In continuing the series on debunking these most popular and 12+ pages being too much for one post – here is part 4 of 4 on the series Debunking The 25 Most Outrageous Money Myths. Part 1 can be found HERE. Part 2 can be found HERE. Part 3 can be found HERE.
19. Money Corrupts People
Very similar to #1 of it being “the root of all evil”. Money itself isn’t the corrupter. Think of how many good things have happened in this world with money. How many charities, art pieces, hospitals, parks, etc have been made with this “corruptive money”.Yes, there are people that will use the money in corrupt ways, but the money itself isn’t the enemy. You’re trying to walk again on the higher moral ground than those with the money.
20. My Best Investment Is My House
First off, if you paid the full amount for your house and plan to live in it for 20 years, it may be a good investment, but if you’re like the 99% of the world that can’t do that, it’s hard to justify it being a good investment when you’ll likely pay at least double that amount over the life of your 30-year loan.Additionally like all other investments, home ownership involves the risk that your investment may decrease in value. While commonly cited statistics say that housing appreciates at somewhere between the rate of inflation and 5% per year, if not more, not all housing will appreciate at this rate.In fact, it is perfectly possible for your home to lose value over the years, meaning that if you want to sell, you’ll have to take a hit. The only way you’ll avoid realizing a loss in such a situation is if you continue to own the home until you die and pass it on to your heirs.
21. I’ll Save Money When I Have Enough
When is enough enough? This can work if you set a number and stick to it. Say you’re going to start saving when you make $1500 a month, and stick to it. That could work. But I’d recommend sticking in as much as you can up to and through that amount with a percentage of your money instead of a dollar amount.Any amount of money you save, no matter how small, is enough to save. The habit of saving money is more important than the amount.
22. I’ll Never Get Rich In This Down Economy
“There’s more than one way to skin a cat.” SOMEONE is making money when the rest of the world is not. Money doesn’t just evaporate; it’s going somewhere. You just need to find where that is. During a recession, good sectors to put your money are in places that people have necessity: medical, food, and energy are resources that people can’t live without, even in a down economy.The key is to understand that there’s always an investment that’s good right now. When stocks go down, bonds go up. When interest rates fall, stocks go up and homes get cheap. If the economy is ‘bad’, that means it’s time to sell your bonds at a profit and buy stocks at a discount.
23. If I Carry A Balance On My Credit Card I Will Improve My Credit Rating
All your improving by doing this is the amount of money the credit card company is making off you. Your credit gets better by proving you’re a good borrower and pay it off each month.If you want to take it a step further, don’t charge more than a 35% of your card’s limit because the amount of available credit you’ve used is another component of your credit score.
24. Money Is A Big Responsibility
Well, yes it is, are you saying that you’re not responsible enough to have money? Even the most irresponsible of the wealthy can keep it flowing. It’s not about responsibility, it’s about your mindset to think you can never attain wealth and this is your excuse for it.If you think of money as a burden, it will become burdensome to you. Even if you do somehow to become wealthy with this mindset, you’ll end up letting it work you into penny-pinching with it rather than finding ways for it to maintain itself and grow to a bigger pot.Obviously, money doesn’t have to be a burden, quite the opposite. It can help you lift burdens that were created before it. if your money works for you, it can lighten your burdens. This myth is a powerful and self-fulfilling thing.
25. Renting Is Throwing Your Money Away
It is a mindset that has been captured a handful of times across the blogosphere (1, 2, 3, 4, 5, 6) and no solid reasoning has been found for it during that time. It’s got 2 sides to the coin:Do you consider the money you spend on food to be money that is “thrown away”? What about the money you spend on gas? Electricity? Toilet paper? All of these are things you’d normally buy and just throw away when you’re done with them and get no lasting value from them, right? Well, consider dumping rent money in that same category.Even if you own a home, you still have to “throw away” money on expenses like property taxes and mortgage interest (and likely more than you were throwing away in rent). In fact, for the first five years, you are basically paying all interest on your mortgage. For example, on a 30-year, $250,000 mortgage at 7% interest, your first 60 payments would total about $100,000. Of that you “throw away” about $85,000 on interest payments.
A lot of money myths have to do with “mindsets” and “sayings” that have been passed down over the years from your parents and your parents parents and so on. Right alongside them are the tendencies of people and their actions around money.Yes, everyone has been stung by a bad investment, a sour financial transaction, or a seedy person trying to get their hands on your money. But the key is to not let that dictate how the rest of your life is going to be when dealing with money. It is an experience that you’ve had and you’d be better of to learn from it than you would be to dwell on it. 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,
Filed Under: 401K • Compensation • Credit • Credit Cards • Debt • Emergency fund • financial education • Frugal • Interviews • Investing • Mutual Funds • Real Estate • Retirement • ROTH IRA • Taxes • Traditional IRA