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There is often great debate between those who catch public transport and those who prefer their own mode of transport, and the debate is further complicated by those who catch public transport because they believe it is the more frugal alternative, and those who are forced to catch public transport because they believe their finances don’t permit them the luxury of driving their own car.

Therefore, following a comparison of the frugality of your own car vs public transport, based on both the financial costs and the costs to your time, because after all your time is not only worth something to you, it is time you could be spending cooking a meal instead of ordering take away, it is time you could be spending ironing instead of paying a drycleaner to press your shirts.

The Costs of Owning and Running a Car

Everyone uses their car differently and everyone has a different taste in cars and so repayments, fuel costs and usage are going to vary in your own comparison. Therefore, we have chosen a standard family car for the comparison of the frugality of a car vs public transport, to give you an idea of the differences between driving your car to work every day vs working in the city, and whether the savings you make in catching public transport really add up for you.

The comparison car:

A middle sized sedan with comfort and luxury as well as room for a family, shopping or large purchases.

• The cost of a middle sized car is approximately $27,000 to buy new, including on road costs.
• On a seven year personal loan at an average current interest rate of 11.49% your monthly repayments would be approximately $498.
• The  gets 7 L/100 km and has a 60 L tank.
• With fuel on average $1.20/L you will pay around $70 to fill up your fuel tank.

Is a Car a Frugal Option to Commute to the City?

First we compare the costs of someone who drives a 100 km round trip into the city and back to work five days a week. This is an approximately 40 minute drive and is a common commute time, and the average amount of time most people spend driving to and from work.

Costs of driving 100 km to work in the city:

• You garage your car in a secure parking lot and pay $10 a day in parking.
• You insure your car based on your commute and usage and pay approximately $78/month.
• You drive another 350 km after work and on weekends to sporting commitments, shopping trips and to see family and friends.
• You therefore pay $70/week to fuel your car.
• Weekly financial costs of owning and driving a car to the city = $265.

Benefits of driving to work in the city:

• A 100 km car trip will be faster and more direct than travelling the same distance by public transport.
• Public transport across this distance will often require you catch a connecting bus, train or tram.
• You are not subject to hot, cold or wet weather.
• You are travelling in safe transport and retrieving your car from well lit private garage.

Is a Car a Frugal Option if You Live in the City?

If you both live and work in the city then you may want to compare the savings you can make from owning a car for the convenience of weekend shopping trips and ferrying the kids around, without the costs of fuel and parking which those with a longer commute face. Plus, if you drive your car less, many insurance companies will also offer you reduced premiums.

Costs of owning a car but not driving to work:

• You insure your car based on your usage and you can pay approximately $58/month.
• You use your car after work, on weekends and in bad weather and so drive approximately 350 km a week.
• You pay $70 to fill your fuel tank every fortnight.
• Weekly financial costs of owning a car but not driving to work = $174.

Benefits of owning a car but not driving to work:

• If you live and work in or close to the city or your office you can walk and stay fit and healthy though you may spend the majority of your days behind a desk.
• You have the convenience of a car if you have a large amount of files to carry to or from work, and in case of extreme hot or cold weather conditions.
• Your reduced use of your car saves you fuel, insurance and parking costs.

The Costs of Using Public Transport

The costs of using public transport vs using your own car may immediately seem much lower financially, however to truly be frugal in using public transport you will financially benefit the most from not owning a car at all. Owning a car but taking public transport to work costs you both for the car and the public transport and as you can see from the second example above, owning a car but not driving to work costs you approximately $174 a week, on top of which come your public transport costs which are detailed below.

Costs to use public transport:

• A ticket which gives you 10 public transport trips each week – one to work and one home each day – will cost you around $29.
• The financial costs of public transport are the same whether you are travelling within the city, or whether you are making a 100 km round trip each day.
• Weekly financial costs of catching public transport to work = $29.

Convenience costs of using public transport:

• Service interruptions cost you time, be they from bad weather, warped tracks, driver strikes or break downs.
• No option to travel in your own car during extreme hot or cold weather can cost your composure when you arrive at work, can damage suits or shoes, can cost for hair appointments and blow-dries to appear professional.
• No option to travel safely late at night, in the dark or early morning.
• You will have your own price to put on the weekly financial costs of these conveniences.

Is a Car or Public Transport the More Frugal Alternative?

To use public transport to and from work while also owning a car for convenience and weekend use will cost you around $200 a week. For just another $65 a week you can travel in the privacy, the security and the comfort of your own vehicle, leave and arrive at work when you choose rather than when it matches with a public transport timetable and be able to arrive composed and ready to get down to work each morning no matter what the weather.

Very few people will do away with a car in their lives completely in favour of public transport as ferrying children, pets and friends requires the use of your own car. Therefore, while using only public transport and not owning a car is the most frugal alternative, catching public transport to work and using your car on the weekends can help you be more frugal and remain organised and in control.

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Well, it really can be a coin flip as to who is hurt worst by the big rise and oil pushing $150 a barrel today. It’s a shame on one hand, but being a “glass half-full” guy, I can see the silver lining that I’m actually enjoying…

It Is Not Cheap

Well, “enjoying” might be overkill, but there ARE some things that will be better off with gas needing to be purchased with a bank loan. Combine that with J.D. Power & Associates stating that overall auto sales are down about 8 percent so far this year and large cars/trucks sales dipping an outrageous 23 percent and we’ve got an epidemic, or is it an opportunity?

