Myth: Buying things on a sale is a great way to save money.
Reality: Buying things on sale is a way to spend less money, but unless you stop by the bank on the way home to deposit the amount you didn’t spend, you’re not saving anything–only spending.
Myth: If I don’t use credit I’ll never have anything.
Reality: When you buy things on credit you end up paying for them twice or even three times depending on the interest rate and terms of repayment. That’s a really silly way to appropriate your precious income.
Myth: If things get too bad, I can always file for bankruptcy and start over with a clean slate.
Reality: Bankruptcy is a very serious matter — and certainly not an easy way out. Bankruptcy can play a terrible toll on a marriage and family relationship. And if that’s not bad enough, although the credit bureaus can only report a bankruptcy for ten years, it ruins your credit score for big ticket items you may want.
Myth: I need at least $2,000 to start an investment program.
Reality: You can start with as little as $25. Many mutual fund companies, for instance, will waive all minimum requirements provided you agree to an automatic investment of $25 each month. You can buy a $50 U.S. Savings bond for just $25 — you could buy one each month at your bank.
Caution: If you have outstanding unsecured debts, all of your surplus funds should go to paying them as quickly as possible. It doesn’t make sense to put any of your money at risk while you are so heavily obligated to high-interest debts.
Myth: No lender or credit card company would approve a loan or line of credit unless they knew I could afford it.
Reality: Are you kidding? They don’t really care if you can afford it or not. In fact, many lenders and telemarketers are paid a bonus for getting you to accept credit up to and beyond your ability to repay. These companies are looking for people who are so desperate they will agree to any terms, even those with outrageously high interest and fees.