Moneywise24 Personal Finance

When I got home the day before yesterday, I had a very interesting message waiting for me on my answering machine. The text was clearly spoken by a computer, and although I already deleted the message, this is roughly what it said:

Hello, this is “Mr X”. Your number has just been selected from our database, and you are a winner. This is not a joke, you have just won a BMW 3-series, or the equivalent of 30,000 Euros in cash. Again, this is not a joke. You can claim your prize, a BMW 3-series or the equivalent of 30,000 Euros, by calling us within the next 48 hours. Please take a pen and a piece of paper, the number is 0900-739555…

I have to admit, I was a bit confused, perhaps a bit joyful. But I decided to research the internet first, before calling on. As I entered the number in Google, it appeared that many people had already written about the message message being a scam, and that calling the 0900 number would cost approximately 2 Euros per minute. The clue: the call center would stall callers as long as they could, but a prize (be it the car or the cash) would never get delivered to the individual.

I currently live in Germany, and having researched the topic a bit further came the next clue: the so-called company which had called me is located in Switzerland. Due to the border issue, it is extremely difficult to sue the company in order to obtain a prize. In fact, many had tried, where some succeeded but many failed.

Such automated calls are clearly scams, since nobody has anything to give away for free, especially if you cannot recall registering anywhere. Additionally, serious companies would contact you in person, and you would most probably have much more time than only 48 hours to respond. Fraudulent companies frequently make use of dialers, meaning that random phone numbers will be called, and as soon as a number is picked up (either by a person or answering machine), the number is saved in the database. Such databases are then frequently sold to third parties.

The sad thing is, that still many people respond to such calls. These are also usually people, who really could use the money and who are living on a tight budget. However, if you watch out for a couple of things, you can fairly easily identify a scam:

• If you are being called and the number of the caller is hidden, it is probably a scam (or another company or individual which clearly does not want you to call them back on that number).
• There is nothing for free without an initial investment. If you play the lottery, you will have to make a purchase first before you can win anything. However, if you won something without any effort from your side, it is probably a scam or a marketing campaign.
• Are you being told to respond within a very short time limit, such as 24 or 48 hours, then it might be a scam. Fraudsters do not want to give you enough time to think it over, or to conduct extensive research; you are being put under pressure.
• Are you being asked to call a very expensive number? Then it is quite obvious how this company is probably generating its earnings, namely via people calling them.
• If you are being told to call to a specific number, try to google that number. Posts and comments on scams are being spread on the internet extremely fast. If you find material on that number, read what people write about it.

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Every now and then I have been thinking what I would do if I would win a few million in a lottery, or in the casino. I am sure most people have, perhaps you have. I have been discussing all possible scenarios with my friends, and often we ended up talking about expensive sports cars, yachts, luxurious estates and world travel. Honestly, if this is really how I would spend my millions, I would probably be instantly in debt.

I watched a documentary the other week, in which they were looking at what people had done with the millions they had won in a lottery, and as it became obvious, most people had spent their money very stupidly. A psychologist was asked about this phenomenon, and he claimed that it is only logical; these lottery winners were not at all used to thinking in dimensions of millions. They were literally thrown out of their own reality, which caused them to make irrational decisions.  This particular documentary set me to think: how would I handle that much money.

Keep my job

Okay, I have to admit, it really depends how much I won. But at least at first, I would definitely keep my job. Especially if I can not live off interest and maintain a good standard, what is the point in quitting my job? Besides that, I love my work. I might quit at a later time, but first I want to see how things are developing.

Cash Savings

Before I would do anything with the money, I would put some part of it on a savings account. Call it an emergency account if you want to, the money is intended for emergency situations, and in case I would lose everything. This money should allow me to start all over again just in case things go wrong. I would probably put aside about two years of my current salary.

Real Estate

Currently, I am renting an apartment, this might be one of the first things I want to get rid of. I would probably buy something bigger and more central than what I have now, but I do not see the point in buying a luxurious estate, which would vaporize most part of my money. A nice 2- or 3-bedroom condo in the city center will do, nicely furnished, a place where I feel good and comfortable. Besides, I am conscious of the fact that the bigger and more luxurious the estate, the more tax and other yearly expenses I will have. Real estate offers me the benefit of lowering my monthly expenses (my monthly rent) while making a long-term investment. Alternatively, I might purchase more than only one object, which I would rent out if I am not using them. This way, the incoming rent will compensate for my expenses I have on the real estate, and I am investing money with a long-term focus.

Long-term investments

At least half of my winnings, if not more, I will invest long-term on the stock markets. Firstly, I want my money to grow over time and it to gain value. Secondly, I want to obtain dividend payouts. If these dividends are high enough, they could even substitute for my current job, either partially or completely. But until I have reached a certain threshold, I would keep my job.

Business

If I feel entrepreneurial, I would perhaps start a business. However, I will do this with great caution. I do not have great experience with running businesses, so I will start small, even though I have the necessary funds to start big. By gaining experience, I can build my business from there, and engage into bigger businesses over time. The documentary I was writing about earlier showed a man, who invested most of his money in a bigger type of manufacturing business, which went bankrupt due to his inability to run that business. By the way, the guy ended up broke, and his wife left him. So did many of his friends.

Education

I am a fan of life-long learning, whether it is a new language, an MBA, or something else which I find interesting. I consider education an important part of my personal development.

Something needs to be spent, right?

Good, I have to admit; of course I will spend some of that money. I might buy some fashion, perhaps travel the world, buy a more fancy car, or take my flying license. I will definitely give myself some treats, but I will do this in a dimension I understand. I would hardly start to buy business suits worth 5,000 Dollars, as this is a dimension of spending I am not familiar with, and which I do not need either. The same goes for my world travel: I might fly business class on long distance flights, but I don’t see the use of paying 8,000 Dollars or so for flying first.

I am in charge of my money

I recognize the fact, that once I win the lottery I will probably be approached by many so-called consultants, who would recommend me to invest my money here or there. But I will, at all cost, remain fully in charge of my own money. I might consult someone I really trust, who may give me advice of specific trends and market developments, while at the same time I make my own decisions.

Honestly, I have never been in a situation of winning millions. However, I believe that becoming suddenly rich can be quite problematic for many people. And even if I am gaining wealth slowly over time, I will cherish the above points, in search for long-term growth, development, and a stress-free life.

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