There’s no strange puzzle as to why new cars aren’t selling, people have a strong inclination that gas isn’t going to be going down anytime soon. At the same time, we realize that something better is just over the horizon. Whether that be a change in the government come election time in the US, or whether it be the car makers kicking out vehicles that don’t guzzle so fast.

I’m not a political pundit by any means, but I feel there is something to be said for the candidates getting grilled about the gas prices now. You’d think they’d need to make a change when they get their place in the Oval Office, but stranger things have happened.

On the other side though, people aren’t buying because they know that car makers are at the cusp of change now. All vehicles are going to need to get 35mpg by 2020 as per the CAFE standard Congress passed last December. This isn’t going to START in 2019, as with any business, they’re building and researching now. People know that the cars that are being pushed out now are end-of-life models that are going to need redesign to meet what Congress is pushing.

Looking To Capitalize on High Gas Prices

Several companies are chomping at the bit and being proactive on this now. They’re taking advantage of the big companies being so big and getting in when they see the opening. As with any entrepreneur, these companies see a hole that needs filling. Jumping in now is going to turn a pretty penny for them before the big manufacturers can work this change into their environment.

Take the Aptera for example. They’re saying this thing can potentially get 300mpg. That’s leaps and bounds above what anyone else has talked about in the past and certainly will get some good ink from around the world if it is possible. Here’s a video about it:

You Can Probably Get a Steal Now

On the flip side and “glass-half-full” mentality though, if you’re in the market for a big rig now, there may not be a better time to jump on it. Dealerships are piling up cars on their lots and not being able to push them now. If you just can’t fight off that new car bug and need one now, consider some of these models that are probably dirt cheap now:

The big V-8 engine Jeep Commander caught on with its catchy phrase of “got a Hemi”. But now the catchy “got a Hemi” phrase has run its lifeline and people are realizing what that really means: “Got a Deep Pocket Book”? The beastly car has dropped 48 percent in sales this year and tops the charts. 13mpg just isn’t going to cut it if you’re on a budget, but like I said, if you’ve got the extra cash, you could probably walk away with a pretty sweet deal right now.

Next on the chopping block is the Nissan Titan. It never really was able to get up to snuff with US rides from Dodge, GMC, and Ford and the gas crunch has made it even tougher for the foreigner and sales are off 45 percent for the year. It is steep, but that’s not to say that the big dogs aren’t hurting as well – Dodge Ram sales are down 27 percent, Chevy Silverado sales down 26 percent, and Ford F series sales are looking good in comparison down just 19 percent.

Hummer sales aren’t actually as bad as I would have thought, I would guess they’d be topping (or bottoming) the list so far this year being down just 36 percent. It’s not rocket science why though. They are built on the same frame as the Chevy Suburban, but offer far less room. This ride was destined to failure I think because it only offered uniqueness. I rarely see one pulling anything and aesthetics and Hollywood keep this one alive. It doesn’t have the space capacities needed, nor the fan base to keep it flowing. Unless they completely overhaul it, I think it’s reached the end of the line.

Chrysler’s sweet deal to lock in $2.99 gas seemed to do the opposite of what they were trying to push. The beefy Chrysler 300 sales are down 31 percent.

Know Where Your Money Goes

Yes, I drive a Suburban and yes it costs me $100+ to fill it up, but it’s not killing me yet. I have a second car that I drive that sees about 10 miles a week. I live very close to my office building; so I offset the big ride gas prices with realizing that I only drive one car. Per month I’m putting in $200-ish for gas. Is it killing me? No. I can afford it now. I budget my money properly and understand that gas isn’t going to be coming down till it has some competition.

People that are complaining about the prices and not doing anything about it (budgeting properly) are going to be the ones that are hurt most by it. Big business isn’t going to slow. We’re all ants in the whole scheme of things and big tires run over ants pretty easily. Roll with the punches and know what is coming. Budget properly and don’t buy any big expenses until you can offset this cost.

Get a raise, don’t buy that flat screen tv, hold off on that vacation for another year. There are plenty of ways to pay for the gas if you analyze what you’re spending now and where you can cut back.

photos by: /travoc/, /chadica/

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Has anyone else become desensitized to the gloom and doom that is reported daily about the state of the economy? Clearly there are huge issues facing the global economy which should concern each of us however as with anything else, when you see and hear the same thing over and over it becomes possible to just stop listening.

Unfortunately tuning out the news, skipping over the articles about the recession or otherwise putting your head in the sand will not change the reality of the current crisis. Instead of avoiding the news and hoping things will improve you have the option of taking control of one area of the economy, your own personal finances. Now would be an ideal time to gauge your own financial situation to determine how financially fit you are today.

Check your savings- Financial experts recommend having at least three to six months of living expenses in your savings account. I am not a financial expert therefore I will certainly not argue that advice, however if I may speak for the population that is living paycheck to paycheck without any savings to speak of, it might be a little tough to put that kind of money away. Tough- but not impossible.

The key to saving money even for families that are working with very limited funds is getting started. A few bucks each pay may not fit into the “standard” saving plan but the economy is anything but standard right now. If you already have a savings account and contribute regularly continue to do so and try to avoid situations that would require you dipping into your savings.

