You may have worked your way into a position where you are a few dollars ahead or you may be more than a few dollars behind. It doesn't really matter which. There will be financial sharks looking to take all of the money they can from you. Sadly, the poor are frequently the targets of these sharks.
Education, fearless caution and a drive to self determination are your best defences. There are some government protections but they aren't as good as they could be. And if you don't know about them they are useless to you. Sadly for people south of 49° their government is actively dismantling the Consumer Protection Agency. In my mind this is analogous to going through an already dangerous factory and removing the safety guards from all of the machines. It's vandalism that will only hurt the already vulnerable workers.
I digress.
Education: I don't believe that any education is wasted. Since this is a blog about finance, the things that I think are most important are - learning about free (or cheap) resources and math. In my city the library is free to use. Libraries are excellent sources of information. If you can't find the information you're looking for, ask the librarian. She (or he) can point you in the right direction or can even order a book in for you. You should be able to find books on personal finance, cooking, investing, home repair, government programs, law and many other topics. The library in my city offers free on-line courses on many topics, too.
Here comes a shark: I almost hate to tell this story. A friend of mine called one day to ask me to take a look at his financial plan. I went and looked at his notes and spread sheets, his bills and pay stubs. I got my nose all up in his business. I thought it was a good framework of a plan that needed some fleshing out. There were some details missing that I would have liked to see but it was a good start for someone who had a spotty history of financial management. Then I found out that he had paid over $2,000 US (close to $3,000 CDN) to get this framework from an on-line course. My spouse had just finished a similar on-line course through the library, getting the same information at no cost.
I would have been happy to sit with my friend a couple of times a month and go over financial concepts with him for the price of a cup of coffee; if he had asked me. This, in fact, is one of the reasons that I'm writing this blog.
The most basic concept in education is "ask someone who knows." If you're broke don't ask another broke person for financial advice. Find someone is was broke and is now where you want to be. But beware. Not all advice is good advice. Seek advice from more than one source and don't act in haste. My friend acted in haste because of a high pressure sales pitch and didn't ask a second opinion until after the money was gone. No one is more affected by your financial condition than you and your dependants. Don't turn your financial future over to someone else.
Shark! : Beware of Easy Credit, it usually means Difficult Repayment. Generally speaking, if a bank won’t lend you money you probably can’t afford the payments.
In “Things Financial 07” I included a link to a CBC Marketplace program about Payday Loans. I don’t like those lenders at all. I lump them in with the financial sharks. They prey on people who are financially squeezed, possibly poorly informed, and squeeze them harder. Some have conditions in the contract that seem designed specifically to make the loan hard to pay off.
Although payday loans are legal I consider them to be usurious. Because payday loans are 'short term' they avoid the stricter provisions of Canada's Usurious Loans Act which restricts longer term loans to a maximum charge of 35% per annum. Payday loans can legally charge up to about 300% per annum.
"Cheque cashing stores" also charge out-sized fees for their services. Avoid them.
Sharks: If it's known or suspected that you have money in your pocket or in your bank, expect to be approached by people offering 'easy money' schemes. Beware of con-men and -women.
Something they will try to do is get you into an emotionally elevated state. Earlier I had said that you should have "fearless caution" but perhaps "emotionless caution" would be better. Emotion tends to cause tunnel vision, where a person sees and considers only one thing. Heightened emotions tend to concentrate a person's focus down to a single problem in a single moment in time. People in emotionally elevated states tend to make poor longer term decisions. This is exactly why a con-man will try to get you excited (in a good or bad way). It's an attempt to get you to make a poor financial decision. This usually results in you handing over your money in an attempt to solve the problem that he has you focused on. Where your money is concerned, the feelings that they will most likely try to trigger are greed and fear. Greed for the One Big Score. Fear of missing the once-in-a-lifetime opportunity. I’ve heard it said that 3 things drive financial decisions; greed, fear and greed. It's probably true.
Also beware of desire. Desire for love, desire for status, desire for fame, desire for community & belonging can all be powerful triggers.
Anyone offering quick riches or easy money should be suspected of dishonesty. Approach with extreme caution. Or run away.
High pressure to 'act now' is always a red flag. High pressure cost my friend $3,000 that he could have saved if he took 24 hours and asked "someone who knows." My province has a "cooling off period" for cold-call sales. A customer has a few days to think, after signing a sales contract, to cancel it. No questions asked. Not so with a con-man. The moment you hand over your money it is gone. Never to be recovered. It doesn’t matter how little or how much money you have, one bad decision can strip it all away. If you walk away from 20 good deals in a row you'll probably still be OK but if you lose all of your money to a scammer just once, you may never recover.
And I repeat - No one is more affected by your financial condition than you and your dependants. Don't turn your financial future over to someone else. Take control of your finances. Take control of your life. Learn as much as you can. Ask someone who knows. Make you own decisions. And go slowly.
