How Americans Get into Credit Card Trouble!

Credit Cards are a trap.  When you step into this trap, it is easy to blame the person who set it.  But you should be blaming the person who stepped into it - YOU.  Just walk away from this baited trap!

A reader recently sent me this link to his website, where he has posted a humorous video about customer service at Bank of America.  While it is a funny video, I think he himself might be missing the real issue.  The issue isn't customer service, but his own habit of taking on credit card debt, over a period of nearly a decade - at very high interest rates - and paying, over time, nearly as much in interest as he did in purchases.

I am not sure of the point of his video.  The customer service at Bank of America has generally been good.  If you don't bounce checks or sign up for their crazy-interest credit cards, it is a great bank.   If you call some low-wage telephone customer service person and give them a hard time about the bank's policies, I am not sure it accomplishes anything.

It is like when I was in Canada, and some Canadians would  lecture me about how bad America is and how wicked George Bush was.  What am I supposed to do about it?  I voted for the other guy.  And I don't make US foreign policy, try as I might.  Beating up on me is about as constructive as beating up on the slug in the call-center at BoA.

The guy answering the phone at BoA can tell you your bank balance, and that's about it.

The real culprit, in this scenario, is US, not THEM.  We need to all look long and hard in a MIRROR before marching on Wall Street.  While the excesses of banks and predatory lenders are to be condemned, we also need to fess up to our complicity in the deal.  Loan sharks stay in business only because people willingly come to them asking to borrow money.

If you go to a loan shark, and later get your kneecaps busted, are you really an innocent victim?  Or should you have seen that coming from a mile away?

This excerpt from the website link is troubling:

Human Shield: Well, as far as going back 9 years, I can’t really go back 9 years and calculate how much you’ve borrowed. But as far as… I can calculate what the highest balance you’ve had, which is of $11,160.99 (inaudible) year to date.

Customer/Victim: OK, well, I actually kept all my statements, and I recently did total it up and it came out to around 18,000 — 18,671.64 — total. You know, one month I borrow some, you know, of course the opening balance, over the course of the years it all totaled up to around 18,000.

Customer/Victim: Over the whole 9 years I added it up. I added it all up — every time I borrowed some on that account it all totaled up to 18,000.  So I guess you wouldn’t have a total of how much I paid back in those 9 years?

Human Shield: That is correct, sir.

Customer/Victim: That is correct — same issue. Well, I did total that up, and I actually paid back just over $26,000. Now that’s — so it came out to I paid the bank back more than I borrowed, right?

Human Shield: Well, your account still has a balance of $7,000.

Do the math on this.  The poster is astute in saying he "borrowed" $18,000 over the years.  Most folks think they "spend" on a credit card.  But as I keep trying to beat into everyone's head, a credit card is a debt instrument, like a mortgage or car loan!  When you swipe that card, you are borrowing money, never forget that.  So kudos to the poster for figuring this out.

The sad part is, over 9 years he paid back $26,000, or a difference of $8,000, PLUS the $7,000 he still owes.  As he notes, he has paid back more than 41% in interest so far and owes about the same amount.  In other words, he will pay back $15,000 in interest on $18,000 in borrowed money for purchases.  Nearly double.

And of course, this is for a credit card with an interest rate that has varied from 13% (which many people think is a "good rate") to 22%.  Both are horrible interest rates on loans.  You would not buy a car, a house, or even a waterbed these days on a 13% loan.  But people blithely sign up for credit cards based frequent flyer miles - the ultimate free pony if there every was one.

I am not picking on this guy for being dumb or anything.  Why?  Because most Americans do the exact same thing at one time in their lives.  I did it myself.  We are all complicit. 

And we all feel outraged at the bank - the loan shark - for kneecapping us.  But as we lie there in an alley, in a pool of our own blood, in agonizing pain, wondering whether we will ever walk again, we know, deep down in our hearts, that somehow we had this coming.  That we should have NEVER asked for money from Tony Knuckles!  Because, let's face it, we knew it would end up this way.

And the CRAP we buy on credit cards is never worth it, either.    A person could do without $18,000 in purchases over nine years - that is about $2,000 a year of stuff, that you could cut out easily.  Getting rid of Cable TV and Cell phones, for example, would more than cover that.  We get into debt over WANTS not NEEDS.  We get into trouble by living beyond our means by a measly $2000 a year.

Those interest payments are killer, man!  I had a BoA VISA, too, and I let a payment go late (I was on vacation so I paid it the day BEFORE the statement came out, and that was not counted as a timely payment for the next month!) and they Jacked my rate to 25%. Some banks go as high as 30%!

In one month, I paid $500 in interest. Ouch.

I looked around at all the stuff I owned (two houses, six cars, two boats, etc.) and thought, “what the ‘F’ am I doing owning all this stuff and paying interest on loans to have it?”

