5 Money Myths

More often than not, a lot of us did not have conversations about money with our parents. Therefore, we either believed wrong information or formed our own views leading to financial misinformation. I strongly believe that once we transform our thinking in how we view money, it is then that we are able to walk in financial freedom. Below are 5 money myths lined up with the truth.

MYTH: Debt is a tool and should be used to create prosperity.

TRUTH: The borrower is a SLAVE to the lender (Proverbs 22:7)

MYTH: Car payments are a way of life and you will always have one.

TRUTH: Staying away from car payments by driving reliable used cars is what the typical millionaire does. A new car loses 70% o its value in the first four years.

MYTH: Leasing a car is what sophisticated financial people do. You should always lease things that go down in value. There are tax advantages.

TRUTH: Consumer reports, Smart Money magazine, and a good calculator will tell you that the car lease is the most expensive way to finance and operate a vehicle. The way to minimize the money lost on things that go down in value is to buy slightly used.

MYTH: Renting is like throwing money away.

TRUTH: Do you consider money you spend on food to be thrown away? What about the money you spend on gas? Both of these expenses are for items you purchase regularly that get used up and appear to have no lasting value, but which are necessary to carry about daily activities. Rent money falls into the 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.

MYTH: I'm young - I don't need to worry about saving for retirement yet. / I'm old - it's too late for me to start saving for retirement.

TRUTH: The younger you are, the more years of compound interest you have ahead of you. Compound interest is like free money, so why not take advantage of it? Someone who starts saving and earning interest when they're young won't need to deposit as much money to end up with the same amount as someone who starts saving later in life.

That said, you shouldn't despair if you are older and haven't started saving yet. Sure, your $50,000 nest egg may not grow to as much as a 20 year old by the time you need to use it, but just because you may not be able to turn it into $1 million doesn't mean you should try at all. Every extra dollar you invest will get close to your goals. You can still sock away money now and make a considerable sum by the time you need it later in life.

Disclaimer: I am not a financial expert; I simply share from my own experiences and my passion to help others.

Source: www.daveramsey.com

#savingmoney #moneychallenge #daveramsey #womenandmoney #moneymyths

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