5 Financial Scams I Have Fallen For

Have you ever been watching one of those cop shows -- Law and Order, CSI, whatever -- and they come to that scene where they have a crime to solve, they have suspect in mind, but they're still unclear on what his motives might have been for killing the victim, at which point the grizzled police sergeant says,
"Pull his financials, follow the money, and see where it leads."
Well if they ever had a legitimate reason to do that to me, once the results came back there would be a scene where they look over the numbers -- and then after a moment of quiet consideration, David Caruso would put on his sunglasses and proclaims, "This guy's ..an idiot."
To say that I've not always been good with money does sort of a disservice to the general idea of what "good" is. I'm a hell of a lot better than I used to be at juggling my finances, but I think a big part of the reason why is that I've been burned so hard in the past.

I wouldn't exactly call myself materialistic -- but there are certain things in my life that I don't necessarily equate with their cost versus the amount of money I have at a given moment as much as I see them as kinda groceries for my soul. For example, music is vitally important to me. So for me, the cost of buying music is a lot like the cost of buying cigarettes probably is for smokers. At certain points in my life it ranked in my budget with the same kind of priority as say, rent. So it was never really a question for me of "Do I have enough money to buy this CD?" as much as it was frequently a case of "Hmmm.. It appears that I'm about $15.99 short of the funds I needed to pay my electric bill ..again."

It's a problem that I've dealt with in a variety of forms over the years -- which speaks volumes about who's actually to blame for the majority of my financial troubles; but when you couple a person with this already flawed mindset of supply versus demand economics with the time honored tradition of bait and switch marketing schemes -- what you sometimes end up with is a perfect storm of financial stupidity.
  1. 12 Cassettes for a Penny -- Where it all began. I think it says a lot about your future as a functional, taxpaying adult when your first experiences with harassing phone calls from a collection agency occur somewhere around your 11th birthday. While I certainly wasn't the only one who fell for this particular evil plot over the years, I sometimes feel like I'm the only one who didn't really learn anything from it.

  2. Emerson Home Electronics -- Once upon a time, when you wanted a cassette player/radio combo, you went to Sears. You'd never walk out of there with anything resembling top of the line equipment, but like everything else they sold -- you were guaranteed to be saddled with it forever, because Zenith made things that simply couldn't be killed. Sure you could break the knobs on their TV's or bend the radio antennae's on their boom boxes just by breathing on them -- but the actual appliance itself would keep on working, which for our parents (many of whom grew up in more practical times) was motivation enough not to replace anything. A broken knob is certainly no reason to trash a perfectly good TV set, especially if you had a pair of pliers around that could help you change the channels, right? I think subconsciously it instilled a deep rooted hatred in many of our souls for the old brand names, regardless of their relative quality. As a result -- brands like Zenith sort of went the way of the dodo, as people chose to buy their home electronics from electronics stores rather than be associated with the stores their parent's shopped at. The problem is that Circuit City doesn't have any sort of vested interest in which brand of VCR you purchased, as long as you gave them your money. So invariably you'd end up with this scene where you'd be standing in the aisle in front of a wall of microwave ovens thinking to yourself, "All of these things look exactly alike -- except that this one costs $300, and this one over here is $11.95" I think a lot of us are discerning when we buy things like computers and cel phones, but when you get down to stuff like boomboxes or coffeemakers, people don't always get that cheap = crap as much as they probably should, deciding instead that by purchasing the less expensive yet seemingly equivalent item, they're getting a 'good deal.' I fell into this trap a few times when I was younger, mainly because even though I knew Sony made a better product, my goal wasn't so much getting a quality appliance as it was just having a boombox. So I would buy the Emersons. I would buy the GPX's. And then they would break. And not just the knob or the antennae -- the whole thing would just freeze up and die. So I'd end up back at the store buying the Sony anyways, thereby spending twice as much to accomplish the same goal.

  3. The No Down Payment Adjustable Rate Home Mortgage -- You know all those shit mortgages people in Florida got suckered into that they couldn't afford? The ones that ruined sorta killed all the banks six months ago and got everyone fired from their jobs? I had one of those. I was married. My wife wanted a house and kids. It seemed like her life was incomplete without them. I could afford neither, but I wanted her to be happy. If she was happy, I could be happy again -- so despite a considerable amount of debt and a crappy credit rating, we began looking for one. Surprisingly, there were a number of people at the time who were telling us that we could qualify for a mortgage. Whenever we balanced the checkbook it didn't seem true, but I gotta be honest here -- the idea that we could "get a house" seemed like an ivory tower. Buying a house was something it seemed only stable people could do -- and it was nice to hear bankers and realtors tell us that we were in that group. But when we found a home we liked and started trying to work the numbers -- the guy we were working with started saying things like, "Well, you don't really qualify for this mortgage, but we might be able to get you into that one instead." Not being able to qualify for a mortgage really should have been the red flag -- but when it was presented to us as "You can't afford the BMW, but we can probably get you into a Hyundai" I think I felt as if we could still sneak into the rarified air that we were shooting for, even if it was through the service entrance. It sucks to say this, because it shines light on one of the biggest mistakes I've ever made -- but when I look back all I can think of is that I sort of bought my house in much the way that I ended up with an Emerson VCR (which is kinda depressing to consider). Getting the house for my then wife was more important to me than how it happened. Not only did I not understand that what I was really buying was not so much the house but the mortgage itself, but at a certain point all I really wanted was for the endless paperwork and negotiation to be over, regardless of the deal. I can put a certain amount of blame on the realtor who saw me for the sucker I was and roped me into a deal so ridiculous ("Can't make a down payment? How about this -- we make an offer the broker will accept and then simply backload it onto the principal of your loan.") that even I can't believe I fell for it -- but in the end it was my foolishness, my impatience, and my pride that got in the way of my common sense -- and there's really no one else I can blame for that other than myself.

