We’ve all heard tall tales about money. But some can have real consequences on your bank account if you’re not careful. People took to an online forum to share pervasive financial myths Americans need to dispel.
Note: Some quotes in this piece have been lightly edited for grammar.
1: Demolishing Credit
Newsflash: if you think carrying a balance and paying interest on your credit card will build credit faster, “It doesn’t,” one person says. A call center employee for a big bank says, “I hear so many people try and tell me this.”
2: Never Invest
One person says they’ve heard it isn’t worth investing your savings because you have to pay taxes on short (or long) term gains. A few commenters agree they’ve heard this skewed line of thinking before. “Even if I take home 1 dollar, that is 1 dollar more than I had prior,” an investor-oriented person says to the naysayers.
3: False Savings
“Tax brackets are marginal, people,” someone said. “This is one of my favorites,” another responded. “You hear some of the dumbest rationalizations from people that seem like reasonably intelligent adults who pay income tax every year on why it would be bad to have more money.”
4: Losing Track
One person thinks it’s just a rumor that your credit score is something you need to be tracking daily “or that you need to worry about small fluctuations in it,” they said. “I know that, and I still can’t help compulsively checking it,” one person responded.
5: Pop the Question
Looking to put a ring on it? No need to break the bank. “You don’t need to spend three months’ salary on an engagement ring,” one commenter said. “The industry made that up.”
6: There’s a Difference
One IRS employee wanted to clarify the difference between tax returns and tax refunds. “Tax Return = The forms, schedules, and math Taxpayers send to the Service, by mail or electronically,” they said. “Tax Refund = After a Tax Return is processed, Taxpayers may request their overpayment be refunded to them, as a paper check or direct deposit.”
7: Good Deal
One thrifty shopper thinks it’s a dangerous myth that thrift stores are only for poor people. “I visit thrift stores semi-regularly, and while I don’t always find something I want/need, I have purchased many essentially ‘brand new’ items for dirt cheap.”
8: Timing Is Everything
If you’re trying to become an armchair expert at “timing the stock market,” you’ll probably be out of luck. “Yes, it’s physically possible,” one person says. But to do it on a consistent basis? “You’re far more likely to get burned.”
9: Don’t Fall For It
Pyramid schemes can be easy to fall for if you’re not careful. One person says multi-level marketing is a pervasive financial scheme. “My stupid roommate took out an 8,000 dollar loan to buy 2 Enagic Water Ionizin/filtering machines so he could become a vendor,” they said. It didn’t work out as well as they thought it would.
10: Not So Efficient
Getting too flippant with tax write-offs can land you in hot water, according to one person’s experience. “I spent ten grand on energy-efficient appliances and windows and saw a 40-dollar return,” they said.
11: Follow the Leader
Next time you trust a real estate, personal finance, or investment “guru,” research where they got their knowledge from. In the eyes of one person, most “got rich by selling their ‘methods’ to audiences, not by actually adhering to the method they peddle.”
12: Can’t Avoid Taxes
If your taxes aren’t automatically withheld from your paycheck, Uncle Sam makes you pay up one way or another. “Being paid in cash does not make your income magically tax-free,” a commenter warned.
13: Forgiving Banks
Banks don’t screw people over by front-loading the interest payments on loans, as some believe. “That is just how interest works. It is a percentage of the principal balance. At the beginning of a loan, the principal balance is larger, so interest is also correspondingly larger,” one person explained.
14: Too Good To Be True
People who believe “tax deductible” is a good thing are probably misled. “It’s only a good thing if you donate or do something tax deductible that is more than the standard deduction,” someone said.
15: Downsides to Everything
Some believe renting an apartment or house is equivalent to throwing their money away. But it’s not as dire as that, according to one person who’s likely been around the block a time or two. “Rent is providing money for a service. It comes with pros and cons, as does owning a house.”
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