Buying a Basic Car, a Classic Example of "How To"

In the United States, it is pretty much required to have a car just to get around. Owning a car is a necessity for many. There are more cars than people in this country.

Yet so many pay far too much for this basic need.

The following example of "How To" buy a car is based on the real-life experiences of a friend of mine, who is "frugal" and willing to do the legwork and research to get more out of life on a given income. My hat is off to her.

Shelia needed a car. She had just returned from a trip around the world, and had sold her old car before leaving. She asked me what kind did I think she should buy. Being more of a car fanatic than a pragmatic car owner, my answer was twofold: "Do the research" and "Japanese, probably".

The former is most important. Take your time and figure out what you need, not what you want, and decide on a make and model and age range, and then research all the aspect of that vehicle. Shop for the same make and model car, rather than comparing different cars, and you can find the real "bargains".


1. Foreign or Domestic? Japanese!

If you are looking for basic, reliable, secondhand transportation, a used Japanese car is usually the best bet at the present time, as they are reliable, hold their resale value well, and are readily available and thus easy to get serviced.

If you are on a budget, esoteric cars like BMWs or Jaguars are out of the picture. In addition to being expensive to buy and own, parts and service are not readily obtainable. Plus, they are expensive to insure. If you are not a "car nut" shy away from such cars.

American cars can be bought cheaply, but they depreciate at an alarming rate and have a poor record of reliability, and generally use more gas. Yea, sure the UAW says that Americans cars can stack up to any car made in the world. But we are talking reality here, not faith-based economics. So let's leave the rhetoric right out of it. American cars by and large suck, period. And so do French cars.

Other foreign makes, such as VW have a so-so record of quality. I would approach with caution.

Among the Japanese makes, Toyota and Honda are the best of the lot. Nissans are not as reliable and Mitsubishis - well, you might as well buy an American car if you are going to get a Mitsu. Oddball brands like Suzuki, Isuzu, and Dhaihatsu are probably not worth considering.

The Koreans are worth considering. Once considered the king of the scrap heap, their quality has come a long way, and some Korean cars could be a bargain.


2. What Kind of Car do You NEED?

Again, we are talking basic transportation, here. A reliable ride for minimal money. We are not talking about some unpresentable junker, here, but a decent rust-free car with no dents, and all the body panels the same color. It is possible to find such cars, even on a budget.

Convertibles, pickup trucks, coupes, SUVs, Jeeps and the like are right out of the picture. Those sorts are cars are for stylin' mostly, and not very practical for daily use. Remember, we are talking basic transportation needs at a minimal cost.

Note also that more esoteric cars, like a BMW convertible, really should be garaged and babied. Shelia lives in an apartment complex. A BMW convertible, left outdoors, would quickly deteriorate, and probably be broken into (usually by slashing the top).

Shelia decided correctly that a small, fuel-efficient sedan was the answer. She needed something that was easy to park and drive in city traffic, got good mileage, could carry passengers on occasion, and not be so flashy as to attract thieves or break-ins.


3. PICK ONE Make or Model

One mistake many car shoppers make is to try to cross-shop different brands and makes. Comparing a Chevrolet to a Honda to a Dodge to a Toyota is frustrating and inefficient. Each is a different type of car, with different features, different sales price, and different resale value. Comparing one deal to another is impossible, as the numbers don't equate between the different makes and models. If you shop for a Chevy after looking at Toyotas, you'll probably over-pay for the Chevy, as Toyotas are more expensive cars, and you'll think an overpriced Chevy is a "bargain" in comparison.

So after doing your research, narrow your focus to ONE make and model car, in a limited rage of model years (3 or less). Then you can compare apples to apples.


4. Don't be a Badge Snob

Many cars are sold under different models and makes. GM sells the same car as a Chevy and a Pontiac and a Buick and a Saturn. Some Saab models are based on Chevys, Subarus, or even the same platform as a Malibu. There is no difference between a Ford and a Mercury except for some chrome trim and the price. And Japanese cars are sold in this country in their base form (Toyota, Honda) and as an upscale version (Lexus, Acura) even through there may be little difference between the two. There is little point, particularly when buying a used car, in paying extra for "badge engineering" as it is known in Detroit. Outside of the showroom, the name on the car makes little difference - so pick the cheaper model.

Shelia had a brilliant idea that I didn't even think of. "What about a Geo Prizm?" she said. Brilliant! The Geo Prizm was made at the New United Motors plant in Fremont, California, a joint venture between Toyota and General Motors. Back then, nearly every Corolla sold in the US was made in that plant, and went down the same Assembly line as the Geo Prizm. The only difference between the two cars is in trim - the Corolla has retractable mirrors and a slightly nicer interior than the Geo. Other than that, the two cars are mechanically the same and even look the same. But in terms of resale value, the Toyota version sells for $500 to $1000 more.

By the way, Toyota and GM still run this plant along with one in Ontario Canada. Today they makes the Toyota Matrix and Pontiac Vibe automobiles. albeit in separate plants. The sheetmetal is slightly different, but the underpinnings of both cars are the same.


5. Pick a Price Range

These steps are not necessarily in order, of course. Price range is key in determining what car to pick, and vice-versa. There is no point in picking a Rolls Royce, and then deciding your price range is $1000. It just isn't going to work.

When selecting a price range, you have to be somewhat realistic. There are cars that are worth little more than their scrap value, which today, is nearly $250 for a good sized car. "Fishing too far down stream" is never worthwhile, as you'll end up with an unreliable car that will need constant repair. So if all you can afford is $500 to $1000 for a car, perhaps you should think about riding the bus for a while, until you can save up enough money for a decent car.

Shelia decided she wanted to spend around $3000 or so for a used Geo Prizm, about 5-7 years old, with no more than 80,000 miles on it. Now, this was several years ago, so such a car no longer exists and probably such prices are not realistic, today. But after researching the vehicle, she decided this was a realistic price for a car of reasonable vintage at that time.


6. Do the Research:

Again, these items are not in order and may be performed concurrently. Shelia checked http://www.nadaguides.com/, http://www.kbb.com/ and http://www.edmunds.com/ for pricing data on the car she was looking at. She also checked the local paper (not much there but dealers) for comparable prices, as well as the local autotrader and autotrader online. She tracked down a "chat board" for owners of the car and the related Corolla and posted a message asking owners what sort of things she should be looking for. She read CONSUMER REPORTS which she checked out of the library. Your local library, by the way, has lots of books on how to evaluate used cars and to help you learn about cars in general. The more you know, the more informed a decision you can make.

With all this data, she was able to pick the make and model car she waned (5-7 year old Geo Prizm) determine what a reasonable price would be for a car in her price range condition, mileage, and age (around $3000). Since she was shopping only ONE BRAND AND MODEL, it was possible to assemble this data easily.


7. Take Your Time

The worst thing you can do when buying a car is to be in a hurry. Going into a car dealer and saying "I need a new car TODAY" is the worst way possible to buy a car. Shelia was content to take the bus to work and wait weeks, if necessary, to find the right car. You cannot rush the process.


8. Start Looking

Shelia asked me to come along and look at cars with her. She felt that I might know something about cars, and that also having a man with her might help her bargaining position (we live in sexist times, still, and women are looked upon as unsophisticated by car sellers). It was also helpful to have a disinterested third party to bounce things off of.

We looked at six cars. I can't remember them all, but I remember a few.

We looked at one Toyota Corolla, just for comparison to its Geo cousin. It was $500 more than the other cars and not in as good condition. This confirmed to her that paying more for the "Man in the Sombrero" logo on the front grill was not worthwhile.

We looked at one Geo at a dealer, but they wanted nearly $1000 more than the other cars. No sale, but the salesman had a snappy plaid suit.

One car for sale by owner was filthy, with coffee stains in the interior, dirt on the engine, scratches on the bumpers and doors, and the ABS light on the dashboard. The owner said "you can fix that for like $500, I just never got around to it". This car had "neglect" written all over it. Oddly enough, of the private sale Geos, it had the highest price and the owner refused to budge.

Another car was clean inside and out, but the engine was dirty, and it had four mis-matched tires and needed a new battery. The price was about middling.

The best of the lot was clean inside and out, and even the engine was detailed. It had four matching tires that were reasonably new, and a new battery. The mileage was in the mid-range and the price was not a steal, but smack in the middle of where her research told her it should be. The interior was clean with no funky smells. Although none of the cars had a complete service record from new (desirable) this car had all the records from when the present owner had it.

I did some simple tests on the car for her - checking the condition and levels of the fluids, doing the "dollar bill" test on the exhaust (if a dollar bill, placed next to the running exhaust, gets sucked back into the tailpipe, count on more dollar bills being sucking into the car, as one or more valves are burnt or sticking. The exhaust should be a steady outward flow of air). The last car passed all test with flying colors.

What was interesting in looking at the same car in six different iterations, was that you tended to see wear and tear in the same places, and comparing prices on the cars was a lot easier, as we were comparing the same model and make. If we had cross-shopped different makes and models, the worn-out car with the broken ABS might have seemed like a "deal". But after looking at other identical cars, we realized it was not.

8A. Get it INSPECTED: If you are not clever with cars, you should consider taking the car to your local mechanic for an overall pre-purchase inspection first. Most mechanics can do this for a flat fee of $100 or so. They can tell you whether the car need brakes, tires, front end work, transmission work, or major engine work. No inspection is a guarantee, of course, but it can point out some hidden defects in a car.


9. Look for a VALUE not a BARGAIN

Many people make the mistake in buying a car of trying to find some incredible "bargain". While you can find a dress in a dress shop marked down to 75% off, you'll never find such a deal in the automotive world. If you do, WATCH OUT! There is something wrong with such a car.

