This may be the granddaddy of all financial scams.

I’m beginning to think we may be genetically programmed to be suckered into these fraudulent snares. How else to explain their utter resistance to repeated exposure and censure?

Like most scams, it works best in distressed economies. Desperate borrowers will lower all their natural defenses, as hope triumphs over experience.

The hook used by the promoters is that they have exclusive access to an untapped reservoir or money, not available to the public.

I’ve Heard That One Before…

Here are some I’ve heard over the years…

• “We represent wealthy investors from the Middle East, who wish to diversify their holdings.”
• “We have access to a pool of banks in the Midwest, who have more depositors than borrowers, and they are desperate to fund more loans.”
• “We have a line of credit with private hedge funds who have surplus cash to invest.”

You get the drift. They have access to money, but only if they are the middlemen in the transaction.

Oh…About the Advance Fee…

There is also a narrative to explain that…such as:

• “Our staff will spend many hours matching your loan with our investors, and the advance fee is our protection in the event you back out before funding.”
• “Our investors ask for a show of good faith, which is fully repaid at funding, to ensure that they are dealing with legitimate borrowers only.”
• “Our escrow department must have a deposit before they will confirm the loan closing.”

It doesn’t matter what excuse they use….anything will do.

And Then…

Because they dangle the prospect of funding in front of a marginal borrower who has already been turned down by legitimate lenders. At this point, you are more or less primed to believe anything.

Once they bag the advance fee, they have several means by which they can stiff arm the hapless borrower.

• “The investors were dismayed to see all the negatives on your credit history and have declined your loan.”
• “It appears the loan to value ratio exceeds our internal guidelines.”
• “Our overseas investors were set to wire transfer your funds, but their host country has instituted currency controls, and there will be a delay.”

The reality is that no legitimate lender will ask for anything other than a nominal fee to cover the cost of the credit report. And even then this fee will be deducted from proceeds when the loan is finally funded.

So Just Say No

Tell the loan broker or agent that of course you know that points or fees may be required, and that you will not object to having these fees deducted from the loan at close of escrow.

And then stand your ground.

They will rant and rave and threaten to leave you high and dry. Just like an infant throwing a tantrum.

If they can’t shame or embarrass or enrage you , goading you to pay an advance fee, they will eventually give up and go on to the next mark.

There is always someone in line who will fall into place.

The financially illiterate are an abundant and rapidly growing resource, begging to be harvested with the next crop.

By Tom Hutchinson | MainStreet.com

This is a bear market. The S&P 500 if off 42% from the October 2007 highs, and almost 30% just since September. The nation is undergoing the worst financial crisis in decades and many think things will get worse before they get better. All this has raised a pressing question among millions of Americans. What should I do with my 401(k)?

Americans are understandably shaken by the turn of events. Many are afraid to look at their statements until they learn from osmosis that things have gotten better. Or, they’re tempted to put everything in cash and ride out the storm. While it can be traumatic to see your 401(k) plummet, this isn’t the time to hide your head in the sand. This is the time to actively position your 401(k) for the future.

In fact, if you have 10, 15 or 20 years left before retirement, this bear market could end up serving you well. If you have some time, you can ride out the current cycle and likely get back what you’ve lost. In addition, while the market has averaged about 10% per year since 1926, investing at the valuations found in the depths of a bear market has yielded even higher returns over time. In the longer view, this market has provided a golden opportunity to add new money to your 401(k) at bargain prices and dramatically increase the propensity to grow your 401(k) going forward.

But, in order to properly position your account, you need to continue adding to your 401(k) and maintain your allocation.

Keep Adding
New money is the great opportunity presented by this market. You should always add money to your retirement account in any event. But now, with stock prices at valuations not seen in years (and in some cases decades), it is crucial that you continue to add as much as you can. A dollar added buys more shares because they are cheaper. Having more shares increases the degree to which your account appreciates when the market comes back.

Maintain Your Allocation
Emotions tend to propel investors toward the wrong course of action. That is, when the market is booming, we tend to want to add more money and get more aggressive so that we can earn even more of those great returns. When the market is crashing, we tend to want to flee to safety and pull our money out of a bad situation. In other words, we’re compelled to buy high and sell low. Obviously, we should do the opposite.

