Parents, friends, colleagues and, of course, the Internet have created a wrong idea about debts, loans, and credits. We believe in everything that is based on someone’s experience instead of relying on the experts’ opinion. Here are gathered six financial myths that create a wrong financial picture. Be aware that you don’t follow these myths in order to avoid the confusion.
- Debt is a Lifebuoy
Some people consider a debt to be a lifesaver when they are out of money. Therefore, they prefer to apply for easy same day loans without thinking twice. While it can help you, you should consider long-term solutions too.
Of course, debts are good when it comes to the emergency and out of the ordinary situations. Sometimes they can really save us. In other situations, debts are the real enemies of your income. They truly unsettle your financial situation and lead you to the restrictions.
While you spend your time and money to pay your debt off, you could spend it on your vacation; put it toward your retirement or children.
- Car Payments is a Monthly Routine
Car payments aren’t the routine everyone must stick to. Nevertheless, this rule is ignored by most of the people, who keep on wasting approximately $500 per month and $6000 per year on the car payments. Even if you know how to use a car payment calculator a car can end up being a deep hole that swallows your budget without any refund.
A wise decision for people, who know the value of money, would be buying a good used car that will cost you approximately $6000.
- Loaning Money for Family Is Okay
Leaving all the sentimentalities alone, let’s admit the fact that family members rarely pay the debt back guiding themselves with a simple rule – “we are family”. Yes, you are unless your cousin owes you several hundred dollars. Therefore, loaning money for your family, in most cases, means that you agree to give these funds without getting them back. Don’t you? Then don’t loan money at all or accept the fact that it will take an eternity to get them back.
- Entering College with a Loan Is Impossible
Yes, entering a college without a loan is impossible unless you don’t try to. There exist effective ways to avoid applying to a bank for a financial help that require some efforts and dedication. Scholarships, grants, exchange programs, specific aid – all these boons make entering college without a loan absolutely possible. Obviously, you can only rely on your personal and professional skills, what makes this step a little more difficult. Nevertheless, it’s better than to burden yourself with monthly payments and financial restrictions.
- I Am too Young to Think about Retirement
You are too young to receive a pension but it’s time to think about the retirement. If you don’t have any debt and have an emergency fund of three to six months of expenses, you are ready to start saving for your retirement. The first option means that saving for the future when you have a debt now can be a kind of difficult. Still, the earlier you start saving the more you can get in 30-40 years. Prepare your sleighs in summer to have no troubles in winter!
- Managing a Budget Is about Knowing the Balance on the Credit Card
Absolutely ridiculous! Knowing the balance on your credit card is good but it is far from budget. Budget is a thing that helps you foresee your future with a help of a thorough analysis of the income and expenses. Some people tend to think that by having an overall picture of the financial situation they will manage their budget. It’s false and this approach will confuse you and give no results. Get the information about the wise management of your budget and see the difference!
Finances are very tricky. Knowing how to deal with them is a priceless experience that you gain during the whole life. Nevertheless, taking into the account the aforementioned tips will bring you closer to the flawless outcome.