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Archive for May, 2009

Recent Money Scams

Thursday, May 28th, 2009

In this economy, people are searching for any way to get an extra buck. Those who have been laid off, or are facing mortgage delinquency or home foreclosure, may be the most desperate, ready for any solution to their financial issues that presents itself. Others, even if they have kept their jobs and homes, are still finding that they cannot afford to live quite they way they did before the recession. As a result of this widespread financial desperation, monetary scams are becoming more and more common.

One of the biggest scams out there today is the fake check. According to the Los Angeles Times, approximately one-third of Americans have been approached by this type of scam, usually through the mail. These scams usually appear extremely official and are easy to mistake for real checks. The checks or money orders look as real as possible, and the scam seems like a good idea at first.

The checks, which have taken in about 1.3 million Americans, are said to be the results of a lottery, sweep-stakes, stay-at-home work, or grants. Once you deposit the check, you are instructed to wire some money immediately, to pay for taxes, fees, middle-men, or other third parties. The check inevitably bounces, and you are left having to pay the failed wire transfers out of your own account.

The average check scam victim ends up losing between $3,000 and $4,000, as most people do not realize that just because a check clears does not mean the check has been deemed legitimate. Checks clear when the funds are available, not because the bank has confirmed the check is not a fake. Also, most people tend to think the money coming in and the money going out are connected—if the check bounces, they will not be responsible for paying the fees. Sadly, this is not true. Depositing the check and paying the fees are separate actions within your account, and you are still responsible for paying your debits. To your bank, it is the same as if your paycheck bounced, and thus you had to re-pay your car insurance.

Another scam that has become all too common in this economy is the mortgage scam. This type of scam preys upon those who have fallen victim to the mortgage crisis, and usually appears in the mail as an official-looking government form claiming to be able to save your mortgage. According to MSNBC, these scammers claim to be “foreclosure rescue” companies, but can actually end up costing victims a good deal of money, or even in the worst cases, their homes.

The bottom line is to not let your financial worries cloud your judgment. Be wary of any scam promising to end your worries or of offers that involve money at all. No actual sweepstakes or lottery will ask you to pay fees and taxes up front, and you should always be wary of anyone asking you to wire money through MoneyGram or WesternUnion. If you think you are being scammed, call the police. They will be happy to asses your situation and let you know if the offer is legitimate. You need to protect yourself from those looking for prey in need.

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Gambling

Thursday, May 21st, 2009

Most of us, at one time in our lives, have gambled a little bit of money. Whether you packed up your life savings and headed for the Las Vegas blackjack table, or whether you bet your best friend an dollar that he couldn’t beat you in a footrace, gambling can be a fun and harmless pastime.

However, we all know that gambling can be incredibly addictive and dangerous. An overwhelming number of people (recently estimated at 15 million) show signs of a gambling addiction, and those who are addicted tend to incur debt between $55,000 and $90,000. Gambling addicts experience higher rates of divorce, depression, and suicide.

So why gamble in the first place? There seems to be an oxymoron at work here. As anyone who studies “luck,” will tell you—you can’t be lucky unless you take chances and risks. There is an even an old joke that we here at Five Point Capital have heard many versions of. Many years ago there lived an old man who was having a hard time in life. He owed money on his house and land, had little money for food, and as he aged he found himself needing more and more money for medical expenses for himself and his wife. Every single day he went to his local church to pray. He called out to God each and every single day “God, please help me to win the lottery. I beg you.” Time goes on and his situation grows worse, and yet every day he still goes to church to ask God to help him win the lottery. One day, the old man was in the church, got down on his knees, bowed his head, and prayed in a weeping voice, “God, please, please help me to win the lottery,” and proceeded to weep. Hearing this, God couldn’t stand it any longer, and shouted down to the man from the Heavens, “Do me a favor my son…Buy a ticket!!!!!”

This joke demonstrates what many of us feel; we know that our chances of winning the lottery are slim (indeed, casinos usually profit about $30 billion annually), but we still feel that we should at least put our luck to the test, just in case.