Many 401(k)s offer plans with different mutual fund allocations (percentage investments in stocks, bonds and cash) that vary in accordance with the contributors risk tolerance. For example, a younger person who has more time to invest and can accept more risk would likely invest a greater percentage of the plan in stocks, while older contributors would invest less in stocks and more in bonds and cash.

Assuming that you chose an allocation that was proper for your age and risk tolerance, you should maintain it. Some 401(k)s offer automatic rebalancing, but some don’t. If your account doesn’t automatically rebalance you need to take care.

For example, let’s say you allocated 60% in stocks, 35% in bonds and 5% in cash at the beginning of the year. After stock and bond prices have fallen this year, your allocation has likely changed. Your allocation in stocks has likely fallen considerably and you need to rebalance to the allocations that existed at the beginning of the year. This involves buying more stocks at today’s lower prices.

Think Long Term
Nobody knows how long it will take the market to come back. In the short-term, the market is a risky bet. But, longer-term, investing becomes less of a bet on market fluctuations and more of a bet on this country. Historically, this country has been something you can take to the bank.

Adam Feuerstein, Portfolio Manager of Biotech Select Premium Service, unveils his top stock picks in this defensive sector poised to make you money in 2009.

Thinking about how this past year stacked up? Planning for the new year? Here are some things to do to get your financial life spruced up and ready for the new year.

1. Check to see how much you’ve contributed to your IRA. (Do you even have one?) Yearly contributions vary depending on age and income. Have you maxed it out? If you haven’t, get cracking. I believe you can still add to your IRA as a “2007 Contribution” until April 15th. (But check with your certified tax or investment person, or Geezeo Expert). Once the year is out, so is your opportunity to contribute to your future, tax-advantaged.

2. Use some of the “down time” to gather everything you need for filing your taxes. Note: I didn’t say you had to DO anything with the paperwork…just put it one place! This will make life at tax time easier…particularly if you’re self-employed. The best part of this task is that there is no reason you can’t do this part with a cup of eggnog (or soynog) in hand.

3. If you moved this year send a postcard to your old employer giving them your new address. It’s a nice gesture, and besides, you need them to send your W2 (or 1099, or other tax documents) to your new place so you can file your taxes without delay.

4. If you secretly think that you could do a better job of saving or investing for your future, now’s the time to sit down and set up that automatic draft. Set it and forget it.

5. Finally, clean out your closet. According to feng shui this opens up new possibilities in your life. But in practical terms, it’s nice to feel organized. And you can donate those unused items for a nice tax write-off… and help someone else out. Isn’t that what it’s all about?

Recently, our users asked our very own Geezeo experts for advice.  See if you were wondering about the same thing, and if not, feel free to ask your own question!

Don56 was thinking of writing a check from HELOC to pay off higher rate mortgage…keep making same payments. Obvious risk if variable rate goes up higher than 6.75%. Too risky? or smart move?  See what Farnoosh Torabi suggests.

Farnoosh was also asked about what to do when collection agents start calling.  Find out what she will advise Nomi to do regarding their current financial situation.

Finally, we come to a car delimma.  Shel7 wants to know “What’s the best strategy for negotiating the price of a used vehicle?”  Does Natalie McNeal have her answer?  Keep reading!

Again, if you have a question for any of our experts, please feel free to start up a conversation in one of our expert groups:

• Ask the Expert : Farnoosh Torabi
• Ask the Expert : John Amorison
• Ask the Expert : James Altucher
• Ask the Expert : Natalie McNeal

(Photo Courtesy Of : hisks / stock.xchng)

By Holly Richmond, DivineCaroline | MainStreet.com

With the holiday season quickly approaching, and families across the country facing uncertain and sometimes difficult economic times, many consumers are looking for ways to cut their household budgets. Cell phones, cable television, and the Internet have become mainstays in the home, but often can create an expense for families.

There are some things consumers can do, however, to switch to less expensive, but reliable services that can ease the pocketbook and serve your families’ technology needs.

Kevin Brand, senior vice president with EarthLink, suggests these money-saving tips to reduce monthly technology bills:

1. Assess Your Needs
Look at the ways you use technology in your home. Take a week and monitor how often you are on the phone, watching television, or surfing the net. Once you see how much time you are using these services, compare it to your plan. Many people have access to high-speed Internet at work, making it unnecessary to pay for high-speed bells and whistles at home. The key is to avoid paying for excess.