Check your credit score- Checking your credit report and credit score should be something that you get in the habit of doing at least once a year regardless of the economy. During a recession the importance of knowing your credit score becomes even more critical since obtaining credit may become difficult if not impossible as lenders scramble to reduce their risk. Add to that the current trend in the credit card industry of canceling dormant accounts and lowering credit limits you may discover your credit is taking a hit even if you have been financially responsible. By being informed you can actively work to repair or at least minimize the damage to your credit score.

Check your investments- Are you afraid to find out where your investments stand? Have you been avoiding checking your statements for fear of realizing how much you have lost? One thing is certain, not acknowledging the facts will not make them go away. Find out where you stand so you can make educated decisions about your investment goals for the upcoming year.

Check your taxes- Don’t worry they haven’t gone anywhere- but your tax planning strategy should be examined to make sure it is working properly. Are you claiming all eligible deductions, receiving applicable tax credits, paying too much money or too little throughout the year? Proper tax planning can take some of the guesswork out of tax season and ensure you won’t have any unwanted surprises when you file your tax return.

Check your retirement- Are you taking full advantage of retirement plans offered by your employer? Do not let the recent turn in the economy stop you from contributing to your retirement fund, especially if your employer offers a match. The best way to guarantee you outlive your retirement assets is by stopping contributions to your retirement account.

Check your insurance policies- You need to make sure all of your policies are still relevant and the information is correct so you can maintain the proper coverage. This applies to all types of insurance from homeowners to life insurance. People often have policies and forget about them -assuming they are covered. Life is not predictable and situations change, it is important to check your policies at least once a year to ensure you are not over/under insured.

Check your estate planning- There is an alarming number of Americans who do not have a will and many who have wills that haven’t been updated in years. First if you do not have a will you need to remedy that as soon as possible. Estate planning is not just for the retired or wealthy. If you do not have your wishes documented the state will determine how your assets get distributed when you pass away. Your will should include your last wishes, appointing a power of attorney, a living will in the event you are unable to make decisions regarding your health care and how you wish your estate to be distributed.

When your financial “checkup” is complete you can feel confident that you have allowed yourself the opportunity to update information, change strategies and confirm your current financial fitness before moving forward into the new year.

Trisha Wagner is a freelance writer for DepositAccounts.com, where you can compare rates from dozens of banks in one place. Trisha writes regularly on the topics of personal finance and saving money.

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I think this is always in my top 10 weekly hits from the search engines so I thought I’d give it a bit more justice with a more specific post.  It’s a very general question that takes some digging to find the answer, but we’ll use the big shovel to find if you’re doing the right things at your current place in life…

If You’re 18 and Asking This Question

You’re in a place that 99.9% of the world wasn’t or hasn’t been at. You’re taking your financial future by the horns, congratulations! First off, you’re starting off on the right foot by asking yourself the question.  Ideally you’re probably not too bogged down with debt at this point.  Maybe a car loan, a first credit card with a bit of debt.

At the same time, you’re probably getting into your first job and/or steady income.  So thinking about having to give away a part of that to be used in 50 years doesn’t sound like that great of an idea, but you asked!    If I were to take a time machine back to that stage in my life, I’d love to start putting away 10% of each paycheck.

Even if you’re only making $20,000 per year, 10% of that money is $2,000/year and in 50 years you’d be sitting on about $2,500,000 at 10% (yes, that is 2 MILLION 5 HUNDRED THOUSAND off someone that makes $20,000 per year). You’d have put in a total of $100,000 and the beauty of compound interest would have accounted for the other $2,400,000 of it. Compounding interest is pretty slick.

Furthermore, think about how your salary is likely to increase over that 50 year span. You’d likely be moving up in salary at a few different points in your life, and yes, inflation would rear its ugly head each year too but there’s not a good way to battle inflation yet.The big thing is, get in early.

If You’re 50 And Asking

You may be thinking that you’re too late in the game to start investing.  You’re wondering where to if it is worth your time.  You’re certainly going to need some catch up against the 18 year old putting in 10%; to match with the 18 year old investing $2000/year, you’re going to need to put in $17,000 per year to hit that 2.5 million plateau.  Attainable, yes.  Preferred, probably not.

Every financial advisor you talk to will tell you that it is never too late to start investing.  Yea, I see their point as 2 fold, they may try to sell you something you don’t need and figure you’ll act on it out of fear of having nothing at the end.  You “could” start tossing a little money towards your retirment in 20 years, but  at 50 years old you shouldn’t be expecting the the world.  With the same scenario as above, $2000/year you’re still going to be pocketing $112,000 of which $40,000 is your own cash.

True, it doesn’t hold a flame to the 2.5 million that your 18 year old counterpart is dumping, but it isn’t chicken scratch either.  In my honest opinion if I were in this situation, i wouldn’t be counting on “investing” as my sole nest egg; I’d be looking to other (non-stock market related) investments, business startups, inventions, partnerships, etc to bump up my chances of retiring sooner than later.  At 50, you need to have something else unless you have a spare $17k to hit that 2.5 mil bucket in 20 years.