Shelia decided that the nicest car we looked at was an acceptable value. It was clean, well-maintained, and offered at a reasonable price. That is the best any of us should hope for. Trying to find a car at a "steal" is unrealistic and immature.


10. Pay CASH

Shelia had cash to buy this car, and that is the best way to buy them. Most folks don't have cash to buy a car, and that limits the resale possibilities and market, and hence used cars sell much more cheaply between private parties than from dealers who can provide financing.

If you really don't have cash, talk to your credit union about financing. It is harder to do, as you have to find the car, line up the financing, and then make the deal, and in the interim, the cash buyer may have bought the car out from under you.

Note that most banks will not lend on cars over 5 years old, which is one reason cars over that age sell for a lot less.

Paying cash puts you in the driver's seat, literally. Pulling out a wad of 100 dollar bills and saying "well, how much will you take for it?" puts the seller on the spot, as he knows you are serious, and wants to sell the car. You can haggle paying cash. When you say "hold the car for me for several days while I line up a loan," well, you just don't have the leverage.

Note also that when you get a car LOAN, you have to get COLLISION INSURANCE. For young people, this can easily cost more than the car payments, which is idiotic. Young men (boys)buying sports cars often pay twice in insurance than they do for the car. At 48, I can afford the insurance on an M Roadster. At 25, you can't.

So if you pay CASH you can forgo collision insurance altogether, or, if the car is worthwhile, get coverage with a higher ($1000) deductible and save a lot of money. Banks usually require a $500 deductible for cars with liens.

Shelia called the owner of the car she liked and offered him 10% less than asking price. He came back at 5% and they closed the deal for a little over $3000. She negotiated a REASONABLE price, but did not expect a STEAL. Trying to STEAL the car at a low ball price just wastes everyone's time, so forget about it!

Shelia drove that car for nearly four years, putting 30,000 miles on it in the process. She later sold it for $1500, which works out to a nickel a mile in depreciation. Her only repair expense was for a new alternator ($400) and for regular oil changes. All in all, the car cost her less than $2000, not including gas an insurance - which is a heck of bargain that puts bus fare to shame.

It was a good looking car, too, with no rust or dents. Most folks thought it was a much newer car than it was, and assumed she had paid far more than she did for it. So yes, you can even have status on a budget, if you shop smartly.

The steps Shelia took in researching, identifying, selecting and buying a car are a perfect model of "how to" make a reasonable and well-informed retail purchase decision. Buying a more expensive or even brand new car (not advised) can follow the same or similar steps. Pick a make or model, research it to death, and then shop several identical cars from individual sellers. Find the nicest example of the marque, negotiate a fair price, and pay cash. These are the best deals going.

Faith-Based Investing - Defying the Laws of Logic

Investing based on faith and not logic, is never a good idea.

 By faith-based investing, I do not mean investing in religious-related investment funds, although such funds are often the source of fraud and thus related to this topic. (Folks buy into the "Jesus Fund" because it is being touted at their church, and they neglect to notice the fellow running it is a convicted felon - until it is too late)

What I mean by this term is investing based on non-logical criteria - investing based on faith alone, which cannot be logically argued or debunked. Like religious beliefs, faith cannot be attacked using logic, so don't bother trying. When someone gets that glazed, far-away look in their eyes, the best thing you can do is back away slowly.

At the present time (December, 2008) we are seeing the fallout from such faith-based investing. Investors bought houses and condos in a orgy of consumption from 2002 to 2006, without any real basis in logic or sound reasoning. Financial instruments were offered to finance these deals - financial instruments that no sound person, in retrospect would either offer or accept. In the cold hard reality of 2008, suddenly the actions of even a year ago seem bizarre and unfathomable. What the heck were we thinking?

And this is not the first time faith-based investing has struck. As recently as the 1990's, we fell victim to it with the "dot com" boom and the Enron meltdown. Defying logic, people declared that basic financial rules, such as profit and loss, no longer applied to this "new economy." We look back and laugh now, but at the time, those meltdowns harmed a great many people.

Before that, it was the Real Estate meltdown of 1989 (a neat 20 years from this meltdown, but no one seems to recall it). Before that, the "Reaganomics" recession of the mid 1980's, then the "stagflation" recession of the 1970's, and so on and so on.

Going back further, we have the Great Depression, the result of the mother of all faith-based investing - the giddy stock market boom of the 1920's. Before that there were various bank crises, crashes, runs, and the like - probably going back to the dawn of time.

What things should we be looking for to tell us when the next bubble comes? And how can you protect yourself from such meltdowns, if at all possible? And what causes these brief incidents of mass-insanity? The first question, I think I can safely answer. The second question, I have some ideas on, but no concrete solutions. The third question, well, I have some guesses.

What things should we be looking for to tell us when the next bubble comes?

Looking at all these incidents of "faith-based investing" a pretty consistent pattern emerges. Economists traditionally have viewed people's economic choices as being based on rational decisions - that the market economy always finds the "right" price for any commodity and is self-correcting. Yet on more than one occasion, mass-hysteria takes over and shifts the market in one extreme direction. Like stretching a rubber band, these deviations from the market equilibrium last only a short while, but the more the rubber band is stretched, the greater the "bounce back" in terms of economic recession or depression.

How can you tell if you are in the middle of a "bubble" or other non-rational deviation from the market norm? Here are some indicia I have seen over the last few market bubbles:

1. People who ordinarily do not get into the market start investing: We saw this in the Real Estate boom, where amateur investors jumped in, well after the boom had started, driving prices up further. Regular Joe's and Jane's, fueled by easy money, decided to "make a killing" in Real Estate, only to later be killed. The same thing happened in the "dot com" boom, where regular salary slaves would try their hand in investing in that booming market. The problem with this scenario is that amateur investors don't know what they are doing, and often bid up the prices of stocks (or houses) to ridiculous levels. These sudden increases in prices encourage more people to "get in on the deal" as it seems that "everyone is making money" and no one is losing. The same thing happened before 1929, when even your grocery clerk was checking his portfolio between stuffing bags. When amateurs get into a certain market segment, beware of extreme volatility!

2. Idiotic Mantras and Silly Talk is Repeated About the Market: During the Real Estate bubble, I heard many folks - Real Estate Agents, Mortgage Brokers, Buyers, Sellers - everyone, it seems, repeating the same stupid theories. "Real Estate in Florida will NEVER go down!" they cried. "Even if folks here stop investing, buyers from the UK or Brazil will buy all these Condos!" We saw similar silly talk occur back in the 1990's as well. "Profits are a thing of the past!" the dot-com millionaires told us, "All that matters is that you have a good 'burn rate!'" The idea that you never need to make a profit and the success of a company can be indicated by how fast they squander capital, are both ridiculous ideas. But people bought into them.

3. Many Articles Appear Warning of a Meltdown: People like to say they were blindsided by this recession. But if you read even the popular press of the last few years carefully, you would have seen all the warning signs. Articles appeared in every newspaper and magazine - not just financial rags - warning that things that were going on made no sense at all, and that an impending economic meltdown was going to occur. I read those articles with great concern and heeded their advice. Most folks preferred to listen to "silly talk" - the foundation of faith-based investing, as it was more comforting and reassuring.

4. The Math Doesn't Add Up: When P/E ratios go haywire and a stock costs hundreds of times its earnings, something isn't right - and a correction will be coming in short order. Similarly, if the monthly carrying cost on a house or condo is more than the rental income, the market is clearly out of whack and a correction will be due. Granted, there are short-term incidents where the market "gets ahead of itself" and people invest, not based on short-term gains, but on how they perceive the long-term value of a stock or real estate investment. But after two or three years, if the market is still "ahead of itself," and the basic math still doesn't work, you're in a bubble!

5. Investments go up in value by double-digits for several years: Back in 1989, houses in Fairfax County, Virginia were going up in value by as much as 30% a year - for several years in a row. Depressed home prices shot up when lower interest loans became available and the government and the region expanded. Such things would explain a modest increase in prices for a year or two. But the double-digit increases for years in a row were simply not sustainable. Similarly, rapid increases in "dot com" stock values clearly could not be sustainable in the long term. Yet many investors "jumped on the bandwagon" (particularly the amateurs) long after the initial increases took place - and just before the correction.

6. Investments Increase in Value for No Apparent Reason: If a pharmaceutical company develops a new cancer-curing drug, or an electronics company makes a new "must have" micro-chip, it is not uncommon to see a big bump in share prices once sales (and profits) go up. Similarly, if oil is discovered near a small town, and people start moving there to work the fields, you can expect Real Estate values to skyrocket - for a short while. But in the long term, the profits level off for new products, and stock prices, having gone up, will level off at the new level, and perhaps go down if competition develops. Boom-towns might see Real Estate go up, until contractors start building new housing to meet demand. Bubbles are characterized by rapid increases in prices for no apparent reason, or rapid increases caused by an apparent reason that continue to rise long after the triggering event has died down.

7. People Investing Talk Only to Themselves or Like-Minded People: Silly-talk deflates like a balloon when exposed to scrutiny. Thus, you tend to find the rabid faith-based investors only talking to their like-minded peers. During the dot-com boom, the dot-com "faithful" would read only those articles that said that everything was great and getting greater. Anyone trying to sound the warning gong was ignored or discounted as an "old school" crank. Similarly, during the recent Real Estate bubble, the amateur investors listened only to their own kind - and the army of Real Estate Agents, Mortgage Brokers, and Developers who repeated the same tired old Mantras - "Real Estate will always go up, up, up!" Folks who wrote articles pointing out that the boom was going to go bust were again dismissed as unnecessarily pessimistic - a view validated every day that the market continued to rise.

This is by no means an exhaustive list of bubble indicators. And not all be present to indicate a bubble is taking place. But if more than one or two are present in any given market, you can be sure the market is overheated - and overvalued.