  4. Marriage --      

  5. Transfer Your Credit Card Balances and SAVE! -- The bad habit I'm still the most vulnerable to right now is the shell game. In other words, I do a lot of moving my debts around -- which does nothing at all to diminish them, but helps to make them more manageable in the short term. It's based in a good idea, which is that making regular payments is one of the most important things you can do, but it's a risky proposition because you're always sorta robbing Peter in order to pay Paul. I'm not exactly rolling in assets, so having lower payments is important to me -- but in the world of financed debt, nothing is more useless than making a minimum payment. This was something I didn't understand as well when I was younger and loaded with credit card debt. Which is probably why I so readily jumped into a deal with another credit card company to consolidate all my balances under a different card. Sure I got those cards covered, and ended up in some places with a lower interest rate -- but the resulting accumulated balance rendered any small payments I threw at it useless. At the same time, as the balance got higher, that cherry minimum payment I was working with started to rise as well -- until eventually I reached the point where I was actually struggling to make the minimum payment each month, with predictably disastrous results.
Unfortunately there are a lot more of these skeletons hiding in my closet, but these are just the main ones I can think of right now. It was sorta sobering to put them altogether on a page like this, because it sort of points out a pattern of mistakes, instead of being a highlight real of dunderheaded moments from my past (which is what I envisioned when I came up with the idea). But like I said before, sometimes you need to get burned to realize your mistakes.
So what are some of yours?

[Listening To:  (hed) P.E."Represent" ]


unMuse said…
Luckily for me I grew up with a mom that tried a few pyramid schemes and who always had friends trying to sell us something - Amway, Mary Kay, Rainbow vacuums. So, I never really fell for any scams. What I do have a problem with is just spending money, period. I learned how to manage it, though. One bank account for bills, one for spending money and one for savings. I'll tell ya this, though. Eating out for at least 1/2 my meals is super expensive. When I stopped doing that, I saved $500 a month.
Heff said…
I'm pretty conservative (yeah, you knew that).

I must give you props for the Sam Kinison clip, though. CLASSIC.
whatigotsofar said…
New crappy electronics freeze up and die because they're digital. If one thing breaks, the whole thing breaks. Older stuff, the Zeniths and Kenmore or whatnot, well that stuff was analog. They used transistors and such. There was much less technology to be broken. Oh, and they were some big motherfuckers too. It would take a slegdehammer to beat through one of those old things.
But just like the reliable old Zenith television, that Sony Trinitron television my dad bought in 1984 worked for the nearly twenty years we had it before giving it away. Right now, I've got a Toshiba TV, thing must be 18 years old at least, still works just fine. Just don't have any place to plug it in. 27" CRT. What am I gonna do with it? Can't give away because it weighs more than me. But if anybody reading this is in Maple Ontario and wants a Toshiba 27" TV, standard definition, works just fine. The remote is pretty much shot, but otherwise it's all good, come by and take it. Flippity-flappity-floop, it's yours.
Monster said…
If something seems to good to be true, it probably is - except that you won't realize that until you're neck-deep in the sonufabitch.

I live by that one too - and in some ways I think it's a virtue. It sucks for us and it doesn't mean we have a reputation as responsible adults... but one of these days our courage to challenge conventional wisdom will work out.

I just hope it counts for enough cred that we can undo all the bogus decisions from before.

Boat drinks, brother Hex.
Werdna said…
5 things that have stopped me from getting scammed:

1) if it seems too good, it is.
2) Scottish cheapness (thanks grandma)
3) I don't trust people.
4) reading a Ponzi biography when I was young and impressionable.
5) Going from well off to poor when my parents divorced.

Two things that lead to being scammed anyway:

A) Having a family (home loans are a scam)
B) Sharing the finances 50/50 with someone else who didn't have 2-5. At least we aren't totally incompatible on that front. We've got #1 in common.
Adam said…
1) Buying a new car (Geo Metro) when I couldn't even pay the rent.

2) Taking out additional credit cards to transfer my current balance... then maxing them out before I transfered the balance.

3) Refinancing my car loan to get a lower interest rate and some extra cash.

I'm a financial genius. Especially when you consider the student loan and 3 credit cards I defaulted on.
Frank said…
No scams yet for me in my youthful age...I've just fallen prey to the whole getting-5-credit-cards-and-maxing-them-all-out thing...
Satorical said…
1) Credit card balance transfers. Sure, the interest is lower, but unless you close the first account or NEVER USE IT EVER SAY IT LIKE YOU MEAN IT, it just means a higher overall balance.

2) Treating overdraft protection on a debit card like a credit account. The interest on overdraft is a bitch.

3) Rewards cards. If you're making the occasional discretionary purchase just because you're close to getting the next $25 gift certificate from Amazon, like I have done, you are an idiot.

4) Ordering in. It's bad enough to eat out--if I had eaten out 50% less while I live in NYC, I probably would have had an extra $10K at the end of it--but ordering in is a vicious cycle: you order in because there's nothing in the fridge. Guess what's in the fridge the following night? Go to the grocery store and cook something, loser. See also: Why I am overweight.
Anonymous said…
I must admit to numbers 1, 4 and 5.

I am older and wiser now.... I hope.