Simply Money Advisors discuss financial infidelity
Every week, Simply Money’s Nathan Bachrach, Ed Finke and Amy Wagner answer your financial questions. If you, a friend, or someone in your family has a money issue or problem, please feel free to send those questions to firstname.lastname@example.org
Joseph in Independence: I’m thinking about buying Bitcoin, but I’m not sure where to buy it online. How do I know something isn’t a scam?
Answer: First of all, the jury’s still out on whether Bitcoin itself is the biggest scam of all.
With that said, with all the hype and excitement around Bitcoin, scammers are taking advantage of the increase in interest in this new opportunity. Since many people are unsure of how the transactions actually work, or where to go to purchase Bitcoin, it’s an easy way for scammers to make a quick buck. Before you move forward with purchasing Bitcoin, it’s important to understand what it is and how to protect yourself against Bitcoin scams.
Bitcoin is a type of digital currency (or cryptocurrency) in which encryption techniques are used to generate units and initiate the transfer of funds. It is created on a peer-to-peer network referred to as “mining.” It is not backed by the government or distributed by a central bank. You keep your digital currency in a digital “wallet” that you pre-select before purchasing. Then you can move forward with purchasing Bitcoin. Sound confusing?
Scammers take advantage of investors because of the confusing nature of this investment. They create legitimate looking websites that entice you to purchase Bitcoin using their site. But then, once you make a payment, nothing happens and there is no one to contact to get a refund.
Another form of a Bitcoin scam is to sway you to convert your bitcoin to U.S. currency. They will attempt to send your funds to a PayPal account, but the transaction will “time out” and not give you your money.
If you want to invest in Bitcoin, it’s important to do your research prior to making any transactions. Simply Money Advisors recommends only investing in something that you truly understand. Partner with a trusted financial planner (we recommend a Certified Financial Planner™) to determine if Bitcoin is an appropriate investment to help you achieve your financial goals and objectives.
The Simply Money Point is that you need to educate yourself prior to investing in anything you don’t fully comprehend. Work with a financial planner to make sure this is the right investment to help you reach your financial goals.
Susan from Mason: Any suggestions for the best ways to pay down credit card debt on multiple cards?
Answer: First, you need to know what you owe and what the interest rates are on your debt. Basically, you need to know where you’re starting in order to create the appropriate plan to address your credit card debt.
There are two common strategies for tackling debt. One of these strategies is called the “snowball method.” With this method, you start by ordering your debts from the smallest balance to the largest balance. You then focus on the smallest balance and dedicate as much money as you possibly can each month to that one, while paying the minimum payment on other cards. Once that first card is paid off, move onto the card with the next smallest balance and so on.
Another method you could use is the “avalanche method.” With this strategy, you start by ordering your debts from highest interest rate to lowest interest rate. Then, you dedicate as much money as you possibly can each month to the card with the highest interest rate, while paying the minimum on the others. Once that card is paid off, move onto the card with the next highest interest rate and so on.
Choosing between these two methods really comes down to knowing yourself. The avalanche method is usually the better method from a pure “numbers” standpoint – getting high-interest rate debt paid off first makes more financial sense. But if you need to see quicker progress to keep yourself motivated, the snowball method might work better for you.
The Simply Money Point is that there isn’t just one way to pay down debt. Start by getting a sense of how much you owe and what the interest rates are, then pick a strategy that works best for you and stick with it.
Responses are for informational purposes only and individuals should consider whether any general recommendation in these responses are suitable for their particular circumstances based on investment objectives, financial situation and needs. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing, including a tax advisor and/or attorney. Nathan Bachrach and Ed Finke and their team offer financial planning services through Simply Money Advisors, a SEC Registered Investment Advisor. Call (513) 469-7500 or email email@example.com.