How can you protect yourself from such meltdowns, if at all possible?

A realistic investor expects that the market will go up and down. Some stocks might see a double-digit increase for a short while, but a rational investor knows that a "good" rate of return on an investment is all that he should reasonably expect. A realistic investor also realizes that in order for an investment to increase in value, it has to make a profit - whether it is a rental condo, or a "dot com" stock. Investments that lose money will decrease in value, simply because no one will buy an investment that loses money.

But as a rational (we hope) investor, how do you deal with these things? The recent downturn in the economy "took out" the investments of nearly everyone in the country. Even if you carefully invested in a 401(k) mutual fund that was stable and slow growing, and made a careful investment in Real Estate with a large down payment and good cash flow, you've probably found yourself losing ground as your investments have decreased in value.

To some extent, you can't protect yourself fully from the follies of your fellow man. Only a clairvoyant could know exactly when the market has peaked and know when to sell a stock at its absolute peak and to buy it at its absolute nadir. But you can take steps.

First of all, recognize a bubble for what it is, using the indicia outlined above. I bought a lot of Real Estate before the last bubble started. When prices started going up, I was making good money on my equity increases, but also had positive cash flow on all my properties. It was the success of folks like myself that drove others into the market (particularly after the "dot com" crash discouraged these same amateurs away from stocks). In a way, it is like the Ponzi scheme (see my article on scams) where the "success" of the early investors fuels the fire later on.

As a conservative investor, I became alarmed early on. I expected my properties would increase by maybe 2-5% a year and be happy with that. When they started increasing by 20-30% a year, I became alarmed. Since I had a positive cash flow on these properties, I held tight and enjoyed my new found millionaire status (on paper, at least).

After a while, I got used to this new level of Real Estate values. But, I had stopped buying properties at that point. Since I strongly believed that you need to have a positive cash flow on any investment, I took a "pass" at deals where I would be paying, every month, for the privilege of owning a property - on the premise that some even bigger fool would buy later on.

I cashed in before the market crashed. Some properties I sold too early, some too late. One duplex I sold for $280,000 increased to nearly $400,000 the next year. If I had "held on" for another year, I would have made a lot more. But, like musical chairs, you want to be sitting down when the music stops. If I had waited a year beyond that, I would have made far less. Since I only paid $95,000 for the property, I took my profit and moved on. There is such a thing as "too greedy."

In another case, I waited a year too long - after the market had cooled off, and I had to lower my price somewhat. Fortunately I sold before the "hard" crash occurred. I still made out (having owned the property for a decade) but since I was no longer a Florida resident, I had to pay a huge capital gains tax in Georgia. Cashing out of Real Estate is never easy, as if you've been depreciating property over the years, you'll discover that that you may owe more in taxes than you realize from the sale.

But even if you cash out, where do you put the money? I realize that doing another Starker-type deferred exchange was out of the question. Selling one piece of property only to buy an overpriced piece of property elsewhere would not protect me from the crash in prices. So I took the cash, paid the taxes and bought a personal residence elsewhere. I lucked out, as I found two places where the Real Estate market continues to grow (Central New York, and Jekyll Island). But if I had to stay in Virginia, I think I would have used that money to simply pay off my mortgage and/or invest in bonds. Not sexy investments, but in an economic recession, sound ones with an effective positive rate of return.

With stocks, I did not "get out" in time. While I could see the bubble in Real Estate pricing, based on firsthand experience, the decrease in the stock market came as something of a surprise to me. Like most folks, I did not realize how much the mortgage-backed securities underpinning this whole bubble were a large part of the stock market - and how a credit crunch would take down a huge sector of the economy as well.

However, I believe that once credit becomes available again, many of these stocks will go back up in value - over time. The worst thing to do at this point would be to sell stocks in a panic to try to get out "before they go any lower". Many folks do just that - often the same folks who got into those same stocks too late - after they were nearly at the peak. Trying to "time" the market inevitably results in buying high and selling low.

One way ANY investor can better survive a downturn without having to try timing the market is to DIVERSIFY their portfolio. The folks who lost out big-time in the 'dot com' bubble were the folks who invested it all in "dot com" stocks. They "doubled down" their investment on the premise that if they won, they'd win big. They failed to realize that if they lost, they'd lose it all.

A balanced portfolio of Real Estate, Stocks, bonds, life insurance, and other investments means that if one segment of the market goes down, then not all the portfolio tanks out. In the current recession, this may not seem like helpful advice, as it seems that EVERY segment of the market has collapsed. But stocks, while down as much as 50%, are doing much better than some Real Estate, which is worth even less than that. And not all stocks are down that much - if you have an expanded portfolio, you'll note that some might even be up. And Bonds in this market are doing quite well, provided they are not shaky corporate bonds.

(Note that how your porfolio should look depends on how old you are. Many oldsters here on the island were heavily into stock and lost a great deal in the current recession. Shame on them! Every financial book, tome, article, and guide out there preaches the same thing: By the time you retire, the majority of your portfolio should be in safe, government-backed securities, such as bonds and FDIC insured accounts. While a 30-year old can recover from the current market, a 70-year old might not live long enough to see the turnaround!)

At this stage in this present recession, we are seeing an inverse bubble - sort of the same thing that happened after 1929. Instead of "irrational exuberance" of a the bubble economy, we are seeing "irrational depression" - the idea that everything is on the skids and it will never get better. Bad economic news fuels more bad economic news - and depresses spending, investing, and savings. It will take some time before we realize that we have "nothing to fear, but fear itself."

What causes these brief incidents of mass-insanity?So what DOES cause these mass-hysteria swings in the market? Again, it is Psychology, not economics which drives these things. People believe things that make no sense. And in many instances, it is government intervention (the ultimate irrational thinking) that fuels such market swings. When the government intervenes in a market in an irrational manner, the market reacts irrationally. This is not to say that all government intervention is irrational, of course. Most of it is, unfortunately. Rational intervention is often shouted down by special interests that want irrational intervention that favors their own interests. And of course irrational lack of government intervention, in the form of irrational deregulation, can also be at fault.

Many have pointed to the Community Reinvestment Act of the 1990's as fueling the current mortgage meltdown. It is not clear that this alone caused the problem - or even lead to it at all. However, changes in the standards for lending over the last decades have created a number of problems that are present today. Fannie Mae and Freddie Mac, both government controlled entities, are largely to blame for the flood of "easy money" in the form of questionable mortgage instruments.

One problem that goes back decades is the Home Mortgage Interest Deduction. At one time, interest on any loan was considered deductable. So your credit card interest and car loan interest could be itemized on your 1040 long form and deducted from your income. Congress decided to eliminate those deductions, and Home Mortgage Interest remained the only deductable interest on your taxes.

This skewing of the tax code (irrational intervention) was designed to encourage home ownership. However, as many rational economists have noted, it served only to increase prices of homes and lending, as the deduction effectively lowered monthly ownership costs, which meant that prices were free to rise to make up the difference. If this deduction was eliminated, home prices would fall further. Of course, at this point, you cannot eliminate this deduction without greatly disturbing the market and throwing millions out of their homes. So it stays on the books. If it ever were to be eliminated, it would have to be phased out over a period of 30 years or more -the term of most home mortgage loans.

But the home mortgage interest deduction, along with the fantastic run-up in home prices, did create a secondary monster - the re-fi mania of the last decade. When mortgage refinancing became popular, particularly with lower rates, it became "rational" for many folks to refinance their homes to pay off non-detectable interest loans. Folding your car loan and credit card debt into a "re-fi" made "sense" as the interest rate was much lower and the interest was deductable as well. Why pay 10% on a car loan or 18% on a credit card, when you could refinance at 6% and deduct the interest? Monthly cash flow would increase, allowing the homeowner to pay off the debt faster - if they chose to do so.

In reality, these waves of "re-fi's" served only to increase consumption. Some folks would get a home equity line of credit, and use it to buy a Mercedes, instead of buying a Chevy and financing it the old-fashioned way. Paid-off credit cards were quickly ratcheted-up again, until the consumer was even further in debt. Consumer spending took off like a rocket in the 1990's and early 2000's. Ecomonists warned of the danger in article after article - that this type of "growth" was not sustainable. But no one listened.

Once home prices plummeted, the whole game ground to a halt. The giddy overspending of the last decade is now history. It will be a long time before people have that kind of money to throw around.

Questionable mortgages were issued because the folks issuing them took no risks - but reaped huge bonuses every year for making the mortgages. The mortgages were "bundled" together and foisted off on investors or Fannie Mae. The disconnect between risk and reward in the financial sector was one compelling reason behind the meltdown.

Long-term recovery from this recession will be difficult, and actions by the government to "prop up" failing institutions such as banks and car companies may simply exacerbate the problem. Of course, realistically, given the politcal climate, we cannot expect the government to take any rational economic steps, as they will be shouted down by the irrationals. Instead, we can expect more "faith-based" investment thinking, such as propping up the car companies.

OWNING MONEY - A Concept to Think About

How much money do you own?  Do you even think of money as something that is owned?

In terms of ownership, we tend to think of things like our home, our car, our furniture, clothes, electronics, even the food in our refrigerator. We own it. It's ours.

What about money? How much money do you own?

To some, this seems an alien concept. Money is a medium of exchange, an indicator of value, a mere number on a piece of paper. It can gauge the value of the things you own, but it is not something you own yourself.

Wrong!

The first step to getting ahead financially (and getting out of debt) is to think about Owning Money and how much money you own - not owe.

When I started out with my financial planning at age 28, I realized that I didn't own a red cent. Money was something that other people owned, and something I owed them. I had debt, I had a paycheck, but money went though my life like water under a bridge. It just flowed and I tried to ride it the best I could.

