We are living in a country and in a time when we are surrounded only by myths. Everything we see, to the left and to the right, are myths and we believe in them.
When we find out the truths about the financial actions we make daily, we begin to ask ourselves questions. Few people end up finding the truths in their actions.
Usually, these people are those who made many financial mistakes and know what is like ending up in a personal bankruptcy status.
Hereafter, I will show you 25 myths and truths about money, personal finances and financial prosperity.
The 25 myths and truths are collected from the book Total Financial Transformation by Dave Ramsey. The book is considered a Bible for those who have debts and want to get rid of them as soon as possible!
25 myths and truths about your financial life
- Myth:Advances in cash, loans with due date on salary day, leasing, title mortgage and consumer credits are necessary in order to help those with low income.
Truth: These examples of deception and incorrect loans are meant to take advantage of persons with low income and to bring benefits only to owners of the companies granting credits.
- Myth: If you loan money to friends or family, you are doing a good deed for them.
Truth: If I loan money to a friend or a relative, the relation will be tense or destroyed. The only type of relation that will prosper is master – subject type.
- Myth: If you play the Lotto or you gamble, you will get rich.
Truth: Lottery and gambling are a tax for the poor and those who do not know how to calculate.
- Myth: Debt is an instrument and should be used to create prosperity.
Truth: Debts imply some considerable risks, most often they do not bring prosperity and rich people do not use them as often as we are lead to believe.
- Myth: Refinancing gets you off the interests and you remain with only a single smaller instalment.
Truth: Refinancing is dangerous, because all you do is to treat the symptom.
- Myth: I do not have enough time to set up a budget, a retirement plan or an action plan in ral estates.
Truth: You do not have enough time to to nothing.
- Myth: “Three months with no interest” means, practically, using other people’s money for free.
Truth: Three months with no interest is not the same as cash.
- Myth: Car instalments are a way of life; you will always have an instalment to pay.
Truth: What millionaires are used to do is to drive a second hand car, but in a good running condition; this is how they got to become millionaires.
- Myth: Sophisticated persons make purchases in leasing. It is good to buy in leasing goods which value is decreasing, profiting from the taxation advantages.
Truth: Consumer protection, well known experts and a usual calculator will tell you that a car bought in leasing is the most expensive way to use a vehicle.
- Myth: You can make a good business if you buy a new, with 0% interest.
Truth: A new car loses 60% of its value in the first four years; this does not mean 0% interest.
- Myth: You need a credit card to rent a car, stay in a hotel or make shopping online.
Truth: A debit card is as good for all of these.
- Myth: The debit card has more risks than the credit card.
- Myth: If no one would use credits, our economy would crash.
Truth: No, it would prosper.
- Myth: Everything will be ok when I retire. I know I do not have savings yet, but everything will be ok.
Truth: Things are not going to solve themselves!
- Myth: Gold is a good investment and will protect me if the economy crashes.
Truth: Gold has a quite weak history and is not used when the economy crashes.
- Myth: Life insurance with a savings fund, the same as the full life insurance, will help me be rich when I retire.
Truth: Life insurances with a savings fund are one of the worst financial products out there.
- Myth: I will declare myself bankrupt and start from zero; it looks very easy.
Truth: Bankruptcy is a painful event which changes your life for worse forever.
- Myth: I do not use cash because it is dangerous, what if someone robs me.
Truth: You are robbed every day if you do not take advantage of the power cash gives you.
- Myth: If I make my will, I will die.
Truth: You will definitely die – so it is better to have a will when it actually happens.
- Myth: That Banker and that Legal Executor were nice, they are treating me nicely.
Truth: Bankers and Legal Executors are not your friends.
- Myth: I can buy a financial history optimisation set and all mistakes from my past will disappear by miracle.
Truth: Only the incorrect data can be excluded from the financial history; anything else is a hoax.
- Myth: The divorce decision says that my wife/husband should have paid the debt, so I will not do it.
Truth: Divorce decisions do not have the power to erase you name from the credit card and from mortgages, so if your wife/husband does not pay, get ready to do it yourself. You continue to be a debtor.
- Myth: Raising money for funeral or children college is a good investment and protects me from inflation.
Truth: Funeral services paid in advance and support funds for education offer a low profit and are putting your money in other people pockets.
- Myth: Have a 30 years mortgage and swear to yourself that you will pay it as if the deadline is in 15, so that you have room for movement, if something happens.
Truth: Something always happens.
- Myth: You cannot buy a house with cash.
Truth: Let’s bet on that!
These are the most important 25 myths and truths which I have taken from the book.
The book is a practical guide of financial education and financial transformation. I recommend everyone to read it and, especially, to turn it into a good plan to implement.
More details on “Total financial transformation” by Dave Ramsey can be found HERE.
In the end, I will leave you with a question and I expect your answer below:
What mistakes have you made in your financial life?