in staff, systems, and processes to manage compliance and mitigate risks. 

The results of due diligence will impact the selling multiples based on EBITDA (earnings before interest, taxes, depreciation, and amortization) in several ways. If the due diligence process reveals positive results, such as strong financial performance, high-quality academic programs, and a positive institutional culture, the selling multiple based on EBITDA may be but will not necessarily be higher. On the other hand, if the due diligence process reveals negative results, such as poor financial performance, low-quality academic programs, and compliance issues, the selling multiple based on EBITDA will be appreciable lower. I always look for schools with some compliance issues as that lowers the EBITDA multiple for a purchase and I know from experience that most compliance issues can be corrected with an astute team of managers. 

In summary, due diligence is important in higher for-profit education to evaluate the institution’s financial, academic, and operational performance and identify potential risks and opportunities. The results of due diligence can impact the selling multiple based on EBITDA, depending on the strength of the institution’s performance and compliance with relevant standards. The objective of my due diligence is to get the information that I need to find the untapped potential of an acquisition, estimate its intrinsic value, purchase it at a low EBITDA multiple, have my team do their magic through branching, new program introduction, better marketing, reduced student turnover and the sell the entity in 3-5 years at a 30-40 time returns on my investment. In my next blog I will address the issue of finding the best entity to purchase and convincing an owner to sell his school to you. 

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What $1.8 Billion Aid Package to Ukraine Means for American Consumers

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On December 21, 2022, President Joe Biden and the Secretary of State, Antony Blinken, announced that the United States will provide $1.85 billion in additional military assistance to Ukraine. The announcement was made during Ukrainian President Volodymyr Zelensky’s first overseas trip to the White House since the outbreak of the Russian invasion of Ukraine.

President Zelensky and other Ukrainian officials have advocated for increased Western support, including providing advanced weapons, such as the Patriot system, to assist Ukraine in its ongoing conflict with Russia.

Will there be any financial consequences for American consumers as a result of this and future aid packages to Ukraine?

Details of the aid package

The aid package includes a $1 billion drawdown for “expanded air defense and precision-strike capabilities” and $850 million in security assistance. One of the crucial components of the aid package is the inclusion of the Patriot Air Defense System, considered one of the most advanced systems
of its kind in the U.S. arsenal.

The Patriot system offers protection against a wide range of airborne threats, including aircraft, cruise missiles, and ballistic missiles. It typically includes launchers, radar, and other support vehicles.

Also included are an undisclosed number of Joint Direct Attack Munitions kits or JDAMs. These are designed to modify large bombs by adding tail fins and precision navigation systems.

These modifications transform the bombs from simple “dumb” munitions, which are dropped from fighter jets onto their targets, into guided weapons.

This will enable the bombs to be released and then guided to their targets with high accuracy. It is a significant upgrade in military capabilities for
Ukraine.

This marks the 28th time the Pentagon has quickly delivered weapons to Ukraine. The U.S. has provided a total of $21.3 billion in military aid to Ukraine since February 2022, which shows a long-term commitment to support Ukraine in this war.

How much aid has the U.S. sent to Ukraine, and what does Zelensky plan to do with it?

The Biden administration, and the U.S. Congress, have provided Ukraine with nearly $50 billion in assistance in 2022, according to The Kiel Institute for the World Economy, a research institute in Germany.

This includes a variety of forms of support, such as humanitarian aid, financial assistance, and military aid. The aid is helping a wide range of Ukrainian individuals and organizations, including refugees, law enforcement agencies, and independent radio broadcasters.

While the aid package includes a diverse range of support, a significant portion of the aid is military-related.

Additionally, many other countries, including most members of NATO and the European Union, have provided large aid packages to Ukraine.

During Ukrainian President Volodymyr Zelensky’s address to a joint session of Congress on December 21, 2022, the President emphasized that the financial assistance provided by the United States is not charity but rather an investment in global security and democracy.

He assured that Ukraine would handle this aid in a responsible manner. He also expressed gratitude to the American people for their support while making a case for further assistance. Zelensky, who had just returned from the front lines of the ongoing conflict with Russia, was making his first visit outside Ukraine since the Russian invasion began.

Financial implications for American consumers

The conflict in Ukraine is primarily a humanitarian catastrophe. Still, like past disasters on a grand scale, it has had an impact on the global financial markets and made investors rethink their approach.

The developing conflict in Russia and Ukraine, inflation that has reached four-decade highs, and looming interest rate increases from central banks are the three hazards that have already roiled financial markets in 2022. The Russian invasion is just the most recent of these risks.