That was my wakeup call. I realized that if I kept living that way, I would have to work the rest of my life, and never have any control or say over my own life whatsoever. It is true that God has the last laugh on running your life. But when you surrender what little control you have to others, then you are truly helpless.

All my bosses were quite happy when I went into debt or bought a new car. So long as I was living off the "cash flow" in my life and not accumulating wealth (owning money), I was dependent on them for a job. Employees deeply in debt are reliable employees.

Owning money is not hard to do. And anyone who has a job can own money. If you have a job that pays X dollars a year, and you spend Y dollars a year, so long as X is greater than Y, you will end up owning money.  Spend a penny less than you earn.

Sounds simple, doesn't it? Yet few grasp this simple equation. And more disturbingly, many people voluntarily sell themselves into modern economic slavery by making Y greater than X, just so they can have a few extra shiny baubles.

We laugh at the Manhattan Indians for selling the settlers the island of Manhattan for $24 worth of shiny beads and trinkets. But how many people today do the same thing with their personal lives? We sell ourselves into Debt Slavery for a shiny car, a wide-screen teevee, or a gourmet kitchen. It is all just trinkets and baubles.

Like most folks, when I was a youth, if I made $200 a week after taxes, then, by God, I spent $200 a week. In addition to rent and utilities, I spent the remainder on food and beer, toys and restaurant meals. Foolishly, I traded-in a "paid for" car with low miles for a shiny new car with four years of payments attached (and staggering insurance, too!).

I was living "paycheck to paycheck" which so many people complain about, yet the only reason I was doing this was because of my own weakness in spending habits and my unwillingness to do without anything I wanted and thought I could afford.

Anyone can trim their budget by a few dollars here and there and live a lifestyle that is about the same as before - and have money left over. It does take a lot of hard work, thinking, and skill.  And if you make a game of it, it can be fun, because when you win, you win big.  But more people spend their hours making their Farm on Farmville profitable than tending to their real lives.

Once you start to accumulate money "left over" you OWN MONEY, and you can invest. If you can invest enough, you can make even more money. Once you reach a certain level, you might not need to work at all.

But the first step in this process is to grasp the concept of OWNING MONEY, and decide that it is something you want to own - something that is more desirable than a shiny car, or a take-out pizza or a six-pack of beer.

Once you reach that point psychologically, you are ready to invest (see my article on Getting Started with Investmenting).

See also:

http://livingstingy.blogspot.com/2008/12/owning-money-concept-to-think-about.html

http://livingstingy.blogspot.com/2011/10/downside-to-owning-money.html

http://livingstingy.blogspot.com/2012/06/renting-money-versus-owning-money.html

http://livingstingy.blogspot.com/2011/10/money-as-commodity.html

UPDATE 2020:  Finding this blog entry on Google is nearly impossible to do. If I search on "Living Stingy Owning Money" Google comes back with You mean owing money, don't you?  Because no one owns money, everyone owes it.  Right?  Because that's the way life is, buddy, so get used to it!

Well, Google doesn't say that outright, but stubbornly refuses to search on the term "owning money" and in fact, will not find this blog entry for me.   It seems this posting is too subversive!  So I must be on the right track.

Scams and How to Identify Them

Con Artists are Everywhere, out to get your money, through illegal and legal means.  Whether outright crooks who steal from you, or salesmen who offer you bad bargains, the net result is the same - you are snookered out of your money.

Note:  See also this great Wikipedia page which includes a list of confidence tricks.  Mandatory reading for the easily confused and gullible!

* * *

I should not even have to add this posting to this blog. However, scam artists have proliferated in the last decade, no doubt aided and abetted by a laissez-faire administration and also the Internet.

While driving home the other day, I saw a sign on a lamp post that read, "Make executive salary from home! $10,000 per month! Call XXX-XXXX. Don't call if you don't believe!"

I almost laughed out loud at the last line, as it illustrated how these con artists work - they prey upon the BELIEF of the victim. As we know from religion, belief is something that is based on faith, and you can't argue faith logically. Thus, if you can get someone to BELIEVE something, there is no way of talking them out of it.

Here is a list of 5o-some-odd things that, in my opinion, are scams. Some of these seem so obvious they you'd wonder why I even mention them in the first place. The funny thing is, there are few, if any places on the Internet that spell out that YES, such-and-such is a scam, period.

Bear in mind that when I say "scam" I don't mean necessarily that it is illegal or fraudulent, but it could merely a bad bargain or excessively overpriced. Paying $5000 more than you should for a car is really not much different than having $5000 stolen from you at gunpoint. Either way, you are out $5000. The car salesman is considered a legitimate businessman. The fellow who mugs you is a criminal. If you can see the difference, let me know, because I surely can't.

Anyway, here's my list:

1. ANYTHING ADVERTISED ON A LAMP POST: And this goes for road sign posts and utility poles as well. They can be neatly printed signs or pieces of cardboard scrawled on with crayon. It makes no difference. A sign taped-up to a utility pole that says "Lose weight now! Call XXX-XXXX" is a scam, as are any job offers, work from home scams or anything else. Other than garage sales and lost dog notices, anything advertised on a sign taped to a lamp post is a scam, PERIOD.

2. Just about EVERYTHING advertised on TV: This category increasingly includes products embedded into the programs themselves. Many people mistakenly believe that in order to advertise on the television, your company has to be "vetted" by the TV station or that the FCC would screen out fraudulent or questionable deals. But this is not the case. And there certainly is no law against selling crappy junk or overpriced goods. Television blares the advertisements into your head, over and over again, until you start to believe that leasing a new SUV every three years "makes sense" because you (wrongly) believe that "everyone else does it". The best bargains are rarely, if ever, advertised on television. Most of what is advertised on TV is overpriced, as the advertiser has to pay the huge advertising fees - and mark up the product as a result. Television wants you to believe that a high-fructose corn syrup carbonated beverage is "refreshing" and that "lite" beer is "tastes great" and will not make you fat. Many invention brokers, credit repair agencies, payday loan places, and other bad bargains are regularly advertised on television. That does not make them good deals or endorsed by the television station. Once you STOP watching television, you can make more informed decisions. If it is advertised on TeeVee, is probably is no bargain.

3. The first three hits on GOOGLE: Google is a great tool for finding things, but increasingly, it is being shilled and sold out. The top hits on Google are usually paid advertisements that pop up whenever certain key words are typed. They are rarely good deals, and may in fact be con jobs. Google does not screen out the quality of their advertisers very well, if at all. A paid advert on Google is not some Housekeeping Seal of Approval. Even the unpaid hits are often bad choices. Keyword SPAMMING (putting keywords into metatext on a site) makes some websites move up in the rankings. Usually the con artists and the overpriced sellers use these techniques to snag sales.

4. Typo websites and weird agglomeration websites: You've seen these before. You mis-type a word in a Google search or in an URL and some other website comes up, offering helpful links to similar goods. These are usually scams or attempts to garner "referral" fees based on clicked links. In some instances, such sites may download malware to your computer. Avoid these at all costs.

5. Anything on a Pop-Up Ad. This should be self-explanatory. These are usually con jobs or bad deals. By clicking on a pop-up ad, you encourage more annoying pop-up ads. If pop-ups don't work, advertisers will stop using them. Install or activate your pop-up filter and DO NOT patronize any ad that makes it way through.

6. FINE PRINT: Car ads are famous for this. They shout about the "GREAT DEALS!" and then at the end of the ad, they flash paragraphs of text so small that only the largest Television could display them - and even then, only for a second or two. The announcer rips through the text so fast you can't understand him. In print, the text is at the bottom of the page and so small as to be barely legible. They do disclose the bad news, of course - the "GREAT DEAL" is just an OK deal if not an outright rip-off. Ask yourself this: If something was a good deal, there would be no need for "fine print" would there? Just walk away from fine print deals.

7. Classified Ads: At one time in our country, the classifieds were a good place to look for a job or buy or sell a car. No more. The Car dealers have Spammed the classifieds so much that you can't find a single listing for a car for sale by owner. Most owners have moved to Craig's list or Autotrader anyway. In addition to car dealers are the con-job ads for "Buy government auction cars for $50!" The employment section may rarely have one or two real ads for real local employers. But most of the ads are for "work at home" cons or "start a Candy Route". Very little is legitimate any more.

8. Work from Home, Candy Route, Own Your Own Business, etc.: All of these are scams, period. You cannot make millions working from home, or else everyone would do it. What they want you to do is pay for a "starter kit" or whatever, for a few thousand dollars. That's how these people make their money. You make nothing.

9. Multi-Level-Marketing, or MLM: These pyramid-like schemes have been around for ages. What they are selling is not the products (very little of that actually changes hands) but the "distributorships". The name "Multi-Level" comes from the scheme, where a distributor gets another distributor under them (who pays initiation fees and for the "starter pack") who in turn hires more distributors. As each product is sold to a customer, each person in the distribution chain gets a share of the profit. The problem with these schemes is that while a lot of distributorships are sold, little product is actually sold. Plus, since so many people are in the supply chain, the products are very overpriced when compared to convention retail outlets. There is not a lot of money to be made in selling things, period. Just walk away from MLM!

10. Anything Sold at a Seminar: You've gotten the flyers in the mail - come to our Real Estate seminar and you'll get a free barbecue grill, just for attending a 90-minute meeting! The "free" grill is a tin-foil job they sell in the grocery for three bucks. But that doesn't matter. What they are trying to do is sell time-shares or some other product. They use evangelical-like tactics, often with "shills" planted in the audience, to use mass-psychology to sell. It is very hard for most people to resist these sales techniques, so just don't go, period.

