Take precautions with finances, analysts say

By Charles Jaffe, Globe Staff, 1/31/99

The Year 2000 is Destination Unknown when it comes to money.

And just as you might plan your finances if you were taking a trip to another country, so too are consumers being warned to plan out their finances for the Y2K trip.

That means bringing along enough cash and the important documents so that you can travel safely to your destination.

"You want to be prepared, not panicky and doing things that you later regret," says Paul M. Connolly, chief operating officer at the Federal Reserve Bank of Boston. "You would not take all of your money out of the bank to take it on vacation with you -- even if you could not access it all for the time you were away -- and you shouldn't be pulling everything out now to get ready for the Year 2000."

Most observers believe the financial services industry is ahead of the pack when it comes to Y2K readiness. The stock exchanges have already done tests setting clocks ahead to the new millennium. The mutual fund industry is working toward a test in March, at which time most money management firms will find out which systems they still need to patch up.

And a story published this week in American Banker noted that only 16 of the 10,415 banks and thrifts insured by the Federal Deposit Insurance Corp. were given an "unsatisfactory" mark from regulators when it comes to Y2K readiness.

In other words, most analysts believe your money is safe.

The big question is whether you will be able to get at it.

While banking and financial executives expect their systems to be functioning, they acknowledge that troubles could arise in the many systems that link the nation's financial network.

Already, issuers of credit and debit cards have been warning consumers that technology glitches caused by the Y2K problem could mean that cards might not be accepted at all locations.

But those computer glitches can happen today, not just in the Year 2000. And typically, the card issuer wants such cases reported so that it can then help the merchant whose technology is not Y2K-compliant.

The Federal Reserve Bank plans to print more cash late in 1999, largely to meet the expected demand.

But having greenbacks to supplement the plastic is not the only task at hand for consumers who want to steer clear of Y2K problems. A host of ordinary financial tasks -- the kind of things consumers routinely put off -- are worth doing this year . . . just in case.

Those steps include:

-- Updating financial records.

Have a paper listing of all investment accounts, credit cards, and other financial obligations, including account numbers, payment addresses, and amounts due or deposited. And make paper copies of your last three tax returns.

If your personal computer gets bitten, these records enable you to make all payments on time and maintain your good name. If your financial institution gets hit, they prove your account.

-- Getting a copy of your credit report.

Many computerized companies report to credit agencies, and some specialists believe this could be a big Y2K trouble spot. To avoid problems, get a copy of your credit report now and clear up any erroneous information. Then get another copy late in the year; this version should not only be correct, but it will help you reconstruct any problems that might be caused by the millennium bug.

-- Getting a benefits statement from Social Security.

Many Y2K forecasters are worried about the government's computer systems. Do a check-up on your most important government account by getting a Personal Earnings and Benefit Estimate Statement, a year-by-year breakdown of your wages and the Social Security taxes paid into the program.

-- Consider spreading your money around.

Because no one can be 100 percent certain that the new year will arrive without problems, this might be a good time to consider diversifying with whom you do business. It may not be necessary, but it's certainly not bad medicine against a computer glitch knocking one firm off-line.

This, along with a little extra spending cash, should help you maintain access to sufficient funds so that the Y2K adjustment period is not a a bad trip.