personal finance

This is a guest post by Dough Roller - a happily married, father of two, on a path to achieving financial independence. Want to know how people fight their way out of $55,000 in debt? … head over to his inspiring blog to read all about it.

Earlier this month, this blog published a reader comment that sparked some controversy - it seemed to imply that most personal finance bloggers were rich and didn’t have any major financial obstacles in their life. [Editor's note: the comment author wanted me to remove the quoted part of the comment - so that's gone now.]

I read this and thought the reader was describing me. My wife and I have gone from a negative net worth 15 years ago to substantial savings today. Although none of what we have was inherited or handed to us, a high salary has allowed us to max out our 401(k) and save a little extra. Add in real estate appreciation and no major financial setbacks, and you have two “middle-class millionaires.”

But if life were only that simple. While many experience financial hardship as adults, I traveled through the winter of my financial discontent as a child. It was painful, but it taught me a lot about money, business and people, and shaped my attitudes about personal finance. Here’s what happened and what I learned from the experience.

Money is a Terrible Thing to Waste

My parents divorced and both remarried before I can remember. I lived with my mom and stepfather, visiting my dad and stepmother on the weekends. When I was about 10, my stepfather opened a store that sold fishing and hunting gear. Was the store near where people fish or hunt? Nope—it was smack dap in the middle of the city and 40 minutes from our home. Go figure. Because my stepfather had to keep his day job to make ends meet, I ran the store by myself during the summers. I was about 13. To make a long story short, the business was a financial disaster.

As the bills mounted, my parents paid them with a second mortgage on our home. (Do you see where this is going?) I can remember our family literally having no money. My stepfather got paid once a month, and on payday (the happiest day of the month) my mom and I would put two or three dollars of gas in the car. Then we would head over to the grocery store to buy food because by the end of the month there was virtually no food in the house.

As finances worsened, my parents told me that they would be filing for bankruptcy and that we would need to move out of the house. The stress on our family was immeasurable. The bitter irony of the situation is that what ultimately saved us was a tragic loss. My father (not my stepfather) died in a car accident.

His death resulted in my receiving social security benefits until I graduated from high school. Those benefits went to pay my stepfather’s bills from his failing business. Was this fair? Maybe not, but it kept my parents from bankruptcy and from losing our home. Money was still extremely scarce and my stepfather continued making bad financial decisions–like the time he cancelled the car insurance to save a few bucks just weeks before a massive hail storm. There is nothing like driving a car around that resembles a golf ball with 120,000 miles on it, but at least we had a car.

Childhood Lessons about Money and Life

Here is what these childhood experiences taught me about money and life:

• Living paycheck to paycheck is miserable. Saving money isn’t easy, and some situations may make it impossible. My childhood experiences motivated me to do everything I possibly could to save money.

• Turning a hobby into a business can be a really bad idea. There is something to be said about doing what you love. But running a successful business requires a lot more than just passion.

• My choices about money affect those I love. We don’t live in a vacuum. Our choices about how we make, spend, save and give money can have a major impact on our families.

• Life can really suck sometimes. As my mom would tell me, life isn’t fair. Indeed, we all have our joys and our tragedies. I was blessed by having a loving mom, yet experienced the tragedy of having a Dad leave so soon.

• We are the sum of our circumstances multiplied by our choices. Each of our circumstances differs but they almost always involve struggles. From those struggles, we can learn and we can choose. Indeed, the financial hardships I experienced as a child have resulted, I believe, in the financial freedoms I enjoy today.

I have tried to draw on the difficulties in my life to make good choices, such as in my education and in financial planning in my adult life. When I write, I try to share what I learned (and continue learning) in the hopes of benefiting a reader facing their own challenges, financial or otherwise. For example, I recently shared My Best and Worst Financial Decisions.

So now it’s your turn. How did your childhood experiences shape your attitudes about money?

Here is a link to The Dough Roller’s feed if you would like to add his blog to your daily reading list.

I know this is selfish and evil, but I need to get this out of my system.

Of course, the rising oil prices cause sharp momentary pain at the gas pump and gradually increasing pain at retail stores; but, there is a silver lining to this dark cloud that I am discovering about now.

If you head over to a campus recruiting department at any college around this time of the year, you will know what I am talking about. Companies are picking up students like hot cakes - full time, part time, interns, and co-ops.