Because the Covid-19 pandemic, which also had a negative impact on the global economy, was just ending, the Russian invasion will have significant but difficult-to-predict economic implications.

How much do taxpayers pay for defense?

It is well known that the US military receives a significant percentage of our tax dollars. This shouldn’t come as a surprise because the military is responsible for safeguarding the country and its citizens. Defense and security account for more than 10% of the government budget, which is equivalent to the percentage of taxes paid that goes to the armed forces.

If we take 2020’s data into consideration, the defense budget was $690 billion. 

“Operation and maintenance” received $279 billion in tax money, making it the highest spending area out of the $690 billion total. The price of military activities, such as planning, equipment upkeep, and training, was covered by this category. The military healthcare system was also supported by it.

With $161 billion, “military personnel” was the second-largest spending category. In this case, it’s about the pay and retirement benefits that are given to service members.

The price of buying weapons and systems, which came in third with $139 billion, came in third. After that, $100 billion was allocated for developing new tools and weaponry.

Different viewpoints

Many individuals support the massive amounts of tax money going to the military, while many others do not. The budget set aside for defense is still the subject of intense discussion. The idea is that more money should go into other things like a universal healthcare system, and less should be spent on “useless” military activity. 

Although, there’s no denying that the military receives a significant portion of the federal budget, given the importance of national defense to the safety and well-being of the country and its citizens.

Will giving aid to Ukraine affect American taxpayers?

The Congressional Budget Office estimates the total U.S. federal budget will exceed $5,872 trillion in F.Y. 2023. Based on this information, it seems that sending $1.8 billion in military aid to Ukraine is not likely to have much of an impact on American consumers’ finances. 

In what ways will the economy be affected?

Different facets of the Russian invasion of Ukraine are covered every day. The United States’ involvement in the conflict affecting NATO security, military and humanitarian aid to Ukraine, and the application of sanctions on Russia are frequently discussed. A distinct viewpoint on how the conflict has affected the U.S. itself is less noticeable. At the source, in transit, and at the final destination, supply chains have been broken.  Therefore, it is crucial to assess how these disruptions affect the American economy and identify which goods are most likely to experience shortages as a result.

Numerous items used by American enterprises are imported from Russia and Ukraine. The Observatory of Economic Complexity’s research indicates that four essential ones—neon gas, palladium, platinum, and pig iron—will be in limited supply. The shortages are probably going to directly affect 12% of the American economy.

The conclusions are based on a subjective examination of the sectors that depend on the identified vital commodities and their contribution to the GDP of the United States. The manufacturing, electronics, and automobile industries will all experience a direct impact.

How concerned should American investors be?

According to a report by the CSIS, the impact of aid to Ukraine on the U.S. economy has been negligible, at least to date. And the U.S. economy was growing steadily as of October 2022, and personal income was estimated to have reached $25.66 trillion in current dollars. The conflict and sanctions
haven’t had much of an impact on the US economy, but Europe’s economy is struggling, which could have an impact on US investment. Professional management may be able to assist US investors in controlling the dangers of long-term international stock investing.

Even while markets have become turbulent since the Russian military entered Ukraine, the rise in US stocks during the early stages of the conflict was more due to anxiety about US monetary policy than it was about Russian military strategy. 

As of now, the markets’ response to the conflict is consistent with history, which demonstrates that geopolitical crises often don’t have long-term effects on investors. New indications, however, show that the economic effects of the conflict and the ensuing sanctions may be getting worse.

How protected is the US?

The US is better protected from the repercussions of the Ukraine war than Europe due to its massive domestic economy and capacity to cover its energy demands without importing. Even if the US avoids recession, but Europe does not, the international structure of financial markets may cause US investors to experience greater volatility in the months to come. 

The economy of the European Union is bigger than that of the US, and many US-listed companies get a considerable portion of their revenue from customers in Europe. Consumer spending may decrease if they are concerned about losing their employment during a recession, which might also affect stock prices and company profits for US investors.

What investors should keep in mind?

Despite geopolitical uncertainties, US investors shouldn’t lose sight of the potential long-term gains that come from investing in foreign stocks. In fact, it is quite possible that over the next 20 years, foreign companies will beat US stocks. These expectations are in part due to the fact that US market values are currently high by historical standards and that US equities have increased more than those of other nations over the past two years. While targeting long-term gains, diversification and expert management can assist in managing short-term dangers.

There are several places, nations, industries, and sectors where stocks and bonds are held. An advantage of a diversified strategy is that investors often have very little direct exposure to investments in Russia and much less exposure to investments in Ukraine. Investors that have that level of
diversity may feel more at ease when faced with global issues. Here, considering the broader perspective is crucial. Don’t be frightened; just stay focused.