If You’re Anywhere In Between 18-50 And Asking

A good rule of thumb is 10%.  Depending on your level of creativity, 10% is a good place to start.  I say “creativity” for the fact that it’s the most common way to bump up your funds.  It’s open to everyone who has money.  There are hundreds (if not thousands) of ways to bump up your nest egg.  Finding them is a little more difficult than contributing to a 401k or ROTH IRA.

Think of the people TAKING your money for the 401k plans.  They’re not just making magical money out of yours and giving you a sweet deal.  They’re putting your money to work for them and giving you a small portion of it back in return.  They’ve got the ideas and people that are using it.  Try to think like one of them.

I’m not saying it is a bad path though, people have done it for decades now and have done well with it.  Depending on your final goal, maybe slow and steady is the way you want to take it.  Personally I’m going for both.  I put money in my 401k and ROTH as a starter, but am always looking for new ways to grow my money faster than 8-10% a year.

The defaults that seems to be a consensus if you’re tacking down a baseline and only using the stock market for your nest egg are:

18-30 years old – 10-15% of your salary
30-40 years old – 12-18% of your salary
40-50 years old – 18-25% of your salary
50+ – 25% or more of your salary

Conclusion

I’m of the mindset that Tim Ferriss brought up in the 4 Day Workweek – “Retirement is worst-case-scenario insurance. Like life insurance, it should be viewed as nothing more than a hedge against the absolute worst case scenario: in this case, becoming physically incapable of working and needing a reservoir of capital to survive.“

I’m not saying to ditch your 401k and ROTH for better waters, if you have these 2 options, use them. Keep in mind that you’re going to be in the “slow and steady” boat and there’s nothing wrong with that. It’s all part of your investment threshold. If slow and steady keeps you comfortable, it’s your bag; do it how you do it.

Right now in both my 401k and ROTH I’m putting in a few more dollars due to the time I have till retirement, and the recent slide in the US economy. I think I’m buying now low at bargain prices and plan on being around the market for another 30 or 40 years.

This is not the only nest-egging that I’m doing though. I’ve got a few spare bucks out there feeling out other opportunities hoping that one of them will be my REAL net egg and my retirement accounts really WILL be my worst-case scenario insurance.

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I’m a fan of fast food.  We grew up on hot dogs and top ramen. Our monthly “dine out” night would usually take us to McDonalds or Burger King. Well, fast food providers have really done well in the past 50 years and have fine-tuned their marketing schemes to milk you for a few more pennies on each visit…

I actually came across this image on StumbleUpon last week and got to thinking about it. How ‘hooked’ do you need to be on a product to actually just order without thinking anymore?

The main purpose of fast food is to get something quick and easy. Their marketing gurus know what people are going to the fast food joint for – something quick and something easy. Additionally, people don’t think about this tactic. People are thinking about getting their food FAST.

In so doing, they get you into thinking you’re getting a better deal by ordering 1 portion. Think again.  Apparently they can whip up a better deal with the cardboard manufacturer to toss out another package than they would to add another portion or 2 in the same package. Crafty, but deceptive.

Fast food chains spend a large amount of marketing to get the attention of children.

People form their eating habits as children so they try to nurture clients as youngsters.

It’s very important that the fast food companies make sure that their fast food meals for children are healthier.

Parents think that chicken meals are healthier than burgers, but they are not since they are fried.

Consumers are programmed into thinking that bigger size means bigger value. Larger portions are presented as a bargain for consumers because they’re relatively cheap for restaurants to offer. Food costs less than other operating costs such as rent, staff, and equipment.

Some Fast Food Fun Facts

Fast Food Nation: The Dark Side of the All-American Meal (2001) is a book by investigative journalist Eric Schlosser; some of the main points are as follows:

* This year Americans will spend over $110 billion on fast food more than they’ll spend on movies, books, magazines, newspapers, videos, and recorded music combined.

* Every day about one quarter of the U.S. population eats fast food.

* Roughly 12% of all American workers have worked at McDonald’s.

* The golden arches are now more widely recognized than the Christian cross.

* Children often recognize the McDonald’s logo before they recognize their own name.

* American children now get about one quarter of their total vegetable servings in the form of potato chips and French fries.

* The typical teenage boy in the United States now gets about 10% of his daily calories from soda.

* The rate of obesity among American children has doubled since the late 1970s.

* A fast food soda that sells for $1.29 costs the restaurant about ten cents, a markup of more than 1200 percent.

* McDonald’s is now the nation’s largest purchaser of beef, pork, and potatoes. It is the second-largest purchaser of chicken in the U.S.

* Hundreds of local slaughterhouses used to supply the United States with beef; today thirteen large slaughterhouses supply most of the nation’s beef.

* A typical fast food hamburger contains meat from dozens or even hundreds of cattle.

* Because fast food is so highly processed, much of its flavor is destroyed, so the tastes of most fast food are manufactured at a series of special chemical plants in New Jersey.

* Chicken McNuggets contain beef additives, while McDonalds French fries derive some of their flavor from “animal products.”

Conclusion

I’m not going to get on the high horse and claim I never have and never will eat fast food again. I enjoy it as well. I don’t make a habit of it, and likely will still consider mixing in a “super size” every so often.

I’m just saying to keep an eye open as to what is around the corner because what you buy isn’t always necessarily the best bang for your buck. Search the menu over if you’re crunching the numbers – you’ll likely find a sly way of milking a few more cents out of your wallet.