It’s difficult to trace the exact routes of all the excessive oil profits, but I guess you can observe some end effects when it comes to recruitment stats. Big companies, small companies, service companies, manufacturing companies, software companies, and many other companies … the money eventually trickles down to all of them and then they all try to get a piece of the action.

The rising demand for oil (one of the reasons why oil prices are hovering high up) and record oil profits in recent times have spurred a major chunk of the industry into a frenzy of new projects, all over the world, worth many billions of dollars. And now, they are needing thousands of people to work on these projects - in US and abroad.

I cannot say whether this is just a short term boom or a fairly sustainable trend, but unless all the developing countries (currently developing … and those which will be on rapid development paths in future) suddenly stop using oil or unless they figure out a way of using sea water as fuel, I would stay bullish on the prospects of this trend sustaining itself for several years down the line.

Right now, “strike while the iron is hot” seems to be my favorite phrase. It appears like a good time to head out there and grab a piece of the recruitment pie.

Ironically, a couple of days ago, I wrote something about oil consumption and environmental concerns. Oh, well … three cheers for hypocrisy .. hyp hyp hypocrisy!

Image credit: edweb.sdsu.edu

We do try to save money on a lot of things in life and generally tweak stuff here and there a bit to get some extra juice out of our financial resources. However, there are rare occasions when we ignore the dollars and just focus on maximizing our experience. Here are two such examples.

1. Eating at an expensive restaurant: JD @ Get Rich Slowly recently posted an article about how to eat at an expensive restaurant without destroying your food budget. Although the article makes some valid points on how to reduce your bill, it’s really not for people like us. Yes, we do try to reduce our expenses on eating outside, but that doesn’t happen when we head out for a dinner at an upscale restaurant (the term “upscale” is relative - for us, $50+ for a dinner for two is upscale).

If we decide to go to an expensive restaurant, it’s mostly because we want to eat enjoy certain specific items on the menu, in a generally pleasing and relaxed atmosphere. The food and the experience are the driving factors - not the money. It’s the mildly intoxicating, cozy feeling of a *hearty* meal that measures the level of our satisfaction from a given restaurant.

If, on a given day, we have chosen the most expensive restaurant in town for that kind of a feeling - then that’s that, we would be eating there irrespective of how much it’s going to cost us (within reasonable limits, of course). On such occasions, there is no micromanagement about how we can save bucks by using tricks like sharing a single dish, eating a snack at home beforehand, eating just the appetizers, etc. Generally this happens when we are in a “live to eat” mode; when we are in a “eat to live” mode (courtesy: exams, report deadlines, etc.), we don’t care about what we are stuffing ourselves with - we just try to get the most out of as little money as possible.

2. Vacations: Earlier this year, we went on a quick vacation to Philadelphia/New York. Although, before we embarked on the trip, I had planned on keeping detailed records of our expenses, I quickly gave up that idea. On vacations, things are driven by enjoyment, convenience, and the overall experience - money takes a back seat (again, within reasonable limits).

On this particular vacation that I mentioned, we had a general large number in our mind - set as the *budget*. But, we didn’t have any specific plan on how to stay within that budget. Of course, it wasn’t a frugal thing to do - in the conventional sense; but, that wasn’t the intention anyways. We had fun, and that’s what mattered.

These are just two examples at the top of my head right now, but I am sure there are other such occasions… and I am sure some readers will have something similar to share along these lines

All in all, I guess it boils down to saying that there are two types of functions that can be maximized (this type of language is called “engineering jargon”) - sometimes independently of each other: frugality and fun.

Frugality is no doubt a good thing to be maximized for the betterment of you and the universe, but sometimes you got to stop worrying about the pennies and enjoy the fun part.

Image credits: www.massas.com, www.internationalliving.com

I have been posting a bit slow over the past two weeks while I continue sulking over some recent unpleasant events. I do have a lot to write, but I am afraid it will sound a bit too negative for my own taste - and that’s not going to be of much help to anyone. So, I will probably be light on posting till my mood lightens up a bit. A few more days… perhaps. Feeling the positive vibes already.

Meanwhile, you can go ahead and entertain yourself with some popular posts from the past month.

• Stop Going Crazy With Birthday Parties For Kids

• Where Exactly Is The “Pressure” To Spend?

• A Quick Financial Awareness Wake-up Call

• Who Is Responsible For Lead In Toys?