2. Downgrade
Once you assess your needs, get rid of services that you aren’t fully using. Are you downloading video and playing games or just checking email and sports scores on the Internet? If it’s the latter, it doesn’t make sense to pay for a high-end, super-fast Internet connection . A less expensive but safe and reliable service such as dial-up service—which some providers offer with a special accelerator option—may be just what you need.

The same applies to your cable bill. Do you need the premium channels or DVR? Better yet, if you can watch most of your favorite shows online, cancel your DVR. Be honest about what you really need, and don’t pay for services you aren’t using to their fullest potential.

3. Take Advantage of Freebies
Look for companies that offer free services. Some Internet providers offer free virus protection, which saves you from buying costly software yourself. Others offer free spam protection and other security enhancements, a good bet if you’re looking to maximize savings and still surf safely. Also, leverage your web access by surfing special cost-savings sites. Look for any special promotions your provider might offer on their home page. A lot of Internet providers have partnerships with other online merchants to offer special savings to their subscribers. If yours doesn’t, consider looking for one that does.

4. Avoid Bundles
Advertisers may create a “need” that might not really exist for you. If you’re a cost-conscience consumer, look closely at what you’re paying for popular, but often pricey, bundle packages that include phone, cable, and Internet. It may be easier to pay all-on-one bill, but it doesn’t allow you the flexibility to choose the best individual services that fit your lifestyle. You may not need all the “bells and whistles” of a high-cost bundle. In fact, if you opt for options like Freestanding DSL for your Internet access, you might be able to ditch your home phone altogether.

5. Study Your Bill
Read the small print. Know what you are paying for and make sure you’re only paying for services that you actually use. Also, be familiar with your contracts and look for changes to the terms of service. Know when your contract ends, so you don’t unwillingly default into another one. And be aware, not all Internet providers offer free, 24/7 customer support. If your provider doesn’t, you could be eating up dollars you don’t need to spend.

6. Pay Smart
Finally, make sure you are taking advantage of special deals and incentives. Some service providers offer discounts up to 40 percent for annually pre-paying. Others offer special pricing for a year’s commitment. And always ask for what you want from your provider. A customer-service focused Internet provider may be willing to give you a month’s credit if there’s been a serious issue involving your service or account.

Bottom line: Remember to step back and assess the tech services you have, and decide if you are really using them to their maximum. If not, you might be able to save a substantial amount just by switching to less costly services. Technology is important, but during these challenging economic times, it’s helpful to make small adjustments, so you can save money and cut down on monthly expenses.

Editor’s Note: High-Tech Lifestyle Takes Toll on Budget Discuss your expensive gadgets and gear here.

The Talented Blonde Kristin Bentz answers your emails about the health of the Chinese consumer in comparison to that of the American, and how the post-Olympics retail landscape in China looks these days as we edge closer to the holidays.

Stephanie Link, Director of Research for Cramer’s Action Alerts Plus Portfolio, says this industrial play is down but it’s not out and recent bad news creates a perfect buying opportunity.

New Year’s resolutions are extremely personal to some people. They like to think up their own things, get creative, and really strive towards these goals they set for themselves. For others, they prefer the generic resolutions that they can find blogs about and other support from people they don’t know to help them accomplish their resolutions.

Here are a few popular New Year’s resolutions that reappear each year…

Lose Weight – After the holidays and all those cakes, cookies, pies, candy, etc. the first thing that comes to mind for many people is that they need to lose weight. Gyms count on this and you can see a change in the attendance at the beginning of the year. Once January drops off and some people give up on their resolutions usually the gyms get their normal flow of people back. Although this is one of the most popular, it is also extremely beneficial to your health and will make you feel great. See if your job offers a discount if you enroll in a gym or if it has a gym located in the building itself.

Stop Smoking – This one is hard for people. After the stress of the holidays has finally burned off they want to quit smoking and try to live a healthier lifestyle. Ask others around you if you are trying to quit what worked for them. You might hear some great stories about things that work for people that can also work for you! For many New Year’s resolutions the point is not to quit, but with this one, quitting is the healthiest thing that you can do!

Spend Less on Shopping – This resolution is typically one that women try to focus on, but often men have shopping addictions as well. Set aside a certain amount of money for yourself each month that can go towards shopping for something that you want. But with the economy in a recession, if you are struggling it is best to put this money towards something else if you can.