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I could hardly believe it Sunday morning when the only game on here in Seattle was the Colts vs. the Vikings.  We used to get 2 games in the morning (10am) and 2 games in the afternoon (1pm) along with the evening game.  Then they cut it back to 2 games in 1 of the 2 times, and I could live with it.  But today we had just one at each time.  I’d had enough and the internet had the answer…

I’ve OFTEN considered switching to DirectTV for just such an occasion, but the customer service hasn’t been too bad from Comcast, especially with the discounts they gave me when I called in for a complaint on the service.

So off to the internet I went in search of alternatives.  Obviously DirectTV and Comcast info came up, but it appears that contract between the NFL and DirectTV lasts through the 2010 season.

So my current Comcast subscription isn’t going to cut it until at LEAST 2 years from now and I don’t really want to go through the overhaul of cable providers.  I checked out NFL.com GamePass and it tells me that “NFL GamePass is not available in the U.S., Canada, Mexico, Bahamas, Bermuda, Antigua, and the U.S. Territories.”

Super, so on with the search and the next link pointed to TvAnts over at MpP2p.eu. I have no idea what it is so Wiki tells me:

TVants is a P2PTV application written and designed by Zhejiang University.

Most programs on TVants are provided and shared by users, so the availability of a program depends on its popularity. Users can add their media source to the platform, or even set up their own media cast platform — because it can act both as a client and a server.

I’m liking it and initial download and test.  Not HD, but the audio is clean, the picture is clear (click the football screenshot to see clarity), and I’m watching the Redskins game!  Switch over to the Jets vs. Patriots and watch Favre re-emerge from retirement?  No prob, easy switch!  Clearly the next thought is illegality of it.

What Is TVants And Is It An Illegal Software?

TVants is a peer-to-peer video streaming application.

TVants ia not an illegal software in itself. However, users have to follow the statement from tvants.com stating “users, TVAnts Feirengong way to flow automatically generated by a third party media server links.”

TVAnts own not download, storage, or alter the content of third party flow media server, or use of any TVAnts own seeds nodes downloading, buffer, or third parties transmit flow media server content, all downloaded, shared, or watching users are TVAnts their behaviour.

TVAnts attaches great importance to intellectual property protection, and developed to protect the rights of people of their legal rights measures and steps, when the right people are found in tvants generated links pointing to the flow of media content in violation of its copyright of third parties, please send the right person to TVAnts. ”

The right to inform “TVants will take measures to remove relevant content or shielding related links.

Source: http://cache.tvants.com/

What Is “P2P?

A peer-to-peer (or P2P) computer network is a network that relies primarily on the computing power and bandwidth of the participants in the network rather than concentrating it in a relatively low number of servers.

Under US law “the Betamax decision” (Sony Corp. of America v. Universal City Studios, Inc.), case holds that copying “technologies” are not inherently illegal, if substantial non-infringing use can be made of them.

In practice, many, often most, of the files shared on peer-to-peer networks are copies of copyrighted popular music and movies.

Sharing of these copies among strangers is illegal in most jurisdictions. As actions to defend copyright infringement by media companies expand, the networks have quickly adapted and constantly become both technologically and legally more difficult to dismantle.

This has caused the users that are actually breaking the law to become targets, because whilst the underlying technology may be legal, the abuse of it by individuals redistributing content in a copyright infringing way is clearly not.

Source: http://en.wikipedia.org/wiki/Peer-to-peer

So What Does All This Mean?

Well, take it for what you’d like. “In theory” it’d mean that you don’t have to buy the DirectTV or NFL.com package to watch football games you CARE about. However, if you’ve got a big screen TV, you might need to purchase some cables to hook your home PC up to your TV. Which isn’t all that tough.

Microsoft thinks there is a future in a PC-based media center, and after seeing this capability, what’s to say there isn’t anything you couldn’t do with the internet?

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In continuing the series on debunking these most popular and 12+ pages being too much for one post – here is part 3 of 4 on the series Debunking The 25 Most Outrageous Money Myths.  Part 1 can be found HERE.  Part 2 can be found HERE.

13. Savings Accounts Save Money

Having money in a high yield savings account or MMA for emergencies is a good idea. But if you are looking to save money or make your money work for you, a savings account isn’t likely going to get there for you.
First, you have to look at what you are paying out in interest rates. For example, if you have a student loan with a 5% interest rate and a savings account making 3% interest rate, your savings are costing you approximately 2%. You would be better off paying off that student loan with your savings account.

It goes the other way around too. If your debt has less of an interest rate than your savings, your money is working better in the savings. But with today’s interest rates being so low, your debt is probably higher than the amount of interest you are earning on your savings account. That means you are actually losing money.

14. The Stock Market Is Dropping With My Money, So I Am Selling!

I wrote a whole post on this exact phrase HERE, but to rehash a bit…

When the stock market goes down, keep your money in it unless you’re right at the brink of retirement. The market goes up and down, that’s just what it does. Know your tolerance. Many seasoned investors consider a decline in the market to be a “sale” and take advantage of the opportunity to pick up some valuable investments that are only experiencing a temporary dip.

15. I’m Too Young To Invest, I Have Plenty Of Time To Worry About Retirement Later

The younger you are, the more years of compound interest you have ahead of you. Compound interest is your best friend, trust me.