It took two years, but I sold more than half of what I owned, paid off all my debts (including my mortgage). Owning things turned out to be a form of slavery.

I realize not everyone is as lucky as I am to be able to do this.  But this experience should be a wake-up call to everyone to look at their debts and ask themselves why they are paying, over time, nearly twice for everything they own.

I cut out cable TV, cell phones, buying books (libraries are FREE!) and designer coffee. No more paying for bottled water or seltzer, either (champagne is actually cheaper!). I cut my insurance costs by hundreds a month by dumping junk coverage and shopping around.

It took a long time to re-think my lifestyle, and it is never over. I was spending my way to the poorhouse on a six-figure salary!

I have two credit cards now, a Simmons First card – 7.14% variable APR with a $5000 limit, and a Capital One 6.5% card (for my business) with a $5000 limit.

At least this way, I can’t get into so much trouble, and if I do, I can realistically pay off the balance at an interest rate that is reasonable.  A low interest rate credit card is the only credit card you should get - if you get one at all!

But I try to pay CASH for things, and not use the cards at all. Credit cards suck, really, and they are so, so dangerous and easy to use. And I think EVERYONE gets in trouble with them at least once in their life.

A few years back, people would simply refinance their home and start the whole credit card debt process all over again. Whoops! Can’t do that anymore…. ouch.

Those frequent flyer miles cards with the 22% interest rates are like loaded handguns. They are fine, if you pay off the balance. If you don’t ouch.

70% of all Americans surveyed claim they pay off the balance on their cards every month. According to the credit industry, 70% of all Americans carry a balance on their credit cards.

We do lie to ourselves about our finances, don’t we?

Self-Employment v. A Job

Working in a factory sucks, until you consider the alternatives!

One of our readers landed a nice job recently, and when I went on his employer's website, I nearly had a heart attack.  In addition to getting a guaranteed paycheck every week - where they take out the money to pay your taxes, no less! (no unpleasant surprises on April 15th!) they had a roster of benefits that were pretty staggering.  401(k) plan, defined contribution retirement plan, free gym membership, health insurance, dental insurance (!!), even discounts on cars.

I was sorely tempted to quit my practice and apply there.  Why?  Self-employment sucks, period.

Yea, I know, you say your boss is an asshole - I have the same problem.

But beyond that, think of all the advantages of having a "Job" and you will understand why they are in such short supply:

1.  Self-Employment Tax:  If you have a "Job" you have to pay about 9% in Social Security and Medicare taxes.  Your boss pays the "other half" on top of this - another 9%.  So for every dollar he pays you, he has to cough up $1.09.  And you get 91 cents.

For us self-employed people, there is no boss to pay "the other half" - so we pay an 18% "Self-employment tax".  Some fun, eh?  For every dollar we get, after the Self-employment tax, we take home 82 cents.

2.  Withholding:  Your employer takes out taxes, which is mighty convenient.  At the end of the year, you fill out your 1040 and probably get a refund.  We self-employed people have to learn the discipline to pay the IRS regularly, or end up owing a boatload of money (and penalties, for not making regular payments) on April 15th.  It ain't easy, as it is hard to project your income as....

3.  No Regular Paycheck:  When you work for ACME company, they cut you a check every bi-week.  If the company loses money one quarter, chances are, you still get paid.   If you are self-employed and lose money one quarter, you don't get paid.  You never know where your next paycheck is coming from - or when.


4.  Health Insurance:  This is so staggeringly expensive today that as a self-employed person you will quickly move to a $10,000 deductible policy - not by choice, but necessity.  Otherwise, the premiums would bankrupt you.  Think about this the next time you want to say "take this job and shove it!"

5. Dental Insurance:  What is this thing you call Dental Insurance?

If you take these things all together, the idea of "being your own boss" loses its allure rapidly.  Retired factory workers and teachers often have fat pensions and few worries.  Retired self-employed people - if they ever can afford to retire - have to live on their savings, and you never know if you have saved enough.

I think this is one reason the tide has turned against the Unions in this country.  Most of us realize that the cushy factory jobs with full benefits are very comfortable sinecures.  And most of us would give our right arm to have such jobs - and such benefits.  When we see petulant strikers out picketing for yet another dollar-an-hour raise, the rest of us shake our heads and think, "What, are they insane?"

And when the company closes down and the jobs go to China and India, few of us have any sympathy.  I mean, when people strike for six years or more, it is hard to feel sorry for them.  That ain't striking, that's quitting your job.

If you are fortunate enough to have such a job, in this day and age, cherish it and nurture it, and don't fall into the trap that so many do, of taking it for granted.

I worked at a GM plant in Connecticut that employed 8,000 people in a factory of 22 acres under one roof.  A huge place, and no one thought GM would ever close it.  And everyone took the place for granted, and didn't work as hard as they could have - or should have.  And when the factory closed, well, those jobs went away and never came back.

