MYTH 15: People that look wealthy are wealthy.

 

REALITY: People that look wealthy often have big bills that they can’t afford. They might be living in a fancy house and driving a fancy car, but sleeping on lawn chairs and avoiding the repo man.

 

MYTH 16: I’ll never have money to retire.

 

REALITY: With that attitude you probably won’t. Most people simply give up because it is more fun to spend money than it is to save it. However, you can build a fortune starting with just a few dollars. The keys to financial success are continuity and time; the earlier you begin to invest, the more you will have when you retire. Don’t be concerned about where you are going to invest your money when you begin. Just start with a simple savings account. It doesn’t pay much in interest, but you can develop the habit of regularly investing your money (at least monthly) while you look around and decide where you want to invest the funds for the long haul. You can invest in mutual funds, individual stocks, treasury bills, bond funds or a host of other investment vehicles. Go to the public library, bookstore or visit the

 

MYTH 17: All I need is for someone to give me a loan and that will solve my problems.

 

REALITY: Wake up. If you’re having financial problems, a loan is usually a quick fix to a larger problem. By getting a loan, you are putting yourself deeper in debt just to make yourself believe that your problem is under control. Consolidation loans are often more costly over the long run, even though your monthly payment might be lower. You could end up consolidating no-interest debts like utilities and medical bills, and once consolidated, you’ll end up paying interest. In addition, a consolidation loan usually requires you to put up some collateral, such as your home or vehicle, in the event that you default. Some consolidation loans can be beneficial. Make sure you have weighed the pros and cons before applying for a loan.

 

MYTH 18: It’s wrong for my lender to take my collateral or sue me if I fall behind.

 

REALITY: When you signed the contract stating that if you failed to repay the loan, the lender could take the collateral or sue you, did you think the lender was kidding? Isn’t that your signature on that contract?

 

MYTH 19: I can wrap up all of my credit card debt into a home equity loan and my interest will be tax deductible.

 

REALITY: You have just placed your home at risk and could lose it if you fail to make your payments. Nobody ever plans not to be able to make his payments. The reason the lender uses your home as collateral is so he can take it from you if you default on the loan. As for the tax deduction, who knows if the interest will be deductible for the life of the loan? Credit card interest used to be deductible but no longer is. Are you confident that home equity interest will always be deductible?

 

MYTH 20: It’s okay if I take a cash advance to keep me from falling behind on my payments.

 

REALITY: Some people take cash advances on their credit cards to pay their other creditors “on time.” It is better to accept a late payment than to borrow your way deeper into debt, just to pay for bills that you can’t afford. What often happens is you put yourself so deep in debt that it is nearly impossible to improve your situation without significant negative marks being made on your credit report.