11. Time Shares: A total rip-off. People who have bought them will argue otherwise, as they don't want to admit they have been had. You pay a fee ($5,000 to $50,000) for a "week" at a "resort". If you added up all the "weeks" for that resort, you'd see that you were in effect, buying a million dollar condo, which might actually be worth only a quarter of that amount. In addition to the purchase price, you have to pay a yearly maintenance fee ($500 to $1500, which can go up at whim) which is equal to pretty much what it would cost to stay in a nearby motel. Some time-shares offer the option of swapping to other weeks or to other resorts, which is good, but usually for a small fee. You are still limited to where and when you can go on vacation, and if your financial condition changes, and you cannot go on vacation (or pay the fee) you lose the vacation week and possibly your interest in the time share. Time shares are difficult, if not impossible to sell, and if they do sell, they sell at greatly discounted prices. Take your vacation when and where you want to. In the long run, it is far cheaper and you have more control over your finances. You are not "saving" anything by buying a time share, period.

12. Unsolicited e-mails: Again this should be self-explanatory. An Oil minister in Nigeria is NOT going to send you THE SUM OF USD$10,ooo,ooo (TEN MILLION DOLLARS) through "certain modalities". SPAM advertisements for Viagra or "Rolodex Watches" are usually rip-offs as well. And no, you have not won a lottery you've never heard of or entered. It is all a come on! Just click on "this message is SPAM" and make sure your SPAM filter is ON.

13. Loud Billboards: On the way back from Florida last week (the only State that is an entire con-job, frankly) there were a series of fluorescent orange and yellow billboards for FLORIDA FRUIT STAND! JUST AHEAD! FREE JUICE! BAG OF FRUIT: $1.00!!! A good rule of thumb is that the louder and more obnoxious an advertisement is, the more likely it is a ripoff. The "free juice" of course is a small sample cup that contains maybe an ounce or two of liquid. The "bag of fruit" is not a huge bag of grapefruit, either. Again, they want you to stop. If you stop, you likely buy. So they will do anything to get you to stop.

14. MAKE MONEY IN REAL ESTATE: This falls under the SEMINARS category. They want to sell you a "system" for making money. There is no "system" and if you believe there is, you are an idiot. One of these hucksters actually advised people to buy Real Estate, over-mortgage it, and then take out the cash as a "profit". Borrowing money is not making a "profit." The only profits to be made in Real Estate are the old-fashioned ones: Buy low, sell high, rent for more than the monthly carrying cost. PERIOD.

15. PAYDAY LOANS, PAWN TITLE LOANS, etc.: Borrowing money on your paycheck or pawning your car title is never a good idea. Oftentimes the interest on these loans can exceed 30% or more. In some instances, people have paid well over 100% interest on such loans. These scams can ruin people financially. If you need money before payday, then you need to restructure your finances. A week or two is not a long time, and there is never a financial "emergency" that requires you borrow at such exorbitant rates for such short periods of time. PERIOD.

16. PYRAMID SCHEMES: Again, you'd think people would know about this by now. But the con artists keep coming up with new ways to rip people off. They call it the "money system" or some such name. Any time someone tries to sell you the idea that you can make money without work or without creating real wealth, run away. There is no such system to create wealth out of nothing. One "friend" of mine, years ago, tried to con me into sending a gold coin to a name on a chain letter. "Within weeks, you will receive gold coins from around the world!". Sorry, no sale. All that will happen is that you will be out a gold coin. I didn't fall for it, neither should you.

17. Anything selling you a "kit" or "system": Investment Gurus want you to buy their "investment kit" as do the Real Estate System scammers. You buy the "kit" and they make money, and you are a little bit (or a lot bit) poorer. Making money cannot be taught in a kit or a seminar or a book or a cassette tape set (remember those?). There is no "system" or "secret" to making money. If there were, no one would just tell you about it, they'd keep it for themselves and become fabulously rich. Just save your money, period. Don't buy the book or kit or seminar or whatever.

18. Day Trading: This falls under both Seminars and also the "kits". Buy our kit and you can start day trading stocks right away! Again, you cannot create wealth from a vacuum. Buying and selling stocks based on some arbitrary "system" that will make money on a daily basis just doesn't work. Why? Because if it did, everyone would be doing it. And if someone had the "secret" to such wealth, why on God's green earth would they SHARE it with ANYONE?

19. Anything on an Infomercial: This can be money making systems, kits, or even a potato peeler or vacuum cleaner. Are they total rip-offs? Well, if you watch Ron Popiel for a half hour and suddenly "decide" that you need a new set of steak knives or a toaster oven, is that a sound financial decision? Any logical purchase should be predicated on you deciding, independently, that you need a product first. Then, you should research the products and make an informed purchase. The infomerical flips this entire process. They get you to decide that you need THEIR product, and moreover that you should buy their product without any research or comparison shopping. Their half-hour spiel is touted as the research and comparison shopping ("these carbon steel chef's knives sell for 10 times more than our knives, and they can't cut through a penny!"). Turn off your teevee and stop buying this crap.

20. Anything on a Shopping Channel: See #19 above. Same deal. Shopping channels sell mediocre goods which you don't get to see up close. On TeeVee, they can make this stuff look good, but since you don't get the handle the goods yourself, you can never be sure. They use high pressure sales tactics ("only 10 left! This deal ends SOON! Call Now!") to encourage you to buy. And most of it is stuff that you had no intention of buying, but after an hour of watching, you get convinced it is a "deal". While working at UPS, the boxes from these home shopping channels (cheap boxes) would break open often, and I would get to see the merchandise and invoices. Most of the jewelry was costume jewelry worth little. And most of these shipments went to the same customers over and over again. People become ADDICTED to home shopping channels and squander thousands of dollars on this stuff. On the plus side, I never would have heard of such "precious" stones as "Tanzanite" if it were not for home shopping.

21. BUY GOVERNMENT AUCTION CARS FOR $50!: This scam is as old as the hills. They used to advertise in the Rolling Stone back in the 1970's, only back then it was Army Surplus Jeeps. My brother sent away the $5 money order for "more information" and in return received a mimeographed sheet that said, in effect, that if you want to buy an Army Surplus Jeep, you should call the Army and find out when and where they auction them off. They have updated the scam to list "Government DEA seized Drug Cars!!" which are probably sound more desirable to kids today. Does the government sell auctioned cars for $50? Yes, on occasion. But that is a car that caught fire and burned to a crisp. And you don't need to send these people money to find out where the auctions are. But even if you went to such an auction, chances are, there are few, if any deals to be had.

22. Auto Auctions: Buying a car under circumstances where you cannot inspect it or rationally think about pricing is ridiculous. Think about it. If you went to a used car dealer and they said "I'll sell you this car, but you have only 10 minutes to inspect it and 90 seconds to think about the price" you'd walk away and call the salesman a madman - or worse. Yet people buy cars at "auto auctions" all the time. Used car dealers routinely buy cars in bulk at wholesale auctions. However, these are usually not open to the public (you and me). Cars that go to wholesale auction are usually cars dealers take in trade that, for one reason or another, are not considered prime material for their own used-car lots. This is not to say they are junk all the time, only that they are rarely the prime choice cars. The cars sold at auto auctions open to the public are usually real junkers that even used car dealers shy away from. What a REAL DEAL in a used car? Buy one from the original owner (not some curbstoner) who took good care of it and has all service records. Private party sale car prices are usually 20-30% less than used car dealer sales prices and private party sale cars are in much better condition that any auction car.

23. Auctions in General: I've been to a number of auctions over the years. In most cases, I cannot point to any "bargains" I found, and in some cases, I was totally ripped off. To begin with, at an auction, you end up bidding sometimes on stuff you never had any intention of buying. You think "Oh, that's nice, I ought to have that" and you bid. But it is an impulse purchase, not a real need or desire for the item in question. Buying stuff on impulse, like all "shopping" is a really bad idea if you want to keep your finances in order. Auctioneers uses "shills" in the audience to make sure that nothing is sold for below market value or their predetermined set price. Once in a while, they let a piece go for cheap, usually to a shill, to get the crowd excited. But mostly, they sell for prices far over retail. Shills often work the crowd, acting as innocent bystanders and talking up the products. Many auctions these days are total come-ons for retail stores. They buy merchandise to auction off and then sell it at auction. One I recently went to consisted entirely of "antiques" manufactured in India and shipped over by the containerload. While they were not total garbage, they were far overpriced at auction. And nothing they were selling was anything I "needed" in the first place.

24. Rent to Own Furniture: These folks, like the pawn shops, paydayloans, and title pawn places, always proliferate in poor neighborhoods or near military bases. The premise is that you can rent, for a weekly fee, a television or other "desireable" consumer good, and have it now, and pay over time. They try to make it seem like a rational premise. One company even calls itself "Everybody Rents" as if to say that all the rich folks do this, why not you? Usually, this deal means paying even over consumer credit prices for goods of mediocre quality. You'd be better off using a credit card or household finance company instead. But these types of places prey upon the poor who have bad credit. You are far better off saving your cash and just buying what you really need at a big-box store somewhere else.

25. Freezer Scam: I have my hapless brother to thank for clueing me into this one. My poor brother managed to fall for nearly every scam there is. He is a rabid true believer! He went to work for a freezer scam place, working the phones in a "boiler room". He would call people and tell them he could sell them a whole side of beef, all cut up, for a very reasonable price - a price below retail in the supermarket. Some folks would bite on this hook. The catch was, where are you going to put a whole side of beef? Most folks don't have a freezer that large! So they sell you a freezer on installments for many times over its retail price. A fairly large freezer can be had for about the price of a similarly sized refrigerator. When you get done paying for the freezer and the electricity to run it, the "bargain" in the meat is long gone. My brother quit after a few months, as working in a telephone "boiler room" is no fun at all.