And it is unfortunate, but people get used to their surroundings, then they get comfortable with them, and eventually they become contemptuous of them.  And I've seen, firsthand, how workers can convince themselves, in short order, what a raw deal they are getting, when they are hardly working at all, and being paid 2-3 times the going rate for their labor.

Don't fall into that trap!

And maybe that is what we need to get our country back on track.  We need to stop taking jobs for granted - thinking of them as a "right" and then demanding ever higher and higher pay, just so we can buy more crap.

Because the alternative is pretty grim - massive unemployment and jobs going overseas.  Overseas to people who cherish those jobs, more than we do.

A House is Just a Place to Live

 They are not HOMES, they are just HOUSES.  Do not get emotionally attached to material things - it leads only to woe!

The Real Estate industry likes to call them "homes" as in "new home sales" and "existing home sales" as the term "house" sounds so cold, and "home" has all the emotional appeal of a Mother's teat to a young baby.

Now, stop and think here a second.  What have I said all along about how people try to play on your emotions?  And how, when someone makes an emotional appeal to you, they are after your wallet?

Nowhere is this more true than with houses.  Yes, houses, NOT homes.  They are just a structure to live in, to keep you out of the wind and rain, not some sort of family homestead where Grandpa sits on the front porch in his rocking chair making some of that delicious Country-time(tm) Lemonade-flavored-drink-mix made with real corn syrup solids.

Politicians play this game, too.  "Elect me!" they say, "and I'll get you a HOME or keep you in your HOME or increase HOME OWNERSHIP and preserve the AMERICAN DREAM OF HOME OWNERSHIP!"

Here's the deal:  The American Dream has never been and should never be, to own a house.  Rather, the American Dream is the concept that you can live in this country and succeed and prosper on your merits, without interference from anyone, including the Government.  THAT is the American Dream, not owning a bunch of shit.

But the commercial interests in this country want to co-opt the American Dream and turn it into a commercial opportunity to sell you their crapola, whether it is a bloated SUV or granite counter-tops on your end-unit townhouse in Foreclosure Mews Estates.

Why do I say a house is just a place to live?  Because the family homestead is dead, for the most part.  And this is not a bad thing.  Yes, to be sure, there are still a few folks who own homes that date back in the family hundreds of years.  But those folks are few and far between.  And a chain of ownership, like Genealogy, is really just bunk, if you think about it.  You have as little in common with Great-Great Grandpa who built the old homestead as you do with anyone else.  But we like to delude ourselves that somehow this chain of custody, like a chain of paternity, has some deeper meaning and makes us more significant as a result.  Usually, however, these sorts of things are, if anything, stifling.

But even assuming there is some sort of point to saying a home has "been in the family" for generations, chances are, if you are a typical American, you don't own such a home and one isn't in your family.  Chances are, you live in a suburban or urban home, built on spec, and you are the umpteenth owner to have lived there.   You may live there 5-10 years (Five is the average) and then move on.  You will not be birthing grand-babies on the living-room floor.

So, getting attached emotionally to a spec-built suburban crackerbox is nothing short of crazy.  And yet, people do it.  All the time.

I recall, when the Beltway was to be widened, a lady in her housecoat, posing next to her 2-bedroom, 1-bath shitbox, with a line of dying posies outside, saying she would "never move".  After all, this was her "home" and she had lived here for 20 years!

She's right.  Why widen the Beltway, and force her to move?  The needs of a couple million people are nothing compared to the lovely birdbath she put in her back yard.  No really, people think that way.

During the housing boom, this sort of craziness became even more apparent.  In my neighborhood, all the homes were built on double lots, and developers bought these houses, knocked them down and put up two.  From a land-use perspective, it made sense - after all, it would help alleviate sprawl to build homes "closer in" than to move further out.  And in 1949, when the deeds were drawn up, they certainly felt the land should be used for that purpose!

One lady, who had put cement birdbaths and figurines (the donkey with the flower cart, two frogs on the kissing chair, the boy fishing, etc.) all over her yard, told the developer, at the closing table, that he couldn't move her precious ornaments.  He told her, "Yes, Ma'am" and as they drove her off to the nursing home, a bulldozer leveled them all.

Sounds heartless?  Perhaps. But it is just a house, and a poorly built one at that.  And no, no one has the right to say "my cement donkey should stay here in perpetuity".

When the developers came to our neighborhood, we sold out as well.  And yea, we had our own version of the cement donkey in our back yard - to the Nth degree.

When the developer offered us double what our house was worth, though, we made the rational decision to sell.  Why?  Because that house would not be worth that price, probably in our lifetime.  It was literally a once-in-a-lifetime deal.