What’s next?

The United States government continues to provide a significant amount of aid to Ukraine, with Congress now poised to approve an additional $44.9 billion in assistance as part of a larger spending bill.

This move will secure continued support for Ukraine from the United States in the coming year and beyond, despite the change in political control of the House of Representatives, where Republicans will take over the majority in January.

Author Bio: Attorney Loretta Kilday has more than 36 years of litigation and transactional experience, specializing in business, collection, and family law. She frequently writes on various financial and legal matters. She is a graduate of DePaul University with a Juris Doctor degree and a spokesperson for Debt Consolidation Care (DebtCC) online debt relief forum. Please connect with her on LinkedIn for further information.

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Women and the Green

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What do you ponder when you. think about golf? Most people picture a group of wealthy businessmen exchanging murmurs on the green and talking shop. 

When I play golf it’s a different scene. Four women, crushing drives, laughing, drinking seltzers, and listening to music. 

The golf stereotype is the epitome of the relentless drive towards a never-ending lack of gender equality in the world. Now many chose to sit and dwell in the sanctity of darkness within this topic, I chose to fight back at it. 

Drive further than the men, have more fun than the men, win more money than the men, then shake their hand at the end and have a beer with them. 

Why in the depths of societies’ failures do we need to accept depressing matters in a depressing manner? My glass has always been half full, which I am appreciative of, my outlook on the world is that of the hopeful spirit and less of the dweller. I am however acutely aware of the lack of inclusion for women in the vast if not the majority of arenas: sports, finance, business and so on. Every sport I have ever played in, the boys team was more important, but what mattered the most to me was the inclusion and accessibility of those that wanted to play the sport. If women include women why scowl at the dugout on the boys team, when we have our own glorious corner, with much cuter outfits and more angst than 100 teenage boys. 

The theme of adversity seemed to journey into adulthood when you realize not only are the sports not equal, but neither are the jobs, payroll, household roles, finances…the list is intimidating at least. In Mandela’s words, “Freedom cannot be achieved unless the women have been emancipated from all forms of oppression.” Yet, still in 2022 we are bounded by our creation. But this does not falter me, it made me fight harder, work harder, and become more confident. 

When I first learned to play golf, I felt strange doing so, it was one of the only sports I had left untouched due to the male domination, and quite frankly it looked kind of boring to me. Little did I know that the empowerment I found from swinging the club, and getting those amazing moments made everyone else on the course invisible. It was for me and my enjoyment. Now don’t get me wrong, there were moments in this learning process when the sheer pressure of having to drive off the first tee in front of men with single digit handicaps had me shaking in my golf skirt, but what is a challenge without fear, and what is overcoming fear without a true challenge? 

TeeMates became this character for me. An unachievable, male dominated industry, of Sports tech. Maybe that is why I was so determined to take a giant bite out of it. To pull myself up on the bar to where they could look straight at me, eye level, and to where I could climb onto their levels of minted green. Either way, I was getting it done. I was going to start creating a sports app empire and no one was stopping me. So, I dug and dug, head down until I got somewhere. This is when the challenge of the most slopped green hit me in the face. As my little golf tech baby grew, I needed money, money to keep it going, to grow it, to keep up with the small beast it was becoming. I pitched and pitched and pitched, knowing that my self-funding days were running low. Suddenly, the number 2 was thrown in my face (and not in the good Eagle way), but in the statistic way. Less than 2% of Venture funds went to female founded businesses (Hinchliffe, n.d.). I couldn’t believe the number and it made me want to start puffing on Daly’s smokes immediately. How could this be, I thought? 

I had always made my own way financially, yet now you’re telling me I’m a less than 2% statistic. Because I’m a smart, hustling entrepreneur? So again, as I thought back to my own favorite life lesson, I will not dwell in the lack of female green for the love of the greens, I will fight my way to that damn ace and make them throw that money at me. This is what I did. I started Girl’s golf events, I called everyone, posted everything, made it happen. Green was my favorite color, and I was not going to be lacking in it anywhere. 

Taking your finances and your financial future into your own hands means freedom, means fulfillment. The Financial Policy Council stands to protect this freedom, to fill your green with single putts. You are allowed to fight for your rights to not only be great at a sport but to be successful and financially independent. To all my strong and powerful ladies, Learn golf. It is not a man’s sport. Find ways to create multiple fairways of financial flow. 

Fill your head with freedom, it is your right, and do what Tiger did, don’t give a Fuck. If he doesn’t have to, why should we? 