In this economy, gambling can go either way. Those who gambled lightly as a simple pastime are now tabling the hobby to save money. The US Casino Report estimates that 60% of Americans have cut back on their gambling spending, which is about the same as the drop in people spending money on dining out. This has drastically impacted the gambling world, and some racetracks in Kentucky have been forced to close or cancel races now that betting is so low. And while in recent history, the amount of money spent each year on gambling has increased (and actually doubled every year since 1997 for internet gambling), this amount actually dropped dramatically in 2008. Casinos experienced their first-ever annual drop in profits since tracking began in 1999, with a drop of approximately $1.6 billion.

However, those who are worse off might be tempted to push their luck a little further, and this can be dangerous. With lay-offs abound and the economy slumping deeper into a recession, some people may turn to desperate measures to slough off some of their debt. And what’s worse, with this economy, getting out of any gambling debts will be even tougher.

Our suggestion here at 5 Point Capital is to treat gambling as you would any other leisure expense, such as dining out or buying new clothes. Look carefully at your budget and see exactly what you can afford to spend each month on gambling. Once you hit that limit, do not allow yourself to go over. And avoid the cardinal sin of budgeting gambling money—if you win money, this does not increase your pool of gambling money. This is your profit to keep. That way you only spend an affordable amount on gambling each month, and will never delve into debt. The worst case scenario is that you spend your gambling allowance, and the best case scenario is that you make a profit.

If you cannot afford to gamble, don’t start. That is the simple rule. If you cannot afford dining out, buying a new CD, or cable television, gambling should go as well. Consider it just as you would any other leisure activity. Budget a trip to the casino just as you would budget a trip to the beach or a cruise.

If you think you or someone you know has a gambling addiction, you can call the Gamblers Anonymous hotline at 888-GA-HELPS.

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Survivor’s Guilt

Tuesday, May 19th, 2009

With hard-working people being laid-off from their jobs left and right, those whose jobs have remained in tact may start to feel some effects of survivor’s guilt. Every single day people are losing their jobs or worrying about losing their jobs; unfortunately it has become the “American Way” of the era. There are countless resources for the jobless or soon-to-be unemployed to turn to, but what about those who have not been left without a job?

Many who have been laid off may turn against their employed neighbors, friends, family members, and spouses, feeling as if there is no way for them to understand the stress and helpless that comes with being unemployed. The employed may then even start to feel guilty for their success, hard work, good luck, or whatever else they may feel has caused their job security. They might be asking “Why did he or she lose their job while I kept mine? Am I expected to be working twice as hard now? Should I be putting in more hours and working through weekends and vacations? Should I double my donations to charity, since no one else can afford it? Should I offer more support to others, even outside of my family? What do I do with this new role as breadwinner, not just for my family, but for my country?” However, at a time when there is enough stress and ill-feeling going around the country, there is simply no room for the guilt of the thriving.

If you have been able to remain secure at your place of employment, do not feel guilty. It is not your sole burden to support the un-working world, to carry hard-hit charities, or to diminish your own skills and success. You should be proud of what you have accomplished, relieved at your stability, and active in supporting your community. Continue on the path that has led to your success and stability, but do not live above your means. Yes, continue to donate your time and money to charity, but do not increase your efforts above what you are comfortable capable of out of remorse.

We here at Five Point Capital know that the world needs strong, stead-fast, good-hearted people, not those crippled with survivor’s guilt. This economy is no time for showing off, bragging, or lavish spending, but it is also not the time for guilt or unwise spending. Do your part for your community, but remember to keep your head held high and your work ethic strong. The rest will soon follow.

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Quitting Your Job in a Down Economy

Thursday, May 14th, 2009

Every day people are being laid off from their jobs. Those who have been laid off are facing an awful situation. Fear, panic, homelessness, hunger, and helplessness are at the forefront of anyone’s mind if they have been laid off. However, there is a small group of people who have been forgotten and who remain as confused and helpless as ever—those who desperately want to quit their jobs.