26. Unsolicited Phone Calls (Telemarketing Calls): #25 illustrates this next one. Anything sold through an unsolicited phone call is a bad proposition. Use the DO NOT CALL registry (http://www.donotcall.gov/) to put an end (mostly) to these calls. If someone calls you after you have registered with the registry, you KNOW they are a scam artist. Boiler room operators prey upon the elderly, who are often at home and tend to trust people. Perhaps this is a dying business in this day and age, with the internet and all, but I wouldn't count these folks out. Anything offered to you in an unsolicited phone call is something you didn't want in the first place (impulse shopping again) and is usually overpriced if not an outright rip-off. One sure way to tell if you are being scammed by a telemarketer is if they ask "How are you today?" right off the bat. This is from a script and designed to put you off and distract you - and gain your trust. As a polite person, you tend to want to respond with "fine, thank you" rather than "who the hell is this and what the frick do you want?" If you hear "How are you today?" just hang up.

27. Selling Vacuum Cleaners Door-to-Door (or buying them): Again, I have my brother to thank for educating me on this. After he left the freezer scam people, he answered a classified ad (see above) to sell vacuum cleaners door-to-door. The ad did not say that, of course, it said "management trainee" (a sure sign of a scam employment ad!). After a day-long seminar (see above) where religious-like training was instilled into the new hires (including singing the company song) they were sent out to sell the vacuum cleaners door-to-door. The product was not bad - in fact, it would be a decent product if they offered it in retail stores. But it was horribly overpriced - over $600 in 1980, which is a lot of money, even today. As you might imagine, most were sold in poor neighborhoods, usually on installments, which marked-up the price even further. Almost everything sold door-to-door is overpriced and not something you made a concious decision to purchase, research, and comparison shop.

28. eBay (or autotrader) seller scams: eBay can be a place to find a good bargain, althogh increasingly it is becoming just a place to find stuff at OK prices. It can be a good place for you to unload your own stuff, too. but beware, there are scammers out there. One scam is the phoney auction. The scammer advertises a desireable consumer item worth maybe $10,000 to $30,000 for less than half the price. Kubota tractors, Honde CBR 500 motorcycles, BMW 3-series cars, Harley Davidson Motorcycles, etc. are typical of the genre. The auction might ask you to contact them directly (their eBay e-mail is "broken") and mysteriously, the auction has only a few hours or a day left on it. You e-mail them, and they ask you to wire $5000 to the UK or Canada or somewhere overseas. They may tell you to send it with a "security password" so the money cannot be released until you receive the car, which they claim they will ship to you by 'air freight". Often there is a convoluted story about how the car belonged to a deceased brother or something. Usually there are glaring descrepencies between the picture of the car and the description as well. Yes, these are stupidly obvious rip-offs. Yes, hundreds, if not thousands of people fall for these every month. eBay tries to police them, but cannot be everywhere at once. The scammers are moving to Autotrader and other vehicle selling sites as a result of increased policing on eBay. If it sounds too convoluted and too good to be true, walk away. NEVER buy a car without seeing it in person first!

29. eBay (or AutoTrader) Buyer Scams (the Cashier's Check Scam): You decide to sell your car or boat on eBay and you get an e-mail. The buyer will pay your asking price, no questions asked, but wants the car shipped overseas. They will send you a money order or cashier's check for the full amont, plus $3000 in shipping. They ask you to wire the money to a 3rd party (usually in Canada or Africa) to pay the shipping. Two weeks later, you find out the cashier's check was a bad forgery and you are out the $3000 you wired overseas. And no, they are not interested in stealing your car, just your $3000, thank you. Again, if it sounds too good to be true (someone willing to buy your car at asking price, sight unseen, and willing to send you more than the asking price) then it probably IS too good to be true! Walk away.

30. Religious Scams (overseas): People of faith are often victims of scam artists. Again, belief is based on faith, which cannot be argued logically. As a result, belivers can be easily scammed. Some African scammers have ripped-off churches in America, asking for funds to build schools or pay for medical care. Usually, the appeals come by e-mail, but they can come by regular mail or ven a phone call or fax. Well-meaning Christians raise money for these worthy causes and send it overseas without much vetting of the destination of this lagress. Only later on (if ever) do they realize that the money they sent overseas bought someone a Mercedes and was not used to help prevent blindness amongst the orphans. Just because you are a Christian, doesn't mean you have to be a patsy as well.

31. Religious Scams (domestic): Again, it is easy to prey on the faithful. While many churches do much good in the world, there are a small number of churches that are little more than money-making operations for their founders. It is not hard to spot these churches - the founders are well dressed, wear lots of gold jewelry, and travel the world by private jet. Well, OK, I guess that describes the Pope, too. But at least he is the head of a huge world-wide operation. These scammers ask little old ladies, often through their teevee evangelistic hours, to tithe or pledge - often sums of money they can ill-afford to spend. Rather than send off money to a remote church on television, check our your local established churches and find out what the money they want goes to. You'd be better off giving money to a local church that sponsors youth groups, homeless shelters, and other support agencies in your area, than to buy some teevee pastor a new Rolls Royce.

32. Mailings that are faked-up to look like a government check or other official mailing: You've seen these, they have the statue of libery on the cover and look like a refund check. You open it up and its a credit card offer. When considering any product offer sent to you in a deceptive package, ask yourself this: What direction is aabusiness relationship founded on deception heading?

33. Patent Renewal Services: See #322 above. They send you a post card or letter that sounds like and looks like it is from the Government. For $110 they offer to "renew" your Patent. If you read the fine print, for the $110 fee they are agreeing to send you the form only. You can pay these fees online yourself at http://www.uspto.gov/ or download the form there for free. And the lowest maintenance fee (first) is well over $400 by now, besides.

34. Invention Brokers: They promise to patent your invention and make you millions. They use boiler room telephone techniques to pressure you into signing a contract with them for "only" $10,000 or so. The patent they obtain (if at all) is of limited or no value. Their "marketing" comprises little more than mailing brochures to a mailing list. They are NOT interested in stealing inventions. They will, however, keep your money.

35. TimeShare Resale services: If you bought a time share, you are a patsy, so why not victimize you yet again? They send you a letter saying they have a buyer for your timeshare and if you send them $500 they will hook you up. You send them $500 and your timeshare gets listed in a resale directory that may or may not be distributed to folks. Needless to say, there is not much of a resale market for these worthless "investments".

36. The Poetry Scam: They hit up little old ladies with this one. The America Poetry Authors Club Society or some such organization has heard all about your poems! They woudl like to publish your poem in an upcoming issue of their annual gazette! The catch is, you have to agree to buy X copies of this gazette at $200 apiece. You are, in effect, paying for publication of your poem. It has not been selected on its merits, only on your ability to pay. Note: There are legitimate poetry societies and clubs out there, but they don't ask for money up front like this.

37. The Electric Scooter Scam: You've seen the loud and obnoxious ads on TV (see above). You can get a FREE electric scooter (wheelchair) to drive around, and Medicare will pay for the whole thing! Just call now! However, if you read the FINE PRINT (see above) you'll realize that if you agree to this scam, and medicare doesn't pay for the scooter, then you are on the hook for the whole purchase price - often twice what the going rate for these things truly are. If you are having trouble walking, oftentimes walking is the best cure. A more sendentary life is not going to make your more active. And medicare doesn't pay for squat these days.

38. The OTHER Electric Scooter Scam: These are folks who sell two-wheeled electric scooters online for prices so low they are unbelievable! That's because they are fake prices. They take your money and.... no scooter!

39. LEASING a CAR: The ads on TV (see above) tout the GREAT DEALS you can get on leasing a new car. But if you read the FINE PRINT (see above) you'll realize that you are limited to less milage per year than is reasonable, and that all sorts of fees are due on signing, your trade-in is considered a "capital reduction" and when you turn the car in, you have to pay fines for scratches and "excess wear". After three years of car payments, you are WALKING. For the same three years of car payments, you could have bought the same car, secondhand, and own it free and clear by now.

40. EXTENDED WARRANTEES (Appliances): You buy a $200 television and they try to sell you an "extended warranty" for $39.95. Is it worth paying nearly 1/5 the price of the item for an additional year or two of "gurarantee"? Most modern electronics either fail during the initial warranty period (infant mortality) or last their expected lifetime. They are least likely to fail during the extended warranty period. You are better off just taking you chances. The most you will be out is $200!

41. EXTENDED WARRENTEES (Cars): After the initial warranty period is over, you get a card in the mail that appears to be from the car company (but is not) offering an extended warranty. If the company is an outright con, the warranty is worthless. Even the "legitimate" companies resist paying out claims, or require a byzantine procedure for filing claims that can never be complied with. Most cover things that NEVER wear out, like axles and crankshafts. They are hughely marked up by used car dealers. The best warranties are from the factory (manufacturer). But beware, even your new car dealer might try to sell you an extended warranty that is from some unknown third party that goes bankrupt a year later. If you buy an extended FACTORY warranty, make sure it is the real deal. A better bet is to put that money in the bank and save it for repairs down the road. At worst, you'll break even if something major goes wrong. If not, you'll come out way ahead.

42. Tax return loans: Paying 25% interest to get an advance on your tax return should be self-explanatory. If you can't wait a few weeks for the IRS to cut you a check, you have severe financial problems.

