Four financial traps to avoid to protect your money post Covid-19
An expression that has gotten people rich throughout the ages is “When there’s blood on the streets, buy property.” Basically, if there is a calamity, people will want to sell their possessions at a steep discount for plenty of valid reasons. Then, when things return to a more stable state, those assets will be worth more and the person who did the buying will realize huge profits. Sure, it’s callous. It doesn’t really take into consideration the person doing the bleeding. It takes a certain cold-bloodedness to take profit off your fellow citizens in time of their need. If you want to look at yourself in the mirror with a sense of pride, this strategy may not be for you. And I’m not telling you to act like this. What I want to help you avoid is being the guy who is getting exploited, because I can guarantee that there will be sharks out there looking to drain you of your last remaining resources as we come out of quarantine and into an economy that is hurting a lot of people.
Here are four things to avoid in order to not get bled through your pocketbook.
Get rich quick schemes, targeting desperate people. People right now are often in tight situations financially. Maybe their jobs evaporated and they don’t know what to do next. They may be flailing around trying to find anything to help them, and people who tell them that “if they just pay me some money, you’ll have a whole new lucrative job.” If the offer seems too good to be true, especially in these times, you are a target for a scam. This could be a “guru” on YouTube, selling you his course. It could be a MLM type pyramid scheme, allowing you to work from home, as long as you sell all your friends essential oils or yoga pants. This isn’t to say that all courses are a scam. But if you want to learn how to do something, odds are that the information is out there on the internet for free, without a hefty price tag attached. A lot of recruitment agencies in the region are even offering to re-train people into growing industries for free.
High interest loans from private sources. One thing I’ve seen many stories about in newspapers here in the UAE are workers without a lot of money being targeted by people for private loans. Many of those workers were living on a shoestring budget before this crisis hit, and I’m sure that many are desperate for money, no matter the source. In these situations, predatory private lenders can seem like a lifeboat, as they will give you cash immediately. What you often overlook in this situation is that they will charge you incredibly high interest rates, often up to 100% per year (broken up into monthly payments so you don’t notice), that will be very difficult to pay off and sometimes wreck your future. If possible, avoid these situations, because they can get really nasty and hard to disentangle yourself from.
Keeping a balance on your credit card, don’t just pay the minimum. Credit cards in the UAE often have an interest rate of 45% per year. It can seem a painless way to get through a tough situation, but realize that if you don’t pay off your balance every month, that interest payment will build very quickly to a monster that devours all your future paychecks. Do everything you can to pay off your credit cards every month.
Paying full rent. Landlords are getting desperate, in many neighborhoods, they had been getting desperate for a while. My friend’s apartment has gone from 55,000 AED a year to 25,000 in just two years. Another friend of mine just got 10,000 AED knocked off her rent by asking. Now is a great time to downsize your living space to cut a major expense. Talk to your landlord, or if there’s someone who is a good negotiator that you know, have them help you if you don’t like to do that sort of work yourself.
I’m sure there are other ways that people will try to profit off of the desperation of others. People can be ruthless and ingenious at the same time, and often are. Protect yourself.
If you liked this post, come join the discussion over at The Happiest Teacher Facebook Group! I would love to have your voice added to the discussion! Also, if you're into that Twitter life, come follow me!