When you start saving young, you’ve got a long time to let that money sit and simmer. Even if it is just a few bucks a paycheck, you’re getting in the habit of saving, which is nearly as important.

It’s true that some brokerage firms require you to have a minimum amount of money to invest in certain funds or even to open an account. However, if you wait until you meet one of these minimums, you may get frustrated and have a harder time reaching your goal.

These days, it’s easy to start investing with very little money thanks to the proliferation of online savings accounts.

While traditional bank savings accounts generally offer interest rates so low that you’ll barely notice the interest you accrue, an online savings account will offer a more competitive rate based on how the market is currently doing. In 2007, it was common to find online banks offering 5% interest. 5% is a pretty good return on your low-risk savings account investment when you consider that stocks historically return an average of 9-10% annually.

Also, some online savings accounts can be opened with as little as $1. Once you’re in a position to start investing in stocks and mutual funds, you can transfer a chunk of change out of your online savings account and into your new brokerage account.

Alternately, you could open a brokerage account with minimal funds through one of the online trading companies that have cropped up.

However, this may not be the best way to start investing because of the fees you’ll pay each time you purchase or redeem shares (generally $5 – $15 per trade). While these fees have been drastically reduced from when you had to trade through human stockbroker, they can still eat into your returns.

16. I’m Not Going To Credit Counseling, It Is Bad On My Credit That I’m Trying To Save!

The current FICO formula ignores any reference to credit counseling that may be in your file. That’s been true for the last three years, after researchers at Fair, Isaac, the company that created the FICO scoring system, noticed that people getting credit counseling didn’t default on their debts any more often than anyone else.

However, your ability to get a loan could still be hurt by credit counseling. Your current lenders may report you as late, because you’re not paying what you originally owed or because your credit counselor isn’t sending your payments in on time. Late payments do hurt your credit score.

Lenders consider other factors besides credit scores in making their decisions, as well. The factors they look at can vary widely. Most want to know your income, for example. Some want to know how much savings you have or whether you’re a homeowner. Some will find credit counseling disturbing, while others see it as a good sign.

If you plan to get a mortgage soon, and you’re not already behind on your debts, it’s probably smart to steer clear of credit counseling. If you’re already in trouble, however, a good credit counseling agency might be able to help you get back on track.

17. The Only Way To Get Rich Is To Catch A Break

Again a generalism of the entire population. Yes, some people get lucky when they strike it rich, and some are giving money through rich relatives (but most of them STAY rich, even when they’re not financially savvy because you can BUY people to watch your money if you have enough of it) but that’s not the case with the remaining 80% of the people that become wealthy.

For the 80% that earn wealth, it’s not an accident, it’s dedication and belief that you’re going to be successful. If you just sit around thinking that your only way to wealth is to “catch a break” at work, you’re most certainly not likely to get that break.

Most of the rich never made it rich at their ho-hum corporate job. They ventured outside of it to find what would make them wealthy. Reach out and investigate other ways to get rich, you may be surprised that you may be able to make your own “break”.

18. If I Refinance My Mortgage, I’m Saving Money

Well, yes, you are initially, but essentially what you’re doing is you’ve refinanced for another 30-year term. This means that if you have already paid 10 years of mortgage, then refinance for another 30, you have basically extended your loan to a 40-year mortgage. Do the math and you’ll see if you are really saving anything.

If you really want to save money, refinance for a lower rate and a shorter term. Your monthly payment may not go down, but your overall repayment may.

Continuation

Stay tuned tomorrow for the remainder of the  Debunking The 25 Most Outrageous Money Myths series!  Part 1 can be found HERE.  Part 2 can be found HERE.  Part 3 can be found HERE.

photos by: digidreamgrafix.com, ??103,  Per Ola Wiberg (former ponanwi and Powi), Elfboy, mckaysavage, Ravenelle, saschapohflepp,

Related posts:

1. Debunking The 25 Most Outrageous Money Myths (part 4 of 4)
2. Debunking The 25 Most Outrageous Money Myths (part 2 of 4)
3. Debunking The 25 Most Outrageous Money Myths (part 1 of 4)

In continuing the series on debunking these most popular and 12+ pages being too much for one post – here is part 2 of 4 on the series Debunking The 25 Most Outrageous Money Myths.  Part 1 can be read HERE.

7. Closing Your Old Accounts Will Help Your Credit Score

Nope. Closing accounts can never help your credit score, but can possibly hurt it. My mortgage lender actually told me to “trim down to 3 or 4 accounts” when I was in the market for my first house. Although it is a true statement that too many open accounts hurts your score, but that, in itself, is what hurts it. The damage has been done when you opened it.The credit score looks at the difference between your available credit and what you’re using. Shut down accounts, and your total available credit shrinks, making your balances larger than what your limit is set to, which hurts your score.The score also tracks the length of your credit history. Shutting older accounts can also make your credit history look younger than it actually is, which can hurt your score.But if your goal is to improve your credit score, you generally shouldn’t close accounts in advance of such a request. Instead, pay down your credit card debt. That’s something that actually can improve your score.

