For many of us, we often learn personal finance principles based on what we hear. As a result, financial myths are more widespread than we think. Here are the four financial myths to be careful about.
Not all debt is debt. If the interest rate is low and the debt amount is not beyond what you can pay, such debt need not be bad. Of course, you need to pay off credit card balances as fast as possible to avoid paying double-figure interest rates.
You should also be very careful when taking on more debt. So, you must be completely sure that you have the means to for pay it. For example, a mortgage can help you to increase personal equity in the form of real estate.
In the US, total household debt reached $15 trillion in the third quarter of 2021. We keep hearing of rising credit card debt, student loan debt, and personal loan debt. As a result, some people might think that carrying a lot of debt is harmless.
You should not take on debt that you cannot pay. Having a lot of debt may be acceptable if you have the means to pay it off and the interest rate is not too high. So, taking out the mortgage for your home may not be such a bad idea if you are making regular payments. However, carrying a lot of credit card debt is almost always bad since the interest rate is high and because it is for consumer spending, which does not build personal wealth in any way.
A lot of people take out loans to receive a qualification, buy a house or a car. Just because everyone else is doing it does not mean that it is harmless. You should be careful about incurring too much debt because you won't save money in this way.
A lot of people think drastically cutting down on expenses is the only way to save money. However, you don't have to live a spartan lifestyle to save more money.
You can save more money by increasing your income. You can try finding a higher-paying job or earning extra income through a side gig.
For many of us, money is a very personal matter. A lot of people are hesitant to discuss their money issues with others for fear of being judged. However, it is better to be open to money matters with those you trust. So, if you are facing financial hardship or overspending, you should not hesitate to inform someone you rely on.
Hopefully these tips will give you a sign of relief as what seems like a big problem is common with most people, so you don’t have to feel alone. You can save yourself a lot of pain and hardship by avoiding the financial myths mentioned above.