Updated: May 3, 2013 12:14PM
Originally published: March 14, 2005
Publishers routinely send me copies of money-related books, and I’m whitling down the stack today.
I have a feeling that the best read business book of the season will be Ponzi’s Scheme by Mitchell Zuckoff (Random House, $25.95), a fascinating biography of the legendary swindler whose name is synonymous with financial scams.
A Ponzi scam is one in which investors are promised extravagant returns, and the promise is kept -- for a while -- as the first investors are paid off with money put into the scheme by subsequent participants. Eventually, there aren’t enough new investors, and the scheme collapses of its own weight.
Ponzi’s scam took place in 1920, and was based on promises that international postal coupons could be redeemed for far higher values in Europe. Americans scurried to get in on the action, at one point giving Ponzi as much as $2 million a week in new money.
Draw your own conclusions
There are lessons here, and you can draw your own conclusions. Anytime a crowd believes it can get returns that far exceed the norm, it’s wise to be skeptical.
I’ve reported on some of those scams and learned a lesson: People don’t want to be warned of their folly. And if you are the one to call attention to the situation, they blame you when the whole thing collapses.
At least the lottery promises only a few big winners and lots of losers. If you’re willing to go for long odds, that’s fine with me. Those who believe that unrealistic gains are available to everyone, all the time, continuously, will always be shocked when their bubble bursts.
Regular readers of this column will know I harp on the potential costs of long-term care. I’m not the only one who sees this looming financial disaster. Two books hit my desk that take different approaches to the same issue, and are guaranteed to get you thinking about the possibilities.
The first is by Karen Shoff, and it’s aptly titled There’s No Place Like (a Nursing) Home, (Invisible Ink, $12.95). Shoff is a gerontologist and long-term care insurance specialist.
Sure, she wants people to buy policies, and she gives us good reason. If you think you can care for your aging parents at home, or that your children will care for you at home, this book is a wakeup call. With long-term care insurance you, indeed, may be able to keep your parents in a home setting instead of a nursing home, but not without expensive help. Whether it’s a licensed practical nurse or a geriatric care coordinator who will help supervise your care if you can’t manage by yourself, you’ll find out the importance of having insurance to cover the costs.
You’re not a “bad” person if you can’t care for your parents alone, however much you love them. You’ll find details of what you might face in an unsettling book called Elder Rage: How to Survive Caring for Aging Parents by Jacqueline Marcell (www. ElderRage.com, $21.45).
It’s a book you’ll want to share with your parents -- and your brothers and sisters. You’ll find some parts humorous, as long as it does not happen in your family! And you’ll find plenty of very practical advice in case it does.
Help for debtors
There are almost as many books designed to help you get out of debt as there are people buried in credit card debt. If you want to read them, I regularly pack them up and send them to the Chicago Public Library.
But there’s one I’ve kept on my shelf in case I need to lend it to someone who’s serious about turning around his or her credit situation. The ABC’s of Getting Out of Debt by Garret Sutton (Warner Business Books, $16.95) is truly one of those rare, useful self-help books. It’s part of the Rich Dad/Poor Dad series, and you can learn more at www.Rich DadsAdvisors.com.
The book warns against credit counseling scams, and offers advice on sensible ways to deal with debt. You probably can’t get your interest rate lowered on your credit cards once you’ve built up a pile of debt, but the author shows you how to effectively try this tactic.
And he deals with everything from stopping debt collectors to repairing credit when possible. With bankruptcy becoming an epidemic and tougher bankruptcy laws on the way, this is a gentle book that doesn’t sound sanctimonious.
They say that good judgment comes from experience. And experience comes from bad judgment. Read these books and avoid some expensive experiences. That’s The Savage Truth.
Terry Savage is a registered investment adviser. Distributed by Creators Syndicate.