We are going to talk about five money myths that might be keeping you poor, that might be something you from getting rich.
1. Debt is Bad
I really hope you don't think that all these millionaires have no debt. It's actually quite safe to say that the majority of people who are millionaires have a lot of debt. It's some of the bad debt it's your debt habits that are bad.
Are you getting into debt? You can buy that brand new Tesla Model 3 Model S model E. I don't even know which one is out right now. Are you trying to buy that now you can't really afford it you may or may not be recognized on those but you want to test luck yeah that's that day.
Or are you using it to control an asset that's worth much more than you could probably pay out in cash but you're gonna rent out a portion of it which is going to put money in your pocket that's good at that that's real it then.
I think it's really important to understand the difference between good debt and bad debt generally speaking if you're going to get into debt two approaches anything that you don't necessarily need.
Maybe a very fancy vacation, maybe a very nice luxury designer item, or maybe a car that's probably really really nice you probably don't need it and that's what we can consider bad debt.
But if the debt is going to make you money. It could kind of be considered an asset you know what I'm saying if you're gonna buy a car but you're going to reflect that car out.
For example that same Tesla we're talking about let's say you buy the Tesla your payments of $600 a month but you rent that Tesla is turbo or whatever other kind of looks like. They have 600 hours a weekend which is now accomplished is getting that car payment paid for and putting money in your pocket.
If you actually are able to rinse it out every single weekend or however many days during the month so that's not using that to your advantage using it as leverage you can never go wrong not ever don't hold.
2. Savings is King
The second myth might be a trigger so you've been savings is king you should save your money and it's really bad to not save any money yes or no.
While I do think it's important to save something if all you're doing is saving you're probably losing a lot. Saving in and of itself is not going to accomplish as much as investing.
Even if you invested in the stock market and I have a huge stock market span I believe you should invest in things that you know about but that's the topic for another post.
But the stock market on average they say is about 7% here over here. There will be some high highs and some low lows but somewhere we average out about 7%.
If you go to chase Wells Fargo Bank of America any of those larger banks are pretty much going to offer you an insulting amount of interest for your money and we'll do a quick little math problem just to put that into perspective but first let me talk about inflation.
Inflation is basically the idea that year-over-year your purchasing power which is your money is reduced because cost increases. I know you remember back in the day we used to be able to get a bag of chips and water for like under a dollar and now what is a dollar the chips is like two for $1.50 I don't even know what they don't even eat chips anymore because of prices.
3. Don't Use Credit Cards
The third money myth is don't use credit cards and if you use a credit card it must mean you can't afford it because you're putting everything on credit.
Most people have ever heard somebody say that they have absolutely no clue what they're talking about yeah I said it if that's you you know I'm sorry.
It goes back to the person behind the credit card. What are your habits?
Are you the person who spends it thinking it's extra money or it's money that you have and you can just kind of use it you want to use your credit card but you absolutely don't want to use a credit card.
Treating it like a Debt card is pretty much the safest thing that you can do. I think a general idea is credit cards are bad because the interest rates are really high.
They also offer a wealth of different perks including points maybe cashback, warranty extension, and most other things obviously take a look at whatever credit cards you have and do some research.
There are a lot of different things you can actually use to your advantage when using a credit card as long as you're using it the right way. Make sure that you're paying off their balance every month.
If you've ever heard that you have to keep a balance on there to build your credit they're lying to you don't believe them it's absolutely not true.
I've had credit cards where I've never carried a balance and my credit was still being built so it's definitely possible stable.
4. Cars and Houses are Assets
The fourth money myth is cars and houses assets. The typical textbook definition is yes a house is an asset a car is an asset. If you're thinking about it from a wealth perspective anything that's taking money out of your pocket is not an asset. If all businesses just purchase things that make them lose money they'd be out of business.
The same thing works for you. These things they're good to have I mean don't get me wrong it's great to own a house it's great to have your own car but it's taking money out of your pocket.
Finally, we don't monetize them. If you have a house that you own consider renting out some rooms. I bring some cash flow in sometimes you might even end up getting your mortgage paid for and you could probably live free just depending on how you do your numbers.
Your car might be a little more trickier and also people do over and live I'm not sure how lucrative that is if you are over or lyft driver let us know you know what kind of benefits you see from that.
5. 401k and Your Pension for Retirement
Your 401k and your pension for retirement are the best thing for you. Please let me know if you know anybody or if you ever heard anybody say they became rich because they have a 401k.
It's not likely okay this is what Wall Street wants you to believe sure yeah I have a 401k we're gonna charge you all these fees it's nowhere and nothing to see here you know yeah and we'll see you in 40 years you know.
Maybe you'll have the money we told you will be calculated for you maybe you won't you don't really know for a fact if what you're investing in is a good investment or if it's something that you should keep your money in.
A lot of times I'll tell you oh you know you're young don't worry about it if everything blows up you still have another 30 years in the work field and you should know somebody telling you something like that sounds ridiculous.
You want to have 401k it's honestly better than nothing it's better than just having savings in most situations but do your due diligence and definitely look at what they've estimated versus what you're actually getting.
- Is it pretty much in line?
- What are your fees?
Even they don't really care necessarily. I mean here's the thing they'll take your money they'll take their feet off the top they'll go and invest everything. If the stock market goes blow and just explodes in your face they already got their fees.
They're not worried about you oh well we'll see you at 65 hopefully you have something in here I don't know but thanks for that point is there a 1% fee or whatever it is.
If you have a 401 K just be aware of what you're investing in don't set it and forget it you should be very active in your income.
This has everything to do with your livelihood soul beans active as you can be figure out what your fees are make sure what they're estimating makes sense make sure what they're investing in makes sense.
But also it's important to note is that 401 K is not your only option. There are other things that you can invest in that might even put cash in your pocket right now and give you cash in the future to have your own business.
