scams Archives - Personal Finance For Beginners In 30 Minutes

Example of a really dumb password

By Blog

Well, maybe it’s not that dumb, but it is certainly a problem. Jordan has made a grave mistake in the password that she uses for her email, social media accounts, online banking, Amazon, and every other online and mobile service that she has signed up for. Here’s the password:


Jordan thinks this is a great password. It’s easy to remember, has a mix of letters and numbers, and looks kind of “random” to anyone who happens to see it. She thinks it’s a lot smarter than some of the other passwords that people use, like “password123” or the names of pets and children.

It’s actually a dumb password. The letters and numbers aren’t random at all — they are Jordan’s initials and the month and year of her birth. Someone who knows her could guess it, and smart hackers who know her name (easily found on Facebook) could apply various techniques to figure out her password.

Dumb password example gives hackers keys to the castle

Don’t give up the keys to the castle with dumb password choices!

There’s another big problem with Jordan’s password. Not only is it easy to guess, she uses it on every website and mobile app she has registered for. This means if someone guesses or steals her password for one service, they have the keys to the castle for every other service she uses, including critical services such as email and bank accounts.

What should Jordan do? As a first step, she should immediately change all of her important passwords. Here are some criteria that she could apply when choosing new passwords:

  • Each account that contains personal or important data should have a unique password. The same goes for four-digit personal identification numbers (PINs).
  • Don’t use first or last names, initials, or common words — especially “password” — this is a dumb password that gets lots of people in trouble!
  • Don’t use repeated or consecutive numbers (“123456” or “8888”).
  • Include a mix of letters (upper and lower case) as well as numbers and (if allowed) symbols.
  • If asked to create answers to security questions, avoid questions which have answers that can be easily found out, such as place of birth, elementary school, or mother’s maiden name.
  • Leave a backup email address or a mobile phone number, which can help with password recovery.
  • Change passwords regularly.
  • Store passwords in a secure place (not on a piece of paper in a desk drawer!)

Dumb passwords and two-factor identification

Anyone who is serious about account security should also use “two-factor identification” when it is offered. If enabled, when someone tries to log on to the account from an unrecognized device or location, that person will not only have to enter the password, they will also have to enter a code that’s sent to the mobile phone associated with the account. It is a bit of an inconvenience, but it makes it extremely difficult for hackers or scheming ex-boyfriends or girlfriends to access email or social media accounts.

This post was excerpted from Personal Finance For Beginners In 30 Minutes, Vol. 1, by Ian Lamont. All rights reserved.

Internet bundles are not as cheap as you think

By Blog

The following post was excerpted from Personal Finance For Beginners In 30 Minutes, Vol. 1, by Ian Lamont. All rights reserved.

Home Internet service is a necessity for most people. Internet service providers and cable companies know this. To get you to pay more, they offer “Internet bundles” that combine Internet, phone, and cable TV. If you only want one of these services, the price is steep — at least $50 or $60 (and sometimes more, if there is no local competition).

Let’s do the math on an Internet plan that does not include phone or television:

Monthly rate: $60

Cable modem rental: $8

Total monthly cost: $68

Annual cost: $68 x 12 months = $816

The bundles may seem like a deal — just $99 per month for all three! That’s not much more than paying for one service at a time, right?

Not so fast. There’s a catch with these bundles. Actually, there are several catches:

  • “Equipment, installation, taxes and fees are extra.” These fees are unavoidable, and bump up the price well over $100 per month.
  • The basic bundle seldom includes everything you want, particularly when it comes to cable television channels. Even local broadcast television channels may not be included!
  • Internet speeds may be limited.
  • Phone service may be limited to local lines; out-of-state area codes cost extra.
  • The rate does not include the cost of renting a cable modem
  • Rates increase regularly — sometimes as much as $15 per year

All of a sudden, the $99 bundle costs $140 per month to get to the service levels you want for Internet, phone, and cable TV. Let’s do the math:

Annual cost, first year: $140 x 12 months = $1,680

That’s not all. The price of the monthly bundle usually jumps after 12 months, and sometimes jumps again after 24 months. I saw one $89 per month bundle that includes Internet, cable TV, and a few premium channels rise to more than $200 after 2 years. Here’s how the bill breaks down when the customer starts paying full price:

Monthly cost for cable TV: $90

Monthly cost for high-speed Internet: $70

Monthly cost for premium channel package: $25

Additional monthly taxes, fees, modem rental, and other charges: $20

Total monthly cost: $205

Annual cost: $205 × 12 months = $2,460

But there are ways to save serious money.

  • Get your own cable modem if you are handy with computers. They cost $20 to $30, and you will have to install and configure it yourself. Savings: $60 in the first year, nearly $100 per year thereafter.
  • Don’t get extra cable channels beyond the basic service. You will be able to get premium programming through your Internet connection using Netflix, Hulu, Amazon Prime, and other services.
  • Negotiate with the ISP or cable company. In the past, I’ve asked for and received discounts from telecom providers. The best time to do this is when you have a better offer in hand and the original contract (typically 2 years) is over.