In this economy, quitting your job seems insane. Thousands of people are struggling to keep their jobs, find new jobs, and just keep their families and lives together. However, think back to a few years ago, when the economy and job market were doing well. If a friend had come to you, describing a miserable job environment, chances are that you would have encouraged them to quit—to damn the man and put themselves back on the market for a job, just as you might encourage a friend in a bad relationship to break up with his or her significant other.

What should those people do now? Stay in their miserable jobs simply because they pay? Sometimes being at a miserable job can be even more depressing and emotionally damaging than being jobless. So what should you do if you desperately want to quit your job?

It depends on who you ask, really. This freelance writer recalls her Dad giving her the sound advice to not quit her job until she had a new one. However, she could simply not bring herself to be miserable at work any longer, and quit against his advice. She claims her financial worries and stresses are great, but that all in all she is happier. This advice columnist claims that any unhappy new employee should slowly begin a job hunt for a new place of employment, but make sure to give the job at least six months before making any decisions. This mom expresses confusion over whether to tell her teenage son to stick out his degrading entry-level labor job to teach him about life in the working world, or to encourage him to quit and enjoy his youth.

This US News and World Report article delivers some interesting statistics about those who have left their jobs. It claims that those who were laid off end up receiving less pay at their next job, but those who quit usually end up receiving just as much as they were before. This may be due to the fact that those who are laid off become a bit desperate, and will accept any job for which they are hired. Those who quit have a more discerning eye, and will only accept a job that was better than the one they originally quit.

Then of course there is the more radical view, as popularized by David Seaman. Seaman has gone public with his controversial idea that the recession is the perfect time to quit your job, as it makes you stand out in the unemployed crowd and can give you a strong sense of self-empowerment. One of his television interviews can be found here.

The bottom line is your happiness and survival. Quitting your job in this economy will, without a doubt, cause an immense deal of stress. The question is, is the financial stress more manageable for you than the stress of a miserable job? If you honestly do not believe you can support yourself or your family in any way without your job, quitting may not be in your future. However, if you think that can you survive financially and deal with the stress of being unemployed, quitting your job may be an option. Five Point Capital cannot encourage you to quit your job in a down economy, nor can we encourage you to stay at a job that is emotionally depressing. This decision must be yours and yours alone. If you are well-informed and knowledgeable of your own financial and mental-health situations, however, you should be able to make the decision that is best for you.

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The Perfect Resume

Thursday, May 7th, 2009

We know that there are endless tips out there for writing the perfect resume, but Five Point Capital would like to put in its own two cents. The job market is tough and every little bit counts, so here are our tips to helping you land the job you want with the perfect resume.

Unfortunately, when many people go looking for resume tips, they are looking for the perfect cookie-cutter resume format—one that says “put your name here and the dates of your last 5 jobs here, print, and you’re done!” While this would be extremely convenient and easy, print-and-go resumes are all but useless in this economy. Resumes must be tailored for the individual, for the industry to which one is applying, for the specific job to which one is applying, and must include that extra special something to get you noticed. You can be sure that someone else is applying for the same position and that no matter how qualified you are for the job, they are just as qualified. So what will bring you out on top?

In South Coast Today, Brian Boyd provides a few rules that would be good for all to follow. First, keep it brief. Unless you are a top-level executive or applying for an academic or medical job, your resume should be one page. Second, make sure to tailor the resume to the job description. If the job description says that the company is looking for someone who is X, Y, and Z, your resume should make it perfectly clear that you are indeed X, Y, and Z. The job interview is not the time to show the hiring manager that are qualified for the job—the resume process weeds out those who are right for the job from the ones who are not.

The New York Daily News suggests taking this concept a little further. Do not just show that you are qualified for the job, but make sure that everything on your resume is fresh, up-to-date, and relevant. If you are a student, it is fine to include things such as extracurricular activities and internships, but if you are in your fifties and have held top-level positions at your most recent jobs, you should omit things like student internships and working with technology or concepts that are now obsolete.

