It has always puzzled me why seemingly intelligent people can fall for telemarketing scams and lies from people they have never met or even spoken to.  Just because someone spins a somewhat believable story online or on the phone doesn’t mean that it’s true, and most of the time it isn’t.  I think the problem lies with two types of people that are natural targets:

1. The softhearted want to help.  If someone needs money to get out of jail, get back home to their troubled family, pay high medical bills, or some other misfortune, they will send whatever is needed – no questions asked.
2. The greedy want to make a buck – or a thousand.  These are the ones that will give personal financial information, send money or cash cheques in order to receive a monetary reward (for their trouble.)

I can’t believe that, even with all the warnings and exposure, people still fall for the “bank inspector” scam and the “African prince” who wants to use your chequing account to hold his millions while he escapes the country with his life, for a substantial reward of course.

Telemarketing Scams

The father of a friend of mine recently wired several thousand dollars to a scammer pretending to be his grandson who needed bail to get out of jail in another province and “please don’t tell mom that I’m in trouble”.

Of course, the grandson was in his home city, at work and had never been in any kind of trouble at all.  I hear all the time of people who give out their credit card numbers to win phony vacations and other high end prizes (to pay for shipping or other bogus reasons), or because the bank has “made a mistake” and can they verify their account numbers and PINs.

Never, ever, give anyone your personal or financial information – SIN, bank account numbers, PIN, credit card number and expiry –  online unless you are doing legitimate business (e.g. if you shop or pay bills online) on a secure, encrypted Internet site (remember the closed lock?), and never discuss this information over the phone.

If there is a banking error or other issue, the bank will want to see you in person or go through the secure procedures on their telephone banking system.  They will never use email, as it is not secure.

If you are selling something online or renting a living space, take payment first and make sure it clears.  Don’t accept any payment that is greater than what you asked for.  With these scams you are requested to send back the difference, and then the original cheque bounces.

Before sending any money to anyone think about the request.  Does is make sense?  Legitimate contests will allow you to call them back and will never ask you to either pay a deposit or shipping, or ask for personal information.

Remember the old adages:  “You don’t get something for nothing,” and “If it seems too good to be true, it usually is.”

I believe that using a personal budget is one of the most effective ways to gain control of your finances.  You can’t possibly begin to reduce your debt and build your net worth unless you know exactly how much money is coming in and how much money is going out.

Budgeting is about tracking your monthly income and ensuring your expenses stay within your limits.  Without a proper budget in place, you take the risk that you are overspending and not taking into account future expenditures.

After tracking my monthly spending with a budget for over a year, I decided that I needed to look further ahead and so I created a budgeting spreadsheet to forecast income and expenses over an entire year.  In fact, I try and look eighteen months out to give me a better idea about my future goals and objectives.  Here’s a look at how I forecast income and expenses, and why it may be beneficial for anyone to do this:

Forecast Income

This sounds pretty self explanatory, however here are a few examples of how our monthly income fluctuated this year.

My Employment Income – I get paid monthly, and I received an annual raise that took effect on July 1^st.  Also, once I contributed to the maximum CPP amount of $2,163.15 and the maximum EI premium of $747.36, I received more net pay each month until the end of the year.

My Wife’s EI from Maternity Leave – We collected 3 ½ months worth of EI benefits from January through March for the remainder of my wife’s maternity leave.  Of course it was important to plan for when these benefits ran out so that we could adjust to single income living.

Refunds and Reimbursements – We received a tax refund this year, and we also have to submit receipts on any health spending claims that my employer covers (prescription drugs, eye care, dental care, etc)

Forecast Expenses

Some expenses are fixed monthly, like our cell phone, cable and internet bills.  But some expenses fluctuate, and by properly forecasting you can avoid an unexpected rise in expenses in a particular month.

Mortgage Payments – As I discussed above, I get paid monthly however I make bi-weekly mortgage payments.  I use the spreadsheet to forecast income and expenses and track the 26 mortgage payments throughout the year and to determine which 2 months the extra payments fall.

Utilities – I looked back at last year’s budget in this category to try and forecast my monthly utility expenses.  Higher water consumption in the summer and higher energy consumption in the winter play a major factor in this category.  Nobody likes to be surprised when their heating bill doubles in the winter time.

Insurance – Our auto insurance is a fixed monthly expense, but our house insurance is paid in three installments throughout the year.  By forecasting this expense I knew to expect extra payments in three specific months this year.

Gifts and Charitable Contributions – It seems like there is always a birthday present that sneaks its way into your expenses each month, but by properly accounting for these special dates in a yearly calendar you can be prepared.  We also participate in a few charitable events and set aside money in those particular months.

Christmas and Summer Holidays – You know they are coming up every year, so why not set some money aside in your forecasting tool to account for these expenses?  It will help to set aside a small amount each month rather than trying to cover all of your holiday expenses in one month.

Using a spreadsheet to forecast income and expenses will complement your existing monthly budget and help to better prepare you for the unexpected expenses as well as the variable costs in your daily lives.

It’s not complicated once you get it set up.  I just use an Excel spreadsheet with my yearly forecast on one tab, and then individual tabs to track my monthly budget.  Here’s a look at some awesome budgeting spreadsheets from Vertex42.

Do you forecast income and expenses along with your budget?

My post last week on my new car purchase brought up some interesting observations (and a few not-so-nice comments, thank you very much) and it’s obvious that the purchase of new vs. used vehicles is quite a controversial topic with decidedly strong opinions on both sides.  With that in mind I’d like to offer a few clarifications of my position:

• Someone has to buy the new cars so that others can buy them used when they’re sold.  However, you won’t be buying my car as I plan to keep it until it dies a natural death – 15 or more years from now.
• My husband is a master researcher who looks for a reliable vehicle for the long term at a reasonable price.  This is why we would never purchase a brand new model in its first year of production. 
• You can’t do research for poor driving habits, lack of regular maintenance and the inevitable “lemons” that can appear in any make or model.  With our new cars we have never had any serious or costly repairs even in their later years.
• To be fair, we have owned used vehicles that were pretty decent and gave good value for money, but with our record we don’t want to take any more chances especially now that we’re getting elderly and own only one vehicle.
• Financing for new vehicles is a lot less expensive – currently 0 – 2% from most dealerships and a lot of them offer rebates.  We negotiated a good price as though we were getting financing, then received considerably more savings when we finally offered a cash deal.  (Don’t forget, I have at least 10 years to save for a new car so I can pay cash next time, also.)

Obviously, the new versus used car debate will never end.  Everyone has his or her own firm convictions.  There is no right or wrong answer, only different opinions.  For what it’s worth, these are my views and I’m pretty stubborn so it would be difficult to change my mind.