• Jobs That Pay Badly And People Who Choose Them

• A Pay Cut, A Raise, And An Incredible Coincidence

• Vehicles Of Financial Frauds: Phishing, Vishing, And Other Social Engineering Methods

• Got Financial Fantasies?

The olive oil issue returns! but this time, somebody else wants to talk about it. This post is authored by Paid Twice who writes over at I’ve Paid For This Twice Already. If you are looking for bloggers in debt, who are fighting it out and inspiring others to do the same, you should stop by her blog sometime. And yeah… forget nasty comments or be ready to get a taste of some serious kicking skills.

I have to admit, when I read the post here a few months ago about buying canola oil and a couple acting superior because they use olive oil, I was taken completely aback. Not that I would ever have some kind of attitude with someone because I use(d) olive oil, but honestly, I never knew that canola oil was as good or even better to use for cooking as olive oil . The whole post, and the ensuing comments, completely surprised me. Basically I had been buying olive oil, extra virgin olive oil no less, for years and years, thinking I was doing something good for my family (and spending a huge premium to do it) when in fact, I could have spent way less than half as much, bought canola oil, and been just as healthy.

Apparently I have been brainwashed by the likes of Rachael Ray and the majority of the Food Network into believing that extra virgin olive oil is *the* thing to use for cooking. I do not generally subscribe to the idea that expensive = better, but sometimes, it actually does equate , and I thought for some reason this was one of those instances. Now yes, I could have researched it, I could have done my own reading, I could have done many oil comparisons and figured this conclusion out for myself this. If I’d even known what to compare. I’d never really given much thought to anything other than “vegetable” oil (which in my experience generally means soybean oil) and olive oil as possible options in my oil usage.

Olive oil is just one example of a growing problem I have when trying to be frugal vs being cheap. Sometimes I feel like the world is designed to throw barriers in the way of being truly frugal at every corner. I always hear the idea of spending money for quality espoused as a frugal concept, but it is so hard for me to figure out what quality is or when quality is worth it.

I want to live a frugal lifestyle. Frugal. Not cheap. I don’t want to sacrifice the health of my family or their safety to save a buck, and I don’t want to buy the same thing ten times for a dollar each I could have bought once for five dollars. It is easy to say save money when it doesn’t matter, but spend money when it does - but for me, so hard to put into practice. I’ve overspent on things I thought were cost-justified but actually were not (see my years of olive oil usage), and I’ve underspent on other things just to be disgusted with the quality and end up with a broken something that had to be replaced (a shelving unit and a laundry hamper both immediately come to mind).

So does every single purchase, no matter how mundane, need hours of thorough research? Whose research do I trust? Where do I look for that kind of information and when do I know that the frugal thing to do is spend more money vs buying cheaply? I don’t know if there is a simple answer to that. So much of life is full of propaganda and supposed experts telling me what to spend money on and where. How do I filter out the propaganda and figure out where the real information is? More and more I’m running into this problem, with food and also beyond.

And to finish with another question about food, those of you who are in the know about oil…. what kind of oil should I be using for baking?

Here is a link to Paid Twice’s feed if you would like to have her blog in your feed reader.

Since Monday evening, this week has been horrible for me in terms of how much crap life can hand over to someone in such a short amount of time. I don’t know how people tend to look at stuff, but right now, to me, it seems that getting your dreams crushed is far more depressing than any amount of financial loss. I am ready to give every penny I have to get back what I lost - but it doesn’t look like that’s going to happen.

Anyways, without making this a morose platitude, let me come to the point. Here are a few parallels that I have been drawing between life and stock markets - almost in a way as to comfort myself in this chaos.

• In general, there are these daily ups and downs, there are these rare black days, and there are these occasional fears of recession; but on the whole, the hope is that things will tend upwards in the long term. So, it helps to not look at the daily volatilities and to focus on a 20~30 year perspective. For me, it has been nothing short of a melt-down for the last couple of days - but I am going to stick to my “hold” strategy (I am talking about life), think long term, and hope for better times ahead.

