Managing your debt has everything to do with controlling your spending, budgeting and careful financial planning. Credit counselling programs are here to help you with all of that. But one source of debt that is often ignored is debt incurred by victims of deception, fraud or exploitation. In many cases, the perpetrators of deception, fraud or exploitation do not break any laws. But they do manage to separate you from your money in ways you later regret. You can avoid exploitation by understanding how it occurs. And with that, I can help because I am a bona fide, highly experienced, card carrying sucker.
There are three things you need to know in order to be a really good sucker:
1. Suckers get hooked in very specific contexts or situations
2. Suckers have beliefs or habits that make them victims
3. Suckers often get re-victimized over and over for very specific reasons.
This blog focuses on the first, the contexts and situations where suckers get fleeced. Let’s start with a good definition of a sucker. In 1982, while on an errand in downtown Kitchener, I happened to meet a relative. At the time, I was investing my student savings at a local bank that was offering 90 day certificates of deposit at a 19% annualized rate. My relative told me of a business venture that involved orange groves in Florida. There had been a freeze in Florida that winter. The company needed a short term loan to meet its obligations, and of course, I stepped forward to provide part of the loan. He was offering me 20% per annum. I gladly gave him my money and received a hand scrawled receipt. Several months later, I joined a room full of people at the Waterloo Motor Inn. Many of them had lost hundreds of thousands of dollars. We listened, dejected, to an official explain that we had lost our money. For me, that was the first of several times when I played the sucker. I was the losing party in an unbalanced transaction who unwittingly participated in my own exploitation. If you care to join me in the Suckers' Club, here’s how:
1. Always follow the crowd
2. Jump both feet into a situation you don’t understand
3. Fail to get the full story on what is motivating the perpetrator
4. Assume that the favourable conditions that are compelling your risk taking will continue forever
5. Be willing to help a dear friend or family member with sacrifices that go beyond what is reasonable or balanced
6. Become paralyzed during any short window that you have to escape a risky situation
7. Overestimate your skills as an investor
8. Jump into areas of investment where you lack experience
9. Succumb to social pressure (most exploitation will occur by people you already know)
10. Take all the risks in a transaction with a person who has nothing to lose and everything to gain
Misery loves company. Most of us have been suckers at some time or other during our lives. Unfortunately, in many cases, the elderly fall for exploitation at a time in their lives when they are unable to recover. There is no shame in being a sucker…once. That “life experience” was very important in my own personal growth and I see other victims of financial tricks all the time. If you or someone you know has fallen for a swindle, don’t hesitate to ask for help from a credit counselling service or other source you can trust.
In my next blog, I’ll talk about habits or beliefs that make people fall victim to exploitation.