And yet, others didn't sell, because they didn't want to leave their "Home" - forgetting for the time being that other houses were available for sale, and that, moreover, this wasn't some family homestead, but rather a house they bought less than five years ago - one that was 60 years old and in need of serious foundation work (good old Marine Clay).

They passed up an opportunity to double or triple their investment - to make hundreds of thousands of dollars, for purely emotional reasons.  And yes, I am sure a lot of them are regretting that decision right about now.

Today, a lot of people hurting - severely - because they bought a house, while emotionally thinking they were buying a home.  According to a recent Reuters article, about 22% of homeowners in America are "under water" on their homes - owing more on their mortgages than their homes are worth.  That's better than 1 out of 5 people - and close to 1/4 of the population!

How did we get snookered so badly?  We believed the hype about "The American Dream of Home Ownership." and thought that owning a house was the end-all to humanity.  And we thought that you could make a lot of money owning a house - which as I have noted before is not true, unless it is an income property.

And once we emotionally bought into this model, it was all-too-easy to sign those toxic ARM loan docs and start the whole ball rolling.

But even beyond the home mortgage crises (that isn't enough?) people make a lot of mistakes by thinking emotionally about homes instead of thinking rationally about houses.

1.  For example, I know a lot of people here on the island, who buy 3-4 bedroom houses, even though they are retired couples, on the premise that "the grandchildren" will come to visit.  They pay $100,000 extra on the premise that maybe once a year they can re-enact a Normal Rockwell moment.  And guess what?  It rarely, if ever, happens.  Emotional Thinking!

2.  Still others buy more home that they need, to impress others.  They want a "look at me" house to impress the folks back in the old country, or their friends or neighbors, or to get acceptance from their parents (cut to the chase there - you never get that, so don't bother looking for it!).

3.  Others buy huge houses, convinced that they are getting a bigger tax deduction or making a great investment, based on emotional mantras ("buy as much house as you can afford!") rather than rational ones ("buy a calculator, asshole - and learn how to use it!").

4.  People refuse to sell and move when it makes sense.  A lady sits on her porch in Flint Michigan, wondering "where all the jobs went" and refuses to move, because "this is my home."  Idiot.  A person is offered huge amounts of money for their home during the housing boom, but refuses to sell, convinced they will be "priced out of the market!" if they do, and besides, who rents anymore?

How can you avoid the emotional pitfalls of home ownership?  Simple: Stop thinking emotionally.

1.  It is OK to rent.  No, really.  Owning a house is a never-ending series of chores - mowing lawns, cleaning gutters, and the like.  And the more house you own, the more work there is.  You can pay people to do this (which is what you do when you "own" a condo) but that just means you are spending more money.  Maybe renters don't make out in the long run, but then again, they have far fewer expenses, and often pay less in rent than you do in a mortgage.

2.  Buy a Calculator - Learn to Use It:  If it is cheaper to rent than it is to buy (taking into account ALL the expenses of home ownership and deducting possible tax deductions) then rent.  Why pay more for possible headaches and also the risk of losing your shirt?  If it costs more to buy than to rent, chances are, the market is overheated.  Very few people sit down and do this simple calculation before buying a home.  Most only look at the monthly mortgage payment and try to figure what they can 'afford'.

3.  Do Not Become Emotionally Attached to Material Things:  Even people who consider themselves to value people more than things often allow themselves to be swallowed up in emotional thinking about an old house.  "This old house has so many memories for me!" they say.  But the house doesn't have memories - you do.  Better to move on, when the time is right, than to get all weepy about sheet rock and vinyl windows.  And by the way - who promotes this emotional thinking about homes?  You guessed it!  The MEDIA!  Every other movie and TeeVee show, it seems, has some woman weeping about how she loves her home and doesn't want to move.  Poor Normative Cues!.

Home is where you hang your hat, and that can be anywhere you and your loved ones are - in a yurt, a motorhome, a tent, an apartment, or a mansion.  But what makes a home is the people in it.  The structure itself is only a shell which houses those folks.

It is easy to confuse this hollow shell with the life that goes on in it.  But without the people, it no longer is a home, just a house, and we should all realize that.  The home travels with you, even after you sell the house, or even after it is destroyed by a tornado.

Thinking emotionally is not very smart and in fact, dangerous.  People who want to rob you of your every last penny want you to think like a weeping teenager - all the time.  They want you to be "Emo" - first, last, and always.

And they do this, because they can sell you a wheelbarrow full of dogshit and tell you it is some great memento with deep emotional meaning.  And if you think emotionally all the time, you will cough up your life's savings for it and wonder where this wheelbarrow full of dogshit came from.

Screw the Real Estate Industry!  Screw the "Home Builders"!  They are not selling "homes" - but merely houses.  A home is something you create not something you buy.  All they can do is sell you a place to get out of the rain from.  Never confuse that with a home, and never get emotionally attached to the physical structure.  If you do, they have you - forever!

