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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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How to Protect Yourself from Craigslist Scams

Thursday, April 30th, 2009

We all know that Craigslist is extremely convenient—you can specify what you want and search for it according to price, city where it is available, description, pictures, and more. You can deal directly with dealers and thus you do not have to worry about customer service and order processing. In the same fashion, you can sell or offer services for just about anything. You can list handyman services, sell your old iPod, or offer up a room in your apartment for rent. The possibilities are endless.

However, recent events have shown that Craigslist can be deadly. Craigslist itself has links on its website with tips to protect yourself and your money. Read them! While Craigslist is extremely useful and convenient, we must treat it for what it is – doing business with strangers.As a result, we must be wary of any and every communication we have through this website.

Here are some tips from Five Point Capital to help keep you safe while perusing and using Craigslist:

First, protect yourself. Never agree to meet up with someone from Craigslist alone. In some cases, meeting face-to-face is inevitable—an interview for a new job, hiring a handyman, meeting up to trade DVDs. However, never agree to meet at ALONE or AT A HOME. Always bring a friend along and meet in public. If you are going on a job interview, make sure the interview takes place during business hours in the office, or someplace very public, like a Starbucks. If you are exchanging items, instead of meeting up, try to suggest shipping them simultaneously via FedEx. FedEx will provide you with a shipping and tracking link, which you can email to each other as proof that you sent the requested item or items. If you must meet up to exchange something, again conduct your exchange in a public place, such as Starbucks or a popular restaurant. If you are hiring someone to do work for your house (or are offering such services), say that you would feel more comfortable meeting the other person first outside of the home, and then meet in public. You can offer to buy the other person a cup of coffee as incentive for meeting up in person beforehand. When the time comes to have someone enter your house, or to enter someone’s house, make sure you are not alone. Invite a friend over for lunch while the person you hired will be there, or bring a “helper” along to carry your equipment or assist you with whatever task you have been hired for.

Second, protect your family and home. Do not give out your home address unless it is absolutely crucial for what you are selling or buying. If you are offering a room for rent, do not give the exact address until the day of the visit. Give the person looking for a room the cross streets on which your apartment or home is located, and then have them call you when they are close by. Again, never enter someone’s home or have someone else enter your home while you are alone. If you hire someone to work in your home, meet the person in a public place first, as suggested before.

Third, protect your money and your identity. If it sounds too good to be true, it is. Never send cash through the mail. Never give out your bank information unless it is through a secure site like PayPal. If someone has sent you a check, cash it and make sure it clears before sending the product. Never send money through Western Union or other similar sites, and never send money overseas. If you are looking for an apartment and someone emails you saying they have a place, but they happen to be abroad at the moment, and if you’ll just send the deposit via Western Union they will happily FedEx you the key to the place—it’s a scam. Trust us. Just delete the email and move on.

Finally, protect your integrity. There are warnings all over Craigslist to never post any discriminatory ads, but still people do so without thinking. You have a right to choose whomever you want as a roommate or to live in your home, but you are NOT allowed to say that you are limiting who can look at the room for reasons such as age, race, religion, sex, sexual orientation, or occupation. So posting an ad offering a room that says “we are looking for another female, about our age (20-30), with a steady job,” may seem typical and harmless, but it can actually result in legal penalties and huge fines.

Try to follow these simple rules and always use your common sense in order to avoid becoming a victim of a scam or crime. Remember, no matter what you are trying to buy or sell, it is not worth your life or your security. Here’s to keeping safe, from your friends at Five Point Capital.

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Restaurants - What is Surviving?

Thursday, April 30th, 2009

In this economy, people are scrimping and saving. While this is good practice for those low on cash and resources, it can be detrimental to the restaurant industry. More and more people have cut dining out from their budget plans, giving the already unforgiving restaurant industry and even more dismal forecast.

According to 5 Point Capital’s research however, not all restaurants, however, are failing. The Cheesecake Factory announced last week that it will be presenting at the Barclays Capital Retail and Restaurants Conference while P.F. Chang’s revealed plans to open 34 more of their franchise Chinese food restaurants abroad. As this Entrepreneur.com article pointed out, “nobody likes to cook three meals a day, seven days a week—no matter how bad the economy gets.” The trick is working with the economy and making the most of a bad situation. Restaurant owners and investors need to realize that this is not a time when the Average Joe is willing to splurge. This leaves you with two options: either stop catering to the Average Joe, or make him feel comfortable with his spending.

High-end restaurants do not rely on the masses for profit; they rely on a very small group of wealthy patrons and exorbitantly high food prices. If you currently own a struggling restaurant, turning your family-run pizza place into the next Alain Ducasse may not be the best idea. Instead, 5 Point Capital recommends the second option, what we like to call the “Sound Splurge.”

There is a reason that restaurant chains such as The Cheesecake Factory and P.F. Chang’s are doing so well. They offer reasonable prices for decent menus. People who are trying to save cannot afford high-end prices, but they also don’t want to waste money on food that isn’t worth it. The Average Joe is not walking around saying “I refuse to spend money,” he is saying “if I spend money, it better be on something good.”

The US News and World Report calls the type of fare that survives in a down-economy “fast-casual.” This refers to mostly quick-service restaurant chains that offer hearty, healthy, affordable meals. Diners get the bang for their buck with good-sized portions, so they don’t feel cheated out of their money, but dining out doesn’t require setting aside two months salary.

So if your restaurant is struggling or you have plans to open a new restaurant or chain, you do not have to panic. Yes, times are bad, but there are ways to keep your business thriving. Try to get into the mindset of the average American, trying to save money but still live life at the same time, and cater to that idea as best you can. Healthy, casual, hearty meals are both appealing and non-threatening and will keep customers coming back for reliable, affordable service. Five Point Capital can help you save costs by offering affordable leasing options for restaurant furniture and equipment, so don’t be afraid to pursue or continue your restaurant dreams. Bon appétit.

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