Rich Uncle Pennybags makes it seem easy, doesn't he?

I keep up on skeptical literature, but I really don’t see a lot of skeptics out there talking about financial schemes that are designed to rip people off. So, over the next several Saturdays, I’m going to tackle some of these topics.

I’m sure most of you are aware of the “Nigerian Email Scam,” also known as the “4-1-9 Scam,” but for those who aren’t, here’s a quick recap. You get an email from someone claiming to be a lawyer who is trying to handle a large estate, but who needs help with the fees. For some reason or another, the lawyer has contacted you, and would like your help. All you have to do is forward the lawyer a small fee and your account number, and he or she will finish the transaction and give you some percent of the money (generally, a 6- or 7-figure dollar amount) for your trouble. Sounds like a win-win, right?

Of course, no one should actually fall for this scam. There are too many things that are fishy. First of all, whoever heard of a lawyer who wants to give money away? And to a complete stranger, at that? Why would a large amount of money be frozen in such a way that a small amount of money could release it? Why couldn’t the lawyer just send a check, or initiate a wire transfer to a neutral account? There are just too many ways this scam sounds fishy to most people.

But, the law of large numbers holds that if you can get your sample size large enough, you’re bound to find a few outliers in the form of suckers who will fall for your scheme. And, lo and behold, here’s the story of a guy who did fall for one of these email scams. When you read it, you’ll find out what a sad and messy ordeal these scams can be. The guy just kept giving these con men money until he had to face the fact that he’d been duped. Now, he’s a pariah, and not only does he feel very stupid, but he also has zero credibility with his friends and family.

He should have known better, right? Of course. But the problem is that most people love the idea of getting something for nothing… of having some magical ship come in and give them everything they’ve ever wanted. And that’s why we all have to be careful and arm ourselves against get rich quick schemes.

Hold on to your money. You work hard for it. You don't want some con man retiring off it, do you?

The Nigerian scam doesn’t work so well on people whom are well educated. But man, oh man, do they fall for things like hot stock tips and “sure thing” sports bets. And rarely do these people stop to ask some basic questions.

1) Where does this tip come from? Is it a rumor started by someone who has something to gain, or is it a tip from a legitimate expert who actually knows what they’re talking about?

2) Are the people spreading this rumor keeping a tight lid on the tip, or does everyone know about it? The more people there are who buy into this tip, the less lucrative it’s going to be.

3) If it’s such a sure thing, why would anyone bet against it?

Gambling can, of course, pay off in the short term, but it’s not a good strategy for repeated investments of money. The odds are always stacked against the gambler, and eventually, he or she is going to lose. There’s no such thing as a “streak” or “good luck” — there’s just the minor probability of winning versus the major probability of losing. That’s it. And if there’s a scam involved, that gap widens even further.

Why do people fall for this stuff? Again, it’s rooted in our psychology. We love the idea of getting something for nothing, and it’s almost as good to get something big in exchange for something small. Everyone wants to get rich, but few people really want to work for it. It sounds a lot easier to write a bestselling book or star in a major film or release a hit music album, and more fun, too.

Often, as an editor in the comic book industry, people would approach me and pitch me on the basis that their idea was going to make me rich. I knew better, because my own ideas (which were infinitely better than those being pitched) weren’t making me rich. I’d also read tons of well-executed ideas that weren’t making their creators rich. Some were actually losing their creators money. That’s reality. Some people do get extraordinarily lucky and manage to sell a lot of something that’s fairly mediocre. But they’re the exception, not the rule, and they can’t attribute their success to anything more than being in the right place at the right time — in other words, getting very, very lucky.

I’d argue that there are four ways to really, truly get rich in life.

1) Win the lottery, a sweepstakes, a nuisance lawsuit, or create something that beats the odds and does so well that you make a ton of money quickly. These are all pretty much the same idea — get really lucky doing something that most people fail to get lucky doing.

2) Inherit a bunch of money from someone else. This is sort of similar to #1, but it’s a little more realistic, since inheritances are something most people experience at some point in their life.

3) Cast your morals aside and scam people, or steal the money you want. Illegal activities are often very lucrative initially… but they come at such a high cost that they’re a bad idea in the long run.

4) Work really, really hard, making constant sacrifices and spending money carefully. Pay off debts, then stay out of debt and invest excess money wisely. Once you gain some wealth, don’t try to live it up; rather, try to live frugally and let your money work for you in a portfolio or retirement account.

Obviously, the last option is the best one, and anyone who is focused on working hard will value the money they have more than those who obtain it the other three ways. For what it’s worth, I’ve read article after article suggesting that people who win the lottery aren’t any happier than they were before they won; often, having a sudden influx of money makes them feel good at first, but then realize that they’ve suddenly got more “friends” and “family” than they know what to do with. People who inherit money generally blow it on something stupid, and people who are into scams or crime generally feel pretty empty in the long term and spend their entire lives trying to get more than they already have.

One final note. If you’re presented with a get rich quick scheme, ask yourself these questions:

1) Am I being pressured to get into this deal?

2) Am I unclear on how, exactly, I’m going to make all this money?

3) If I tell someone else about this, are they going to try to talk me out of it?

4) Am I going to be forced to give up personal information that someone shouldn’t logically need, like my bank account information or social security number?

If your answer is “yes” to any of these, don’t commit to anything, and wait until you can say “no” to all four before you proceed.

Next week, we’ll talk about how you can spot a con man. If your heart even slightly bleeds to help people, you’ll need to know this informaton.