The material is mortal error!

Manager Trainee

The position of 'Manager Trainee' doesn't exist, really.  But it sounds appealing and people apply for that reason.  Usually, it is a con-job, not a real job.  9 times out of 10 it is an MLM scheme or door-to-door sales.

I mentioned in the last post about people who don't pay employees, and what scumbags they are.  But there are a LOT of employment scams out there, where people prey upon the desperation of the unemployed, which is a pretty low thing to do, to be sure.

I thought it would be a good idea to relate a true story in this regard, that happened to me, back in 1986.  I did not get conned, as I saw through the scam pretty quickly.  But it was an interesting scam to observe, and these sorts of folks are around in one form or another, even today.

If you want an inside peek at how these sorts of con artists work, rent The Great Wall of Sound from Netflix.  It is not the same scam, but some of the hallmarks are similar.

I had just graduated from school and was looking for a job.  My boss at UTC told me that they were moving the EE department to Hartford, and that they would be downsizing in a few years.  He was right, too, and working there would have been a dead-end.  I applied at a lot of places, sending resumes out, going on job interviews, and perusing job postings at the placement office at school.  I also sent out "cold" resumes and cover letters to companies - all the usual gambits.

And I checked the want ads in the local newspaper, too.  And since there was no "Monster.com" back then, there were one or two real ads in there, for example, one from a local Steel Mill that wanted someone to maintain their creaky older British-made relay-logic system for their rolling mills (what fun!).

Needless to say, I am glad I decided to get into the Patent Business.  Engineers these days are treated like dirt.

But one ad caught my eye.  It said "Manager Trainee wanted!  No experience necessary!  Make $50,000 in the first year!"

I strongly suspected it was a con-job, but since I had to drive into the City for another interview, I thought I would see what it was all about.  They told me to show up at 10:00 AM the next day.  I tried to ask questions as to what the job was all about, but they were vague and evasive, and told me that everything would be explained at the "interview" and that this was a great opportunity for a hard-working individual.

 

I stopped at the address the next day, about a half-hour early.  It was an older, smaller office building that had seen better days - the sort of place that might have once housed a Dentist's offices.  Inside, they were unpacking boxes and the phone company man was wiring up the phones, which were scattered on the floor.

One of the "managers" met me, full of enthusiasm, and lead me into his "office" which had a battered desk in it.  "Excuse the mess," he said, "but we're expanding rapidly in this market!  And this is a great opportunity for you to get in on the ground floor!"

We talked a bit more, but he was evasive when I pressed him for more details.  He said the "interview"would begin at 10:00, and at that point, I noticed a number of other people trickling in.  Now at this point, I figured out that this was a con-job.  But my curiosity made me stay around to see exactly what they were up to.

By 10:00, about a dozen people had arrived.  Most were casually dressed and clearly not "manager trainee" material, but rather unskilled workers.  Listening to their conversations and talking with them, I realized that most were either unemployed or were working at, or had worked at, minimum wage jobs all their lives, usually in restaurants or the like, and were looking at this as an "opportunity" to get ahead.

The "Manager" I talked to, Chuck, lead us all into the "conference" room, where we had to stand, as there were no chairs or other furniture. The whole operation had a fly-by-night feel to it.  We were told again and again what a great "ground floor" opportunity we were being offered, but without any specifics as to what it was about.  Some others came in and gave testimonials about how much money they were making and how they could afford to buy a new car, and that sort of thing.

We were lead in a series of cheers, in sort of a call-and-response kind of thing.  "Does anyone here want to be a SUCCESS?  Can I hear you say YEA???  YEA!!!!"  - that kind of thing.  It had the feel of a revival meeting.  And of course, all the "Managers" and people giving testimonials all had that plastered-on kind of plastic smile that only televangelists and sociopaths (once again, I am being redundant) have.

They took their sweet time explaining the con. "Everyone likes music, right?" they said, "All your friends like music, right?  How much do you spend on records and tapes every year?"  Of course, this was before CDs, when we still used Cassette tapes.

Charts went up, showing record industry sales, retail sales for record albums, etc.  Then came the pitch.  What we were to do was become "distributors" for music.  It sounded pretty glamorous.  What the real deal was, of course, was that we were to sell cassettes door-to-door and to our friends.

And of course, the hook was, we had to buy the "starter kit" of cassettes, for only $500.  And with that "starter kit" they would give you a box of cassettes that the record stores couldn't sell, and likely you wouldn't.  That is, presuming you got even that, and they didn't in fact just take your money and move on to the next town.

I slipped out the side door.  One of the managers intercepted me. "You aren't leaving now, are you?  This is a GROUND FLOOR opportunity!"

"Look," I said, "You don't want me in there.  If I stay there, I will have to loudly say what a rip-off this is, selling cassettes door-to-door.  So I tell you what, you go your way, and I'll go mine."