  

• In life and in stock markets, smart decisions can help accentuate success and mitigate failure, but there are days of profound realization when the randomness becomes quite apparent and success becomes a game of probability. Makes us acknowledge a multitude of factors, beyond our control, that can affect future outcomes.
• At times, we regret our past choices - “I wish I had that winning one” OR “I wish I didn’t have this losing one” - but no amount of regret can reverse what has already been done. The only thing you can do is to take it easy and think in terms of the future prospects.
• Just like people start wondering whether their portfolio is balanced enough for their long term goals - right when the market hits the bottom - the last few days have made me contemplate on some balancing aspects of my life’s portfolio - why am I doing what am I doing and how am I doing it. Although I understand that, just like in a stock market, a depression is a bad time to rebalance one’s portfolio (think impulsive decisions), the very fact that I became pretty uneasy over these recent unpleasant events tells me that I probably didn’t have all the right equations to begin with. Rebalancing seems to be in order once the dust settles on the present issues.
• DIVERSIFY -your dreams, your ambitions, and your approaches (think backup plans). Banking too much on any given aspect of life with a narrow focus is like betting all your money on WorldCom. Unfortunately, we become so cozy with specific things that work for us, that the importance of diversification is not felt till we sense the threat of an impending disaster. And usually, it’s too late by that time to do anything about it.

All said and done, for now, all I have to do (rather, all I can do) is focus on the big picture, suck it up, and give a fight till the good times return.

Unfortunately, there is no Federal Reserve for life that can boost your confidence by tweaking some interest rates; probably that’s why life’s a beach while the stock market isn’t.

Recently, a reader added some extra dimensions to the topic which amounted to saying that most personal finance bloggers are rich and self-righteous. [Editor's note: I had the comment quoted here, but the author wanted it removed, so it's gone now]

Any thoughts?

It all started with these lines from the movie Rush Hour, which we watched over this weekend for the umpteenth time:

Carter: …My daddy once saved five crackheads from a burnin’ building, by himself.
Lee: My daddy once caught a bullet with his bare hand.

One thing led to another and we (me and my wife) eventually got to discussing how our respective parents struggled through adverse financial conditions, and yet managed to make the most of their lives.

Here are a few interesting features (although, not as exciting as catching bullets with bare hands) about my parents’ lives that briefly came under discussion:

• My dad and his siblings walked to school on tar roads without any footwear to protect their feet. I often thought that this story was blown to legendary proportions until I visited the village where he lived when he was young, and saw quite a few school children walking on hot roads without any footwear (and this was in 2005!). He got his first flip-flops when he was in 7th grade and didn’t have proper *shoes* till 3 years later.
• Mom was a bit luckier - she had access to footwear when she was a kid (she grew up in an urban area); but, she spent about 18 years of her life sharing a small single room (about 400 sq. ft) with 8 other family members. “Privacy” was an unheard concept among the middle class at the time - even now, it’s not a very popular concept.
• Both of them had to give up their education at some point of time in order to work towards earning income, so that they can lend a helping hand towards educating their respective younger siblings.
• After they were married, their life together started in a small rented apartment which didn’t even have plumbing facilities for the first 4 of the 8 years that they spent there. Drinking water had to be brought from a well that was about 200 feet away from the apartment.
• They couldn’t afford a car until after retirement [it did help that a public transport system was in place and they didn't really need one].
• Luxuries like refrigerator, washing machine, television, telephone, etc. came very late in their adult lives (long after I was born; check my TV story here). They still don’t have an air conditioner at their home - though it does get pretty hot in summer. For them, it’s not really a big deal because most other middle class families around them don’t have air conditioners either (astute readers will have realized by now that I am not talking about the US here).

In fact, in the part of the world where my parents grew up (and in their time frame), such financial hardships were a norm. Many people of my generation (although, not all), who were brought up in middle class families in that part of the world, would have similar stories to share about their parents.

Sometimes, when I think of all this and compare it with how we are living our lives right now - with all the educational and financial opportunities available to us, with most of the *comforts* in life one could ask for, without having to worry about how we will survive till the next paycheck, without having to worry about how we will be able to provide for our younger siblings, and stuff like that - I can’t help but feel extremely grateful for how life has treated us so far. We may not be among the wealthiest people in the world, but whatever we are getting out of our life at present is a whole lot more than what was even remotely possible for our parents.

It’s truly humbling to look back and think of how much the efforts and sacrifices (mostly sacrifices) of our parents have contributed to where we are at present. Of course, I wouldn’t underestimate the importance of our own decisions and choices towards getting us to our present situation - but, it’s with the full understanding that those decisions and choices couldn’t have been very effective without a solid foundation and unconditional support that was provided to us early on by our parents - in spite of all the financial adversities they were facing in their lives.