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How to Form Good Money Habits in the New Normal

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There’s a lot about the pandemic period that you want to forget. For much of it, you’re either isolated, broke, or sick, which can be detrimental to your physical, mental, and financial health. As everyone is coming out and heading towards the new normal, good money habits are something everyone needs to keep. 

With so much uncertainty coming into the future, a better focus on money matters can help shift you into better habits. There are so many financial improvements we can do in our lives now that we’re going back outside. Here’s how you can form good money habits in the new normal and be more ready for the future. 

Start Your Financial Planning 

One good money mindset to have in the new normal is to “step back, then step forward.” In simpler words, you need to plan first before moving forward with any big spending. If you intend on going for a vacation or buying something big in the coming months, it’s time to reevaluate your future plans. 

Think about the bigger picture when it comes to your financial health. Sure, you can start cutting down on your coffee and save pennies on the dollar. Instead, you can take a step back and give your life a good, long think. How do you visualize where you are in a few years? 

Ask yourself a few crucial questions: 

How much savings do you have?
How much should you save every month?
Do you want to work from home or from an office?
What kind of investments are you comfortable having?
What kind of insurance do you have? 

Change your answers to these questions according to your long-term needs. Planning is an ever-changing exercise that needs consistent attention. You need to make sure that your plans are not “dreams.” You want them to be actionable, with a specific timeline to help you achieve them. 

Enjoy, But Don’t Go Crazy With Your Money 

Post-pandemic, people have pent-up energies. Everyone wants to go places, enjoy a vacation, and go out to town. There’s a big desire to go out into the world, do the things they’ve always done, and go wild if they can. It’s not bad to enjoy your hard-earned money but remember to go back slowly. 

Don’t go crazy with your money. Make sure that you have enough money to live through the month. Have a plan in place to pay for entertainment expenses so you can play around guilt-free. Even then, don’t go into debt just because you want to feel alive. 

Look for deals available out there, especially now that businesses are looking to get people walking through their establishments. Living your life means living beyond the moment. Saving some money now takes a good amount of discipline to do. 

Stick To A Budget 

One of the financial areas that everyone had to learn over the pandemic was budgeting. Sticking to a budget was a must because having cash on hand can be useful when emergencies happen. Being prudent with your disposable cash means you can take stock of your needs and potential expenses. 

Once we move on to a life post-pandemic, budgeting needs to stay. Not only will it help you prevent overspending, it will also give you a sense of control with your life. As everything gets better, you can generate long-term savings and help you get out of debt or, at least, avoid getting more. 

Practice frugal, rather than discretionary, spending. Once you’re in a pickle, it’s crucial to know which parts of your lifestyle to cut off. Less spending on travel, eating out, and going to concerts means more savings for you. Reevaluate your cash flow and stick to a set budget for every expense you have. 

Live Within Your Means 

The idea of “living within your means” can be a problematic aphorism but the truth is that you need to stay within how much you can pay for a certain period without going into debt. Many who lost their jobs suddenly had to cut back on credit card spending and learned that they were going beyond their means, which is never good news. 

Living within your means is not restricting yourself from your own money. Rather, you need to understand that spending for something out of budget means you need to pull it off somewhere. Even if you take out the credit card to pay for it, the payments that go towards your card should increase. 

There are many ways to monitor your spending and do your best to live within your means. It’s one thing to create a budget and it’s another to live within your budget. If you want to maximize some areas of your budget, you need to cut in some areas that are far less important for you. 

Build A Six-Month Emergency Fund 

The six-month emergency fund feels like a big number to strive for but you will thank yourself for getting it once you need it. The rule of thumb is to have six months’ worth of your monthly expenses prepared as your emergency fund. This money should also be easily accessible and not in any type of investment where you can’t easily pull it out. 

Six months’ worth of expenses can be the absolute bare minimum time you would need to find a new job. It can be your period of recovery from an accident or illness. If you can afford to, it’s best to create emergency funds for up to a year. It can be challenging to meet this astronomical number, especially for cash-strapped individuals, but it should be worth it. 

Start with a small amount. As you’re still healthy, build towards the number by chipping away at it. If any financial issue comes up, this should be money that you can fall back on. A 6-month fund should give you ample financial security to find your way back, while a 12-month emergency fund can give you better freedom of choice. 

The Bottom Line 

Forming good money habits in the new normal can be one of the biggest financial challenges you face. Apart from having to prepare for the worse, it’s a lot of the boring stuff that most people overlook like budgeting and staying within your means. Then again, these will benefit you and your loved ones over time. 