He let go of my arm and let me go, nodding in understanding.

I suppose I should have gotten up at the meeting and said "Hey, everyone, this is all a ton of BULLSHIT!  Walk away from this!"

But, I suspect it probably wouldn't have done any good, and 25 years of experience since then have confirmed this.    When you tell people something is a rip-off, not only do they not believe you, they actually defend the people ripping them off.  And moreover, the rip-off artists will spin your outrage into their favor.

"Well of course Mr. [Disgruntled Former Employee] says this is a con.  But he just didn't work the system properly!  If you don't want to do the work, you won't be a SUCCESS!  And who wants to be  SUCCESS!  YEA!!!"

Let's face it, you can't argue with that "logic."

It was an interesting experience for me, to see this seamy underside of the world.  And it saddened me to think that these hard-working but not-very-bright folks were being conned out of money as they tried to climb our socioeconomic ladder.

But such schemes have been going on for at least 50 years, if not a century, and it is clear that we can't rely on the Government to shut them down - you have to rely on your own internal compass and skepticism.

I mentioned before in this blog how a hapless friend of mine was briefly snared in telemarketing jobs.  Graduating from Expensive University with a useless degree and a 2.5 grade average, he was shocked to discover (as the Occupy protesters are) that no high-paying jobs were waiting for him.

He answered an ad for a "Manager Trainee" and got a job with a company doing what is called the Freezer Scam.  He sat in a telephone "boiler room" cold-calling people and offering to sell them a side of meat for a startling low price per pound.  Many folks jump on this offer, as it sounds "Too Good to Be True".  However, since most folks don't have the space for a side of beef, the company helpfully offers to sell them, on time, a freezer to put it in.

And the gag is, of course, that the freezer is sold for nearly double retail price, plus interest.  It is hardly a good bargain, and when you get done paying for the freezer, the interest, and the electricity to run the freezer, well, the price per pound of that side of beef is more than what you'd pay at the grocery store, retail.

He quit that job after a few weeks and answered another "Manager Trainee" ad, which turned out to be selling vacuum cleaners door-to-door.  The product was not bad, just overpriced by a factor of at least two.  They took the people out in a van, and dropped them off in poor neighborhoods.  They then walked door-to-door trying to convince people to spend $600 on a vacuum cleaner, paid for "on time" of course.  He made one sale - to his Mother, before quitting.

Such "jobs" are really not jobs at all.  And in many cases, they don't pay, they leave town, they pay little, they pay on commission (which results in you making less than minimum wage) or they ask you to buy a "starter kit".  Just walk away from these sort of things.

And the effect on the people involved is devastating.  The folks who go for these scams end up ripped off, depressed, and convinced that life is just one big con game, and that the whole system is rigged.  And this has a corrosive effect on our society as a whole.  Every person ripped off in scams like this is one more person not willing to defend his country against outside aggression.  Why bother?  His country wasn't there to defend HIM.  And in fact, the government institutions PROTECT the con artists in many situations.

But alas, that ain't about to change soon.  Many of these con artists take in tens of millions of dollars annually - enough to buy Judges and Congressmen.  Yes, in some States, Judges are elected, and campaign contributions talk.  Act shocked.

The only defense, therefor, to the con-games and rip-offs is your own internal compass and your own skepticism.  When someone offers you something-for-nothing, you just have to walk away.  Whether it is Glenn Beck selling gold, people offering free ponies, or job offerings for the mythical position of "manager trainee".

Just walk away!

Too Clever By Half

Some folks think they are being clever and devious, when in fact, they are just annoying.  Avoid such folks!

In your life, you will run into a lot of people, most of whom are hard-working, honest, kind, open, caring, and friendly.  However, you will also run into a lot of folks who are the diametric opposite, and of course, such folks are trouble.

Why are people this way?  It is hard to understand.  At the extreme end of the spectrum, you have Sociopaths - the Ted Bundy's of the world, who look and act like humans, but are little more than manipulative robots inside, using other people toward their own ends.  People like him can be charming, friendly, and persuasive.  And they are easy to spot, as they are charming, friendly, and persuasive - in a manner that is always too-good-to-be-true.

But aside from Sociopaths, I think there are a lot of ordinary people who get knocked about in life and convince themselves that no one gets ahead anymore by their merits, but rather by fixing the system.  And the media presents ample evidence of this, of course, and lately has been dramatizing it in television fiction shows - where the good guys are now bad guys, and morals are vague and subject to interpretation these days.  This is a corrosive effect on our society, and of course, it goes without saying that not watching television is a really good idea.

I stopped watching television a few years back, when it became alarming to me that we now rooted for the bad guys.  Tony Soprano was the new hero - breaking hearts and kneecaps, one at a time.  In a way, it is a parallel to the Japanese Yakuza dramas of the 1990's, which glamorized their own mafia, with predictable and disastrous results.