The other item you should consider getting on your own is a wireless router, which will allow you to set up Wi-Fi. These devices are small and connect to the cable modem. Unfortunately, they can be tricky to set up, but at least they are cheap — the one I have cost just $20 from Amazon.

Wireless routers cost

This post was excerpted from Personal Finance For Beginners In 30 Minutes, Volume 1:
How to cut expenses, reduce debt, and better align spending & priorities

PayPal vs Dwolla

By Blog

Paypal vs Dwolla, pros and cons

If you use eBay or have paid someone over the Internet, you’re probably familiar with PayPal. The basic PayPal service lets people pay another PayPal account holder almost instantly. It’s an alternative to paying someone by check, or via cash.

The setup for PayPal and alternative services such as Dwolla is straightforward:

  • Enter your bank account information
  • Wait a few days for the accounts to be connected
  • Confirm that several small electronic funds transfers have taken place — typically a few pennies are deposited into your bank account, which verifies to PayPal, Dwolla, or competing services that the account is yours.
  • Transfer some of your bank funds to the PayPal or Dwolla account. You will be able to use these funds to pay other people who have an account with the same service.

The services have different fee structures:

  • PayPal transfers between private parties are supposed to be free, but business-related transactions are charged a fee that totals about 3% of the transaction.
  • Dwolla doesn’t charge anything for basic transfers, but has fee-based services for priority support and other features.

The services are convenient, and I have used both PayPal and Dwolla for my business. However, there are definite drawbacks:

  • Each service requires both the sending and receiving parties to have active accounts with the same service, and connected bank accounts. This means if you want to pay someone right away, and they don’t have an account, it will take that person at least three or four days to get the account set up and connected with his or her bank. In that time, you could easily write and send a check.
  • Although the services are supposed to be easy to set up, many people have trouble getting their bank accounts connected or performing other basic functions.
  • Because online payment systems have been abused by fraudsters and organized crime, these companies are often overzealous about sudden, unexplained flows of money. PayPal is notorious for freezing legitimate accounts and making it nearly impossible to quickly access frozen funds.

Many people have understandable qualms about trusting their bank information to a Web-based service that will store the data remotely. Conceivably, a lot of money can be instantly lost if passwords and other credentials are stolen.

There are other alternative payment systems (including new virtual currencies like Bitcoin) as well as traditional money transmission services such as Western Union. While these services have features that some people may find useful, they also come with risk and other drawbacks.

This post was excerpted from Personal Finance For Beginners In 30 Minutes, Vol. 1, by Ian Lamont. All rights reserved.

Tips for buying used cars from dealers

By Blog

Used car dealers have a bit of an image problem. I’m not going to get into the stereotypes or horror stories, but let’s just say there are additional considerations when buying used cars from dealers:

  1. Check out the dealer’s reputation. Google is your friend. You can see if complaints have been filed with local consumer protection agencies. And talk with friends or family members who have purchased cars from local dealers in the last year or two.
  2. Assume each car on the dealer’s lot is being marked up at least a few thousand dollars. Yes, you can haggle the price down, but no dealer is going to sell a vehicle at a loss.
  3. Cosmetic improvements may hide serious defects. You can bet the dealer has waxed the car and power-washed the interior. But that doesn’t mean the car is in “excellent” condition. There may be serious mechanical or electrical problems that the dealer hasn’t addressed.
  4. Dealers don’t have to offer money-back guarantees for used cars. If a dealer offers one, that’s great — but get it in writing!
  5. The FTC requires dealers to post a “Buyers Guide” in every used car they sell, including demonstration models. The guide has to include warrantee information (if applicable), as well as various consumer warnings. The Buyers Guide becomes part of the sales contract, and overrides any provisions in the signed contract.
  6. Some states don’t allow “as is” sales from dealers. The list includes Connecticut, Hawaii, Kansas, Maine, Maryland, Massachusetts, Minnesota, Mississippi, New Jersey, New Mexico, New York, Rhode Island, Vermont, West Virginia, and the District of Columbia. Some other states have requirements that carefully define an “as-is” sale of a used vehicle.

There are many more things to watch out for when it comes to purchasing a used car from a dealer. To learn more, visit the Federal Trade Commission website at ftc.gov.

The main advantage of buying a used car is saving money. Here’s how Edmunds.com breaks down average used car prices for different types of cars sold by franchise dealers:

Edmunds used car prices chart

Keep in mind that these are average prices sold by franchise dealers. These cars tend to be newer and come with a higher markup than those vehicles sold by individuals, or those sold at auction.

And remember: At the end of the day, a shiny lemon is still a lemon.

This post was excerpted from Personal Finance For Beginners In 30 Minutes, Volume 1:
How to cut expenses, reduce debt, and better align spending & priorities