8. I Bought My Mortgage With Zero Down So I Could Write Off The Interest, Which Is Advantageous

I don’t know if “advantageous” is the word I’d look for. I don’ see the advantage in paying thousands of dollars in interest each year. Interest tax deductions should always be considered when filing your taxes and calculating whether you can afford the mortgage payments, but they should not be considered a reason to buy a home.I can see the advantage if you’re selling a previous home and pocketing that cash or putting it towards other debts (car, credit cards, loans, etc) that carry a higher interest rate than what you’d get a house for, but again, there are always loopholes in everything.

9. I Don’t Have Enough Money To Start Investing

I don’t buy this one.  I find this one comes in a lot when people are looking for excuses that they don’t have a good paying salary.  They want you to feel sorry for them that they have a low-paying gig and further proof in their lack of ability to put anything to savings.This can be argued semantically as well.  How much is “enough”?  Well, if you cut it to the most basic, it’s $0.02 since the smallest currency is a penny.  So if you’re making $0.02, you can invest half of it.  Whether you want to is another thing.The second part of the semantics is the word “investing”.  You don’t have to put your money in a stock to have it be considered “investing”.  Put it in a high yield savings or MMA account.  That’s investing as well.Thirdly is that people just don’t think small amounts matter in investing.  So that extra $40 at the end of the month left won’t be worth putting into an investment.  WRONG!  It is.  Think of that $40 for 12 months.  Then think of that 12 months for 30 years.Just putting that away is giving you $14,000.  Now put that to work with a very modest 5% growth and you’ve made yourself a pretty penny turning in over 100% more than you put into it (click the chart to enlarge).So yes, you DO have enough money to start investing.  Even if it is just a few cents, seeing that amount grow will get you in a mindset of saving.  That money will eventually add up – maybe not in the near term, but program yourself to thinking to the future, which leads to the next myth…

10. I’m Too Old To Worry About Saving Now – It Is Too Late.

So you’re old, get over it.  That doesn’t mean you should just throw in the towel!  You’ll still be able to build SOME nest egg if you start now.  Granted, it won’t be the same as someone firing it up right out of school, but you may live to be 100 – you never know!  Starting at 55 gives you another 45 years of investing ahead of you if you’re going to push the triple digits in age.Furthermore, age can be an advantage in the ROTH IRA game.   The 2008 limit for IRAs is $5,000. If you’re 50 or older on 2008, it’s $6,000.  So every year after 50 gives you a $1,000 bonus.  I highly recommend it.Don’t look at it as a hindrance, look at it as a challenge to kick it up in just 1 year, then 2, 3, etc.  Get in the mindset of saving it and it’ll be much easier to overcome the idea.

11.  Checking Your FICO Score Hurts Your Credit

Nope. The actual act of inquiring doesn’t hurt it if you’re doing it once a year from annualcreditreport.com. Applying for new credit is what hurts your score. The credit card folks that send you 50 snailmails per day trying to get you to sign up with their card hits your score. Shredding them will help your score more than filling them out and applying for them.Your score fluctuates between 300 and 850 – when your credit is run by a credit card agency or lender it usually knocks off about 5 points, which won’t end the world, but if you’re on the brink of one echelon or the next for their offer, it’s best to keep the inquiries down and only use them when you plan on buying something.When you’re searching for a mortgage remember that FICO treats multiple inquiries in a 45-day period as just one inquiry and ignores all inquiries made within 30 days prior to the day the score is computed. So if you’re gonna hit it, hit it in that timeframe.

12. The Rich Are Getting Richer, And The Poor Are Getting Poorer

TheDigeratiLife sums it up very well in 3 statements why the rich get richer:The rich have started successful businesses.The rich get tax breaks.The rich are paid higher and higher salaries while regular people don’t.While I agree with the statements, I think a big point is that the rich know how to make MORE money because money begets money. If you have it and know how to use it, it can really pay off for you. So there is no lie to the statement of the “rich get richer” – they should if nothing more than evolution. They’re getting richer because they’re learning how and teaching their kids how to do it also.But that doesn’t cover the 2nd half of the statement “the poor are getting poorer”. Professor Sala-i-Martin wrote a p
aper titled “The Disturbing `Rise’ of Global Income Inequality.” In it he estimates the worldwide distribution of income by individuals rather than countries. The results are striking.In 1970, global income distribution peaked at about $1,000 in today’s dollars, a common measure of poverty ($2 a day in 1985 dollars). In 1998, by contrast, the largest number of people earned about $8,000 — a standard of living equivalent to Portugal’s.”That’s what I call a new world middle class,” says Professor Sala-i-Martin. It is mostly made up of the top 40 percent of Chinese and Indians, and the effect of their economic rise is big.What about the argument that income gaps are widening within these rapidly advancing countries? With a few exceptions, it is true, but still misleading.The rich did get richer faster than the poor did. But for the most part the poor did not get poorer. They got richer, too. In exchange for significantly rising living standards, a little more internal inequality is not such a bad thing.”One would like to think that it is unambiguously good that more than a third of the poorest citizens see their incomes grow and converge to the levels enjoyed by the richest people in the world,” writes Professor Sala-i-Martin. “And if our indexes say that inequality rises, then rising inequality must be good, and we should not worry about it!”

