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Monday, November 23, 2009

May Financial Fitness Challenge—Know a Windfall From a Downfall

When your relic of a car needs a new engine, or your neighbors throw their daughter a wedding you never could afford for your daughter, it's easy to start daydreaming about winning the big jackpot. What would you do if you won the lottery?

Daydreams of winning are as close as most of us are likely to get. And if it's any consolation, consider the numerous reports of winners ending up with nothing, after lawsuits, grasping relatives, and poor decisions drain it all away.

Frankly, if you can't manage the money you have now, you'd likely do no better if you had a lot more money. So maybe the best way to prepare for eventually winning that big jackpot is to do a better job today managing what you have. The people at your credit union, and the resources on this Web site, can help you with that.

If you had a pile of money, perhaps your priorities would be to:

• Protect it, and protect yourself from those looking to cash in on your good fortune.
• Make it grow with sensible decisions about investing.
• Help family and friends; help others in need.
• Enjoy it, but spend cautiously so it doesn't run out.

Those are all good things to do with the money you already have. This month's Turning Point feature, Make the Most of Unexpected Good Fortune, examines in detail how to manage a windfall.

Defend against windfall scams

In the 'every silver lining has a cloud' category, scammers have figured a way to make money from our dreams of winning the lottery and similar prizes. Say you receive notice that you've won a big prize in a sweepstakes or lottery—perhaps from overseas—along with a check or money order as an "advance" on your winnings. You're told to deposit that advance and send back some money for taxes or fees to claim the rest of your prize. The notice might come by e-mail but often comes by conventional mail.

Of course, the whole thing is a scam—you'll be sending back your own real money but the check you received turns out to be bogus.

Here are a few things to keep in mind about check scams, lottery-based and otherwise:

• It's usually impossible to tell if a check or money order is good by looking at it. Even a valid account number is not enough to verify an item; a telephone number printed on the check or money order may be the scammer's.
  You will be responsible for any funds you spent from the "prize" if it's returned.
• You can withdraw funds even while a check is still being processed. Processing time can vary, so waiting a certain number of days before withdrawing the money is no guarantee it won't come back unpaid.
• You only find out there's a problem with the check when the institution it goes back to for payment notifies your credit union or other financial institution where you made the deposit.
• You will be responsible for any funds you already spent from the "prize" if it's returned.

The bottom line: No one who presents you with a legitimate check or prize winnings will ever ask you to send money in return.

Financial Fitness Challenge

Remember to register for the Financial Fitness Challengeregister for the Financial Fitness Challenge, paired with our Turning Points feature. Each month we'll randomly select five winners to receive $50 Visa gift cards; we'll choose each month's winners only from that month's entries, so enter often.

ST
Susan Tiffany, CCUFC
askem@cuna.coop

Published May 4, 2009