43. Cable Television: Cable TV is overpriced for what you get, and it is designed to keep you watching so they can sell your "eyeballs" to advertisers. You are PAYING to be advertised to. The people who are involved in Cable TV come from some colorful backgrounds and are not averse to questionable dealings. One of the all-time classic Cable TV con-jobs happened when Congress got into the action and decided to impose a cap on basic cable fees, becasue they were skyrocketing. Cable TV providers would have to provide "basic" cable service for a discounted flat fee. How did Cable respond? Simple. They raised all their rates by the "flat fee" and called it a "Government mandated fee increase". Nice touch! In addition, they took most of the former "basic" channels out of basic cable and made them part of a "tier 1" service that you'd have to pay extra for. You know, it takes real brass balls to take a law designed to LOWER Cable rates and spin it into a rate increase. If that isn't enough to make you vomit, consider this: When satellite dishes became popular in the 1980's, "concerned citizens" flocked to zoning board meetings to demand a ban on these "public eyesores". Of course, the "concerned citizens" were all employees of the cable companies. Now ask yourself this, why are you giving these guys $70 to $150 a month so you can get fatter and fatter and waste more and more of your time? Pull the plug on TeeVee, period - and live. Wealthy and effective people DO NOT watch television! The people who are ON TELEVISION do not watch television. That should be all you need to know.

44. Tax Protesters (or Tax Deniers): These folks sell seminars (see above) and books saying that you don't have to pay Federal Income tax, you know, because it is unconsititutional! They take words out of context, or quote parts of the tax code aimed at foreign corporations and then claim they apply to you. They don't. Federal tax is not "voluntary" and it has been held by the Supreme Court to be Constitional. Again, this is faith-based economics, based on BELIEF and not hard facts. They make a lot of money selling you books and seminars - a lot of money out of your MISERY. I had a friend try this scam. Smart guy, too, or so I thought. Yes, both the Federal and State tax authorities came after him and put a lien on his house and garnished his wages. Two things are unavoidable in life, death and taxes. You can wish both away all you want, they both still come due.

45. PONZI Schemes: A Ponzi scheme is one in which the con artist promises investors huge returns on their money - 20%, 30%, 50% or more. He takes in investments and after a few months pays off the initial investors with dividends equal to 25% of their money. WOW! What a great return on your investment! But the money paid out is just part of what is now coming in. The "satisfied investors" stories are used to con more people into the deal. Eventually, the whole thing collapses, as it is a pyramid scheme (see above) and once people stop investing, no "dividends" can be paid out. These schemes go back decades, if not a century or more. Yet new ones pop up even today. People are still greedy and willing to believe anything that defies the law of economic gravity.

46. LOTTERY TICKETS: Buying a lottery ticket once or twice a year is never going to bankrupt you. However, many poor folks purchase these tickets $20 at a time. The smaller "scratch and win" cards prey upon people's need to gamble. They "win" a free ticket or a dollar or two just often enough to make it seem like they might make money at it. In the long run, the law of probability is inflexible. For every dollar you put into the lottery, you might get out 10 cents. If you keep playing long enough, you'll lose every dollar you put in.

47. GAMBLING: They prefer to call it "Gaming" as that doesn't sound so bad. But it is bad, and can ruin lives, marriages, and families. It is hugely profitable and organized crime is inevitably involved. Again, the law of probability rules supreme. If you take $100 into a Casino, you are going to come out with less, perhaps nothing. Talk all you want about free drinks and "compted" meals - you paid for those "freebies" many times over. Gamblers will regale you with tales of "hitting the jackpot" but live in denial about the tens of thousands of dollars they have frittered away over the years (if not hundreds of thousands). If you can't understand why Gambling with money is a really bad idea, you are a moron or just trying to be deceptive, PERIOD.

48. Home Refinancing: It is hard to even get a mortgage these days. But back in the day, mortgage brokers, particularly those on the internet, would offer to refinance your home and reduce your monthly payment. Sounds like a good deal, until you realize you've just added several years to the term of your mortgage, increased the balance of your mortgage to pay all their "garbage fees" and moreover their lower monthly payment is only part of a "teaser rate" that will double in a few years, forcing you out of your own home. How many people are now paying the ultimate price for THIS con?

49. Perpetual Going-Out-Of-Business Sales: I lived in Alexandria Virginia for 20 years. The whole time I was there, there was a rug merchant who was running a FINAL! GOING OUT OF BUSINESS SALE! For 20 years. Nothing in his store was a particular bargain. He did the usual rug merchant trick of trying to sell synthetic fiber machine made carpets at hand-loomed wool prices. Again, any business deal predicated on a LIE (they are going out of business perpetually) is sure to lead nowhere. If they lie to you from the get-go, chances are they are screwing you later on.

50. Particle Board Furniture Sold on Installments: You've seen their LOUD advertisements on the TV (see above). You've seen their fine print ads in the newspaper (see above). Acme Furnture warehouse is having a weekend blowout going-out-of-busness sale! You go to the warehouse and they have all sorts of shiny furniture - most of it gaudy stuff that looks more at home in a bordello, but that poor people think looks "rich". It is cheaply made of particle board and far overpriced. The dealer offers high interest rate financing (and gets a cut of that action as well). Oftentimes by the time the loans are paid off, the furniture has delaminated and is falling apart. Suprisingly, many folks go back to the same dealer and buy new furniture and start over again, having learned nothing. Quality furniture can last a lifetime. And you have a lifetime to accumulate it, so don't feel the need to furnish your house all at once and go into debt.

51. Health discount plans - these are not health insurance, and are usually sold over the phone by telemarkers who may or may not be upfront with whether they are in fact not a health insurance plan. One site boldly prints that they are NOT health insurance, and by the way, fees paid are NOT refundable. So if you sign up and change your mind, too bad! Discount fees can be had by purchasing regular health insurance, even if you have a high deductable. For the dollars spent on a "discount" plan, you'd be better off spending it on a traditional health insurance plan. Most of these plans are sold by folks who "buy in" to become "work at home" salespeople. Can you make money selling these plans? Perhaps, but you'll have to find a lot of gullible people to make much.

52. Pre-paid legal services plans: Again, these are not necessarily fraudulent, but do you really need them? Consider that most people will never consult with an attorney in their lifetime, and you are paying a lot of money over the years for something you may never need. One of these services approached me, asking if I wanted to be part of their plan. However, the amount they paid for services was so low that I could not imagine making any money at it. Put your money in the bank into a savings plan. If you need money for a lawyer, you'll have it. If you don't need a lawyer (more likely than not) you'll have the money. Most of these plans are sold by folks who "buy in" to become "work at home" salespeople. Can you make money selling these plans? Perhaps, but you'll have to find a lot of gullible people to make much.

53. ANYTHING with a "negative option" cancellation policy: You sign up for a service, such as internet access, and they want to bill your credit card for the service. IN order to cancel, you have to call them and cancel. You call, they don't cancel, and surprise, they have no record of your earlier call. In some instances, you have to cancel your credit card to get them to stop billing you. Another twist is the "3 months free trial" - which of course, requires a credit card number to activate. If you fail to cancel the "free trial" during a certain time window, they charge your card for the full three months and then continue to charge forever. Granted, some services do require credit card billing. But shy away from using anything that requires credit cards as the only form of payment. Some savvy people online use a separate "throwaway" credit card for such services - one that can be cancelled and discarded if an on-line provider doesn't take "NO" for an answer.

54. Credit Repair Scams: These folks claim that they can "repair" bad credit. In reality, they are usually trying to get you to borrow more money, at high interest rates to consolidate debt, or for a fee, they claim they can make repairs to your credit record. The only "repairs" you can make to your credit record are ones you can make yourself. Save your money, or use it to get out of debt. There is no magic bullet to repairing bad credit.

55. Credit Monitoring or Protection Scams: For a monthly fee, they claim they will monitor your credit or protect you from "identity theft" which is a largely overstated phenomenon. You are already protected from most of these risks by ordinary credit card protections. The additional amount spent, over time, would be better spent on investment or paying down debt.

56. Your Free Credit Score: You can get a REALLY free credit score at: https://www.annualcreditreport.com/cra/index.jsp. But the "free" credit reports hyped online require you to sign up for a credit monitoring service for $10 a month - or more. Forgetabout these come-on websites. Get the real deal - you are entitled to it under the law.

57. Mortgage Life Insurance: If you get a mortgage or refinance your house, you'll get solicitations in the mail from companies offering to "insure" your mortgage, so if you die, the balance of the mortgage will be paid off. All for only a few dollars a day! The problem with this coverage is that it is very expensive for the coverage involved. You can buy a term policy for a half-million dollars for far less - and such a policy will not decline in payoff over time.

58. Auto Loan Insurance: Same deal as Mortgage Life Insurance but an even bigger rip-off. For a "few dollars a month" you are buying a life policy with a term of 36-72 months (the term of your loan) with a declining balance as time progresses. For the cost of one of these policies, you could easily buy $100,000 in real life insurance. And besides, once you're dead, who cares about your car payments?

59. Fake Charities: They appeal to you by phone (telemarketing call) and may have similar-sounding names to real charities. Or they appeal by mail, internet, or on the television. One of the latest scams is to use your own neighbors to "fundraise" for you. They get your neighbor sucked into the scam, and then get them to solicit donations from you as well. A fake charity can be distinguished from the "real" deal in that the fake ones spend only a token amount on the charity, with the bulk being spent on "fundrasing" and "overhead". In other words, someone is drawing a nice salary from your donation, but that's about it. There is little way for the average person to distinguish from fake and real charities without a lot of legwork. The best solution is to find a charity you think is worthy, research it, and then donate to that charity with money, like donations, and your time. When others call or knock on the door, you can say "No" to them with a clear conscience.

60. Employment Scams: In addition to Work-at-home scams and other classified ad scams, another employment scam also exists. These promise a job interview with a good company for a high-paying job. The problem is, they want you to fly out there on your own ticket for the interview. Instead of asking you to fly out and get reimbursed, or sending you a ticket, they ask you to send them money so they can buy the ticket, and then promise to repay you once you show up. Needless to say, this is not a standard way of doing business with most companies. Most companies will buy the ticket and mail it to you, or tell you to buy your own ticket and then reimburse you. No legitimate company asks for cash money from you in advance in order to conduct a job interview, period.