Follow the money tips above and see why you need to reevaluate your spending habits. As you make personal and financial adjustments, you will slowly achieve the life you want. 

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Credit Reporting Reform: Individual Consumers Must Take Responsibility of Their Own Data

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In September 2017, Equifax announced that the information of 143 million of Americans had been hacked. This was just one of the latest companies to be compromised, joining Yahoo’s 1 billion accounts, JPMorgan’s 83 million accounts, and Target’s 40 million accounts hacked, among others.

What made this hack very concerning was the fact that Equifax is one of the largest consumer reporting agencies that collects our very personal and actionable information, including our names, birthdates, social security numbers, addresses, personal finances, credit card numbers, student loans, insurance of choice, rent payments, and others, without us knowing or giving consent, into a centralized database. 143 million accounts (60% of all adults in US) have been compromised. Our data, which we never offered or given permission to be collected and used, has been made available to malicious strangers. This is a very important topic.

The Fair Credit Reporting Act (FCRA), a law that was last updated in 1970 currently governs Equifax and the other credit reporting agencies. Since then, there hasn’t been any changes or updates, except in 2010, when Congress created the Consumer Financial Protection Bureau (CFPB) as the first federal agency with authority to examine and regulate consumer reporting agencies. While this was a much-needed addition, it does not provide the necessary requirements to keep our data safe.

Credit bureaus are treated much more loosely than banks, as they do not have the same regulatory oversight and do not have regular security audits. In the event of data breaches, such as Equifax’s, there is no specific federal entity designated to investigate the breach.

In response this tragedy, Rep. Maxine Waters has introduced the Comprehensive Consumer Credit Reporting Reform Act of 2017, which intends to be a complete overhaul the country’s credit reporting system. Among others, it plans to change the dispute process, switching the responsibility of proving accuracy of information from consumers to credit bureaus, restore the affected credit of victims of predatory activities and unfair practices, restrict the use of credit information for employment, rehabilitate the credit standing of struggling private education loan borrowers and limit the amount of time negative information can stay on a credit report.

The proposed changes of this act could positively impact consumers, but they do not specifically address the cybersecurity problem. This act does not provide a specific solution to preventing data breaches and protecting consumers’ information from hackers.

This is a new world defined by ubiquitous, overpowering cyberattacks that render all current cybersecurity systems inadequate and lacking. For the time being, unfortunately, it seems that there isn’t a hack proof solution of storing our data. So, if we cannot control who sees our data, we must at least be able to control, and limit the use of our data.

The best bet is to provide each individual person with their own ability to monitor and control access to their credit information. Regulators must require credit reporting agencies to provide free credit freezes to all people.

A credit freeze is a process that allows you to automatically block anyone from checking your credit, making it impossible for impersonators to open any line of credit under your name. If your credit has a freeze on it, you’ll be notified if someone even attempts to open a line of credit using your information. In the same way you have a 2-factor verification system for your email or cryptocurrency accounts, credit freezes can provide added security layers that consumers can monitor and control individually.

This way, you can keep your credit info in “dark mode”, and only open access to your credit in the exact instant you are applying for a loan, or do any other activity requiring access to your credit score. As soon as you were approved/denied, you can freeze your credit again.

Currently, credit freezes cost $20 each time you initiate it. And because you most likely must initiate a credit freeze for each of the big three credit reporting agencies (Equifax, Experian, and TransUnion), this cost adds up to $60 per credit freeze. Even more, there are hundreds other smaller credit reporting agencies, so this process can get rather complicated and tedious. New legislation needs to require this credit freeze process to be available, and preferably free (or much lower cost) for the consumer across all agencies.

This is a tremendous opportunity for the private sector to provide a much-needed solution: create a platform or application which connects with all credit agencies and offers consumers instant and painless options to take control over their data. Instead of logging on to multiple credit agencies websites each time they wish to freeze/unfreeze their credit profile, there should be a simple application that communicates with all credit agencies (or separate ones – depending on the consumers’ preference) and is able to freeze/unfreeze credit profiles with the simple push of a button.

This collaboration between the government and private sector must have the chief purpose of allowing individual consumers to control their own use of their credit profile, in the hopes of enhancing security. By definition, it is much more complicated, discouraging and fruitless for hackers to try to break into 143 million individual accounts, than it is breaking into one database holding 143 million accounts. As our banking and financial system is changing to provide consumers with more freedom over their money, perhaps it is time for the credit reporting agencies to do so as well.

Since the credit bureaus and regulatory organizations cannot protect our credit data, it is time to let the private market and individual consumers provide a smarter solution.

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