A Myth as defined by Merriam-Webster Dictionary is: a popular belief or tradition that has grown up around something or someone; especially: one embodying the ideals and institutions of a society or segment of society. Guess what? This is exactly with the credit industry wants you to believe.
Have you ever heard, “if you tell a lie often enough, loudly enough and long enough that the myth will become accepted as the truth?”
Let’s get right to some myths and bust them, consider this a myth-buster exercise.
Myth 1: Car payments are a way of life, so expect to always have one.
Truth: You can buy a used car with cash if you will just put a little money as side each month. Wealthy people rarely buy new cars and don’t make monthly payments.
Myth 2: Taking out a 30-year mortgage is the smart way to buy a house.
Truth: A 15-year mortgage will save you thousands of dollars in interest over the life of the loan for just a few hundred dollars a month more.
Myth 3: High income earners are wealthy.
Truth: High income earners does not equal wealth, it’s not what you make it’s what you keep. Most high-income earners are also high consumers, therefore, having as much or more debt as a midrange income earner.
Myth 4: You can save a lot of money if you take out an adjustable rate or a Balloon mortgage if you will move within 5 years.
Truth: The adjustable rate mortgage is designed to keep the lender from losing money if the prime lending rate goes up, your ARM will go up to protect the mortgage company.
Myth 5: You need a credit card to make a hotel reservation or rent a car online or over the phone.
Truth: A debit card does the same thing and if you use it as a credit card, you are afforded the same protections against fraudulent charges.
Debt is one of the must marketed products in the country today, just look at the TV commercials, the kiosk set up in the airport and the clerk at most retail stores; they always ask if you would like to put it on your XXX card. It’s so convenient that people don’t even think about it…until the bill comes in the mail. Do yourself a favor don’t buy into the Debt Myths, get on a budget and spend cash like your life depends on it, because it does.
Boris G. Robinson is a Financial Coach and Business Coach with a passion for helping people get out of debt, build wealth and enjoy financial freedom.