But the low point, to me, was when the TeeVee started glamorizing serial killers as the new American Hero.  And we wonder what is wrong with our society.

But getting back to the point, an increasing number of Americans are convinced that the whole deal is rigged.   They think that in order to get ahead in life, you have to cut corners, rip people off, have some sort of con going, or have insider information, some sort of system, trick, or whatever.  The old ideas of saving money, working hard, living within your means are for chumpsters, in their opinion.  Only a fool would believe that sort of Mayberry mentality!

And yet, experience has shown, time and time again, that the con artists and flim-flam boys always end up in the trash heap, over time.  You just have to wait for it - and often not wait long.  Karma catches up - always.

And many ordinary folks, beaten down by life in general, and in particular by the con-artists and rip-off kings, again and again, start to think that maybe, they too, should step over to the dark side and become clever fellows themselves.  And so they start to think of life as one big con game, with corners to cut and shortcuts to be made.  And usually, this just makes things far worse for them.

The problem with all these sorts of folks is that they are too clever by half.  They think they are getting a strategic edge in a deal by pulling a fast one, without realizing that "heads I win, tails you lose" is not a sustainable business model.  Eventually, over time, people realize your are a rip-off artist and they stop patronizing your business.  Or the FBI breaks down the door one day.  Or you are subpoenaed in an investigation, or they repossess your furniture.  Or, if you push people hard enough, someone shows up at your office with a gun one day.  Being a crook is no answer to anything.

How do you avoid dealing with crooks like this?  Well, it can be easy to spot them, once you know the signs.  And the key thing is, to see the signs and have the guts to walk away immediately and not look back!  It is tempting to ignore trouble signs and think, "Hey, this still might be a good deal!" and later on end up in a world of woe.

If a potential business partner, a vendor, or other person you have or are contemplating to have, a financial relationship with, tries to con you or steal from you or deceive you, even once, just walk away.  There is no "second chance" you should give to intentionally and habitually dishonest people.

What do I mean by this?  Let me give some examples:

1.  Starting a Business Relationship Based on Deception:  I gave the example the other day of a telemarketing robo-call that purported to be a "survey" with a "free cruise" offered for completing the survey.  This is a blatant and ineffective attempt to get around the Federal "Do Not Call" act, by deceiving you into thinking that you are participating in a survey, when in fact they are just selling cruises on a cruise line you've never heard of.

I'll say it again and again, until I am blue in the face:  If you start a business or financial relationship with someone or some organization based upon a deception - no matter how trivial the deception is - the relationship will only go downhill from there - and you will have no one to blame but yourself.

But of course, the temptation is to overlook the deception.  "OK, so they tricked me in a marketing scheme.  No harm done!  And they are giving away a free cruise!  It is too good a deal to pass up!"

It is tempting, yes.  But no one is giving away free ponies, so just stop thinking that way.

If someone lies to you at the beginning of a relationship, and you continue the relationship, you have no one but yourself to blame later on.  They have clearly telegraphed to you what scumbags they are.  You are the fool for continuing to deal with them. 

2.  If It Sounds Too Good To Be True, It Probably Is a Raw Deal:  I worked with the Federal Trade Commission, as an Expert Witness in a fraud case.  It was one of those Invention Broker scams, where they take your money and do little in return.  And yea, Invention Brokers advertise on TeeVee, which is a key right there that the TeeVee doesn't have your best interests at heart - they take ad money from anyone, without even bothering to figure out whether they are assisting in a rip-off or not.

The people at the FTC are hard-working government employees, and the sort of folks the GOP would like to put on the unemployment line.  After all, their investigations are harming "legitimate" businessmen and creating "unnecessary regulations!"  But the reality is, they are the only Sheriff in town, provided with a tin badge and a rusty six-shooter, holed up in the town jail, waiting for the Black Hats to come into town and wipe them out.  (and I guess if you want to torture that analogy further, that makes me "Old Gus" the town drunk, in the jail cell with the Sheriff). 

But all that aside, you talk to these folks and they say the same thing over and over again:  Prosecuting con artists is an endless task - and often impossible.  They feel like Sisyphus, pushing the same rock up the hill, over and over again, only to see it roll down again.

No matter how hard they try, no matter how many warnings, press releases, websites, law suits, criminal prosecutions, public service announcements, whatever, there is still some Jethro out there willing to believe that he can get something-for-nothing because some fly-by-night operator told him so.

And so, they say, over and over again, "If it Sounds Too Good To Be True, It Probably Is" - that whenever someone tells you they can make you rich, give you dramatic discounts, or otherwise transmute tin into gold, all they are after is your money.

