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When I started to get on track financially a few years ago I realized there were money lies that I was telling myself that were keeping me in debt. Some were commonly held societal beliefs and others were convenient things that just seemed to make mathematical sense. That’s the trouble with beliefs, we don’t often stand back and wonder what’s behind them. We just sort of muddle through life with them until one day, hopefully, those lies get challenged.
A lot of getting on track with money is getting honest with yourself about where you’re at. You can’t begin to make changes if you don’t repair the faulty logic that got you off track in the first place. Money lies are super convenient and comfortable to hold on to, but they’ve got you walking up the down escalator wondering why you’re never reaching the top. Here are some of the biggest money lies you can clear out of your life.
Table of Contents
5 Big Money Lies To Overcome
The Credit Card Is At 0% So I Have Time To Pay It Off
This is a great way to get in a lot of debt quickly. After all, it’s like free money! You might charge more than you can pay off this month but that’s OK because you’ll definitely pay it off before that 0% deal ends. In reality, you probably won’t pay it off and you’ll end up with a nice pile of debt on a card that’s jacked up to 12%. Why do you think credit card companies offer these cards? It gets people to spend money they don’t have.
What’s worse, some people will get a card at 0% and transfer balances from their other credit cards. The math on that makes sense if you actually pay off the balance but I rarely see that happen. If you’ve run up the balance on other cards, I think that’s a sign for you that credit cards are getting the best of you. More credit cards aren’t going to solve a credit card problem.
Action Plan: Set up a snowball repayment method to get out of debt once and for all.
I Got Approved For A Mortgage So I Can Afford It
Home ownership is one of those measures of success that’s getting further and further away from being viable for middle class families. Generally a bank will look at your savings, cash flow, and credit and try to determine whether you’ll be able to pay back a home loan. They’re not calculating whether you can afford it, they are essentially just calculating the chances you won’t have the resources to pay back the loan which is different.
More and more, people don’t even have a 20% down payment for a home so not only are they paying the mortgage for longer (which means more interest), they’re paying mortgage insurance to protect the lender. To comfortably own a home your monthly payment should be around 30% of your monthly income, not 50% as is practiced more and more these days.
Action Plan: If you feel like home ownership is an unattainable goal I recommend Rent vs. Homeownership.
I Have Plenty Of Time To Save
Ah time, that most precious of resources. Time tends to creep up on us especially when it comes to our money. Turns out to save a lot, time actually matters more than your savings amount. If you save $15,000 a year for 15 years you’ll have $225,000 at the end. If you spent 5 years in your 20s telling yourself you didn’t need to save yet and not really worrying about saving, then you ramped up and saved $20,000 a year for 10 years you’d have $200,000. $25,000 towards a down payment or a car was lost. The results would be worse if any of that money was invested, even at a lowly 1%.
Action Plan: Of all the money lies, this one is the most prevalent. To overcome this lie, start saving now! If you find you are procrastinating, then set up an automatic savings plan.
I’ll Invest When…
I must confess to this one. I think we’re always waiting for just the right time to put money into the stock market. The main excuses I hear are “I’ll invest when the market gets better,” or “I’ll invest once I do more research.” Everybody out there is trying to time the market and everyone is failing miserably. Warren Buffet can’t even time the market. If you have a year of expenses in an emergency fund and you aren’t going to need a major chunk of money for anything in the near future, you need to start investing now.
As far as research goes, I think it’s great to look into what investments are best for you but don’t let that be a driver of investing stagnation. There are a lot of investment options such as index funds that are diversified and low-fee that won’t require much research at all. After all, stock investing research is about as boring as it gets. That’s why you read articles like these and let us do the boring work for you.
Action Step: Take the time to learn how to become a stock market millionaire. It’s not that hard, trust me.
The Future Is Certain
We make all kinds of assumptions about the future of our money that we have no idea about. We think we’ll make more money, that our kids will go to college, that we’ll need to retire at a certain age, etc. We plan our career paths as if the job will always be there. None of these things are guaranteed in the slightest. It would be silly for us to try to plan our life around a future that doesn’t exist.
Follow the path that’s in front of you not the imaginary obstacles you’ve imagined five years from now. One of my mentors calls this following the shiny thing at the corner of your eye. Don’t be overly caught up in plans, take the opportunities that reveal themselves presently. Be smart about your money but don’t be rigid. Our world and our reality are constantly changing and we have to stay flexible.
Action Plan: Understand what opportunity cost is and start looking at you life through this lens.
When you look at the money lies we tell ourselves it can seem pretty silly. Never have I said to myself, “I wish I would’ve put off that loan payment,” or “I’m really glad I spent that money yesterday instead of saving it.” I’m much more likely to be grateful I know my money situation and I face the truth head on each and every day. I read lots of financial topics and I question everything. The world at large would be very happy to have us remain aloof spenders. Today you can wake up to the all-to-common money lies and get on the road to financial security.
The fact remains that the truth is not a very fun thing to face. We make lots of charges to the credit card then don’t want to look at the statement. We pay the minimum on the student loan and don’t want to think about how the balance isn’t going down. Slowly but surely the things we believe about money chip away at our well-being, our self-esteem, and most of all our wallets. That can change right now if you choose.
Author Bio: Elsie Brown is a student, blogger, and all around cheapskate who writes about how we can all live better on less. Visit her blog at gundomoney.com
I have over 15 years experience in the financial services industry and 20 years investing in the stock market. I have both my undergrad and graduate degrees in Finance, and am FINRA Series 65 licensed and have a Certificate in Financial Planning.
Visit my About Me page to learn more about me and why I am your trusted personal finance expert.