Save More Money – Using this resolution will benefit you the greatest. Even if you are saving towards something such as a new car or a vacation that you want to go on, saving money each week will allow you to get into a habit that you won’t want to quit. Once you start and forget about the money you put in your savings once you have reached your goal you will want to keep going. Having a sense of security and a buffer in your savings account is always beneficial if something unexpected happens and you some extra money.

Financial Planning and Keeping a Budget – This goes along with saving. Set aside a certain amount of money you need for your bills, mortgage, groceries, and gas each month and then put the rest into savings. Budgets and financial planning can be very personal and you want to make sure your budget is right for you. Staying within your budget can be difficult at times when extra money is needed, but just expect ups and downs with any financial resolution, it doesn’t always go smoothly.

Stop Biting Your Nails – With all the nervousness and habit forming that goes on, biting your nails is one of the most annoying habits to have (be believe me I know from firsthand experience!). Even if this is just a side note resolution, try to keep with it. Many people make this resolution but have a hard time actually following through with it because it seems so petty compared to others such as saving more money. But anything that was important enough for you to make a resolution of is important enough to stick with it throughout the year.

Resolutions range from a great variety of things and these are just a few popular ones that pop up each year. A great thing to do if you like any of the above ideas is to take them and personalize them to something that fits for you. Make them more goal-oriented and specific so you can track whether you are staying on track with your resolution.

Share your resolutions with others here and see what advice others Geezeo users might have for you!

Photo: Aldo Garza

By Jeffrey Strain | MainStreet.com

There are plenty of reasons not to make New Year’s resolutions for the coming year. Why? Most resolutions end in failure.

But if you insist, you can make success more likely. If you treat your New Year’s resolution like a baby step instead of a huge leap, you are much more likely to achieve it. That way, your finances will be in better shape come 2010. Here are a few resolutions to consider.

Credit card payments: Make a New Year’s resolution to pay more than the minimum amount on your credit card, even if that means only putting in an extra dollar. The best way to approach this is through the snowball method of debt reduction. That additional dollar means you have taken the initial step to achieve credit-card debt-reduction success.

Why you can keep this resolution: Twelve extra dollars a year is something anyone can afford. While the hope is you can pay much more, the $1 minimum will allow you to keep the resolution even during months when money is tight.

Read a personal-finance book: You don’t even have to buy one; look at your library. If you are worried you will fail this resolution because you think all personal-finance books are dry and dull, try David Chilton’s The Wealthy Barber, which is set up more like a story than a “how to” book.

Why this resolution will work: All you need to do is read a book. You don’t have to make any changes. Without that pressure, you can simply read, digest the material and decide which, if any, of the book’s recommendations make sense for your situation. Chances are that you’ll find a number of points you should be doing but aren’t.

Track expenses for a week: Choose a week where you keep track of all your expenses down to the penny. It doesn’t need to be a fancy system. Keep a small notebook in your pocket or enter each expense into your personal organizer or phone.

Why this resolution will work: All you have to do is record your spending to succeed. You’re not being asked to reduce spending. The hope is that you will realize you are spending a lot more than you thought in certain areas, and you won’t need any prodding to make changes. The time period is short enough that it shouldn’t be a burden.

Play a money-saving game: If saving money is on your list of goals, play a money-saving game instead of trying to slash spending. Many people already play money games without even realizing it. Keeping a coin jar is one example.

Why this resolution will work: By simply playing the game, you have succeeded, no matter how little or much you save. It’s usually much easier to save money if you make a game out of it and turn it into a challenge rather than a chore. You know what motivates you the most, so you can tailor the game with that in mind.

Find a new income stream: The part of personal finance that often gets ignored when it comes to improving your finances is earning more money. Just as you want to be diversified in investments, diversifying your income is a positive step. There are many hobbies that can be turned into income streams with a bit of thought and effort. And there are plenty of part-time businesses you can begin that cost little to no money.

Why this resolution will work: If you learn to make $1 in some new way, you have succeeded. You aren’t forcing yourself to find something you can do to replace your current income. In most cases, it’s the process of starting that is the hardest, but expanding your earnings from this new source should be quite easy if you want to.

Remember to break down major goals into simple steps to get yourself going. By doing so, you will start off in the right direction and build on your resolution with more goals.