One thing that most hiring managers and HR professionals will agree on is that you should never pad your resume. Brief and relevant is always better than long and full of fluff. So instead of padding your resume with computer skills when applying for an outdoors job or summer work experience from high school if you are over the age of 25, “pad” your resume with your accomplishments. The number one rule from the New York Daily News for writing a resume is “show, don’t tell.” Everyone knows what kind of work a receptionist, assistant, salesman, or bank teller does, but hiring managers want to know what you did personally. So do not just say “I answered phones,” but instead say “I answered between 20 and 30 phone calls a day as a receptionist for three top level executives, and provided customer service for calls regarding complaints or questions about our product.” Padding a resume with accomplishments and personal details is what turns a resume from a list of job descriptions into an individual’s career biography.

Besides these tips and the resume basics (no typos, readability, easy-to-read font, contact information, etc.), today’s job market means you have to go above and beyond. In the same way that you must be willing to make your mark in a job interview, armed with a flawless appearance, firm handshake, and pleasing personality, you must do the same with your resume as well. Make sure the appearance of the resume is appealing, but not tacky or over-the-top. A large picture of you in a business suit shaking hands with the mayor is unnecessary, but high-quality, monogrammed paper would not be out of the question. An objective section that is not wordy but gives an individual flair is a must, but be careful to avoid giving a personal biography or any information that might be deemed unlawful to know during the interview process (such as age, marital status, or details of appearance). Companies aren’t allowed to hire based on these factors, so do not give them a reason to throw your resume out for legal reasons (more details on this issue are given here in tip #6).

Finally, give in and join LinkedIn, Facebook, Twitter, and any other social networking site that might give your hiring manager an additional glimpse into your life. As this Wall Street Journal article points out, Facebook is not just for the younger crowd. As always, do not put anything into your profile that you would not want your manager or boss to know, but do not risk losing the job to a younger candidate just because you are unfamiliar with the world of social networking. Networking can only help!

We here at 5 Point Capital hope you find these tips helpful and hope you can create the perfect resume when looking for your next job. Just remember—keep it brief and relevant, and back up everything you say with an example. Once you have the perfect information down on paper for the job you want, go that extra mile to make you and your resume stand out. Then prepare yourself for a stellar interview. Good luck!

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Automatic Bill Pay

Tuesday, May 5th, 2009

We here at Five Point Capital know that paying bills can be a hassle. Who has time to write a check, find a stamp, and make a trip to the post office, all on time for the check to arrive before the due date? As a result, we are sure that many people take advantage of the automatic deduction services that billing companies offer. With this type of service, instead of sending a monthly bill to your residence to be mailed back with a check, you provide the company with your banking information and they automatically deduct what you owe in full from your bank account every month.

In some ways, this process is great. You never have to worry about missing a payment, incurring interest on partially paid bills, having to find stamps, or having to make a trip to the mailbox or post office. However, the service also has some downsides that many people do not take into consideration before selecting this payment option. For one, the service works just like writing a check; if there is not enough money in your checking account to pay the service in full, your account will be overdrawn. Then you are at risk for both paying late fees for the bill and for paying overdraft fees to your bank. Secondly, you cannot choose when to pay the bill. Most of these deductions are taken on a set day of the month, while for some it may be better to pay bills on a Monday, after payday on Friday, or after a trip to the bank to deposit paychecks. Finally, what might be the most annoying is that when you cancel the service you are paying for, it sometimes takes a while for the cancellation to process. In the meantime, you continue to have money withdrawn from your account and then must wait for reimbursement checks after the cancellation has gone through.

All of these problems can be avoided by going through your bank instead of going through the company who provides you the service. Most banks, including Bank of America, Citizen’s Bank, and Wells Fargo, have a “bill pay” option which works very similarly to an automatic deduction. The money comes directly out of your checking account and goes to the company of your choice. The benefits are that since you are in control, you can choose the date of payment to coincide with when you get paid, your bank will not make the payment if there are not enough funds in your account so that you can avoid overdraft fees (and normally they will send you an alert telling you there were insufficient funds to pay the bill so that you never miss a payment), and you can cancel payments whenever you choose without having to wait for a cancellation to process.

Your money is your money—hard earned and to be spent how you so choose. In this tough economy, every little cent counts, so we recommend keeping in control as much as possible by using bill pay services through your bank instead of automatic deductions through an outside company.

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