Sometimes we’re our own worst enemy when it comes to privacy. The cavalier use of Peer-to-Peer (P2P) programs like Kazaa and LimeWire is one such instance.

Michelle Malkin links to a disturbing story that is not about identity theft, but about inadvertent Identity Giveaway (bolds added):

Don Bodiker uses a popular file sharing program to swap music and other information over the internet. He also uses his computer to prepare his taxes.

He never thought the two had anything to do with each other, until he got a call. “I had no idea who he was or what he was. I just thought he was a typical telemarketer,” Bodiker said of the call. “And he wanted to inform me that my tax returns were being posted out on the internet. I was very skeptical but he then proceeded to tell me some very specific details about my tax return.”

File sharing software allows you to download files stored in certain shared folders on other users’ computers. The flipside is they can also download files from your shared folder. There’s a folder on their computer the Bodikers use store the music files they wanted to share. What they didn’t realize is that their tax return software saved their returns in the very same place.

“Oh my God, I thought everybody and anybody knows exactly what my social security number is, my address, you know, anything that I had that was pertinent on there that could be used as an identity theft process,” said Bodiker.

And he’s not alone. A simple search on the file sharing network for the word “tax” turned up hundreds of returns. “It’s made me more aware of the possibilities of programs that you attach to your computer,” said Bodiker. “Ultimately, if you don’t have to keep it on your computer, make a hard copy, and file it away. And that’s always the best thing.”

That last idea of taking all sensitive files off of your hard drive is nice but IMHO impractical advice, simply because if you take it off your hard drive, you have to back it up TWICE in case one of the backup media fail. In the case of taxes, the current year return relies on info from the previous year’s return, and depending on how you do backup, this year’s program may not be able to read in last year’s info.

Two better ideas:
- Purge ALL P2P from all of your computers (Kazaa, Limewire, Bit Torrent, etc.).
- If you must do P2P, turn off all sharing from your computers to the outside world. Purists might say you’re being “selfish,” but I say you’re practicing self-defense.

Also, be aware that anyone who uses P2P, especially on a Windows-based machine, opens themselves up to any virus, spyware, or malware that a mischievous file-sharer might incorporate into an innocent-looking music or other file.

THE PREVIOUS POST showed, based on the Federal Reserve graph from this Marketwatch column (link requires registration), that interest costs have gone up substantially in the past 10 years despite falling interest rates:

I concluded that this shows that “amounts borrowed have simply gone through the roof in the past 10-plus years…..more than offsetting the impact of interest-rate reductions, meaning that households ARE NOT in about the same position as they always have been, as proponents claim.

A quick example will show you why this is so:

The above uses a person or family with annual disposable income of $40,000 in 1994. A disposable income with roughly the same purchasing power would be $50,000 in 2004.

I multiplied each disposable income by the related interest expense percentages on the Federal Reserve/Marketwatch graph. I then divided each interest expense amount by a rough estimate of what average interest rates would have been at the time, assuming only a 2-point differential between 2004 and 1994 rates, to arrive at Estimated Debt Balances. What this tells us is how much debt a person had to be carrying in each year to have the indicated amount of interest expense.

NOTE: I suspect that the interest rate differential is closer to 3%, but wanted to be conservative. I’m very confident that the differential is NOT less than 2%, because the average rate on 30-year mortgages was 7.75% at the end of 1994 and 5.71% at the end of 1994, rates on installment loans have dropped like a rock because of car-dealer incentive rates, and overall credit card interest rates have dropped a bit (with the lower rates mostly going to “desirable” cardholders).

The Estimated Debt Balance in 2004 is not too far from double that of 1994 (50% or so after adjusting for inflation, for those who wish to quibble).

As noted in the previous post, we can debate whether the increase constitutes a “drowning in debt” scenario (and the research on that continues). You could also dispute the average interest rates I used, but if anything they’re high–If I had used 9% and 7%, the results would have shown an even bigger percentage jump in the Estimated Debt Balance. But the proponents of bankruptcy “reform” should at least stop promoting the fantasy that the average person or family is in about the same shape as they were 10 years ago. They just aren’t.