Easy tips to avoid being ripped off

For consumers, it’s a jungle out there, says Bob Sullivan, author of the new book “Stop Getting Ripped Off: Why Consumers Get Screwed and How You Can Always Get a Fair Deal.”

For consumers, it’s a jungle out there, says Bob Sullivan, author of the new book “Stop Getting Ripped Off: Why Consumers Get Screwed and How You Can Always Get a Fair Deal.”

The book is a manifesto for the uneducated, the gullible, the greedy, the pathological optimists and the math-impaired. Sullivan,” talks about why consumers got shafted so badly in the last decade, and what they can do to protect themselves.

“American consumers have become bad at being consumers,” says Sullivan, due to their own innumeracy, magical thinking and greed. Here are a few of Sullivan’s unorthodox personal finance tips for consumers:

1) Assume any salesperson may be a sociopath. Research by psychiatrist Martha Stout suggests an estimated one in 20 adults is a Bernie Madoff -- a shameless, often charismatic liar.

2) When negotiating, be prepared to lie. Obviously you don’t want to fib about things like your credit score or income, which can be easily verified. But instead of revealing a planned down payment to an auto salesperson, say “I only have X in my bank account.”

3) Never use friends for major transactions. “That sounds harsh, but it’s the truth,” says Sullivan. “When I talked to investigators at the Securities and Exchange Commission, almost every sad story begins with ‘I thought he was my friend.’ When someone is making money off you in a business transaction, at that moment he is not really your friend. Call three professionals, get a price, and never see them again when the deal is done. That’s the best way to do business.”

4) Be engaged with your finances on a daily basis. “It’s human nature to put off the bad news -- nobody wants to look at a credit card bill that arrives after Christmas,” Sullivan says. “But when you do that, you detach from day-to-day notions of where the money is.”

Take a cue from baseball managers, he says, who rouse benchwarmers by asking, “What’s the count?” Keep your financial head in the game with questions like: How much cash is in my primary checking account right now? How much did I spend last month?

5) Never maintain a single checking account for all your transactions. “You should never make ticky-tacky purchases or weekly cash withdrawals from the main staging place for your money,” writes Sullivan. “Eventually you’re going to trip up, screw up and be hit with (an overdraft) fee.”

Sullivan argues that it’s easier to set up two accounts -- a “staging” account where your paycheck is deposited, and a “workaday” account for all those little debits and ATM withdrawals. Then shift a pre-determined amount of cash -- say $500 -- into the second account for the dozens of minor transactions. Use your staging account for the regular monthly stuff -- rent or mortgage, utilities, auto loan and cell phone.

Finally, Sullivan says, every consumer should be able to answer the question: How much would I need to survive if I lost my income for three months? It’s an old saw, but one that’s taken on more urgency in the last two years.

“If you don’t have that somewhere in cash, you’re living a high-wire act,” says Sullivan. “I’m convinced so many people lose sleep and have stress in their marriages and don’t feel liberated at work to complain because they know they’re only a few paychecks away from being in real trouble.”

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