61. The Hot Tub and Pool Table Store: In every major metropolitan area, there is a store, usually in the suburbs, selling hot tubs and pool tables. They advertise heavily on the television and radio and offer "low, low prices" on hot tubs and pool tables. When you ask what the price is, they say "$99 amonth!". They want you to finance the purchase through expensive consumer financing (20-30% interest) which they get a "taste" of as well. Hot Tubs and Pool Tables are not very expensive items - they certainly don't cost as much as a car, that's for sure. But after you've made all the payments, you could have bought an inexpensive car for the same amount. Walk away from these "deals" and look for the same item lightly used or from a legitimate dealer or store. Chances are, you'll pay HALF of what the loud-ad place charges. We bought a brand new hot tub from a lady who ran a business out of a storage locker. I think we paid $2500 for it. That was 12 years ago and it still runs great. The Scam place wanted $6500 for the same tub, but offered low, low monthly payments. Buying anything based on monthly payment is a bad, bad idea.

62. RV shows and Boat Shows: Along these lines are the RV and Boat shows. Imagine getting people to PAY to go look at consumer goods. Ridiculous idea, right? Yet people do, every year in every town. And dealers show up to hawk their wares, with "Show Specials" that encourage you to "BUY NOW!!!" because the laws of physics dictate that the price has to go up after the show is over, right? People look at Boats and RVs and think they are expensive items and overpay for them. They also don't think about where they are going to store them or how they are going to use them. They just seem so nice at the show. It is a common story one hears in the RV and boat business - "I bought it at the show, and we used it twice and didn't like it". Now they owe more on it than it is worth and can't unload it. Skip the shows, or, if you go, leave your checkbook and credit cards behind and just LOOK. Research big-ticket purchases like this over time, and look at the prices of secondhand units, if nothing else but to give you an idea of how rapidly these things depreciate.

63. Free $250 Gift Card! Again, one wonders why people continue to believe you can get something-for-nothing. The sites that promote these "free gift cards" ask you to take an online survey (usually just for appearance sake) and then to sign up for one or more (usually three) online offers from participating advertisers. These services are charged to your credit card (or your phone bill) and are difficult, if not impossible, to cancel. The free gift card is often slow in coming (the rules usually state you must sign up for the bogus services for at least 30 days) if they come at all. If someone offers you something for "free", chances are it has no value to begin with, or it is an outright scam. Just walk away.

64. Anything Advertised in the Smithsonian Magazine: I get this magazine as a gift subscription, and while the quality of the articles has improved somewhat in recent months, the advertisments in the magazine are nothing short of scandalous. Targeted at the older set, these ads, which are made to look like articles (with the word "advertisement" in small letters) sell everything from cheap watches to non-collectable collector coins, all at inflated prices. Again, any business transaction predicated on a LIE is going nowhere but SOUTH. So an advertisment for coins from "The Gov't Mint" (always "Gov't" never "Government") that is made to look like an article is based on a minor deception to begin with. So do you think the deal is legitimate? Just as many older people believe that anything advertised on television is "vetted" by the stations or networks, many older people trust magazines (like Smithsonian and others) that the advertisements are for quality and reasonably priced products. However, other than culling out the outright frauds (people who take your money and give you nothing in return) most magazines do little to police or screen their advertisers, simply because they can't afford to lose the ad revenue. Buyer beware!

65. Sell Your Car For You Scam (Craig's List): If you list yoru car for sale on Craig's list (and increasingly, Auto Trader) you may get an unsolicited phone call from a fellow in Nevada offereing to help you sell your car for you. They make verbal promises about markeing your car on a number of websites, offering links to financing, and helping you "price" your vehicle. The catch is, of course, they want as much as $500 up front, which is a lot of money for the resale of any car. And guess what? Once you send this fellow your money, you'll never hear from him again. If you really want to sell the car, lower the price by $500 instead. It it ain't selling, try adding better pictures and description, and then lowering your price slightly. Check the private party resale values (not dealer retail) on kbb.com nadaguides.com and edmunds.com to make sure you are being realistic. The used car business is in the tank right now, so cars are hard to sell unless priced right.

66. The White Van Speaker Scam: Two young guys offer to sell you a pair of high-quality speakers or a home theater system for an astonishingly small amount of money - inferring that they may in fact be stolen. They claim to be deliverymen, and the warehouse "over-ordered" them. The system is worth only $20 to $50 (if that) and you end up with useless garbage that you overpaid for. The Police tell you to take a hike. You are out $200 to $500. See my other posting on this subject as well.

67.  New Credit Repair Scam:  There is a new credit repair scam that promises desperate people that they can "get out from under" debts.  These con artists ask for several thousand dollars up front, and then tell you to stop paying your bills, and instead to pay them and put the money in "escrow".  The theory is, the creditors will eventually sell off the debt to collection agencies, who in turn will accept pennies on the dollar for the debt, which the "escrow" will pay.  But of course, this destroys your credit rating and you may end up getting sued and going bankrupt. And you may end up having wages garnished (which could cause you to lose your job) or a lien put on your house.  The agency keeps your money, of course. And now you are bankrupt, unemployed, homeless, and have no credit whatsoever.

68.  Free Energy Audits:  You register with the Federal Do Not Call Registry, to eliminate pesky telemarketer calls.   Someone calls you anyway, and claims they are not a telemarketer, and are not subject to the Do Not Call act.  The are lying.  They say or imply they are from the Government and you are entitled to free money or they can cut your energy bill in half "and wouldn't you like that?"  They offer to do a home "energy audit", but are selling overpriced insulation or storm windows.  Just hang up - they are violating the Do Not Call law, so you know they have no scruples, whatsoever.

69.  Robo-Calls Concerning Credit Cards:   Sometimes they make a robo-call, purporting to be from the "Card Services" or a Credit Card Company (they guess at your card company name, and if you bite, they win).   They say your card was stolen, will you please provide the card number, name on the card, expiration date and security code as "verification" that they are speaking to the right person?  Yup, scam. Or they say they can offer you a discounted interest rate (well below even the lowest rates available) on a Credit card.  Press "9" for more information!  And then they will ask for your existing card number to "roll over" the balance to the new card!  They just steal your credit card information and leave you with nothing.

70.  Cramming & Slamming:  In the old days, people used to call and get you to say the word "Yes" which they would then record and then "slam" you to an expensive long-distance service, which you might not notice until the next billing cycle.  Some companies were fined heavily for this.  Others attempt to "cram" services onto your phone bill, for example, by saying they will pay you for a survey or say you have to sign up for the service to enter a contest  - but can cancel within 30 days! (negative option - good luck with that).  Call your carrier and ask them to lock your long-distance provider and to lock out any cramming services.  These should be free services.  And read your bill carefully - you have 30 days to contest slammed services.

71.  Free Puppy Scam:   This is a variation on the Craigslist and eBay scams, where they advertise a non-existent product at an unreasonably low price.  You contact the seller and they give you a long-winded story about leaving the country or whatever, and offer to ship you the $2500 purebred puppy for "free", provided you wire them $400 by Western Union.  You wire them the money, and that is the last you hear from them.    Never wire anything by Western Union, ever, ever, ever!

72. Check Cashing Stores:   If you are "unbanked" a helpful check cashing store will offer to cash your paycheck or other check for you for a fee of $25 to $30.   This is idiotic.  It takes only minutes to set up an account with a real bank, or to cash your paycheck at the bank that issues it.   Paying 10% to cash your paycheck is a ripoff.   And no, it is not just illegal immigrants doing this - many poor folks are afraid of banks.

* * *

Now some of you are saying, "Gee, isn't this list kind of harsh? Maybe there IS a good deal on time shares out there! My cousin Ned made money on a Candy Route! And maybe that Russian Viagra site won't steal my credit card number!" Maybe. Maybe. But I doubt it. If you are so predisposed to BELIEVE in these sort of things, you are Grade A prime meat for these con-artists.

And the real "true believers" out there will never heed good advice - they will keep falling victim to scam after scam, and never learn from their mistakes.

Most of these scams have a number of things in common:

1. The "something for nothing" mentality: The idea that somehow you can make money without working or adding value to the process. People who don't understand money always fall for this. TANSTAAFL! There Ain't No Such Thing As A Free Lunch! Remember that.

2. High pressure sales pitches: Buy now or lose a good deal forever! Cons do not want people to think over an investment, or worse yet, consult with friends and family who will point out the obvious flaws in the deal and flaws in their thinking.

3. Relying on people's misunderstanding of how money works or what it is: Some folks think money is like the weather. Some days it pours and other days you have a drought. Where money comes from and how some folks end up with more is a mystery to them. To them, some folks are "lucky" and get rich, and other folks (themselves) are "unlucky" and are poor. Their actions have nothing to do with their situation, in their minds.

4. Preying upon the Greed of the Mark: "All good cons prey upon the Greed of the Mark" (A quote from the movie The Sting). The "Mark" is the victim, and if you can get the victim to believe that somehow HE is the one ripping YOU off, then you can fleece him all day long and he'll never even know he's been had until it is too late.

5. Business Deals Predicated on a LIE: They use a deceptive envelope, phone call, e-mail, or "sale" to get your interest or get their foot in the door. Having lied to you once, don't act all surprised when they lie to you again and again. Just walk away from deceptive people. They've played their card right up front. You have only yourself to blame in thinking that you can outwit them.

Making wise purchases and managing your money means avoiding the temptation of the something-for-nothing mentality or the "I have to have it NOW!" mentality. Over-hyped products and services are usually never worth what they are asking for them. Financial decisions, including purchasing, have to be made in a calm and collected manner - if you want to accumulate wealth rather than squander it.