In between such sentimental thoughts, I often slip in the future - yeah.. many years in the future - and wonder what kind of comments our would-be kids will have about our evolving financial situation. As things stand now, I am sure they won’t have anything to write about how their parents rose through “financial hardships” and stuff .. so, I don’t know if I will hear about any “grateful” type of feelings … the only thing I am hoping for, is to not see/hear statements like:

• My old man had everything but he blew it away and couldn’t save anything for my college.
• My old man had everything but he still got into huge debt.
• My old man was miserable and greedy, he had money on his mind all the time - never had enough time for family.
• Etc., etc.,

~$$~

Interestingly, in spite of the tough financial conditions early on, my dad and mom retired at the ages of 49 years and 46 years, respectively. More about this sometime later.

Over the past few weeks, I have been getting increasing number of messages from readers about some Bank of America scam emails and related fake websites. As such, I though it would be in order to discuss some of these issues by the way of a dedicated post. Although, the content below is by no means a comprehensive compilation of methods of financial fraud, it should be a fairly useful starting point to generate awareness about this topic.

Also, since most people who read this blog (and other personal finance blogs) are probably financially savvy to some extent - that is, they probably conduct a lot of financial transactions online, are aware of the risk of identity theft, etc - it’s all the more important that they are aware of the information discussed below.

This post became a bit too lengthy for my taste, so here is a little table of contents to help you navigate if you don’t like scrolling too much:

Phishing

This is an internet-based activity in which attempts are made to fraudulently extract sensitive financial and personal information from unsuspecting victims. The most common method for perpetrating this criminal activity is generating fake emails that direct readers to counterfeit websites designed to look like authentic ones. The thieves pursue pieces of information like: credit card numbers, CVV or CVC codes (those three digit numbers at the back of your card), ATM card numbers and passwords, and login ids and passwords to transaction sites like eBay, Paypal, bank accounts, etc.

Here is an example of a Bank of America phishing email that I received several months ago - since then, there have been many instances of people almost being fooled by similar BoA emails (check the comments in that post).

Here is an YouTube video that explains a bit more about phishing using a specific example:

A rich source of information on phishing and related issues is the Anti-Phishing Working Group. Some essential guidelines from this website to avoid being a victim of a phishing scam are as below:

• Be suspicious of any email with urgent requests for personal financial information.
• Don’t use the links in an email, instant message, or chat to get to any web page if you suspect the message might not be authentic or you don’t know the sender or user’s handle.
• Avoid filling out forms in email messages that ask for personal financial information.
• Regularly log into your online accounts.
• Regularly check your bank, credit and debit card satements to ensure that all transactions are legitimate.
• Always report “phishing” or “spoofed” e-mails to the following groups:
  1. Forward the email to reportphishing@antiphishing.org
  2. Forward the email to the Federal Trade Commission at: spam@uce.gov
  3. forward the email to the “abuse” email address at the company that is being spoofed (e.g. “spoof@ebay.com”)
  4. When forwarding spoofed messages, always include the entire original email with its original header information intact
  5. Notify The Internet Crime Complaint Center of the FBI by filing a complaint on their website: www.ic3.gov/

In addition to these measures, read below about protection against spoofing and ransomware - all the measures should go together for increased effectiveness.

Spoofing

There are different types of spoofing, but for our purposes, let’s restrict to website spoofing - that is, the creation of fake financial websites designed to imitate authentic ones… again for the purpose of stealing financial information. Spoofing goes hand in hand with phishing - a phishing email, with all it’s fake links, is designed to lure the recipients to a spoof website.

Here are links to two sample images: 1. Bank of America Spoof Site, and 2. Bank of America Authentic Site. You can see how good this spoofing business can get.

Two quick ways of catching most spoof sites are:

• Look at the URL in the address bar of your browser. Authentic financial websites are secured and their URLs must start with “https” not with “http”.

• Look for the padlock image in the status bar of your browser - no padlock image means site is not secured. In fact, go ahead and click on the padlock image and see if it displays a valid security certificate - in all probability, spoof sites won’t have one.

If you are looking for automatic protection, Firefox 2.0 and Internet Explorer 7.0 have some built-in spoof/phishing detection measures in them. To add an additional level of security, you can use browser extensions or other programs that will do the job for you. Here are a couple of such free programs that can be really valuable:

• Comodo Verification Engine (supports all major browsers)

• McAfee Site Advisor (for Firefox and IE)

Vishing

This is an offshoot of phishing, specifically coined to describe the attempts to steal financial information using voice plus phishing - with the “voice” term coming from VoIP (Voice over Internet Protocol) technology. Criminals are attracted to this method of scamming because VoIP offers a good measure of caller ID spoofing - calls made from VoIP terminals are difficult to trace back to their origins (protects the identity of identity thieves!), which is unlike calls made from a land line or a cell phone.

