"Sow a thought and you reap an action; sow an action and you reap a habit; sow a habit and you reap a character; sow a character and you reap a destiny."
- Ralph Waldo Emerson
A few things we believe about money hold us back from achieving our financial goals. So today, we are busting these myths.
Let's get busting
This post is 1,777 words, a 9 min read
Money is the Root of All Evil
First of all, this is quoted wrong all the time. The correct quote is
For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows. - 1 Timothy 6:10
Money is nothing more than a tool. It can be used for good or evil.
Money reveals our true nature and feelings.
Money doesn't buy happiness
BULL S#!+
Hot Take: I believe people who say this do not realize the privileged position they have.
It is about how we use our money.
If we use our money to do things that add value to our lives, We'll be happy
If we choose to do things with money to please the world. We'll never be happy.
Proverbs 19:4 - "Wealth attracts many friends, but even the closest friend of the poor person deserts them."
The Ultimate Power of money is taking control of our time and the number 1 thing we all want is more time.
More Money More Problems
"If you have a problem that money can solve, you don't have a problem." - Edgar Doucet
If we have a problem that money can solve and we have the money to solve it. We don't have a problem we have an inconvenience
We don't have more problems, our problems change. It takes a new skill set to solve them
I can't negotiate my bills.
Everything is negotiable.
If we have a bill we can't pay or don't want to pay. Pick up the phone and call
Sometimes you will surprise yourself at just how flexible these businesses are.
Always remember it's much cheaper for the business to keep us as customers than for them to get a new customer.
Money is hard and complicated
Here is everything we need to know about money:
LIVE ON LESS THAN WE MAKE,
INVEST AND SAVE THE REST
The hard part is taking action and ownership of our finances.
We just have to give ourselves the time to learn about it.
The good news is we are by reading this post.
Investing is hard and complicated
Warren Buffett said it best, "You don’t need to be a rocket scientist. Investing is not a game where the guy with a 160 IQ beats the guy with a 130 IQ. The most important quality for an investor is temperament, not intellect.”
We do not need to know all the fancy jargon
All we need to know is to keep fees low and be consistent
It is as simple as setting up an automated direct deposit to buy Target Date Index Fund
It is not hard but it is much more boring than portrayed.
Buy the cheaper item
I am still breaking away from this myth
For some things, I am far better off getting quality because it ends up being cheaper in the end.
The easy framework I started using is Cost Per Use
How much will I use this thing?
How does the cheaper option compare?
It's the same reason you buy in bulk.
It might be cheaper on the front but we end up spending way less over time.
We can't be responsible with money and enjoy life
A lot of us may not agree that we believe this but by our actions, we absolutely believe this.
We think we have to go full cold turkey and never spend or go YOLO and spend all our money
But you can do both.
It's all about prioritizing and determining what we actually value.
We may not be able to do everything but we can do the things we love.
We need a lot of money to start investing
I started investing with $50
With the number of options we have to start investing today, you can start with as little as $1 on most platforms.
The goal is to get started and make it a consistent part of your plan.
An easy way is to use your company 401(k) or open a Roth IRA
Starting a business is the only way to build wealth
BULL S#!+
Ignore the noise on social media
There are much easier paths to wealth than starting and running a business
The vast majority of those we would consider wealthy, build their wealth by working a 9-5 job and investing over time
Renting means I'm throwing away money
Rent is paying for a service.
Just like we pay for a meal at a restaurant, we are paying for a place to live
Renting provides us with flexibility and freedom that owning does not
Renting does not mean we cannot build wealth and owning does not mean we will build wealth
There are a lot of house-poor people and rent-rich people
A house is an investment
BULL S#!+
A house that is your primary residence is a cost, not an investment
You can read this article on why I believe this
Real Estate is the best way to build wealth
See above Myth #10 for why this is not true
Also read this article from Nick Magguilli, on just what it takes to build wealth with real estate
All Debt is BAD
Another myth I am trying to break away from
Debt is a tool that can be used to better your financial position
However, DEBT IS DEBT. It is not something to be played with.
It is not free money that we can do whatever we want with
Use debt for things that will build our finances not for indulges.
Credit Card is an emergency fund
Using our credit card as an emergency fund is like stuffing our dirty clothes in the closet or under the bed. We may hide the clothes but our room still stinks and the problem just gets worse
Credit cards have some of the highest interest rates. Using it for emergencies is not how we get out of an emergency. It is how we make the emergency much worse
Get 3-6 months of expenses saved up to ensure with emergencies we can survive.
Credit Score is the most important financial number
I saw a poll on Twitter of choosing between an 850 credit score and $100,000 and people were choosing the perfect credit score.
PLEASE ALWAYS TAKE THE CASH!
Credit score is probably the 5th most important thing in our finances.
Emergency Fund, Investing, Insurance, and Net Worth are things that come way before
It is important but not that important
It is useful for getting loans but it is not something for you to stress yourself with.
BONUS MYTH: Carrying a credit card balance DOES NOT increase your credit score.
BONUS MYTH: Perfect credit score is a waste of time. You get the best rates once you have a 750 or above
Retirement is an age that is defined by law (67)
Retirement is a number but that number is not our age
Retirement is the point where we have enough money to live without needing outside funds
Retirement can be as early or as late as we choose for it to be.
Retiring early just takes more aggressive savings and investing.
BONUS MYTH: Worrying about retirement when we are older. Time is your best friend when it comes to building wealth. The earlier we begin the easier it is.
401(k) or Roth IRA is an emergency fund
Money taken from a 401(k) comes with a 10% penalty or if taken as a loan that is interest you have to pay before you can start investing again
These should never be seen as emergency fund unless in absolutely dire circumstances.
This money is for our future self. Touching it impacts our ability to grow wealth
As Charlie Munger says, "Never interrupt compounding unnecessarily."
I can't start saving because I have debt
I paid off over $10,000 in credit cards while also investing over $10,000 in the span of 6 months.
I used my company 401(k) to save
We can definitely do both and it is important to build the habit of saving early
We do not want to wait cause it can take time to pay off that debt
I will have my student loans (insert any type of debt) forever
Student loans stay for as long as we choose to keep them in our life.
If we choose to get rid of them, we can eliminate them.
Also, do not bank on the government to save you from your loans.
BONUS MYTH: I need to take student loans to go to college.
You can get scholarships and grants to pay for college
Turn every stone and get that free money
Pay off your mortgage as fast as possible
Depending on the other responsibilities we have
Do you have an emergency fund?
Do you have credit card debt?
Are you investing?
Paying off your house can feel great but it all depends on your financial situation
It is extremely hard and costly to turn a house into cash
But if it will give you peace of mind then sure pay it off
CHEAT CODE: Rather than putting extra dollars toward the mortgage. Open a brokerage account and call it house payoff.
Invest the extra funds you would put towards the house into a Low-Cost Total Market Index Fund
This way you hit two birds with one stone.
Don't talk about money
EFF THAT NOISE!!
The best way we learn about money is by talking with others whom we trust
Learning how they are handling things
Greed is GOOD
BULL S#!+
Generosity is ALWAYS GREATER than greed!!
Thanks for reading
Generosity>greed
God Bless You
✌🏾
What myths about money did I miss or do you disagree with?
Please share in the comments.
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