Continuation

Stay tuned tomorrow for the remainder of the  Debunking The 25 Most Outrageous Money Myths series!  Part 1 can be found HERE.  Part 2 can be found HERE.photos by: digidreamgrafix.com, ??103,  Per Ola Wiberg (former ponanwi and Powi), Elfboy, mckaysavage, Ravenelle, saschapohflepp,

Related posts:

1. Debunking The 25 Most Outrageous Money Myths (part 1 of 4)
2. Debunking The 25 Most Outrageous Money Myths (part 3 of 4)
3. Debunking The 25 Most Outrageous Money Myths (part 4 of 4)

I thought I’d take WriterDad’s advice in cooking this one up thinking that [My] Baby’s Born in the Rough Draft. You raise it in the Rewrite“.  I’ve been working on this post for cumulatively about a month.  A change here, a new post here, realization here, but I’m done.  I could come up with 2,380 myths to only find another 13 in that search, so that’s it, I’m done with it and hope it rings a few bells for a few folks…Let’s start off on the philosophical myths and get down to the real “roots” of money…

1. Money Is The Root Of All Evil

No it’s not. You can say that for anything. I think that bad attitudes are the root of all evil; or evil thoughts are the root of all evil. I can go on, but I’ve got a long list to go through.Diving in to this one a bit more though, and taking a philosophical approach to why people say it – You get to put yourself on the higher moral pedestal than the people with the money by taking a shorter cut and you’ll look for evil when money is referenced. Money does bait people to do bad things, but it’s not the money that is doing it, I think it is the person offering the money that is “the root”.I can vouche I’ve wanted more money before and blamed those that actually had it, but who am I trying to convince? Ultimately with a little introspection, just myself it appears.Sign me up for more money, I’ll take on the challenge of proving it is not the root of all evil.

2. Money Can’t Buy Happiness

Can’t it? Really? Again this is similar to the statement above and can get into a philosophical or semantic debate over what it means.Certainly it can’t “buy” an emotion. But it can buy things that lead to an emotion. The same way that having no money leads to unhappiness. The lack of money didn’t make you unhappy, the lack of emotions money can provide contributes to your unhappiness.

3. If I Became Rich, My Friends Will Be Resentful Of My Success

Seriously? If that’s the only reason you’re not trying to get ahead in life, you might find benefit in re-evaluating your priorities. If your friend resents you for your successes, they may not be your friend after all. You may feel the need to be better than them at some financial aspect and it’s not abnormal to want that, but to actually resent you is not “friendly”.

4. You Get What You Pay For

So to get on my soapbox a little, just because a product is higher-priced does NOT always mean it is higher quality. Take a stock for example, just because Microsoft stock falls a few bucks over a time doesn’t mean that it is any worse company. If you bought it at $20 and it dropped to $10 and then shot up to $40 dollars, how do you determine that “you got what you paid for”?Take generic drugs for another example. I really don’t know anyone that goes with the name brand stuff anymore. Thousands of people (and myself included) can validate that they do the same thing. The big name companies aren’t targeting the bargain shopper though in their sales, they’re targeting this myth that people still hold on to.How about beer? It’s completely left up to the taster. I can’t stand Guiness, but I have several friends that won’t drink anything else. I’m a Bud man myself. I think it’s delicious and think the $7.99 I pay for a case is well worth it and paying MORE for the 12 pack of Guiness costing me $15. I would say I’m NOT getting my moneys worth in that situation.As a final example, how about a website you regularly visit? If you’re visiting it regularly, you must be getting something out of it. “Something” isn’t “nothing” and “something” is more than the $0 you’re paying to view the info it provides.

5. If I Get Just a Small Raise, I’ll Move To A Higher Tax Bracket, Get Taxed More, And Take Home Less Money

Absolutely not true. When you move into a higher bracket, ONLY that amount you make IN THAT BRACKET is taxed at that amount. So for example, your old salary was $30,000 a year and your new salary is $35,000 a year. According to the IRS’s 2007 federal tax rate schedules, when your salary was $33,000, your marginal tax rate was 15%. With a salary of $33,000, your marginal tax rate is now 25%.Based on this info, your first $31,850 of income is taxed the same way it always was was before you got your raise. With a $30,000 income, your take-home will be $25,891.25. If you make $33,000, you will take home $28,326.25. This is because only the extra $1,150 above $31,850 is taxed at 25% – not the whole $33,000.

6. Tis Better To Give Than Receive

If you believe this, I’m happy to be the “givee” of your money or other gifts worth giving. Digging deeper philosophically again, neither is better than the other. If you think about it, neither can possibly be better than the other because every time someone is giving, someone is receiving. Being a bad receiver doesn’t make you a good person, or for that matter, a good giver; it just makes you uncomfortable about receiving.Now don’t get me wrong, I give a good chunk to a lot of charities, but I’m just debating the money myth that it’s better to give than receive, and I enjoy giving, but I’m a big fan of receiving too.

Continuation

Stay tuned tomorrow for the remainder of the  Debunking The 25 Most Outrageous Money Myths series!

photos by: digidreamgrafix.com, ??103,  Per Ola Wiberg (former ponanwi and Powi), Elfboy, mckaysavage,Ravenelle, saschapohflepp,

Related posts:

1. Debunking The 25 Most Outrageous Money Myths (part 4 of 4)
2. Debunking The 25 Most Outrageous Money Myths (part 3 of 4)
3. Debunking The 25 Most Outrageous Money Myths (part 2 of 4)