Here is the modus operandi according to Wiki:

When the victim answers the call, an automated recording, often generated with a text to speech synthesizer, is played to alert the consumer that their credit card has had fraudulent activity or that their bank account has had unusual activity. The message instructs the consumer to call the following phone number immediately. The same phone number is often shown in the spoofed caller ID and given the same name as the financial company they are pretending to represent. When the victim calls the number, it is answered by automated instructions to enter their credit card number or bank account number on the key pad.

A simplest thing to do to avoid being a victim of this scam is to make sure that you never give your personal information on the phone to unsolicited callers. Don’t compromise on this for any reason.

Pharming

This is essentially phishing, but it goes beyond simple tricks like fake emails filled with bogus links. Phishing can be remedied by simple security measures that you can observe while using your computer, however, pharming is not that easy to contain.

Here, the fraudsters attack the flow of information on the internet - such that, even if you type in the real authentic URL for a financial institution in your computer, you will be illegally redirected to a scam website designed to steal your information. Due to the technical complexity involved in rigging up such a system, pharming scams are not as popular as phishing scams - as of yet; but fraudsters become smarter by the minute, so this will be something to watch out for in future.

A particularly ominous pharming tactic is known as domain name system poisoning (DNS poisoning), in which the domain name system table in a server is modified so that someone who thinks they are accessing legitimate Web sites is actually directed toward fraudulent ones. In this method of pharming, individual personal computer host files need not be corrupted. Instead, the problem occurs in the DNS server, which handles thousands or millions of Internet users’ requests for URLs. Victims end up at the bogus site without any visible indicator of a discrepancy. Spyware removal programs cannot deal with this type of pharming because nothing need be technically wrong with the end users’ computers. (source)

Ransomware-ing

This is a relatively new beast. In this, attackers remotely access your computer and steal photos, documents, or encrypt all the data (so that you can’t access anything). Then they send you a ransom note demanding money if you want your data back or you want access to your computer again. Call it “data kidnapping” if you want.

Here is a video that explains it all:

The malicious programs or “ransomware” that is used in these cases, comes via some stupid email attachments or automatic downloads from untrusted websites. The best defense against such attack is to have your computer security updated with the latest antivirus, spyware, and firewall protections. Some popular free security tools are listed below:

• AVG Antivirus

• Windows Defender (anti-spyware)
  

• ZoneAlarm Firewall

Dumpster Diving

On yeah! low tech means to achieve rich results. This has nothing to do with computers or internet, but it can be equally damaging in terms of losing valuable financial information. And the sole reason why this is still going on? people have still not learned to shred their financial documents before disposing them in the trash.

If you don’t yet have a shredder, go get one right now. Now-a-days, you can get a shredder in the cost of a couple of burgers.

There is a technological side to dumpster diving which raises it’s head occasionally. It’s dumpster diving for electronic data. Don’t throw your used hard drives in the trash without wiping them off (completely stripping them of residual data). Simply deleting data or formatting a drive is just not enough. Read this article to learn more about this issue - wiping your hard drive clean before disposing it. Personal finance enthusiasts who maintain spreadsheets, or software programs to manage their finances should especially be aware of how they dispose their hard drives.

Social Engineering

This is defined as follows:

… social engineering is generally a hacker’s clever manipulation of the natural human tendency to trust. The hacker’s goal is to obtain information that will allow him/her to gain unauthorized access to a valued system and the information that resides on that system. (source)

“Hacker” means any unauthorized person wishing to steal your sensitive information - not restricted to just computer hackers.

From this definition, it is obvious that all the methods used to perpetrate financial fraud, as discussed above, are subsets of this huge thing called social engineering. Be very wary of social engineering - it inevitably ends in identity theft and loss of valuable and sensitive financial information.

~$$~

Apart from using the technological tools to fight social engineering, the best thing we can do is to train ourselves to look at things with a critical eye. Knowledge and awareness are your best friends towards mitigating the risk of becoming a victim of social engineering and financial fraud. Hope this post gives you a head start in that respect.

Additional useful resources:

• McAfee Phishing Quiz

• SonicWALL Phishing IQ Test