And it is a simple thing, if you think about it.  If there was a "money system" that allowed you to become rich with no effort, why would anyone SELL IT - wouldn't they make more money just using the system?  Folks don't think about that, they only think about this fantastic payout, and fail to realize that they are spending thousands and thousands of dollars on a con.

Again, if something seems too easy, just walk away.  No one is giving away free ponies.

3.  People Who Don't Pay You:  If you are a landlord, you will be approached by a number of people wanting to rent your place - and telling you how lucky you are to have them as a tenant (in spite of all the flaws in your rental property, of course!).  These people never pay you.

And many amateur landlords fall into this trap.  They offer a place for rent, often setting the rent too high, thinking it will attract better tenants - twisted logic to be sure.  So, after months of no applicants, they are thrilled when an apparently sophisticated tenant shows up, willing to rent the place, but of course noting "flaws" in the property.  And they have a very long-winded excuse why they don't have the first month's rent or down payment.  And they talk you out of doing a credit check, because, after all, they are so wealthy you don't need to do that!

But the upshot is you are being conned, and you will never see a dime from them.  They will use every trick in the book to stay in the property until you finally evict them, which they will further delay, until the night before the Sheriff shows up to toss them out, at which point, they will leave, taking the appliances with them.

As soon as you get a whiff of "not getting paid" be sure to run for the hills.  When a tenant doesn't pay the deposit and first month's rent, don't give them the keys or allow them to occupy the place.

It is temping to say, "Well, they seem like nice people, and I want to rent out my place!"  Just move on to another tenant - one with the first month's rent and security deposit in hand.  And lower the rent until you attract such tenants.  Better to get less rent from a real tenant than to get fantasy rents from a non-paying con-artist.

And again, the warning signs were all there for you to see - people too slick, too smooth, and with excuses for everything.

4.  Employers Who Don't Pay:  This scenario can happen to employees.  The folks running the telemarketing scam selling "free" cruises don't pay the people who man the phones, according to one website.  And this is not atypical of most telemarketers.  They put an ad in the paper for a "manager trainee" to get in desperate people who are tired of minimum wage no-skill jobs.  They are told they can make big money, on commission, selling over the phone, with the potential to be promoted over time.  And they bring in a shill, a fake "fellow employee" who touts how much money he is making, perhaps even showing off his new car.

But the joke is, they never pay these people.  They string them along with one excuse after another, for weeks on end, perhaps paying them a pittance here and there, until one day the employee (if they don't quit first) shows up to a locked office door.  The con artists have fled, off to a new location to ply their trade.  And by the way, their landlord is wondering where they went, too, as they never paid a dime in rent.

As soon as you get a whiff of "not getting paid" be sure to run for the hills.  When an employer misses a paycheck, just quit right then and there.

Again, it is temping to say, "Well, if I quit, then I won't get the back pay I am owed!" - but you ain't getting that anyway, so just move on to a real job with a real paycheck.

* * *

All of these scenarios occur on a regular basis.  I have seen them firsthand, when people have tried them on me.  I have seen them used on other people who were not wary enough to catch the warning signs.  And of course, you read about them in the paper all the time.

What prompted me to write this was a scenario in my own life.  A new client appears, wanting work done.  The work is due tomorrow and requires I pay a $500 fee to the Patent Office.  The client is in a foreign country.  I send them an invoice for payment for my services and the fee, and immediately they object to making any payment whatsoever.  They believe a third party should have to pay - when there is no realistic reason that party should pay at all.

I call them out on this, and they proffer apologies and say they want me to represent them.  Should I?  It represents a big chunk of business, and with the economy the way it is, it is temping to say "Yes".

But they have tipped their hand, haven't they?  They are trying to be too clever by half by interpreting an agreement with a third party in their own favor, in a manner that places me caught in the middle, unpaid.

And the big tip-off here was their initial reaction was "we don't pay".  Where is this relationship going from here?  Uphill or Downhill?

How much money do I want to throw at this before I throw in the towel?  Why should I have to pay to find out if someone is honest?  Why bother even risking it, if they have already tipped their hand.

So, reluctantly, or perhaps gladly, I walk away from the business.  I have been stung before by foreign clients - and domestic ones - who ask to have a lot of work done, fees advanced, and then go belly-up in Chapter 7 bankruptcy.  I end up not getting paid for my labor, and not getting reimbursed for my fees.  I end up paying for the privilege of working, for free.

And it is a scenario that I simply cannot afford.  In the last two years alone, I have been stuck with close to $20,000 in unpaid fees from bankrupt clients.  I realize that with the way the economy is, we are all taking our lumps.  But that sort of losses are simply not sustainable.

And yet, I have to fight my inner urge for the Free Pony.   'Don't walk away now!' my brain argues, 'They might just pay you!  You are leaving money on the table here!'

But you have to fight the inner urge to go for the free pony.  Free Ponies don't exist!